ENEGEX LIMITED — Annual Report 2017

Sep 27, 2017

ENEGEX LIMITED

ABN 28 160 818 986

ANNUAL REPORT

FOR THE YEAR ENDED

30 JUNE 2017

ENEGEX LIMITED ABN 28 160 818 986

CORPORATE DIRECTORY

E.G Albers (Chairman) R.L. Clark A.P. Armitage

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 ............................................ 5 Directors’ Declaration ........................................... 8 Statement of Profit or Loss and Other Comprehensive Income ............................... 9 Statement of Financial Position ........................... 10 Statement of Changes in Equity .......................... 11 Statement of Cash Flows ..................................... 12 Notes to the Financial Statements ....................... 13 Audit Report ...................................................... 25 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 Automic Pty Ltd Level 3 50 Holt Street Surry Hills, NSW 2010, Australia

Telephone: 1300 288 664 (within Australia) Telephone: +61 (2) 9698 5414 (outside Australia) Website: www.automic.com.au

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

ASX Code: ENX Ordinary Shares

Incorporated in the State of Victoria 17 October 2012

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.

RISK FACTORS

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

Dear Shareholders

Enegex is a natural resources company, incorporated in Australia, with its securities listed on the ASX. Its focus is on energy in all its forms, with a particular emphasis to date on the oil and gas industry.

Enegex holds a 14.875% participating Interest in the Cornea Retention Lease WA-54R in which the Cornea oilfield is situated.

The Cornea Retention Lease was granted following the significant new information gained from the Cornea–3 well in which Enegex’s predecessor company actively participated. The initial Cornea Retention Lease work program was formulated to address the technical challenges to development of Cornea; with the first three years of the Lease designed to support the quantification of drilling and produceability challenges.

Demonstrating Cornea’s ability to achieve threshold production was then seen as, and remains, the key barrier to commercialisation of Cornea, and a production test well, designed to achieve such economic production was identified as a key means of moving Cornea towards development. However, the reduced oil price environment has impacted significantly on the required threshold production barrier.

As a result, the parameters of a Cornea development have changed considerably since the Retention Lease was granted, as has the basis of design for a viable Cornea production well test. We now have a development concept which is significantly simplified from the originally proposed high capex development. Integrated reservoir modelling and facilities work has been commenced to support design of a production test well capable of delivering threshold productivity using this development concept.

The Cornea Joint Venture has applied to the authorities to vary the conditions of WA-54-R to enable the work programme to focus on achieving threshold production within the current oil price regime.

The Cornea JV is pursuing potential alliances to assist in the development of Cornea.

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

Enegex is open to other natural resource opportunities that may present. With oil prices continuing to languish, we have considered other avenues where our future may lie. In particular, with advances being made in energy storage, Enegex is seeking to become involved in innovations that are transforming the storage of energy. Our involvement in energy storage and services may take a variety of forms including direct participation, joint venture and equity investment.

• Our initial initiatives are to investigate and to undertake corporate investment in the following areas: • Strategic energy storage minerals

• Energy storage technologies

• Alternative and renewable energy sources

I thank my co-directors for their support during the year.

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E.G. Albers Chairman

27 September 2017

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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 2017.

PRINCIPAL ACTIVITY

The principal activity of the company during the financial year ended 30 June 2017 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 2017 of $91,307 (2016: $95,980).

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 2017, the company had a working capital (current assets less current liabilities) surplus of $402,564 (2016: $545,395).

REVIEW OF OPERATIONS

Corporate

During the year the Company maintained tight fiscal discipline.

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 Greater Cornea Fields (being the Cornea, 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).

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ENEGEX LIMITED ABN 28 160 818 986

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Figure 1 - Greater Cornea Field Retention Lease Location Map

The Greater Cornea Fields present a large in place oil resource contained in a challenging reservoir. At the time the Retention Lease was applied for and granted, production uncertainty was identified as the primary constraint to the development of the Greater Cornea Fields. A successful production test well designed to demonstrate threshold productivity for development initiation is required to commercialise Cornea.

