ENEGEX LIMITED — Annual Report 2016

Sep 28, 2016

ENEGEX LIMITED

ABN 28 160 818 986

ANNUAL REPORT

FOR THE YEAR ENDED

30 JUNE 2016

ENEGEX LIMITED ABN 28 160 818 986

CORPORATE DIRECTORY

G.A. Menzies (Chairman) E.G Albers R.L. Clark

COMPANY SECRETARY

R.J. Wright

Registered Office

and Principal Administration Office Level 21, 500 Collins Street Melbourne, Victoria 3000, Australia Telephone: +61 (0)3 8610 4713 Facsimile: +61 (0)3 8610 4799 Email: admin@enegex.com.au

CONTENTS

Chairman’s Review ............................................... 1 Directors’ Report .................................................. 2 Remuneration Report ............................................ 6 Directors’ Declaration ......................................... 10 Statement of Profit or Loss and Other Comprehensive Income ............................. 11 Statement of Financial Position ........................... 12 Statement of Changes in Equity .......................... 13 Statement of Cash Flows ..................................... 14 Notes to the Financial Statements ....................... 15 Audit Report ...................................................... 26 Auditor’s Independence Declaration ................... 28 Corporate Governance ........................................ 29 Shareholder and Other Information ..................... 29

Auditor

Grant Thornton Audit Pty Ltd GPO Box 4736 Melbourne, Victoria 3001 Australia

Website: www.enegex.com.au

Share Registry

Link Market Service Limited Tower 4, 727 Collins Street Melbourne, Victoria 3008 Australia

Telephone: +61 (0)3 9615 9947 Facsimile: +61 (0)3 9633 8495 Website: www.linkmarketservices.com.au

Stock Exchange Listing

ASX Limited Level 4, North Tower, Rialto 525 Collins Street Melbourne, Victoria 3000 Australia

FORWARD LOOKING STATEMENTS

This Annual Financial Report includes certain forward-looking statements that have been based on current expectations about future acts, events and circumstances. These forward-looking statements are, however, subject to risks, uncertainties and assumptions that could cause those acts, events and circumstances to differ materially from the expectations described in such forward-looking statements.

These factors include, among other things, commercial and other risks associated with the meeting of objectives and other investment considerations, as well as other matters not yet known to the company or not currently considered material by the company.

ASX Code: ENX Ordinary Shares

RISK FACTORS

Incorporated in the State of Victoria 17 October 2012

On 29 April 2016 the company changed its status from no liability to a public company and its name from Enegex NL to Enegex Limited.

Exploration for oil and gas is speculative, expensive and subject to a wide range of risks. There can be no assurance that any well drilled by the company will result in the discovery of oil or gas, nor that any discovery will prove to be commercially viable. Individual investors should consider these matters in light of their personal circumstances (including financial and taxation affairs) and seek professional advice from their accountant, lawyer or other professional adviser as to the suitability of an investment in the Company.

ENEGEX LIMITED ABN 28 160 818 986

CHAIRMAN’S REVIEW

Enegex is a natural resource exploration company, incorporated in Australia, with its securities listed on the ASX.

Enegex’s current focus is its interest in the Cornea Retention Lease WA-54R, in which it holds a 14.875% participating Interest.

During the year, and on a continuing basis, both technical and commercial work has been carried out by the Cornea joint venturers. Technical work has included drilling studies, particularly focusing on the use of technology to address key reservoir productivity uncertainties. Economic studies were directed at the effect on project viability, following the significant and protracted fall in oil price.

The initial Cornea Retention Lease work program was formulated to address the technical challenges of the Fields; with the first three years of the Lease designed to support the quantification of drilling and produceability challenges. With oil prices exceeding US$110 a barrel, the original work programme was designed on the premise that Cornea’s main challenge was whether the Cornea reservoir would produce, rather than whether production would be economic.

Economic modelling completed during the year has demonstrated that a fundamental shift in the Greater Cornea Field’s commerciality has taken place as a result of the current sustained low oil price environment. It has demonstrated that the Greater Cornea Fields are not presently economic (even were the production uncertainties resolved). “Oil price” is now identified as the input to which the field is most sensitive, rather than “production”, which was the case in 2013/14 when oil prices exceeded US$110 a barrel.

Accordingly, the Cornea Joint Venture has agreed to apply to the authorities to vary the conditions of WA-54-R in order that the work programme is focussed on the “oil price” barrier to development that we now face.

At a corporate level, Enegex completed a fully underwritten pro rata non-renounceable rights issue as a result of which it raised $321,998 before costs, and issued 26,833,246 shares. There are now 80,499,737 shares on issue.

Enegex maintained extreme fiscal discipline during the year. Directors continue to forgo directors’ fees and all other forms or corporate expenditure have been limited or reduced to the bare minimum.

Enegex remains interested in potential alliances for the development of Cornea and is also open to other worthwhile natural resource exploration and development opportunities that may present.

==> picture [141 x 16] intentionally omitted <==

==> picture [141 x 17] intentionally omitted <==

G.A. Menzies Chairman

29 September 2016

1

ENEGEX LIMITED ABN 28 160 818 986

DIRECTORS’ REPORT

The directors present their report on the results and state of affairs of Enegex Limited ( the company or Enegex ) for the year ended 30 June 2016.

PRINCIPAL ACTIVITY

The principal activity of the company during the financial year ended 30 June 2016 was the exploration for natural resources, unchanged since the incorporation of the Company.

FINANCIAL RESULTS FOR THE YEAR

The company recorded an operating loss after income tax for the year ended 30 June 2016 of $95,980 (2015: $260,821).

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There have been no significant changes in the state of affairs during the financial year and to the date of this report.

DIVIDENDS

No dividend has been paid, provided or recommended during the financial year and to the date of this report.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The likely developments in the company’s operations in future years and the expected result from those operations are dependent on exploration success in the permit area in which the company holds an interest.

REVIEW OF FINANCIAL POSITION

At 30 June 2016, the company had a working capital (current assets less current liabilities) surplus of $545,395 (2015: $396,288).

