Annual Report 2022

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Contents

Chairman's Review

Business Review

Permit Schedule

Directors' Report

Remuneration Report - Audited

Lead Auditor's Independence Declaration

Annual Financial Report

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Directors' Declaration

Independent Auditor's Report

Additional Shareholder Information

Definitions

Corporate Information

Dear Shareholder,

The past year has seen many changes in global events and in your company. One of the most noticeable company events is the very recent name change from Oilex to Synergia Energy. This reflects the significant change in the company's position, with the resolution of a number of historical issues including in the Cambay project and the commencement of new initiatives including a carbon sequestration business in the UK. The world energy scene has also witnessed dramatic changes recently with investor confidence returning particularly to the natural gas industry. Global events have impacted the availability and cost of energy and are perhaps best reflected in the very recent large increases in gas price. Two markers important to us are the Asian LNG price (which relates to Indian industrial gas pricing) and the UK gas price shown in the graph below.

Synergia Energy has been rebranded to focus on natural gas which will be an important element of energy transition to renewables and on Carbon Capture and Sequestration ("CCS") which is an increasingly important element in future carbon abatement.

Our project in Cambay in India is one element of our gas strategy. We have increased our participating equity position to 100% in the project and in recent months, carried out a stimulation exercise on the Eocene siltstone reservoir which is known to contain gas. The stimulation project is currently in the clean-up and evaluation phase, returning the fluids that were injected into the reservoir. Gas is being produced as we progress this project and early results are promising. The plan is to divest up to 50% of our equity in the project to other parties to reduce our exposure to both the cost and the risk in any future drilling and development activities. As a second leg to our gas strategy, we are looking for late life gas producing assets in the UK continental shelf area and an agency has been appointed to conduct the search on our behalf.

The company's CCS activities are focused on the UK continental shelf and draw on the experience of our UK based management team who have been instrumental in setting up and developing gas storage schemes in the UK in the past. This experience provides a good understanding of where likely geological CO2 storage features are located and work is advanced. The UK government is supportive of such ventures and has recently issued the first ever carbon storage licence bidding round. Late life gas producing assets can also be converted to CCS.

Our efforts to regain interest in an Indonesian oilfield have proved unsuccessful marking the company's exit from that country. Our historic commitments in Timor Leste are being wound up with the expectation that the Joint Venture on the JPDA will be finalised before the end of 2022.

The outlook for the company remains positive. I am happy to report that Synergia Energy has a strong and dedicated board of directors and a management team who are well equipped and experienced to guide the company forward. Throughout the year, we have enjoyed support from our major shareholders who have continued to provide the necessary funding and who maintain a strong interest in the Company's activities.

On behalf of the Board, I wish to thank you, our staff, contractors, local communities, shareholders, and stakeholders for the ongoing support of the company.

Mr J Salomon

Executive Chairman

22 September 2022

Industry Overview

The global energy crisis caused by the events in Ukraine has impacted Synergia Energy in a number of ways. The most obvious impact is on gas prices in India, which have more than doubled during Q1-Q2 2022. Another related effect has been the renewed resolve by the Government of India and, in particular, the Directorate General of Hydrocarbons, to stimulate domestic hydrocarbon production and development.

As the global oil and gas industry responds to the dramatic increase in demand post the Covid-19 crisis, the cutbacks in the oilfield services sector over the preceding years have led to a global shortage of equipment and qualified personnel. This will inevitably inhibit the ability of operators to respond rapidly to increased demand.

In the UK, there has been a recognition of the importance of indigenous gas production but at the same time, a new urgency to reduce fossil fuel emissions, especially via carbon capture and storage ("CCS").

Synergia Energy Strategy

The Company continued to execute on the strategy developed during 2021:

· Focus on gas production from its Cambay, India gas field

· Seeking to acquire mature gas assets in the UKCS

· Development of a CCS project in the UK

The rationale behind the focus on gas production is the Company's belief that natural gas will continue as a vital transition fuel for the foreseeable future coupled with the need to reduce carbon emissions via CCS. The Company is well-positioned to address both gas production and CCS given the track record of Synergia Energy's personnel. 

Cambay Field, Onshore Gujarat, India

Synergia Energy - 100% Participating Interest and Operator

Synergia Energy is the Operator of the Cambay field and as a result of the acquisition of GSPC's 55% participating interest, the Company holds 100% participating interest in the project.

The Cambay Production Sharing Contract ("PSC") has been explored since the late 1950s and saw one of the first exploration successes in India's history.  Hydrocarbon production was established from several conventional vertically stacked reservoir sections over the succeeding decades. Synergia Energy entered the project in 2006 and drilled a number of successful early wells establishing production, however, the focus then turned to a potentially large gas resource in the Eocene-aged tight siltstone, which was known to contain and flow gas on test, starting with some of the earliest exploration wells in the region.

The PSC area is located onshore in the state of Gujarat in the heart of one of India's most prolific hydrocarbon provinces. It is ideally located within a major industrial corridor and approximately 20 km from the existing national gas trunk pipeline grid. India's large energy market is currently dependent on gas imports. The Cambay PSC is well-positioned to displace imported gas with indigenous gas supplies.

The Cambay field development is centred on the successful exploitation of the gas resources held in the Eocene EP-IV reservoir which extends across the field and has been penetrated by over 30 wells. The EP-IV reservoir comprises low permeability ("tight") siltstones and requires frac stimulation to provide economic gas production rates.

Cambay Field, Onshore Gujarat, India (Continued)

Synergia Energy - 100% Participating Interest and Operator

Whereas two horizontal wells (C-76H in 2011 and C-77H in 2014) were successfully and efficiently drilled to total depth in the EP-IV reservoir, the fraccing and completion of the wells were disappointing. The Company has re-fracced the existing C-77H well to not only increase production but to also develop a reliable fraccing methodology that can be applied to future wells. C-77H had initial production levels of up to 1.0 mmscfd. The Company believes that a successful re-frac stimulation could potentially increase production levels in future new wells by 3 to 5 times.

The Company will be undertaking a farmout process for the Cambay PSC in the next few months for the purpose of further developing the asset.

Receipt of Outstanding Cash Calls

Synergia Energy received a payment of US$154k from its previous Joint Venture partner resulting from reconciling final sale accounts with GSPC's finance team in April 2022. Post the acquisition of 55% of the participating interest in the Cambay field, the Company does not anticipate any further receipts from its previous Joint Venture partner.

Cambay Well 77H Re-Frac

Due to a global shortage of fraccing equipment and services, the Company's re-fraccing operation on the C-77H well commenced on 20 June 2022 with the arrival on site of the workover rig required to pull the completion out of the well prior to the actual fraccing operation. The perforating and fraccing of the first of two zones commenced after the year-end on 20 July 2022. The second zone was perforated and fracced by 27 July 2022. The well flow-back and clean up commenced on 28 July 2022.

The results of the C-77H re-frac will have a significant impact on the future of the Cambay field. The original C-77H fraccing operation produced disappointing results with a maximum initial gas flow rate of c. 1 mmscfd and steep decline rate. A number of revised key fraccing parameters are being incorporated in the re-frac program with a view to proving up a robust fraccing methodology for future new wells.

Cambay Production Re-start Update

Following a lengthy hiatus, production was resumed on the Cambay field on 8 April 2022. Initial production was from the C-73 well at c. 0.3 mmscfd and 21 bopd of condensate. A revised gas sales agreement resulted in a headline gas price increase from $2.9/mcf to $6.1/mcf. During the last quarter, gas production from the C-77H well was co-mingled with C-73 prior to the shut-in of C-77H prior to the re-frac operation.

Cambay Reserves Re-classification

During the Quarter the Company announced the following update with respect to the re‑classification of Cambay gas and condensate volumes to reserves and increase in resources.

Summary

1. A review of Synergia Energy's net reserve and resource position in the Cambay PSC by an independent reserves auditor has resulted in the return of 206 BCF of gas and 8 million barrels of condensate to the 2P Reserves category from Contingent Resources.

2. Synergia Energy's participating interest in the reserves and resources has increased from 45% to 100% following its purchase of GSPC's share of the project. 

Cambay Field, Onshore Gujarat, India (Continued)

Synergia Energy - 100% Participating Interest and Operator

Cambay Reserves Re-classification (Continued)

Summary (Continued)

The revised reserve and resource position showing the re-allocation from Contingent Resource category to Reserves and the increase in volumes from the GSPC acquisition is shown in Tables 1 and 2:

Background

In April 2015, the Company tabled a Resource Report on the Cambay Field Eocene gas and condensate reservoir which is the same reservoir that hosts current oil and gas production and that is the focus of the upcoming re-frac of the C-77H well as reported in recent announcements. The resource report was prepared by independent oil and gas advisors RISC and allocated recoverable gas and condensate volumes across Reserve, Contingent Resources and Prospective Resources categories. In June 2016, due to changes in economic assumptions specifically a fall in world oil and gas prices and the then impasse with GSPC deferring field development activities, the Reserves component of the overall gas and condensate volumes was re-classified to Contingent Resources while the aggregate Reserve and Resource volumes remained unchanged.