Middle Albian B & C Sands	Low Estimate (P90)	Best Estimate (P50)	High Estimate (P10)	Units
Probabilistic Oil In-place (100% basis)	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.

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

A production test well must be placed and constructed in the same manner as intended for field development in order to prove up viable well construction methodologies and technologies, ensure representative threshold oil production is achieved and control of gas and water ingress.

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ENEGEX LIMITED ABN 28 160 818 986

Given the favourable prevailing oil price when the Retention Lease was applied for and granted, numerous field development concepts were then considered likely to be economic (subject to achieving threshold production volumes).

The current sustained low oil price environment presents a further significant challenge to the field’s commerciality, having rendered as non-viable the field development concepts previously considered likely to be economic.

Reflecting the changed oil price environment, new development concept screening was undertaken during the year with the objective of identifying a field development concept with the potential to be commercial at current oil prices (US$50/Bbl). Following this screening, a field development concept predicated on the use of a Mobile Offshore Production Unit (MOPU) with a subsea tank and single point mooring has been selected for further investigation. This concept is significantly different to earlier concepts with significant cost reduction implications. Integrated reservoir modelling and facilities work has been commenced to support design of a production test well capable of delivering threshold productivity using this development concept.

The Cornea Joint Venture has applied to vary the conditions of WA-54-R to facilitate this work.

DIRECTORS

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

GA Menzies LL.B

Chairman - Appointed 17/10/12 – Resigned 11/4/17

EG Albers LLB, FAICD

Chairman since 12/4/17

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 Limited 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 Limited and Peako Limited.

AP Armitage FCA FAICD

Non-Executive Director

Director since 11/4/17

Mr Armitage began his professional career with an international accounting firm. After qualification he was invited into partnership of a national firm. Since the early 1980s he has been a director of a number of listed exploration companies in both Australia and New Zealand. He is currently a Non-Executive director of ASX listed Strategic Energy Resources Limited and Peako Limited.

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ENEGEX LIMITED ABN 28 160 818 986

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 the ASX listed companies Octanex Limited and Peako Limited. 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	2	2	2	2
RL Clark	2	2	2	2
AP Armitage*	-	-	-	-

The board undertakes all audit committee functions.

• AP Armitage was appointed 11 April 2017. GA Menzies resigned 11 April 2017.

SHARE CAPITAL

ORDINARY SHARES

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

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

EG Albers Non-Executive Chairman RL Clark Executive Director AP Armitage Non-Executive Director

AP Armitage was appointed 11 April 2017. GA Menzies resigned 11 April 2017.

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 (2016: $Nil).

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

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ENEGEX LIMITED ABN 28 160 818 986

REMUNERATION REPORT (Continued)

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.

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	2017	-	-	-	-		-	-
	2016	-	-	-	-		-	-
EG Albers	2017	-	-	-	-		-	-
	2016	-	-	-	-		-	-
RL Clark	2017	-	-	-	-		-	-
	2016	-	-	-	-		-	-
AP Armitage	2017	-	-	-	-		-	-
	2016	-	-	-	-		-	-
TOTAL	2017	-	-	-	-		-	-
	2016	-	-	-	-		-	-

AP Armitage was appointed 11 April 2017. GA Menzies resigned 11 April 2017.

There were no shares or options issues to directors as part of compensation during the year ended 30 June 2017.

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 2016	Issue	Exercised	Change	30 June 2017
				Other
GA Menzies	269,674	-	-	(269,674) (i)	-
EG Albers	30,888,308	-	-	1,750,762	32,639,070
RL Clark	75,000	-	-	-	75,000
AP Armitage	-	-	-	-	-
	____	__	__	__	__
	31,232,982	-	-	1,481,088	32,714,070
	=========	=======	=======	=======	=========

(i) AP Armitage was appointed 11 April 2017. GA Menzies resigned 11 April 2017.

End of Remuneration Report

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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.

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 2017.

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

Signed in accordance with a resolution of the directors.