REVIEW OF OPERATIONS

Corporate

On 29 April 2016 the company changed its status from no liability to a public company and its name from Enegex NL to Enegex Limited.

In June 2016 the Company completed a pro rata non-renounceable rights issue pursuant to which it raised $321,998 before costs, and issued 26,833,246 shares.

During the year the Company maintained tight fiscal discipline, with corporate overheads reduced.

Interest in WA-54-R Greater Cornea Fields

The company holds a 14.875% interest in the Cornea Joint Venture. The Cornea Joint Venture ownership is the following:

Enegex Limited	14.875%
Octanex Group. (ASX Code: OXX)	18.750%
Cornea Resources Pty Ltd (Operator)	13.100%
Others	53.275%

The assets of the Cornea Joint Venture being, The Greater Cornea Fields, comprising the Cornea (Central and South), Focus and Sparkle Oil Fields and the Cornea North (Tear) Gas Field, are located in the Browse Basin, offshore from Western Australia and held via a Retention Lease (WA-54-R) over 6 graticular blocks, amounting to an area of 497km2.

2

ENEGEX LIMITED ABN 28 160 818 986

==> picture [451 x 377] intentionally omitted <==

Figure 1 - Greater Cornea Field Retention Lease Location Map

The oil volumes in the Greater Cornea Fields are such that, if threshold production flow rates can be demonstrated, but dependent on oil price, the economics may provide a reasonable expectation of commercial development. (Refer Table 1).

Middle Albian B & C Sands	Low Estimate (P90)	Best Estimate (P50)	High Estimate (P10)	Units
Total Oil In-place	298.0	411.7	567.2	mmbbl
Recovery Factor (RF)	2	7	25	%
Contingent Oil Resources	7.9	28.8	101.9	mmbbl
Prospective Enegex Economic Interest*	1.16	4.28	15.16	mmbbl

• Based on Enegex’s 14.875% Participating Interest in WA-54-R.

Table 1 Probabilistic In-place and Contingent Oil Resources for Cornea Central and South Fields (no development risk applied)

Work Program

The WA-54-R work program is aimed at overcoming the various challenges likely to be faced in bringing the Greater Cornea Fields into commercial production.

3

ENEGEX LIMITED ABN 28 160 818 986

At the time the Retention Lease was granted, production uncertainty was considered to be the greatest barrier to the development of the Greater Cornea Fields. Given the potential size of the oil resource, and the oil price then prevailing (in the order of US$110/bbl), it was understood that resolving the production uncertainty could provide a reasonable expectation for future development.

Accordingly, the Retention Lease work program substantially addressed the technical challenges of the Fields; with the first three years of the Lease designed to support the quantification of drilling challenges, culminating in a Year-4 production test, with the Year-5 work programme involving review of the Year-4 outcomes. The work programme was thus designed on the premise that Cornea’s challenge was whether it would produce, rather than whether production would be economic.

An economic study was completed during the year which used assumptions based on present date oil price, capex and opex assumptions. The economic modelling demonstrated the fundamental shift in the field’s commerciality in the current sustained low oil price environment, as well as demonstrating that the Greater Cornea Fields are not presently economic (even were the production uncertainties resolved). “Oil price” was identified as the input to which the field is now most sensitive, rather than “production”, which was the case in 2013.

Recent technical work has included drilling studies, particularly focusing on the use of technology to address key uncertainties. Additional field development concept work has focussed on an appropriate production system. The presently preferred configuration being a Mobile Drilling and Production Unit (MODPU) and tanker.

==> picture [253 x 100] intentionally omitted <==

Figure 2 - Preferred Cornea Field Development Concept using MODPU and FSO

Our studies indicate that the material and sustained fall in the price of oil since the grant of the Retention Lease has resulted in an assessment that a development of the Greater Cornea Fields would not be presently commercial, even were the production uncertainties to be resolved.

Given the ~60% decline in oil price, the most significant hurdle to commerciality of the Greater Cornea Fields is no longer producibility, but is “oil price”. As such, the WA-54-R work program no longer appropriately addresses the Greater Cornea Fields’ most significant barrier to development. Accordingly, the Cornea Joint Venture intends to apply to vary the conditions of WA-54-R in order that the work programme is focussed on the “oil price” barrier to development now faced by the Greater Cornea Fields.

Potential Alliances

In addition to maintaining fiscal discipline and progressing the Retention Lease work program, Enegex remains interested in developing potential alliances for the development of Cornea.

DIRECTORS

The directors in office during the entire financial year and to the date of this report were:

GA Menzies LL.B Chairman

Director since 17/10/12

Mr Menzies is a barrister and solicitor. He graduated from Melbourne University in 1971 and qualified for admission to the degree of Master of Laws in 1975. He was admitted to practice in 1972.

Since 1987 he has carried on practice as a sole practitioner under the name of Menzies & Partners. In the course of his legal practice Mr Menzies has been involved in a wide range of activities, including takeovers, litigation in respect thereof, numerous capital raisings and corporate reconstructions. He has been involved as a lawyer in the listing of a large

4

ENEGEX LIMITED ABN 28 160 818 986

number of public companies ranging from junior explorers to substantial mining companies. Over recent years his activities have focused primarily on corporate reconstructions and capital raisings.

He is the director of a number of private and unlisted public companies.

EG Albers LLB, FAICD

Non-Executive Director

Director since 1/10/15

Mr Albers has over 35 years’ experience as a director and administrator in corporate law, petroleum exploration and resource sector investment. Mr Albers became involved in oil exploration in 1977 and has a track record of developing significant oil and gas assets.

Mr Albers has interests in a number of companies active in the petroleum industry in Australia and Malaysia.

Mr Albers is also a director of the ASX listed companies Octanex NL and Peako Limited.

RL Clark B.Bus (dist), CA, MAICD, AGIA, ACIS

Executive Director

Director since 12/10/15

Mrs Clark has more than 15 years’ experience focussed primarily on the natural resources sector. Her experience includes business development, financial modelling and analysis, capital raising and mergers and acquisitions, as well as managing joint venture partners, government, regulator and investor relations.

