Annual Financial Report

AIM and ASX listed company Wildhorse Energy Limited ("WHE" or the "Company"), announces its results for the year ended 30 June 2014.

The Company's Report and Accounts can be viewed at www.wildhorse.com.au.

Operating and Financial Review

Operations

During the 2014 financial year the Company initially focused on progressing its underground coal gasification ('UCG') and uranium assets in a cost effective manner while also seeking possible strategic partners in order to enhance shareholder value and allow the further development of these projects.

In the second half of the 2014 financial year the Company narrowed the scope of its activities and then focused on reducing operating and administrative costs by reducing the number of projects it was funding and also staff numbers. On 29 August 2014, the Company announced a company restructure, share consolidation and new rights issue.

Company Restructuring

Effective 29 August 2014 Mr Ian Middlemas, (previously a Non-Executive Director) was appointed as Chairman of the Company while outgoing Chairman, Mr Mark Hohnen, has remained on the Board as a Non-Executive Director. Further, as part of the restructure of the Company and the Board, Mr Matthew Swinney resigned as Managing Director and Messrs James Strauss, Brett Mitchell and Konrad Wetzker all resigned as Non- Executive Directors of the Company. Mr Mark Pearce joined the Board as a Non-Executive Director.

Share Consolidation and One for Five Renounceable Rights Issue

On 29 August 2014, the Company advised plans to:

· seek shareholder approval for a 1 for 30 consolidation of shares, thereby reducing the number of shares on issue to approximately 13.6 million. The number of options on issue will also be consolidated on a 1 for 30 basis, with the exercise price of the options increasing in inverse proportion to the consolidation ratio ("Consolidation"); and

· following completion of the Consolidation, the Company will undertake a 5 for 1 pro rata renounceable entitlements issue ("Entitlements Issue") to raise up to approximately $3.4 million before costs.

Eligible shareholders would be entitled to acquire five (5) new ordinary shares ("New Shares") for every ordinary share held at the record date (to be determined). New Shares under the Entitlements Issue will be offered at $0.05 per share (on a post Consolidation basis).

The Board is confident that following the recent cost cutting measures and ongoing company restructure, which had already significantly reduced the Company's operating and administrative expenses, the funds raised from the Entitlements Issue will enable the Company to pursue new opportunities in the resource and other sectors and to progress the Company's current projects.

Golden Eagle Uranium and Vanadium Project

The Golden Eagle Uranium and Vanadium Project holds nine U.S. Department of Energy (DOE) Uuranium/Vanadium Mining Leases, covering 22.7 km2 located in the Uravan Mineral Belt, Colorado USA. Technical reports for a number of the lease have been drafted based on historic data, however, exploration drilling and core analysis need to be completed in order to finalize these reports. The leases will expire eight years after the courts complete their review of the Record Of Decision (ROD) published this past spring in the Federal Register and the DOE allows the lease holders to resume activates on their leases. It should be noted that the lease can be held beyond their expiration through continued renewals and the continuation of lease maintenance, including exploration work and future production. Historically these DOE leases have been renewed for 10 year periods after the expiration date; existing leases issued to past Lessee's have been renewed dating back to 1974. Wildhorse also possess an option on Gold Eagle Mining Inc (GEMI) leases; GEMI has three DOE properties of which two have active operating permits.

Mecsek Hills Uranium Project

WHE examined a number of scenarios regarding the development of the Mecsek Hills Uranium Project which combines WHE's 13.7km2 Pécs uranium licence and Hungarian state owned Mecsekérc ('ME') adjoining 19.6km2 MML-E uranium licence. The project has a total JORC Inferred Resource of 48.3Mt at 0.072% U3O8 for 77Mlbs of U3O8 and an Exploration Target of an additional 55-90Mlbs of U3O8 with a grade range of 0.075-0.10% U3O8.

As discussed above, exploration activities for all projects were substantially reduced to conserve cash. As a result, no active exploration work has been undertaken on this project in recent months, and further exploration activities for 2015 will not be finalized until the recapitalisation process is completed.

It should be noted that the license for this project will expire in March 2016. In absence of the Company recommencing activities in the near future, then the license may be withdrawn by the relevant authorities. Should this occur, then the Company will focus its efforts on progressing the Golden Eagle Uranium and Vanadium Project (as discussed above) and acquiring new projects.

UCG Portfolio

The Company holds one primary UCG asset, which is the Mecsek Hills UCG Project.

Following the previously initiated strategic review and partnership search, the Company signed on 24 February 2014 a Heads of Agreement ('the HOA'), whereby Singapore Exchange listed Linc Energy agreed to acquire a 100% interest in WHE's UCG assets for a consideration of the equivalent of $4.04 million in shares of Linc Energy. The primary asset is the Mecsek Hills UCG Project.