RISC has again reviewed the recent material changes to the circumstances surrounding the Cambay project which remove the previous impediments to progress on the project development. These changes include the following:

1. Grant of a PSC term extension to September 2029 by the Indian government.

2. Approval of a Field Development Plan for the Eocene reservoir by the Indian regulator (the Directorate General of Hydrocarbons).

3. Resolution of the joint venture impasse through Synergia Energy's purchase of GSPC's participating interest taking Synergia Energy's participating interest to 100%.

4. Recommencement of gas and condensate production from the Eocene reservoir with the delivery of gas to buyers under a new gas sales agreement.

5. Issue of new Environmental Clearances by the Indian government.

6. Synergia Energy's commitment to the required work program to develop the resources including advanced planning and contracting for a re-frac of the C-77H well planned to commence in July 2022.

7. Improvements in economic factors including the high current global and Indian oil and gas prices and the high demand for petroleum products in India.

Cambay Field, Onshore Gujarat, India (Continued)

Synergia Energy - 100% Participating Interest and Operator

Cambay Reserves Re-classification (Continued)

Background (Continued)

As a result, the contingencies for development identified in 2016 have been resolved and RISC considers that the Reserves re-classified as Contingent Resources in 2016 can now be reclassified as undeveloped Reserves, justified for development as shown in Table 1. The Company's net volumes have also increased following the GSPC acquisition as shown in Tables 1 and 2. At this point in time the 1P allocation is zero. Under the Society of Petroleum Engineers Petroleum Resource Management System ("PRMS") the 1P volumes may be attributed once capital has been spent and a commercial analysis has confirmed a positive NPV10. Synergia Energy intends that 1P volumes will be added at the appropriate time.

JPDA 06-103, Timor Sea

(Synergia Energy - 10% Participating Interest, Operator)

(Production Sharing Contract Terminated on 15 July 2015)

In August 2020, on behalf of its Joint Venture Participants, Synergia Energy Ltd announced a Deed of Settlement and Release ("Deed") with the Autoridade Nacional Do Petroleo E Minerais ("ANPM"). Under the terms of the Deed, Synergia Energy committed to a settlement of US$800,000 payable up to the financial year 2024. To fund the settlement, Synergia Energy entered into an unsecured loan facility agreement with two of the JPDA joint venture partners. The joint venture partners providing the loan facility were Japan Energy E&P JPDA Pty Ltd ("JX"), who agreed to lend the Company US$775,000, and Pan Pacific Petroleum (JPDA 06 103) Pty Ltd ("PPP"), who agreed to lend the Company $25,000 for the purposes of the settlement.

The drawdowns from the loan facility, and settlement payments made to ANPM to 30 June 2022 included the following:

· US$50,000 drawn down (US$25,000 from JX and US$25,000 from PPP) and paid to ANPM in August 2020;

· US$250,000 drawn down from JX and paid to ANPM in December 2021; and

· US$250,000 drawn down from JX and paid to ANPM in March 2022.

Following the above partial settlement payments made to ANPM, the balance of the settlement payable to ANPM at 30 June 2022 was US$250,000. This balance was paid to ANPM subsequent to year-end on 7 September 2022, thereby fully extinguishing the Group's obligations to ANPM. The funding for the final instalment was drawn from the Company's remaining loan facility with JX.

The loan facility from JX and PPP was restricted for the purposes of the settlement of the Company's liability with ANPM, and as such at the date of this report, no further loan facility is available to be drawn from JX. The portion borrowed from PPP was fully repaid in December 2021. The portion borrowed from JX has been partially repaid in instalments, with the balance of the loan from JX being at US$310,938 at year end (and approximately US$429,114 at report date), after interest and net of partial repayments.

The interest rate of the loan facility is 11% and the balance of the loan from JX, plus interest, is to be repaid in three instalments (in August 2022, February 2023 and August 2023), prior to the loan's maturity on 17 August 2023.

West Kampar PSC, Central Sumatra, Indonesia

Through the year, the Company continued to work on its objective to regain a participating interest in the West Kampar PSC in Indonesia. Subsequent to the end of the report period, the Company has been advised that its efforts to regain a participating interest and control of the West Kampar PSC in Indonesia have been unsuccessful. The Company understands the West Kampar PSC has been awarded to a third party. This marks the end of the Company's activities in Indonesia.

East Irish Sea (P2446 Licence)

Following an unsuccessful request to the UK Oil and Gas Authority to extend the initial term of the P2446 exploration licence, the Company elected to relinquish its UK P2446 exploration licence, which incorporated the Doyle and Peel structures in the East Irish Sea ("EIS"), UK. The extension was requested due to COVID-19 related delays in completing the initial phase work programme. The remaining technical uncertainties and the Company's current strategy to focus on mature gas field acquisitions and CCS opportunities were the main drivers behind the Company's decision. The licence was relinquished on 30 September 2021 upon its expiry.

Carbon Capture and Storage

The Company believes that natural gas will form a vital component of the energy mix for the foreseeable future, however, it also recognises the adverse impact of ongoing CO2 emissions. The Company has significant gas storage credentials and is seeking to exploit that expertise to implement CCS projects, initially in the UK, where there is a mature carbon allowance structure.

To this end, the Company has applied for carbon storage licenses under the NSTA's 1st carbon storage licensing round to complement its Medway Hub CCS project. Under this scheme, the Company plans to transport CO2 emissions from three large CCGT power stations in liquid form in special marine tankers for permanent storage in depleted fields or aquifers in the Southern North Sea. The CO2 tankers will offload liquid CO2 onto a Floating Injection, Storage and Offloading ("FISO") vessel for subsequent injection into the CO2 store via subsea manifolds. The target is to store c. 7.4 Mta (million tonnes per annum) of CO2 which would make a major contribution towards the UK's Net Zero goals.

Financial

Treasury Policy

The funding requirements of the Group are reviewed on a regular basis by the Group's Chief Financial Officer and reported to the Board to ensure the Group can meet its financial obligations as and when they fall due. Internal cash flow models are used to review and test investment decisions. Until sufficient operating cash flows are generated from its operations, the Group remains reliant on equity or debt funding, as well as assets divestiture or farmouts to fund its expenditure commitments.

Formal control over the Group's activities is maintained through a budget and cash flow monitoring process with annual budgets considered in detail and monitored monthly by the Board and forming the basis of the Company's financial management strategy.

Financial (Continued)

Treasury Policy (Continued)

Cash flows are tested under various scenarios to ensure that expenditure commitments can be met under all reasonably likely scenarios. Expenditures are also carefully monitored against the budget. The Company continues to actively develop funding options in order to meet its expenditure commitments and its planned future discretionary expenditure.

During the year, various capital raisings were completed to provide for working capital for the Company:

December 2021 quarter

· Placement of 1,422,590,303 ordinary shares ("December Placement") at an issue price of £0.0014 per share (A$0.00259 per share) for gross proceeds of £2 million (A$3.7 million); and

June 2022 quarter

· Placement of 1,250,000,000 ordinary shares at an issue price of £0.0020 per share (A$0.0035 per share) for gross proceeds of £2.5 million (A$4.4 million), in two tranches ("May Placement"). The first tranche for 1,075,168,606 ordinary shares were received before year-end; the remaining funds were received by the Company post year-end.

The funds raised from the December Placement and the May Placement were applied to the re-fraccing of the Cambay 77H well which occurred in July 2022, the continued development of the Company's plans to undertake a drilling and testing appraisal program on the Cambay field, and the Company's working capital base.

Corporate

The Company has dual listing on the Australian Securities Exchange ("ASX") and the Alternative Investment Market ("AIM") of the London Stock Exchange with approximately 81.33% of the Company's shares held on the Company's UK register.

During the year 54,839,185 broker options were exercised at an exercise price of £0.0014 per option.

As at 30 June 2022 the Company had:

· Available cash resources of $4,837,483.

· Borrowings of US$310,938 ($451,355) relating to the loan facility restricted to the payment of the settlement of termination penalty to ANPM.

· Issued capital of 8,242,959,310 fully paid ordinary shares and unlisted options of 736,505,236.

Executive and Board Changes

During the financial year, the following board changes were made:

· On 24 November 2021 the Board established a Remuneration Committee comprising Messrs Paul Haywood (Chair), Peter Schwarz and Mark Bolton; and

· The appointment of Mr Colin Judd, the Company's current Chief Financial Officer, as Director, effective 27 January 2022.

