Final Results

RNS Number : 1555K

Tlou Energy Ltd

27 August 2019

Tlou Energy Limited

("Tlou" or "the Company")

Final Results

Tlou Energy Limited, the AIM, ASX and BSE listed company focused on delivering power in Botswana and Southern Africa through the development of coal bed methane (CBM) projects, is pleased to announce its 2019 results.

Highlights

· Production wells drilled successfully and now producing sustained gas flows at the Lesedi CBM project;

· Environmental approval secured for the Company's planned downstream development, all environmental approvals are now in place to commence commercial development;

· The Company has been selected as a preferred bidder for a CBM gas-to-power proposal in Botswana.

The Annual Report and Consolidated Financial Statements for the year ended 30 June 2019 are available on the Company's website http://tlouenergy.com/reports.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

****

For further information regarding this announcement please contact:

Tlou Energy Limited	+61 7 3012 9793
Tony Gilby, Managing Director
Solomon Rowland, General Manager

Grant Thornton (Nominated Adviser)	+44 (0)20 7383 5100
Samantha Harrison, Colin Aaronson, Harrison Clarke, Seamus Fricker

Shore Capital (Broker)	+44 (0) 207 408 4090
Jerry Keen, Toby Gibbs, Mark Percy

FlowComms Limited (Investor Relations)	+44 (0) 7891 677 441
Sasha Sethi

Chairman's letter

Dear Shareholders,

We have made excellent progress towards establishing ourselves as a key power player in Botswana, culminating in May 2019 on receiving written confirmation from the government of Botswana that we have been chosen as a preferred bidder for the development of a Coal Bed Methane (CBM) gas-to-power plant in Botswana. This was a key target during the year, as we work towards our goal of becoming a regional power provider in southern Africa through the development of our CBM assets.

We are privileged to have the support of the forward-thinking government of Botswana, which announced in 2016 that CBM, a relatively clean source of energy and more competitively priced than solar and diesel, is to be included as part of the country's forward plan to combat power deficiency.

In October 2018, the Company submitted its proposal for development of a pilot CBM gas-to-power project in response to the Request for Proposal (RFP) issued by the Ministry of Mineral Resources, Green Technology and Energy Security. The submission, which was assessed on eligibility, technical and financial criteria, outlined a staged development commencing with up to 10MW of power generation and included the required connection into Botswana's national power distribution network. With the Company selected as a preferred bidder for this project, Tlou is now in the final stage of the process, being negotiations with the government on a Power Purchase Agreement (PPA) ahead of commencing the development work.

The Company has also received environmental approval for up to 20MW of CBM power generation including the drilling of 200 production pods, a 66 kV Transmission Line and a Solar Farm up to 20MW. With this approval, the Company has the required environmental approvals to commence commercial development.

During the last 12 months, Tlou has completed a work program including drilling of two dual lateral development wells in the Lesedi project. The wells (Lesedi 3 and 4) are located adjacent to the proposed central gas gathering and power generation facility and are currently producing gas.

In April 2019, the Company successfully completed targeted private placements to sophisticated investors in Botswana and Australia. Following the placements, local ownership increased significantly, with the Botswana Public Officers Pension Fund (BPOPF) now the Company's largest shareholder.

This has been a highly active year for Tlou, following confirmation that the Company has been chosen as a preferred bidder for the development of the one of the first commercial CBM gas-to-power projects in Botswana, approval of the required Environmental Impact Statement and the successful drilling of two dual lateral development wells. We look forward to another successful year ahead.

With CBM development not previously established in Botswana, Tlou is pioneering CBM development in the region. Successful results from Tlou's projects could potentially impact a whole new CBM basin and be a significant boost not only for Tlou, but for the whole region.

I would like to take this opportunity to thank the Tlou Board, management, field staff and advisers, and most importantly our shareholders for their continued support during this exciting time for Tlou.

Yours faithfully,

Martin McIver

Chairman

Managing Director's Report

Dear Shareholders,

Tlou Energy has made significant advancements over the year adding to the number of milestones reached to date which include:

· Established the first Independently Certified Gas Reserves in Botswana with enough 2P gas already in place to complete the currently proposed 10MW power project;

· Flowed gas from the Selemo Pilot for approximately 2 years;

· Generated electricity from the Selemo Pilot gas for several months;

· Awarded the first Mining Licence for CBM gas in the country;

· Obtained upstream environmental approval for over 200 production wells, water handling, seismic, gas gathering pipelines and a gas processing facility;

· Successfully acquired the first seismic program in the country specifically targeting CBM gas;

· Successfully completed two gas production pods (Lesedi 3 & 4) in 1H19, safely and on budget;

· Considerably reduced well cost over time;

· Obtained downstream environmental approval for 20MW of gas fired power generation coupled with 20MW of solar plus a transmission line to connect to the grid;

· Numerous wells drilled since Tlou operations commenced adding to a database comprising over 100 wells;

· Tlou has a 100% owned project over approximately 9,300Km², with enormous scope for gas Reserve expansion;

· The Company has built an experienced in-county operational workforce;

· Landholder agreements are either in-place or being finalised;

· Botswana investors (Pension Funds) are now the largest shareholder group in the Company aligning the country's interest with that of the broader shareholder base;

· Experienced and diverse board.

The principal remaining risks for the Company are achieving a commercial gas flow from the recently drilled development wells and finalising Power Purchase Agreement (PPA) negotiations.

At the time of writing, a stabilised gas flow from Lesedi 3 and Lesedi 4 has been achieved. It is anticipated that, based on industry norms, the stabilised gas flow from the Lesedi wells should increase with time until a peak is reached.

PPA negotiations with the government are progressing and will remain confidential until the government is in a position to make an announcement.

If everything goes according to plan, shareholders can look forward to further gas flow rate updates from Lesedi 3 & 4, drilling at the Mamba project area, finalisation of the PPA, agreement of a development financing package potentially from Botswana based investors or debt financiers, seismic acquisition, an anticipated gas Reserve upgrade and commencement of the downstream power generation development.

Yours faithfully,

Anthony (Tony) Gilby

Managing Director

Directors' report

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Tlou Energy Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at 30 June 2019.

General Information

Directors

The following persons were directors of Tlou Energy Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Martin McIver	Non-Executive Chairman
Anthony Gilby	Managing Director & Chief Executive Officer
Gabaake Gabaake	Executive Director
Colm Cloonan	Finance Director
Hugh Swire	Non-Executive Director
Linah Mohohlo	Non-Executive Director

Dividends

There were no Dividends recommended or paid during the financial year.

Principal activities

The principal activity of the consolidated entity is the exploration and evaluation of assets in Botswana to identify and develop Coalbed Methane (CBM) natural gas resources suitable for gas-to-power generation. No revenue from this activity has been earned to date, as the consolidated entity is still in the exploration and evaluation or pre-development stage.

Significant changes in the state of affairs

During the year ended 30 June 2019, there were no other significant changes to the state of affairs of the consolidated entity other than those disclosed in the financial report and notes thereof.

Review and results of operations

The loss for the year after income tax amounted to $3,216,695 (30 June 2018: $2,810,730). The loss for the year is in line with expectations, with the Company being an exploration entity that has not yet commenced revenue generation.

Gas-to-Power Tender

The Company was invited by Botswana's Ministry of Mineral Resources Green Technology and Energy Security ('the Ministry') to submit a response under a Request for Proposal (RFP) for Development of CBM fuelled power plants in Botswana as an Independent Power Producer (IPP).

This proposal is for the development of CBM fuelled power plants up to 100MW. A successful RFP process can assist in the development of a new CBM gas industry in the country and create a new market for Tlou's independently certified gas reserves and contingent gas resources.

The Company submitted its proposal on 10 October 2018. The RFP submission was assessed based on eligibility, technical and funding criteria. The Company successfully passed these criteria with the process now at the final stage, aimed at agreeing a Power Purchase Agreement (PPA). These PPA negotiations are confidential and are being led by the government of Botswana.

Tlou's submission outlined a staged development commencing with up to 10MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana. Upon successful completion of the initial project, the Company would look to expand further.

Once an initial development is completed, Tlou Energy's gas field will be connected to the regional grid, thereby opening the possibility for the Company to provide power across the region, via the Southern African Power Pool (SAPP).

Development well drilling program

The Company drilled two development wells in the Lesedi project area during the year. The wells were drilled as 'dual lateral pods', comprising a single vertical production well intersected by two lateral wells. These pods are designated 'Lesedi 3' and 'Lesedi 4'.

The drilling program was completed, having been carried out efficiently and safely as a result of the excellent work of the Company's field personnel. The pods are located adjacent to the Company's proposed central gas gathering and power generation facility.

The Lesedi gas production pods are performing strongly. Water rates in both pods continues to decline as planned, with both Lesedi 3 & 4 having successfully commenced flowing sustained rates of gas. As with most new CBM developments this rate is anticipated to steadily increase over the coming months, leading to a peak gas flow rate.

Downstream Environmental Impact Statement approval

Botswana's Department of Environmental Affairs (DEA) has approved the Environmental Impact Statement (EIS) for up to 20MW of CBM power generation including the drilling of up to 200 production pods, a 66kV Transmission Line and a Solar Farm up to 20MW. In 2018 the Company commenced work on its application for an EIS for downstream development (power generation and transmission). The Company already has approval in place for its upstream activities (development drilling and exploration).

Downstream EIS approval is a major achievement as it is the final environmental authorisation required to move the Lesedi CBM Project through to commercialisation. The EIS is for all the specified project activities in the Company's application, is valid for 30 years and provides the Company the flexibility to rapidly expand power generation activities.

