for personal use only - australian securities exchange · he also manages the financial and day-to-...

ABN 33 153 194 846

ANNUAL REPORT

30 JUNE 2012

For

per

sona

l use

onl

y

Indus Coal Ltd ABN 33 153 194 846

Annual Report 2012

COMPANY INFORMATION

DIRECTORS Mr Scott Douglas (Executive Chairman)

Mr John Kenny (Executive Director)

Mr Vinay Hariani (Executive Director)

Mr Ashish Patel (Executive Director)

Mr Andrew Parker (Executive Director)

Mr Lalit Balchandani (Alternate Director)

Mr Vishal Bhatia (Alternate Director)

COMPANY SECRETARY Mr Mark Clements

REGISTERED OFFICE Level 1

1251 Hay Street

West Perth WA 6005

Tel: +61 8 6555 3280

Fax: +61 8 6555 3281

WEBSITE www.induscoal.com.au

AUDITORS HLB Mann Judd

Level 4

130 Stirling Street

Perth WA 6000

STOCK EXCHANGE Australian Securities Exchange Ltd

HOME EXCHANGE Perth

SHARE REGISTRY Security Transfer Registrars Pty Ltd

770 Canning Highway

Applecross WA 6153

Tel: +61 8 9315 2333

Fax: +61 8 9315 2233

ASX CODE ICZ

CONTENTS

Company Information 2

Chairman’s Letter 3

Directors’ Report 4

Auditor’s Independence Declaration 15

Corporate Governance Statement 16

Statement of Comprehensive Income 24

Statement of Financial Position 25

Statement of Changes in Equity 26

Statement of Cash Flows 27

Notes to the Financial Statements 28

Directors' Declaration 51

Independent Auditor's Report 52

Additional ASX Information 54

For

per

sona

l use

onl

y


Annual Report 2012

CHAIRMAN’S LETTER

Dear Shareholder,

I am pleased to report that the 2012 financial year has been a good one for Indus Coal Ltd. As you

are aware the company successfully completed a $7 million capital raising, acquired the MukoMuko Coal

Project and listed on ASX in the March 2012 Quarter.

We, along with our Indonesian partners, PT Param Energy, successfully obtained a Production IUP

License (mining license permit) which was officially granted on 7 March 2012. The granting of this

license added significant value to the MukoMuko asset and demonstrated PT Param Energy’s ability to

successfully manage the environmental and regulatory approvals process in an expedient time frame.

PT Param Energy have completed a significant amount of work in progressing the development of the

MukoMuko Project through work on a preliminary feasibility study including preliminary economic studies,

geotechnical, engineering design, preliminary transport analysis and product marketing. An experienced

team of geologists were mobilized to site and have undertaken regional geological mapping, preliminary

geophysics, petrology and are managing a field crew completing identification and sampling of

outcropping coal in preparation for a drilling program, details of which will be provided to shareholders

in due course.

Our strategy is to expedite the transition from an explorer to a producer of coal in a low cost and

effective manner.

We are currently evaluating a number of potential projects that meet with our investment criteria of

early stage production and low capital expenditure relative to Australian style coal mining operations.

Globally, the price of coal has been under some downward pressure, however based on our preliminary

feasibility study and capital expenditure estimates the MukoMuko Project remains economically robust. In

particular, the demand for coal product from the Bengkulu Basin remains in strong demand due to its

use in blending with lower calorific value coals.

The achievements of the company to date would not have been possible without the contributions and

effort of our partners PT Param Energy and Executive Director, Vinay Hariani, with whom we have a solid

commercial relationship that augurs well for shareholders to achieve significant growth into the future.

Yours faithfully,

Scott Douglas

Chairman

For

per

sona

l use

onl

y


Annual Report 2012

DIRECTORS' REPORT Your directors present their report on the consolidated entity consisting of Indus Coal Ltd and the

entities it controlled at the end of, or during, the period ended 30 June 2012.

DIRECTORS

The following persons were directors of Indus Coal Ltd during or since the end of the financial year and

up to the date of this report:

Mr Scott Douglas (Executive Chairman)







INFORMATION ON DIRECTORS


Mr Douglas is a highly experienced public company executive with considerable experience and skills in

the exploration and resources industry. Until recently he was Executive Chairman of Resource Generation

Limited (ASX Code: RES) responsible for the acquisition and subsequent delineation of a significant coal

project in South Africa.

Mr Douglas has also been directly involved with ASX listed public companies Nucoal Resources Limited

(ASX Code: NCR) and Ironclad Mining Limited (ASX Code: IFE). He has previously held board positions

with various unlisted public and private companies.

Directorships in the past 3 years: Resource Generation Limited


Mr Kenny is a lawyer by profession. He holds a Bachelor of Commerce (Hons) and Bachelor of Laws

from the University of Western Australia. Through his practise of corporate and mining law and

investment banking, he has advised many ASX listed public companies in the areas of equity and debt

finance. Mr Kenny has been a venture capital investor in several ASX mining floats. He also has

experience in a number of sectors of Australian agribusiness with involvement both as a director and as

an investor. He has been a director of a number of ASX listed public companies and is currently on the

board of ASX listed public resource company Gippsland Limited (ASX Code: GIP) and Sun Resources NL

(ASX Code: SUR).

Directorships in the past 3 years: Gippsland Limited, Sun Resources NL.


Mr Hariani is a highly experienced coal mining executive and brings valuable mining, corporate and

country experience to the company. Mr Hariani is an Indonesian citizen and is the founder of PT Param

which has become a vertically integrated coal mining business specialising in coal project identification,

coal mining and international coal trading. PT Param currently produces in excess of 3 million tonnes

per annum of export coal and has acquired over 30 coal bearing concessions in the last 5 years.

A company which is controlled by Mr Hariani, Apex Code Holdings Ltd, is the major shareholder of the

company.

Directorships in the past 3 years: None

For

per

sona

l use

onl

y


Annual Report 2012

DIRECTORS' REPORT (continued)


Mr Patel is an engineer by profession. He holds a Bachelor of Science degree in Engineering from

Harvey Mudd College (USA) and a Bachelor of Arts degree majoring in Management/Engineering from

Claremont McKenna College (USA). Previously he was head of the “Financial Institutions, Investment

Banking Divisions” for Merrill Lynch. Mr Patel is currently a director of a number of private companies in

the construction and mining sectors.



Mr Parker holds a Bachelor of Laws degree from the University of Western Australia and has extensive

experience in the mineral exploration and resources industry. Mr Parker was the co-founder and, until

December 2008, the managing director of Perth based corporate advisory and venture capital firm,

Trident Capital Pty Ltd.

During this time Mr Parker advised a number of clients with respect to general corporate advice,

structuring, capital raisings, mergers and acquisitions and ASX listings. Prior to establishing Trident

Capital Pty Ltd in 2002, Mr Parker was legal counsel to B Digital Limited, an ASX listed company, with

his principal role being to oversee the international expansion of the company into South Africa and the

USA. Mr Parker remained in the USA as Chief Operating Officer of B Digital USA, Inc. until late 2001. Mr

Parker is currently a director of ASX listed Jaguar Minerals Limited (ASX Code: JAG) and has previously

held a number of board positions with listed and unlisted public companies, principally in the junior

resources sector.

Directorships in the past 3 years: Jaguar Minerals Limited


Mr Balchandani is an entrepreneur with successful forays in IT, commodity trading, and international

business in India and brings a wealth of international experience in the fields of production, distribution

& logistics spanning over 25 years. Mr Balchandani has been a key reason for the continued

exponential growth and expansion of the Param group over the past 6 years involving acquisitions and

sales of over 36 coal concessions in the Indonesia region. He also manages the financial and day-to-

day operations of the Param group including mine procurement, mine development/management and

coal trading.



Mr Bhatia is an experienced member of the Param group which has become a vertically integrated coal

mining business specialising in coal project identification, coal mining and international coal trading. PT

Param currently produces in excess of 3 million tonnes per annum of export coal and has acquired over

30 coal bearing concessions in the last 5 years.


For

per

sona

l use

onl

y


Annual Report 2012


INFORMATION ON COMPANY SECRETARY

Mr Mark Clements (Company Secretary)

Mr Clements gained a Bachelor of Commerce degree from the University of Western Australia. He is a

Fellow of the Institute of Chartered Accountants and a member of both the Australian Institute of

Company Directors and the Institute of Chartered Secretaries in Australia. Mr Clements currently holds

the position of Company Secretary for a number of publically listed companies and has experience in

corporate finance, accounting and administration, capital raisings and ASX compliance and regulatory

requirements.

DIRECTORS' INTERESTS

The interests of directors in securities of the company at the date of this report are:

Director

Fully Paid

Ordinary

Shares

Convertible

Performance

Shares

Options

S Douglas 4,200,001 402 1,000,000

J Kenny 3,200,001 402 1,000,000

V Hariani1 29,700,001 8002 1,000,000

A Patel 3,200,001 402 1,000,000

A Parker 3,200,001 402 1,000,000

L Balchandani - - -

V Bhatia - - -

Notes:

1. These figures include equities held by Apex Code Holdings Ltd, a company that is

controlled by Mr Hariani. To the extent that Apex Code Holdings Ltd derives a

profit from these holdings, Mr Patel (via Vitarag Pty Ltd ATF Kailash Trust) and

Mr Kenny (via JDK Nominees Pty Ltd ATF the Kenny Capital Trust) will participate

in the profits earned by Apex Code Holdings Ltd.

2. This figure is comprised of equal numbers of Class B, Class C, Class D and Class

E Convertible Performance Shares.

SHARE OPTIONS GRANTED TO DIRECTORS AND SHAREHOLDERS DURING AND SINCE THE END OF THE FINANCIAL YEAR

Options were granted to directors of the company as part of the Initial Public Offering.

REPORTING PERIOD

The company was incorporated on 13 September 2011. Accordingly, the financial reporting period

covered by these financial statements is the period from incorporation to 30 June 2012. This period is

referred to in this report as the year or the financial year.

PRINCIPAL ACTIVITIES

Since incorporation, the principal activity of the consolidated entity during the course of the financial

year was the exploration of coal concessions in Indonesia. There were no significant changes in the

nature of the consolidated entity’s principal activities during the year.

For

per

sona

l use

onl

y



RESULTS

The total loss of the consolidated entity attributable to the owners of Indus Coal Ltd for the financial

year was $353,454.

REVIEW OF OPERATIONS

Indus Coal Ltd successfully completed a $7 million capital raising, acquired the MukoMuko Coal Project

and listed on ASX in the March 2012 Quarter.

granting of the Production IUP License, t

PT MukoMuko Baratama Sejahtera

located in the Bengkulu Coal Basin in Western Sumatra. The acquisition was completed on 7 March

2012 following the final payment of US$3 million (A$2.83 million) and the issue of 20,000,000 fully paid

ordinary shares to the vendors of the MukoMuko Coal Project.

The group is focused on monetizing the MukoMuko Coal Project over the next 12 months and

continuing to build scale through further acquisitions with

company founded by Indus Executive Director Mr Vinay Hariani

mining business with 15 years of experience in coal project identification,

coal trading in Indonesia.

The Production IUP License (mining license permit)

License is valid for 10 years as and from 7 March 2012 with the ability to extend this term furthe

During the June 2012 Quarter PT Salva Resources completed their first phase work program including

geological mapping, surface sampling and outcrop mapping.

MukoMuko Coal Project Development

The company entered into an agreement with PT Salva Resource

mapping, surface sampling and outcrop mapping on the MukoMuko Project.

phase, subsequent work is to include

to test the Lemau and Bitunan Formations for coal intersections and potentially delineate an initial

JORC Compliant Resource (Figure 1.) It is expected that the first 5 holes will be approximately 100

metres deep and that the balance of the initial drilling campaign would

centres for about 3,000 metres of core drilling. A

second drilling campaign will be designed to

evaluate and validate specific targets such as areas

where multiple seams are found or across fault

structures.

The group has continued to progress the

development of the MukoMuko Coal Project during

the June 2012 Quarter through work on a

Preliminary Feasibility Study on the MukoMuko Coal

Project including preliminary economic studies,

geotechnical, engineering design, preliminary

transport analysis and product marketing.

The group has mobilized an experienced team of

geologists on site which has undertaken regional

geological mapping, preliminary geophysics and

petrology and is managing a field crew completing

identification and sampling of outcropping coal.

(continued)


us Coal Ltd successfully completed a $7 million capital raising, acquired the MukoMuko Coal Project

and listed on ASX in the March 2012 Quarter. Following the completion of the

granting of the Production IUP License, the company completed the purchase of 100% of

PT MukoMuko Baratama Sejahtera (“MMBS”) which in turn owns 100% of the MukoMuko Coal Project,


nal payment of US$3 million (A$2.83 million) and the issue of 20,000,000 fully paid

ordinary shares to the vendors of the MukoMuko Coal Project.

is focused on monetizing the MukoMuko Coal Project over the next 12 months and

cale through further acquisitions with its local coal partner PT Param Energy, a

founded by Indus Executive Director Mr Vinay Hariani, which is a vertically integrated coal

mining business with 15 years of experience in coal project identification, coal mining and international

Production IUP License (mining license permit) was granted on 7 March 2012. The Production IUP License is valid for 10 years as and from 7 March 2012 with the ability to extend this term furthe

uring the June 2012 Quarter PT Salva Resources completed their first phase work program including

geological mapping, surface sampling and outcrop mapping.

MukoMuko Coal Project Development

entered into an agreement with PT Salva Resources (“Salva”)

mapping, surface sampling and outcrop mapping on the MukoMuko Project. Having completed this first

phase, subsequent work is to include geophysical surveys and an initial 24 hole drilling program planned

and Bitunan Formations for coal intersections and potentially delineate an initial


metres deep and that the balance of the initial drilling campaign would be conducted at 1 kilometre

000 metres of core drilling. A

second drilling campaign will be designed to

evaluate and validate specific targets such as areas

where multiple seams are found or across fault

inued to progress the

development of the MukoMuko Coal Project during

the June 2012 Quarter through work on a

Preliminary Feasibility Study on the MukoMuko Coal

Project including preliminary economic studies,

geotechnical, engineering design, preliminary

ransport analysis and product marketing.

has mobilized an experienced team of

geologists on site which has undertaken regional

geological mapping, preliminary geophysics and

petrology and is managing a field crew completing

sampling of outcropping coal. Figure 1

Annual Report 2012


us Coal Ltd successfully completed a $7 million capital raising, acquired the MukoMuko Coal Project

the capital raising and the

pleted the purchase of 100% of

which in turn owns 100% of the MukoMuko Coal Project,


nal payment of US$3 million (A$2.83 million) and the issue of 20,000,000 fully paid

is focused on monetizing the MukoMuko Coal Project over the next 12 months and

local coal partner PT Param Energy, a

is a vertically integrated coal

coal mining and international

7 March 2012. The Production IUP

License is valid for 10 years as and from 7 March 2012 with the ability to extend this term further.

uring the June 2012 Quarter PT Salva Resources completed their first phase work program including

) to complete geological

Having completed this first

geophysical surveys and an initial 24 hole drilling program planned

and Bitunan Formations for coal intersections and potentially delineate an initial


be conducted at 1 kilometre

For

per

sona

l use

onl

y


Annual Report 2012


AMDAL Environmental Licenses and Permits

During the June 2012 Quarter, the group completed its government reporting obligations regarding all

pertinent environmental matters and completed the attainment of all the necessary environmental

documentation and permits required to be held by the owner of the MukoMuko Coal Project.

This documentation is called the "AMDAL Documentation" which means the Analysis of Environmental

Effect documents required by Law No. 23 of 1997 dated 19 September 1997 regarding Environmental

Management. All necessary AMDAL environment related licenses and permits were finalized in full during

the year.

Forestry Exploration Licenses and Permits

During the year the group also completed its government reporting obligations regarding all pertinent

forestry matters and completed the attainment in full of all necessary forestry exploration licenses and

permits required to be held by the owner of the MukoMuko Coal Project.

Competent Person Statement

The information in this report that relates to exploration results, mineral resources or ore reserves is

based on information provided by Mr Brian Davis from the geological consulting firm Geologica Pty Ltd.

Geologica Pty Ltd is a consultant to the Company and Mr Brian Davis is a member of the Australasian

Institute of Mining and Metallurgy. Mr Davis has sufficient experience which is relevant to the style of

mineralisation and type of deposit under consideration and to the activity which he is undertaking to

qualify as a Competent Person as defined in the 2004 Edition of the 'Australian Code for Reporting of

Exploration, Mineral Resources and Ore Reserves'. Mr Davis consents to the inclusion in this report of

the matters based on this information in the form and context in which it appears.

FINANCIAL POSITION AND SIGNIFICANT CHANGES IN STATE OF AFFAIRS

The net assets of the consolidated entity at 30 June 2012 were $12,735,233.

Cash on hand at 30 June 2012 totalled $3,819,345.

During the year a total of $6,489,835 of share capital, net of capital raising costs, was contributed to

the company from the Initial Public Offering.

Other than the Initial Public Offering and consequent project acquisition transactions, there were no

significant changes in the state of affairs of the consolidated entity during the financial year.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

The company intends to continue exploration and to develop the resources on the concessions that

comprise the MukoMuko Coal Project in Indonesia, acquire further concessions/tenements for exploration

of minerals and to seek other areas of investment.

GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS The directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007

which requires entities to report annual greenhouse gas emissions and energy use. For the measurement

period to 30 June 2012 the directors have assessed that there are no current reporting requirements

but may be required to do so in the future.

DIVIDENDS

No dividends have been provided for or paid by the consolidated entity in respect of the year ended

30 June 2012.

For

per

sona

l use

onl

y


Annual Report 2012


MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

There have been no other matters or circumstances that have arisen since the end of the financial year

which significantly affected or may significantly affect:

• the consolidated entity's operations in future years; or

• the results of those operations in future years; or

• the consolidated entity's state of affairs in future years.

ENVIRONMENTAL REGULATIONS

The company’s environmental obligations are regulated by Australian State and Federal Law, and by the

Laws of other countries in which it operates. The company has complied with its environmental

performance obligations. No environmental breaches have been notified by any Government agency to

the date of the Directors’ Report.

SHARES UNDER OPTION OR ISSUE ON EXERCISE OF OPTION At the date of this report, the unissued, ordinary shares of the company under option are as follows:

Expiry Date Exercise Price Number under Option

31 October 2015 $0.20 6,700,0001,2

Notes: 1. Free attaching options

2. The number held by each of the directors is shown in Note 17.

The Options do not entitle the holder to participate in any share issue of the company or any other

body corporate.

During the financial year the company issued no ordinary shares as a result of the exercise of options.

Since the end of the financial year no further ordinary shares have been issued as a result of the

exercise of options.

INDEMNIFICATION AND INSURANCE OF OFFICERS

The company resolved that it would indemnify its current directors and officers. Coverage in respect of

this indemnity has been provided via a Directors and Officers insurance policy negotiated at commercial

terms. The premium paid during the year was $18,367.

Excluding the matter noted above the company has not, during or since the financial year-end, in

respect of any person who is, or has been an officer or auditor of the company or a related body

corporate:

• Indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer,

including costs and expenses in successfully defending legal proceedings; or

• Paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an

officer for the costs or expenses to defend legal proceedings.

NON-AUDIT SERVICES

No non-audit services were performed during the financial year by the auditor.

For

per

sona

l use

onl

y


Annual Report 2012


DIRECTORS' MEETINGS

The number of meetings attended by each director during the year is as follows:

Director Number of meetings held

while in office

Number of meetings

attended

S Douglas 3 3

J Kenny 3 3

V Hariani 3 2

A Patel 3 2

A Parker 3 3

L Balchandani 3 2

V Bhatia 3 -

Note: Messrs Douglas, Kenny and Parker are members of the Audit and

Remuneration Committees. As this is the first financial report since

incorporation there have not been any meetings held of these committees.

PROCEEDINGS OF THE COMPANY

No person has applied to the Court to bring proceedings on behalf of the company or 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 any part of those proceedings.

The company was not a party to any such proceedings during the year.

REMUNERATION REPORT - AUDITED

This report, which forms part of the directors’ report, outlines the remuneration arrangements in place

for the key management personnel of the company for the financial year ended 30 June 2012. The

information provided in this remuneration report has been audited as required by Section 308(3C) of the

Corporations Act 2001.

The remuneration report details the remuneration arrangements for key management personnel (“KMP”)

who are defined as those persons having authority and responsibility for planning, directing and

controlling the major activities of the company and the group, directly or indirectly, including any

director (whether executive or otherwise) of the parent entity.

Key Management Personnel

Directors Mr Scott Douglas (Executive Chairman)







There were no executives in either the company or the group during the financial year.

For

per

sona

l use

onl

y


Annual Report 2012


Remuneration Philosophy

The objective of the company's reward framework is to set aggregate remuneration at a level which

provides the company with the ability to attract and retain directors and executives of the highest

calibre whilst maintaining a cost which is acceptable to shareholders.

Non-executive directors

Fees and payments to non-executive directors reflect the demands which are made on, and the

responsibilities of, the directors. Non-executive directors' fees and payments are reviewed by the board.