Risk Management

The full Board undertakes the function of the Audit and Risk Committee and is responsible for the Group's internal financial control system and the Company's risk management framework. Management of business risk, particularly exploration, development and operational risk is essential for success in the oil and gas business. The Group manages risk through a formal risk identification and risk management system.

Health, Safety, Security and Environment

Synergia Energy is committed to protecting the health and safety of everybody who plays a part in our operations or lives in the communities where we operate. Wherever we operate, we will conduct our business with respect and care for both the local and global, natural and social environment and systematically manage risks to drive sustainable business growth. We will strive to eliminate all injuries, occupational illness, unsafe practices and incidents of environmental harm from our activities. The safety and health of our workforce and our environmental stewardship are just as important to our success as operational and financial performance and the reputation of the Company.

Synergia Energy respects the diversity of cultures and customs that it encounters and endeavours to incorporate business practices that accommodate such diversity and that have a beneficial impact through our working involvement with local communities. We strive to make our facilities safer and better places in which to work and our attention to detail and focus on safety, environmental, health and security issues will help to ensure high standards of performance. We are committed to a process of continuous improvement in all we do and to the adoption of international industry standards and codes wherever practicable. Through implementation of these principles, Synergia Energy seeks to earn the public's trust and to be recognised as a responsible corporate citizen.

Qualified Petroleum Reserves and Resources Evaluator Statement

Pursuant to the requirements of Chapter 5 of the ASX Listing Rules, the information in this report relating to petroleum reserves and resources is based on and fairly represents information and supporting documentation prepared by or under the supervision of Mr Jonathan Salomon, Executive Chairman employed by Synergia Energy Ltd. Mr Salomon has over 36 years' experience in petroleum geology and is a member of the American Association of Petroleum Geologists, and the Society of Petroleum Engineers. Mr Salomon meets the requirements of a qualified petroleum reserve and resource evaluator under Chapter 5 of the ASX Listing Rules and consents to the inclusion of this information in this report in the form and context in which it appears. Mr Salomon also meets the requirements of a qualified person under the AIM Note for Mining, Oil and Gas Companies and consents to the inclusion of this information in this report in the form and context in which it appears.

(1) On 4 February 2022, the Government of India Ministry of Petroleum and Natural Gas approved the transfer of assignment of the 55% participating interest in the Cambay Field Production Sharing Contract held by GSPC to Synergia Energy Ltd (formerly known as "Oilex Ltd"). Synergia Energy now holds 100% equity.

(2) PSC terminated 15 July 2015. The Joint Venture remains operational governed by a Joint Operating Agreement.

(3) The P2446 licence was relinquished on 30 September 2021 upon its expiry.

(4) On 10 August 2022, Oilex EIS Limited changed its name to Synergia Energy CCS Limited.

For the Year Ended 30 June 2022

The directors of Synergia Energy Ltd (formerly known as "Oilex Ltd") present their report (including the Remuneration Report) together with the consolidated financial statements of the group comprising of Synergia Energy Ltd (the "Company" or "Synergia Energy") and its subsidiaries (together collectively referred to as the "Group") for the financial year ended 30 June 2022 and the auditors' report thereon.

DIRECTORS

The directors of Synergia Energy Ltd in office at any time during or since the end of the financial year are:

Mr Jonathan Salomon (B App Sc (Geology), GAICD)

(Executive Chairman)

Mr Salomon was appointed as a Non-Executive Director in November 2015, Managing Director on 18 March 2016, and Interim Chairman on 5 May 2020. Mr Salomon continued as Managing Director and Interim Chairman until he was appointed as Executive Chairman on 16 June 2021. Mr Salomon has over 36 years of experience working for upstream energy companies. Further details of Mr Salomon's qualifications and experience can be found in the Executive Management section of the Directors' Report.

During the last three financial years and up to the date of this report, Mr Salomon has not been a director of any other ASX listed companies.

Mr Roland Wessel

(Chief Executive Officer and Director)

Mr Wessel was appointed Chief Executive Officer and Director on 16 June 2021. Mr Wessel is a geologist with over 40 years' experience in all of the world's major oil and gas regions. Further details of Mr Wessel's qualifications and experience can be found in the Executive Management section of the Directors' Report.

During the last three financial years and up to the date of this report, Mr Wessel has not been a director of any other ASX listed companies.

Mr Colin Judd

(Chief Financial Officer and Director,

 appointed in each role 1 July 2021 and 27 January 2022 respectively)

Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and as Director on 27 January 2022. Mr Judd is a chartered accountant with over 40 years' experience in corporate financial management. Further details of Mr Judd's qualifications and experience can be found in the Executive Management section of the Director's Report.

During the last three financial years and up to the date of this report, Mr Judd has not been a director of any other ASX listed companies.

Mr Mark Bolton (B Business)

(Non-Executive Director, appointed 1 July 2021)

(Executive Director and Chief Financial Officer until 1 July 2021)

(Company Secretary until 25 August 2021)

Mr Bolton was appointed Chief Financial Officer and Company Secretary on 3 June 2016, and as Executive Director on 26 March 2020. Mr Bolton continued as Executive Director and Chief Financial Officer until 1 July 2021, when he was appointed as Non-Executive Director. Mr Bolton resigned as Company Secretary on 25 August 2021. Mr Bolton has significant experience in the development and financing of new resources projects, particularly in emerging economies. Further details of Mr Bolton's qualifications and experience can be found in the Executive Management section of the Directors' Report.

During the last three financial years and up to the date of this report, Mr Bolton has not been a director of any other ASX listed company.

DIRECTORS (CONTINUED)

Mr Paul Haywood

(Non-Executive Director)

Mr Haywood was appointed as a Non-Executive Director in May 2017. Mr Haywood has over 18 years of international experience in delivering value for his investment network through a blended skill set of corporate and operational experience, including more than six years in the Middle East, building early stage and growth projects. More recently, Mr Haywood has held senior management positions with UK and Australian public companies in the natural resource and energy sectors including oil and gas exploration and development in UK, EU and Central Asia. Mr Haywood's expertise stretches across UK and Australian public markets, with a cross-functional skill set encompassing research, strategy, implementation, capital and transactional management. Mr Haywood is currently Chief Executive Officer of Block Energy Plc.

During the last three financial years and up to the date of this report, Mr Haywood has not been a director of any other ASX listed companies.

Mr Peter Schwarz (B Sc (Geology), M Sc (Petroleum Geology))

(Non-Executive Director)

Mr Schwarz was appointed as a Non-Executive Director in September 2019. A former director of BG Exploration and Production Limited and CEO of independent exploration company Virgo Energy Ltd, Mr Schwarz is an AAPG Certified Petroleum Geologist and business development professional with over 40 years' experience in the oil and gas industry. Mr Schwarz has previously held various senior management roles with Amerada Hess, BG, and Marubeni and is currently a director of Finite Energy Limited, an oil and gas consultancy business he founded over 15 years ago, specialising in strategy and business development advice in the UK and Europe.

During the last three financial years and up to the date of this report, Mr Schwarz has not been a director of any other ASX listed companies.

COMPANY SECRETARY

The Non-Executive Director, Mr Mark Bolton, was appointed Company Secretary on 3 June 2016. He resigned as Company Secretary on 25 August 2021. Mrs Suzie Foreman (FGIA, CA, BComm) was appointed as Company Secretary on 25 August 2021. Mrs Foreman was the Company Secretary from 25 August 2021 until her resignation on 17 May 2022, when Ms Lisa Wynne, Synergia Energy's current Company Secretary, was appointed.

Ms Wynne (BCOMM, CA, FCIS) is a Chartered Accountant and Chartered Secretary with 16-plus years of experience in CFO and Company Secretary roles, and has Board level experience including with ASX and TSX listed companies and significant experience in the exploration and mining industries. Ms Wynne is a Member of the Institute of Chartered Accountants, a Fellow of the Governance Institute of Australia and a member of the Australian Institute of Company Directors.

CORPORATE GOVERNANCE STATEMENT

The Corporate Governance Statement, which reports on Synergia Energy's key governance principles and practices is available on the Synergia Energy website.

In establishing its corporate governance framework, the Company has referred to the recommendations set out in the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations 4th edition.

The Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the "if not, why not" reporting regime, where, after due consideration, the Company's corporate governance practices do not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation.

The Corporate Governance Statement provides detailed information on the Board and committee structure, diversity and risk management.

DIRECTORS' MEETINGS

Directors in office and directors' attendance at meetings during the financial year ended 30 June 2022 are as follows:

(1) The full Board performs the role of the Audit and Risk Committee. Up until 24 November 2021, the Board also performed the role of the Remuneration Committee. On 24 November 2021 the Board established a Remuneration Committee comprising Paul Haywood (Chair), Peter Schwarz and Mark Bolton. The Company does not have a Nomination Committee.

(2) Held indicates the number of meetings available for attendance by the director during the tenure of each director.

