MOAB MINERALS LIMITED — Annual Report 2017

Aug 28, 2017

Appendix 4E Preliminary final Report

Appendix 4E

Preliminary final report

Name of entity

Delecta Limited

ABN or equivalent company reference 92 009 147 924 Results for announcement to the market	ABN or equivalent company reference 92 009 147 924 Results for announcement to the market	Financial year ended (‘current period’) 30 June 2017 $A'000
Revenues from continuing operations Profit from continuing operations after tax attributable to members Net profit after tax for the period attributable to members		Up 7% to 18,500 Up - to 1,219 Up - to 1,219
Dividends (distributions)		Amount per security Franked amount per security
Final dividend Interim dividend		None - ¢
Previous corresponding period		None -¢
+Record date for determining entitlements to the dividend, (in the case of a trust,distribution)		N/A

The above results should be read in conjunction with the notes and commentary contained in this report.

Page 1

Appendix 4E Preliminary final Report

Management Discussion and Analysis

Overview

The consolidated entity recorded a net profit of $1,219,000 from continuing operations and total operations (2016: loss $172,000).

The total earnings per share for the year was 0.19 cents (2016: loss 0.03 cents).

The total Group revenues from continuing operations for the year increased by 7% to $18,500,000, with the Group recording a net profit of $1,219,000 from operations after accounting for a $913,000 profit on the de-recognition of its former associate, European Lithium Limited (formally Paynes Find Gold Limited) and a $652,000 impairment of its oil and gas property.

Summarised operating results are as follows:

Year ended 30 June 2017

Year ended 30 June 2017
Operating Segment	Sales and services revenues from external customers $’000 Other income $’000 Earnings before interest, tax, depreciation, amortisation and impairment $’000 Depreciation, amortisation and impairment $’000 Net Interest received $’000	Profit / (loss) before income tax $’000
Wholesale Unallocated Profit on de-recognition of associate Impairment of oil and gas property Total	18,495 333 1,835 (84) - - - (798) - 5	1,751 (793)
	18,495 333 1,037 (84) 5	958 913 (652) 1,219

Year ended 30 June 2016

Operating Segment	Sales and services revenues from external customers $’000 Other income $’000 Earnings before interest, tax, depreciation, amortisation and impairment $’000 Depreciation, amortisation and impairment $’000 Net Interest received $’000	Profit / (loss) before income tax $’000
Wholesale Unallocated Share of loss of associate Total	17,273 369 800 (189) - - - (689) - 6	611 (683)
	17,273 369 111 (189) 6	(72) (100) (172)

Page 2

Appendix 4E Preliminary final Report

Wholesale

The division’s continuing focus on the supply of premium brands and products to its customers saw the wholesale division record a 7% increase in wholesale revenues for the year.

This increase in revenues, along with the ongoing focus on costs has resulted in the division recording a net profit of $1,751,000 for the period, up from a net profit of $611,000 in the prior year.

Oil & Gas Operation

On 25 September 2014, the Group acquired an 80% working interest and a 58% net revenue interest in an oil and gas field development project, the Wise I-25 Well, situated within the Canadian River Project area, in Okfuskee County, Oklahoma.

For most of the current financial year, oil and gas continued to be drawn in decreasing volumes from the Viola Limestone formation.

In April 2017, the Wilcox Formation was perforated allowing the wellbore to access both the Viola Limestone and Wilcox formations. Since then the operator has been tuning the production and upgrading the production facilities, including the water disposal system, in order to handle the additional water from the Wilcox Formation.

In line with the Group’s accounting policies the project has been fully transferred to oil and gas properties given the changes in the operation in the last six months with the break-through to the second reservoir formation.

At 30 June 2017, the well had not commenced full production, although oil, gas and water rates had starting to trend in the expected direction. However, a valuation of the project based on discounted projected cash flows resulted in the group recording an impairment provision of $652,000 for the year.

Head Office / Corporate

Head office / corporate expenditure for the year increased from $689,000 to $798,000.

Contingencies

There were no known contingent assets or liabilities within the group at year end.

Subsequent Events

No matter or circumstance has arisen since the end of the financial year to the date of this report which has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial years.