In line with the HOA, Linc Energy provided operational and financial support of $100,000 per month over a four month period ending 30 June 2014 for a total of $400,000 in contributed (non-recourse) funding. On 11 August 2014, Linc Energy advised the Company that it no longer wished to proceed with any further discussions or completion of the coal sale transaction contemplated by the HOA.

As discussed above, exploration activities for all projects were substantially reduced to conserve cash. As a result, no active exploration work has been undertaken on this project in recent months. Effective from 31 December 2013, this project has been classified as a discontinued operation.

It should be noted that the license for this project will expire on December 31, 2014. In absence of the Company recommencing activities in the near future, then the license may be withdrawn by the relevant authorities. Should this occur, then the Company will focus its efforts on progressing its Mecsek Hills Uranium and / or Golden Eagle Uranium and Vanadium Projects (as discussed above) and acquiring new projects. 

Financial Position

The Consolidated Group reported a loss for the period of $40,146,445 (2013: $7,983,999). The net loss of the Consolidated Entity is mainly attributable to the Exploration and Evaluation impairment expenses of $4,014,897 (2013: $68,845) and the loss of $32,355,862 (2013: $2,929,424) from discontinued operations recognised in respect of the Group's exploration and evaluation assets. Based on current market conditions and best available information, a decision was made during the year to fully impair the carrying value of the UCG and European uranium assets.

 As at 30 June 2014 the Consolidated Group has $404,143 (2013: $5,417,836) cash at bank. No dividends have been paid or declared by the Company during the financial period ended 30 June 2014.

The Company has announced plans to undertake a 5 for 1 pro rata renounceable entitlements issue to raise up to approximately $3.4 million before costs ("Entitlements Issue"). The Board is confident that following the recent cost cutting measures and ongoing company restructure, which had already significantly reduced the Company's operating and administrative expenses, the funds raised from the Entitlements Issue will enable the Company to pursue new opportunities in the resource and other sectors and to progress the Company's current projects.

Business Strategies and Prospects for Future Financial Years

The objective of the Company is to create long-term shareholder value through the discovery, development and acquisition of potentially viable projects in the natural resource and energy sector.

To date, the Company has not commenced production. To achieve its objective, the Company currently has the following business strategies and prospects over the medium to long term:

· continue to develop the Company's current uranium project;

· continuing to examine other new business development opportunities in the natural resource energy sector, both locally and overseas;

· apply for new oil and gas exploration interests; and

· explore other non-energy related business development opportunities in the resources sector.

All of these activities are inherently risky and the Board is unable to provide certainty that any or all of these activities will be able to be achieved. The material business risks faced by the Company that are likely to have an effect on the Company's future prospects, and how the Company manages these risks, include:

· The Company's current capital raising activities may not be successful - The Company has announced plans to undertake a 5 for 1 pro rata renounceable entitlements issue to raise up to approximately $3.4 million before costs. Whilst the Directors are satisfied that they will be able to raise sufficient capital when required to enable the Consolidated Group to meet its obligations as and when they fall due, there can be no guarantee that the Company will be able to raise sufficient capital to undertake exploration activities that will result in a successful discovery of economically recoverable reserves and/or pursue and complete acquisitions of new projects;

· The Company's exploration properties may never be brought into production - The exploration for, and development of, energy and/or natural resource projects involves a high degree of risk. Few properties which are explored are ultimately developed into production. To mitigate this risk, the Company will undertake systematic and staged exploration and testing programs on its projects. However there can be no guarantee that the exploration activities will result in a successful discovery of economically recoverable reserves;

· New Projects and Acquisitions - The Company has to date and will continue to actively pursue and assess other new business opportunities in the natural resources and energy sectors. These new business opportunities may take the form of direct project acquisitions, joint ventures, farm-ins, acquisition of tenements/permits, or direct equity participation. The acquisition of projects (whether completed or not) may require the payment of monies (as a deposit and/or exclusivity fee) after only limited due diligence and prior to the completion of comprehensive due diligence. There can be no guarantee that any proposed acquisition will be completed or be successful. If a proposed acquisition is not completed, monies already advanced may not be recoverable, which may have a material adverse effect on the Company. If any acquisition is completed, the Company will need to reassess, at that time, the funding allocated to any current projects and new projects, which may result in the Company reallocating funds from other projects and/or the raising of additional capital (if available). Furthermore, notwithstanding that an acquisition may proceed upon the completion of due diligence, the usual risks associated with a new project/business activities will remain;