(3) Executive Director until 30 June 2021, appointed Non-Executive Director 1 July 2021.

(4) Appointed Executive Director 27 January 2022. Mr Judd also attended (by invitation) Board meetings held prior to his appointment.

(5) Attended indicates attendance by invitation. Where a director is not a member of a committee but attended meetings during the period, only the number of meetings attended, rather than held, is disclosed.

EXECUTIVE MANAGEMENT

Mr Jonathan Salomon (B App Sc (Geology), GAICD)

(Executive Chairman)

Mr Salomon was appointed as a Non-Executive Director in November 2015, Managing Director on 18 March 2016, and Interim Chairman on 5 May 2020. Mr Salomon continued as Managing Director and Interim Chairman until he was appointed as Executive Chairman on 16 June 2021. Mr Salomon has a Bachelor Degree in Applied Science and is a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers, and has over 36 years of experience working for upstream energy companies. Mr Salomon has worked for a number of oil and gas companies in various senior positions including General Manager Exploration and New Ventures at Murphy Oil Corporation and Global Head of Geoscience at RISC PL, in addition to a number of Executive Director roles including Strategic Energy Resources, Norwest Energy and Nido Petroleum. At several times in his career, Mr Salomon has acted as an independent consultant for various oil and gas companies, including New Standard Energy and Pacrim Energy. Mr Salomon first worked on Indian projects in 1994 while at Ampolex and since that time has maintained a connection with the Indian industry, at various times bidding in India's exploration and field development rounds and working with Indian companies as joint venture partners, both in India and internationally.

Mr Roland Wessel

(Chief Executive Officer and Director)

Mr Wessel was appointed as Chief Executive Officer and Director on 16 June 2021. Mr Wessel is a geologist with over 40 years' experience in all of the world's major oil and gas regions. Mr Wessel founded and built Star Energy, the UK onshore operator of 25 oil and gas fields, through to its listing on AIM in 2004 and its sale to Petronas in 2008. During its evolution, Star Energy grew rapidly through acquisitions and diversification, culminating in it becoming a major gas storage developer and operator. During his career, Mr Wessel has founded and managed a drilling services company and has developed and patented several key oilfield technologies. He has extensive experience in both project and corporate management.

Mr Colin Judd

(Chief Financial Officer and Director,

 appointed in each role 1 July 2021 and 27 January 2022 respectively)

Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and as Director on 27 January 2022. Mr Judd qualified as a chartered accountant with Price Waterhouse in 1979, where he fulfilled various professional accounting positions in the UK, Europe and the Far East. Mr Judd joined Christian Salvesen plc in 1987, undertaking senior financial management roles culminating in the position of European Financial Controller. In 1994, Mr Judd moved to Aberdeen where he undertook Chief Financial Officer roles for two private-equity-backed oil service businesses. In 1999, Mr Judd joined Star Energy Limited as a founder member and Chief Financial Officer and was instrumental in the company's successful listing on AIM in 2004, various subsequent share placings and the company's ultimate sale to Petronas. Mr Judd cofounded Trans European Oil & Gas Limited, a company backed by KKR, with the strategy to develop a pan-European oil and gas business.

Mr Ashish Khare(Bachelor of Engineering (BE in Chemical Engineering, including petroleum management))

(Head of India Assets)

Mr Khare was appointed Head of India Assets on 8 November 2016 and is based in India. Mr Khare has over 21 years of experience in the petroleum industry. Mr Khare's area of expertise include upstream oil and gas, as well as midstream and downstream project implementation and operations management. Mr Khare originally worked for Synergia Energy Ltd as GM Operations & Business Development, and has experience working for various Indian companies including Cairn India Ltd and Reliance Petroleum.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year included:

· exploration for oil and gas;

· appraisal and development of oil and gas prospects; and

· production and sale of oil and gas.

There were no significant changes in the nature of the activities during the year.

OPERATING RESULTS

The loss after income tax of the consolidated entity for the year ended 30 June 2022, from continuing operations, amounted to $2,061,924 (2021: $1,710,917, which was reduced to $614,345 after taking into account the profit after income tax from discontinued operations of $1,096,572). The Group had no income or expenses from discontinued operations during the current financial year.

On 4 February 2022, the Government of India approved the sale and transfer of 55% of the participating interest ("PI") in the Cambay PSC associated with the Cambay field ("Cambay Acquisition" or "Acquisition"). Following the Acquisition, $3,187,168, of expected credit losses ("ECLs") relating to the share of balances directly receivable from the Cambay operation to the Group were reversed (refer to footnote (11) of Note 9 of the Consolidated Financial Statements for further details).

This reversal of $3,187,168 of ECLs relating to the Cambay operation (2021: $622,216 mostly relating to amounts agreed to be paid and received from GSPC in September 2021) has been offset during the year by increases to ECLs related to the JPDA joint operations and other receivables of $40,263 (2021: $121,551) and $15,623 (2021: reversal of $25,720) respectively. As a result, results from continuing operations include a credit to the provision for ECL of $3,131,282 (2021: $526,385).

Since the completion of the Acquisition, the Cambay operations contributed $703,222 of losses to the results of the Group. This includes $438,371 in production costs, $113,556 in care and maintenance costs and $134,958 in exploration expenditure.

The impact of the ongoing COVID-19 pandemic up to 30 June 2022 has been financially negative for the Group. This is largely due to its general impact in India where significant delays were experienced with the completion of the sale of GSPC's 55% PI in the Cambay Production Sharing Contract ("PSC" or "Cambay PSC"). The sale was completed on 4 February 2022, as mentioned above. As a result, Indian operations continued to be maintained on a 'care and maintenance' basis for a longer period than originally anticipated, until April 2022 when production recommenced following the receipt of environmental clearance and consent to operate, as further detailed below.

Following the Group's receipt of the new Environmental Clearance Certificate issued by India Ministry of Environment, Forest and Climate Change on 17 March 2022, and the receipt of the Consent to Operate from the Gujarat Pollution Control Board on 8 April 2022, production recommenced on the Cambay field together with gas sales. Gas sales revenues during the year (since the recommencement of production) amounted to $141,435 (2021: $nil), which was from the Group's sole customer during the year, Enertech Fuel Solutions Private Limited. Cost of sales including production costs (since the recommencement of production) amounted to $754,365 (2021: $nil), which included re-fraccing costs (including those related to re-fraccing preparation) of $687,184 (2021: $nil).

Care and maintenance costs from continuing operations of $441,338 (2021: $140,259) included re‑fraccing costs (including those related to re-fraccing preparation that was incurred prior to the recommencement of production in April 2022) of $335,717 (2021: $nil).

OPERATING RESULTS (CONTINUED)

Included in exploration costs related to continuing operations of $937,181 (2021: $822,825) are amounts written off of $616,374 (2021: $309,703) to impair the exploration and evaluation asset to $nil (2021: written down to $549,778). The current year exploration write-off costs of $616,374 was the result of an internal assessment of the Cambay field exploration and evaluation asset at year-end (following the Acquisition), which showed that these assets were unlikely to recover costs capitalised to date (2021: the exploration write-off costs of $309,703 was related to the relinquishment of the P2446 exploration licence in the UK). Refer to Note 12 of the Consolidated Financial Statements for further details.

No impairment charge has been applied to the Cambay field development assets during the current financial year (2021: $nil).

The increase in employee benefits expenses to $1,023,136 (2021: $503,643) reflects increases to employee benefits expenses since the appointment of Roland Wessel and Colin Judd as CEO and CFO respectively, as well as reflecting remuneration increases to other staff from 1 September 2021. The administrative expenses also included net debit adjustments in accrued recoveries of prior period operating costs from external parties to $111,805 (2021: net credit recoveries of $569,552), an increase in bank charges to $94,851 (2021: $12,505) and an increase in other administrative expenses to $1,348,526 (2021: $1,129,115). The increase in bank charges is attributable to the bank charges incurred and relating to the bank guarantee related to the Acquisition. The increase in other administration expenses is mainly due to the Group's increased expenditure on external consultants during the period. These increases collectively resulted in the increase of total administration expenses to $2,578,317 (2021: $1,075,711).

Net finance costs of $377,812 (2021: $150,450) includes a loss of $254,117 (2021: $68,123) resulting from the fair value revaluation of listed shares held in Armour Energy Limited. It also includes interest from the unwinding of discount on the Group's site restoration provision of $76,753 (2021: $nil) and interest expense from the Group's loan facility relating to the repayment of the Group's termination penalty payable of $19,836 (2021: $nil).

FINANCIAL POSITION

The net assets of the Group at year-end include cash and cash equivalents of $4,838,459 (2021: $4,310,767). The level of cash and cash equivalents has been maintained at similar levels to the prior year, mainly due to two capital raisings undertaken during the year to fund the re-fraccing and other developmental activities undertaken by the Group during the year, and also to fund the Group's other working capital requirements during the year.