Funds raised

In April 2019, the Company successfully completed targeted private placements to sophisticated investors in Botswana and Australia ('Placements'). The Placements raised approximately A$4.1 million before costs. Following the Placements, the Botswana Public Officers Pension Fund (BPOPF) are now the Company's largest shareholder.

Matters subsequent to the end of the financial year

There has not been any matter or circumstance, other than that referred to in this report and disclosed in the financial statements or notes thereto, that has arisen since the end of the period, that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of these operations, or the state of affairs of the consolidated entity in future financial years.

Likely developments and expected results of operations

The Company has drilled pilot development wells in the Lesedi project area. These wells are currently producing CBM. These wells were designed to achieve enhanced gas flow rates in the area proposed for the Company's initial project development. The gas flow rates from these wells are vitally important to assess the viability of the Lesedi CBM project. At the date of this report it is not yet known if the gas rates from these wells will prove to be sufficient for commercial development of the project.

The Company is in negotiations with the government of Botswana in relation to the purchase of electricity from Tlou's Lesedi project. This would provide an ideal path to market for Tlou's gas. While ideal, it is not the only option available to the Company, as there are other potential off-takers available in the region. Negotiations with government are confidential and further updates will be provided when and if an agreement is reached.

No guarantee can be given in relation to the results of the Company's operations, gas flows or government negotiations. However, the electricity market in southern Africa continues to suffer from chronic shortage of supply, so development of gas and gas-fired power in the region remains a very attractive commercial option.

Environmental regulation

The Directors are satisfied that adequate systems are in place for the management of its environmental responsibilities and compliance with its various licence requirements and regulations. The Directors are not aware of any breaches of these requirements and to the best of their knowledge, all activities have been undertaken in compliance with environmental regulations.

Information on Directors

Martin McIver MBA

Special Responsibilities Non-Executive Chairman

Member of the Audit Committee

Member of the Risk Committee

Chairman of the Nomination & Remuneration Committee

Interest in Shares and options 812,102 Ordinary Shares

750,000 Performance Rights

Experience

Martin holds an MBA (International) from the American Graduate School of International Management, a Graduate Diploma in Applied Finance and Valuations (FINSIA/Kaplan) and a Bachelor of Business (Marketing) from the Queensland University of Technology.

Martin has over 15 years' experience as General Manager for mining services companies including bulk and dangerous goods logistics, and drilling services. Martin was the Executive General Manager of the Mitchell Group, a vertically integrated coal and coal seam gas company with investments and operations across Australia, Asia and Africa. Prior to joining the Mitchell Group, Martin was a Director in Mergers and Acquisitions with PricewaterhouseCoopers.

Martin was appointed Non-Executive Director in September 2010 and is currently the Chief Financial Officer of the Workpac group. During the past three years, Martin has not served as a Director of any other ASX listed companies.

Anthony Gilby B.Sc. (First Class Honours)

Special Responsibilities Managing Director and Chief Executive Officer

Member of the Audit Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 21,701,789 Ordinary Shares

750,000 Performance Rights

Experience

Tony was appointed Managing Director and Chief Executive Officer in March 2012 and has over 30 years' experience in the oil and gas industry. He is a founding director of Tlou Energy Limited.

Tony was awarded a Bachelor of Science (First Class Honours) degree in Geology from the University of Adelaide in 1984, and also won the University Medal in Geology (Tate Memorial Medal). Tony began his career working as a well-site geologist for Delhi Petroleum in the Cooper Basin. He subsequently joined ESSO Australia. His roles with ESSO included exploration geology, geophysics, petrophysics and a period of time working in the Exxon Production Research Centre in Houston studying the seismic application of sequence stratigraphy.

On his return to Australia, he continued to work with ESSO in a New Ventures capacity working on a variety of projects prior to relocating to Brisbane where he worked for MIM Petroleum and the Louisiana Land and Exploration Company (LL&E). In 1996, he left LL&E to take on a consulting role as well as the acquisition of prospective Queensland acreage in a private capacity. This work culminated with the founding of Sunshine Gas Limited where he remained Managing Director until its sale in late 2008. He is a former Non-Executive director of ASX listed Comet Ridge Limited.

Gabaake Gabaake M.Sc.

Special Responsibilities Executive Director

Member of the Risk Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 330,857 Ordinary Shares

750,000 Performance Rights

Experience

Gabaake graduated with a Bachelor of Science degree in Geology from the University of Botswana in 1986 followed by a Masters degree in groundwater hydrology from the University College of London in 1989.

Gabaake is a Botswana citizen based in Gaborone. He is a former Botswana Government senior public servant having worked as Permanent Secretary at the Ministry of Minerals, Energy and Water Resources. Prior to that, he served at the Ministry of Local Government.

Gabaake has served on various private company boards including De Beers Group, Debswana Diamond Company (Pty) Limited and Diamond Trading Company Botswana. During the past three years, Gabaake has not served as a Director of any other ASX listed companies.

Colm Cloonan FCCA

Special Responsibilities Finance Director

Member of the Audit Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 1,081,112 Ordinary Shares

750,000 Performance Rights

Experience

Colm Cloonan is the Company's Finance Director. Colm is a Fellow of the Association of Chartered Certified Accountants (FCCA) with 20 years' experience in various finance roles.

Colm joined Tlou in 2009 at the very early stages of the Company's activities and has been with the Company through all phases of its operations and development to date. Colm has worked in Europe and Australia in a range of finance roles including audit and business services, as well as providing financial and management accounting services to clients in various industries including power generation in Australia.

Colm studied accountancy at the Galway-Mayo Institute of Technology in Ireland. During the past three years, Colm has not served as a Director of any other ASX listed companies.

Hugh Swire BA (Hons)

Special Responsibilities Non-Executive Director

Chair of the Risk Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 4,560,092 Ordinary Shares

500,000 Performance Rights

Experience

Hugh started his career working with Mahon China, an established investment management and advisory partnership based in Beijing. Active in China since 1985, Mahon China have over 3 decades of experience advising foreign companies with investments and corporate activities in China. Hugh has remained a Partner of the firm and now supports UK / EU companies from London looking to expand and find partners in China or increasingly support Chinese companies looking to make investments internationally.

After leaving Mahon China, Hugh spent a decade working for Investment funds and International banks in Hong Kong and Tokyo where he worked for Nomura as well as in London for JP Morgan where he was Vice President.

Since 2010, Hugh has been focused on supporting fast growing UK companies in the low carbon and technology sectors by investing growth capital in Water Powered Technologies Ltd, a leading innovator in zero energy water management systems as well as MWF Ltd, one of the largest suppliers of renewable heat in the UK, which has since been sold to Aggregated Micro Power Holdings plc. Hugh also helped found a leading technology education company Black Country Atelier Ltd, which provides specialist training courses to students globally in 3D printing (CAM) digital electronics and CAD.

Hugh still travels to China regularly after studying Chinese at Oxford University graduating with a BA Hons. During the past three years, Hugh has not served as a Director of any other ASX listed companies.

Linah Mohohlo MA Finance & Investments, BA Economics

Special Responsibilities Non-Executive Director

Chair of the Audit Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 500,000 Performance Rights

Experience

Ms Linah Kelebogile Mohohlo, is the former Governor of the Bank of Botswana, a position she held from 1999 to 2016. Ms Mohohlo joined the Bank of Botswana in 1976, and served in several capacities including Board Secretary, Deputy Director of Research, Director of the Financial Markets and Deputy Governor, before being appointed Governor.

Ms Mohohlo was a member of the Commission for Africa and the Africa Progress Panel, a group of ten distinguished individuals who advocate at the highest levels for equitable and sustainable development in Africa. Along with her contacts and expertise in the banking and finance sectors, Ms Mohohlo brings to Tlou Energy significant experience from the mining industry in Botswana having been a board member of both Debswana Diamond Company and Diamond Trading Company Botswana.

Ms Mohohlo holds a Bachelors Degree in Economics from The George Washington University (Washington DC), a Masters Degree in Finance and Investments from the University of Exeter (UK) and a Diploma in Accounting and Business Studies from the University of Botswana.

During the past three years, Ms Mohohlo has not served as a Director of any other ASX listed companies.

Remuneration Report - audited

This report outlines the remuneration arrangements in place for the key management personnel of the consolidated entity.

Remuneration policy

Ensuring that the level of Director and Executive remuneration is sufficient and reasonable is dealt with by the full Board. The Remuneration Policy of Tlou Energy Limited has been designed to align the objectives of key management personnel with shareholder and business objectives. The Board of Tlou Energy Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the consolidated entity, as well as create shared goals between key management personnel and shareholders.

The Board's policy for determining the nature and amount of remuneration for the executive Directors and senior executives of the consolidated entity is as follows:

· The remuneration policy is developed by the Board after seeking, if appropriate, professional advice from independent external consultants.

· Executives employed by the consolidated entity receive a base salary (which is based on factors such as length of service and experience), inclusive of superannuation, fringe benefits, options and performance incentives where appropriate. Performance incentives are generally only paid once predetermined key performance indicators have been met.

· Executives engaged through professional service entities are paid fees based on an agreed market based hourly rate for the services provided and may also be entitled to options and performance based incentives. Performance incentives are generally only paid once predetermined key performance indicators have been met.

· Incentives paid in the form of options or performance rights are intended to align the interests of management, the Directors and Company with those of the shareholders. In this regard, executives are prohibited from limiting risk attached to those instruments by use of derivatives or other means.

The Board reviews executive remuneration arrangements annually by reference to the consolidated entity's performance, executive performance and comparable information from industry sectors.