Mrs Clark is also a director of the ASX listed companies Octanex NL and Peako Limited. She is also company secretary of Peako Limited.

BD Maltz resigned as a director on 1 October 2015. RJ Coppin resigned as a director on 21 October 2015.

COMPANY SECRETARY

RJ Wright B Bus, CPA – appointed 17 October 2012

Mr Wright is a senior financial professional with over 25 years commercial experience in the resource, energy and manufacturing industries gained at various companies and locations, including 14 years at BHP. As well as carrying out his secretarial duties for Enegex, he is the company’s Chief Financial Officer and the Company Secretary and CFO of several listed and unlisted exploration companies. Mr Wright is a member of CPA Australia.

BOARD AND COMMITTEE MEETINGS

The following table sets out the number of meetings held during the year and the number of meetings attended by each director.

each director.
	Board of Directors		**Audit **	Committee
	Held	Attended	Held	Attended
GA Menzies	2	2	2	2
EG Albers*	1	1	1	1
RL Clark*	1	1	1	1
RJ Coppin*	1	1	1	1
BD Maltz*	1	1	1	1

The board undertakes all audit committee functions.

• EG Albers was appointed 1 October 2015. RL Clark was appointed 12 October 2015. BD Maltz resigned 1 October 2015. RJ Coppin resigned 21 October 2015.

5

ENEGEX LIMITED ABN 28 160 818 986

SHARE CAPITAL

ORDINARY SHARES

A total of 26,833,246 ordinary shares were issued during the year, raising $321,998 before issue costs. There are now 80,499,737 ordinary fully paid shares on issue.

OPTIONS

No options were issued during the year and to the date of this report.

REMUNERATION REPORT

This report is audited.

Directors / Executives

Position Held

GA Menzies Non-Executive Chairman EG Albers Non-Executive Director RL Clark Executive Director

EG Albers was appointed 1 October 2015. RL Clark was appointed 12 October 2015. BD Maltz resigned 1 October 2015. RJ Coppin resigned 21 October 2015.

During the year there were no employees or consultants to the company that meet the definition of key management personnel, other than the directors.

Remuneration levels are reviewed annually.

Director Remuneration

During the year under review, directors were remunerated a total of $Nil (2015: $98,550),

There is no performance related remuneration for directors. Directors’ remuneration paid covers all board activities including serving on committees.

The directors do not receive employee benefits, including annual leave and long service leave, but remuneration may include the grant of options (share based payments) over shares of the company so as to align directors’ interests with that of the shareholders.

There is no direct relationship between remuneration of directors and the company’s performance since incorporation.

6

ENEGEX LIMITED ABN 28 160 818 986

REMUNERATION REPORT (Continued)

Components of directors’ compensation are disclosed below.

		Short Term		Post	Equity	Total
				Employment	Settled
	Year	Directors	Other	Super-	Options		Options as
		Fees	Fees	annuation			percentage of
		$	$	$	$	$	Total
GA Menzies	2016	-	-	-	-	-	-
	2015	30,000	-	2,850	-	32,850	-
EG Albers	2016	-	-	-	-	-	-
	2015	-	-	-	-	-	-
RL Clark	2016	-	-	-	-	-	-
	2015	-	-	-	-	-	-
RJ Coppin	2016	-	-	-	-	-	-
	2015	30,000	-	2,850	-	32,850	-
BD Maltz	2016	-	-	-	-	-	-
	2015	30,000	-	2,850	-	32,850	-
TOTAL	2016	-	-	-	-	-	-
	2015	90,000	-	8,550	-	98,550	-

EG Albers was appointed 1 October 2015. RL Clark was appointed 12 October 2015. BD Maltz resigned 1 October 2015. RJ Coppin resigned 21 October 2015.

There were no shares or options issues to directors as part of compensation during the year ended 30 June 2016.

Ordinary Shares

The number of shares in the company held during by each director, including their related parties, is set out below:

	Held at	Rights	Options	Net	Held at
Directors	1 July 2015	Issue	Exercised	Change	30 June 2016
				Other (i)
GA Menzies	229,444	40,230	-	-	269,674
EG Albers	-	19,872,711	-	11,015,597	30,888,308
RL Clark	-	25,000	-	50,000	75,000
RJ Coppin	16,667	-	-	(16,667)	-
BD Maltz	41,416	-	-	(41,416)	-
	____	__	__	__	__
	287,527	19,937,941	-	11,007,514	31,232,982
	=========	=======	=======	=======	=========

(i) EG Albers was appointed 1 October 2015. RL Clark was appointed 12 October 2015. BD Maltz resigned 1 October 2015. RJ Coppin resigned 21 October 2015.

End of Remuneration Report

7

ENEGEX LIMITED ABN 28 160 818 986

INDEMNIFICATION OF OFFICERS AND AUDITORS

During the financial year and to the date of this report, the company did not pay premiums in respect of contracts insuring officers or auditors of the company against liabilities arising from their position of officers or auditor of the company.

ENVIRONMENT, HEALTH AND SAFETY

The company has adopted an environmental, health and safety policy and conducts its operations in accordance with the APPEA Code of Practice.

The company’s petroleum exploration activities are subject to environmental conditions specified in the Offshore Petroleum and Greenhouse Gas Storage Act 2006, associated Regulations and Directions, as well as the Environment Protection and Biodiversity Conservation Act 1999. There were no known contraventions of any relevant environmental regulations by the company, its subsidiary or by the operator of any of the permits in which an interest is held.

The company believes all injuries are avoidable and has policies and procedures to ensure employees and contractors manage safety accordingly. The company monitors and evaluates its procedures. During the year there were no known contraventions of health and safety by the company or reported health and safety incidents.

CORPORATE GOVERNANCE STATEMENT

A corporate governance statement reporting on Enegex’s governance framework, principles and practices is provided on the Enegex website www.enegex.com.au.

WEBSITE

The company has a website that can be found at www.enegex.com.au where relevant company documents and information are displayed.

EVENTS SINCE BALANCE DATE

There has been no significant after balance date event up to the date of signing this report.

