Announcement PDF ADAVALE RESOURCES LIMITED ACN 008 719 015 HALF YEAR REPORT 31 DECEMBER 2015 This financial report covers the consolidated entity consisting of Adavale Resources Limited and it’s controlled entities. This Interim Financial Report should be read in conjunction with the company’s annual report for the period ended 30 June 2015. 1 ADAVALE RESOURCES LIMITED FINANCIAL REPORT for the half year ended 31 December 2015 ACN 008 719 015 CORPORATE DIRECTORY .......................................................................................................................................... 3 DIRECTORS’ REPORT .................................................................................................................................................. 4 AUDITOR’S INDEPENDENCE DECLARATION ....................................................................................................... 6 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............ 7 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................................. 8 CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................ 9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................................ 10 NOTES TO THE FINANCIAL STATEMENTS .......................................................................................................... 11 DIRECTORS’ DECLARATION ................................................................................................................................... 19 INDEPENDENT REVIEW REPORT ........................................................................................................................... 20 2 ADAVALE RESOURCES LIMITED CORPORATE DIRECTORY Directors Haryono Eddyarto (Chairman) Saharto Sahardjo Albert Cheok Peter Murphy Company Secretary Leanne Ralph Registered Office Level 9, 115 Pitt Street SYDNEY NSW 2000 Telephone Facsimile (02) 82630515 (02) 82630500 Share Registry Computershare Investor Services Pty Limited Level 4, 60 Carrington Street Sydney NSW 2000 Auditor Grant Thornton Audit Pty Ltd Level 1, 10 Kings Park Road PERTH WA 6005 Stock Exchange Australian Stock Exchange Limited 20 Bridge Street SYDNEY NSW 2000 ASX Code ADD (fully paid ordinary shares) 3 ADAVALE RESOURCES LIMITED DIRECTORS’ REPORT The Directors of Adavale Resources Limited submit herewith the financial report for the half year ended 31 December 2015. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: Directors The names of the Directors of the company during or since the end of the half year and up to the date of this report are: Haryono Eddyarto (Chairman) Saharto Sahardjo Albert Cheok Peter Murphy The Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Principal Activity The principal activities of the Group continue to be mining explorations and development in Australia and Indonesia. Adavale Resources Ltd has established itself in the coal industry in Indonesia and will continue to research and identify quality coal projects across Indonesia. The Group continues to hold its uranium tenements at Lake Surprise in South Australia and is actively seeking joint venture partners to further explore the area. Dividends No dividends were paid or declared for payment during the financial period. Review of Operations The net loss from ordinary activities after income tax for the half year ended 31 December 2015 was $235,417 (December 2014: net loss $293,164). The loss from ordinary activities before income tax expense includes the following revenues and expenses disclosure is relevant in explaining the financial performance of the entity: Revenue from continuing operations Half Year Ended 31 Dec 2015 $ 1,818 Half Year Ended 31 Dec 2014 $ - Expenses from continuing operations (237,235) (293,164) Loss from continuing operations (235,417) (293,164) Loss from ordinary activities (235,417) (293,164) The result for the half-year is in line with Management and Board expectations. 4 Level 1 10 Kings Park Road West Perth WA 6005 Correspondence to: PO Box 570 West Perth WA 6872 Auditor’s Independence Declaration To The Directors of Adavale Resources Limited T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Adavale Resources Limited for the half-year ended 31 December 2015, 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 review; and b No contraventions of any applicable code of professional conduct in relation to the review. GRANT THORNTON AUDIT PTY LTD Chartered Accountants P W Warr Partner - Audit & Assurance Perth, 15 March 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. ADAVALE RESOURCES LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the half year ended 31 December 2015 Note Continuing operations Other revenue Total Revenue Insurance Depreciation and amortisation expense Contractor and consultants expense Legal expenses Share registry fees Management & administration Finance cost – Financial Instrument Interest expense – convertible loan Exchange difference Impairment of exploration assets Other expenses from ordinary activities Total expenses 11 Loss before income tax Income tax