As mentioned under the previous Operation Results heading, the Cambay Acquisition was completed on 4 February 2022. As a result of the Acquisition, the net assets of the Group increased by $6,312,288 (refer to Note 26 of the Consolidated Financial Statements for further details of individual assets and liabilities taken up). This increase was mainly offset by $616,374 which was written off from the balance of the exploration and evaluation asset (refer to Note 12 of the Consolidated Financial Statements for further details). Overall, this net increase contributed to the net assets of the Group increasing to $14,583,598 (2021: $8,982,903).

DIVIDENDS

No dividend was paid or declared during the year and the directors do not recommend the payment of a dividend.

REVIEW OF OPERATIONS

A review of the operations of the Group during the financial year and the results of those operations are set out in the Review of Operations on pages 4 to 10 of this report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The Review of Operations details those changes that have had a significant effect on the Group. 

Other than those matters, there have been no other significant changes in the state of affairs of the Group that occurred during the financial year.

LIKELY DEVELOPMENTS

Additional comments on expected results on operations of the Group are included in the Review of Operations on pages 4 to 10.

Further disclosure as to likely developments in the operations of the Group and expected results of those operations have not been included in this report as, in the opinion of the Board, these would be speculative and as such, disclosure would not be in the best interests of the Group.

ENVIRONMENTAL ISSUES

The Group's oil and gas exploration and production activities are subject to environmental regulation under the legislation of the respective states and countries in which they operate. The majority of the Group's activities involve low level disturbance associated with its drilling programmes and production from existing wells. The Board actively monitors compliance with these regulations and as at the date of this report is not aware of any material breaches in respect of these regulations.

The Group also has an active program of education, monitoring and reporting within the Group's business to identify and mitigate any other environmental risks.

SIGNIFICANT EVENTS AFTER BALANCE DATE

The impact of the COVID-19 pandemic is ongoing and while it has been financially negative for the consolidated entity up to 30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is constantly evolving and is dependent on measures imposed by the Australian and Indian Governments and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

After year-end, the Company was advised that its efforts to regain a participating interest and control of the West Kampar PSC in Indonesia have been unsuccessful. The Company understands the West Kampar PSC has been awarded to a third party. This marks the end of the Company's activities in Indonesia.

On 13 July 2022, following shareholder approval, the Company released its Employee Incentive Plan. Shareholders approved the issue of up to a maximum of 388,559,703 shares under the Company's Employee Incentive Plan.

On 21 July 2022 and on 3 August 2022, following shareholder approval on 13 July 2022, the Company issued 174,831,394 shares (69,932,558 shares and 104,898,836 shares respectively on each date) at £0.0020 ($0.0035) per ordinary share for Tranche 2 of the May Placement (refer to Note 21, footnote (5), for further details).

On 26 July 2022, following shareholder approval on 13 July 2022, the Company, which was formerly known as "Oilex Ltd", changed its name to "Synergia Energy Ltd".

On 12 August 2022, following shareholder approval on 13 July 2022, the Company issued the following unquoted options to the Company's executive directors:

· 88,311,688 options to Mr Joe Salomon;

· 136,363,636 options to Mr Roland Wessel; and

· 100,000,000 options to Mr Colin Judd.

The options are exercisable at £0.0022 ($0.0039), are subject to vesting criteria and expire on 12 August 2027.

SIGNIFICANT EVENTS AFTER BALANCE DATE (CONTINUED)

On 17 August 2022, the Company made a repayment to JX of US$140,414. This repayment was followed by one more final draw down of US$250,000, which was made on 7 September 2022 to settle the final instalment of the termination penalty payable to ANPM (thereby fully extinguishing the Group's obligations to ANPM). Following the repayment and drawdown, at the date of this report, the balance of the loan is approximately US$429,114, with no further loan facility available to be drawn from JX.

On 13 September 2022, following shareholder approval on 13 July 2022, the Company issued 30,000,000 unquoted options to Novum Securities Limited ("Novum"), pursuant to the capital raising advisory agreement relating to the May Placement. The options are exercisable at £0.0020 ($0.0034) and expire on 30 April 2024.

There were no other significant subsequent events occurring after the year-end.

FINANCIAL POSITION

Capital Structure and Treasury Policy

As at 30 June 2022 the Group had unsecured loans at face value $451,355 (2021: credit balance on unsecured loans of $215,274). Refer to Note 17 of the Consolidated Financial Statements for details of the carrying amount, terms and conditions, repayment schedule, and options attached to the loans.

Details of transactions involving ordinary shares during the financial year are as follows:

In accordance with the ASX Waiver granted 2 November 2020 the Company advises that the number of remuneration shares that were issued to non-executive directors during the year totalled 4,389,645. This represents 0.05% of the Company's issued capital as at 30 June 2022.

As at the date of this report the Company had a total issued capital of 8,417,790,704 ordinary shares and 1,091,180,560 unlisted options exercisable at weighted average price of £0.0026 (A$0.0044) per option.

DIRECTORS' INTERESTS

The relevant interest of each director in shares and unlisted options issued by the Company, as notified by the directors to the ASX in accordance with Section 205G(1) of the Corporations Act 2001, at the date of this report is as follows:

(1) Exercisable at £0.0022, expiring 12 August 2027. One third (1/3) of these options were exercisable at reporting date.

(2) As per point (1) above, 29,437,229 of Mr Salomon's options were exercisable at reporting date.

(3) As per point (1) above, 45,454,545 of Mr Wessel's options were exercisable at reporting date.

(4) As per point (1) above, 33,333,333 of Mr Judd's options were exercisable at reporting date.

SHARE OPTIONS

Unissued Shares under Option

All options were granted in the current financial year.

At the date of this report, unissued ordinary shares of the Company under option (with an exercise price) are:

These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.

SHARE OPTIONS (CONTINUED)

Unissued Shares under Option that Expired during the Year 

During the financial year, the following unlisted options expired:

Shares issued on exercise of unlisted options

During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of unlisted options as follows (there were no amounts unpaid on the shares issued):

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Group paid a premium in respect of insurance cover for the directors and officers of the Group. The Group has not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors' liability and legal expense insurance contracts, as such disclosure is prohibited under the terms of the insurance contract.

PROCEEDINGS ON BEHALF OF THE COMPANY

No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company under Section 237 of the Corporations Act 2001.

NON-AUDIT SERVICES

The Company may decide to employ the Auditor on assignments additional to their statutory audit duties where the Auditor's expertise and experience with the Group is important.

The Board has considered the non-audit services provided during the year and is satisfied that the provision of the non-audit services is compatible with, and did not compromise, the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

· all non-audit services were subject to the corporate governance procedures adopted by the Group and these have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the auditor; and

· the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

Refer Note 29 of the Consolidated Financial Statements for details of the amounts paid to the auditors of the Group, PKF Perth and their network firms for audit and non-audit services provided during the year.

ROUNDING OF AMOUNTS

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest dollar, unless otherwise stated.

LEAD AUDITOR'S INDEPENDENCE DECLARATION

The Lead Auditor's Independence Declaration for the year ended 30 June 2022 has been received and can be found on page 34.

REMUNERATION REPORT - AUDITED

The Board performed the function of the Remuneration Committee since June 2016 when the Board considered that, given the size and composition of the existing Board, that there are no efficiencies to be gained by having a separate committee. The Board has adopted a Remuneration Committee Charter, which describes the role, composition, functions and responsibilities of the committee. On 24 November 2021, the Board established a Remuneration Committee comprising Messrs Paul Haywood (Independent Chair), Peter Schwarz (Independent Non-Executive Director) and Mark Bolton (Non-Independent Non-Executive Director).The Remuneration Committee is responsible for the review and recommendation to the Board, of the Company's Remuneration Policy, senior executives' remuneration and incentives, the remuneration framework for directors, superannuation arrangements, incentive plans and remuneration reporting.

1. PRINCIPLES OF COMPENSATION

Remuneration is referred to as compensation throughout this report. The Remuneration Report explains the remuneration arrangements for directors and senior executives of Synergia Energy Ltd who have authority and responsibility for planning, directing and controlling the activities of the Group (key management personnel). 

The compensation structures explained below are designed to attract, retain and motivate suitably qualified candidates, reward the achievement of strategic objectives and achieve the broader outcome of the creation of value for shareholders. The compensation structures take into account:

· the capability and experience of the key management personnel;

· the ability of key management personnel to control the performance of the relevant segments;

· the current downturn and uncertainty within the resources industry;

· the Company's performance including:

o the Group's earnings; and

o the growth in share price and delivering constant returns on shareholder wealth;

· exploration success; and

· development of projects.