The chairman's fees are determined independently to the fees of non-executive directors based on

comparative roles in the external market. The chairman is not present at any discussions relating to

determination of his own remuneration.

Directors’ fees

Directors' fees are determined within an aggregate directors' fee pool limit, which is periodically

recommended for approval by shareholders. The maximum, for all directors, currently stands at

$300,000 in aggregate. This amount is separate from any specific tasks the directors may take on for

the company in the normal course of business and at normal commercial rates.

Fees for directors are not linked to the performance of the consolidated entity however, to align all

directors’ interests with shareholders’ interests, directors are encouraged to hold shares in the company

and may receive options. This effectively links directors’ performance to the share price performance

and therefore to the interests of shareholders. There have been no performance conditions imposed

prior to the grant of options which act as an incentive to increase the value for all shareholders.

Executive remuneration

The company aims to reward executives (both directors and executives) with a level and mix of

remuneration commensurate with their position and responsibilities within the company and so as to:

• Reward executives for company performance

• Align the interest of executives with those of shareholders

• Ensure total remuneration is competitive by market standards

Fixed remuneration is reviewed annually or upon renewal of fixed term contracts by the board and the

process consists of a review of company and individual performance, relevant comparative remuneration

in the market and internal policies and practices. Executives are given the opportunity to receive their

fixed remuneration in a variety of forms including cash and fringe benefits. It is intended that the

manner of payment chosen will be optimal for the recipient without creating undue cost for the

company.

The objective of variable remuneration provided is to reward executives in a manner which aligns this

element of remuneration with the creation of shareholder wealth. Variable remuneration may be

delivered in the form of share options granted with or without vesting conditions.

For

per

sona

l use

onl

y


Annual Report 2012


Details of remuneration

REMUNERATION FOR THE YEAR ENDED 30 JUNE 2012

Short-Term

Benefits

$

Post-

Employment

Benefits

$

Share Based

Payments

$

Total

$

Value of

Share Based

Payments

as a

Proportion of

Remuneration

%

Name Base

Remuneration

Super-

annuation

Value of

Options and

ESS

Directors

Scott Douglas 20,000 - - 20,000 -

John Kenny 20,000 - - 20,000 -

Vinay Hariani 20,000 - - 20,000 -

Ashish Patel 20,000 - - 20,000 -

Andrew Parker 20,000 - - 20,000 -

Lalit Balchandani - - - - -

Vishal Bhatia - - - - -

Total 100,000 - - 100,000 -

Note: The directors have agreed to commence their remuneration entitlements under their

contracts as from 1 March 2012.

Proportion of above remuneration that is performance based is nil.

No key management personnel appointed during the period received a payment as part of his or her

consideration for agreeing to hold the position.

Service agreements

Mr Scott Douglas

The company has entered into a consultancy agreement with Satomi Pty Ltd (an entity controlled by

Scott Douglas) and Mr Scott Douglas (Douglas Consultancy Agreement), commencing on 5 November

2011.

Under the Douglas Consultancy Agreement, Mr Douglas is engaged by the company to provide services

in the capacity of Executive Director. Mr Douglas will be paid a consulting fee of $5,000 (plus GST) per

month. Mr Douglas will also be reimbursed for reasonable expenses incurred in the performance of his

duties.

For

per

sona

l use

onl

y


Annual Report 2012


The Douglas Consultancy Agreement continues for a period of one year, with the option to extend the

term by mutual written agreement of the parties. The Douglas Consultancy Agreement contains standard

termination provisions under which the company must give 3 months written notice of termination (or

shorter period in the event of a material breach), or alternatively, payment in lieu of service. At the end

of that notice period the company must pay to Mr Douglas an amount equal to the consulting fee that

would otherwise be payable to Mr Douglas over a 3 month period if the agreement had not been

terminated.

Mr John Kenny

The company has entered into a consultancy agreement with Venture Works JDK Pty Ltd (an entity

controlled by John Kenny) and Mr John Kenny (Kenny Consultancy Agreement), commencing on 5

November 2011.

Under the Kenny Consultancy Agreement, Mr Kenny is engaged by the company to provide services in

the capacity of Executive Director. Mr Kenny will be paid a consulting fee of $5,000 (plus GST) per

month. Mr Kenny will also be reimbursed for reasonable expenses incurred in the performance of his

duties.

The Kenny Consultancy Agreement continues for a period of one year, with the option to extend the

term by mutual written agreement of the parties. The Kenny Consultancy Agreement contains standard



of that notice period the company must pay to Mr Kenny an amount equal to the consulting fee that

would otherwise be payable to Mr Kenny over a 3 month period if the engagement had not been

terminated.

Mr Vinay Hariani

The company has entered into a consultancy agreement with Auspicious Glory Universal Ltd (an entity

controlled by Vinay Hariani) and Mr Vinay Hariani (Hariani Consultancy Agreement), commencing on 5

November 2011.

Under the Hariani Consultancy Agreement, Mr Hariani is engaged by the company to provide services to

the company in the capacity of Executive Director. Mr Hariani will be paid a consulting fee of $5,000

(plus GST) per month. Mr Hariani will also be reimbursed for reasonable expenses incurred in the

performance of his duties.

The Hariani Consultancy Agreement continues for a period of one year, with the option to extend the

term by mutual written agreement of the parties. The Hariani Consultancy Agreement contains standard



of that notice period the company must pay to Mr Hariani an amount equal to the consulting fee that

would otherwise be payable to Mr Hariani over a 3 month period if the engagement had not been

terminated.

Mr Ashish Patel

The company has entered into a consultancy agreement with Brown Sugar Trading Pty Ltd (an entity

controlled by Ashish Patel) and Mr Ashish Patel (Patel Consultancy Agreement), commencing on 5

November 2011.

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a worldwide organisation of accounting firms and business advisers.

15

AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Indus Coal Limited for the year ended 30 June 2012, I declare that to the best of my knowledge and belief, there have been no contraventions of:

a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Indus Coal Limited.

Perth, Western Australia 28 September 2012

N G NEILL Partner, HLB Mann Judd

For

per

sona

l use

onl

y

http://www.hlb.com.au/


Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

INTRODUCTION

The company has adopted comprehensive systems of control and accountability as the basis for the

administration of corporate governance. The Board is committed to administering the policies and

procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate

with the company's needs.

To the extent applicable, the company has adopted The Corporate Governance Principles and

Recommendations (2nd Edition) as published by ASX Corporate Governance Council (Recommendations).

In light of the company’s size and nature, the Board considers that the current board is a cost effective

and practical method of directing and managing the company. As the company’s activities develop in

size, nature and scope, the size of the Board and the implementation of additional corporate

governance policies and structures will be reviewed.

The company’s main corporate governance policies and practices as at 30 June 2012 are outlined

below and the company’s full Corporate Governance Plan is available in a dedicated corporate

governance information section of the company’s website www.induscoal.com.au.

Board of directors

The Board is responsible for corporate governance of the company. The Board develops strategies for

the company, reviews strategic objectives and monitors performance against those objectives. The goals

of the corporate governance processes are to:

• maintain and increase Shareholder value;

• ensure a prudential and ethical basis for the company’s conduct and activities; and

• ensure compliance with the company’s legal and regulatory objectives.

Consistent with these goals, the Board assumes the following responsibilities:

• developing initiatives for profit and asset growth;

• reviewing the corporate, commercial and financial performance of the company on a regular

basis;

• acting on behalf of, and being accountable to, the Shareholders; and

• identifying business risks and implementing actions to manage those risks and corporate systems

to assure quality.

The company is committed to the circulation of relevant materials to Directors in a timely manner to

facilitate Directors’ participation in the Board discussions on a fully-informed basis.

Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting.

The Board currently consists of only executive directors. As the company’s activities develop in size,

nature and scope, the composition of the Board and the implementation of additional corporate

governance policies and structures will be reviewed.

Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect

the company’s business. Key operational risks and their management will be recurring items for

deliberation at Board meetings.

For

per

sona

l use

onl

y


Annual Report 2012

CORPORATE GOVERNANCE STATEMENT (continued)

Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

Independent professional advice Subject to the Chairman’s approval (not to be unreasonably withheld), the Directors, at the company’s

expense, may obtain independent professional advice on issues arising in the course of their duties.

Remuneration committee

The remuneration of an executive Director will be decided by the Board, without the affected executive

Director participating in that decision-making process, following the recommendation of the Remuneration

Committee.

The total maximum remuneration of non-executive Directors is initially set by the Constitution and

subsequent variation is by ordinary resolution of Shareholders in general meeting in accordance with the

Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non-

executive Directors’ remuneration within that maximum will be made by the Board having regard to the

inputs and value to the company of the respective contributions by each non-executive Director. The

current amount has been set at an amount not to exceed $300,000 per annum.

In addition, a Director may be paid fees or other amounts (i.e. subject to any necessary Shareholder

approval, non-cash performance incentives such as Options) as the Directors determine where a Director

performs special duties or otherwise performs services outside the scope of the ordinary duties of a

Director.

Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them

respectively in or about the performance of their duties as Directors.

The Remuneration Committee reviews and approves the remuneration policy to enable the company to

attract and retain executives and Directors who will create value for Shareholders having consideration

to the amount considered to be commensurate for a company of its size and level of activity as well as

the relevant Directors’ time, commitment and responsibility. The Board is also responsible for reviewing

any employee incentive and equity-based plans including the appropriateness of performance hurdles

and total payments proposed.

Trading policy

The Board has adopted a policy that sets out the guidelines on the sale and purchase of securities in

the company by its key management personnel (i.e. Directors and, if applicable, any employees reporting

directly to the Managing Director). The policy generally provides that the written acknowledgement of

the Chair (or the Board in the case of the Chairman) must be obtained prior to trading. Details of the

policy are available on the company’s website.

External audit

The company in general meetings is responsible for the appointment of the external auditors of the

company, and the Board from time to time will review the scope, performance and fees of those

external auditors following the recommendation from the Audit Committee.

For

per

sona

l use

onl

y


Annual Report 2012


Audit committee

The company has established an Audit Committee which operates under an Audit Charter which includes

but is not limited to, monitoring and reviewing any matters of significance affecting financial reporting

and compliance, the integrity of the financial reporting of the company, the company’s internal financial

control system and risk management systems and the external audit function.

Diversity

The Board values diversity and recognises the benefits it can bring to the organisation’s ability to

achieve its goals. Accordingly the company has a diversity policy. This policy outlines the company’s

diversity objectives in relation to gender, age, cultural background and ethnicity. It includes requirements

for the Board to establish measurable objectives for achieving diversity, and for the Board to assess

annual both the objectives, and the company’s progress in achieving them. Details of the policy are

available on the company’s website.