· The Company's activities will require further capital - The exploration and any development of future and current projects will require substantial additional financing. Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration and any development of the Company's projects or even a loss of project interest. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company;

· The Company may be adversely affected by fluctuations in commodity prices, which fluctuate widely, and are affected by numerous factors beyond the control of the Company. Future production, if any, from the Company's projects will be dependent upon the price of the related commodity being adequate to make these projects economic. The Company currently does not engage in any hedging or derivative transactions to manage commodity price risk. As the Company's operations change, this policy will be reviewed periodically going forward; and

· Global financial conditions may adversely affect the Company's growth and profitability - Many industries, including the energy and natural resources industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. Due to the current nature of the Company's activities, a slowdown in the financial markets or other economic conditions may adversely affect the Company's growth and ability to finance its activities. If these increased levels of volatility and market turmoil continue, the Company's activities could be adversely impacted and the trading price of the Company's shares could be adversely affected.

Events subsequent to reporting date

Since the end of the financial year, the following events have taken place:

Company Restructuring

Effective 29 August 2014 Mr Ian Middlemas, (previously a Non-Executive Director) was appointed as Chairman of the Company while outgoing Chairman, Mr Mark Hohnen, has remained on the Board as a Non-Executive Director. Further, as part of the restructure of the Company and the Board, Mr Matthew Swinney has resigned as Managing Director and Messrs James Strauss, Brett Mitchell and Konrad Wetzker have all resigned as Non- Executive Directors of the Company. Mr Mark Pearce joined the Board as a Non-Executive Director.

Share Consolidation and One for Five Renounceable Rights Issue

On 29 August 2014, the Company advised plans to:

· seek shareholder approval for a 1 for 30 consolidation of shares, thereby reducing the number of shares on issue to approximately 13.6 million. The number of options on issue will also be consolidated on a 1 for 30 basis, with the exercise price of the options increasing in inverse proportion to the consolidation ratio ("Consolidation"); and

· following completion of the Consolidation, the Company will undertake a 5 for 1 pro rata renounceable entitlements issue ("Entitlements Issue") to raise up to approximately $3.4 million before costs.

Eligible shareholders would be entitled to acquire five (5) new ordinary shares ("New Shares") for every ordinary share held at the record date (to be determined). New Shares under the Entitlements Issue will be offered at $0.05 per share (on a post Consolidation basis). The Board is confident that following the recent cost cutting measures and ongoing company restructure, which had already significantly reduced the Company's operating and administrative expenses, the funds raised from the Entitlements Issue will enable the Company to pursue new opportunities in the resource and other sectors and to progress the Company's current projects.

Linc Heads of Agreement

The previously announced Head of Agreement between Wildhorse Energy and Linc Energy in relation to the acquisition of the Company's coal assets officially expired on 21 July 2014 but the Company has announced on 22 July 2014 that negotiations were still ongoing with Linc Energy. On 11 August 2014 the Company has then subsequently announced that Linc Energy has officially decided to not pursue the acquisition of the Company's coal assets.

Cancellation of One for Two Non-Renounceable Rights Issue

As announced on 12 June 2014, the Company was to undertake a one for two pro-rata non-renounceable rights issue at $0.007 per share to raise up to approximately $1.435 million (before costs). On 21 July 2014 the Company announced that the WHE Board had extended the closing date of the offer by fourteen business days from 24 July 2014 to 13 August 2014 in order to allow additional time for shareholders to respond to the offer made to them. On 19 August 2014 the Company then announced a further extension, with ASX approval, to the date for notification to the ASX of under-subscription and the issue date for the rights issued shares being entered into shareholder security holdings, to 22 August 2014. Subsequently on 22 August 2014 the Company has announced the cancellation of this rights issue and that a review and possible restructuring would be undertaken of its Board, operations and strategy.

For further information please visit www.wildhorse.com.au or contact:

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2014

The above statement of profit and loss and other comprehensive income should be read in conjunction with the accompanying notes.

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

The above statement of financial position should be read in conjunction with the accompanying notes.

The 2013 comparatives have been re-presented for discontinued operations, see note 5.

The above statements of changes in equity should be read in conjunction with the accompanying notes.

The above statement of cash flows should be read in conjunction with the accompanying notes.

1.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

1. Summary of significant accounting policies

Wildhorse Energy Limited is an entity domiciled in Australia.

The principal activities of the Consolidated Group during the course of the financial year were the exploration and evaluation activities related to underground coal gasification projects and uranium projects in Europe. The Consolidated Group is a for-profit entity.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statement report includes Wildhorse Energy Limited and its subsidiaries as the Consolidated Group.