Compensation packages include a mix of fixed compensation and long-term performance-based incentives. In specific circumstances, the Group may also provide short-term cash incentives based upon the achievement of Company performance hurdles or in recognition of specific achievements.

1.1 Fixed Compensation

Fixed compensation consists of base compensation and employer contributions to superannuation funds. Compensation levels are reviewed annually through a process that considers individual, sector and overall performance of the Group. In addition, reviews of available data on oil and gas industry companies provide comparison figures to ensure the directors' and senior executives' compensation is competitive in the market. 

Reductions in remunerations were introduced in 2016 and 2017 for the Executive and Non-Executive Directors in office at the time, and all staff have remained in place, with further reductions for some staff introduced in 2020.

Remunerations for Executive, Non-Executive Directors and staff members impacted were reviewed early in the 2022 financial year. Remuneration increases were implemented for certain individuals with effect from 1 September 2021.

Compensation for senior executives is separately reviewed at the time of promotion or initial appointment.

REMUNERATION REPORT - AUDITED (CONTINUEd)

1. PRINCIPLES OF COMPENSATION (Continued)

1.2 Performance Linked Compensation

Performance linked compensation includes both short-term and long-term incentives designed to reward key management personnel for growth in shareholder wealth. The short-term incentive ("STI") is an "at risk" bonus provided in the form of cash or shares, while the long-term incentive plan ("LTI") is used to reward performance by granting options over ordinary shares of the Company.

Short-Term Incentives

The Group has introduced a short-term incentive scheme for key management personnel with effect from 1 January 2022.

The short-term incentive scheme has been designed by the Remuneration Committee and approved by the Board, having regard to the business plans as well as the achievement of performance targets as determined by the Board. These targets include a combination of key strategic, financial and personal performance measures which have a major influence over company performance in the short term.

Other than the ex-gratia joining bonus for Mr Khare disclosed (refer 3. Directors' and Executive Officers' Remuneration), there were no short-term incentives or performance bonuses paid, nor shares granted to senior executives or staff during the year ended 30 June 2022.

Long-Term Incentives

On 13 July 2022, following shareholder approval, the Company released its Employee Incentive Plan. The shareholders approved, subject to the maximum issue amount increasing or decreasing in accordance with the 5% capital limit set out in the Class Order or the change of any laws, the issue of up to a maximum of 388,559,703 shares under the Company's Employee Incentive Plan.

The primary objectives of the Employee Incentive Plan are to:

· establish a method by which eligible participants can participate in the future growth and profitability of the Company;

· to provide an incentive and reward for eligible participants for their contribution to the Company; and

· attract and retain a high standard of managerial and technical personnel for the benefit of the Company.

Under the Employee Incentive Plan, an award (i.e. options or performance rights, etc.) may be awarded to an eligible participant.

The Board, at its sole and absolute discretion, may invite an eligible person selected by it to complete an application relating to a specified number of awards allocated to that eligible person by the Board. The Board may offer an award (as applicable) to any eligible person it elects and determine the extent of that person's participation in the Employee Incentive Plan (Participant).

An offer by the Board is required to specify, among other things, the type of award offered, the date and total number of awards granted, the exercise price and exercise period and any other matters the Board determines necessary, including the exercise conditions and disposal restrictions attaching to the awards.

At the General Meeting held on 13 July 2022, the shareholders approved the issue of 324,675,324 unlisted options as long term incentives to the Executive Directors. The options are to vest with the holder over a period of three (3) years, commencing on 1 July 2021. The Company did not issue any long-term incentives to senior executives or staff during the year ended 30 June 2022.

REMUNERATION REPORT - AUDITED (CONTINUEd)

1. PRINCIPLES OF COMPENSATION (Continued)

1.3 Non-Executive Directors

Total compensation for all Non-Executive Directors is based on a comparison with external data with reference to fees paid to Non-Executive Directors of comparable companies. Directors' fees cover all main Board activities and membership of committees, if applicable.

The annual fee for Mr Bolton was set at $55,381 plus statutory superannuation per annum effective from 1 July 2021 when he resigned as Executive Director and was appointed as Non-Executive Director and remains unchanged.

The annual fee for Mr Haywood, the Company's UK based Non-Executive Director was set at £30,000 per annum on commencement in May 2017 and remains unchanged.

The annual fee for Mr Schwarz, the Company's UK based Non-Executive Director was set at £30,000 per annum on commencement in September 2019 and remains unchanged.

At the Annual General Meeting ("AGM") held 16 December 2020 shareholders approved the issue of remuneration shares, whereby two Non‑Executive Directors agreed to receive part of their Directors fees paid through the issue of shares in lieu of cash payments, for the period of 1 November 2020 through to 31 October 2021, in order to conserve the cash reserves of the Company. For subsequent periods thereafter, the issue of remuneration shares to the Non-Executive Directors was discontinued.

The aggregate maximum fixed annual amount of remuneration available for Non-Executive Directors of $500,000 per annum was approved by Shareholders on 9 November 2011.

In addition to the fixed component, the Company can remunerate any director called upon to perform extra services or undertake any work for the Company beyond their general duties. This remuneration may either be in addition to, or in substitution for, the director's share of remuneration approved by Shareholders.

REMUNERATION REPORT - AUDITED (CONTINUEd)

1. PRINCIPLES OF COMPENSATION (Continued)

1.4 Clawback Policy

The Board has adopted the following Clawback Policy applicable from August 2015.

In relation to circumstances where an employee acts fraudulently or dishonestly, or wilfully breaches his or her duties to the Company or any of its subsidiaries, the Board has adopted a clawback policy in relation to any cash performance bonuses (including deferred share awards) or LTIs. The Board reserves the right to take action to reduce, recoup or otherwise adjust an employee's performance based remuneration in circumstances where in the opinion of the Board, an employee has acted fraudulently or dishonestly or wilfully breached his or her duties to the Company or any of its subsidiaries. The Board may:

· deem any bonus payable, but not yet paid, to be forfeited;

· require the repayment by the employee of all or part of any cash bonus received;

· determine that any unvested and/or unexercised LTIs will lapse;

· require the repayment of all or part of the cash amount received by the employee following vesting and subsequent sale of a LTI;

· reduce future discretionary remuneration to the extent considered necessary or appropriate to take account of the event that has triggered the clawback;

· initiate legal action against the employee; and/or

· take any other action the Board considers appropriate.

1.5 Remuneration Consultants

There were no remuneration recommendations made in relation to key management personnel by remuneration consultants in the financial year ended 30 June 2022.

1.6 Adoption of year ended 30 June 2021 Remuneration Report

At the AGM held 26 November 2021 shareholders adopted the 30 June 2021 Remuneration Report with a clear majority of 21,958,420 votes in favour, being 83.43% of the votes cast.

REMUNERATION REPORT - AUDITED (CONTINUEd)

2. EMPLOYMENT CONTRACTS

The following table summarises the terms and conditions of contracts between key executives and the Company:

(1) The Company may terminate the contract immediately if serious misconduct has occurred. In this case the termination payment is only the fixed remuneration earned until the date of termination and any unvested options will immediately be forfeited.

(2) Appointed Chief Financial Officer on 1 July 2021 and as Director on 27 January 2022.

REMUNERATION REPORT - AUDITED (CONTINUEd)

3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION

Details of the nature and amount of each major element of remuneration of each director of the Company and other key management personnel of the consolidated entity are:

The Directors and Executives of the Company may be Directors or Executives of the Company's subsidiaries. No remuneration is received for directorships of subsidiaries. All key management personnel other than Mr Wessel, Mr Judd and Mr Khare are employed by the parent entity.

Refer to the following explanatory notes for additional information.

REMUNERATION REPORT - AUDITED (CONTINUEd)

3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION (Continued)

Notes in Relation to Directors' and Executive Officers' Remuneration

(1) Benefits, including non-monetary include relocation costs and related expenses, as well as minor benefits, such as payments on behalf of employees considered personal, insurance premiums, car parking and any associated fringe benefits tax.

(2) Includes, where applicable, accrued employee leave entitlement movements.

(3) The 2022 share-based payment disclosures relate to the issue of remuneration shares for the period 31 July 2021 to 31 October 2021 (refer point 4 below) and unlisted options issued to the Executive Directors approved by the shareholders at the General Meeting held on 13 July 2022 (refer point 5 below). No other unlisted options were issued to key management personnel as remuneration during the year ended 30 June 2021 or 30 June 2022. In accordance with the ASX waiver granted 2 November 2020, the Company advises that the number of remuneration shares that were issued to directors in the year ended 30 June 2022 totalled 4,389,645 and the percentage of the Company's issued capital represented by these remuneration shares was 0.05%.