Diversity Policy

The company and all its related bodies corporate are committed to workplace diversity.

The company recognises the benefits arising from employee and Board diversity, including a broader

pool of high quality employees, improving employee retention, accessing different perspectives and ideas

and benefiting from all available talent.

Diversity includes, but is not limited to, gender, age, ethnicity and cultural background.

To the extent practicable, the company will address the recommendations and guidance provided in the

ASX Corporate Governance Council's Principles and Recommendations.

The Diversity Policy does not form part of an employee's contract of employment with the company, nor

gives rise to contractual obligations. However, to the extent that the Diversity Policy requires an

employee to do or refrain from doing something and at all times subject to legal obligations, the

Diversity Policy forms a direction of the company with which an employee is expected to comply.

The key objectives of the Diversity Policy are to achieve:

• a diverse and skilled workforce, leading to continuous improvement in service delivery and

achievement of corporate goals;

• a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;

• improved employment and career development opportunities for women;

• a work environment that values and utilises the contributions of employees with diverse

backgrounds, experiences and perspectives through improved awareness of the benefits of

workforce diversity and successful management of diversity; and

• awareness in all staff of their rights and responsibilities with regards to fairness, equity and

respect for all aspects of diversity,

(collectively, the Objectives).

For

per

sona

l use

onl

y


Annual Report 2012


The Diversity Policy does not impose on the company, its directors, officers, agents or employee any

obligation to engage in, or justification for engaging in, any conduct which is illegal or contrary to any

anti-discrimination or equal employment opportunity legislation or laws in any State or Territory of

Australia or of any foreign jurisdiction.

Diversity Reporting

The group’s gender diversity as at the end of the reporting period is as follows:

30 June 2012

Gender representation Female Male

No. % No. %

Board representation - - 7 100

Group representation - - 7 100

There are currently no senior positions with the group that are held by female employees.

The company’s proposed diversity objectives for the 2013 financial year are as follows:

• Appointment of a diversity officer to:

o assess and proactively monitor gender diversity at all levels of the business and report to the

Board; and

o assess and monitor the implementation and effectiveness of the company’s diversity initiatives

and programs.

• Update recruitment policies and procedures to reflect the company’s position on diversity;

• Undertake an annual review of maternity and paternity leave and flexible working arrangements to

ensure roles are appropriate to maintain career development.

Departures from recommendations

Following admission to the Official List of ASX, the company will be required to report any departures

from the recommendations in its annual financial report.

The company’s compliance and departures from the Recommendations as at the date of this report are

set out on the following pages.

For

per

sona

l use

onl

y


Annual Report 2012


Principles and RECOMMENDATIONS COMMENT

1. Lay solid foundations for management and

oversight

1.1 Companies should establish the functions

reserved to the board and those delegated to

senior executives and disclose those functions.

The Board has adopted a formal charter setting

out the responsibilities of the Board.

This charter can be accessed at:

www.induscoal.com.au

1.2 Companies should disclose the process for

evaluating the performance of senior executives.

The Board will meet annually to review the

performance of executives. The senior

executives’ performance is to be assessed

against the performance of the company as a

whole.

1.3 Companies should provide the information

indicated in the Guide to reporting on Principle

1.

A performance evaluation will be completed

during the reporting period in accordance with

the process detailed in 1.2 above.

2. Structure the board to add value

2.1 A majority of the board should be independent

directors.

A definition of director independence can be

accessed at www.induscoal.com.au. The Board

currently does not have any independent

Directors.

2.2 The chair should be an independent director. The Chairman is not independent.

2.3 The roles of chair and chief executive officer

should not be exercised by the same individual.

The Chairman and Managing Director is not the

same person.

2.4 The board should establish a nomination

committee.

The Board has established a Remuneration and

Nomination Committee and has adopted a

formal Charter.

2.5 Companies should disclose the process for

evaluating the performance of the board, its

committees and individual directors.

The performance evaluation of Board members

occurs in accordance with the Board’s

Performance Evaluation Policy can be accessed

at www.induscoal.com.au



2.

The skills, experience and expertise relevant to

the position held by each Director will be

disclosed in the Directors’ Report which forms

part of the Annual Report.

The company’s policies can be accessed at


3. Promote ethical and responsible decision-making

3.1 Companies should establish a code of conduct

and disclose the code or a summary of the

code as to:

• the practices necessary to maintain

confidence in the company’s integrity

• the practices necessary to take into

account their legal obligations and the

reasonable expectations of their

stakeholders

• the responsibility and accountability of

individuals for reporting and investigating

reports of unethical practices.

The company has adopted a Code of Conduct

and Diversity Policy which can be accessed at

www.induscoal.com.au. For

per

sona

l use

onl

y


Annual Report 2012


3.2 Companies should establish a policy concerning

diversity and disclose the policy or a summary

of that policy. The policy should include

requirements for the board to establish

measureable objectives for achieving gender

diversity and for the board to assess annually

both the objectives and progress in achieving

them.

The company has adopted a Diversity Policy

which can be accessed at www.induscoal.com.au.

3.3 Companies should disclose in each annual

report the measureable objectives for achieving

gender diversity set by the board in accordance

with the diversity policy and progress in

achieving them.

The information is disclosed in the Annual

Report.

3.4 Companies should disclose in each annual

report the proportion of women employees in

the whole organisation, women in senior

executive positions and women on the board.


Report.



3.

The diversity policy is disclosed in the Directors’

Report which forms part of the Annual Report.

The company’s policies can be accessed at

www.induscoal.com.au.

4. Safeguard integrity in financial reporting

4.1 The board should establish an audit committee. The company has established an Audit

Committee.

4.2 The audit committee should be structured so

that it:

• consists only of non-executive directors

• consists of a majority of independent

directors

• is chaired by an independent chair, who is

not chair of the board

• has at least three members.

The company has an Audit Committee which

consists of three members. The Board currently

does not have any independent or non-

executive directors. The Company Secretary acts

as secretary to the committee and attends its

meetings.

4.3 The audit committee should have a formal

charter.

The formal charter can be accessed at

www.induscoal.com.au.



4.

The members of the Audit Committee will be

disclosed in the Directors Report which forms

part of the Annual Report.

The Audit Committee will meet twice in each

year, before signing off the annual and half

year financial statements.

For

per

sona

l use

onl

y


Annual Report 2012


5. Make timely and balanced disclosure

5.1 Companies should establish written policies

designed to ensure compliance with ASX Listing

Rule disclosure requirements and to ensure

accountability at a senior executive level for

that compliance and disclose those policies or

a summary of those policies.

The company has adopted a Continuous

Disclosure Policy which can be accessed at



indicated in Guide to Reporting on Principle 5.

The information will be disclosed in the Annual

Report.

6. Respect the rights of shareholders

6.1 Companies should design a communications

policy for promoting effective communication

with shareholders and encouraging their

participation at general meetings and disclose

their policy or a summary of that policy.

The company has adopted a Shareholder

Communications Policy which can be accessed

at www.induscoal.com.au.



6.


Report.

7. Recognise and manage risk

7.1 Companies should establish policies for the

oversight and management of material business

risks and disclose a summary of those policies.

The company has adopted a Risk Management

Policy which can be accessed at

www.induscoal.com.au. This policy outlines the

key material risks faced by the company as

identified by the Board.

7.2 The board should require management to

design and implement the risk management and

internal control system to manage the

company’s material business risks and report to

it on whether those risks are being managed

effectively. The board should disclose that

management has reported to it as to the

effectiveness of the company’s management of

its material business risks.

The CEO/Executive Directors (equivalent) and

Chief Financial Officer (equivalent) report to the

Board on the areas they are responsible for,

including material business risks and provide an

annual written report to the Board summarizing

the effectiveness of the companies’ management

of material business risks.

7.3 The board should disclose whether it has

received assurance from the chief executive

officer (or equivalent) and the chief financial

officer (or equivalent) that the declaration

provided in accordance with section 295A of

the Corporations Act is founded on a sound

system of risk management and internal control

and that the system is operating effectively in

all material respects in relation to financial

reporting risks.

The Board receives assurance in the form of a

declaration, from the CEO/Executive Directors

and Chief Financial Officer (equivalent) as

required by the Corporations Act.


indicated in Guide to Reporting on Principle 7.


Report.

For

per

sona

l use

onl

y


Annual Report 2012


8. Remunerate fairly and responsibly

8.1 The board should establish a remuneration

committee.

The company has established a Remuneration

and Nomination Committee under a formal

charter.

8.2 The remuneration committee should be

structured so that it:

• consists of a majority of independent

directors

• is chaired by an independent director

• has at least three members

The company has a Remuneration Committee

which consists of three members. The Board

currently does not have any independent or

non-executive Directors. The Company Secretary

acts as secretary to the committee and attends

its meetings.

8.3 Companies should clearly distinguish the

structure of non-executive directors’

remuneration from that of executive directors

and senior executives.

The structure of non-executive Directors’

remuneration is clearly distinguished from that

of executive Directors and senior executives will

be described in the Directors’ Report which

forms part of the Annual Report.



8.


Report.

For

per

sona

l use

onl

y


Annual Report 2012

STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2012

Note

Consolidated 2012

$

Continuing operations

Other income 4 15,668

Interest received 64,934

80,602

Expenses

Administration expenses (434,056)

Loss before income tax expense (353,454)

Income tax expense 5 -

Net loss for the year (353,454)

Other comprehensive income

Exchange differences on translation of foreign operations (291,899)

Exchange differences on translation of foreign loan 292,050

Other comprehensive income for the year, net of tax 151

Total comprehensive loss for the year (353,303)

Loss per share

Basic loss per share (cents per share) 6 (0.78)

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

For

per

sona

l use

onl

y


Annual Report 2012

STATEMENT OF FINANCIAL POSITION as at 30 June 2012

Note

Consolidated

2012

$

ASSETS

Current Assets

Cash and cash equivalents 7 3,819,345

Trade and other receivables 8 9,601

Other assets 9 23,785

Total Current Assets 3,852,731

Non-Current Assets

Other assets 9 981

Deferred exploration expenditure 10 10,158,172

Total Non-Current Assets 10,159,153

TOTAL ASSETS 14,011,884

LIABILITIES

Current Liabilities

Trade and other payables 11 1,276,651

Total Current Liabilities 1,276,651

TOTAL LIABILITIES 1,276,651

NET ASSETS 12,735,233

EQUITY

Issued capital 12 13,088,536

Reserves 151

Accumulated losses (353,454)

TOTAL EQUITY 12,735,233

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

For

per

sona

l use

onl

y


Annual Report 2012

STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2012

Consolidated

Issued Capital Reserves Accumulated

Losses Total

Note $ $ $ $

Balance at beginning of year - - - -

Total comprehensive income for

the year -

151 (353,454) (353,303)

Issue of shares:

Ordinary shares 12 13,598,700 - - 13,598,700

Convertible performance shares 12 1 - - 1

Share issue costs 12 (510,165) - - (510,165)

Balance at end of year 13,088,536 151 (353,454) 12,735,233

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

For

per

sona

l use

onl

y


Annual Report 2012

STATEMENT OF CASH FLOWS for the year ended 30 June 2012

Note

Consolidated 2012

$

Cash flows from operating activities

Interest received 57,854

Payments to suppliers and employees (350,497)

Net cash outflow from operating activities 7 (292,643)

Cash flows from investing activities

Deferred exploration expenditure (3,975,567)

Payments for other assets (981)

Net cash outflow from investing activities (3,976,548)

Cash flows from financing activities

Proceeds from issue of shares 8,598,701

Share issue costs (510,165)

Net cash inflow from financing activities 8,088,536

Net increase in cash and cash equivalents 3,819,345

Cash and cash equivalents at the beginning of the financial year -

Cash at the end of the financial year 7 3,819,345

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

For

per

sona

l use

onl

y


Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

The financial statements of Indus Coal Ltd for the year ended 30 June 2012 were authorised for

issue in accordance with a resolution of the directors on 27 September 2012.