(a) Basis of Preparation

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).

The annual report was authorised for issue by the Directors on 26th September 2014.

Basis of measurement

These financial statements have been prepared on the historical cost basis, with the exception of the following material item:

- assets held for sale are measured at fair value less the estimated costs of sale.

Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions. It also requires management to exercise its judgement in the process of applying the Consolidated Group accounting policies. Critical estimates and judgements are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and may have a significant impact on the amounts recognised in the financial statements.

During the preparation of the 2014 financial statements critical judgements were made to assess the fair value of assets held for sale. Management made critical judgements to determine the valuation technique of these assets. Critical accounting estimates are included in Note 3.

Going Concern

As at 30 June 2014, the Consolidated Group had cash available of $404,143 and for the year ended 30 June 2014, the Group incurred a loss of $40,146,445 and a net cash outflow from operating activities of $3,075,705.

The Board considers that the Company is a going concern and recognises that additional funding is required to ensure that it can continue to fund its operations during the twelve month period from the date of this financial report. In this regard, on 29 August 2014, the Company advised plans to:

· seek shareholder approval for a 1 for 30 consolidation of shares, thereby reducing the number of shares on issue to approximately 13.6 million. The number of options on issue will also be consolidated on a 1 for 30 basis, with the exercise price of the options increasing in inverse proportion to the consolidation ratio ("Consolidation"); and

· following completion of the Consolidation, the Company will undertake a 5 for 1 pro rata renounceable entitlements issue ("Entitlements Issue") to raise up to approximately $3.4 million before costs.

If the entitlements issue is not completed, which, based on a number of recent Company recapitalisations the Directors have been involved with, appears unlikely, additional funding can be derived from either one or a combination of revised capital raising and debt financing. Based on the above, the Board has reasonable expectations that it can raise or realise additional cash resources. Accordingly, the Directors have prepared the financial report on a going concern basis.

Should the Company be unable to obtain sufficient funding, there is a material uncertainty that may cast significant doubt over whether it will be able to continue as a going concern and therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

The financial statements do not include any adjustments as to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the entity not continue as a going concern.

Discontinued operation

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations that has been disposed of or held for sale, or is a subsidiary acquired exclusively with a view of resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as discontinued operation, the comparative statement is restated as if the operation had been discontinued from the start of the comparative period.

(b) Reclassification of comparative information

Certain comparatives have been reclassified to conform with the presentation and classification of the current financial year.

(c) Principles of Consolidation Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Wildhorse Energy Limited as at 30 June 2014 and the results of all subsidiaries for the year then ended. Wildhorse Energy Limited and its subsidiaries together are referred to in these financial statements as the Consolidated Group.

Subsidiaries are those entities where the Consolidated Group assessed it has a control. The Consolidated Group considered all relevant facts and circumstances and controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The Consolidated Group controls an investee if and only if it has all of the following elements:

· power over the investee, (i.e. the investor has existing rights that give it the ability to direct the relevant activities (the activities that significantly affect the investee's returns))

· exposure, or rights, to variable returns from its involvement with the investee

· the ability to use its power over the investee to affect the amount of the investor's returns

The Financial Statements of Subsidiaries are fully consolidated from the date on which control commences until the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Consolidated Group.

Intercompany transactions, balances and any unrealised gains or losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Consolidated Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, statement of financial position and statement of changes in equity respectively.

(d) Business Combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Consolidated Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Consolidated Group takes into consideration potential voting rights that currently are exercisable.

Acquisitions on or after 1 July 2009

For acquisitions on or after 1 July 2009, the Consolidated Group measures goodwill at the acquisition date as:

· The fair value of the consideration transferred; plus

· The recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less

· The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Consolidated Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by acquiree's employees (acquiree's awards) and relate to past services, than all or a portion of the amount of the acquirer's replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of acquiree's awards and the extent to which the replacement awards relate to past and/or future service.

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

(e) Segment Reporting

An operating segment is a component of the Consolidated Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Consolidated Group's other components, whose operating results are viewed regularly by the Managing Director to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. The Consolidated Group segments have been identified as Hungary Coal, Hungary Uranium, United States of America and Central Europe.

Segment results that are reported to the Managing Director, who is the chief operating decision maker, include items directly attributed to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly, head office expenses.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment and intangible assets.