PROCEEDINGS ON BEHALF OF THE COMPANY

There are no proceedings on behalf of the company.

8

ENEGEX LIMITED ABN 28 160 818 986

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

A copy of the Auditor’s Independence Declaration, as required under Section 307C of the Corporations Act 2001, is attached on page 28 and forms part of this Directors’ Report for the year ended 30 June 2016.

No fees were paid to the auditor for non-audit services.

Signed in accordance with a resolution of the directors in Melbourne on 29 September 2016.

RL Clark Director

9

ENEGEX LIMITED ABN 28 160 818 986

DIRECTORS’ DECLARATION

The directors of the company declare that:

1. The financial statements, comprising the statement of profit or loss and other comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001 and

2. (a) comply with Accounting Standards and the Corporations Regulations 2001;

3. (b) give a true and fair view of the company’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and

4. (c) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1(a).

5. In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

6. The remuneration disclosures included in pages 6 to 7 of the Directors’ Report, (as part of the audited Remuneration Report), for the year ended 30 June 2016, comply with section 300A of the Corporations Act 2001.

7. The directors have been given the declarations by the executive officer and the financial officer required by section 295A of the Corporations Act.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:

RL Clark Director

Melbourne, 29 September 2016

10

ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

		2016	2015
	NOTE	$	$
Revenue - interest received		8,810	16,551
Expenses	2	(104,790)	(277,372)
		__	__
Loss before income tax expense		(95,980)	(260,821)
Income tax expense	3	-	-
		__	__
Loss for the year		(95,980)	(260,821)
		__	__
Other comprehensive income		-	-
		__	__
Total comprehensive income for the year		(95,980)	(260,821)
		__	__
		cents	cents
Basic loss per share (cent per share)	15	(0.178)	(0.486)
Diluted loss per share (cent per share)	15	(0.178)	(0.486)

The above Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.

11

ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2016

STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2016
		2016	2015
	NOTE	$	$
CURRENT ASSETS
Cash and cash equivalents	4	609,011	467,153
Trade and other receivables	5	8,776	6,227
		__	__
TOTAL CURRENT ASSETS		617,787	473,380
		__	__
NON-CURRENT ASSETS
Exploration and evaluation assets	6	89,580	66,633
		__	__
TOTAL NON-CURRENT ASSETS		89,580	66,633
		__	__
TOTAL ASSETS		707,367	540,013
		__	__
CURRENT LIABILITIES
Trade and other payables	7	72,392	77,092
		__	__
TOTAL CURRENT LIABILITIES		72,392	77,092
		__	__
TOTAL LIABILITIES		72,392	77,092
		__	__
NET ASSETS		634,975	462,921
		========	=======
EQUITY
Issued capital	8	1,364,941	1,096,907
Accumulated losses		(729,966)	(633,986)
		__	__
TOTAL EQUITY		634,975	462,921
		========	=======

The above Statement of Financial Position is to be read in conjunction with the accompanying notes.

12

ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016

FOR THE YEAR ENDED 30 JUNE 2016
	Issued	Accumulated	Total
2016	Capital	Losses	Equity
	$	$	$
At 1 July 2015	1,096,907	(633,986)	462,921
Transactions with owners in their
capacity as owners
Issue of shares	321,998	-	321,998
Cost of issue	(53,964)	-	(53,964)
Loss after tax for the period	-	(95,980)	(95,980)
	__	__	____
Total comprehensive income for the year	268,034	(95,980)	172,054
	__	__	____
At 30 June 2016	1,364,941	(729,966)	634,975
	=======	=======	=========
	Issued	Accumulated	Total
2015	Capital	Losses	Equity
	$	$	$
At 1 July 2014	1,096,907	(373,165)	723,742
Transactions with owners in their
capacity as owners
Loss after tax for the period	-	(260,821)	(260,821)
	__	__	____
Total comprehensive income for the year	-	(260,821)	(260,821)
	__	__	____
At 30 June 2015	1,096,907	(633,986)	462,921
	=======	=======	=========

The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

13

ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016
	NOTE	2016	2015
		$	$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers		(136,932)	(264,373)
Interest received		9,553	14,341
		__	__
Net cash outflow in operating activities	(i)	(127,379)	(250,032)
		__	__
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to suppliers - exploration		(22,947)	(39,627)
		__	__
Net cash outflow from investing activities		(22,947)	(39,627)
		__	__
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares		321,998	-
Costs of share issue		(29,814)	-
		__	__
Net cash inflow from financing activities		292,184	-
		__	__
Net increase / (decrease) in cash and cash equivalents		141,858	(289,659)
Cash and cash equivalents at the beginning of the year		467,153	756,812
		__	__
CASH AND CASH EQUIVALENTS AT YEAR END	4	609,011	467,153
		=======	=======
(i) RECONCILIATION OF LOSS TO NET CASH OUTFLOW IN OPERATING		ACTIVITIES
Loss after income tax		(95,980)	(260,821)
Non Cash Items
Impairment of exploration assets		-	39,377
Changes in Assets and Liabilities:
Decrease in payables		(28,850)	(24,781)
Increase in receivables		(2,549)	(3,807)
		__	__
Net cash outflow from operating activities		(127,379)	(250,032)
		=======	=======

The above Statement of Cash Flows is to be read in conjunction with the accompanying notes.

14

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES

Enegex Limited (“Enegex” or ‘the company”) is a for-profit company incorporated and domiciled in Australia with its registered office and principal place of business located at Level 21, 500 Collins Street, Melbourne, Victoria 3000. The financial report of the company for the year ended 30 June 2016 comprises the company and its interest in joint operations.

The principal activity of the company during the year was exploration for petroleum in Australia and has remained unchanged since incorporation.

The financial report was authorised for issue by the directors on 29 September 2016.

(a) Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, including the Accounting Interpretations, issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001 . The financial report of the company complies with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board.

(b) Basis of preparation

The financial report is presented in Australian dollars which is the company’s functional currency and is prepared on the accrual and historical cost basis.

The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of Australian Accounting Standards that have a significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are discussed in note 1(n).

The accounting policies set out below have been applied consistently to all periods presented in the financial report.