(4) Fees for Non-Executive Directors are not linked to the performance of the Group. At the AGM held on 16 December 2020, shareholders approved the issue of remuneration shares, whereby two Non-Executive Directors agreed to receive part of their directors' fees paid through the issue of shares in lieu of cash payments, for the period of 1 November 2020 through to 31 October 2021, in order to conserve the cash reserves of the Company. For subsequent periods thereafter, the issue of remuneration shares to the Non-Executive Directors was discontinued.

(5) At the Company's General Meeting held on 13 July 2022, shareholders approved the issue of 324,675,324 unlisted options as long term incentives to the Executive Directors, vesting over a period of three (3) years, commencing on 1 July 2021. Further details of the terms and conditions of the options is included in section 4.2. The options for the Executive Directors are not linked to the performance of the Group.

(6) Mr Bolton resigned as Executive Director and Chief Financial Officer and was appointed as Non‑Executive Director on 1 July 2021, with his annual remuneration negotiated to $55,381 plus statutory superannuation per annum effective from this date.

(7) Mr Haywood was appointed a Non-Executive Director on 29 May 2017. Mr Haywood is based in the United Kingdom and is paid £30,000 per annum. The amount disclosed is converted into Australian dollars at the applicable exchange rate at the date of payment. During the 2022 financial year Mr Haywood received 1,254,186 remuneration shares (refer point 3 above) at a value of $5,568 (which included remuneration shares at a value of $1,818 which was previously accrued at 30 June 2021). The issue of remuneration shares to Non-Executive Directors was discontinued from 1 November 2021.

(8) Mr Schwarz was appointed a Non-Executive Director on 4 September 2019. Mr Schwarz is based in the United Kingdom and is paid £30,000 per annum. The amount disclosed is converted into Australian dollars at the applicable exchange rate at the date of payment. During the 2022 financial year Mr Schwarz received 3,135,459 remuneration shares (refer point 3 above) at a value of $13,921 (which included remuneration shares at a value of $4,545 which was previously accrued at 30 June 2021). The issue of remuneration shares to Non-Executive Directors was discontinued from 1 November 2021.

REMUNERATION REPORT - AUDITED (CONTINUEd)

3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION (Continued)

Notes in Relation to Directors' and Executive Officers' Remuneration (Continued)

(9) Mr Salomon was appointed Managing Director in March 2016 with an initial fixed annual remuneration of $350,000 per annum, inclusive of statutory superannuation, which was reduced to $271,950 inclusive of statutory superannuation effective from 1 October 2016, following the implementation of cost reductions by the Company. A reduction in Mr Solomon's working hours to further reduce costs was implemented on 1 April 2020. Mr Salomon was appointed as Interim Chairman on 5 May 2020 and continued as Managing Director and Interim Chairman until he was appointed as Executive Chairman on 16 June 2021. His annual remuneration was renegotiated to $170,100 effective from 1 September 2021. On 12 August 2022, after year-end, the Company issued 88,311,688 unlisted options as a long-term incentive to Mr Salomon, following approval by shareholders at the General Meeting held on 13 July 2022. A third of the unlisted options vested on 30 June 2022. Further details of the terms and conditions of the options is included in section 4.2.

(10) Mr Wessel was appointed as Chief Executive Officer and Director on 16 June 2021 at a fixed annual remuneration of £150,000 per annum, plus 14% UK National Insurance. On 12 August 2022, after year-end, the Company issued 136,363,636 unlisted options as a long-term incentive to Mr Wessel, following approval by shareholders at the General Meeting held on 13 July 2022. A third of the unlisted options vested on 30 June 2022. Further details of the terms and conditions of the options is included in section 4.2.

(11) Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and Executive Director on 27 January 2022 at fixed annual remuneration of £110,000 per annum, plus 14% UK National Insurance. On 12 August 2022, after year-end, the Company issued 100,000,000 unlisted options as a long-term incentive to Mr Judd, following approval by shareholders at the General Meeting held on 13 July 2022. A third of the unlisted options vested on 30 June 2022. Further details of the terms and conditions of the options is included in section 4.2.

(12) Mr Khare became key management personnel on 8 November 2016 and is based in India. The amount paid during the year ended 30 June 2021 reflects the reduced working hours implemented 1 October 2017 to facilitate a 20% reduction in salaries together with a further reduction in working hours which was implemented on 1 May 2020. Mr Khare's terms and conditions of employment were revised with effect from 1 September 2022, which included an ex-gratia joining bonus of INR 595,546 (A$10,929) as a full time employee (previously engaged as a consultant from 1 May 2020). Mr Khare's remuneration has been converted from Indian Rupees at the average exchange rate for the year.

Analysis of Bonuses included in Remuneration

Other than the ex-gratia joining bonus for Mr Khare disclosed above, there were no short-term incentive cash bonuses awarded as remuneration to key management personnel during the financial year.

4. Equity Instruments

All rights and options refer to rights and unlisted options over ordinary shares of the Company, which are exercisable on a one-for-one basis.

4.1 Rights and Options Over Equity Instruments Granted as Compensation

There were no rights or options over ordinary shares granted as compensation to key management personnel during the financial year (2021: nil).

REMUNERATION REPORT - AUDITED (CONTINUEd)

4. Equity Instruments (CONTINUED)

4.2 Rights and Options Over Equity Instruments Granted as Compensation Granted Since Year End

At the General Meeting held on 13 July 2022, shareholders approved the issue of:

· 88,311,688 options to Mr Salomon (and/or his nominee(s));

· 136,363,636 options to Mr Wessel (and/or his nominee(s)); and

· 100,000,000 options to Mr Judd (and/or his nominee(s)).

The above options were issued on 12 August 2022, with one third (1/3) of the options vesting on 30 June 2022, one third (1/3) of the options vesting on 30 June 2023 and one third (1/3) of the options vesting on 30 June 2024. The fair value of the options issued to the Executive Directors were calculated at $0.0016 each using the Black-Scholes valuation model, based on the following inputs:

Based on the above, the value of the options granted to the Executive Directors, as well as the number and percentages of options vested (or otherwise) were as follows:

No other rights and options over ordinary shares in the Company were granted as compensation to key management personnel and executives since the end of the financial year.

4.3 Modification of Terms of Equity-Settled Share-based Payment Transactions

No terms of equity-settled share-based payment transactions (including options granted as compensation to key management personnel) have been altered or modified by the issuing entity during the financial year.

4.4 Exercise of Options Granted as Compensation

During the financial year no shares were issued on the exercise of options previously granted as compensation.

4.5 Details of Equity Incentives Affecting Current and Future Remuneration

There are no rights or options currently held by key management personnel at year end (2021: nil). Subsequent to year end on 12 August 2022, as detailed in section 4.2 above, a total of 324,675,324 options were issued to Executive Directors, as follows:

· 88,311,688 options to Mr Salomon;

· 136,363,636 options to Mr Wessel; and

· 100,000,000 options to Mr Judd.

Details of the terms of the options, the value of the options as well as the number of options vested during the year are detailed in Section 4.2.

REMUNERATION REPORT - AUDITED (CONTINUEd)

4. Equity Instruments (CONTINUED)

4.6 Analysis of Movements in Equity Instruments

There were no shares, rights or options over ordinary shares in the Company granted to or exercised by key management personnel in the current year.

4.7 Options or Rights over Equity Instruments Granted as Compensation

There are no rights or options held by key management personnel, or their related parties as at 1 July 2021 through to 30 June 2022.

5. KEY MANAGEMENT PERSONNEL TRANSACTIONS

5.1 Other Transactions with Key Management Personnel

There were no other transactions with entities associated with key management personnel in the year ended 30 June 2022 (2021: nil).

5.2 Movements in Shares

The movement during the financial year in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

END OF REMUNERATION REPORT - AUDITED

Signed in accordance with a resolution of the Directors.

West Perth

Western Australia

22 September 2022

AUDITOR'S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF SYNERGIA ENERGY LTD

In relation to our audit of the financial report of Synergia Energy Ltd for the year ended 30 June 2022, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

PKF Perth

Shane Cross

Partner

22 September 2022

West Perth,

Western Australia

2022 CONSOLIDATED FINANCIAL REPORT

CONTENTS

Consolidated Statement of Profit or Loss and Other Comprehensive Income.................... 36

Consolidated Statement of Financial Position................................................................. 37

Consolidated Statement of Changes in Equity................................................................. 38

Consolidated Statement of Cash Flows.......................................................................... 39

Notes to the Consolidated Financial Statements……………………………………................ 40

Directors' Declaration..................................................................................................... 98

Independent Auditor's Report......................................................................................... 99

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2022

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2022

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2022

(1) Capital raising costs include cash payments and the fair value of options granted to the underwriter.

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

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

notes to the consolidated financial statements

for the year ended 30 june 2022

NOTE 1 - REPORTING ENTITY

Synergia Energy Ltd (formerly "Oilex Ltd") (the "Company") is a for-profit entity domiciled in Australia. These consolidated financial statements comprise the Company and its subsidiaries (collectively the "Group" and individually "Group Entities"). Synergia Energy Ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the ASX and on AIM of the London Stock Exchange. The Group is primarily involved in the exploration, evaluation, development and production of hydrocarbons.