(f) Foreign Currency Translation

Functional and presentation currency

Items included in the financial statements of the Consolidated Group are measured using the currency of the primary economic environment in which the Company operates ('the functional currency'). The financial statements are presented in Australian dollars, which is Wildhorse Energy Limited's functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency at exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rates at the reporting date. Foreign exchange gains and losses resulting from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

 Foreign operations

The results and financial position of entities in the Consolidated Group that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· assets and liabilities of foreign operations are translated at the closing rates at the reporting date;

· income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions) and all resulting exchange differences are recognised in other comprehensive income and presented in foreign currency translation reserve, as a separate component of equity; and

· goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign entity and translated at exchange rates at the reporting date.

When a foreign operation is sold, the cumulative amount in the translation reserve related to that foreign operation is recognised in the statement of comprehensive income as part of the gain or loss on sale. However, if the foreign operation is a non-wholly owned subsidiary, then the relevant proportion of the translation difference is allocated to non-controlling interests.

(g) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and tax paid. Revenue of the Company is recognised on services provided.

(h) Other income

Net gain on disposal of property, plant and equipment and financial instruments is presented as other income. Gain and losses on disposals are determined as the difference between the net proceeds from disposal and the carrying amount of the assets.

Fair value gains on financial assets (at fair value through profit or loss) are recognised as other income.

(i) Financial income and expense

Interest Income

Interest income is recognised on term deposits by using the effective interest method.

Foreign currency gains and losses

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either financial income or financial expense depending on whether foreign currency movements are in a net gain or net loss position.

(j) Income Tax

The income tax expense or income for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and the carrying value of the financial instruments amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in transactions other than a business combination that at the time of the transaction affects neither of accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent that it is probable that future taxable amounts will be available against which those deductible temporary differences and unused tax losses can be utilised.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances related to the same taxation authority. Current tax assets and tax liabilities are offset when the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income, or directly in equity respectively.

Wildhorse Energy Limited and its wholly owned Australian controlled entities have not implemented the tax consolidation legislation.

(k) Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

(l) Acquisition of Assets

The purchase method of accounting is used to account for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the Company's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(m) Impairment of Assets

Non-financial assets

The carrying amounts of non-financial assets other than inventories and deferred tax asset that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Exploration and evaluation expenditures that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances exist:

· The term of the exploration licence in the specific area of interest has expired during the reporting period or will expire in the near future, and is not expected to be renewed;

· Substantive expenditure in further exploration for and evaluation of mineral resources in the specific area are not budgeted nor planned;

· 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 decision was made to discontinue such activities in the specified area; or

· Sufficient data exists 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.

Where a potential impairment is indicated, an assessment is performed for each cash generating unit ('CGU') which is no larger than the area of interest.

The recoverable amount of an asset is the higher of its fair value less costs to sell and value in use. In 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. Impairment losses are recognised in the statement of comprehensive income. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

Financial assets measured at amortised cost

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and fair value. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, applying management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends. 

Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Consolidated Group will not be able to collect all amounts due according to the original terms of receivables. Impairment losses are recognised in statement of comprehensive income.

(n) Financial Instruments

The fair value of financial assets must be estimated for recognition, measurement and for disclosure purposes. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Consolidated Group has transferred substantially all the risks and rewards of ownership. Risks arising from financial instruments are disclosed in Note 2.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise of trade and other receivables.

Cash and cash equivalents comprise cash balances and cash call deposits with original maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Consolidated Group in the management of its short-term commitments.

Short term receivables with no stated interest rate are measured at the original contracted amount if the effect of discounting is immaterial. The maximum exposure to credit risk is represented by the carrying amount of these financial instruments.

Financial liabilities

Financial liabilities are recognised initially at fair value less any directly attributable transaction costs and subsequently measured at amortised cost by using the effective interest rate method. Short term financial liabilities with no stated interest rate are measured at the original contracted amount if the effect of discounting is immaterial.

Financial liabilities comprise loans and borrowings and trade and other payables.

Trade and other payables represent unpaid liabilities for goods and services provided to the Consolidated Group. These amounts are unsecured and usually paid within 30 days of recognition.

(o) Plant and Equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment loss. Cost includes expenditure that is directly attributable to the acquisition of the assets.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Consolidated Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation on plant and equipment assets is calculated using the straight line method to allocate their cost net of their residual values, over their estimated useful lives, as follows:

Plant and equipment 2 - 7 years

The assets' residual values and useful lives are reviewed, and adjusted if required, annually, at each reporting date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Impairment loss is recognised in other comprehensive income.

Gains and losses on disposals are determined as the difference between the net proceeds from the disposal and the carrying amount of the asset(s). These are included in the statement of comprehensive income as other income.

(p) Exploration and evaluation expenditure

Exploration and evaluation expenditures are expenditures incurred by the Consolidated Group in connection with the exploration and evaluation of mineral resources before the technical feasibility and commercial viability of extracting these resources can be proved. These expenditures are recognised as exploration and evaluation assets presented by specific areas where the Consolidated Group has legal rights to explore certain (Uranium, Coal and CBM) mineral resources.