(c) Exploration and evaluation expenditure

Exploration and evaluation assets are capitalised as exploration and evaluation assets on an area of interest basis.

Exploration and evaluation costs are only recognised when the rights to tenure of the area of interest are current and either:

(i) the expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively by its sale, or partial sale; or

(ii) activities in the area of interest have not at the reporting 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 assessed for impairment if the facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment, accounting policy 1 (g)).

Proceeds form the sale of exploration permits or recoupment of exploration costs from farmin arrangements are credited against exploration costs previously capitalised. Any excess of the proceeds over costs recouped are accounted for as a gain on disposal.

15

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Restoration, rehabilitation and environmental expenditure

Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are provided for as part of the cost of those activities. Costs are estimated on the basis of current legal requirements, anticipated technology and future costs that have been discounted to their present value. Estimates of future costs are reassessed at each reporting date.

(e) Trade and other receivables

Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts and have repayment terms between 30 and 90 days. Collectability of trade receivables is assessed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance is made for doubtful debts where there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the company will not be able to collect all amounts due according to the original terms.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and at call bank deposits. Bank overdrafts that are repayable on demand and form an integral part of the company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(g) Impairment of assets

The carrying amounts of the company’s assets are reviewed at each statement of financial position date to determine whether there are indicators of impairment. At each reporting date the company assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the cash-generating unit to which the asset belongs.

(h) Share capital

Ordinary share capital is recognised at the fair value of the consideration received by the company. Transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the consideration received, net of any related income tax benefit.

(i) Provisions

A provision is recognised in the statement of financial position when the company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(j) Trade and other payables

Trade, accruals and other payables are recorded initially at fair value and subsequently at amortised cost. Trade payables are non-interest bearing and are normally settled on 60-day terms.

(k) Revenue

Revenue is recognised at the fair value of consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. The following specific recognition criteria must also be met before revenue is recognised:

Interest

Revenue is recognised as interest accrues using the effective interest method. The effective interest method uses the effective interest rate which is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial asset.

16

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(l) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The initial recognition of assets or liabilities that do not affect accounting nor taxable profit is not provided for in determining deferred tax amounts. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be applied. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

The Company recognises deferred tax assets arising from unused tax losses of the company to the extent that is probable that future taxable profits of the company will be available against which the asset can be utilised.

(m) Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

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

(n) Accounting estimates and judgements

Management determine the development, selection and disclosure of the company’s critical accounting policies and estimates and the application of these policies and estimates. There are no estimates and judgements that are considered to have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

There is, however, a risk that actual expenditure to achieve minimum work obligations could differ from estimates disclosed in the notes to the financial statements (Note 12). The estimated amounts represent the higher end of possible future expenditure. Work requirements achieved by farm-ins materially reduce the level of expenditure incurred by the company to comply with work program commitments.

Management has determined that realisation of the estimated deferred tax asset arising from tax losses and temporary differences is not probable and has not brought to account the asset at balance date (Note 3).

Per Note 1(c) and 1(g) management exercise judgement as to the recoverability of exploration expenditure. Any judgement may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploitation, then the relevant capitalised amount will be written off through profit or loss.

17

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(o) Joint Operations

Interest in joint operations is brought to account, by including in the respective classifications, the company’s share of individual assets employed, liabilities, income and expenses incurred. Where the company is acquiring or disposing of a joint operation interest the company’s share of joint operation assets is based on the contributions made to the joint operation.

( p) Fair value

Fair values may be used for financial asset and liability measurement as well as for sundry disclosures. Fair values for financial instruments traded in active markets are based on quoted market prices at statement of financial position date. The quoted market price for financial assets is the current bid price and the quoted market price.

The fair value of financial instruments that are not traded in an active market are determined using valuation techniques. Assumptions used are based on observable market prices and rates at balance date. Estimated discounted cash flows are used to determine fair value of the remaining financial instruments.

The carrying value (less impairment provision of trade receivables and payables) are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments

(q) Foreign Currency Translation

The functional and presentation currency of the company is Australian dollars (A$).

Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date. Foreign exchange gains and losses resulting from settling foreign currency transactions, as well as from restating foreign currency denominated monetary assets and liabilities, are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges or where they relate to differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity.

Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined.

(r) Earnings per Share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to members of Enegex, adjusted for the aftertax effect of preference dividends on preference shares, if any, classified as equity, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares during the year.

Diluted earnings per share

Earnings used to calculate diluted earnings per share are calculated by adjusting the basic earnings by the after-tax effect of dividends and interest associated with dilutive potential ordinary shares. The weighted average number of shares used is adjusted for the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

18

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(s) New and revised accounting standards issued not yet effective

The company has adopted all of the new and revised Accounting Standards issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for annual reporting periods beginning on 1 July 2015.

The Directors do not believe that new and revised standards issued by AASB (that are not as yet effective) will have any material financial impact on the financial statements.

	NOTE	2016	2015
		$	$
NOTE 2 EXPENSES
Audit and other related fees	16	24,660	32,020
Directors’ remuneration		-	98,550
Consultants fees		7,378	28,817
Exchange Loss		6	-
Management fees		-	(16,000)
Office costs		26,176	32,702
Printing and stationery		-	6,607
Stock exchange and registry costs		26,878	30,485
Other expenses		19,692	24,814
Exploration costs written off		-	39,377
		__	__
		104,790	277,372
		=======	=======
NOTE 3 INCOME TAX BENEFIT
Components of income tax benefit
Current tax benefit		(28,794)	(78,246)
Deferred tax relating to the origination and reversal of temporary differences		-	-
Deferred tax asset not brought to account		28,794	78,246
		__	__
Income tax benefit		-	-
		=======	=======
Reconciliation between tax benefit and pre-tax loss
Loss before tax		(95,980)	(260,821)
		=======	=======
Income tax using statutory income tax rate of 30% (2015: 30%)		(28,794)	(78,246)
		__	__
Tax benefit		(28,794)	(78,246)
Deferred tax asset not brought to account		28,794	78,246
		__	__
Income tax benefit		-	-
		=======	=======
Unrecognised deferred tax asset
The estimated deferred tax asset arising from tax losses and temporary differences
not brought to account at balance date as realisation of the	benefit is not probable:
Tax losses carried forward		242,702	205,449
Temporary differences		(23,715)	(15,253)
		__	__
		218,987	190,196
		=======	=======

19

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016
	2016	2015
	$	$
NOTE 4 CASH AND CASH EQUIVALENTS
Cash at bank and on hand	609,011	467,153
	__	__
	609,011	467,153
	=======	=======

Cash and cash equivalents are subject to interest rate risk as they earn floating rates. The bank deposit is at call in 2016.