RL Clark Director Melbourne, 27 September 2017

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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 2017 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 5 to 6 of the Directors’ Report, (as part of the audited Remuneration Report), for the year ended 30 June 2017, 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, 27 September 2017

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ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017

		2017	2016
	NOTE	$	$
Revenue - interest received		9,783	8,810
Expenses	2	(101,090)	(104,790)
		__	__
Loss before income tax expense		(91,307)	(95,980)
Income tax expense	3	-	-
		__	__
Loss for the year		(91,307)	(95,980)
		__	__
Other comprehensive income
Increase in fair value of available-for-sale financial asset		1,970	-
		__	__
Total comprehensive income for the year		(89,337)	(95,980)
		__	__
		cents	cents
Basic loss per share (cent per share)	15	(0.113)	(0.178)
Diluted loss per share (cent per share)	15	(0.113)	(0.178)

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

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ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2017

STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2017
		2017	2016
	NOTE	$	$
CURRENT ASSETS
Cash and cash equivalents	4	431,664	609,011
Trade and other receivables	5	3,757	8,776
		__	__
TOTAL CURRENT ASSETS		435,421	617,787
		__	__
NON-CURRENT ASSETS
Available-for-sale financial assets	6	23,104	-
Exploration and evaluation assets	7	121,920	89,580
		__	__
TOTAL NON-CURRENT ASSETS		145,024	89,580
		__	__
TOTAL ASSETS		580,445	707,367
		__	__
CURRENT LIABILITIES
Trade and other payables	8	32,857	72,392
		__	__
TOTAL CURRENT LIABILITIES		32,857	72,392
		__	__
TOTAL LIABILITIES		32,857	72,392
		__	__
NET ASSETS		547,588	634,975
		========	=======
EQUITY
Issued capital	9	1,366,891	1,364,941
Reserves		1,970	-
Accumulated losses		(821,273)	(729,966)
		__	__
TOTAL EQUITY		547,588	634,975
		========	=======

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

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ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017

At 1 July 2016 Cost of Issue (reversal) Loss for the year Revaluation of financial asset (net of tax) Total comprehensive income for the year At 30 June 2017 At 1 July 2015 Transaction with owners in their capacity as owners Issue of shares Cost of issue Loss for the year Total comprehensive income for the year At 30 June 2016	Issued capital Accumul’d losses AFS Reserve Total Equity $ $ $ $ 1,364,941 ( 729,966) - 634,975 1,950 - - 1,950 - ( 91,307) - ( 91,307) - - 1,970 1,970
	- ( 91,307) 1,970 (89,337)
	1,366,891 (821,273) 1,970 547,588
	1,096,907 ( 633,986) - 462,921 321,998 - - 321,998 ( 53,964) - - ( 53,964) - ( 95,980) - ( 95,980)
	- ( 95,980) - (95,980)
	1,364,941 (729,966) - 634,975

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

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ENEGEX LIMITED ABN 28 160 818 986

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017
	NOTE	2017	2016
		$	$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers		(111,966)	(136,932)
Interest received		10,293	9,553
		__	__
Net cash outflow in operating activities	(i)	(101,673)	(127,379)
		__	__
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to suppliers - exploration		(32,340)	(22,947)
Payments for investments		(21,134)	-
		__	__
Net cash outflow from investing activities		(53,474)	(22,947)
		__	__
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares		-	321,998
Costs of share issue		(22,200)	(29,814)
		__	__
Net cash (outflow) / inflow from financing activities		(22,200)	292,184
		__	__
Net (decrease) / increase) in cash and cash equivalents		(177,347)	141,858
Cash and cash equivalents at the beginning of the year		609,011	467,153
		__	__
CASH AND CASH EQUIVALENTS AT YEAR END	4	431,664	609,011
		=======	=======
(i) RECONCILIATION OF LOSS TO NET CASH OUTFLOW IN OPERATING		ACTIVITIES
Loss after income tax		(91,307)	(95,980)
Changes in Assets and Liabilities:
Decrease in payables		(15,385)	(28,850)
Decrease / (increase) in receivables		5,019	(2,549)
		__	__
Net cash outflow from operating activities		(101,673)	(127,379)
		=======	=======

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

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ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

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 2017 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 27 September 2017.