Accounting for exploration and evaluation expenditures is assessed separately for each 'area of interest'. An 'area of interest' is an individual geological area which is considered to constitute a favourable environment for the presence of a mineral deposit or has been proved to contain such a deposit.

Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all expenditure incurred prior to securing legal rights to explore an area, is expensed as incurred.

A regular review is undertaken to determine the appropriateness of the carrying value of exploration and evaluation assets.

There is no need for recognition of any impairment loss in the following cases:

· the carrying value of the assets is expected to be recovered through successful exploitation;

· or expected to be recovered from sale of the area;

· or exploration and evaluation activities in the area have not reached a stage which permits a reasonable assessment of the recoverable value of the asset and active operations in, or relating to, the area are continuing.

Exploration and evaluation assets include:

· Acquisition of rights to explore;

· Topographical, geological, geochemical and geophysical studies;

· Exploratory drilling, trenching and sampling; and

· Activities in relation to evaluating the technical feasibility and commercial viability of extracting the mineral resource.

General and administrative costs are allocated to, and included in, the cost of exploration and evaluation assets only to extent that those costs can be related directly to the operational activities in the area of interest to which the exploration and evaluation assets relate. In all other instances, these costs are expensed as incurred.

Exploration and evaluation assets in respect of an area of interest which is abandoned are to be written off in full against profit in the year in which the decision to abandon the area is made. See accounting policy for impairment in Note 1(m).

(q) Intangible Assets

Intellectual properties are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight line method to allocate the cost of intellectual property over the estimated useful life which is one to three years.

(r) Assets held for sale

Assets held for sale are expected to be sold within 12 months and are measured at fair value. Their fair value is assessed based on the estimated realisable market value of the asset. The difference between the book value and estimated realisable market value is to be written off.

(s) Employee Benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

Share-based payments

Share-based compensation benefits are provided to employees via the Wildhorse Energy Limited Employee Option Plan and the Wildhorse Energy Employee Performance Rights Plan. Information regarding this scheme is set out in Directors' Report.

In relation to the Employee Option Plan, the fair value at grant date has been determined as zero, taking into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable.

(t) Bonus plans

The Consolidated Group recognises a provision for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation, or as otherwise agreed by the Board of Directors.

(u) Dividends

Dividends are recognised as distributions within equity upon approval of the Company's shareholders.

(v) Earnings per Share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(w) Goods and Services Tax (GST) and Value Added Tax (VAT)

Revenues, expenses and acquired assets are recognised net of the amount of associated GST and VAT, unless the GST or VAT incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST and VAT recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST and VAT components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(x) New standards and interpretations not yet adopted

New standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2014, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Consolidated Group, except for AASB 9 Financial Instruments for which the Consolidated Group has not made an assessment of the impact of these amendments.

· The Group has adopted the following new and revised accounting standards that are mandatory for annual periods beginning on or after 1 January 2014. These standards are applicable to the Group from 1 July 2013.

· AASB 10 Consolidated Financial Statements introduces a revised definition of control and establishes a single control model that applies to all entities. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes guidance for applying the model.

· The adoption of AASB 10 had no material effect on the financial position or the condensed consolidated financial statements of the Group.

· AASB 11 Joint Arrangements and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists has changed.

· The adoption of AASB 11 had no impact on the financial position or the condensed consolidated financial statements of the Group.

· AASB 12 Disclosures of Interests in Other Entities prescribes the disclosure requirements for entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. New disclosures have been introduced regarding the judgements made by management to determine whether control exists and to require summarised information about joint arrangements and subsidiaries with non-controlling interests.

· The adoption of AASB 12 had no material impact on the accounting policies of the Group.

· AASB13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB13 provides a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when fair value is required to be used, but rather provides guidance on how to determine fair value when required or permitted.

· The adoption of AASB 13 had no material effect on the financial position or the condensed consolidated financial statements of the Group.

· AASB 119 Employee Benefits revises the definition of short-term employee benefits, to benefits that are expected to be settled wholly within twelve months after the end of the annual reporting period in which the employees render the related service.

· The adoption of AASB 119 (2011) had no material effect on the financial position or the condensed consolidated financial statements of the Group.

2. Financial risk management

The Consolidated Group's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Consolidated Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Consolidated Group. The Consolidated Group does not engage in any hedging or derivative financial instruments. The Consolidated Group uses sensitivity analysis to measure foreign exchange risks and aging analysis for credit risk assessment. The Board of Directors carries out risk management.