expense relating to continuing operations Net Loss from continuing operations after income tax expense Other Comprehensive Income: Movement in foreign exchange reserve Total comprehensive Loss for the period Earnings Per Share: Basic (cents per share) Diluted (cents per share) 8 8 Consolidated 31 Dec 2015 $ Consolidated 31 Dec 2014 $ 1,818 1,818 - (12,678) (3,447) (32,418) (118,280) (2,733) (30,246) (35,514) (1,919) (237,235) (10,030) (57) (18,500) (3,000) (35,854) (113,225) (54,431) (25,426) (36) (31,486) (1,119) (293,164) (235,417) (293,164) - - (235,417) (293,164) (24,833) (260,250) (38,627) (331,791) (1.11) (1.11) (1.85) (1.85) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes 7 ADAVALE RESOURCES LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2015 Consolidated 31 Dec 2015 $ Consolidated 30 June 2015 $ 26,672 10,039 36,711 32,024 24,378 56,402 807,500 807,500 807,500 807,500 TOTAL ASSETS 844,211 863,902 CURRENT LIABILITIES Payables TOTAL CURRENT LIABILITIES 721,469 721,469 606,043 606,043 789,627 789,627 720,000 720,000 TOTAL LIABILITIES 1,511,096 1,326,043 NET ASSETS / (DEFICIENCY) (666,885) (462,141) 37,440,031 129,321 (38,236,237) 37,397,632 142,934 (38,002,707) (666,885) (462,141) Note CURRENT ASSETS Cash assets Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Exploration and evaluation assets TOTAL NON-CURRENT ASSETS 4 NON-CURRENT LIABILITIES Borrowings TOTAL NON-CURRENT LIABILITIES 11 EQUITY Share capital Reserves Accumulated losses 8 TOTAL EQUITY The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes 8 ADAVALE RESOURCES LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS for the half year ended 31 December 2015 Note Consolidated 31 Dec 2015 $ Consolidated 31 Dec 2014 $ CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees NET CASH FLOWS USED IN OPERATING ACTIVITIES (108,152) (108,152) (90,041) (90,041) CASH FLOWS FROM INVESTING ACTIVITIES Exploration costs paid NET CASH FLOWS USED IN INVESTING ACTIVITIES (19,600) (19,600) (29,472) (29,472) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Net proceeds from issue of equity securities NET CASH FLOWS FROM FINANCING ACTIVITIES 80,000 42,400 122,400 100,000 100,000 NET (DECREASE) IN CASH ASSETS HELD (5,352) (19,513) Cash assets at the beginning of the half year CASH ASSETS AT THE END OF THE HALF YEAR 32,024 26,672 49,736 30,223 This above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes 9 ADAVALE RESOURCES LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half year ended 31 December 2015 F/X Equity Accumulated Revaluation Component Options Losses Reserve Instrument Reserve $ $ $ $ Share Capital $ Balance at 1 July 2014 Total $ 37,326,274 (37,412,090) 8,620 166,627 51,177 140,608 Comprehensive income / (loss) for the period - (293,164) (38,627) - - (331,791) Equity component of financial instrument - - - 16,923 - 16,923 Transfer on expiry of options - 43,482 - - (43,482) - Net issue of shares - - - - - - Balance at 31 December 2014 37,326,274 (37,661,772) (30,007) 183,550 7,695 (174,260) Balance at 1 July 2015 37,397,631 (38,002,706) (48,310) 183,549 7,695 (462,141) Comprehensive income / (loss) for the period - (235,417) (24,833) - - (260,250) Equity component of Financial Instrument (see Note 11) - - - 13,106 - 13,106 Transfer on expiry of options - 1,886 - - (1,886) - 42,400 - - - - 42,400 37,440,031 (38,236,237) (73,143) 196,655 5,809 (666,885) Net issue of Shares Balance at 31 December 2015 This Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes 10 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 1. NATURE OF OPERATIONS Adavale Resources Limited (“the Company”) and its controlled entities (“the Group”) principal activities of the consolidated entity are mining explorations and development in Australia and Indonesia. Adavale Resources Limited has established itself in the coal industry in Indonesia and will continue to research and identify quality coal projects across Indonesia, including through the Group's 40% joint venture interest in Adavale Harner Resources. The Group is also continuing exploration on its uranium project at Lake Surprise in South Australia as well as evaluating other uranium and coal exploration opportunities. The Company has continued to identify and review coal projects in Indonesia, and continues to pursue farm-out and joint venture opportunities for the Australian Lake Surprise area in South Australia. The Group has continued to place emphasis on the TAPAN project, and has recently renewed the South Australian Lake Surprise Tenements. The Group has been granted tenement acreage adjacent to the existing Lake Surprise tenements. The Group has further curtailed the administrative costs associated with the Group head office, with the Adavale Harner Resources (AHR) Joint Venture bearing the majority of Indonesian expenditure in the last twelve months. 