(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, including the costs of acquiring permits or licences, are capitalised as exploration and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if 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 of an exploration and evaluation asset may exceed its recoverable amount. One or more of the following facts and circumstances indicate that an entity should test exploration and evaluation assets for impairment (the list is not exhaustive):

(i) the exploration and evaluation tenure right has expired or are expected to expire in the near future, and is not expected to be renewed.

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ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Exploration and evaluation expenditure (continued)

(ii) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned.

(iii) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area.

(iv) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

Proceeds from 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 overs costs recouped are accounted for as a gain on disposal.

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.

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ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2016

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(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.

(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.

15

ENEGEX LIMITED ABN 28 160 818 986

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Accounting estimates and judgements (continued)

The estimated amounts represent the higher end of possible future expenditure. Work requirements achieved by farmins 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 and other comprehensive income.

Management have determined that there are no impairment indicators for the capitalised exploration and evaluation expenditure relating to WA-54-R (note 7) relying upon and applying the tests contained in AASB 6.20, in particular on the basis that the Cornea Joint Venture continues to undertake work to address Cornea’s key barriers to commercialisation.The objective of the current work activities is to support design of a production test well to achieve economic production. The Joint Venture has applied to the regulator to vary the conditions of the Retention Lease to move the timing for a production test well from the current year (May 17-May 18) so that integrated reservoir modelling and facilities work using the recently identified low-capex development concept can be completed in order to design a production test well capable of delivering sufficient threshold productivity to demonstrate economic viability for the development of the field.

(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.

16

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

(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.

(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 2016.

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.

17

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2017

	NOTE	2017	2016
		$	$
NOTE 2 EXPENSES
Audit and other related fees	17	25,000	24,660
Consultants fees		12,275	7,378
Office costs		25,652	26,176
Stock exchange and registry costs		21,264	26,878
Other expenses		16,899	19,698
		__	__
		101,090	104,790
		=======	=======
NOTE 3 INCOME TAX BENEFIT
Components of income tax benefit
Current tax benefit		(27,392)	(28,794)
Deferred tax relating to the origination and reversal of temporary differences		-	-
Deferred tax asset not brought to account		27,392	28,794
		__	__
Income tax benefit		-	-
		=======	=======
Reconciliation between tax benefit and pre-tax loss
Loss before tax		(91,307)	(95,980)
		=======	=======
Income tax using statutory income tax rate of 30% (2016: 30%)		(27,392)	(28,794)
		__	__
Tax benefit		(27,392)	(28,794)
Deferred tax asset not brought to account		27,392	28,794
		__	__
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		950,960	809,007
Temporary differences		(110,563)	(79,050)
		__	__
		840,397	729,957
		=======	=======

18

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017
	2017	2016
	$	$
NOTE 4 CASH AND CASH EQUIVALENTS
Cash at bank and on hand	431,664	609,011
	__	__
	431,664	609,011
	=======	=======
Cash and cash equivalents are subject to interest rate risk as they earn floating rates. The bank deposit is at ca
2017.
NOTE 5 TRADE & OTHER RECEIVABLES
Other receivables	3,757	8,776
	__	__
	3,757	8,776
	=======	=======

Cash and cash equivalents are subject to interest rate risk as they earn floating rates. The bank deposit is at call in 2017.

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 AVAILABLE-FOR-SALE FINANCIAL ASSETS

Investments in listed equities
Balance at beginning of year	-	-
Purchase of listed equities	21,134	-
Net revaluation increment	1,970	-
	__	__
Balance at end of year	23,104	-
	=======	=======
NOTE 7 EXPLORATION AND EVALUATION ASSETS
Balance at beginning of year	89,580	66,383
Expenditure for the year	32,340	23,197
	__	__
Balance at end of year	121,920	89,580
	=======	=======

Exploration and evaluation assets relate to the areas of interest in the exploration phase for petroleum retention lease WA-54-R. (2016: WA-54-R).