The Consolidated Group holds the following financial instruments.

Carrying value of the financial instruments

(a) Market risk

Foreign Exchange Risk

The Consolidated Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Hungarian Forint (HUF), Great Britain Pound (GBP), Euro (EUR), Czech Koruna (CZK), Polish Zloty (PLN), US dollar (USD) and South African Rand (ZAR).

Foreign exchange risk arises from future commercial transactions related to recognised assets and liabilities denominated in a currency that is not the individual companies functional currency. The risk is measured by using sensitivity analysis and cash flow forecasting.

The Consolidated Group has not entered into any derivative financial instruments to hedge anticipated future cash flows denominated in a foreign currency. The Board manages the purchase of foreign currency to meet operational requirements.

The Consolidated Group exposure to foreign currency risk at the end of the reporting was as follows:

Consolidated Group sensitivity

Exchange rates per AUD as at 30 June:

A 10% increase or decrease in the value of the Australian dollar against the above currencies at 30 June would have the following effect:

Price risk

The Consolidated Group and Company have no exposure to equity securities price risk as there are no financial assets of this type. Neither the Consolidated Group nor the Company are exposed to commodity price risk.

Cash flow and fair value interest rate risk

The Consolidated Group does not have any long-term borrowing or long term deposits, which would expose it to significant cash flow interest rate risk.

(b) Credit Risk

Credit risk is managed on a Consolidated Group basis. Credit risk arises from cash and cash equivalents, deposits with banks as well as credit exposures related to outstanding receivables and committed transactions.

All cash balances are held at internationally recognised institutions with the majority of cash being held with an A rated Australian Bank. Credit risk of receivables is identified by credit quality assessment, taking into account past experience, financial position and other factors.

The Consolidated Group does not have any past due financial assets and based on the credit quality assessment, the credit quality of financial assets is good.

The maximum exposure to credit risk of the Company is equal to the carrying amount of the financial assets, $498,123 (2013: $5,797,514).

(c) Liquidity Risk

Liquidity risk arises from the management of cash and cash equivalent resources. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and ensures the availability of funding through an adequate amount of committed credit facilities. The Consolidated Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

At reporting date the Consolidated Group had sufficient cash reserves to meet its requirements. The Consolidated Group therefore had no credit standby facilities or arrangement for further funding in place.

Financial assets and liabilities contractual cash flows equal their carrying value.

The financial liabilities of $163,689 (2013: $601,488) comprised of trade and other payables incurred in the normal course of the business are covered by cash and cash equivalents of $404,143 (2013: $5,417,836) at the end of the financial year. These were non-interest bearing and due within the normal 30 days terms of creditor payments.

(d) Fair Value Estimation

The fair value of financial assets and financial liabilities must be estimated for disclosure purposes.

The carrying values of sundry debtors and other receivables and trade and other payables are assumed to approximate their fair values due to their short term nature.

3. Critical accounting estimates

The Directors make estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Consolidated Group.

Key Estimates - Impairment

The Consolidated Group assesses impairment at each reporting date by evaluating conditions specific to the Consolidated Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Exploration and evaluation expenditure

The Consolidated Group accounting policy for exploration and evaluation expenditure is set out in Note 1(p). The application of this policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular, assumptions of future changes in resource prices and operating expenses, expected changes in market conditions and the assessment of whether economic quantities of reserves have been found.

Any such estimates and assumptions may change due to future events and circumstances. If, after having capitalised expenditure under this policy, the Consolidated Group concludes that it is unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the statement of comprehensive income.

For the year ended 30 June 2014, $37,631,330 of exploration and evaluation expenditure was impaired and is recognised in the comprehensive statement of income (included in Note 21 Exploration and evaluation expenditure).

Share based payments

The Consolidated Group's accounting policy for share based payments is set out in Note 1(s). The application of this policy requires certain assumptions to be made in relation to the value of options. Further details are included in Note 29.

Assets held for sale

Assets held for sale is to be recorded at the lower of cost or net realisable value. To determine the net realisable value the Company make assumptions about the market conditions and prices.

4. Segment information

Management has determined that the operating segments are based on reports reviewed by the chief operating decision maker, the Managing Director, which are used to monitor performance and make strategic decisions. The business is considered from both a geographic and functional perspective and has identified four reportable segments: Hungary Coal and Hungary Uranium, United States and Central Europe.

Management assesses the performance of the operating segments based on a measure of contribution to comprehensive income. This measure excludes items such as the effects of equity settled share based payments, and unrealised gains and losses on financial instruments, interest income, corporate expenses, as well as other centralised expenses not attributable to segments.