Indus Coal Ltd is a company limited by shares incorporated in Australia whose shares are publicly

traded on the Australian Securities Exchange and operating in Australia, Singapore and Indonesia.

Separate financial statements for Indus Coal Ltd as an individual entity are no longer presented as

the consequence of a change to the Corporations Act 2001, however, required financial

information for the company as an individual entity is included in Note 16.

The nature of operations and principal activities of the consolidated entity, comprising Indus Coal

Ltd and its subsidiaries, are described in the Directors’ Report.

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set

out below.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian

equivalents to International Financial Reporting Standards (AIFRSs), other authoritative

pronouncements of the Australian Accounting Standards Board, Urgent Issues consolidated entity

Interpretations and the Corporations Act 2001.

Australian Accounting Standards as issued by the Australian Accounting Standards Board and

International Financial Reporting Standards (IFRS) as issued by the International Accounting

Standards Board.

New Accounting Standards for Application in Future Periods

For the year ended 30 June 2012 the group has reviewed all of the new and revised Standards

and Interpretations issued by the AASB that are relevant to its operations and effective for annual

reporting periods beginning on or after 1 January 2012.

It has been determined by the Directors that there is no impact, material or otherwise, of the new

and revised Standards and Interpretations on its business and, therefore, no change is necessary

to group accounting policies.

The group has also reviewed all new Standards and Interpretations that have been issued but are

not yet effective for the year ended 30 June 2012. As a result of this review, the Directors have

determined that there is no impact, material or otherwise, of the new and revised Standards and

Interpretations on its business and, therefore, no change is necessary to group accounting policies.

For

per

sona

l use

onl

y


Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS (continued)

Historical cost convention

These financial statements have been prepared under the historical cost convention.

The company was incorporated on 13 September 2011, accordingly, as this is the first financial

report of the company, no comparative information is disclosed.

Critical Accounting Estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It

also requires management to exercise its judgement in the process of applying the group’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 3.

Functional and Presentation Currency

These consolidated financial statements are presented in Australian dollars, which is the company’s

functional currency and the functional currency of the majority of the consolidated entity’s current

financial transactions. The functional currency of the controlled entities is United States dollars.

Going Concern

The financial report has been prepared on a going concern basis, which contemplates the

continuity of normal business activities and the realisation of assets and the settlement of

liabilities in the normal course of business.

(b) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of

Indus Coal Ltd (“company” or “parent entity”) as at 30 June 2012 and the results of all

subsidiaries for the year then ended. Indus Coal Ltd and its subsidiaries together are referred to

in these financial statements as the “consolidated entity” or “group”.

Subsidiaries are all entities over which the group has the power to govern the financial and

operating policies, generally accompanying a shareholding of more than one-half of the voting

rights. The existence and effect of potential voting rights that are currently exercisable or

convertible are considered when assessing whether the group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the group.

They are de-consolidated from the date that control ceases.

The financial statements of subsidiaries are prepared for the same reporting period as the parent

company, using consistent accounting policies. The effects of all intercompany transactions,

balances and unrealised gains on transactions between entities in the group are eliminated in full.

(c) Change of accounting policy

There have been no changes in accounting policies in the period ended 30 June 2012.

For

per

sona

l use

onl

y


Annual Report 2012


(d) Deferred exploration expenditure Exploration and evaluation expenditures in relation to each separate area of interest are

recognised as an exploration and evaluation asset in the year in which they are incurred where

the following conditions are satisfied:

(i) the rights to tenure of the area of interest are current; and

(ii) at least one of the following conditions is also met:

(a) the exploration and evaluation expenditures are expected to be recouped through

successful development and exploration of the area of interest, or alternatively, by its

sale; or

(b) exploration and evaluation activities in the area of interest have not at the balance date

reached a stage which permits a reasonable assessment of the existence or otherwise of

economically recoverable reserves, and active and significant operations in, or in relation

to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to

explore, studies, exploratory drilling, trenching and sampling and associated activities and an

allocation of depreciation and amortised of assets used in exploration and evaluation activities.

General and administrative costs are only included in the measurement of exploration and

evaluation costs where they are related directly to operational activities in a particular area of

interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances

suggest that the carrying amount of an exploration and evaluation asset may exceed its

recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash

generating unit(s) to which it has been allocated being no larger than the relevant area of

interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment

loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate

of its recoverable amount, but only to the extent that the increased carrying amount does not

exceed the carrying amount that would have been determined had no impairment loss been

recognised for the asset in previous years.

Where a decision has been made to proceed with development in respect of a particular area of

interest, the relevant exploration and evaluation asset is tested for impairment and the balance is

then reclassified to development.

(e) 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.

(f) Plant and equipment

Plant and equipment is stated at historical cost less depreciation. Depreciation is calculated on a

straight line basis so as to write off the net cost of each asset during their expected useful life of

3 to 5 years.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not

shown in the accounts at a value in excess of the recoverable amount from assets.

For

per

sona

l use

onl

y


Annual Report 2012


(g) Investments and other financial assets Classification

The company classifies its investments in the following categories: financial assets at fair value

through profit and loss, loans and receivables, held-to-maturity investments and available-for-sale

financial assets. The classification depends on the purpose for which the investments were

acquired. Management determines the classification of its investments at initial recognition and, in

the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting

date.

Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss are financial assets held for trading. A

financial asset is classified in this category if acquired principally for the purpose of selling in the

short term. Assets in this category are classified as current assets.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that

are not quoted in an active market. They are included in current assets, except for those with

maturities greater than 12 months after 30 June 2012 which are classified as non-current assets.

Loans and receivables are included in trade and other receivables in the statement of financial

position.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments

and fixed maturities that the company’s management has the positive intention and ability to hold

to maturity. Held-to-maturity investments are included in non-current assets, except for those with

maturities less than 12 months from the reporting date, which are classified as current assets.

Available-for-sale financial assets

Available-for-sale financial assets, principally comprising marketable equity securities, are non-

derivatives that are either designated in this category or not classified in any of the other

categories. They are included in non-current assets unless management intends to dispose of the

investment within 12 months of 30 June 2012.

Recognition and derecognition

Regular purchases and sales of financial assets are recognised on trade date – the date on which

the company commits to purchase or sell the asset. Investments are initially recognised at fair

value plus tranasction costs for all financial assets not carried at fair value through profit or loss.

Financial assets carried at fair value through profit or loss are initially recognised at fair value and

transaction costs are expensed to the income statement. Financial assets are derecognised when

the rights to receive cash flows from the financial assets have expired or have been transferred

and the company has transferred substantially all the risks and rewards of ownership.

When securities are classified as available-for-sale are sold, the accumulated fair value adjustments

recognised in equity are included in the income statement as gains and losses from investment

securities.

For

per

sona

l use

onl

y


Annual Report 2012


Subsequent measurement

Loans and receivables and held-to-maturity investments are carried at amortised cost using the

effective interest method.

Available-for-sale financial assets at fair value through profit or loss are subsequently carried at

fair value. Gains or losses arising from changes in the fair value of the “financial assets at fair

value through profit or loss” category are presented in the income statement within other income

or other expenses in the period in which they arise. Dividend income from financial assets at fair

value through profit and loss is recognised in the income statement as part of income from

continuing operations when the company’s right to receive payment is established.

Fair value

The fair values of quoted investments are based on last trade prices. If the market for financial

assets is not active (and for unlisted securities), the company establishes fair value by using

valuation techniques.

Impairment

At each balance date the company assesses whether there is objective evidence that a financial

asset is impaired. In the case of equity securities classified as available-for-sale, a significant or

prolonged decline in the fair value of a security below its cost is considered as an indicator that

the securities are impaired. If any such evidence exists for available-for-sale financial assets, the

cumulative loss – measured as the difference between the acquisition cost and the current fair

value, less any impairment loss on that financial asset previously recognised in profit or loss – is

removed from equity and recognised in the income statement.

(h) Provisions and employee benefits

Provisions and employee benefits

Provisions are recognised when the group has a present obligation (either legal or constructive) as

a result of a past event, it is probable that an outflow of resources embodying economic benefits

will be required to settle the obligation and a reliable estimate can be made of the amount of the

obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure

required to settle the present obligation at 30 June 2012 using a discounted cash flow

methodology. The risks specific to the provision are factored into the cash flows and as such a

risk-free government bond rate relative to the expected life of the provision is used as a discount

rate. The increase in the provision resulting from the passage of time is recognised in finance

costs.

Employee leave benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating

sick leave expected to be settled within 12 months of the reporting date are recognised in respect

of employees’ services up to the reporting date. They are measured at the amounts expected to

be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised

when the leave is taken and are measured at the rates paid or payable.

For

per

sona

l use

onl

y


Annual Report 2012


(i) Share based payments

The company provides benefits to directors, employees, consultants and other advisors of the

company in the form of share-based payments, whereby the directors, employees, consultants and

other advisors render services in exchange for shares or rights over shares (equity-settled

transactions).

The cost of these equity-settled transactions is measured by reference to the fair value of the

equity instruments at the date at which they are granted. The fair value is determined by an

external valuer using a Black-Scholes model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other

than conditions linked to the market price of the shares of the company if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in

equity, over the period in which the performance and/or service conditions are fulfilled, ending on

the date on which the relevant recipient becomes fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-settled transactions at each reporting date until

vesting date reflects:

� the extent to which the vesting period has expired, and

� the company’s best estimate of the number of equity instruments that will ultimately vest.