WA-54-R is held through joint operations and details of interests held in the permits can be found in Note 10.

NOTE 8 TRADE AND OTHER PAYABLES

NOTE 8 TRADE AND OTHER PAYABLES
Other payables and accrued expenses	14,746	21,186
Director-related entities – other payables (Note 12)	18,111	51,206
	__	______
	32,857	72,392
	=======	======

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 14.

19

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2017

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

|||||||
|---|---|---|---|---|---|
|2017|2017|2016|2016|
|Shares|$|Shares|$|
|NOTE 9 ISSUED CAPITAL|
|Issued Capital|
|Ordinary shares fully paid|80,499,737|1,364,941|80,499,737 1,364,941|
|========= ========|========= ========|
|Ordinary Shares|
|Movements during the year|
|Balance at beginning of year|80,499,737|1,364,941|53,666,491 1,096,907|
|Shares issued:|
|-|Per rights issue|-|-|26,833,246|321,998|
|- Costs of issue|-|1,950*|-|(53,964)|
|_|_|_ _|
|Balance at end of year|80,499,737|1,366,891|80,499,737 1,364,941|
|========= ========|========= ========|

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

• Partial reversal of 2016 cost

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 10 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 13. Details of the company’s interests in the joint operations are:

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

|||||
|---|---|---|---|
|Interest|Interest|Interest|
|30/6/2017|Acquired 30/6/2016|
|(|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:|
|2017|2016|
|$|$|
|CURRENT ASSETS|
|Cash and cash equivalents|1,372|9,846|
|Trade and other receivables|1,119|197|
|_|_|
|TOTAL CURRENT ASSETS|2,491|10,043|
|NON-CURRENT ASSETS|
|Exploration costs|121,920|89,580|
|_|_|
|TOTAL ASSETS|124,411|99,623|
|=======|=======|

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

20

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

2017 2016 $ $

NOTE 10 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
Trade and other payables – director related	7,910	9,580
	__	__
TOTAL LIABILITIES	7,910	9,947
	=======	=======

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 13.

NOTE 11 KEY MANAGEMENT PERSONNEL

Non-executive Directors Executive Director EG Albers RL Clark AP Armitage

AP Armitage was appointed 11 April 2017. GA Menzies resigned 11 April 2017.

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 PA Armitage, EG Albers and RL Clark in their capacities as consultants or service providers to Enegex are disclosed below in the Related Party Note 12. 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	2017	-	-	-	-		-
	2016	-	-	-	-		-

NOTE 12 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

21

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 12 RELATED PARTY TRANSACTIONS (Continued)

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

	Service Provided	2017	2016
			$
		$
Gresham	Management and consulting services to the Company	-	13,809
Samika	Consulting services to the Company	14,274	5,065
Exoil	Office rental and services	28,020	20,727
NRG	Management of exploration tenements	10,064	8,925
Octanex	Accounting and company secretarial services	9,456	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, Octanex Cornea Pty Ltd, Moby Oil & Gas Pty Ltd, Octanex Limited, 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:

	2017	2016
	$	$
Payables
Natural Resources Group Pty Ltd	7,066	35,490
Exoil Pty Ltd	6,480	6,315
Samika Pty Ltd	181	2,430
Octanex Limited	4,384	6,971
	__	__
TOTAL LIABILITIES	18,111	51,206
	=======	=======
NOTE 13 EXPLORATION AND EVALUATION PERMIT COMMITMENTS
Estimated expenditure to satisfy contractual and permit work obligations
Not later than 1 year
WA-54-R	37,188	46,484
	======	======
Later than 1 year but not later than 3 years
WA-54-R	6,098,750	6,015,078
	=======	=======

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.

22

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 14 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 $3,022 (2016: $4,264)

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 2017 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.

