A Flick Through BPH Energy’s Annual Report 2019

Australia-based diversified player, BPH Energy Limited (ASX: BPH) invests in various sectors, including medical cannabis, biotech and oil and gas, and holds significant interests in Advent Energy Ltd, Molecular Discovery Systems, Patagonia Genetics Pty Ltd and Cortical Dynamics Ltd.

BPH has recently released its Annual Report for the year ended 30th June 2019 on the ASX. BPH’s investee companies – Cortical and Advent – observed several developments during the financial year, as discussed below:

Cortical Dynamics Ltd (4.39 per cent interest)

Medical device technology firm based in Australia, Cortical Dynamics Ltd has developed a paradigm busting technology, the Brain Anaesthesia Response Monitor (BARM), an industry disruptive brain function monitor. Cortical has obtained both approval from TGA and the CE mark for BARM and has now initiated its sales campaign.

Cortical observed many developments during the period, including:

  • Mr Gary Todd appointed as Managing Director.
  • BARM trial conducted at Sydney Adventist Private Hospital returned positive comments from all four anaesthetists that trialled BARM.
  • BARM is currently being trialled by LiDCO Ltd UK at England-based Southampton University Hospital.
  • Chief Technological Officer of Cortical, Mr Louis Delacretaz, appeared at Korea Anesthesia congress 2018 in Seoul.
  • Successful trials of BARM were performed at Strathfield Private Hospital and Elizabeth Bay-based St. Luke’s Private Hospital, with Dr Adrian Sultana (consultant anaesthetist and the Director of “International Society for the Perioperative Care of the Obese Patient”) reporting the following conclusions-

Subsequent to the financial year 2019, Cortical also obtained Korean KGMP certification for its BARM medical device product.

Advent Energy Ltd (22.6 per cent interest)

BPH holds a direct interest in Advent, whose primary objective is to drill well in the PEP 11 permit (85% owned by Advent’s wholly owned subsidiary Asset Energy Pty Ltd) at the Baleen drilling target in the offshore Sydney basin in 2020. In the onshore Bonaparte Basin, Advent also holds 100 per cent of each of the RL 1 and EP 386 permits, via its 100% subsidiary Onshore Energy Pty Ltd.

Advent witnessed the following developments during the year:

  • Advent published its Environmental Performance Report for the PEP11 permit 2D Baleen HR Seismic Survey.
  • Asset Energy Pty Ltd and RL Energy Pty Ltd entered into a conditional farm-in agreement, which was terminated in September 2019.
  • On 6 March 2019, MEC Resources Limited further increased its investment into Advent from 50 to 53 per cent.
  • A binding term sheet for the majority sale of Onshore Energy Pty Ltd to Bonaparte Petroleum Pty Ltd was signed on 28 September 2018. The agreement was later terminated on 10 August 2019.
  • Onshore Energy got successful in its application to the WA Department of Mines, Industry Regulation and Safety for funding from their Exploration Incentive Scheme.

Post the financial year, Advent noted the following developments:

  • The RL Energy Joint Venture Agreement for the PEP11 permit was terminated by mutual consent. The JV is assessing the work program and reviewing proceeding with the well drilling operation at the Baleen target, subject to consents of regulatory authorities, including NOPTA.
  • Advent received a renewal of RL1 by the Department of Primary Industry and Resources (DPIR) in the Northern Territory for a five-year period completing in July 2023.

BPH’s Key Activities – Subsequent to FY19

Reached Settlement with MEC Resources Limited

BPH reached a settlement with MEC regarding the oppression proceedings the company commenced in the Supreme Court of Western Australia with Grandbridge, Trandcorp Pty Ltd and Mr David Breeze.

Marked Entry into the Medical Cannabis Sector

The company initiated a complementary strategy of investing into the medical cannabis sector by acquiring a 10 per cent interest (with an option to increase the share to 49 per cent) in Patagonia Genetics Pty Ltd.

BPH reported about the purchase of first 1,300 litres of Wonderland Agronutrients products by Patagonia Genetics in September 2019.

BPH’s Financial Performance

During the financial year, BPH recorded an increase in revenue by 17.8 per cent to $278,227, owing to the interest accrued by the company on its secured loans to its investee companies. The company also reported a net loss after tax of $3,013,043 for the year ended 30th June 2019.

The company issued ~1.19 billion shares at an issue price of $0.001 per share, raising $1.02 million in cash and satisfying $158,536 by debt set-off. The company also raised $148,000 cash during the period from the issue of placement shares.

Following the year, the company issued 20 million share options at an exercise price of $0.002 (expiry date of 9th August 2024) on 9th August 2019, as part of remuneration arrangements with a contractor.

The company also issued 282 million fully paid ordinary shares on 28th August 2019 for cash to make investments in medical devices, biotechnology and oil and gas and for debt reduction, working capital, due diligence and review and consideration of proposed investment in medical cannabis. In addition, the company issued 15 million fully paid ordinary shares as an introductory fee for a business transaction.

As at 30th September 2019, BPH had a cash balance of $257,000.

Focusing on value-creation and growth capacity, BPH has progressed considerably well during the financial year. The company is well positioned to tap further opportunities in diverse fields, backed by its robust investments. The company aims to continue its investment in energy resources and to assist its investee companies to commercialise breakthrough biomedical research developed in universities, medical institutes and hospitals.

BPH closed the day’s trading session, up 100% on 4 November 2019.


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