No adjustment is made for the likelihood of market performance conditions being met as the

effect of these conditions is included in the determination of fair value at grant date. The income

statement charge or credit for a period represents the movement in cumulative expense

recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting

is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if

the terms had not been modified. In addition, an expense is recognised for any modification that

increases the total fair value of the share-based payment arrangement, or is otherwise beneficial

to the recipient, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,

and any expense not yet recognised for the award is recognised immediately. However, if a new

award is substituted for the cancelled award and designated as a replacement award on the date

that it is granted, the cancelled and new award are treated as if they were a modification of the

original award, as described in the previous paragraph.

For

per

sona

l use

onl

y


Annual Report 2012


(j) Earnings per share Basic earnings per share is determined by dividing the profit (loss) after income tax attributable to

equity holders of the company by the weighted average number of ordinary shares outstanding

during the year.

(k) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and

measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as shares in listed

companies) is based on quoted market prices at 30 June 2012.

The nominal value, less any estimated credit adjustments, of trade receivables and payables are

assumed to approximate their fair value.

(l) Impairment of assets

At each reporting date the consolidated entity reviews the carrying amounts of its tangible assets

to determine whether there is any indication that those assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated in order to

determine the extent of the impairment loss (if any).

(m) Trade and other payables

Trade payables and other accounts payable are recognised when the consolidated entity becomes

obliged to make future payments resulting from the purchase of goods and services.

(n) Revenue recognition

Interest income is recognised on a time proportionate basis that takes into account the effective

yield on the financial assets.

(o) Foreign currency

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of

the transaction. Monetary assets and liabilities denominated in foreign currencies at the beginning

of the reporting period are translated to Australian dollars at the foreign exchange rate ruling at

that date. Foreign exchange differences arising on translation are recognised in the income

statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a

foreign currency are translated using the exchange rate at the date of the transaction. Non-

monetary assets and liabilities denominated in foreign currencies that are stated at fair value are

translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was

determined.

For

per

sona

l use

onl

y


Annual Report 2012


(p) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to

the chief operating decision maker (“management approach”). The chief operating decision maker,

who is responsible for allocating resources and assessing performance of the operating segments,

has been identified as the board of directors.

(q) Income tax

The income tax expense or revenue for the year is the tax payable on the current year’s taxable

income based on the notional income tax rate, adjusted by changes in deferred tax assets and

liabilities attributable to temporary differences between tax bases of assets and liabilities and their

carrying amounts in the financial statements, and to unused tax losses.

A deferred tax asset for unused tax losses is recognised only if it is probable that future taxable

amounts will be available to utilise losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset

current tax assets and liabilities and when the deferred tax balances relate to the same taxation

authority. Current tax assets and liabilities are offset where the entity has a legally enforceable

right to offset and intends either to settle on a net basis, or to realise the assets and settle the

liability simultaneously.

3. SIGNIFICANT 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 and estimates on historical

experience and on other various factors it believes to be reasonable under the circumstances, the

results of which form the basis of the carrying values of assets and liabilities that are not readily

apparent from other sources. Actual results may differ from these estimates under different

assumptions and conditions.

Management has identified the following critical accounting policies for which significant

judgements, estimates and assumptions are made. Actual results may differ from these estimates

under different assumptions and conditions and may materially affect financial results or the

financial position reported in future periods.

Further details of the nature of these assumptions and conditions may be found in the relevant

notes to the financial statements.

For

per

sona

l use

onl

y


Annual Report 2012


Significant accounting judgements

Determination of mineral resources

The determination of mineral resources impacts the accounting for asset carrying values. The

group estimates its mineral resources in accordance with the Australian Code for Reporting of

Exploration Results, Mineral Resources and Ore Reserves 2004 (the ‘JORC’ Code). The information

on mineral resources was prepared by or under the supervision of Competent Persons as defined

in the JORC Code. The amounts presented are based on the mineral resources determined under

the JORC Code.

There are numerous uncertainties inherent in estimating mineral resources and assumptions that

are valid at the time of estimation may change significantly when new information becomes

available.

Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates

may change the economic status of reserves and may ultimately result in reserves being restated.

Significant accounting estimates and assumptions

Share based payment transactions

The group measures the cost of equity-settled share based payment transactions with employees

by reference to the fair value of the equity instruments at the grant date. The fair value is

determined by using a recognised option valuation model. The accounting estimates and

assumptions relating to equity-settled share based payments would have no impact on the carrying

amounts of assets and liabilities within the next annual reporting period but may impact expenses

and equity.

Impairment of capitalised deferred exploration expenditure

The future recoverability of capitalised deferred exploration expenditure is dependent on a number

of factors, including whether the group decides to exploit the related lease itself or, if not, whether

it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources,

future technological changes, which could impact the cost of mining, future legal changes

(including changes to environmental restoration obligations) and changes to commodity prices.

To the extent that capitalised deferred exploration expenditure is determined not to be recoverable

in the future, profits and net assets will be reduced in the period in which this determination is

made.

In addition, deferred exploration expenditure is capitalised if activities in the area of interest have

not yet reached a stage that permits a reasonable assessment of the existence or otherwise of

economically recoverable reserves. To the extent it is determined in the future that this capitalised

expenditure should be written off, profits and net assets will be reduced in the period in which this

determination is made.

For

per

sona

l use

onl

y


Annual Report 2012


Consolidated

2012 $

4. OTHER INCOME

Foreign exchange gains 15,668

5. INCOME TAX

(a) Income tax expense in loss

Current tax expense -

The prima facie income tax on the pre-accounting loss from operations

reconciles to the income tax expense in the financial statements as

follows:

Reconciliation

Loss before tax from continuing operations (353,454)

Income tax expense calculated at 30% (106,036)

Effect of unused tax losses not recognised as deferred tax assets 106,036

-

(b) Deferred tax assets comprise:

Deferred tax assets have not been recognised in respect of the following

items:

Tax losses 353,454

(c) Unutilised Australian tax losses 353,454

The group has no franking credits to offset against future taxable income.

No income tax expense has been provided in the accounts because the company has an operating

loss for the year. No future tax benefit attributable to tax losses has been brought to account as

recovery is not certain or assured.

The benefit will only be obtained if the company derives future assessable income of a nature and

of an amount sufficient to enable the benefit to be realised, continues to comply with the

conditions for deductibility imposed by taxation legislation and there are no changes in tax

legislation adversely affecting the consolidated entity in realising the benefit.

For

per

sona

l use

onl

y


Annual Report 2012


Consolidated

2012 $

6. LOSS PER SHARE

(a) Basic loss per share – cents per share

Loss attributable to the ordinary equity holders of the

company.

(0.78)

(b) Diluted earnings per share

None of the options on issue as at balance date are

included in the calculation of the weighted average number

of shares for diluted earnings per share as they are

considered anti-dilutive as the group made a loss for the

year.

(c) Weighted average number of shares used as the denominator

Weighted average number of ordinary shares outstanding

during the year used in calculation of basic loss per share 45,197,393

7. CASH AND CASH EQUIVALENTS

Cash as at the end of the financial year as shown in the

statement of cash flows is reconciled to the related items in

the statement of financial position as follows:

Cash at bank and on deposit 3,819,345

Balance per statement of cash flows 3,819,345

(a) Reconciliation of the loss for the year to net cash flows

from operating activities

Operating loss (353,454)

Add (less) non-cash items:

Foreign exchange gain (15,668)

Decrease/increase in operating assets and liabilities:

Trade and other receivables (9,601)

Other assets (23,785)

Trade and other payables 109,865

Net cash (outflow) from operating activities (292,643)

(b) Non-cash financing activities

Acquisition of assets via shares 5,000,000

For

per

sona

l use

onl

y


Annual Report 2012


Consolidated

2012 $

8. TRADE AND OTHER RECEIVABLES

Current Assets

GST refundable 9,601

9,601

None of the receivables are past due and therefore are not impaired.

9. OTHER ASSETS

Current

Prepaid expenses 16,705

Accrued income 7,080

23,785

Non Current

Formation costs 981

10. DEFERRED EXPLORATION EXPENDITURE

Costs carried forward in respect of:

Exploration and evaluation phase – at cost 10,158,172

A reconciliation of the carrying amounts of deferred

exploration expenditure is set out below:

Balance at beginning of year -

Exploration assets acquired on the acquisition of Indus Coal

Singapore Pte Ltd 7,848,956

Exploration costs incurred during the year 2,309,216

Total deferred exploration expenditure 10,158,172

The recoupment of costs carried forward in relation to areas of interest in the exploration and

evaluation phase is dependent on the successful development and commercial exploitation or sale

of the respective areas.

Consolidated 2012

$

11. TRADE AND OTHER PAYABLES

Trade payables 1,216,651

Accrued expenses 60,000

1,276,651

For

per

sona

l use

onl

y


Annual Report 2012


Consolidated 2012

$

12. ISSUED CAPITAL

Ordinary and Convertible Preference Shares

(a) Issued and Fully Paid 13,088,536

(b) Movement in ordinary shares on issue

Fully paid, ordinary shares at the beginning of the year -

Fully paid, ordinary shares issued during the year:

Seed capital (26,780,005 fully paid, ordinary shares) 1,598,700

Acquisition of assets (25,000,000 fully paid, ordinary shares) 5,000,000

Initial public offer (35,000,000 fully paid, ordinary shares) 7,000,000

13,598,700

Transaction costs of issuing shares (510,165)

Issue of ordinary shares, net of transaction costs 13,088,535

86,780,005 fully paid, ordinary shares at 30 June 2012 13,088,535

Movement in convertible performance shares on issue

Fully paid, convertible performance shares at the beginning of the

year -

Fully paid, convertible performance shares issued during the year:

1,000 1

Transaction costs of issuing shares -

Issue of convertible performance shares, net of transaction costs 1

1,000 fully paid, convertible performance shares at 30 June 2012 1

Total Issued Capital at end of year 13,088,536

(c) Rights attaching to ordinary shares and convertible performance shares

Ordinary shares

i. Ordinary shares participate in dividends and the proceeds on winding up of Indus Coal Ltd in

proportion to the number of shares held.

ii. At shareholder meetings, when a poll is called, each ordinary share is entitled to one vote

otherwise each shareholder has one vote on a show of hands.

Convertible performance shares

i. Convertible performance shares do not entitle the holder to vote on any resolutions

proposed at a general meeting of shareholders of the company.

ii. Convertible performance shares do not entitle the holder to any dividends.

iii. Convertible performance shares participate in the surplus profits or assets of the company

upon winding up of the company only to the extent of $0.001 per convertible performance

share.