2. GENERAL INFORMATION AND BASIS OF PREPARATION The half year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standard AASB 134: Interim Financial Reporting. It is recommended that this half-year financial report be read in conjunction with the annual financial report for the year ended 30 June 2015 and any public announcements made by Adavale Resources Limited and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001. The half-year report does not include full disclosures of the type normally included in an annual financial report. 3. SIGNIFICANT ACCOUNTING POLICIES Except as referred to below, the interim financial statements have been prepared in accordance with the same accounting policies adopted in the Group’s last annual financial statements for the year ended 30 June 2015. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements. The Group has adopted all of the new and revised Standards and Interpretations issued by the Australia Accounting Standards Board (AASB) that are relevant to its operations and effective for the current half year reporting period. The adoption of all of the new and revised Standards and Interpretations has not resulted in any changes to the Group’s accounting policies and has had no effect on the amounts reporting for the current or prior periods. These half-year financial statements were approved by the Board of Directors on 15 March 2016. Critical Accounting Estimates and Judgements When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in the company’s last annual financial statements for the year ended 30 June 2015. 11 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 Going Concern The Group is at the exploration and evaluation phase of each of its mining tenements. The Group has incurred a loss for the period of $235,417 and a cash outflow from operating and investing activities of $127,752. At period end, the Group’s current liabilities exceeded its current assets by $648,758. The Group is also committed to payments to maintain rights to perform its evaluation activity. As a result, the Group has and expects further cash outflows from operating and investing activities in the next 12 months. Funding of ongoing activities is required from future capital raisings, debt funding and / or asset sales. Therefore at balance date significant uncertainty exists as to the Group’s ability to continue as a going concern. The Directors have prepared the financial statements on a going concern basis, as the Directors believe that sufficient funding will be generated from drawing on the $1,000,000 convertible loan as agreed with the Chairman of the Group. At the end of the period, the Group had drawn down $800,000 of the convertible loan facility, with a remaining $200,000 to be drawn down. In addition to the Convertible Loan Facility, on 15 January 2015, the Company announced it had entered into a capital raising facility (Facility) with a non-related entity Gurney Capital Pty Ltd (GC). The Company also entered into a Standby Subscription Agreement with GC. The purpose of these agreements is to provide further working capital to the Group. The general terms of the agreements are as follows;  Facility limit: $1,000,000;  Period of facility; 5 years;  The Company may draw down in one or more amounts within the facility limit, each draw down will result in an issue of fully paid ordinary shares to GC; and  The issue price of shares will 80% of the 5 days VWAP.. Since the signing of this agreement to 31 December 2015, the Company had drawn down a total of $113,757 against the facility and 6,925,411 shares issued as a consequence. Since 31 December 2015 a further 3,571,428 ordinary shares have been issued raising a further $40,000 share capital. The utilization of the facility beyond the available capacity of ASX Listing Rules 7.1 and 7.1A will require shareholder approval. In addition, shareholder approval will be required should GC exceed the 19.99% shareholding in the Company. The Directors also have the continued support of its creditors. As disclosed in note 12, the Company’s related party creditors have deferred settlement of the outstanding amounts owing at balance date for a period of 12 months from the date of this report or until the Company has sufficient cash resources available to settle the outstanding debt. Given the nature of the funding facilities the Directors have put in place, the Directors consider it is appropriate to prepare the financial statements on a going concern basis and hence no adjustments have been made in relation to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary if the entity is unable to continue as a going concern. 12 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 4. EXPLORATION AND EVALUATION ASSETS Consolidated 31 Dec 2015 $ Consolidated 30 June 2015 $ 1,050,160 3,981,903 (4,224,563) 807,500 1,050,160 3,962,303 (4,204,963) 807,500 Exploration leases Exploration expenditure capitalised Less: Provision for impairment Exploration assets are carried at cost of acquisition less impairment losses. At 30 June 2015, the Directors reviewed the carrying value of each of the TAPAN and Lake Surprise areas, and in recognition of factors such as coal price, and in consideration of potentially relinquishing some of the Lake Surprise tenements in the future, an additional impairment charge was applied to bring the carrying value down to $807,500. The Directors are of the view the carrying value of the Exploration and Evaluation Assets at 31 December 2015 remains recoverable in line with AASB 6. Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and development of these assets. 5. COMMITMENTS There is no material change to the commitments disclosed by the Group in its 30 June 2015 annual report. 6. CONTINGENCIES In June 2013, the Group’s subsidiary PT Prima Perkasa Abadi (PPA) was cited as a respondent in a civil claim lodged in the District Court of South Jakarta. The claim was lodged by two previous shareholders of PPA who challenged the passing of ownership in 2011 of the shares in PPA to the Group. In November 2014 the Group received the copy of the official verdict dated 7 October 2014 and advised the decision was not in the Group’s favour. The Group’s legal representation advised that the Judge’s decision has no merit and an appeal was lodged with the High Court. The Group subsidiary PT Prima Perkasa Abadi (PPA) received Notification dated 25 January 2016 from the District Court South Jakarta regarding the verdict of the High Court, Jakarta dated 22 December 2015. The decision of the High Court is in the Group’s favour wherein the Judge Council at the High Court decided to accept the appeal of PPA and former Director Mr J Risinger, and annulled the verdict of the District Court of South Jakarta. Subsequent to this verdict the Plaintiffs have submitted an Appeal Brief to the Supreme Court. 7. SEGMENT REPORTING The Group has identified its operating segments based on internal reports that are reviewed by the Board and management. The Group operated in one business segment during the half year, being mining and in two geographical area, being Australia and Indonesia. 13 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 7. SEGMENT REPORTING (CONTINUED) Reportable segment’s assets reconciled to total assets as follows: a) The segment information provided for 31 December 2015 is as follows: Primary Reporting – Business Segments Half year ended 31 December 2015 Mining and exploration $ Australia Segment Result Profit/(loss) from ordinary activities before income tax Income tax expense Net Profit/(loss) Total segment assets Exploration expenditure Receivables Others Total segment liabilities Creditors and accruals Loans b) Mining and Unallocated exploration $ $ Indonesia $ (19,600) (19,600) (15,914) (15,914) (199,903) (199,903) (235,417) (235,417) 391,000 3,038,033 3,429,033 416,500 25,924 442,424 10,039 748 10,787 807,500 3,048,072 26,672 3,882,244 3,038,033 3,038,033 552,443 552,443 169,026 789,627 958,653 3,759,502 789,627 4,549,129 Segment assets: Reportable segments’ assets reconciled to total assets as follow: Consolidated 31 Dec 2015 $ SEGMENT ASSETS 3,882,244 Intersegment Eliminations (3,038,033) Total assets as per Statement of financial position c) Total 844,211 Segment liabilities: Reportable segments’ liabilities reconciled to total liabilities as follow: Consolidated 31 Dec 2015 $ SEGMENT LIABILITIES 4,549,129 Intersegment Eliminations (3,038,033) Total liabilities Statement of financial position 1,511,096 14 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 7. SEGMENT REPORTING (CONTINUED) d) The segment information provided for 31 December 2014 is as follows: Primary Reporting – Business Segments Mining and Mining and Unallocated Half year ended 31 December 2014 exploration exploration $ $ $ Australia Indonesia Segment Result Profit/(loss) from ordinary activities before income tax Income tax expense Net Profit/(loss) Total segment assets Exploration expenditure Receivables Others Total segment liabilities Creditors and accruals Loans e) $ (15,472) (15,472) (16,014) (16,014) (261,678) (261,678) (293,164) (293,164) 391,000 3,020,184 3,411,184 416,500 27,216 443,716 27,231 27,231 807,500 3,020,184 54,447 3,882,131 3,018,229 3,018,229 - 606,043 720,000 1,326,043 3,624,272 720,000 4,344,272 Segment assets: Reportable segments’ assets reconciled to total assets as follow: Consolidated 30 June 2015 $ SEGMENT ASSETS 3,882,131 Intersegment Eliminations (3,018,229) Total assets as per Statement of financial position f) Total 863,902 Segment liabilities: Reportable segments’ liabilities reconciled to total liabilities as follow: Consolidated 30 June 2015 $ SEGMENT LIABILITIES 4,344,272 Intersegment Eliminations (3,018,229) Total liabilities Statement of financial position 1,326,043 15 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 8. SHARE CAPITAL Consolidated 31 Dec 2015 Number $ 22,775,250 37,440,031 Consolidated 30 June 2015 Number $ 19,810,299 37,397,631 Opening Balance Share issues 19,810,299 37,397,631 2,964,951 42,400 15,849,839 3,960,460 37,326,273 71,358 Closing Balance 31 December 2015 22,775,250 37,440,031 19,810,299 37,397,631 Fully paid ordinary shares Ordinary Shares 9 OPTION RESERVE There has been no further issue of options since 30 June 2015. During the period the following options expired:   1,000,000 milestone options expired on 31 July 2015 500,000 Class c options expired 31 July 2015 Options Reconciliation