NOTE 5 TRADE & OTHER RECEIVABLES

NOTE 5 TRADE & OTHER RECEIVABLES
Other receivables	8,776	6,227
	__	__
	8,776	6,227
	=======	=======

The carrying amount of all receivables is equal to their fair value as they are short term. None of the receivables are impaired or past due. The maximum credit risk for the company is the gross value of all receivables. All receivables are non-interest bearing.

NOTE 6 EXPLORATION AND EVALUATION ASSETS

Balance at beginning of year	66,383	66,383
Expenditure for the year	23,197	39,627
Expenditure written off	-	(39,377)
	__	__
Balance at end of year	89,580	66,633
	=======	=======

Exploration and evaluation assets relate to the areas of interest in the exploration phase for petroleum retention lease WA-54-R. (2015: WA-54-R).

WA-54-R is held through joint operations and details of interests held in the permits can be found in Note 9.

NOTE 7 TRADE AND OTHER PAYABLES

NOTE 7 TRADE AND OTHER PAYABLES
Other payables and accrued expenses	21,186	77,092
Director-related entities – other payables (Note 11)	51,206	-
	__	______
	72,392	77,092
	=======	======

Trade payables are current liabilities which result in their fair value being equal to the current carrying amount. Information about the company’s exposure to foreign exchange risk in relation to other trade payables and accrued expenses, including sensitivities to changes in foreign exchange rates, is provided in Note 13.

20

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

==> picture [451 x 195] intentionally omitted <==

----- Start of picture text -----

|||||||
|---|---|---|---|---|---|
|2016|2016|2015|2015|
|Shares|$|Shares|$|
|NOTE 8 ISSUED CAPITAL|
|Issued Capital|
|Ordinary shares fully paid|80,499,737|1,364,941|53,666,491 1,096,907|
|========= ========|========= ========|
|Ordinary Shares|
|Movements during the year|
|Balance at beginning of year|53,666,491|1,096,907|53,666,491 1,096,907|
|Shares issued:|
|-|Per rights issue|26,833,246|321,998|-|-|
|- Costs of issue|-|(53,964)|-|-|
|_|_|_ _|
|Balance at end of year|80,499,737|1,364,941|53,666,491 1,096,907|
|========= ========|========= ========|

----- End of picture text -----

Ordinary Shares

Ordinary shares entitle the holder to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company. The company does not have a limited authorised capital and issued shares have no par value.

Share Options

No options were on issue during the year and to the date of this report.

NOTE 9 INTEREST IN JOINT OPERATIONS

The company has an interest in the assets, liabilities and output of joint operations for the exploration and development of petroleum in Australia. The company has taken up its share of joint operations transactions based on the company’s contributions to the joint operations. Expenditure commitments in respect of the joint operations are disclosed in Note 12. Details of the company’s interests in the joint operations are:

==> picture [458 x 230] intentionally omitted <==

----- Start of picture text -----

|||||
|---|---|---|---|
|Interest|Interest|Interest|
|30/6/2016|Acquired 30/6/2015|
|(|Disposed)|
|Cornea Joint Venture – WA-54-R|14.875%|-|14.875%|
|Assets and liabilities of the joint operations are included in the financial statements as follows:|
|2016|2015|
|$|$|
|CURRENT ASSETS|
|Cash and cash equivalents|9,846|976|
|Trade and other receivables|197|1,012|
|_|_|
|TOTAL CURRENT ASSETS|10,043|1,988|
|NON-CURRENT ASSETS|
|Exploration costs|89,580|66,633|
|_|_|
|TOTAL ASSETS|99,623|68,621|
|=======|=======|

----- End of picture text -----

21

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

2016 2015 $ $

NOTE 9 INTEREST IN JOINT OPERATIONS (Continued)

Assets and liabilities of the joint operations are included in the financial statements as follows:

CURRENT LIABILITIES
Trade and other payables	367	11,328
Trade and other payables – director related	9,580	3,453
	__	__
TOTAL LIABILITIES	9,947	14,781
	=======	=======

There are no contingent liabilities in any of the joint operations. Minimum work requirements in exploration permit interests held in joint operations is estimated at reporting date and is shown at Note 12.

NOTE 10 KEY MANAGEMENT PERSONNEL

Non-executive Directors Executive Director EG Albers RL Clark GA Menzies

EG Albers was appointed 1 October 2015. RL Clark was appointed 12 October 2015. BD Maltz resigned 1 October 2015. RJ Coppin resigned 21 October 2015.

During the year the only persons that met the definition of key management personnel were the directors. The company has no employees.

Fees paid to GA Menzies, EG Albers and RL Clark in their capacities as consultants to Enegex are disclosed below in the Related Party Note 11. Fees paid to directors are summarised in the table below and detailed in the Remuneration Report section of the Directors’ Report.

Individual compensation disclosures

Information regarding individual director’s compensation is provided in the Remuneration Report section of the Directors’ Report. In summary form:

		Short	Term	Post	Equity	Total
				Employment	Settled
	Year	Directors	Other Fees	Super-
		Fees		annuation	Options
		$	$	$	$	$
TOTAL	2016	-	-	-	-	-
	2015	90,000	-	8,550	-	98,550

NOTE 11 RELATED PARTY TRANSACTIONS

Director-related Entities

Companies in which an Enegex director controls or significantly influences, that provide services to the company or to a joint operation in which the company has an interest.