Key management personnel including Non-executive Directors and employed executives receive the superannuation guarantee contribution required by the Commonwealth Government, which is currently 9.5% and do not receive any other retirement benefits. Individuals, however, can chose to sacrifice part of their salary to increase payments towards superannuation.

Non-Executive Director Remuneration

The Board's policy is to remunerate Non-Executive Directors for time, commitment and responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required.

The maximum aggregate amount of fees that can be paid to Non-Executive Directors is $500,000 per year. This was approved by shareholders at a general meeting held on 10 July 2012.

Fees for Non-Executive Directors are not linked to the performance of the consolidated entity, however, to align Directors interests with shareholder interests, where possible the Directors are encouraged to hold shares in the Company. There is no minimum holding prescribed in the Constitution.

Performance conditions linked to remuneration

The Board provides advice on remuneration and incentive policies and practices and specific recommendations on remuneration packages and other terms of employment for executive Directors, other senior executives and Non-Executive Directors. The aim is to ensure that reward for performance is competitive and appropriate for the results delivered.

Remuneration and the terms and conditions of employment for executive Directors and Company executives are reviewed annually having regard to performance and relative comparative information and are approved by the Board following independent professional advice, as required. In this respect, consideration is given to normal commercial rates of remuneration for similar levels of responsibility.

Key management personnel during the financial year ended 30 June 2019

Directors

Martin McIver Non-Executive Chairman

Anthony Gilby Managing Director and Chief Executive Officer

Gabaake Gabaake Executive Director

Colm Cloonan Finance Director

Hugh Swire Non-Executive Director

Linah Mohohlo Non-Executive Director

Executives

Solomon Rowland Company Secretary

There were no other key management personnel of the consolidated entity during the financial year ended 30 June 2019.

Details of remuneration

Details of remuneration of each of the Directors and executives of the consolidated entity during the financial year are set out in the following table:

Benefits and Payments for the year ended 30 June 2019

	Short-term benefits		Post Employment benefits	Long term benefits		Share based payments
	Salary & Fees	Cash Bonus	Superannuation	Leave Benefits	Total Cash Remuneration	Performance Rights	Equity Compensation	Total
Directors	$	$	$	$	$	$		$
M McIver	48,000	-	4,560	-	52,560	43,150	45.1%	95,710
A Gilby	415,082	-	17,965	-	433,047	43,150	9.1%	476,197
G Gabaake	170,919	-	12,661	10,713	194,293	43,150	18.2%	237,443
C Cloonan	257,749	-	24,479	47,041	329,269	43,150	11.6%	372,419
H Swire	24,000	-	-	-	24,000	43,150	64.3%	67,150
L Mohohlo	24,000	-	1,119	-	25,119	43,150	63.2%	68,269
Total Directors	939,750	-	60,784	57,754	1,058,288	258,900		1,317,188


Executives
S Rowland	182,648	-	17,352	-	200,000	43,150	17.7%	243,150
Total Executives	182,648	-	17,352	-	200,000	43,150		243,150
Total	1,122,398	-	78,136	57,754	1,258,288	302,050		1,560,338

During the 2019 year, no proportion of the remuneration of any key management personnel was performance based. No key management personnel received cash bonuses, performance related bonuses, termination benefits or non-cash benefits during the year.

Benefits and Payments for the year ended 30 June 2018

	Short-term benefits		Post Employment benefits	Long term benefits		Share based payments
	Salary & Fees	Cash Bonus	Superannuation	Leave Benefits	Total Cash Remuneration	Performance Rights	Equity Compensation	Total
Directors	$	$	$	$	$	$		$
M McIver	48,000	-	4,560	-	52,560	21,937	29.4%	74,497
A Gilby	331,915	-	14,365	18,083	364,363	21,937	5.7%	386,300
G Gabaake	134,668	-	12,243	10,359	157,270	21,937	12.2%	179,207
C Cloonan	200,000	-	19,000	8,974	227,974	21,937	8.8%	249,911
H Swire	24,000	-	-	-	24,000	-	-	24,000
L Mohohlo*	23,812	-	1,082	-	24,894	-	-	24,894
Total Directors	762,395	-	51,250	37,416	851,061	87,748		938,809


Executives
S Rowland	182,649	-	17,352	8,196	208,197	21,937	9.5%	230,134
Total Executives	182,649	-	17,352	8,196	208,197	21,937		230,134
Total	945,044	-	68,602	45,612	1,059,258	109,685		1,168,943

* Appointed 12 July 2017

During the 2018 year, no proportion of the remuneration of any key management personnel was performance based. No key management personnel received cash bonuses, performance related bonuses, termination benefits or non-cash benefits during the year.

Service agreements

The following outlines the remuneration and other terms of employment for the following personnel during the reporting period which are formalised in employment contracts for services.

Anthony Gilby Managing Director and Chief Executive Officer

Term of Agreement: Mr Gilby's services are provided in a personal capacity. The agreement has no fixed term. Based on the agreed rate the estimated contracted annual cost to the Company is approximately $578,000. Mr Gilby continues to waive 25% of his current contracted rate, so the cost for the reporting period is approximately $433,000.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: The Company may give Mr Gilby three months' notice or pay 1.5 times his contracted salary in lieu of notice to terminate the Agreement.

Solomon Rowland Company Secretary

Term of Agreement: Mr Rowland's services are provided in a personal capacity. The agreement has no fixed term.

Base Fee: Based on the contracted rate during the reporting period and taking account of adjustments for industry standards and CPI, the annual cost to the Company was approximately $200,000.

From 1 July 2019 Mr Rowlands annual salary is ~$230,000.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: The Company may give the Company Secretary six months' notice of its intention to terminate the Agreement.

Gabaake Gabaake Executive Director

Term of Agreement: Mr Gabaake's services are provided in a personal capacity. The agreement has no fixed term.

Base Fee: Based on the contracted rate during the reporting period and taking account of adjustments for industry standards and CPI, Botswana severance benefits payable during the year, the annual cost to the Company was approximately $184,000.

From 1 July 2019 Mr Gabaake's annual salary is ~$167,747.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: The Company may give the Executive Director six months' notice of its intention to terminate the Agreement.

Colm Cloonan Finance Director

Term of Agreement: Mr Cloonan's services are provided in a personal capacity. The agreement has no fixed term.

Base Fee: Based on the contracted rate during the reporting period and taking account of adjustments for industry standards and CPI, the annual cost to the Company was approximately $282,000.

From 1 July 2019 Mr Cloonan's annual salary is ~$288,137.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: The Company may give the Finance Director six months' notice of its intention to terminate the Agreement.

Key management personnel shareholdings

The number of ordinary shares in Tlou Energy Limited held by each key management person of the consolidated entity during the financial year is as follows:

30 June 2019	Balance at beginning of year	Granted as remuneration during the year	Additions	Disposals	Balance at date of resignation / appointment	Balance at end of year
M McIver	696,088	-	116,014	-	-	812,102
A Gilby	18,196,487	-	3,505,302	-	-	21,701,789
G Gabaake	330,857	-	-	-	-	330,857
C Cloonan	669,525	-	411,587	-	-	1,081,112
H Swire	3,064,366	-	1,495,726	-	-	4,560,092
L Mohohlo	-	-	-	-	-	-
S Rowland	250,000	-	-	-	-	250,000
	23,207,323	-	5,528,629	-	-	28,735,952

Performance rights

Performance Rights are linked to the share price performance of the Company, ensuring alignment with the interests of the Company's shareholders. The Performance Rights issued to key management personnel are split into Tranches of 250,000 shares. For the Performance Rights to vest and, therefore, become exercisable by a participant, certain performance conditions are required to be met as set out below. On vesting, holders of Performance Rights will be entitled to acquire Tlou Energy Limited ordinary shares at nil cost.

Performance rights held by key management personnel at 30 June 2019 are as set out below:

30 June 2019	Tranche	Issue Date	Opening Balance	Value	Exercised	Lapsed	Balance at Year End	Unvested
M McIver	(i)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(ii)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(iii)	31-Jan-17	250,000	34,000	-	-	250,000	250,000

A Gilby	(i)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(ii)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(iii)	31-Jan-17	250,000	34,000	-	-	250,000	250,000

G Gabaake	(i)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(ii)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(iii)	31-Jan-17	250,000	34,000	-	-	250,000	250,000

C Cloonan	(i)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(ii)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(iii)	31-Jan-17	250,000	34,000	-	-	250,000	250,000

H Swire	(i)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(ii)	19-Oct-18	250,000	21,575	-	-	250,000	250,000

L Mohohlo	(i)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(ii)	19-Oct-18	250,000	21,575	-	-	250,000	250,000

S Rowland	(i)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(ii)	19-Oct-18	250,000	21,575	-	-	250,000	250,000
	(iii)	31-Jan-17	250,000	34,000	-	-	250,000	250,000
Total			4,750,000	472,050	-	-	4,750,000	4,750,000

Tranche	Performance conditions and expiry date
(i)	To vest the share price needs to be AUD $0.165 or greater for a period of 10 consecutive trading days. These performance rights expire on 31/01/2025.
(ii)	To vest the share price needs to be AUD $0.22 or greater for a period of 10 consecutive trading days. These performance rights expire on 31/01/2025.
(iii)	To vest the share price needs to be AUD $0.28 or greater for a period of 10 consecutive trading days. These performance rights expire on 31/01/2024.

Shares issued on exercise of performance rights

Other than as shown in the table above, no other shares were issued on exercise of performance rights up to the date of this report.