Parent Entity Information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in Note 24.

NOTE 2 - BASIS OF PREPARATION

(a)  Statement of Compliance

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 consolidated financial statements were authorised for issue by the Board of Directors on 22 September 2022.

(b)  Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis except for share-based payment arrangements measured at fair value and the foreign currency translation reserve.

A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for some measurement and/or disclosure purposes and where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(c)  Going Concern Basis

The Directors believe it is appropriate to prepare the consolidated financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

The Group incurred a loss of $2,061,924 (2021: $614,345), had cash outflows from operating activities of $4,801,134 (2021: $1,177,325), concluded the year with cash and cash equivalents of $4,838,459 (2021: $4,310,767), and had loans outstanding at year-end of $451,355 (2021: no loans outstanding).

The Group requires further funding within the next twelve months in order to repay its loan facility balance related to the Company's termination penalty settlement payable (see Note 15 for further information), progress the Cambay development and drilling programme, to meet its ongoing administrative expenses, and for any new business opportunities that the Group may pursue.

The Directors believe that the Group will be able to secure sufficient funding to meet the requirements to continue as a going concern, due to its history of previous capital raisings, acknowledging that the structure and timing of any capital raising is dependent upon investor support, prevailing capital markets, shareholder participation, oil and gas prices and the outcome of planned exploration and evaluation activities, which creates uncertainty.

NOTE 2 - BASIS OF PREPARATION (CONTINUED)

(c) Going Concern Basis (Continued)

The Directors consider the going concern basis of preparation to be appropriate based on its forecast cash flows for the next twelve months and that the Group will be in a position to continue to meet its minimum administrative, evaluation and development expenditures and commitments for at least twelve months from the date of this report.

If further funds are not able to be raised or realised, then it may be necessary for the Group to sell or farmout its exploration and development assets and to reduce discretionary administrative expenditure.

The ability of the Group to achieve its forecast cash flows, particularly the raising of additional funds, represents a material uncertainty that may cast significant doubt about whether the Group can continue as a going concern, in which case it may not be able to realise its assets and extinguish its liabilities in the normal course of business and at the stated amounts in the financial statements.

(d)  Currency and Foreign Currency Transactions

These consolidated financial statements are presented in Australian dollars, which is the Company's functional currency. The functional currency of the Company's subsidiaries is United States dollars, Australian dollars or Pounds Sterling.

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the foreign exchange rate at the reporting date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.

(e)  Basis of Consideration

These consolidated financial statements comprise the Company and its subsidiaries (collectively the "Group" and individually "Group Entities").

i) Subsidiaries

Subsidiaries are entities controlled by the Group. The list of controlled entities is contained in Note 23. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

ii) Joint Arrangements - Joint Operations

The interests of the Group in unincorporated joint operations and jointly controlled assets are recorded in Note 25.

iii) Transactions Eliminated on Consolidation

Intragroup balances and transactions, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

NOTE 2 - BASIS OF PREPARATION (CONTINUED)

(f) Key Estimates, Judgements and Assumptions

In preparing these consolidated financial statements, management continually evaluate judgements, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances. Actual results may differ from these judgements, estimates and assumptions. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

A key assumption underlying the preparation of the financial statements is that the entity will continue as a going concern. An entity is a going concern when it is considered to be able to pay its debts as and when they fall due, and to continue in operation, without any intention or necessity to liquidate or otherwise wind up its operations.

Judgement has been required in assessing whether the entity is a going concern as set out in Note 2(c).

In the process of applying the Group's accounting policies, management have made judgements, assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year as follows:

· Income tax - refer Note 5

· Trade and other receivables - refer Note 9

· Exploration and evaluation assets - refer Note 12

· Development assets - refer Note 13

· Plant and equipment - refer Note 14

· Provisions - refer Note 16

· Share-based payments - refer Note 22

COVID-19 Pandemic

Judgement has been exercised in considering the impacts that the ongoing COVID-19 pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates.

The impact of the COVID-19 pandemic up to 30 June 2022 has been financially negative for the consolidated entity. This is largely due to its general impact in India where significant delays were experienced with the sale of GSPC's 55% PI in the Cambay PSC. The sale was completed on 4 February 2022, when the Government of India approved the sale and transfer of the 55% PI in the Cambay PSC from GSPC to the Company.

As a result, Indian operations continued to be maintained on a 'care and maintenance' basis for a longer period than originally anticipated, until April 2022 when production recommenced following the receipt of environmental clearance and consent to operate. Following the Group's receipt of the new Environmental Clearance Certificate issued by India Ministry of Environment, Forest and Climate Change on 17 March 2022, and the receipt of the Consent to Operate from the Gujarat Pollution Control Board on 8 April 2022, production recommenced on the Cambay field together with gas sales.

Other than this matter and those addressed in specific notes, there does not currently appear to be either any other significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the ongoing COVID-19 pandemic.

NOTE 2 - BASIS OF PREPARATION (CONTINUED)

(g)  Rounding of Amounts

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest dollar, unless otherwise stated.

(h)  Accounting Policies

Significant accounting policies that are relevant to the understanding of the consolidated financial statements have been provided throughout the notes to the financial statements. Accounting policies that are determined to be non-significant have not been included in the consolidated financial statements.

The accounting policies disclosed have been applied consistently to all periods presented in these consolidated financial statements and have been applied consistently by Group entities, except for any changes in accounting policies.

Changes in Significant Accounting Policies

The Group has adopted all new or amended accounting standards, interpretations and other accounting pronouncements issued by the AASB that are effective for reporting periods beginning on or after 1 January 2021 and therefore mandatory for the current reporting period. The adoption of these accounting standards, interpretations and other accounting pronouncements did not have any significant impact on the financial performance or position of the Group.

Any new or amended accounting standards, interpretations and other accounting pronouncements issued by the AASB that are not yet mandatory for the current reporting period have not been early adopted.

Accounting Standards and Interpretations Issued But Not Yet Effective

A number of new or amended accounting standards, interpretations and other accounting pronouncements issued by the AASB (as applicable to the Group) are effective for reporting periods beginning on or after 1 January 2022, and are as follows:

NOTE 2 - BASIS OF PREPARATION (CONTINUED)

(h) Accounting Policies (Continued)

Accounting Standards and Interpretations Issued But Not Yet Effective (Continued)

The above new or amended accounting pronouncements are not yet effective, with early application permitted. However, at the date of authorisation of these financial statements, the Group has not early adopted the above accounting pronouncements in preparing these consolidated financial statements.

The Group has not yet assessed the impact of these new or amended accounting pronouncements, however, none of the above accounting pronouncements are expected to have a significant impact on the financial performance or position of the Group in the current or future financial periods.

This section focuses on the results and performance of the Group.

NOTE 3 - OPERATING SEGMENTS

An operating segment is a component of the 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 Group's other components. The Group has identified its operating segments based upon the internal management reports that are reviewed and used by the executive management team in assessing performance and that are used to allocate the Group's resources. The operating segments identified by management are generally based on the geographical location of the business. Each segment has responsible officers that are accountable to the Chief Executive Officer ("CEO") (the Group's chief operating decision maker). The operating results of all operating segments are regularly reviewed by the Group's CEO to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 

The Group's executive management team evaluates the financial performance of the Group and its segments principally with reference to revenues, production costs, expenditure on exploration evaluation and development costs.

The Group undertakes the exploration, development and production of hydrocarbons and its revenue is from the sale of oil and gas. Information reported to the Group's CEO is on a geographical basis.

Financing requirements, finance income and expenses are managed at a Group level.

Corporate items include administration costs comprising personnel costs, head office occupancy costs and investor and registry costs. It may also include expenses incurred by non-operating segments, such as new ventures and those undergoing relinquishment. Assets and liabilities not allocated to operating segments and disclosed are corporate, and mostly comprise cash, plant and equipment, receivables as well as accruals for head office liabilities.

Major Customer

The Group's most significant customer is Enertech Fuel Solutions Pvt Limited with gas sales representing 100% of the Group's total revenues (2021: 0%).

Revenue

The Group recognises revenue as follows:

a) Revenue from Contracts with Customers

Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

NOTE 3 - OPERATING SEGMENTS (CONTINUED)

b) Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

c) Other Revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Expenses

Amortisation - refer to Note 13

Impairment - refer to Notes 12 and 13

Depreciation - refer to Note 14

Expected credit losses - refer to Note 9

Employee benefits - refer to Note 16

Leases - refer to Note 18

Goods and Services Tax ("GST") and Other Similar Taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the 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 recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

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

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

NOTE 3 - OPERATING SEGMENTS (Continued)