(i) During the year services were provided under normal commercial terms and conditions by:

Gresham Management Pty Ltd (Gresham), a director-related entity of GA Menzies Samika Pty Ltd (Samika), a director-related entity of RL Clark Exoil Limited (Exoil), a director-related entity of EG Albers Natural Resources Group (NRG), a director-related entity of EG Albers

22

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 11 RELATED PARTY TRANSACTIONS (Continued)

Octanex NL (Octanex), a director-related entity of EG Albers

	Service Provided	2016	2015
		$	$
Gresham	Management and consulting services to the Company	13,809	92,904
Samika	Consulting services to the Company	5,065	-
Exoil	Office rental and services	20,727	-
NRG	Management of exploration tenements	8,925	-
Octanex	Accounting and company secretary services	11,365	-

The group holds an interest in a petroleum joint venture with certain director-related entities:

• As a participant of the Cornea Joint Venture with Cornea Petroleum Pty Ltd, Cornea Oil & Gas Pty Ltd, Coldron Pty Ltd, Cornea Energy Pty Ltd, Moby Oil & Gas Pty Ltd, Octanex NL, Cornea Resources Pty Ltd and Auralandia Pty Ltd, all director-related entities of EG Albers.

(ii) Amounts payable to related parties including those under joint venture arrangements:

	2016	2015
	$	$
Payables
Natural Resources Group Pty Ltd	35,490	-
Exoil Pty Ltd	6,315	-
Samika Pty Ltd	2,430	-
Octanex NL	6,971	-
	__	__
TOTAL LIABILITIES	51,206	-
	=======	=======
(iii) Transactions with Related Parties
During the year, $24,150 was paid to Natural Resources Group Pty Ltd, a related	entity of Mr EG	Albers, fo
provision of underwriting services for a shareholder entitlement issue.
NOTE 12 EXPLORATION AND EVALUATION PERMIT COMMITMENTS
Estimated expenditure to satisfy contractual and permit work obligations
Not later than 1 year
WA-54-R	46,484	81,813
	======	======
Later than 1 year but not later than 3 years
WA-54-R	6,015,078	111,563

During the year, $24,150 was paid to Natural Resources Group Pty Ltd, a related entity of Mr EG Albers, for the provision of underwriting services for a shareholder entitlement issue.

NOTE 12 EXPLORATION AND EVALUATION PERMIT COMMITMENTS

Estimated, arising from retention lease work programme which, may, subject to negotiation and approval, be varied. They may also be satisfied by farmout, sale, relinquishment or surrender.

23

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 13 FINANCIAL INSTRUMENTS

Purchases and sales of financial assets and financial liabilities are recognised on trade date; the date on which the company commits to purchase or sell the financial assets or financial liabilities. 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.

Exposure to credit, interest rate, liquidity and currency risks arises in the normal course of the company’s business. The company’s overall risk management approach is to identify the risks and implement safeguards which seek to minimise potential adverse effects on the financial performance of the company.

Credit risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. At balance date there were no significant concentrations of credit risk for the company. The maximum exposure to credit risk of financial assets is represented by the carrying amounts of each financial asset in the statement of financial position.

Interest rate risk

All financial liabilities and financial assets at floating rates expose the company to cash flow interest rate risk. The company has no exposure to interest rate risk at balance date, other than in relation to cash and cash equivalents which attract a floating interest rate. Details of cash and cash deposits can be found in Note 4. At balance date a 1% (100 basis point) increase/ decrease in the interest rate would improve / worsen the company’s post tax profit by $4,264 (2015: $5,298)

Liquidity risk

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. Liquidity risk is monitored to ensure sufficient monies are available to meet contractual obligations as and when they fall due. All financial assets and liabilities have a maturity date of less than 12 months.

Foreign currency risk

The company is exposed to foreign currency risk arising on purchases that are denominated in a currency other than the Australian dollar functional currency. The company incurs seismic, exploration and well costs in US dollars. The risk is measured using sensitivity analysis and cash flow forecasting and monitored by management when seismic and drilling programs are current. To this extent, the company is exposed to exchange rate fluctuations between the Australian and US dollar.

As at 30 June 2016 the company has no US dollars in cash at bank.

Capital Management

When managing capital, directors’ objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders.

It is the company’s plan that capital will be raised by any one or a combination of the following manners: placement of shares to excluded offerees, pro-rata issue to shareholders, the exercise of outstanding options, and/or a further issue of shares. Should these methods not be considered to be viable, or in the best interests of shareholders, then it would be the company’s intention to meet its exploration obligations by either partial sale of its interests or farmout, the latter course of action being part of its overall strategy.

The company is not subject to any externally imposed capital requirements.

24

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 14 SEGMENT INFORMATION

The company has adopted AASB 8 Operating Segments whereby segment information is presented using a 'management approach', i.e. segment information is provided on the same basis as information used for internal reporting purposes by the board of directors

At regular intervals the board is provided management information at a company level for the company’s cash position, the carrying values of exploration permits and a company cash forecast for the next twelve months of operation.

On this basis, no segment information is included in these financial statements.

All interest received has been derived in Australia. All exploration and evaluation assets are held in Australia.

NOTE 15 LOSS PER SHARE

The following reflects the loss and share data used in the calculation of basic and diluted loss per share:

	2016	2015
	$	$
Net Loss	(95,980)	(260,821)
The weighted average number of shares used for the purposes
of calculating diluted earnings per share reconciles to the
number used to calculated basic earnings per share as follows:
	Weighted	Weighted
	Average	Average
	Number of	Number of
	Shares	Shares
Basic and diluted loss per share	53,945,391	53,666,491
	2016	2015
	$	$
NOTE 16 AUDITOR’S REMUNERATION
Amounts received or due and receivable by the auditor
of the Company for:
Audit of the full year and review of the half year
financial reports	24,660	32,020
Other assurance services	-	-
	______	______
	24,660	32,020
	======	======

NOTE 17 EVENTS SINCE BALANCE DATE

There are no significant after balance date events up to the signing of this report.