Relationship between remuneration and Company performance

The factors that are considered to affect shareholder return during the last five years is summarised below:

	2019	2018	2017	2016	2015
Share price at end of financial year ($)	0.115	0.10	0.11	0.07	0.13
Market capitalisation at end of financial year ($M)	52	35	33	14	24
Loss for the financial year ($)	(3,216,695)	(2,810,730)	(3,165,323)	(3,065,583)	(2,730,900)
Cash spend on exploration programs ($)	(6,942,758)	(3,330,951)	(1,852,642)	(5,783,800)	(4,529,184)

Director and Key Management Personnel remuneration ($)	1,560,338	1,168,943	964,891	968,640	1,441,785

Given that the remuneration is commercially reasonable, the link between remuneration, Company performance and shareholder wealth generation is tenuous, particularly in the exploration and development stage. Share prices are subject to market sentiment towards the sector and increases or decreases may occur independently of executive performance or remuneration.

The Company may issue options or performance rights to provide an incentive for key management personnel which, it is believed, is in line with industry standards and practice and is also believed to align the interests of key management personnel with those of the Company's shareholders.

No remuneration consultants were used in the 2019 financial year.

Other transactions with key management personnel

	2019	2018
	$	$
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related entity of Anthony Gilby.	32,000	21,000

Terms and conditions

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

(End of Remuneration Report)

Company secretary

Mr Solomon Rowland was appointed Company Secretary on 19 August 2015 and continues in office at the date of this report. Mr Rowland is a commercial lawyer with over 19 years' experience in various private, government and in-house legal roles. Solomon holds a Juris Doctor from the University of Queensland.

Prior to joining Tlou Energy Limited as Legal Counsel in February 2013, Solomon worked for Crown Law representing various Queensland government departments in a range of legal matters. During his time in government, Solomon was involved in advising government departments on commercial, corporate governance and policy matters as well as representing the state in various courts, tribunals and commissions of Inquiry. Solomon brings many years of experience in commercial, advocacy, administrative and planning and environment law.

Meetings of directors

The number of meetings of the consolidated entity's Board of Directors and committees held during the year ended 30 June 2019, and the number of meetings attended by each Director are listed below. The Nomination & Remuneration committee comprises the full board.

	Board / Nomination & Remuneration Committee		Audit Committee		Risk Committee
	Attended	Held	Attended	Held	Attended	Held
M McIver	7	7	2	2	4	4
A Gilby	7	7	2	2	-	-
G Gabaake	6	7	-	-	3	4
C Cloonan	7	7	2	2	-	-
H Swire	7	7	-	-	4	4
L Mohohlo	6	7	2	2	-	-

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

Shares under option

There were no unissued ordinary shares of Tlou Energy Limited under option at the date of this report.

Issued performance rights at the date of this report are as follows:

Vesting Date	Exercise Price	1/07/2018	Issued	Exercised	Expired	30/06/2019
19 October 2018	$0.165	-	2,475,000	-	-	2,475,000
19 October 2018	$0.22	-	2,475,000	-	-	2,475,000
31 January 2017	$0.28	2,275,000	-	-	-	2,275,000
		2,275,000	4,950,000	-	-	7,225,000

Shares issued on the exercise of options

Other than those disclosed in the table above there were no ordinary shares of Tlou Energy Limited issued during the year ended 30 June 2019 on the exercise of options granted or up to the date of this report.

Indemnity and insurance of officers

The consolidated entity has indemnified the Directors and executives of the consolidated entity for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the consolidated entity paid a premium in respect of a contract to insure the Directors and executives of the consolidated entity against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.

Indemnity and insurance of auditor

The consolidated entity has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the consolidated entity or any related entity against a liability incurred by the auditor.

During the financial year, the consolidated entity has not paid a premium in respect of a contract to insure the auditor of the consolidated entity or any related entity.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

Currency and rounding

The financial report is presented in Australian dollars and amounts are rounded to the nearest dollar.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is included in the annual report which is available on the Company's website http://tlouenergy.com/reports.

Auditor

BDO Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.

Non-audit services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Company and/or the consolidated entity are important.

The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

· all non-audit services have been reviewed to ensure they do not impact the impartiality and objectivity of the auditor; and

· none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

Details of the amounts paid or payable to the auditor for non-audit services provided during the year are set out below.

	2019	2018
	$	$
Non-audit services - BDO Australia
Tax consulting and compliance services	8,400	11,810
BSE listing	-	4,500
Corporate finance services	-	30,000
Total	8,400	46,310

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the Directors

Anthony Gilby

Director

Brisbane, 27 August 2019

2019 Annual Reserves Statement

Tlou Energy Limited is pleased to present its Annual Reserves Statement for the period ending 30 June 2019. SRK Consulting (Australasia) Pty Ltd ('SRK') upgraded the Company's reserves during the prior reporting period. There has been no adjustment to the net gas reserves and contingent resources of the Company since the upgraded reserves were announced on 20 February 2018. Please refer to the ASX announcement on 20 February 2018 for full details of the consolidated entity's gas reserves and contingent resources.

Having conducted a review of its gas reserves and resources position during the reporting period and satisfying itself that there was no new data that might materially increase the reserves or resources estimates reported during the reporting period, the Company hereby presents the net gas reserves and contingent resources on a combined basis as well as for each of its individual tenements as at 30 June 2019:

Location	Project	Tlou Interest	Gas Reserves (BCF)
			30/06/2019	30/06/2018	30/06/2019	30/06/2018	30/06/2019	30/06/2018
			1P*	1P	2P*	2P	3P	3P
Karoo Basin Botswana	Lesedi CBM (all coal seams) PL001/2004, ML 2017/18L	100%	0.34	0.34	25.2	25.2	252	252
Karoo Basin Botswana	Mamba CBM (Lower Morupule coal) PL238/2014 - PL241/2014	100%	0.01	0.01	15.5	15.5	175	175
Karoo Basin Botswana	PL003/2004, PL035/2000, PL037/2000	100%	-	-	-	-	-	-
Total			0.35	0.35	40.7	40.7	427	427

Location	Project	Tlou Interest	Gas Contingent Resource (BCF)
			30/06/2019	30/06/2018	30/06/2019	30/06/2018	30/06/2019	30/06/2018
			1C	1C	2C**	2C**	3C	3C
Karoo Basin Botswana	Lesedi CBM (all coal seams) PL001/2004, ML 2017/18L	100%	4.6	4.6	214	214	3,043	3,043
Karoo Basin Botswana	Mamba CBM (Lower Morupule coal) PL238/2014 - PL241/2014	100%	-	-	-	-	-	-
Karoo Basin Botswana	PL003/2004, PL035/2000, PL037/2000	100%	-	-	-	-	-	-
Total			4.6	4.6	214	214	3,043	3,043

ASX Listing Rules Annual Report Requirements

*Listing Rule 5.39.1:

· All 1P and 2P petroleum reserves recorded in the table are undeveloped and are attributable to unconventional gas.

· 100% of all 1P and 2P petroleum reserves are located in the Karoo Basin in Botswana.

*Listing Rule 5.39.2:

· All 1P and 2P petroleum reserves reported are based on unconventional petroleum resources.

Listing Rule 5.39.3:

· The table shows the 2P and 3P petroleum reserves as at 30 June 2019 and comparative petroleum reserves certified at 30 June 2018.

Governance Arrangements and Internal Controls Listing Rule 5.39.5:

· Tlou Energy has obtained all its gas reserves and resources reported as at 30 June 2019 from external independent consultants who are qualified petroleum reserves and resource evaluators as prescribed by the ASX Listing Rules.

· Tlou Energy estimates and reports its petroleum reserves and resources in accordance with the definitions and guidelines of the Petroleum Resources Management System 2007, published by the Society of Petroleum Engineers (SPE PRMS).

· To ensure the integrity and reliability of data used in the reserves estimation process, the raw data is reviewed by senior reservoir and geological staff and consultants at Tlou Energy before being provided to the independent reserve certifiers. Tlou Energy has not and does not currently intend to conduct internal reviews of petroleum reserves preferring to appoint independent external experts prior to reporting any updated estimates of reserves or resources so as to ensure an independent and rigorous review of its data.

· Tlou Energy reviews and updates its gas reserves and resources position on an annual basis to ensure that if there is any new data that might affect the reserves or resources estimates of the Company steps can be taken to ensure that the estimates are adjusted accordingly.

** Listing Rule 5.40.1:

· All 2C contingent resources recorded in the table are undeveloped. 100% of the reported 2C contingent resource is attributable to unconventional gas.

· The geographical areas where the 2C contingent resources are located is the Karoo Basin in Botswana.

Listing Rule 5.40.2:

· The table shows the 2C and 3C contingent resources as at 30 June 2019 as against the previous year. The net 2C and 3C contingent resources did not increase from the 2018 year to the 2019 year.

· There were no other changes to the 2C and 3C contingent resources since the announcement on 20 February 2018.

Listing Rule 5.44:

· The estimates of Reserves and Contingent Resources appearing in the 2019 Annual Reserves Statement for Tlou Energy Limited and its subsidiaries are based on, and fairly represent, information and supporting documentation determined by the various qualified petroleum reserves and resource evaluators listed below.