23

ENEGEX LIMITED ABN 28 160 818 986

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 15 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 16 LOSS PER SHARE

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

	2017	2016
	$	$
Net Loss	(91,307)	(95,980)
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	80,499,737	53,945,391
	2017	2016
	$	$
NOTE 17 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	25,000	24,660
Other assurance services	-	-
	______	______
	25,000	24,660
	======	======

NOTE 18 EVENTS SINCE BALANCE DATE

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

24

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The Rialto, Level 30 525 Collins St Melbourne Victoria 3000

Correspondence to: GPO Box 4736 Melbourne Victoria 3001

Independent Auditor’s Report To the Members of Enegex Limited

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

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Enegex Limited (the “Company”), which comprises the statement of financial position as at 30 June 2017, 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, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

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

• a Giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its performance for the year ended on that date; and

• b Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter	How our audit addressed the key audit matter
Exploration and Evaluation Assets – valuation Note 7
At 30 June 2017 the carrying value of Exploration and Evaluation Assets was $121,920. In accordance with AASB 6_Exploration for and_ Evaluation of Mineral Resources, the company is required to assess at each reporting date if there are any triggers for impairment which may suggest the carrying value is in excess of the recoverable value. The process undertaken by management to assess whether there are any impairment triggers in each area of interest involves an element of management judgement. This area is a key audit matter due to the valuation of exploration and evaluation assets being a significant risk.	Our procedures included, amongst others: Obtaining the management prepared reconciliation of capitalised exploration and evaluation expenditure and agreeing to the general ledger; Conducting a detailed review of management’s assessment of trigger events prepared in accordance with AASB 6 including; - Tracing projects to statutory registers and exploration licenses to determine whether a right of tenure existed; - Enquiry of management regarding their intentions to carry out exploration and evaluation activity in the relevant exploration area, including review of managements’ budgeted expenditure; - Understanding whether any data exists to suggest that the carrying value of these exploration and evaluation assets are unlikely to be recovered through development or sale; and Reviewing the appropriateness of the related disclosures within the financial statements.

Information Other than the Financial Report and Auditor’s Report Thereon The Directors are responsible for the other information. The other information comprises the information included in the Company’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard

Responsibilities of the Directors’ 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 gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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In preparing the financial report, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 5 to 6 of the directors’ report for the year ended 30 June 2017.

In our opinion, the Remuneration Report of Enegex Limited, for the year ended 30 June 2017, complies with section 300A of the Corporations Act 2001 .

Responsibilities

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.

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GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

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

A R J Nathanielsz Partner - Audit & Assurance

Melbourne, 27 September 2017

==> 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 ENEGEX LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Enegex Limited for the year ended 30 June 2017, 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.

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GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

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

A R J Nathanielsz Partner - Audit & Assurance

Melbourne, 27 September 2017

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.

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 25 SEPTEMBER 2017

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	200	63,804
1,001 – 5,000	314	957,522
5,001 – 10,000	212	1,663,273
10,001 – 100,000	430	14,125,019
100,001 and over	72	63,690,119
TOTAL ON ISSUE	1,228	80,499,737

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

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ENEGEX LIMITED ABN 28 160 818 986

SHAREHOLDER AND OTHER INFORMATION (continued)

COMPILED AS AT 25 SEPTEMBER 2017

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	32,639,070	40.55
Ross Di Bartolo	8,815,126	10.95

THE 20 LARGEST HOLDERS OF ORDINARY	SHARES
Holder	Ordinary Shares	% of Total Issued
Mr Ernest Geoffrey Albers	14,690,467	18.25%
Mr Ross Di Bartolo	8,815,126	10.95%
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 Ltd	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%
TRE Pty Ltd	1,345,942	1.67%
ICM Investments Pty Ltd	1,311,233	1.63%
Peppercorn Hill Pty Ltd	1,125,000	1.40%
Pillage Investments 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%
500 Custodian Pty Ltd	765,000	0.95%
EERC Australasia Pty Ltd	648,750	0.81%
Appledore Custodians Limited	632,813	0.79%
Relativity Pty Ltd	603,333	0.75%

The 20 largest shareholders hold 53,044,812 shares representing 65.89% of the issued share capital.

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