25

==> picture [467 x 65] intentionally omitted <==

The Rialto, Level 30 525 Collins St Melbourne Victoria 3000

Correspondence to: GPO Box 4736 Melbourne Victoria 3001

T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Report

To the Members of Energex Limited

Report on the financial report

We have audited the accompanying financial report of Energex Limited (the “Company”), which comprises the statement of financial position as at 30 June 2016, the statement of profit or loss and other comprehensive income, statement of changes in equity and 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 of the company.

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. The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is 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 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. Those standards 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.

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

==> picture [326 x 46] intentionally omitted <==

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view 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 qualified audit opinion.

Independence

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

Auditor’s opinion

In our opinion the financial report of Energex Limited is in accordance with the Corporations Act 2001, including:

• i giving a true and fair view of the Company’s financial position as at 30 June 2016 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 the notes to the financial statements.

Report on the remuneration report

We have audited the remuneration report included in pages 6 to 7 of the directors’ report for the year ended 30 June 2016. 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 on the remuneration report

In our opinion, the remuneration report of Energex Limited for the year ended 30 June 2016, complies with section 300A of the Corporations Act 2001.

==> picture [127 x 42] intentionally omitted <==

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

==> picture [101 x 62] intentionally omitted <==

Adrian Nathanielsz Partner - Audit & Assurance

Melbourne, 29 September 2016

==> picture [467 x 65] intentionally omitted <==

The Rialto, Level 30 525 Collins St Melbourne Victoria 3000

Correspondence to: GPO Box 4736 Melbourne Victoria 3001

T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration

To the Directors of Energex Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Energex Limited for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b no contraventions of any applicable code of professional conduct in relation to the audit.

==> picture [128 x 43] intentionally omitted <==

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

==> picture [102 x 63] intentionally omitted <==

Adrian Nathanielsz Partner - Audit & Assurance

Melbourne, 29 September 2016

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

ENEGEX LIMITED ABN 28 160 818 986

CORPORATE GOVERNANCE

The Board is responsible for the strategic direction of the Company, the identification and implementation of corporate policies and goals, and the monitoring of the business and affairs of the Company on behalf of its shareholders.

The Board delegates responsibility for the day-to-day management of Enegex to the Chief Executive Officer. All Directors have unrestricted access to Company records and information and receive detailed financial and operational reports.

The Board is currently comprised of two Non- Executive Directors and one Executive Director. In accordance with the Company’s Constitution and the ASX Listing Rules, the Directors (other than the Chief Executive Officer) are subject to re-election by shareholders every three years.

The Board meets regularly throughout the year. Where appropriate, presentations are given to the Board from management who may be questioned directly by Board members on technical, operational and commercial issues.

Details of the Company’s corporate governance practices are included in the Corporate Governance statement found on the Company’s website.

SHAREHOLDER AND OTHER INFORMATION

COMPILED AS AT 22 SEPTEMBER 2016

VOTING RIGHTS

At meetings of members or classes of members:

• (a) each member entitled to vote may vote in person or by proxy, attorney or representative;

• (b) on a show of hands, every person present who is a member or a proxy, attorney or representative of a member has one vote; and

• (c) on a poll, every person present who is a member or a proxy, attorney or representative of a member has:

• (i) for each fully paid share held by him, or in respect of which he is appointed a proxy, attorney or representative, one vote for the share;

• (ii) for each partly paid share, only the fraction of one vote which the amount paid (not credited) on the share bears to the total amounts paid and payable on the share (excluding amounts credited),

subject to any rights or restrictions attached to any shares or class or classes of shares.

DISTRIBUTION OF ORDINARY SHARES

Numbers of members by size of holding and the total number of shares on issue:

Ordinary Shares	No. of Holders	No. of Shares
1 – 1,000	196	61,789
1,001 – 5,000	325	997,578
5,001 – 10,000	229	1,795,589
10,001 – 100,000	462	15,446,812
100,001 and over	73	62,197,969
TOTAL ON ISSUE	1,285	80,499,737

1,075 holders held less than a marketable parcel of ordinary shares. There is no current on-market buy-back.

29

ENEGEX LIMITED ABN 28 160 818 986

SHAREHOLDER AND OTHER INFORMATION (continued)

COMPILED AS AT 22 SEPTEMBER 2016

SUBSTANTIAL SHAREHOLDERS

As disclosed in notices given to the Company.

Name of Substantial Shareholder	Interest in Number of Shares	% of Shares
	Beneficial and non-beneficial
Albers Group	30,888,308	38.37
Ross Di Bartolo	7,288,417	13.58

THE 20 LARGEST HOLDERS OF ORDINARY SHARES

Holder	Ordinary Shares	% of Total Issued
MR ERNEST GEOFFREY ALBERS	12,673,926	15.74
MR ROSS DI BARTOLO	8,715,126	10.83
AURALANDIA PTY LTD	5,000,000	6.21
GASCORP AUSTRALIA PTY LTD	4,750,000	5.90
SACROSANCT PTY LTD	2,273,886	2.82
SMALL BUSINESS FINANCE PTY LIMITED	2,150,000	2.67
AUSTRALIS FINANCE PTY LTD	1,871,078	2.32
STRATA RESOURCES PTY LTD	1,769,332	2.20
MR IANAKI SEMERDZIEV	1,407,000	1.75
ICM INVESTMENTS PTY LTD	1,311,233	1.63
PEPPERCORN HILL PTY LTD	1,125,000	1.40
FAITH HOPE & CHARITY PTY LTD	1,037,088	1.29
TRE PTY LTD	1,000,000	1.24
ALBERS CUSTODIAN COMPANY PTY LTD	987,906	1.23
MR HARLEY REXHEP	966,667	1.20
MR VINCENZO BRIZZI & MRS RITA LUCIA BRIZZI	931,279	1.16
FIRST INVESTMENT PARTNERS PTY LTD	878,742	1.09
500 CUSTODIAN PTY LTD	765,000	0.95
EERC AUSTRALASIA PTY LTD	648,750	0.81
APPLEDORE CUSTODIANS LIMITED	632,813	0.79

The 20 largest shareholders hold 50,894,826 shares representing 63.22% of the issued share capital.

30