· The gas reserves and resource estimates for the Lesedi CBM Project provided in this report were released to the Market on 20 February 2018 ('Announcement'). Tlou Energy confirms that it is not aware of any new information or data that materially affects the information included in the Announcement and that all of the material assumptions and technical parameters underpinning the estimates in the Announcement continue to apply and have not materially changed. The gas reserve and resource estimates are based on and fairly represents, information and supporting documentation and were determined by Dr. Bruce Alan McConachie of SRK Consulting (Australasia) Pty Ltd, in accordance with Petroleum Resource Management System guidelines. Dr. McConachie is considered to be a qualified person as defined under the ASX Listing Rule 5.42 and has given his consent to the use of the resource figures in the form and context in which they appear in this report.

Notes to Net Reserves and Resources Table:

1) Gas Reserve and Resource numbers have been rounded to the nearest whole number.

2) Gas Resource numbers have been rounded to the nearest tenth for amounts less than 100 BCF, otherwise to the nearest whole number.

3) Tlou's Gas Reserves have not been adjusted for fuel or shrinkage and have been calculated at the wellhead (which is the reference point for the purposes of Listing Rule 5.26.5).

4) Contingent Gas Resources are (100%) Unrisked Gross and are derived from the SRK certification at 31 March 2015 for all coal seams (as previously announced by Tlou on 9 April 2015) with adjustment for the gas volumes which have now been certified by SRK in the Gas Reserves category.

5) ASX Listing Rule 5.28.2 Statement relating to Prospective Resources:

The estimated quantities of petroleum gas that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

6) Prospective Gas Resources are (100%) Unrisked Gross and are derived from a report to Tlou from Netherland, Sewell and Associates Inc (NSAI) dated 16th February 2012 regarding certification for all coal seams located in the remaining prospecting licences (as previously announced by Tlou in its prospectus dated 20 February 2013).

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2019

		Consolidated
	Note	June 2019	June 2018
		$	$

Interest income		6,933	883

Expenses
Employee benefits expense	3	(1,109,658)	(998,700)
Depreciation expense		(555,675)	(204,788)
Foreign exchange gain/(loss)		119,277	194,706
Share issue costs		-	(176,685)
Performance rights expense	3	(377,305)	(199,624)
Professional fees		(168,072)	(218,862)
Corporate expenses		(7,280)	(17,510)
Occupancy costs	3	(63,592)	(53,524)
Other expenses	3	(1,061,323)	(1,136,626)
LOSS BEFORE INCOME TAX		(3,216,695)	(2,810,730)
Income tax		-	-
LOSS FOR THE PERIOD		(3,216,695)	(2,810,730)

OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations		1,355,609	413,563
Tax effect	4	-	-
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)		1,355,609	413,563
TOTAL COMPREHENSIVE INCOME/(LOSS)		(1,861,086)	(2,397,167)


Earnings per share
		Cents	Cents
Basic loss per share	5	(0.8)	(0.9)
Diluted loss per share	5	(0.8)	(0.9)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

as at 30 June 2019

		Consolidated
	Note	June 2019	June 2018
		$	$
CURRENT ASSETS
Cash and cash equivalents	6	5,204,948	7,019,345
Trade and other receivables		430,351	194,814
Other current assets		77,535	364,956
TOTAL CURRENT ASSETS		5,712,834	7,579,115

NON-CURRENT ASSETS
Exploration and evaluation assets	8	60,896,127	52,861,961
Other non-current assets	9	770,750	652,522
Property, plant and equipment	7	1,867,025	440,683
TOTAL NON-CURRENT ASSETS		63,533,902	53,955,166
TOTAL ASSETS		69,246,736	61,534,281


CURRENT LIABILITIES
Trade and other payables	10	221,404	258,024
Provisions	11	140,357	215,183
TOTAL CURRENT LIABILITIES		361,761	473,207

NON-CURRENT LIABILITIES
Deferred tax liabilities		369,353	369,353
Provisions	11	115,000	97,000
TOTAL NON-CURRENT LIABILITIES		484,353	466,353
TOTAL LIABILITIES		846,114	939,560

NET ASSETS		68,400,622	60,594,721


EQUITY
Contributed equity	12	99,753,504	90,463,822
Reserves		(1,172,054)	(2,904,968)
Accumulated losses		(30,180,828)	(26,964,133)
TOTAL EQUITY		68,400,622	60,594,721

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

for the year ended 30 June 2019

	Contributed Equity	Share Based Payments Reserve	Foreign Currency Translation Reserve	Accumulated Losses	Total
	$	$	$	$	$
Balance at 1 July 2017	83,380,184	520,500	(3,627,932)	(24,153,403)	56,119,349
Loss for the period	-	-	-	(2,810,730)	(2,810,730)
Other comprehensive income, net of tax	-	-	413,563	-	413,563
Total comprehensive income	-	-	413,563	(2,810,730)	(2,397,167)

Transactions with owners in their capacity as owners
Share based payments	-	199,624	-	-	199,624
Transfers	410,723	(410,723)	-	-	-
Shares issued, net of costs	6,672,915	-	-	-	6,672,915
	7,083,638	(211,099)	-	-	6,872,539
Balance at 30 June 2018	90,463,822	309,401	(3,214,369)	(26,964,133)	60,594,721


Balance at 1 July 2018	90,463,822	309,401	(3,214,369)	(26,964,133)	60,594,721
Loss for the period	-	-	-	(3,216,695)	(3,216,695)
Other comprehensive income, net of tax	-	-	1,355,609	-	1,355,609
Total comprehensive income	-	-	1,355,609	(3,216,695)	(1,861,086)

Transactions with owners in their capacity as owners
Share based payments	-	377,305	-	-	377,305
Shares issued, net of costs	9,289,682	-	-	-	9,289,682
	9,289,682	377,305	-	-	9,666,987
Balance at 30 June 2019	99,753,504	686,706	(1,858,760)	(30,180,828)	68,400,622

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

for the year ended 30 June 2019

		Consolidated
	Note	June 2019	June 2018
		$	$

CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT)		(2,749,259)	(2,845,889)
Interest received		6,933	883
GST and VAT received		682,516	262,111
NET CASH USED IN OPERATING ACTIVITIES	22	(2,059,810)	(2,582,895)

CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets		(6,942,758)	(3,330,951)
Payment for property, plant and equipment		(1,987,503)	(562,062)
NET CASH USED IN INVESTING ACTIVITIES		(8,930,261)	(3,893,013)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		9,595,592	6,894,517
Share issue costs		(305,910)	(237,767)
NET CASH PROVIDED BY FINANCING ACTIVITIES		9,289,682	6,656,750

Net (decrease)/increase in cash held		(1,700,389)	180,842
Cash at the beginning of the period		7,019,345	6,727,424
Effects of exchange rate changes on cash		(114,008)	111,079

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	6	5,204,948	7,019,345

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the financial statements

Note 1. Significant accounting policies

Introduction

This financial report includes the consolidated financial statements of Tlou Energy Limited (the "Company") and its controlled entities (together referred to as the "consolidated entity" or the "group").

The separate financial statements of the parent entity, Tlou Energy Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. Supplementary information about the parent entity is disclosed in note 25.

Tlou Energy Limited is a public company, incorporated and domiciled in Australia. Its registered office and principal place of business is 210 Alice St, Brisbane, QLD 4000, Australia.

The following is a summary of the material and principal accounting policies adopted by the consolidated entity in the preparation of the financial report. The accounting policies have been consistently applied to all the years presented, unless otherwise stated.

Operations and principal activities

The principal activity of the consolidated entity is the exploration and evaluation of assets in Southern Africa to identify and develop CBM resources. No revenue from this activity has been earned to date, as the consolidated entity is still in the exploration and evaluation stage.

Currency

The financial report is presented in Australian dollars, rounded to the nearest dollar, which is the functional currency of the parent entity.

Authorisation of financial report

The financial report was authorised for issue on 27 August 2019.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Tlou Energy Limited is a for-profit entity for the purposes of preparing the financial statements.

Compliance with IFRS

The consolidated financial statements of Tlou Energy Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention

The consolidated financial statements have been prepared on an accruals basis and are based on historical costs.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Going Concern

The consolidated financial statements have been prepared on a going concern basis which contemplates that the consolidated entity will continue to meet its commitments and can therefore continue normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

Because of the nature of the operations, exploration companies, such as Tlou Energy Limited, find it necessary on a regular basis to raise additional cash funds for future exploration activity and meet other necessary corporate expenditure. The Company has recently completed a capital raising which is expected to fund ongoing operations and working capital requirements for the next 12 months. Subject to the results of these operations the consolidated entity may need to raise additional capital to expand and develop the project further. Accordingly, the consolidated entity is in the process of investigating various options for the raising of additional funds which may include but is not limited to an issue of shares or the sale of exploration assets where increased value has been created through previous exploration activity.

At the date of this financial report, none of the above fund-raising options have been concluded and no guarantee can be given that a successful outcome will eventuate. The directors have concluded that as a result of the current circumstances there exists a material uncertainty that may cast significant doubt regarding the consolidated entity's and the Company's ability to continue as a going concern and therefore the consolidated entity and Company may be unable to realise their assets and discharge their liabilities in the normal course of business. Nevertheless, after taking into account the current status of the various funding options currently being investigated and making other enquiries regarding other sources of funding, the directors have a reasonable expectation that the consolidated entity and the Company will have adequate resources to fund its future operational requirements and for these reasons they continue to adopt the going concern basis in preparing the financial report.

The financial report does not include adjustments relating to the recoverability or classification of recorded assets amounts or to the amounts or classification of liabilities that might be necessary should the consolidated entity not be able to continue as a going concern.

Accounting Polices

(a) Principles of consolidation

Subsidiaries are all entities (including structured entities) over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the consolidated entity.

Intercompany transactions, balances and unrealised gains on transactions between consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

(b) Revenue recognition

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs to sell and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs.

Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

(d) Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the consolidated statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

(e) Comparative figures

When required by accounting standards comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(f) New Accounting Standards and Interpretations

The consolidated entity has adopted all new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2018. The consolidated entity did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.

A number of new or amended standards became applicable for the current reporting period and the group had to change its accounting policies as a result of adopting the following standards:

· AASB 9 Financial Instruments; and

· AASB 15 Revenue from Contracts with Customers.

The impact of the adoption of these standards and the new accounting policies are disclosed below. The other standards did not have any impact on the group's accounting policies and did not require retrospective adjustments.

AASB 15 Revenue from Contracts with Customers - Impact of adoption

The group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018. In accordance with the transition provisions in AASB 15, the group has adopted the new rules retrospectively however there was no material impact on the amounts disclosed previously and as a result there has been no restatement required as a result of reclassification or remeasurement and no change to the previously disclosed accounting policies.

AASB 9 Financial Instruments - Impact of adoption

AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.

The adoption of AASB 9 Financial Instruments from 1 July 2018 resulted in changes in accounting policies. The new accounting policies are set out in note below. In accordance with the transitional provisions in AASB 9, comparative figures have not been restated.

(i) Classification and Measurement

On 1 July 2018 (the date of initial application of AASB 9), the Group's management has assessed which business models apply to the financial assets held by the group and has classified its financial instruments into the appropriate AASB 9 categories. There were no changes to the classification and measurement of financial assets.

(ii) Impairment of financial assets

The Group has one type of financial asset that is subject to AASB 9's new expected credit loss model, being trade and other receivables.

The group was required to revise its impairment methodology under AASB 9. There was no material impact of the change in impairment methodology on the group's accumulated losses and equity.

While cash and cash equivalents are also subject to the impairment requirements of AASB 9, there was no material impairment loss identified.

AASB 9 Financial Instruments - Accounting policies applied

Classification

From 1 July 2018, the group classifies its financial assets in the following measurement categories:

· those to be measured subsequently at fair value (either through OCI, or through profit or loss); and

· those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the group's business model for managing the asset and the cash flow characteristics of the asset. The Group's financial assets (cash and cash equivalents and trade and other receivables) are under this measurement category:

· Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

Impairment

From 1 July 2018, the group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables

(g) New Standards and Interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2019 reporting periods. The consolidated entity has decided against early adoption of these standards. The consolidated entity's assessment of the impact of these new standards and interpretations is set out below:

AASB 16: Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.

The main changes introduced by the new Standard include:

§ recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets);

§ depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;

§ variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date;

§ by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all components as a lease; and

§ additional disclosure requirements.

The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The only item considered to be an operating lease is the lease or office space. The amount of this lease is not considered material, so no change will be recognised in the financial statements in relation to this standard.

Note 2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Exploration & evaluation assets

The consolidated entity performs regular reviews on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. These reviews are based on detailed surveys and analysis of drilling results performed to reporting date.

Deferred Tax assets

The Company is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity estimates its tax liabilities based on the consolidated entity's understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

In addition, the consolidated entity has recognised deferred tax assets relating to carried forward tax losses to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same subsidiary against which the unused tax losses can be utilised. However, utilisation of the tax losses also depends on the ability of the entity, which is not part of the tax consolidated group, to satisfy certain tests at the time the losses are recouped. Due to the parent entity acquiring the entity that holds the losses it is expected that the entity will fail to satisfy the continuity of ownership test and therefore has to rely on the same business test. As at 30 June 2019 the consolidated entity has not received advice that the losses are unavailable, however should this change in the future the consolidated entity may be required to derecognise these losses.

Note 3. Expenses

		Consolidated
		June 2019	June 2018
Loss before income tax includes the following specific expenses:		$	$

Employee benefits expense
●	Defined contribution superannuation expense	69,729	57,616
●	Performance rights	377,305	199,624
●	Other employee benefits expense	1,039,929	941,084
		1,486,963	1,198,324

Occupancy costs
●	Rental expense relating to operating leases ‑ minimum lease rentals	61,219	53,524
●	Other occupancy costs	2,373	-
		63,592	53,524

Other expenses include the following specific items:
●	Travel and accommodation costs	189,090	198,056
●	Consultants	125,492	327,238
●	Stock exchange, advisory, secretarial fees	357,619	264,438
●	Insurance	72,783	55,694

Note 4. Income Tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses and under and over provision in prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

· When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

· When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

	Consolidated
	June 2019	June 2018
	$	$
Loss before income tax	(3,216,695)	(2,810,730)

Tax at the domestic tax rates applicable to profits in the country concerned	(884,591)	(772,951)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Other non-deductible items	(437,049)	578,713
Difference in overseas tax rates	(81,849)	56,833
Previously unrecognised tax losses used to reduce deferred tax expense		-
Deferred tax asset not recognised	1,403,489	137,404
Income tax benefit	-	-

Recognised deferred tax assets
Unused tax losses	9,777,322	7,223,446
	9,777,322	7,223,446
Recognised deferred tax liabilities
Assessable temporary differences	10,146,675	7,592,799
	10,146,675	7,592,799

Net deferred tax liability recognised	369,353	369,353

Unrecognised temporary differences and tax losses
Unused tax losses and temporary differences for which no deferred tax asset has been recognised	36,558,768	34,834,624

The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the consolidated entity can utilise these benefits.

Note 5. Earnings per share

Basic and diluted earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Tlou Energy Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

		Consolidated
		June 2019	June 2018
		$	$
(a)	Reconciliation of earnings used in calculating basic and diluted loss per share:

	Loss for the year attributable to owners of Tlou Energy Limited	(3,216,695)	(2,810,730)
	Loss used in the calculation of the basic and dilutive loss per share	(3,216,695)	(2,810,730)

(b)	Weighted average number of ordinary shares used as the denominator
		Number	Number
	Number used in calculating basic and diluted loss per share	414,964,965	319,100,085

Options and performance rights are considered to be "potential ordinary shares" but were anti-dilutive in nature and therefore the diluted loss per share is the same as the basic loss per share.

Note 6. Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the consolidated statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the consolidated statement of financial position.

	Consolidated
	June 2019	June 2018
	$	$

Cash at bank	5,204,948	7,019,345
	5,204,948	7,019,345

Note 7. Property, Plant and Equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Plant and equipment 3-7 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

	Consolidated
	June 2019	June 2018
	$	$
Plant and equipment at cost	4,334,656	2,289,826
Accumulated depreciation	(2,467,631)	(1,849,143)
	1,867,025	440,683

Movements in Carrying Amounts
Movement in the carrying amount of plant and equipment between the beginning and the end of the current financial year:

Balance at the beginning of year	440,683	320,739
Additions	1,963,765	320,928
Depreciation	(555,675)	(204,788)
Foreign exchange movements	18,252	3,804
Carrying amount at the end of year	1,867,025	440,683

Note 8. Exploration and Evaluation Assets

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing.

Accumulated costs in relation to an area no longer considered viable are written off in full in the year the decision is made. Regular reviews are undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

	Consolidated
	June 2019	June 2018
	$	$
Exploration and evaluation assets	60,896,127	52,861,961
	60,896,127	52,861,961

Movements in exploration and evaluation assets
Balance at the beginning of period	52,861,961	49,328,038
Exploration and evaluation expenditure during the year	6,554,654	3,109,241
Foreign currency translation	1,479,512	424,682
Balance at the end of period	60,896,127	52,861,961

The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

There is a risk that one or more of the exploration licences will not be extended, or that the terms of the extension are not favourable to Tlou. This could have an adverse impact on the performance of Tlou. The consolidated entity is not aware of any reasons why the licences will not be renewed.

Note 9. Other non-current assets

Inventory and well consumables are valued at lower of cost or net realisable value. Inventory and well consumables are allocated to exploration and evaluation expenditure when the assets are used in operations.

	Consolidated
	June 2019	June 2018
	$	$

Inventory and well consumables	770,750	652,522
	770,750	652,522

Note 10. Trade and Other Payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

	Consolidated
	June 2019	June 2018
	$	$
Current
Trade payables	84,799	152,737
Accruals	108,690	105,249
Other payables	27,915	38
	221,404	258,024

The carrying values of trade and other payables approximate fair values due to short-term nature of the amounts. These are non-interest bearing.

Note 11. Provisions

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Restoration

Both for close down and restoration and for environmental clean-up costs, a provision is made in the accounting period when the related disturbance occurs, based on the net present value of estimated future costs. The amortisation or 'unwinding' of the discount applied in establishing the net present value of provision is charged as a finance cost to the consolidated statement of comprehensive income in each accounting period.

For close down and restoration costs, which include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas, movements in provision other than the amortisation of the discount, such as those resulting from changes in the cost estimates, lives of operations or discount rates, are capitalised into the carrying amount of development and amortised against future production.

Rehabilitation

The provision represents the estimated costs to rehabilitate wells in licences held by the consolidated entity. This provision has been calculated based on the number of wells which require rehabilitation and the expected costs to rehabilitate each well, taking into consideration the type of well and its location.

Employee benefits

Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leave

The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Severance pay

As per the Botswana Labour a provision is calculated for each Botswana based employee of one day per month of service, which can be paid out after 60 months or when employment ends. The benefit rises to two days per month after the first 60 months.

	Consolidated
	June 2019	June 2018
Current	$	$
Employee benefits	64,248	59,214
Employee benefits - Botswana severance	76,109	155,969
	140,357	215,183

Non-current
Rehabilitation	115,000	97,000
	115,000	97,000

Movements in rehabilitation provision during the year
Balance at the beginning of the year	97,000	94,000
Rehabilitation required on wells drilled during the year	18,000	3,000
Carrying amount at the end of the year	115,000	97,000

Employee benefits - Botswana Severance

A provision has been recognised for employee benefits relating to severance pay payable in Botswana.

Note 12. Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the consolidated entity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

			Consolidated
	June 2019	June 2018	June 2019	June 2018
	Shares	Shares	$	$
Opening balance	354,224,275	304,042,848	90,463,822	83,380,184
Issue of ordinary shares during the year*	95,955,910	50,181,427	9,595,591	6,894,517
Share issue costs	-	-	(305,909)	(221,602)
Transfer from share based payment reserve	-	-	-	410,723
Ordinary shares ‑ fully paid	450,180,185	354,224,275	99,753,504	90,463,822

*Shares issued during the year and the issue price of each issue is as follows:

	Issue Date	No. of Shares	Issue Price (AUD)
Entitlement Offer & Additional Placement	13-Jul-18	54,889,260	$0.10
Placement (Australia)	11-Apr-19	12,000,000	$0.10
Placement (Botswana)	26-Apr-19	29,066,650	$0.10

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of, and amounts paid on, the shares held. The fully paid ordinary shares have no par value. On a show of hands every member present at a meeting, in person or by proxy, shall have one vote and upon a poll, each share shall have one vote. The Company does not have authorised capital or par value in respect of its issued shares.

Options and performance rights

At 30 June 2019, there were no outstanding options for ordinary shares in Tlou Energy Limited (2018: Nil). The following performance rights were on issue:

Performance rights:

Vesting Date	Exercise Price	1/07/2018	Issued	Exercised	Expired	30/06/2019
19 October 2018	$0.165	-	2,475,000	-	-	2,475,000
19 October 2018	$0.22	-	2,475,000	-	-	2,475,000
31 January 2017	$0.28	2,275,000	-	-	-	2,275,000
		2,275,000	4,950,000	-	-	7,225,000

Refer to note 14 for details of performance rights valuation.

Capital risk management

The capital structure of the consolidated entity consists of equity attributable to equity holders of the parent entity, comprising issued capital and reserves as disclosed in the Consolidated Statement of Changes in Equity.

When managing capital, management's objective is to ensure the parent entity continues as a going concern and to maintain a structure that ensures the lowest cost of capital available and to ensure adequate capital is available for exploration and evaluation of tenements. In order to maintain or adjust the capital structure, the consolidated entity may seek to issue new shares. Consistent with other exploration companies, the consolidated entity, including the parent entity monitors capital on the basis of forecast exploration and development expenditure required to reach a stage which permits a reasonable assessment of the existence or otherwise of an economically recoverable reserve.

There were no changes in the consolidated entity's approach to capital management during the year.

The consolidated entity is not subject to externally imposed capital requirements.

Note 13. Reserves

Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities.

The financial report is presented in Australian dollars rounded to the nearest dollar, which is Tlou Energy Limited's functional and presentation currency.

Foreign operations

The assets and liabilities of foreign operations are translated into functional currency using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into functional currency using the average exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised in the foreign currency translation reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

Share Based Payments Reserve

The share-based payments reserve is used to record the share based payment associated with options granted to employees and others under equity-settled share based payment arrangements.

Note 14. Share-based payments

Equity-settled and cash-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Employee Share Options and Performance Rights

Share Options and Performance Rights may be granted to certain personnel of the Company on terms determined by the directors or otherwise approved by the Company at a general meeting.

Share options are granted for no consideration. Options and entitlements to the options are vested on a time basis and/or on specific performance-based criteria such as share price increases or reserves certification. Options granted as described above carry no dividend or voting rights. When exercisable, each option is convertible to one ordinary share.

Performance Rights are linked to the share price performance of the Company, ensuring alignment with the interests of the Company's shareholders. For the Performance Rights that are issued but not yet exercised at the date of this report to vest and, therefore, become exercisable by a participant, certain performance conditions are required to be met as set out below. On vesting, holders of Performance Rights will be entitled to acquire Tlou Energy Limited ordinary shares at nil cost.

Performance rights outstanding at the date of this report:

No. of Performance Rights	Reference	Date of Approval	Share price at approval date	Exercise Price
2,475,000	(i)	17-Oct-18	$0.11	$0.165
2,475,000	(ii)	17-Oct-18	$0.11	$0.22
2,275,000	(iii)	10-Nov-16	$0.14	$0.28

	Performance Condition
(i)	The closing price of Shares being 50% or more above the price at the date of shareholder approval for a period of 10 consecutive trading days.
(ii)	The closing price of Shares being 100% or more above the price at the date of shareholder approval for a period of 10 consecutive trading days.
(iii)	The closing price of Shares being 100% or more above the price at the date of shareholder approval for a period of 10 consecutive trading days.

The expense recognised in the consolidated statement of comprehensive income in relation to share based payments amounts to $377,305 (2018: $199,624). The amount assessed as fair value at the grant date is allocated equally over the period from grant date to vesting date. The fair value at grant date is determined using generally accepted valuation techniques that take into account exercise price, the term of the option or performance rights, the impact of dilution, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option/performance rights and an appropriate probability weighting to factor the likelihood of the satisfaction of non-vesting conditions.

Inputs used to value the performance rights on issue are as follows:

Reference	(i)	(ii)	(iii)
Grant date	17/10/18	17/10/18	10/11/16
Expected volatility (%)	100	100	100
Risk-free interest rate (%)	2.55	2.55	2.20
Expected life of (years)	6.3	6.3	7
Weighted average share price ($)	$0.165	$0.22	$0.28
Model used	Monte Carlo	Monte Carlo	Trinomial

The following table shows the number, movements and exercise price of performance rights for the 2019 year.

Date of Approval	Exercise Price	1/07/2018	Issued	Exercised	Expired	30/06/2019
19 October 2018	$0.165	-	2,475,000	-	-	2,475,000
19 October 2018	$0.22	-	2,475,000	-	-	2,475,000
31 January 2017	$0.28	2,275,000	-	-	-	2,275,000
		2,275,000	4,950,000	-	-	7,225,000

The following table shows the number, movements and exercise price of performance rights for the 2018 year.

Date of Approval	Exercise Price	01/07/2017	Issued	Exercised	Expired	30/06/2018
31 January 2017	$0.21	2,275,000	-	2,275,000	-	-
31 January 2017	$0.28	2,275,000	-	-	-	2,275,000
		4,550,000	-	2,275,000	-	2,275,000

There are no share options outstanding at the end of the 2019 financial year (2018: Nil).

Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transaction recognised during the year were as follows:

	Consolidated
	June 2019	June 2018
	$	$

Performance rights	377,305	199,624
	377,305	199,624

Note 15. Commitments

Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

Operating lease commitments

Commitments for minimum lease payments for non-cancellable operating leases for offices and equipment contracted for but not recognised in the financial statements.

		Consolidated
		June 2019	June 2018
Payable - minimum lease payments		$	$
●	not later than 12 months	8,250	5,250
●	between 12 months and 5 years	-	-
		8,250	5,250

Exploration expenditure:

To maintain an interest in the exploration tenements in which it is involved, the consolidated entity is required to meet certain conditions imposed by the various statutory authorities granting the exploration tenements or that are imposed by the joint venture agreements entered into by the consolidated entity. These conditions can include proposed expenditure commitments. The timing and amount of exploration expenditure obligations of the consolidated entity may vary significantly from the forecast based on the results of the work performed, which will determine the prospectivity of the relevant area of interest. The consolidated entity's proposed expenditure obligations, which are not provided for in the financial statements are as follows:

		Consolidated
		June 2019	June 2018
Minimum expenditure requirements		$	$
●	not later than 12 months	251,982	4,153,861
●	between 12 months and 5 years	770,913	82,893
		1,022,895	4,236,754

Note 16. Financial instruments

Overview

The consolidated entity's principal financial instruments comprise receivables, payables, cash and term deposits. The main risks arising from the consolidated entity's financial assets are interest rate risk, foreign currency risk, credit risk and liquidity risk.

This note presents information about the consolidated entity's exposure to each of the above risks, its objectives, policies and processes for measuring and managing risk. Other than as disclosed, there have been no significant changes since the previous financial year to the exposure or management of these risks.

The consolidated entity holds the following financial instruments:

	Consolidated
	June 2019	June 2018
Financial Assets	$	$
Cash and cash equivalents	5,204,948	7,019,345
Trade and other receivables	430,351	194,814
	5,635,299	7,214,159
Financial Liabilities
Trade and other payables	221,404	258,024
	221,404	258,024

Financial risk management objectives

The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk.

Key risks are monitored and reviewed as circumstances change (e.g. acquisition of new entity or project) and policies are created or revised as required. The overall objective of the consolidated entity's financial risk management policy is to support the delivery of the consolidated entity's financial targets whilst protecting future financial security.

Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows, the consolidated entity does not enter into derivative transactions to mitigate the financial risks. In addition, the consolidated entity's policy is that no trading in financial instruments shall be undertaken for the purpose of making speculative gains. As the consolidated entity's operations change, the Directors will review this policy periodically going forward.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees policies for managing the consolidated entity's financial risks as summarised below. These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits.

Risk management is carried out by senior finance executives (finance) under policies approved by the Board of Directors. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units where appropriate.

(a) Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The consolidated entity is also exposed to earnings volatility on floating rate instruments.

A forward business cash requirement estimate is made, identifying cash requirements for the following period (generally up to one year) and interest rate term deposit information is obtained from a variety of banks over a variety of periods (usually one month up to six-month term deposits) accordingly. The funds to invest are then scheduled in an optimised fashion to maximise interest returns.

Interest rate sensitivity

A sensitivity of 1% interest rate has been selected as this is considered reasonable given the current market conditions. A 1% movement in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

	Profit or loss		Equity
	1% increase	1% decrease	1% increase	1% decrease
	$	$	$	$
Consolidated - 30 June 2019
Cash and cash equivalents	50,049	(50,049)	50,049	(50,049)
Consolidated - 30 June 2018
Cash and cash equivalents	70,193	(70,193)	70,193	(70,193)

Interest rate risk on other financial instruments is immaterial.

(b) Liquidity risk

Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The Board's approach to managing liquidity is to ensure, as far as possible, that the consolidated entity will always have sufficient liquidity to meet its obligations when due.

Ultimate responsibility for liquidity risk management rests with the Board of Directors. The consolidated entity manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. This is based on the undiscounted cash flows of the financial liabilities based on the earliest date on which they are required to be paid. At the end of the reporting period the consolidated entity held cash of $5,204,948 (2018: $7,019,345).

The following table details the remaining contractual maturity for non-derivative financial liabilities.

	Within	Between	Total Contractual	Carrying
	1 Year	1 & 2 years	Cash Flows	Amount
Consolidated - 30 June 2019	$	$	$	$
Trade and other payables	221,404	-	221,404	221,404
Consolidated - 30 June 2018
Trade and other payables	258,024	-	258,024	258,024

As a result of activities overseas, the consolidated entity's consolidated statement of financial position can be affected by movements in exchange rates. The consolidated entity also has transactional currency exposures. Such exposures arise from transactions denominated in currencies other than the functional currency of the relevant entity.

The consolidated entity's exposure to foreign currency risk primarily arises from the consolidated entity's operations overseas. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The consolidated entity currently does not engage in any hedging or derivative transactions to manage foreign currency risk. The consolidated entity's policy is to generally convert its local currency to Pula, Rand or US dollars at the time of transaction. The consolidated entity, has on rare occasions, taken the opportunity to move Australian dollars into foreign currency (ahead of a planned requirement for those foreign funds) when exchange rate movements have moved significantly in favour of the Australian dollar, and management considers that the currency movement is extremely likely to move back in subsequent weeks or months. Therefore, the opportunity has been taken to lock in currency at a favourable rate to the consolidated entity. This practice is expected to be the exception, rather than the normal practice.

The consolidated entity's exposure to foreign currency risk at the reporting date, expressed in Australian dollars, was as follows:

	2019	2019	2019	2019	2018	2018	2018	2018
	USD	BWP	ZAR	GBP	USD	BWP	ZAR	GBP
	A$	A$	A$	A$	A$	A$	A$	A$
Financial Assets
Cash and cash equivalents	27,884	2,878,496	15,470	1,245,221	18,950	2,895,669	89,615	2,946,349
Trade and other receivables	-	404,063	-	-	-	186,725	-	-

Financial Liabilities
Trade and other payables	-	(108,858)	-	-	-	(101,457)	-	-
Net Financial Instruments	27,884	3,173,701	15,470	1,245,221	18,950	2,980,937	89,615	2,946,349

Foreign currency rate sensitivity

Based on financial instruments held at 30 June 2019, had the Australian dollar strengthened/weakened by 10% the consolidated entity's profit or loss and equity would be impacted as follows:

	Profit or loss		Equity
	10%	10%	10%	10%
	Increase	Decrease	Increase	Decrease
2019	$	$	$	$
Dollar (US)	(2,788)	2,788	(2,788)	2,788
Pula (Botswana)	(317,370)	317,370	(317,370)	317,370
Rand (South Africa)	(1,547)	1,547	(1,547)	1,547
Pound (UK)	(124,522)	124,522	(124,522)	124,522

2018
Dollar (US)	(1,895)	1,895	(1,895)	1,895
Pula (Botswana)	(298,094)	298,094	(298,094)	298,094
Rand (South Africa)	(8,962)	8,962	(8,962)	8,962
Pound (UK)	(294,635)	294,635	(294,635)	294,635

(d) Credit risk

Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other receivables. The consolidated entity's exposure and the credit ratings of its counterparties are continuously monitored by the Board of Directors.

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised in the table above.

Credit Risk Exposures

Trade and other receivables

Trade and other receivables comprise primarily of VAT and GST refunds due. Where possible the consolidated entity trades with recognised, creditworthy third parties. The receivable balances are monitored on an ongoing basis. The consolidated entity's exposure to expected credit losses is not significant.

Cash and cash equivalents

The consolidated entity has a significant concentration of credit risk with respect to cash deposits with Westpac Banking Corporation, First National Bank Botswana and First National Bank South Africa. However, significant cash deposits are invested across banks to mitigate credit risk exposure to a particular bank. AAA rated banks are used where possible and non-AAA banks are utilised where commercially attractive returns are available.

Note 17. Key Management Personnel

Key management personnel comprise directors and other persons having authority and responsibility for planning, directing and controlling the activities of the consolidated entity.

Detailed remuneration disclosures are provided in the remuneration report.

Key management personnel compensation

The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:

	Consolidated
	June 2019	June 2018
	$	$
Short-term employee benefits	1,122,398	945,044
Post-employment benefits	78,136	68,602
Other long-term benefits	57,754	45,612
	1,258,288	1,059,258

Share based payments	302,050	109,685
	1,560,338	1,168,943

Note 18. Auditors' Remuneration

During the year the following fees were paid or payable for services provided by the auditor of the consolidated entity:

		Consolidated
		June 2019	June 2018
		$	$
Audit services
	Auditing or reviewing the financial statements - BDO Australia	56,500	55,000
	Auditing or reviewing the financial statements - BDO Botswana	32,962	27,932

Non-audit services - BDO Australia
	Tax consulting and compliance services	8,400	11,810
	BSE Listing	-	4,500
	Corporate finance services	-	30,000
Total		97,862	129,242

Note 19. Contingent Liabilities

The Directors are not aware of any contingent liabilities (2018: nil).

Note 20. Related Party Transactions

Parent entity

The legal parent entity is Tlou Energy Limited.

Subsidiaries

Interests in subsidiaries are set out in note 23.

Transactions with related parties

The following transactions occurred with related parties:

	Consolidated
	2019	2018
	$	$
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related entity of Anthony Gilby.	32,000	21,000

Note 21. Segment Reporting

Reportable Segments

Operating segments are identified on the basis of internal reports that are regularly reviewed by the executive team in order to allocate resources to the segment and assess its performance.

The Company currently operates in one segment, being the exploration, evaluation and development of Coalbed Methane resources in Southern Africa.

Segment revenue

As at 30 June 2019 no revenue has been derived from its operations (2018: nil).

Segment assets

Segment non-current assets are allocated to countries based on where the assets are located as outlined below:

	June 2019	June 2018
	$	$
Botswana	63,526,670	53,949,941
Australia	7,232	5,225
	63,533,902	53,955,166

Note 22. Cash Flow Information

	Consolidated
	June 2019	June 2018
	$	$
Reconciliation of cash flow from operations
Loss for the period	(3,216,695)	(2,810,730)
Depreciation	555,675	204,788
Share-based payments	377,305	199,624
Net exchange differences	161,460	35,229

Changes in operating assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
Decrease/(increase) in trade and other receivables	73,149	(28,674)
Decrease/(increase) in other assets	(64)	(1,865)
Increase/(decrease) in trade payables and accruals	9,849	(183,242)
Decrease/(increase) in employee benefits	5,347	(47,017)
Increase/(decrease) in provisions	(25,836)	48,991
	(2,059,810)	(2,582,895)

There were no non-cash investing or financing activities during the year (2018: nil).

Note 23. Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1.

Name of entity	Country of incorporation	Class of shares	Equity holding %
			June 2019	June 2018
Tlou Energy Botswana (Proprietary) Ltd	Botswana	Ordinary	100	100

Technoleads International Inc	Barbados	Ordinary	100	100
Tlou Energy Exploration (Proprietary) Limited	Botswana	Ordinary	100	100

Sable Energy Holdings (Barbados) Inc	Barbados	Ordinary	100	100
Tlou Energy Resources (Proprietary) Limited	Botswana	Ordinary	100	100

Copia Resources Inc	Barbados	Ordinary	100	100
Tlou Energy Corp Services Botswana (Proprietary) Limited	Botswana	Ordinary	100	100

Madra Holdings (Barbados) Inc	Barbados	Ordinary	100	100
Tlou Energy Solutions (Proprietary) Limited	Botswana	Ordinary	100	100

Note 24. Matters subsequent to the end of the financial year

Note 25. Parent entity disclosures

	Parent
	June 2019	June 2018
	$	$

Current assets	2,425,557	4,196,540
Non-current assets	30,220,983	30,218,976
Total assets	32,646,540	34,415,516

Current liabilities	160,683	194,898
Total liabilities	160,683	194,898
Net assets	32,485,857	34,220,618

Contributed equity	99,753,504	90,463,822
Share based payment	686,706	309,400
Accumulated losses	(67,954,353)	(56,552,604)
Total equity	32,485,857	34,220,618

Loss for the period	11,401,749	9,177,297
Total comprehensive income	11,401,749	9,177,297

Commitments, Contingencies and Guarantees of the Parent Entity

The Parent Entity has no commitments for the acquisition of property, plant and equipment, no contingent assets, contingent liabilities or guarantees at balance date.

**ENDS**

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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