Page 3

Appendix 4E Preliminary final Report

Statement of Comprehensive Income For the Year ended 30 June 2017

==> picture [448 x 597] intentionally omitted <==

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

Consolidated
For the year For the year
Notes ended 30 June ended 30 June
2017 2016
$'000 $'000
Continuing Operations
Revenue 1 18,500 17,279
Cost of sales (13,056) (12,934)
Gross Profit 5,444 4,345
Other income 1 1,246 481
Other expenses 1 (5,471) (4,898)
Profit /(loss) from continuing operations before
tax, finance costs and share of associate 1,219 (72)
income
Finance costs - -
Share of loss of associate - (100)
Profit / (loss) from continuing operations before
income tax 1,219 (172)
- -
Income tax expense
Net profit / (loss) for the period 1,219 (172)
Other comprehensive income
Items that may be reclassified subsequently to profit
and loss
- Foreign currency translation (121) 68
- Available for sale gains and (losses) (429) -
Other comprehensive (loss) / income (550) 68
Total comprehensive income / (loss) for the
period 669 (104)
Loss per share
Earnings / (loss) per share 0.19 cents (0.03) cents
Diluted earnings / (loss) per share 0.19 cents (0.03) cents
----- End of picture text -----

Page 4

Appendix 4E Preliminary final Report

Statement of Financial Position As at 30 June 2017

==> picture [448 x 549] intentionally omitted <==

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

As at As at
Consolidated Notes 30 June 2017 30 June 2016
$'000 $'000
Current assets
Cash and cash equivalents 1,099 701
Trade and other receivables 2,626 2,022
Inventories 3,455 3,020
Available for sale assets 3 484 -
Prepayments and deposits 818 801
Total current assets 8,482 6,544
Non-current assets
Plant and equipment 227 276
Exploration and evaluation 4 - 3,729
Oil and gas properties 5 2,962 -
Total non-current assets 3,189 4,005
Total assets 11,671 10,549
Current liabilities
Trade and other payables 1,376 887
Provisions 130 128
Total current liabilities 1,506 1,015
Non-current liabilities
Provisions 114 152
Total non-current liabilities 114 152
Total liabilities 1,620 1,167
Net assets 10,051 9,382
Equity
Contributed equity 6 69,493 69,493
Reserves 238 788
Accumulated losses (59,680) (60,899)
Total equity 10,051 9,382
----- End of picture text -----

Page 5

Appendix 4E Preliminary final Report

Cash Flow Statement For the Year ended 30 June 2017

==> picture [447 x 434] intentionally omitted <==

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

Consolidated Notes For the year For the year
ended 30 June ended 30 June
2017 2016
$’000 $’000
Cash flows from operating activities
Receipts from customers 20,438 20,109
Payments to suppliers and employees (19,982) (20,097)
Interest received 5 5
Net cash flows from operating activities
461 17
Cash flows (used in) / from investing activities
Payment for purchases of property, plant and
equipment (35) (208)
Proceeds from disposal of fixed assets - 23
Exploration and evaluation - 334
Security deposits (paid) / refunded (18) 12
Net cash flows (used in) / from investing (53) 161
activities
Net increase in cash held 408 178
Cash and cash equivalents at beginning of period 701 515
Net foreign exchange difference (10) 8
Cash and cash equivalents at end of period 1,099 701
----- End of picture text -----

Page 6

Appendix 4E Preliminary final Report

Statement of Changes in Equity Year ended 30 June 2017

==> picture [457 x 318] intentionally omitted <==

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

Consolidated
Issued Accumulated Other Total equity
Capital losses reserves
$’000 $’000 $’000 $’000
At 1 July 2015 69,493 (60,727) 720 9,486
Other comprehensive income - - 68 68
Loss for the year - (172) - (172)
Total comprehensive income for the
year - (172) 68 (104)
At 30 June 2016 69,493 (60,899) 788 9,382
- -
Other comprehensive loss (550) (550)
Profit for the year - 1,219 - 1,219
Total comprehensive income for the
year - 1,219 (550) 669
At 30 June 2017 69,493 (59,680) 238 10,051
----- End of picture text -----

Page 7

Appendix 4E Preliminary final Report

Reconciliation of cash

==> picture [452 x 119] intentionally omitted <==

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

Reconciliation of cash at the end of the period (as shown in
the consolidated statement of cash flows) to the related items As at 30 June As at 30 June
in the accounts is as follows : 2017 2016
$'000 $'000
Cash on hand and at bank 1,096 698
Deposits at call 3 3
Total cash at end of period 1,099 701
----- End of picture text -----

Non-cash financing and investing activities

There were no non-cash financing and investing activities undertaken by the consolidated entity in the current or prior financial year.