Consolidated 31 Dec 2015 Number $ Consolidated 30 June 2015 Number $ Opening Balance Options issued Options expired 3,000,000 1,500,000 7,695 (1,886) 3,000,000 - 7,695 - Closing Balance at the end of the period 1,500,000 5,809 3,000,000 7,695 The remaining options on issue at 31 December 2015 are as follows: December 2015 No June 2015 No Milestone Options – Exercisable at $1.20, expiry date 31 Jul 2015 Opening Balance Less expired 31 July 2015 Closing Balance 1,000,000 (1,00,000) - 1,000,000 1,000,000 Milestone Options – Exercisable at $0.07, expiry date 31 Jul 2016 Opening Balance 1,000,000 1,000,000 Closing Balance 1,000,000 1,000,000 16 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 9 OPTION RESERVE (CONTINUTED) December 2015 No June 2015 No Class C Options – Exercisable at $0.90, expiry date 31 Jul 2015 Opening Balance Less expired 31 July 2015 Closing Balance 500,000 (500,000) - 500,000 500,000 Class D Options – Exercisable at $1.00, expiry date 31 Jul 2016 Opening Balance 500,000 500,000 Closing Balance 500,000 500,000 Refer to the 30 June 2015 annual report for further details on these options. 10. CAPITAL RAISING FACILITY On 15 January 2015, the Company announced it had entered into a capital raising facility (Facility) with a nonrelated entity Gurney Capital Pty Ltd (GC). The Company also entered into a Standby Subscription Agreement with GC. The purpose of these agreements is to provide further working capital to the Group. The general terms of the agreements are as follows;  Facility limit: $1,000,000;  Period of facility; 5 years;  The Company may draw down in one or more amounts within the facility limit, each draw down will result in an issue of fully paid ordinary shares to GC; and  The issue price of shares will 80% of the 5 days VWAP.. Since the signing of this agreement and up to 31 December 2015, the Company has drawn down a total of $113,757 against the facility and 6,925,411 shares issued as a consequence. Since 31 December 2015 a further 3,571,428 ordinary shares have been issued raising a further $40,000 share capital. The utilization of the facility beyond the available capacity of ASX Listing Rules 7.1 and 7.1A will require shareholder approval. In addition, shareholder approval will be required should GC exceed the 19.99% shareholding in the Company. 11. BORROWINGS Note Borrowings Less: Equity component instrument Add: Unwinding of interest 11(a) Consolidated 31 Dec 2015 $ 800,000 (196,656) 186,283 789,627 Consolidated 30 June 2015 $ 720,000 (183,550) 183,550 720,000 (a) In 2012, the Company announced it has entered into a Convertible Loan Agreement with Mr Eddyarto (Chairman). The Convertible Loan was approved by Shareholders at the General Meeting on 20 December 2012. During the reporting period, a further $80,000 has been drawn down on this loan to assist in funding the Group’s operations. (b) The full terms of the convertible loan are disclosed in the 30 June 2015 annual report. 17 ADAVALE RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2015 11. (c) 12. BORROWINGS (CONTINUED) The convertible loan has been considered a Compound Financial Instrument, that is, an instrument that has both a debt and an equity component. A review of the convertible loan for accounting purposes determined that applicable market interest rate for this convertible loan would be 30% pa. Consequently, the drawn down amount has been split between debt and equity using that rate as a basis for the split. RELATED PARTY TRANSACTIONS Included in Payables is an amount of $534,067 (June 2015: $438,517) owing to PT Harner (PTH), a Company controlled by Mr Haryono Eddyarto, Chairman of the Company. The amount owing to PTH will not be called upon for repayment until the Company has available funds. During the reporting half-year period ended 31 December 2015 charges were made to a subsidiary company by PTH amounting to $82,338, including reimbursement of tenement costs amounting of $15,914, and finance and legal assistance amounting to $66,424. 13. SUBSEQUENT EVENTS Except for the further capital raising of $40,000 referred to in Note 10 above, no matters or circumstances have arisen since the end of the half year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. 18 Level 1 10 Kings Park Road West Perth WA 6005 Correspondence to: PO Box 570 West Perth WA 6872 Independent Auditor’s Review Report To the Members of Adavale Resources Limited T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au We have reviewed the accompanying half-year financial report of Adavale Resources Limited (“Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2015, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement of accounting policy, other explanatory information and the directors’ declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year. Directors’ responsibility for the half-year financial report The directors of Adavale Resources Limited are responsible for the preparation of the halfyear financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such controls as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express a conclusio