For

per

sona

l use

onl

y


Annual Report 2012


iv. Convertible performance shares are not transferable and convert on the following basis:

(a) Each Class B Convertible Performance Share, subject only to any necessary Shareholder approvals for the purposes of item 7 Section 611 of the Corporations Act (Cth), will

convert (by way of a variation of their rights) to 50,000 fully paid ordinary shares upon

the Company announcing to ASX that it has defined an indicated and/or measured

resource under the Joint Ore Reserves Committee Code (JORC) of not less than fifty (50)

million tonnes of coal across all the tenements owned by the Company (Milestone).

(b) Each Class C Convertible Performance Share, subject only to any necessary Shareholder approvals for the purposes of item 7 Section 611 of the Corporations Act (Cth), will


the Company announcing to ASX that it has defined an indicated and/or measured

resource under the Joint Ore Reserves Committee Code (JORC) of not less than one

hundred (100) million tonnes of coal across all the tenements owned by the Company

(Milestone).

(c) Each Class D Convertible Performance Share, subject only to any necessary Shareholder approvals for the purposes of item 7 Section 611 of the Corporations Act (Cth), will


the Company extracting and selling an average of 50,000 tonnes of coal per calendar

month from tenements owned by the Company for a period of 3 consecutive calendar

months (Milestone).

(d) Each Class E Convertible Performance Share, subject only to any necessary Shareholder approvals for the purposes of item 7 Section 611 of the Corporations Act (Cth), will


the Company extracting and selling an average of 100,000 tonnes of coal per calendar

month from tenements owned by the Company for a period of 3 consecutive calendar

months (Milestone).

(e) If the Milestone is not achieved by 31 October 2016, then the Convertible Performance Shares shall each automatically convert into 1 fully paid ordinary share in the capital of

the Company.

(d) Nature and purpose of reserves

Foreign currency translation reserve

The foreign currency translation reserve comprises all foreign currency differences arising from the

translation of the financial statements of foreign operations.

For

per

sona

l use

onl

y


Annual Report 2012


13. SEGMENT INFORMATION

The group operated predominantly in one industry and in two geographic locations. The operations

of the group consisted of mineral exploration within Australia and Indonesia with the chief operating

decisions being made by the board of directors.

Australia Indonesia Consolidated

$ $ $

Year ended 30 June 2012

Segment revenue

Other income 15,668 - 15,668

Interest received 64,934 - 64,934

80,602 - 80,602

Segment loss (286,760) (66,694) (353,454)

Segment assets 3,852,731 10,159,153 14,011,884

Segment liabilities 109,865 1,166,786 1,276,651

14. RELATED PARTIES

(a) Controlled Entities

The consolidated financial statements include the financial statements of Indus Coal Ltd and the

following subsidiaries:

Equity Interest 2012

%

Indus Coal Singapore Pte Ltd (incorporated in Singapore) 100

PT Mukomuko Baratama Sajahtera (incorporated in Indonesia) 100

Balances and transactions between the company and its subsidiaries, which are related parties of

the company, have been eliminated on consolidation and are not disclosed in this note. Details of

transactions between the group and other related parties are disclosed below.

(b) Key management personnel

Details relating to key management personnel, including remuneration paid, are included in Note

17 and the audited remuneration report section of the Directors’ Report.

For

per

sona

l use

onl

y


Annual Report 2012


(c) Transactions with other related parties

i. The company has entered into a consultancy agreement with Satomi Pty Ltd (an entity

controlled by Scott Douglas) and Mr Scott Douglas (Douglas Consultancy Agreement). Under

the agreement, Mr Parker is engaged by the company to provide services in the capacity of

Executive Director. Mr Douglas has received or is entitled to receive a total of $20,000 (plus

GST) for the period to 30 June 2012.

ii. The company has entered into a consultancy agreement with Venture Works JDK Pty Ltd (an

entity controlled by John Kenny) and Mr John Kenny. Under the agreement, Mr Kenny is

engaged by the company to provide services in the capacity of Executive Director. Mr Kenny

has received or is entitled to receive a total of $20,000 (plus GST) for the period to 30

June 2012.

iii. The company has entered into a consultancy agreement with Auspicious Glory Universal Ltd

(an entity controlled by Vinay Hariani) and Mr Vinay Hariani. Under the agreement, Mr

Hariani is engaged by the company to provide services in the capacity of Executive Director.

Mr Hariani has received or is entitled to receive a total of $20,000 (plus GST) for the period

to 30 June 2012.

iv. The group has entered into an agreement with Param Energy Pte Ltd (Param), a company

associated with Vinay Hariani, to reimburse it for costs incurred in relation to the application

for required environmental documentation and permits and completion of a preliminary

feasibility study in relation to the MukoMuko Project. The amount paid to Param during the

year was $1,040,674.

v. The group has entered into an agreement with PT Anugrah Prima Coalindo (APC), a company

associated with Vinay Hariani, to provide exploration and administration services in relation

to the MukoMuko Project under terms and conditions no more favourable than those the

group would have adopted if dealing at arm's length. The amount paid or payable to APC

during the year was $1,280,854.

vi. The company has entered into a consultancy agreement with Brown Sugar Trading Pty Ltd

(an entity controlled by Ashish Patel) and Mr Ashish Patel. Under the agreement, Mr Patel is

engaged by the company to provide services in the capacity of Executive Director. Mr Patel

has received or is entitled to receive a total of $20,000 (plus GST) for the period to 30

June 2012.

vii. The company has entered into a consultancy agreement with Treypark Pty Ltd as Trustee for

the Three P Trust (an entity controlled by Andrew Parker) and Mr Andrew Parker (Parker

Consultancy Agreement). Under the agreement, Mr Parker is engaged by the company to

provide services in the capacity of Executive Director. Mr Parker has received or is entitled

to receive a total of $20,000 (plus GST) for the period to 30 June 2012.

15. COMMITMENTS FOR EXPENDITURE

Mineral Tenement Leases

In respect of the Indonesian tenements, the minimum annual outlay required to maintain current

rights of tenure which expire in August 2016 are nominal. Future expenditure is dependent on the

success of pre-feasibility work that is currently being undertaken. It is anticipated that, subject to

achieving certain milestones, the company will spend a minimum of $1,000,000 in the year to

June 2013.

For

per

sona

l use

onl

y


Annual Report 2012


2012 $

16. AUDITORS’ REMUNERATION

During the year the following fees were paid or payable for services

provided by the auditors:

(a) Audit services

Audit and review of financial reports under the Corporations Act 2001 -

(b) Other services

Income tax return preparation -

Total remuneration of auditors -

The company has received notification from the company's auditor that he satisfies the

independence criterion and that there have been no contraventions of the auditor independence

requirements of the Corporations Act 2001 or any applicable code of professional conduct in

relation to the audit. The company is satisfied that the non-audit services provided is compatible

with the general standard of independence for auditors imposed by the Corporations Act 2001.

17. KEY MANAGEMENT PERSONNEL

(a) Details of Key Management Personnel

The key management personnel (KMP) of Indus Coal Ltd during the year were:








(b) Remuneration Committee

Messrs Douglas, Kenny and Parker are members of the Remuneration Committee. As this is the

first financial report since incorporation there have not been any meetings held of the

Remuneration Committee.

2012

$

(c) Compensation for Key Management Personnel

Short term employee benefits 100,000

Post-employment benefits -

Share based payments -

Total compensation 100,000

Indus Coal Ltd has applied the option to transfer Key Management Personnel disclosures required

by AASB 124 Related Party Disclosures paragraphs Aus 25.4 to Aus 25.7.2 to the Remuneration

Report section of the Directors’ Report. These transferred disclosures have been audited.

For

per

sona

l use

onl

y


Annual Report 2012


(d) Share holdings of Key Management Personnel

30 June 2012 Ordinary Shares Convertible Performance Shares

Directors

Balance

at

beginning

of year

Granted as

remuner-

ation

Net change

other

Balance at

end of year

Balance at

beginning

of year

Granted as

remuner-

ation

Net change

other

Balance at

end of year

S Douglas - - 4,200,001 4,200,001 - - 40 402

J Kenny - - 3,200,001 3,200,001 - - 40 402

V Hariani1 - - 29,700,001 29,700,001 - - 800 8002

A Patel - - 3,200,001 3,200,001 - - 40 402

A Parker - - 3,200,001 3,200,001 - - 40 402

L Balchandani - - - - - - -

V Bhatia - - - - - - -

- - 43,500,005 43,500,005 - - 960 960

Notes: 1. These figures include equities held by Apex Code Holdings Ltd, a company that is controlled by Mr Hariani. To the

extent that Apex Code Holdings Ltd derives a profit from these holdings, Mr Patel (via Vitarag Pty Ltd ATF Kailash

Trust) and Mr Kenny (via JDK Nominees Pty Ltd ATF the Kenny Capital Trust) will participate in the profits earned by

Apex Code Holdings Ltd.

2. This figure is comprised of equal numbers of Class B, Class C, Class D and Class E Convertible

Performance Shares.

Option holdings of Key Management Personnel

30 June 2012

Balance at

beginning

of period

Granted as

remuner-

ation

Options

exercised

Net change

other

Balance at

end of

period

Vested at 30 June 2012

Directors Total Exercisable

Not

exercise-

able

S Douglas - - - 1,000,000 1,000,000 1,000,000 - 1,000,000

J Kenny - - - 1,000,000 1,000,000 1,000,000 - 1,000,000

V Hariani1 - - - 1,000,000 1,000,000 1,000,000 - 1,000,000

A Patel - - - 1,000,000 1,000,000 1,000,000 - 1,000,000

A Parker - - - 1,000,000 1,000,000 1,000,000 - 1,000,000

L Balchandani - - - - - - - -

V Bhatia - - - - - - - -

- - - 5,000,000 5,000,000 5,000,000 - 5,000,000

Note 1: These figures include equities held by Apex Code Holdings Ltd, a company that is controlled by Mr Hariani. To the

extent that Apex Code Holdings Ltd derives a profit from these holdings, Mr Patel (via Vitarag Pty Ltd ATF Kailash

Trust) and Mr Kenny (via JDK Nominees Pty Ltd ATF the Kenny Capital Trust) will participate in the profits earned by

Apex Code Holdings Ltd. For

per

sona

l use

onl

y


Annual Report 2012


18. PARENT ENTITY FINANCIAL INFORMATION

2012 $

Current assets 3,852,731

Non-current assets 8,992,367

Total assets 12,845,098

Current liabilities 109,865

Non-current liabilities -

Total Liabilities 109,865

12,735,233

EQUITY

Issued capital 13,088,536

Accumulated losses (353,303)

TOTAL EQUITY 12,735,233

Loss for the year (353,303)

Other comprehensive income -

Total comprehensive income (353,303)

19. ASSET ACQUISITION

On 7 March 2012 Indus Coal Singapore Pte Ltd, a wholly owned subsidiary of Indus Coal Ltd,

acquired 100% of the voting shares of PT Mukomuko Baratama Sajahtera, a company incorporated

in Indonesia.