Segment Report - 2014

Segment Report - 2013

5. Discontinued operations

In the half year ended 31 December 2013 the Group was committed to the sale or the finding of a strategic partner(s) for its UCG business. As a result in February 2014 the Group entered into a Heads of Agreement with Linc Energy Limited, whereby Linc Energy will acquire 100% interest in WHE's UCG assets for a consideration of the equivalent of $4.04 million in shares of Linc Energy. On 11 August 2014, Linc Energy advised the Company that it no longer wished to proceed with any further discussions or completion of the coal sale transaction contemplated by the HOA. Exploration activities for all UCG projects were substantially reduced to conserve cash. As a result, limited exploration has been undertaken on this project in recent months. Effective from 31 December 2013, this project has been classified as a discontinued operation.

Of the loss from discontinued operations of $32,355,862 (30 June 2013: $2,929,424) an amount of $32,347,315 is attributable to the owner's of the Company.

The tax impact of the discontinued operations was incorrectly presented in the 31 December 2013 interim financial report. The refersal of the deferred tax liability was presented in other comprehensive income, however the correct treatment was a deferred tax benefit in profit or loss. This has been corrected in these financial statements.

6. Loss per share

(a) Basic earnings per share

Basic earnings per share are calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.

(b) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Diluted earnings per share are the same as basic earnings per share in 2014 and 2013 as the Consolidated Group is in a loss position.

The following reflects the income and share data used in the basic and diluted earnings per share computations.

As earnings per share (EPS) is a loss per share, any potential ordinary shares would be anti-dilutive. As a result, earnings per share is identical for the basic and diluted EPS calculations.

7. Other income

Gain on disposals comprises of $58,816 accruals write off and $224,773 gain related to FCTR disposal of deregistered US companies.

The other income of $400,000 is non-refundable funds received from Linc Energy Limited in relation to the planned sale of the coal assets.

8. Other costs

The other expenses of $130,401 (2013: $164,241) includes telephone cost, IT cost, bank charges and other operating expenses.

9. Professional costs

Auditor's remuneration

Professional costs include tax and other advisory services provided by KPMG in the amount of $67,837.

10. Employee benefits

· (i) The $319,507 income of share based payments is made up of $66,099 share based payment expense for the reported period and $385,606 of prior year share based payment expense relating to 2,233,333 options for which the service and non-market conditions will not be met and has been reversed in the current period.

11. Loss on disposal of U.S. companies

12. Financial income

13. Financial expense

14. Income tax expense

The Company has estimated income tax losses of $7,242,136 (2013: $10,245,110) available to be offset against future taxable income. The significant decrease was mainly attributable to the tax loss carried forward by Wildhorse Energy Inc, having been deregistered during the current financial year. A deferred tax asset in relation to the losses has not been recognised by the Consolidated Group on the basis that it is not probable that there will be future taxable income available against which the tax losses can be utilised.

Deferred tax liability recognized in the amount of $2,317,540 as at 30 June 2013 was reversed parallel with the related exploration and evaluation assets impairment. No deferred tax asset is recognized.

Unused tax losses carried forward, for which no deferred tax asset has been recognised in the balance sheet comprises of the following:

The Company has not consolidated for tax purposes.

The tax rate in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared to the previous reporting period.

15. Cash and cash equivalents

Cash at bank and on hand, amounting to $392,805 (2013: $3,529,373) is non-interest bearing.

Deposits at call of $11,338 (2013: $1,888,463) are interest bearing at fixed interest rates of between 3.3% and 4.0% (2013: between 3.5% and 4.0%). Deposits at call have a weighted average interest rate of 3.70% (2013: 3.84%). These deposits have an average period to repricing of less than 90 days (2013: 30 days).

16. Deposits held

Mining deposits are held with banks for the Hungarian tenements. During the current financial year the mining deposit of $222,179 has been realised for the Cikó, Bátaszék, Abaliget, Dinnyeberki and Pécs CBM projects which have been relinquished.

17. Sundry debtors and other receivables

Sundry debtors and other receivables

Sundry debtors and other receivables arise from transactions outside the usual operating activities of the Consolidated Group. The credit quality of sundry debtors and other receivables is assessed to be adequate.

Fair value and credit risk

Due to the short term nature of these receivables, their carrying amount is assumed to approximate their fair value.

The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables as mentioned above. More information on the risk management policy of the Consolidated Group is provided in Note 2.

18. Assets held for sale

During the current financial year Golden Eagle Uranium assets relating to the U.S. operation have been reclassified to the exploration and evaluation asset category because management decided not to sell the asset in the foreseeable future.