Preliminary Results

Spitfire Oil Limited (“the Company”) and its wholly owned subsidiary, Spitfire Oil Pty Ltd (“Spitfire”), together (“the Group”), recorded a loss before tax for the year ended 30th June 2016 of A$623,614 (2015 A$596,094), after providing $275,194 (2015: $288,217) for diminution in value of the Salmon Gums tenements. The Group benefited from interest receivable of A$125,328 (2015 A$144,291). Operating costs of A$473,748 (2015 A$452,168) were incurred. A$275,194 (2015 A$288,217) was incurred and capitalised on licence fees and tenement management.

The auditors have opined that they have been unable to obtain sufficient evidence to support the directors’ assessment that the recoverable amount of the mineral resources asset is at least equal to its carrying value. As with any valuation an assessment of the carrying value / recoverable amount of a mineral deposit yet to be mined it is highly subjective issue. The directors, supported by independent advice, remain of the opinion that the recoverable amount of the Salmon Gums tenements is at least equal to the carrying value in the financial statements, being the same as that reported in the financial statements to 30th June 2015, upon which the auditors opinion was not qualified, and in light of increase in the oil price in 2016 of some $10 per barrel.

Operations

The Salmon Gums Lignite Project remains on hold and the Retention Licence on which it occurs has been renewed for a further year until September 2017.

The directors continue to pursue potential joint ventures for the development of facilities to process the Salmon Gums lignite.

Although a resource has been defined, and title to the Salmon Gums mineral tenements has been secured for the foreseeable future, with active exploration work now suspended and with due consideration to market prices for fuel products the directors are of the view that the carrying value of the Salmon Gums mineral tenements continues to be $4,340,000, in conformity with a review undertaken by independent consultants for the purposes of this report.

The Company has continued to keep its running costs to a minimum while reviewing possible new projects. A number have been considered during the year but have so far not met requirements.

Chairman’s Statement

To say the Oil & Gas industry continues to suffer would be an understatement and nowhere more so than in the junior listed market. The prolonged drop in oil and gas prices has had a profound effect on the junior exploration and production sector. With the world turning ever more to renewable energy sources, the implicit and explicit taxation of carbon by a larger number of governments and the over supply of oil from the income strapped nations of OPEC, Iran and fracked oil from the USA, there seems little hope of a recovery in the foreseeable future. Nevertheless, for the moment, we continue to retain our Salmon Gums project as a hedge against a possible rise in the oil price, however unlikely that seems.

The Company has been investigating acquisitions and projects in the oil and gas sector for some years now, with no success. The projects have generally been uneconomic or unfinanceable. Now is the time to be realistic, swallow our pride and focus the Company’s attention to projects in the hard rock mining sector which have a looming supply side deficit or other compelling economic argument. Even this task will be difficult. Real projects providing real returns are extraordinarily difficult to find and even more difficult to acquire. Your board has extensive expertise in this area and will endeavour to focus all its efforts in finding a project worthy of the patience and loyalty the shareholders have shown over these many years. Hopefully, better news will be forthcoming in 2017.

Spitfire Oil Limited
Statement of Profit or Loss and Other Comprehensive Income

YEAR ENDED 30 JUNE 2016 2016 2015
A$ A$
OTHER INCOME 125,328 144,291
EXPENDITURE
Corporate expenses (346,012) (369,325)
Other expenses (127,736) (82,843)
OPERATING LOSS (348,420) (307,877)
Impairment – exploration and evaluation costs (275,194) (288,217)
LOSS BEFORE INCOME TAX (623,614) (596,094)
INCOME TAX
LOSS AFTER INCOME TAX (623,614) (596,094)
OTHER COMPREHENSIVE INCOME, NET OF TAX
LOSS AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF SPITFIRE OIL LIMITED (623,614) (596,094)
Basic and diluted loss per share for loss attributable to the ordinary equity holders of the Company (cents per share) (2.4) (2.3)

Spitfire Oil Limited
Consolidated Statement of Financial Position

AS AT 30 JUNE 2016 2016 2015
A$ A$
CURRENT ASSETS
Cash and cash equivalents 3,840,977 4,428,982
Trade and other receivables 798 1,733
Accrued revenues 63,887 94,347
Other current assets 19,533 17,341
TOTAL CURRENT ASSETS 3,925,195 4,542,403
NON‑CURRENT ASSETS
Capitalised exploration and evaluation costs 4,340,000 4,340,000
Office equipment 164 164
Other non-current assets 45,000 45,000
TOTAL NON‑CURRENT ASSETS 4,385,164 4,385,164
TOTAL ASSETS 8,310,359 8,927,567
CURRENT LIABILITIES
Trade and other payables 129,284 122,878
TOTAL CURRENT LIABILITIES 129,284 122,878
TOTAL LIABILITIES 129,284 122,878
NET ASSETS 8,181,075 8,804,689
EQUITY
Issued capital 19,289,284 19,289,284
Reserves
Accumulated losses (11,108,209) (10,484,595)
TOTAL EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT 8,181,075 8,804,689