The total cost of the combination was $7,848,956 and comprised an issue of equity instruments

and cash consideration. Indus Coal Ltd issued 25,000,000 ordinary shares with a fair value of

$5,000,000 each, based on the price shares of Indus Coal Ltd were subscribed for via the Initial

Public Offering.

Details of the net assets acquired and purchase consideration are as follows:

Fair value

$ Net assets acquired

Exploration expenditure 7,848,956

Purchase consideration

Cash 2,848,956

Equity instruments issued 5,000,000

7,848,956 For

per

sona

l use

onl

y


Annual Report 2012


20. CONTINGENT LIABILITIES

The directors are not aware of any contingent liabilities that may have arisen from the group’s

operations as at 30 June 2012.

21. EVENTS AFTER THE REPORTING PERIOD

There have been no matters or circumstances that have arisen since the end of the financial year

which significantly affected or may significantly affect:

• the consolidated entity's operations in future years; or

• the results of those operations in future years; or

• the consolidated entity's state of affairs in future years.

22. FINANCIAL INSTRUMENTS

Overview – Risk Management

This note presents information about the consolidated entity’s exposure to credit, liquidity and

market risks, its objectives, policies and processes for measuring and managing risk and the

management of capital.

The consolidated entity does not use any form of derivatives as it is not at a level of exposure

that requires the use of derivatives to hedge its exposure. Exposure limits are reviewed by

management on a continuous basis. The consolidated entity does not enter into or trade financial

instruments, including derivative financial instruments, for speculative purposes.

The board of directors of the company has overall responsibility for the establishment and

oversight of the risk management framework. Management monitors and manages the financial

risks relating to the operations of the company and the consolidated entity through regular

reviews of the risks.

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 and arises principally from the

consolidated entity’s receivables from customers and investment securities. At 30 June 2012 there

were no significant concentrations of credit risk.

Cash and cash equivalents

The consolidated entity limits its exposure to credit risk by only investing in liquid securities and

only with counterparties that have an acceptable credit rating.

Trade and other receivables

As the consolidated entity operates primarily in exploration activities, it does not have trade

receivables and therefore is not exposed to credit risk in relation to trade receivables.

The consolidated entity where necessary establishes an allowance for impairment that represents

its estimate of incurred losses in respect of other receivables and investments. Management does

not expect any counterparty to fail to meet its obligations.

For

per

sona

l use

onl

y


Annual Report 2012


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 consolidated entity’s approach to managing liquidity is to ensure,

as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under

both normal and stressed conditions, without incurring unacceptable losses or risking damage to

the consolidated entity’s reputation.

The consolidated entity manages liquidity risk by maintaining adequate cash reserves from funds

raised in the market and by continuously monitoring forecast and actual flows. The consolidated

entity does not have any external borrowings.

The following are the contractual maturities of financial liabilities, including estimated interest

payments and excluding the impact of netting agreements:

Consolidated Entity

30 June 2012

Carrying

amount

Contractual cash

flow

6 months

or less

6-12

months

$ $ $ $

Trade and other

payables 1,276,651 1,276,651 1,276,651 -

Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates

and equity prices will affect the consolidated entity’s income or the value of its holdings of

financial instruments. The objective of market risk management is to manage and control market

risk exposure within acceptable parameters, while optimising the return.

Currency Risk

The consolidated entity’s exposure to currency risk at 30 June 2012 on financial assets

denominated in United States dollars was $nil. The effect of future movements in the exchange

rate for United States dollars on the consolidated entity’s financial position and results of

exploration and evaluation activities is likely to be negligible.

The parent entity’s exposure to currency risk at 30 June 2012 on financial assets denominated in

United States dollars, being loans made to controlled entities to fund exploration activities in

Indonesia, which amounts are not hedged. The effect of future movements in the exchange rate

for United States dollars on the parent entity’s financial position and results of exploration and

evaluation activities is likely to be negligible.

Interest Rate Risk

The consolidated entity is exposed to interest rate risk (primarily on its cash and cash

equivalents), which is the risk that a financial instrument’s value will fluctuate as a result of

changes in the market interest rates on interest-bearing financial instruments. The consolidated

entity does not use derivatives to mitigate these exposures.

The company adopts a policy of ensuring that as far as possible it maintains excess cash and

cash equivalents on short term deposit at interest rates maturing over 90 day rolling periods.

For

per

sona

l use

onl

y


Annual Report 2012


Profile

At the reporting date the interest rate profile of the consolidated

entity’s interest-bearing financial instruments was:

Carrying Amount

2012 $

Fixed rate instruments

Financial assets – cash and cash equivalents

-

Variable rate instruments

Financial assets – cash and cash equivalents 3,819,345

Weighted average interest rate 4.32%

Fair value sensitivity analysis for fixed rate instruments

The company does not account for any fixed rate financial assets and liabilities at fair value

through profit or loss or through equity, therefore a change in interest rates at the reporting date

would not affect profit or loss or equity.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points 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 remain constant.

Consolidated Entity

Profit or loss Equity

100bp Increase

$

100bp Decrease

$

100bp Increase

$

100bp Decrease

$

30 June 2012

Variable rate instruments 38,193 (38,193) 38,193 (38,193)

Fair Values

The fair values of all financial assets and liabilities of the group approximated their carrying

values.

Commodity Price Risk

The consolidated entity operates primarily in the exploration and evaluation phase and accordingly

the consolidated entity’s financial assets and liabilities are subject to minimal commodity price risk.

For

per

sona

l use

onl

y


Annual Report 2012


Capital Management

The consolidated entity’s objectives when managing capital are to safeguard the consolidated

entity’s ability to continue as a going concern, so as to maintain a strong capital base sufficient

to maintain future exploration and development of its projects. In order to maintain or adjust the

capital structure, the consolidated entity may return capital to shareholders, issue new shares or

sell assets to reduce debt. The consolidated entity’s focus has been to raise sufficient funds

through equity to fund exploration and evaluation activities. The consolidated entity monitors

capital on the basis of the gearing ratio, however there are no external borrowings as at balance

date.

There were no changes in the consolidated entity’s approach to capital management during the

year. Risk management policies and procedures are established with regular monitoring and

reporting.

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

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a worldwide organisation of accounting firms and business advisers.

52

INDEPENDENT AUDITOR’S REPORT To the members of Indus Coal Limited

Report on the Financial Report

We have audited the accompanying financial report of Indus Coal Limited (“the company”), which comprises the consolidated statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for the consolidated entity. The consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

In Note 2(a), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the consolidated financial report complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

For

per

sona

l use

onl

y

http://www.hlb.com.au/

53

Matters relating to the electronic presentation of the audited financial report and remuneration report

This auditor’s report relates to the financial report and remuneration report of Indus Coal Limited for the financial year ended 30 June 2012 published in the annual report and included on the company’s website. The company’s directors are responsible for the integrity of the company’s website. We have not been engaged to report on the integrity of this website. The auditor’s report refers only to the financial report and remuneration report. It does not provide an opinion on any other information which may have been hyperlinked to/from the financial report and remuneration report. If users of the financial report and remuneration report are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial report and remuneration report to confirm the information contained in this website version of the financial report and remuneration report.

Auditor’s opinion In our opinion:

(a) the financial report of Indus Coal Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June

2012 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations

2001; and (b) the financial report also complies with International Financial Reporting Standards as

disclosed in Note 2(a).

Report on the Remuneration Report

We have audited the remuneration report included in the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion the remuneration report of Indus Coal Limited for the year ended 30 June 2012 complies with section 300A of the Corporations Act 2001.

HLB MANN JUDD Chartered Accountants

Perth, Western Australia N G NEILL 28 September 2012 Partner

For

per

sona

l use

onl

y


Annual Report 2012

ADDITIONAL ASX INFORMATION

The shareholder information set out below was applicable as at 25 September 2012.

1. Distribution of Shareholders

(a) Analysis of number of shareholders by size of holding.

Category of Holding Number of Holders Number of Shares % of

capital

1 – 1,000 7 26 0.00%

1,001 – 5,000 6 20,003 0.02%

5,001 – 10,000 64 632,823 0.73%

10,001 – 100,000 271 14,454,205 16.66%

100,001 and over 81 71,672,948 82.59%

Total 429 86,780,005 100.00%

(b) Non-marketable parcels

There are 10 shareholders with less than a marketable parcel of ordinary shares.

2. Twenty Largest Shareholders The names of the twenty largest shareholders by account holding of quoted ordinary shares are

listed below:

Shareholder Holding %

Apex Code Holdings Ltd 27,700,000 31.92%

Macdermott, Katherine 4,200,000 4.84%

Vitarag Pty Ltd 3,200,000 3.69%

JDK Nom Pty Ltd 3,200,000 3.69%

Treypark Pty Ltd 3,033,333 3.50%

Celtic Cap Pte Ltd 2,990,832 3.45%

Hariani, Vinay Parmanand 2,000,000 2.30%

John Wardman & Assoc Pty Ltd 1,650,000 1.90%

Gejaso Pte Ltd 1,415,000 1.63%

Fishrking Aust Pty Ltd 1,000,000 1.15%

Paterson, James Willcock 660,000 0.76%

Driscoll, Andrew Tasman 660,000 0.76%

Snaith, Michael Lachman 660,000 0.76%

Jenne, Edward Thomas 660,000 0.76%

Eddington, Kathleen Mary 641,143 0.74%

Balion Pty Ltd 620,000 0.71%

Mulato Nom Pty Ltd 500,000 0.58%

Battaglia, Mark 500,000 0.58%

Chowder Bay Pty Ltd 500,000 0.58%

Ziziphus Pty Ltd 500,000 0.58%

For

per

sona

l use

onl

y


Annual Report 2012

ADDITIONAL ASX INFORMATION

(continued)

3. Substantial Shareholders

As at 25 September 2012, the Company has received substantial notices from the following

shareholders:

Name of Shareholder No. of Shares % of Issued Capital at

the Time of Notice

Apex Code Holdings Ltd 27,700,000 31.92%

4. Voting Rights

At a general meeting of shareholders:

(a) On a show of hands, each person who is a member or sole proxy has one vote.

(b) On a poll, each shareholder is entitled to one vote for each fully paid share.

For

per

sona

l use

onl

y

for personal use only - australian securities exchange · he also manages the financial and day-to-...

Documents