NTA backing

NTA backing
	As at 30 June 2017	As at 30 June 2016
Net tangible asset backing per ordinary security	1.59 cents	1.50 cents

Page 8

Appendix 4E Preliminary final Report

Notes to the Preliminary Final Report

1 REVENUE AND EXPENSES

Consolidated Revenue Continuing Operations Sales and services revenue Finance revenue	For the year ended 30 June 2017 $'000	For the year ended 30 June 2016 $'000
	18,495 5	17,273 6
	18,500	17,279
Other Income Continuing Operations Foreign exchange gain Profit on de-recognition of associate Other Income	- 913 333	112 - 369
	1,246	481
Expenses Continuing operations Administration expenses Distribution expenses Marketing expenses Occupancy expenses Other	3,453 194 233 478 1,113	3,377 220 222 456 623
	5,471	4,898
Continuing Operations Included in other expenses: Depreciation and amortisation of fixed assets Foreign exchange loss Loss on disposal of fixed assets Impairment of oil andgasproperty	84 2 - 652	189 - 26 -

2 DIVIDENDS PAID AND PROPOSED

No dividends have been paid or proposed during the year.

Page 9

Appendix 4E Preliminary final Report

3 AVAILABLE FOR SALE ASSETS

Listed European Lithium Limited	As at 30 June 2017 $'000 As at 30 June 2016 $'000	As at 30 June 2017 $'000 As at 30 June 2016 $'000
	484 -
	484	-

Following a capital raising, the Group’s investment in European Lithium Limited (formally Paynes Find Gold Limited) was diluted to 3% on 9 September 2016 from 15.1% at 30 June 2016. This resulted in the loss of significant influence and the re-classification of the investment as an associate accounted for using the equity method (investment value was carried at nil at the date of losing significant influence (30 June 2016: nil)) to an available for sale financial asset, recognised at fair value on the date of reclassification ($913,000) and subsequently re-value to market value at 30 June 2017 with the movement being recorded in other comprehensive income.

At 30 June 2017, the investment has been valued with reference to its market price at balance date (AUD$0.044) by the 11 million shares owned. This is a level 1 measurement basis on the fair value hierarchy.

4 EXPLORATION AND EVALUATION

Exploration and evaluation Cost at beginning of period Foreign exchange gain on conversion Exploration expenditure net of testing revenue Transferto Oiland GasProperties	As at 30 June 2017 $'000 As at 30 June 2016 $'000	As at 30 June 2017 $'000 As at 30 June 2016 $'000
	3,730 (115) (1) 3,836 140 (246) (3,614)
	-	3,730

On 25 September 2014, the Group acquired an 80% working interest and a 58% net revenue interest in an oil and gas field development project, the Wise 1-25 Well, situated within the Canadian River Project area, in Okfuskee County, Oklahoma. The Group accounts for this interest as a joint arrangement. At 30 June 2017, there were no commitments relating to this joint operation

In April 2017, the Wilcox Formation was perforated allowing the wellbore to access both the Viola Limestone and Wilcox formations. Since then the operator has been tuning the production and upgrading the production facilities, including the water disposal system, in order to handle the additional water from the Wilcox Formation.

At 30 June 2017, the well had not commenced full production, however in line with the Group’s accounting policies the project has been fully transferred to oil and gas properties given the changes in the operation in the last six months with the break-through to the second reservoir formation.

The recoverability of the carrying amount of exploration expenditure assets is dependent upon the successful commercialisation or disposal of the assets at amounts in excess of their current values.

Page 10

Appendix 4E Preliminary final Report

5 OIL AND GAS PROPERTIES

==> picture [455 x 131] intentionally omitted <==

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

As at As at
30 June 2017 30 June 2016
$'000 $'000
Oil and gas properties
- -
Cost at beginning of period
Additions - -
-
Transferred from exploration and evaluation assets 3,614
-
Impairment current year (652)
2,962 -
----- End of picture text -----

During the year ended 30 June 2017 the Group transferred its interest in the Wise 1-25 Well development project to oil and gas properties.

A valuation of the project based on discounted projected cash flows resulted in the group recording an impairment provision of $652,000 for the year.

6 ISSUED CAPITAL

==> picture [461 x 180] intentionally omitted <==

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

As at As at
30 June 2017 30 June 2016
$'000 $'000
Issued and fully paid
Ordinary shares 69,493 69,493
69,493 69,493
Number of shares $’000
Movements in ordinary shares on issue
At 1 July 2016 633,496,205 69,493
- -
Issued during the year
At 30 June 2017 633,496,205 69,493
----- End of picture text -----

7 OPERATING SEGMENTS

Identification of Reportable Segments

The Group has identified its operating segments based on its internal reports and used by the executive team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on the manner in which the product is sold and the nature of the services provided. Discrete financial information about each of these operating businesses is reported to the executive management team on a monthly basis.

The reportable segments are based on aggregated operating segments determined by the similarity of the manner in which the products are sold or provided as these are the sources of the Group’s major risks and have the most effect on the rates of return.

Page 11

Appendix 4E Preliminary final Report

Types of Products and Services

Wholesale

The wholesale segment divisions are those divisions that sell adult products directly to wholesale customers in Australia and New Zealand.

Accounting Policies and Inter-segment Transactions

The accounting policies used by the Group in reporting segments are the same as those contained in note 2 to the financial statements and in prior periods.

Inter-entity sales

Wholesale sales within the group are at cost.

Corporate Charges

Non-segmental expenses, such as head office expenses and expenses that are not directly attributable to a segment and not considered part of the core operations of any segment, are not allocated to operating segments by way of corporate charges and include:

• Head office employee expenses and directors’ fees

• Company secretarial and listing expenses

• Group legal fees

• General head office expenses (travel and accommodation, directors and officer’s insurance, telephone, etc)

The following table presents the revenue and profit information relating to business segments for the years ended 30 June 2017 and 30 June 2016:

30 June 2017 Segment Revenue Sales to and other revenue from external customers Unallocated interest income Total Revenue and Other Income per the Statement of Comprehensive Income Segment Result Segment Results Unallocated items - Corporate charges - Net Interest income Profit on de-recognition of associate Impairment of oil and gas property Net loss per the Statement of Comprehensive Income	Continuing Operations Wholesale Other Total $’000 $’000 $’000	Continuing Operations Wholesale Other Total $’000 $’000 $’000
	18,828 - 1,751 -	18,828 5
		18,833
		1,751 (798) 5 913 (652) 1,219

Page 12

Appendix 4E Preliminary final Report

30 June 2016 Segment Revenue Sales to and other revenue from external customers Unallocated interest income Total Revenue and Other Income per the Statement of Comprehensive Income Segment Result Segment Results Unallocated items - Corporate charges - Net Interest income Share of loss of associate Net loss per the Statement of Comprehensive Income	Continuing Operations Wholesale Other Total $’000 $’000 $’000	Continuing Operations Wholesale Other Total $’000 $’000 $’000
	17,642 - 611 -	17,642 6
		17,648
		611 (689) 6 (100) (172)

Page 13

Appendix 4E Preliminary final Report

Annual meeting

(Preliminary final report only)

The annual meeting will be held as follows:

Place

Date

Time

Approximate date the[+] annual report will be available

9 Foundry Street, Maylands, Perth. 30 November 2017 9 am 23 October 2017

Compliance statement

• 1 This report has been prepared in accordance with ASX Listing Rules.

• 2 This report, and the +accounts upon which the report is based (if separate), use the same accounting policies.

• 3 This report does give a true and fair view of the matters disclosed.

• 4 This report is based on +accounts to which one of the following applies.

(Tick one)  The[+] accounts have been  The[+] accounts have been audited. subject to review.  The[+] accounts are in the  The[+] accounts have not yet process of being audited been audited or reviewed. or subject to review.

==> picture [117 x 81] intentionally omitted <==

Sign here: ............................................................ Date: 29 August 2017 (Director)

Print name: Malcolm Day

Page 14