Spitfire Oil Limited
Consolidated Statement of Changes in Equity

YEAR ENDED 30 JUNE 2016 Issued Capital Accumulated Losses Total
A$ A$ A$
BALANCE AT 30 JUNE 2014 19,289,284 (9,888,501) 9,400,783
Loss for the year (596,094) (596,094)
TOTAL COMPREHENSIVE INCOME (596,094) (596,094)
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS
Transaction with owners
BALANCE AT 30 JUNE 2015 19,289,284 (10,484,595) 8,804,689
Loss for the year (623,614) (623,614)
TOTAL COMPREHENSIVE INCOME (623,614) (623,614)
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS
Transaction with owners
BALANCE AT 30 JUNE 2016 19,289,284 (11,108,209) 8,181,075

Spitfire Oil Limited
Consolidated Statement of Cash Flows

YEAR ENDED 30 JUNE 2016 2016 2015
A$ A$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (463,010) (371,525)
Interest received 155,788 49,944
NET CASH FLOWS USED IN OPERATING ACTIVITIES (307,222) (321,581)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation expenditure (275,194) (288,217)
Payments for equipment
NET CASH FLOWS USED IN INVESTING ACTIVITIES (275,194) (288,217)
NET DECREASE IN CASH AND CASH EQUIVALENTS (582,416) (609,798)
Cash and cash equivalents at the beginning of the financial year 4,428,982 5,049,361
Effects of exchange rate changes on cash and cash equivalents (5,589) (10,581)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 3,840,977 4,428,982

Spitfire Oil Limited
Independent Auditor’s Report To the Members of Spitfire Oil Limited

We have audited the financial report of Spitfire Oil Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2016, and the consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information to the financial report of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Responsibility of the Directors for the financial report

The Directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards. This responsibility includes such internal controls as the Directors determine are necessary to enable the preparation of the financial report to be free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements and notes, comply 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 which require us to 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 Company’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 Company’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.

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 applicable independence requirements of the Accounting Professional and Ethical Standards Board.

Basis for Qualification Opinion

A limitation in scope of our audit work exists for the reasons described below:

Carrying value of exploration and evaluation expenditure:

As set out in Note 11, the consolidated entity has reported Capitalised Exploration and Evaluation Costs (“mineral resources”) totalling $4.3m in relation to the Salmon Gums Project.

The recoverability of the carrying value of the mineral resources asset has been estimated based on available inputs and assumptions. Australian Accounting Standard AASB 136 Impairment of Assets requires an asset to be carried at no more than its recoverable amount. We have been unable to obtain sufficient appropriate audit evidence to support the Directors’ assessment of the recoverable amount of the mineral resources asset is at least equal to its carrying value. In the event that the carrying value of the asset exceeds its recoverable amount, it would be necessary for the carrying value of the asset to be written down to its recoverable amount.

Auditor’s Opinion

In our opinion, except for the effects on the consolidated financial report of the matter referred to in the qualification paragraph:

a. the financial report of Spitfire Oil Limited

i presents fairly, in all material respects, the consolidated entity’s financial position as at 30 June 2016 and of its performance and cash flows for the year then ended; and

ii complies with Australian Accounting Standards; and

the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

Spitfire Oil Limited
Notes to the preliminary results to 30th June 2016

  1. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Group.
  2. The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 435 of the UK Companies Act 2006. The summarised consolidated statement of financial position at 30 June 2016 and the summarised consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and the summarised consolidated statement of cash flows for the year then ended have been extracted from the Group’s 2016 statutory financial statements upon which the auditors’ opinion is qualified. In the opinion of the auditors they have been unable to obtain sufficient evidence to support the directors assessment of the recoverable amount the capitalised exploration and evaluation costs. The statutory financial statements for the year to 30 June 2016 have been prepared in accordance with the requirements of International Accounting Standard IAS1: Presentation of Financial Statements as adopted in Australia. The results for the year ended 30 June 2015 have been extracted from the statutory accounts for that period, which contain an unqualified auditors’ report.
  3. The annual report and accounts for 201 are being sent by post to all registered shareholders. Additional copies of the annual report and accounts are available from the Company’s London correspondent office, 8th Floor, 54 Jermyn Street, London, SW1A 6LX and on the Company’s web site .
  4. The calculation of the basic and diluted losses per share is based on the loss attributable to ordinary shareholders of A$623,614 divided by the weighted average number of shares in issue during the year of 25,884,001. There is no dilutive effect of share purchase options.

The full preliminary results are available in Adobe Acrobat PDF format. Please click on the link below: