CONTENTS
-
2
Corporate Directory
Chairman’s Letter
4 Managing Director’s Report
10 Company Performance
11 Cooper Energy Permit and Infrastructure Assets
12 Community Support
13 Annual Financial Report
15 Directors’ Statutory Report
37 Consolidated Statement of Comprehensive Income
38 Consolidated Statement of Financial Position
39 Consolidated Statement of Changes in Equity
40 Consolidated Statement of Cash Flows
41 Notes to the Financial Statements
91 Directors’ Declaration
92
Independent Audit Report
94 Auditors Independence Declaration
95 Securities Exchange and Shareholder Information
95 Number of Shareholders
96 Twenty Largest Shareholders
96 Substantial Shareholders
98 Statement on Corporate Governance
111 Listing Rules
112 Glossary of Terms
Tunis Office
Bargou, Hammamet
and Nabeul
T U N I S I A
Sukananti and
Sumbagsel
Jakarta Office
I N D O N E S I A
Cooper Basin
Perth Office
Otway Basin
A U S T R A L I A
Adelaide Office
Gippsland Basin
1
COOPER ENERGY LIMITED ANNUAL REPORT 2012 CHA IRMAN’S LE TTER
Dear Shareholders,
The 2012 financial year has been a period of significant change and
transition for Cooper Energy. It is very pleasing to advise that the firm
decisions taken by the Board of Directors regarding organisation and strategy
are now being reflected in material improvements in the financial performance
of your company.
Total oil production for the year was 517,186 barrels (FY11: 406,710) from
the Cooper Basin, South Australia and Indonesia which delivered total sales
revenue of $59.61 million (FY11: $39.12 million). The resultant cash flow
funded the ongoing exploration and production activities primarily in
Australia, Tunisia and Indonesia.
After funding all our activities the Company
generated net profit after tax before abnormal events
of $15.76 million (FY: $11.73 million). For a company
the size of Cooper Energy this is a very pleasing
result and illustrates the strength of the key Cooper
Basin production assets.
There was a write off for unsuccessful exploration
and the impairment of assets of $19.61 million
(FY11: $22.08 million). This write off was attributable
mainly to exploration assets in Poland and
Indonesia. With the introduction of the Australian
Commonwealth Government Petroleum Resources
Rent Tax (PRRT) from 1 July 2012 there has been the
need to recognise the deferred tax asset attributable
to the PEL 92 permit in the Cooper Basin, South
Australia of $12.23 million. The consequent net
profit after impairment and taxation is $8.38 million
(FY11: loss of $10.35 million).
Following a review of the Company’s strategy and
future plans the Board made a number of important
22
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Hector Gordon was appointed to the Company’s
Board as Executive Director - Exploration and
Production. Hector Gordon brings a wealth of very
relevant valuable technical experience to both the
management and Board of Cooper Energy.
At the 2011 Annual General Meeting I advised my
intention to stand aside as Chairman once the
proposed changes had been implemented.
As recently announced, the Company is in the
process of recruiting a new Non-Executive Chairman
who will be ideally suited to lead the Board of
Directors through the next and important phase
of your Company’s growth.
The Board will continue to strive to apply high
standards and best practice to all Board processes,
corporate and financial governance and clear and
continuous disclosure.
Whilst the past year has been a period of transition
and change, my fellow directors and I are firmly of
the view that these changes will help ensure the
future prosperity and growth of Cooper Energy.
As outlined in the Managing Director’s review the
Company has a very busy year ahead. We look
forward to Cooper Energy continuing to improve
performance and returns for the shareholders.
I thank my fellow directors, management and staff
of Cooper Energy for their contributions and effort
over the past year.
On behalf of the Board I also thank all shareholders
for their ongoing support and encouragement
during the year.
Mr Laurie Shervington
Chairman
September 2012
changes. These changes were advised in my
Chairman’s letter included in the 2011 Annual
Report and included:
•
the appointment of David Maxwell as the
Managing Director from 12 October 2011;
•
•
•
the resignation of three directors (Gregory
Hancock, Stephen Abbott and Christopher
Porter) in October, 2011;
the appointment of Jeffrey Schneider as a new
non executive director in October 2011; and
the plan to focus on developing and growing
the very good Australia and Tunisia assets and
reducing international exploration expenditure.
The 2011 Annual General Meeting held in December
2011 voted 39.6% against the 2011 Remuneration
Report. This was very soon after the proposed
changes were announced and at a time when some
shareholders were seeking changes in the Company.
The directors have taken account of the views of
shareholders and very carefully ensured that the
plans and activities are fit for purpose and deliver a
solid foundation for medium and long term success.
It is this careful and considered evaluation which
led to the changes announced in October 2011
and we now see the benefits flowing through to
the financial results.
I encourage all shareholders to vote in support of
the 2012 Remuneration Report at the 2012 Annual
General Meeting.
The directors, management and staff remuneration
levels have been benchmarked against industry
peers and the remuneration of all staff and
management is now closely linked to the delivery
of plans and shareholder returns. Consistent with
this approach to effective cost management the
Board has also announced the decision to move
the Head Office of the Company from Perth to
Adelaide. Whilst this decision has a personal impact
on many staff and management it is most definitely
the right decision for the future of the Company and
importantly the shareholders.
In May 2012 an off market offer to acquire Somerton
Energy Limited was announced. The acquisition
of Somerton Energy was concluded in July 2012
and materially increases the oil and gas exploration
opportunities available from the onshore Otway
Basin, South Australia and Victoria. The Somerton
Energy acquisition is very consistent with the plans
announced in October 2011 and the core strengths
of Cooper Energy.
Following the acquisition of Somerton Energy
33
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MAN AG ING DIRE CTOR’ S REPO RT
I am pleased to have the opportunity to reflect on the performance
of Cooper Energy over the past twelve months and comment on the
outlook and plans for the 2013 financial year.
Since October 2011 when I was appointed Managing Director the
decisions made and plans pursued have all been with the objectives of
delivering the best sustainable shareholder return AND taking account
of safety, the environment, security and health.
Our business and strategy can be simply described in the diagram
illustrated below. The approach being pursued is to leverage and grow
the strengths of the Company, which include a very sound cash and
cash flow position, with the management experience and capabilities.
The purpose is to build value in the geographic areas where we already
have competitive strengths – Australia and Tunisia in particular and
Indonesia. The strategy includes a clear focus on the key fundamentals
of the oil and gas business – cost, technical, market and commercial.
FIGURE 1
TOTAL SHAREHOLDER RETURN
AND
Safety, Environment, Security & Health
Experience & Skills
Link Results
& Remuneration
Leverage & Grow
Strengths
Assets
Cash & Cash Flow
Fundamentals Focus
Market, Commercial,
Technical & Costs
OIL & GAS
Australia, Tunisia, Indonesia
4 COOPER ENERGY LIM IT ED AN N U A L R E P O RT 2 0 12
4
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MA NAG I NG DI R EC TOR’S R EPO RT ( c ontinued )
The consequence of implementing this business
strategy is a significant reduction in capital
expenditure on international exploration and an
increased focus and investment in Australia – and
in particular Australian opportunities consistent with
Cooper Energy’s key assets and capabilities.
The very sound financial results of the Australian
business in the 2011/12 year illustrate the strength
of the key Cooper Basin assets and the merits of the
strategy being pursued. We will continue with this
approach and only develop opportunities that meet
acceptable cost and return criteria.
The description below of the Cooper Energy assets
and activities has been kept appropriately brief.
Investors are encouraged to use the Cooper Energy
website (www.cooperenergy.com.au) to keep up to
date with the Company’s assets, activities and plans.
The exploration and development plans for the
2012/13 year are directed to building the Company’s
oil and gas reserves and resources, increasing the
size of the exploration portfolio consistent with the
strategy and increasing the number and size of
the lower risk opportunities.
Cooper Basin
The 2011/12 oil production from the Cooper
Basin of 501,012 barrels is a 26%% increase on the
2010/11 year of 398,859 barrels. Cooper Basin oil
production was interrupted during the year due to
FIGURE 2
weather and oil pipeline integrity issues. In May
2012 the operator of the Tantanna to Gidgealpa oil
pipeline advised that the pipeline will stop operation
due to integrity concerns and the pipeline stopped
operating from 1 June 2012. A new pipeline is
being constructed from Lycium to Moomba and
it is planned that this new pipeline will transport
oil production from PEL92 to Moomba. It is
anticipated that the new pipeline will commence
operating within December 2012. Until the new
Lycium to Moomba pipeline is operating oil is being
transported primarily by road tanker to Moomba.
As a consequence of these oil transport plans it is
anticipated oil production will be lower in the first half
of the 2012/13 year and then significantly increase
in the second half of the 2012/13 year. The total
Cooper Basin oil production (Cooper Energy share)
anticipated for the 2012/13 year is 525,000 barrels.
In 2011/12 the Company participated in the drilling
of 11 wells in the Cooper Basin – all in PEL92. This
exploration program resulted in 3 new discoveries
[Rincon, Elliston and Germein] and 4 successful
appraisal/development wells.
The objective of the 2012/13 Cooper Basin
exploration plan is to at least maintain oil production
levels, appraise recent discoveries and mature new
prospects and leads for drilling in later years.
5
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MANAGING DI R EC TOR’S REP ORT ( c ontinue d)
COOPER BASIN
6
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MA NAG I NG DI R EC TOR’S R EPO RT ( c ontinued )
Otway Basin
The Company’s Otway Basis acreage has
significantly increased from 1 license of 793km2
to now include 6 licences and totalling 8,350km2
following the acquisition of Somerton Energy
Limited in June 2012.
Cooper Energy is now very well placed to
evaluate and explore the valuable conventional
and unconventional gas and oil opportunities in
the onshore Otway Basin. If successful the Otway
Basin portfolio will be very competitive from a
cost perspective and therefore is a potentially very
valuable opportunity for the company.
In the 2012/13 year the plan is to drill 2 onshore
Otway Basin wells to evaluate both conventional and
unconventional opportunities and further analyse the
Casterton Formation unconventional oil and gas play.
OTWAY AND GIPPSLAND BASIN
Gippsland Basin
As a part of the Somerton Energy acquisition
Cooper Energy acquired the right to participate in
PRL2 in the onshore Gippsland Basin.
In August and September 2012 Cooper Energy
also acquired an interest in Bass Strait Oil Limited
which increased the Company’s interest in Bass
Strait Oil to 19.9%. The key Bass Strait Oil assets
include undeveloped gas resources and exploration
opportunities in the Gippsland Basin. The opportunity
to develop the Bass Strait Oil gas assets for supply
into the rapidly growing Eastern Australia gas market
will be investigated.
7
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MANAGING DI R EC TOR’S REP ORT ( c ontinue d)
In addition to the Hammamet West-3 well the
Company will further evaluate and prioritise other
exploration opportunities in the Tunisia licences.
This will include plans to farm-out an interest in the
prospective Nabeul exploration permit following the
interpretation of the 600 km2 3D offshore seismic
survey acquired in November 2011.
Tunisia
Since 2006 Cooper Energy has built a valuable
position offshore Tunisia in the Gulf of Hammamet in
the Mediterranean Sea. The Cooper Energy licenses
surround existing production and undeveloped
oil and gas fields and include a range of valuable
prospects and leads.
Consistent with the strategy outlined above in
October 2011 the farmout of 55% of the Bargou
exploration permit to Dragon Oil (Holdings) Ltd was
announced. This farmout together with a farm-out to
Jacka Resources Limited announced in September
2010 means that Cooper Energy is fully funded by
others up to US$26.6 million for the Hammamet
West-3 well, which is to be drilled to appraise an
existing oil discovery in the current financial year.
TUNISIA
8
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MA NAG I NG DI R EC TOR’S R EPO RT ( c ontinued )
INDONESIA
SOUTH EAST ASIA
Indonesia
In Indonesia Cooper Energy focussed on
establishing stable production and cash flow to
fund opportunities to increase production and
reserves. It is pleasing that since January 2012 this
objective has been achieved.
During the 2012/13 year the focus will continue on
growing the stable production and cash flow base
from the existing licenses and pursuing the best
exploration opportunities to add further reserves.
9
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MANAGING DI R EC TOR’S REP O RT ( c ontinue d)
Cooper Energy Staff
As explained in the Chairman’s letter to shareholders
at the front of this report the decision has been made
to relocate the Head Office from Perth to Adelaide
from December 2012. This decision is consistent
with the strategy and locates the company and staff
closer to the current key assets, joint venture parties,
governments and importantly prospective customers.
Unfortunately such decisions also have an impact on
many staff. I thank all staff for the approach taken to
the changes that have been announced.
I welcome the new staff joining Cooper Energy in
2012 and look forward to working closely with them
all to add value for our shareholders.
Health, safety and the environment (HSE)
continues to be a high priority for the company
and no significant HSE incidents occurred through
the year.
Company Performance
The Board and management of Cooper Energy
monitor several key performance indicators in order
to provide a relative measure of our Company’s
health and growth. A table of those relevant
measures is shown below.
Key Performance Indicators
Units
FY08
FY09
FY10
FY11
FY12 FY11 to FY12 change
OPERATIONAL
Wells drilled
Exploration success rate
Cumalative success rate
number
percent
percent
11
40%
21%
7
60%
26%
4
0%
24%
11
0%
20%
Annual production sales
barrels of oil
380,135
487,254
465,012
406,710 517,186
1 year
performance
11
0%
50% 100%
29%
57%
27%
Proved plus Probable
Recoverable Oil
FINANCIAL
Oil sales revenue
Cash
Working capital
EBITDAX
EBITDA
Profit before tax
Profit after tax
Accumulated profit
Franking credits
million barrels
1.444
1.912
2.000
2.472
1,880
-24%
A$ millions
A$ millions
A$ millions
A$ millions
A$ millions
A$ millions
A$ millions
A$ millions
A$ millions
45.014
41.647
40.030
39.121
59.606
64.609
93.437
92.273
51.891
59.010
1 year
performance
52%
14%
73.600
96.465
95.443
79.520
55.384
-30%
27.300
25.700
21.260
17.904
28.546
59%
15.700
15.300
5.200
5.041
7.963
7.221
-5.616
26.797
577%
-5.488
21.006
483%
6.400
-2.816
1.247
-10.349
8.381
181%
25.966
23.150
24.428
14.079
22.460
3.100
9.300
8.402
8.025
5.657
5.587
17.702
25.727
31.384
36.971
60%
-1%
18%
Cumulative franking credits
A$ millions
CAPITAL
Share price
Issued shares
A$ per share
0.465
0.450
0.370
0.360
0.450
millions
252.263
291.926
292.576
292.576 327.329
Market capitalisation
A$ millions
117.302
131.367
108.253
105.327 147.298
1 year
performance
5 year
performance
25%
12%
40%
-3%
30%
26%
10
COOPER ENERGY LIMITED ANNUAL REPORT 2012 MA NAG I NG DI R EC TOR’S R EPORT ( c ontinued )
Portfolio Management
A key element of the Cooper Energy strategy is
to grow and add value in the existing areas of
operations by business development, farm-in and
acquisition. The Company will continue to evaluate
opportunities and where possible pursue the
opportunities which can add value and increase
total shareholder return.
The implementation of the strategy illustrated in
Figure 1 earlier in this report has meant that the
Cooper Energy interest in Romania and Poland
and pursuit of other international new ventures was
not consistent with the portfolio. Accordingly the
Company has exited these assets and activities
during 2011/12.
Cooper Energy Exploration & Production Tenements
Tenement
Location
Interest
Location
Area
(km2)
Area
(acres)
Region
AUSTRALIA
PPL 204 (Sellicks)
Cooper Basin (S.A.)
PPL 205 (Christies/Silversands) Cooper Basin (S.A.)
PPL 207 (Worrior)
Cooper Basin (S.A.)
PPL 220 (Callawonga)
Cooper Basin (S.A.)
PPL 224 (Parsons)
Cooper Basin (S.A.)
PEL 90 (Kiwi sub-block)
Cooper Basin (S.A.)
PEL 92
PEL 93
PEL 100
PEL 110
PRL 2
PEL 186
PEL 495
PEP 150
PEP 151
PEP 168
PEP 171
Cooper Basin (S.A.)
Cooper Basin (S.A.)
Cooper Basin (S.A.)
Cooper Basin (S.A.)
Otway Basin (S.A)
Otway Basin (S.A.)
Otway Basin (VIC.)
Otway Basin (VIC.)
Otway Basin (VIC.)
Otway Basin (VIC.)
25% Onshore
25% Onshore
30% Onshore
25% Onshore
25% Onshore
2.0
4.3
6.4
5.6
1.8
25% Onshore
145.4
25% Onshore
1,900.9
30% Onshore
19.17% Onshore
20% Onshore
33% Onshore
65% Onshore
623.3
297.6
730.0
687.1
709.0
792.3
20% Onshore
3,253.3
75% Onshore
50% Onshore
863.9
772.3
494
7,063
1,581
1,384
447
35,929
469,723
154,021
73,539
180,387
169,786
175,198
195,782
803,908
213,474
190,839
25% Onshore
1,961.7
484,747
Gippsland Basin (VIC.)
earning up to16.7% Onshore
INDONESIA
TUNISIA
POLAND
Sukananti KSO
Sumbagsel PSC
South Sumatra
South Sumatra
55% Onshore
18
4,448
100% Onshore
1,753
433,176
Bargou
Hammamet
Nabeul
Gulf of Hammamet
Gulf of Hammamet
Gulf of Hammamet
30% Offshore
35% Offshore
85% Offshore
4,616
4,676
3,352
1,140,638
1,155,465
828,297
MUA2 (414, 415)*
Southern Carpathians
40% Onshore
559
138,132
*On 22 August 2012, a controlled subsidiary withdrew from Licence Blocks 433, 434, 435 & 455 in Contracts MUA 1 & MUA 3.
11
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Community Support
Cooper Energy is fortunate in that the Company is fully funded and able to pursue
our primary objectives. Many in the broader community do not have the benefit of
such organisations support and funding. These non-profit organisations have goals
and objectives that are targeted towards the betterment of society and they are
commonly supported by donations and the efforts of volunteers who give their
time, energy and compassion.
Cooper Energy each year provides a small amount of funding to a number of organisations so that we
can assist them to meet their goals and objectives.
The organisations that Cooper Energy has historically and currently is very pleased to support are as
follows:
ASTHMA FOUNDATION WA
www.asthmawa.org.au
MAKE A WISH FOUNDATION
www.makeawish.org.au
PRINCESS MARGARET HOSPITAL FOUNDATION
www.pmhfounndation.com
THE ROYAL FLYING DOCTOR SERVICE
www.flyingdoctor.net
THE ROYAL SOCIETY FOR THE PROTECTION OF CRUELTY TO ANIMALS
www.rspca.org.au
THE SMITH FAMILY
www.thesmithfamily.com.au
SURF LIFESAVING AUSTRALIA
www.slsa.com.au
STARLIGHT CHILDREN’S FOUNDATION
www.starlight.org.au
TELETHON SPEECH AND HEARING CENTRE
www.speechandhearing.org.au
WA SPECIAL CHILDREN’S CHRISTMAS PARTY
12
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Cooper Energy Limited and
its controlled entities
Financial Report
For the year ended 30 June 2012
ABN 93 096 170 295
13
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Contents
Directors’ Statutory Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consoldiated Statement of Cash Flows
Notes To Financial Statements
1. Corporate Information
2. Summary Significant Accounting Policies
3. Segment Reporting
4. Revenues and Expenses
5.
Income Tax
6. Earnings Per Share
7. Cash and Cash Equivalents and Term Deposits
8. Trade and Other Receivables (Current)
9. Materials (Current)
10. Prepayments (Current)
11. Exploration Assets held For Sale (Current)
12. Available For Sale Investment (Non-Current)
13. Oil Properties (Non-Current)
14. Exploration and Evaluation (Non-Current)
15. Trade and Other Payables (Current)
16. Provisions (Non-Current)
17. Business Combinations
18. Contributed Equity and Reserves
19. Financial Risk Management Objectives & Policies
20. Commitments and Contingencies
21. Interest in Joint Venture Assets
22. Related Parties
23. Share Based Payments
24. Auditor’s Remuneration
25. Parent Entity Information
26. Events after the Reporting Period
Directors’ Declaration
Independent Audit Report
Auditor’s Independence Declaration
Corporate Directory
14
COOPER EN ERGY LIM IT ED AN N U A L R E P ORT 2012
15
37
38
39
40
41
41
41
60
62
63
66
67
68
69
69
69
70
71
72
72
73
73
75
76
80
81
83
87
89
90
90
91
92
94
Inside front cover
Directors’ Statutory Report
For the year ended 30 June 2012
The Directors present their report together with the consolidated financial report of the Group, being Cooper
Energy Limited (the “parent entity”) and its controlled entities, for the financial year ended 30 June 2012, and the
independent auditor’s report thereon.
1. Directors
The Directors of the parent entity at any time during or since the end of the financial year are:
Name, qualifications and
independent status
Mr Laurence J. SHERVINGTON
LLB, SA FIN, MAICD
Chairman
Non-Executive Director
Age
69
Mr Jeffrey W. SCHNEIDER
B.Com
Non-Executive Director
Mr David P. MAXWELL
M.Tech, FAICD
Managing Director
Mr Hector M. GORDON
B.Sc. (Hons). FAICD
Executive Director
Mr Gregory G. HANCOCK
B.A. (Econs), B.Ed. (Honours),
F.FIN
Mr Christopher R. PORTER
B.Sc. (Honours), M.Sc.,
Mr Stephen H. ABBOTT
FCPA
Mr Neil FEARIS
Alternate Director to Chairman
62
59
57
62
72
67
61
Experience, special responsibilities and other directorships
Extensive commercial and corporate law experience.
Mr. Shervington is a solicitor. Member of the Corporate
Governance; Remuneration and Nomination and Audit
Committees. Director since October 2003 and appointed
Chairman in November 2004.
Extensive management experience in the oil and gas
industry. Director of Green Rock Energy Limited and Comet
Ridge Limited and past director of Strike Energy Limited
(resigned August 2010). Chairman of the Audit and the
Remuneration and Nomination Committees and member
of the Corporate Governance Committee. Appointed on 12
October 2011.
Extensive management experience in the oil and gas
industry. Appointed on 12 October 2011.
Extensive geological and management experience in the
oil and gas industry. Member of the American Association
of Petroleum and the Society of Petroleum Engineers.
Appointed on 26 June 2012.
Extensive management and financial experience and a
founding Director. Non-executive Chairman of Ausquest
Limited and Director since October 2003. Director since
March 2001 and Chairman until November 2004. Resigned
on 12 October 2011.
Extensive petroleum geological experience and consultant
to the industry. Member of the Corporate Governance and
Remuneration and Nomination and Audit Committees.
Director since January 2002. Resigned on 12 October
2011.
Extensive accounting and consulting career. Chairman of
the Audit Committee and Member of the Remuneration and
Nomination and the Corporate Governance Committees
Director since September 2007. Resigned on 12 October
2011.
Appointed as an alternate to Mr Shervington from
4 November 2011 to 18 March 2012.
COOPER ENER GY LI MI TED AN N U A L RE P ORT 2012
15
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
2. Company Secretary
Mr Ian E. Gregory, 57, B.Bus., FCIS, FFIN, MAICD, was appointed to the position of Company Secretary in
December 2005. Mr Gregory has acted as Company Secretary for the past 28 years for various listed and
unlisted companies and currently consults on secretarial matters to a number of listed companies.
Mr Cathal Smith was appointed joint Company Secretary from 13 December 2011 to 19 March 2012.
3. Directors’ Meetings
The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings
attended by each of the Directors of the parent entity during the financial year are:
Director
Board Meetings
Audit Committee
Meetings
Remuneration
and Nomination
Committee
Meetings
Corporate
Governance
Committee
Meetings
Mr L.J. Shervington
Mr D.P. Maxwell
Mr J.W. Schneider
Mr H.M. Gordon
Mr N. Fearis
Mr G.G. Hancock
Mr C.R. Porter
Mr S.H. Abbott
A
24
21
20
1
-
3
2
3
B
24
21
21
1
10
3
3
3
A
4
-
3
-
-
-
-
1
B
4
-
3
-
-
-
-
1
A
4
-
4
-
-
-
-
-
B
4
-
4
-
-
-
-
-
A
3
-
3
-
-
-
-
-
B
3
-
3
-
-
-
-
-
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office, or was a member of the committee, during the year
4. Corporate Governance Statement
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of
Cooper Energy Limited support the principles of corporate governance.
Introduction
Key Terms
5. Remuneration Report (Audited)
This report is presented in the following sections:
5.1
5.2
5.3 Governance
5.4
5.5
5.6
Existing Remuneration Arrangements for Directors and Executives
Elements of Remuneration related to Performance
KMP Remuneration related to Performance
5.1 Introduction
The Directors of the Company have prepared this remuneration report to outline the overall remuneration
strategy, policies and practices, which were applied by the Company for the twelve months to the 30 June 2012
and the application of the Performance Rights plan that was approved by the shareholders on 16 December
2011. The report has been prepared in accordance with Section 300A of the Corporations Act 2001 and
its Regulations.
16
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
The Company’s remuneration policy is designed to ensure that the level and form of compensation achieves
certain objectives, including:
(a)
(b)
(c)
(d)
Attract, motivate and retain highly skilled Directors and senior employees to pursue and deliver the
Company’s strategy and goals;
Delivery of value-adding outcomes for the Company;
Fair and reasonable reward for past individual and Company performance; and
Incentive to deliver future individual and Company performance.
Remuneration consists of base salary, superannuation, short term incentives and long term incentives.
Remuneration is determined by reference to market conditions and performance. Performance is evaluated
at an individual level as well as the performance of the Company as a whole.
In addition to the year-end annual review of remuneration, the Board obtained and used independent resource
industry remuneration data in November 2011, May 2012 and June 2012 to determine market remuneration
rates in relation to the oil and gas industry in Australia.
For the purposes of this report, Key Management Personnel (KMP) of the group are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the parent entity
and the group, directly or indirectly, including any Director (whether Executive or otherwise) of the parent entity.
The following were key management personnel of the Group at any time during the reporting period and
unless otherwise indicated were key management personnel for the entire period.
Non-Executive Directors
Executive Directors
Mr L.J. Shervington (Chairman)
Mr D.P. Maxwell (Managing Director)1
Mr J.W. Schneider1
N Fearis (Alternate Director)3
Mr H. M. Gordon4
Former Non-Executive Directors
Former Executive Director
Mr C.R. Porter2
Mr S.H. Abbott2
Mr G.G. Hancock2
1 Appointed 12 October 2011; 2 Resigned 12 October 2011;
3 Appointed 4 November 2011 and resigned 19 March 2012; 4 Appointed 26 June 2012
Key Management Personnel during the year and at the report date
Mr J.A. Baillie (Chief Financial Officer)
Mr Andrew D. Thomas (Exploration Manager) 5
Mr A. Warton (Development Manager)
Key Management Personnel who ceased employment during the year or since the year end
Mr S.K. Twartz (Exploration Manager) 7
Mr S.F. Blenkinsop (Legal and Commercial Manager) 8
Mr M.T. Scott (Chief Operating Officer) 9
51 July 2012; 7 31 July 2012; 8 5 July 2012; 9 31 August 2011; respectively; Appointed
Except as noted, the named persons held their current positions for the whole of the financial year
and since the end of the financial year.
17
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.2 Key Terms
Throughout this remuneration report, the following terms have the meaning indicated below:
Directors denote the Managing Director, Executive Director and the Non-executive Directors.
Executives represents the Managing Director, Executive Director Exploration and Production and managers
who report to the Managing Director.
Executive Directors denotes any Directors who are also Executives. For this report, the only Executive Directors
were the Managing Director (Mr David Maxwell) and the Executive Director (Mr Hector Gordon).
Base Salary stands for fixed annual remuneration or base salary (including superannuation).
KPI stands for key performance indicators determined by the Board.
Key management personnel (KMP) is defined by those persons having authority and responsibility for
planning, directing and controlling the activities of the Consolidated Entity.
LTIP stands for long term incentive plan and which provides an incentive to deliver successful future Company
shareholder value and performance.
STIP stands for short term incentive plan which provides a reward for successful individual and Company
performance in the past year.
5.3 Governance
The Remuneration and Nomination Committee
The Remuneration and Nomination Committee’s role is to review and recommend remuneration for Non-
executive Directors, the Executive Directors and senior employees. The Remuneration and Nomination
Committee is also responsible for the review of remuneration policies and practices.
The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount
of remuneration of Directors and senior employees on at least an annual basis by reference to relevant
employment market conditions and third party remuneration benchmark reports. The overall objective is to
ensure shareholders benefit from the retention of a high quality Board and Executive team which is remunerated
consistent with industry practises.
The ASX Listing Rules and the Constitution require that the maximum aggregate amount of remuneration to be
allocated among the Non-executive Directors be approved by shareholders at the annual general meeting.
The Remuneration and Nomination Committee takes account of the time demands made on Directors and such
factors as fees paid to Non-executive Directors in comparable Australian Companies in proposing the maximum
amount of compensation for approval by the shareholders and also in determining the allocation
of the compensation. The latest determination was at the parent entity’s Annual General Meeting held on
28 November 2006, when shareholders approved an aggregate remuneration of up to $325,000 per year.
From 12 October 2011 the Remuneration and Nomination Committee has consisted of two Non-executive
Directors. Prior to 12 October 2011 the Remuneration and Nomination Committee was made up of three
Non-executive Directors. The Committee meets formally at least once a year and has numerous informal
meetings during the year. The Managing Director attends meetings on invitation.
18
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
Remuneration arrangements for Directors and Executives are reviewed by the Remuneration and Nominations
Committee and recommended to the Board for approval. The Remuneration and Nominations Committee
considers external information and may (and has) engage independent advisers to establish market benchmarks.
Remuneration arrangements are determined in conjunction with the annual review of the performance of
Directors, Executives and employees of the Company. Performance of the Directors of the Company including
the Managing Director are evaluated by the Board and assisted by the Remuneration and Nomination
Committee. The Managing Director reviews the performance of Executives with the Remuneration and
Nomination Committee. These evaluations take into account criteria such as the achievement toward the
Company’s performance benchmarks and the achievement of individual performance objectives.
At the Annual General Meeting held in December 2011, the non binding votes cast against adopting the
Remuneration Report, which formed part of the Annual Report for the year to 30 June 2011, exceeded
twenty five percent.
The incoming Board following the change in its composition on 12 October 2011, as detailed in the Directors’
Statutory Report, acknowledged the shareholders concerns and the need to provide greater transparency
and accountability for the setting of base salaries, short and long term incentives and bonuses. Some of these
actions were implemented after October 2011 but before the Annual General Meeting in December 2011 with
the adopting by that same meeting of a Performance Rights Plan. In January 2012 a Short Term Incentive Plan
was put in place, details of which are set out in the Remuneration Report.
The establishment of both a short and long term incentive plans was to draw a close and strong link between
each employees total remuneration and their individual performance, the company’s performance and total
shareholder return measured against peer group companies.
The Remuneration Committee have engaged the services of Strategic Human Resources Pty Ltd (“SHR”) to
review all the policies and procedures for employees and bench mark existing salaries for all staff. This included
the review and application of remuneration data sourced from National Rewards Group Inc and Godfrey
Remuneration Group Pty Limited. SHR have continued to provide ongoing guidance for personnel management.
5.4 Existing Remuneration Arrangements for Directors and Executives
The reviews undertaken by National Rewards Group Inc and Godfrey Remuneration Group Pty Ltd were
conducted independent of all Executive management and managed directly by the Chairman of the
Remuneration Committee and SHR. The Board was satisfied that all recommendations were independent
of Executive management influence.
Fees payable to SHR for services to the 30 June 2012 totalled $11,900 and Godfrey Remuneration Group Pty
Ltd $3,400. Annual membership fees payable to National Rewards totalled $5,060.
Overview of Executive Remuneration Structure
The remuneration structure in place for the financial year was applied to all employees including Executive
Directors and Executives of the Company.
The Company’s remuneration structure has three elements set out below:
a)
b)
c)
Base Salary;
STIP (Short Term Incentive Plan); and
LTIP (Long Term Incentive Plan).
19
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.4 Existing Remuneration Arrangements for Directors and Executives (continued)
(a)
Base Salary
Employees are paid base salaries which are competitive in the markets in which the Company operates.
Individual base salary is set each year based on job description, competitive salary information sourced
by the Company and overall competence in fulfilling the requirements of the particular role.
Base Salary is paid in cash and is not at risk other than by termination.
(b)
Short Term Incentive Plan (STIP)
In January 2012 the Company implemented for all staff a revised new scorecard to measure the
Company’s short term performance (i.e. 1 year) with the focus on the core elements needed to
successfully deliver the Cooper Energy strategy and plan and shareholder returns for all staff.
Company performance against the scorecard is reported monthly to all staff and the scorecard
is used as a key imput into the performance based remuneration.
The scorecard is based on those key business deliverables that will in combination drive the value of the
enterprise. The Managing Director in conjunction with the Chairman of Remuneration and Nomination
Committee jointly develops the draft scorecard for Board consideration. The deliverables are set no later
than 30 September of each year. However, for the year end 30 June 2012 they were set in January 2012
when the scorecard was introduced.
For an oil and gas exploration and production company such as Cooper Energy oil and gas reserves and
production are at the heart of the business and are therefore the key measures. Unless either production
or reserves performance is above the threshold, no STIP payment will be made.
Other key items included in the scorecard each year are safety and environmental performance, delivery
of company strategy, cost management and business conduct and relationships.
For each item in the scorecard a base or threshold level will be described as will a target, stretch target
and super stretch target.
•
•
•
•
Base or threshold is not going backwards against performance in the previous year and is the
mimimum acceptable for that year.
Target basis is solid steady growth or improvement.
Stretch basis is doing better than target and consistent with leading peers.
Super stretch basis is leading peers or best in class when compared to others.
Each item in the scorecard will be assigned a weighting.
Average weighted performance of the total scorecard is the sum of the performance assessed for each
item multiplied by the weighting for each item.
20
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
The maximum STIP payment at various organisational levels are as follows:
For the Managing Director the maximum STIP is 100% of Base Pay;
•
For the Executive Director the maximum STIP is 75% of Base Pay;
•
For nominated senior staff (e.g. direct reports to the Managing Director or the Executive Director)
•
such as CFO, Exploration Manager maximum STIP is 50% of Base Pay;
For all other staff the guideline is maximum STIP is 25% of base pay.
•
The level of “at risk” remuneration is at the discretion of the Board and will be reviewed annually by
the Board.
•
•
For the Managing Director the portion of the maximum STIP to be paid will be based entirely on
company performance as assessed by the Board having close regard to the Company scorecard
performance.
For the Management Team (including the Executive Director) the portion of the maximum STIP
to be paid will be based largely on company performance but also individual performance as
assessed by the Board will also be taken into account.
Individual performance ratings will be as determined in staff performance reviews which will be
undertaken each year by 31 August.
In the event that corporate activity occurs such that the company is merged or taken over then the
scorecard will be re-set at the discretion of the Board.
A staff member must have been with the Company for 3 months to qualify for any STIP. If the staff
member is with the Company for 3 months but less than the full year the STIP is pro-rata to the period of
time with the Company as a full time employee.
If a staff member leaves the Company during a year (other than for retirement or due to redundancy) no
STIP is payable. If the staff member retires or is made redundant then the STIP paid is pro-rata with the
portion of the year worked full time.
Notwithstanding these guidelines the final STIP to be paid to each staff member will be at the discretion
of the Board.
In the financial year 2012 the scorecard key performance indicators are as follows:-
STIP Performance Indicators
Quantitative and Financial
Reserves
Production
Cost management
Non-Financial Measures
Safety and environmental performance
Strategy development and implementation
Relationships with investors, partners and the Board
%
25
25
15
15
10
10
21
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.4 Existing Remuneration Arrangements for Directors and Executives (continued)
(b)
Short Term Incentive Plan (STIP) (continued)
A matrix demonstrating how STIP is calculated for staff other than the Managing Director and nominated
senior staff is set out below. The score ranging from 0 to 1.0 is the portion of the maximum STIP payable
for the staff member:-
Company Scorecard (60%)
Performance Rating
(40%)
Threshold/Base
(0)
Target
(0.25)
Stretch
(0.6)
Super Stretch
(1.0)
Improvement needed in
some areas (0)
0x0.4+
0x0.6 =0
0x0.4+
0.25x0.6 =0.15
0x0.4+
0.6x0.6 =0.36
Performed well in most
areas (0.4)
0.4x0.4+
0x0.6 =0.16
0.4x0.4+ 0.25x0.6
=0.31
0.4x0.4+
0.6x0.6 =0.52
Performed well &
exceeded in some (0.63)
0.63x0.4+
0x0.6 =0.25
0.63x0.4 +
0.25x0.6 =0.4
0.63x0.4+
0.6x0.6 =0.61
Exceeded in many areas
(1.0)
1x0.4+
0x0.6 = 0.4
1x0.4+
0.25x0.6 =0.55
1x0.4+
0.6x0.6 =0.76
0x0.4+
1x0.6 =0.6
0.4x0.4+
1x0.6 =0.76
0.63x0.4+
1x0.6 =0.85
1x0.4+
1x0.6 =1.0
Irrespective of the scorecard outcome payment of any STIP is entirely at the discretion of the Board.
(c)
Long Term Incentive Program (LTIP)
The Company believes that encouraging its employees to become shareholders is the best way of
aligning their interests with those of its shareholders.
LTIP awards are made in the form of performance rights to shares which will have a vesting timeframe of
three years. The number of performance rights that vest will be based on the Company’s performance
over the same three years.
The number of performance rights to be granted annually to each employee is calculated by the
following formula:
Organisational Level Benchmark x Individuals Base Salary ÷ Share Price
Three maximum LTIP organisational benchmarks have been established as percentages on individual
base salary. These three levels reflect the increased involvement of each level in pursuing and achieving
the Company’s goals. These benchmarks are set out in the following table.
Organisational Level
Managing Director
Management
Professional and
Technical Support
Organisational level
benchmark
120%
70%
30%
22
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
The share price calculation will use the 30 day volume-weighted average share price (VWAP) of the
Company’s shares immediately prior to the award date.
The Board has established an initial guideline that the total number of performance rights to be issued in
each tranche is capped at 2% of the fully paid issued capital of the Company while the total number of
performance rights on issue may not exceed 5% of the issued capital of the Company. In the event that
the potential number of performance rights to be issued exceeds these caps then all potential awardees
will receive a pro-rata reduced number of performance rights.
Each tranche of performance rights issued is divided into three portions and each portion is made up
of two parcels for testing. Each portion is tested within 12, 24 and 36 months of the issue date of the
performance rights.
Testing of each portion parcels is as follows:-
•
•
25% of the performance rights against the Company’s absolute total shareholder return (ATSR)
over the testing period.
75% of the performance rights against the Company’s absolute total shareholder return (ATSR)
to the total shareholder return (RTSR) over the testing period.
The ATSR is the absolute shareholder return calculated as the percentage difference between the
relevant testing date VWAP and the award date.
The RTSR means the Company’s ATSR measured against the peer group of 8 companies ATSR
between the relevant testing date and the award date.
The ATSR and RTSR performance hurdles required to achieve vesting levels are as follows:-
Assess 25% of Rights measured against
ATSR over the performance period
Assess 75% of Rights measured against
relative percentile ranking of RTSR over the
performance period
ATSR
Below 5%
Equal to 5%
Number of
Performance Rights
to be exercised
RTSR
Number of
Performance Rights
to be exercised
No rights exercisable
Below 50%
No rights exercisable
25% of the rights
Equal to 50%
50% of the rights
Equal to 15%
50% of the rights
Greater than 75%
100% of the rights
Greater than 25%
100% of the rights
Greater than 50% but
below or equal to 75%
Pro rata 50% to 100%
ATSR and RTSR are used rather than earnings per share (EPS), as in the Board’s view, the EPS
would shift the key focus away from the Company’s long-term business objectives which includes
successful exploration.
Rights that do not qualify for vesting in any one year can be carried forward to the following year for
testing of vesting eligibility.
23
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.4 Existing Remuneration Arrangements for Directors and Executives (continued)
(c)
Long Term Incentive Program (LTIP) (continued)
Vesting characteristics of the performance rights are as follows:
(i)
(ii)
(iii)
(iv)
Performance measurement period is annually tested over a three year period, which is consistent
with the typical time cycle for an exploration program and the Company’s strategic emphasis on
exploration and growing the reserves base;
Performance is based on differences in ATSR and RTSR as measured from the commencement
date to the end of the assessment period. The ATSR and RTSR use 30-day VWAP of the
Company’s shares immediately prior to the relevant testing date, and
RTSR will be assessed against a peer group of like companies determined by the Board before
the start of each assessment period or as soon as practical thereafter.
The peer group for the performance rights issued in January 2012 is Beach Energy Limited;
Acer Energy Limited; Senex Energy Limited; Drillsearch Energy Limited; Tap Oil Limited;
Carnarvon Petroleum Limited; Cue Energy Resources Limited and Icon Energy Limited.
Accounting for Performance Rights on shares granted to executives and employees
The values of the performance rights are recognised as Share Based Payments in the statement of
comprehensive income and amortised over the vesting period.
Performance rights were issued in January 2012 for no consideration and the KMP received no cash
benefit at the time of receiving the rights. The cash benefit will be received by the KMP following the sale
of the resultant shares, which can only be achieved after the rights have been vested and the shares
are issued.
Performance rights were valued by an independent consultant who applied the Monte Carlo Simulation
model to determine the probability of the absolute return performance hurdles and the relative return
performance hurdles being achieved. Performance Rights are valued at the closing market price on the
date they are granted and no adjustment is made for subsequent movements in share price during any
vesting period.
(d)
Executive Directors Remuneration
As at 30 June 2012, David Maxwell and Hector Gordon are Executive Directors on the Board of
the Company.
Mr Maxwell commenced as Managing Director on 12 October 2011 under contract of employment of
that date. The term of the Managing Director’s executive employment agreement expires 10 October
2014. The base salary is reviewed annually at the Board’s discretion. Either the Company or Mr Maxwell
may terminate this contract by providing six months written notice of intent to terminate.
24
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
Mr Gordon commenced as Executive Director Exploration and Production on 26 June 2012 under
contract of employment for a period of three years expiring on 24 June 2015. The base salary is reviewed
annually at the Board’s discretion. Either the Company or Mr Gordon may terminate this contract by
providing six months written notice of intent to terminate.
A range of other terms and conditions apply to Mr Maxwell, Mr Gordon and the Company.
Pursuant to shareholder approval obtained at the 2011 Annual General Meeting, Mr Maxwell was
eligible to receive a maximum of 1,647,713 Performance Rights that were subsequently awarded
on 20 January 2012.
Remuneration
All employment agreements now standardise the Executive Directors’s entitlement to:
(i)
(ii)
(iii)
Base Salary (refer to section 5.4(a) of this report)
STIP (refer to section 5.4(b) of this report)
LTIP (refer to section 5.4(c) of this report)
In the event of a redundancy or defined change in circumstances, Executives are entitled to the following;
(i)
(ii)
(iii)
(iv)
Lump Sum Redundancy Payment comprising;
a. 6 weeks total salary package
b. 3 weeks salary for each completed full year of service
c. Notice or payment in lieu of notice as per the Executives contract of employment.
Short Term Incentive Plan
Employee Performance Rights Plan (Long Term Incentive Plan)
Annual and long service leave.
For all other KMP’s, notice of termination by either party varies between two and three months.
(e)
Non-Executive Directors’ Remuneration
In line with Corporate Governance principles, Non-Executive Directors of the Company are remunerated
solely by way of fees and statutory superannuation. The annual fee is set to reflect current market levels
based on the time, responsibilities and commitments associated with the proper discharge of their duties
as members of the Board.
All Directors of the Company are encouraged to apply a proportion of their fees to purchase shares in
the Company.
The maximum total pool of available fees was set by shareholders in General Meeting held on 28
November 2006 when shareholders approved an aggregate remuneration of up to $325,000 per year.
Other than statutory superannuation, Non-executive Directors of the Company are not entitled to any
retirement benefits upon retirement from office.
The Company has entered into arrangements with Non-Executive Directors Mr Shervington (Chairman)
and Mr Schneider whereby those persons are appointed as Non-Executive Directors of the Company.
25
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.4 Existing Remuneration Arrangements for Directors and Executives (continued)
(e)
Non-Executive Directors’ Remuneration (continued)
The term of the appointments is determined in accordance with the Company’s Constitution and
is subject to the provisions of the Constitution dealing with retirement, re-election and removal of
Non-executive Directors of the Company.
In this regard the Constitution provides that all Non-executive Directors of the Company are subject to
re-election by shareholders by rotation every three years during the term of their employment.
The terms of engagement provide that the Company will maintain an appropriate level of Directors’ and
Officers’ insurance and access to Company records in accordance with the terms of deeds of indemnity,
insurance and access entered into between the Company and each of the Non-executive Directors.
The remuneration payable by the Company to Non-executive Directors is shown in the relevant tables.
5.5 Elements of Remuneration related to Performance
The Corporations Act requires disclosure of the Company’s remuneration policy to contain a discussion of the
Company’s earnings and performance and the effect of the Company’s performance on shareholder wealth in
the reporting period and the four previous financial years. The table below provides a five year financial summary
to 30 June 2012.
Net Profit/(loss) after tax
EPS Basic
EPS Diluted1
Year-end share price
$’000
cents
cents
$
Shares on issue
’000,000
Market Capitalisation
$’000,000
30 June
2012
30 June
2011
30 June
2010
30 June
2009
30 June
2008
8,381
(10,349)
1,247
(2,816)
6,406
2.8
2.8
0.45
327.3
147.3
(3.5)
(3.5)
0.36
292.6
105.3
0.4
0.4
0.37
292.6
111.2
(1.0)
(1.0)
0.45
291.9
131.4
3.0
2.9
0.47
252.3
118.6
1 No dividends were paid during any of the financial years.
Short Term Incentive Plan indicators assessment for the year
In the twelve months to 30 June 2012, the Board determined a set of Company STIP’s, reflecting the Company’s
strategies, business plan and budget. The STIP’s and performance against them are set out below:
Performance against budgeted net profit after tax from continuing operations
The Company exceeded budget expectations partially as a result of increased production, higher oil price and
tax accounting for the take up of Petroleum Resource Rent Tax.
Performance against budgeted capital and exploration expenditure.
Expenditure was below budget due to carry over of exploration activities into the 2013 fiscal year and the
withdrawal from exploration activity in Europe.
26
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
Performance against net reserves and resource addition targets.
Net 2P hydrocarbon reserves declined and was below target due to delayed exploration from inclement
weather and accelerated production.
Performance against total share holder value against prior periods
The market capitalisation increase relative to prior years is reflective of investor confidence in the revised
business strategy.
Performance against health, safety and environment targets.
A no liability incident by an independent contractor undertaking offshore seismic activity occurred, there were
no material incidents that impacted on employees and the Company.
The Board will assign an overall performance rating against target levels which will drive the key management
personnel and employee STIP award for the period ending the 30 June 2012.
5.6 KMP Remuneration related to Performance
Base salary for all employees is based on comparisons with similar positions in peer companies and is
reviewed annually. An individual’s performance and role and responsibilities will have a strong influence on
any annual increase.
The elements of remuneration shown in the columns labelled Cash Bonus in the tables below are related to
Company and individual performance (STIP).
The elements of remuneration shown in the Performance Rights column are directly related to the performance
of the Company total shareholder return. The elements of remuneration shown in the remaining columns are not
performance related. The performance conditions used in the determination of performance-based remuneration
for Executive Directors and Executives of the Company are explained in detail in the discussion on remuneration
policy in this remuneration report.
Except as noted above, the cash bonuses shown in the 2012 remuneration table below were based on the
increase in 2P hydrocarbon reserves at the end of June 2011. The bonus was awarded and paid in
September 2011.
The value of performance rights shown in the tables below are the accounting costs accrued in the financial
year for grants in the financial year. No KMP of the Company received a cash benefit from rights having been
received. No cash benefit is received by KMP of the Company until the sale of the resultant shares, which cannot
be done until the rights have vested and the shares issued. No cash bonus awards were forfeited because the
person did not meet the relevant service or performance conditions.
Managing Director
The Company entered into a contract of employment of Managing Director with Mr David Maxwell as set out
in 5.4(d). Under that contract, Mr Maxwell’s base salary with effect from 12 October 2011 was $550,000 per
annum and $50,000 superannuation.
The Company entered into a deed of indemnity insurance and access with Mr Maxwell whereby the
Company will maintain an appropriate level of Directors’ and Officers’ indemnity insurance and provide access
to Company records.
27
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.6 KMP Remuneration related to Performance (continued)
Executive Director - Exploration and Production
The Company entered into a contract of employment of Executive Director Exploration and Production with
Mr Hector Gordon as set out in 5.4(d). Under that contract, Mr Gordon’s base salary with effect from 26 June
2012 was $423,530 per annum and $16,470 superannuation.
The Company entered into a deed of indemnity insurance and access with Mr Gordon whereby the Company
will maintain an appropriate level of Directors’ and Officers’ indemnity insurance and provide access to
Company records.
a.
Other Elements of Executive Director and Executive Remuneration
Remuneration packages contain the following key elements:
(a)
(b)
Short term employee benefits – salary/fees, bonuses and non-monetary benefits, such as car parking.
Post-employment benefits – including superannuation and redundancy packages.
Value of options that expired during the year
During the year, 425,000 fully vested options, valued at $318,750 at grant date, with a strike price of 75 cents
expired at 31 December 2011 and 500,000 fully vested options, valued at $375,000 at grant date, with a strike
price of 75 cents expired at 30 April 2012. No options were issued or forfeited during the year.
Analysis of Movement in Performance Rights Granted
Number of
Performance
Rights granted
Fair value of
Performance
Rights granted
Director
Mr D. Maxwell
1,647,713
$604,133
Executive
Mr S. Twartz
Mr S. Blenkinsop
Mr. A. Warton
Mr J.A. Baillie
732,605
529,788
569,021
454,952
$268,609
$194,247
$208,631
$166,808
Number of
Performance
Rights vested
during the
reporting
period
Number of
Performance
Rights vested
to date
Percentage of
Performance
Rights vested
to date
-
-
-
-
-
-
-
-
-
-
-%
-%
-%
-%
-%
The Performance rights were granted on the 20 January 2012 with the likely first testing date and vesting date in
either September or October 2012. The performance rights were independently valued at weighted average of
26.1 cents per right. See note 23 of the Notes to the Financial Statements for further details. At the date of this
report, Mr Twartz and Mr Blenkinsop have forfeited their rights after ceasing employment with the Company.
28
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
Value of Performance Rights Granted – Basis of Calculation
The value of performance rights at the grant date is calculated as the fair value of the rights at grant date,
using the Monte Carlo Simulation model, multiplied by the number of rights granted.
The fair value of performance rights is set out in note 23 of the financial statements.
Table 1 Directors’ remuneration
for the year ended 30 June 2012
Benefits
Short Term
Long Term
Post
Employment
Share Based
Payment
Salary &
Fees
$
Long Service
Leave
$
Super-
annuation
$
Performance
Rights
$
Termination
Payments
$
Directors
Mr L.J. Shervington
Chairman
Mr D.P. Maxwell
Managing Director
100,417
390,102
Mr J.W. Schneider
53,833
Mr H. M. Gordon
Mr N. Fearis
Mr G.G. Hancock
Mr C.R. Porter
Mr S.H. Abbott
Mr M.T. Scott
Chief Operating Officer
-
-
73,022
22,667
22,667
12,370
-
-
-
-
-
29,971
-
-
56,457
9,225
-
11,174
143,351
5,319
-
-
7,888
2,040
2,040
4,167
-
-
-
-
-
-
-
Total
$
109,642
544,627
59,152
-
-
-
-
-
-
-
105,249
216,130
-
-
24,707
24,707
297,701
370,695
675,078
86,428
41,853
143,351
402,950
1,349,660
Mr Maxwell was appointed Managing Director on 12 October 2011. The proportion of Mr Maxwell’s
remuneration that is performance related in the year to 30 June 2012 is 26.3%.
Mr Hancock provided services to the parent entity three days per week via employment contact until his
date of resignation on 11 October 2011as an Executive Director. Mr Hancock continued as a marketing
consultant until 31 January 2012 under a marketing consultancy agreement.
Mr M.T. Scott was Managing Director until 15 June 2011and was then appointed the Chief Operations
Officer effective from that date until his resignation on 31 August 2011.
The share based payment for Mr Maxwell represents the proportionate share of the value of performance
rights that were awarded in January 2012. The basis for computing the value of the performance rights is
included in this report and also set out in Note 23 of the Annual Financial Statements.
There were no short-term non monetary benefits earned during the year.
Mr Gordon was appointed on the 26 June 2012.
Mr Fearis did not receive any fees.
a)
b)
c)
d)
e)
f)
g)
29
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.6 KMP Remuneration related to Performance (continued)
Table 1 Directors’ remuneration (continued)
for the year ended 30 June 2011
Benefits
Post
Employment
Share Based
payment
Short-term
Long-term
Salary &
Fees
$
Cash
Bonus
$
Long Service
Leave
$
Super-
annuation
$
Options
$
Total
$
Directors
Mr L.J. Shervington
Chairman
90,000
-
Mr G.G. Hancock
212,801
22,100
68,000
68,000
-
-
Mr C.R. Porter
Mr S.H. Abbott
Mr M.T. Scott
Chief Operating
Officer
-
-
-
-
8,100
15,199
6,120
6,120
-
98,100
23,934
274,034
-
-
74,120
74,120
528,786
62,356
63,653
15,199
39,891
709,885
967,587
84,456
63,653
50,738
63,825
1,230,259
a)
b)
c)
d)
e)
Mr Hancock’s proportion of remuneration that was performance related is 16.8% while the value of
options as a proportion of remuneration was 8.7%
Mr Hancock’s cash bonus of $22,100 was paid in accordance with the STIP for the year to
30 June 2011.
Mr Hancock provided services to the parent entity three days per week via employment contract as an
Executive Director and a marketing consultancy.
Mr M.T. Scott was Managing Director until 15 June 2011and was then appointed the Chief Operations
Officer effective from that date. The cash bonus of $62,356 was paid in accordance with the STIP for the
year to 30 June 2011. The proportion of remuneration that was performance related was 14.4% while the
value of options as a proportion of remuneration was 5.6%.
The share based payment for each of Mr Hancock and Mr Scott represented the proportionate share of
the value of vesting options that were awarded in December 2007. The basis for computing the value of
these options is set out in Note 23 of the Annual Financial Statements.
f)
There were no short-term non-monetary benefits earned during the year.
30
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
Table 2 Executives and Senior Employees remuneration
for the year ended 30 June 2012
Short-term Benefits
Post-
Employment
Share Based
Payment
Salary & Fees
$
Cash Bonus
$
Super-
annuation
$
Performance
Rights
$
Total
$
438,164
25,404
15,775
63,737
543,080
245,733
24,250
15,775
39,581
325,339
314,941
19,500
15,775
46,092
396,308
339,432
17,500
15,775
49,505
422,212
1,338,270
86,654
63,100
198,915
1,686,939
Executives and senior
employees
Mr S.K. Twartz
Exploration Manager
Mr J.A. Baillie
Chief Financial Officer
Mr S.F. Blenkinsop
Legal and Commercial
Manager
Mr A. Warton
Development Manager
a)
b)
c)
d)
e)
f)
Messrs Twartz, Baillie, Blenkinsop and Warton all received a proportionate share of a cash bonus
that was awarded and distributed to all staff on 12 September 2011. The bonus awarded was based
on the increase in 2P hydrocarbon reserves at the end of June 2011 by the Remuneration and
Nomination Committee. There was no forfeiture of bonus.
Mr S. Twartz proportion of remuneration that is performance related is 11.7%.
Mr J.A. Baillie proportion of remuneration that is performance related is 12.2%.
Mr S.F. Blenkinsop proportion of remuneration that is performance related is 11.7%.
Mr A. Warton proportion of remuneration that is performance related is 11.7%.
The share based payment for Executives and senior employees represent the proportionate share
of the value of performance rights that were awarded in January 2012. The basis for computing the
value of the performance rights is included in this report and also set out in Note 23 of the Annual
Financial Statements.
31
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
5. Remuneration Report (Audited) (continued)
5.6 KMP Remuneration related to Performance (continued)
Table 2 Executives and Senior Employees remuneration (continued)
for the year ended 30 June 2011
Short-term
Salary & Fees
$
Cash Bonus
$
Post
Employment
Super-
annuation
$
Share-based
payments
Options
$
Total
$
Executives and senior
employees
Mr S.K. Twartz
Exploration Manager
Mr T.J. Magee
Chief Geologist
Mr J.A. Baillie
Chief Financial Officer
Mr A.N. Craig
Chief Geophysicist
Mr S.F. Blenkinsop
Legal and Commercial
Manager
Mr C.D Todd
Exploration Manager
Mr D. Gillies
New Venture Manager
Mr K. Craigue
Drilling Engineer
Mr A. Warton
Development Manager
217,400
-
338,499
15,000
224,688
5,000
302,301
20,000
180,717
262,011
199,716
431,750
167,400
-
-
-
-
-
7,600
15,199
15,199
15,199
8,866
5,066
5,533
8,866
7,600
-
225,000
9,973
3,989
3,989
378,671
248,876
341,489
-
189,583
19,945
287,022
3,496
208,745
-
-
440,616
175,000
2,324,482
40,000
89,128
41,392
2,495,002
a)
b)
c)
d)
e)
f)
g)
Messrs Magee; Baillie and Craig all received a proportionate share of a cash bonus that was awarded
and distributed to all staff on the 13 January 2011.
Mr T.J. Magee’s proportion of remuneration that is performance related was 6.6% while the value of
options as a proportion of remuneration was 2.6%.
Mr J.A. Baillie proportion of remuneration that is performance related was 3.6% while the value of options
as a proportion of remuneration was 1.6%.
Mr A.N. Craig proportion of remuneration that s performance related was 7.0% while the value of options
as a proportion of remuneration was 1.2%.
Mr C.D Todd proportion of remuneration that is performance related was 6.9% while the value of options
as a proportion of remuneration wais 6.9%. Mr Todd resigned on 19 October 2010.
Mr D. Gillies proportion of remuneration that is performance related was 1.7% while the value of options
as a proportion of remuneration was 1.7%. Mr Gillies resigned on the 19 October 2010.
The basis of share based payment represents the proportionate share of the value of options that were
awarded in December 2007 and May 2009. The basis for computing the value of these options is set out
in Note 23 of the Annual Financial Statements.
h)
Messrs Magee and Craig were not key management personnel from 1 July 2011.
End of remuneration report.
32
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
6. Principal Activities
The Group is an upstream oil and gas exploration and production company whose primary purpose is to secure,
find, develop, produce and sell hydrocarbons. These activities are undertaken either solely or via unincorporated
joint ventures. There was no significant change in the nature of these activities during the year.
7. Operating and Financial Review
The net profit after tax attributable to members was $8,381,000 (2011: Loss $10,349,000).
The net profit was significantly impacted by the accounting disclosure arising from the introduction of Petroleum
Resource Rent Tax, which increased the net profit from continuing operations for the year by $12,233,000, and
the write down of the value of exploration assets in Indonesia and Poland by $17,880,000 (2011: 19,306,000).
The following table summarises.
Net profit after tax before
abnormal events
Write off of unsuccessful exploration and
impairments of assets
PRRT Deferred Tax Asset recognition
Net profit/((loss) after taxation attributable
to members
2012
$’000
15,760
(19,612)
12,233
8,381
2011
$’000
11,729
(22,078)
-
(10,349)
In the twelve months to June 2012 the Company’s share of oil from joint ventures in the Cooper Basin totalled
501,012 (2011: 398,859) barrels of oil and from the Sukananti field in Indonesian 16,174 (2011: 7,851) barrels
of oil.
In the twelve months to June 2012 the Company’s revenue from sale of oil was $59,606,000 (2011:
$39,121,000).
At 30 June 2012 the proved and probable reserves (2P) totalled 1,791,000 (2011: 2,348,000) barrels of oil in the
Cooper Basin (South Australia) and 91,000 (2011: 123,000) barrels of oil at Sukananti (Indonesia).
33
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Directors’ Statutory Report (continued)
For the year ended 30 June 2012
7. Operating and Financial Review (continued)
The Company has also analysed and reviewed the possible reserves (3P) and contingent resources (2C and 3C)
which are summarised in the following table (million barrels).
Net Oil Reserves (millions of barrels)
Net Oil Resources
(millions of barrels)
Proved (1P)
Proved & Probable (2P)
Proved, Probable &
Possible (3P)
0.92
1.88
2.75
(3C)
6.47
During the year the Company participated in the drilling of six exploration wells (2011: six wells) and five
appraisal/development wells (2011: five wells) in the Cooper Basin, South Australia. Three of the exploration
wells and four of the development wells were successful.
In June 2012 the Company acquired a controlling interest in Somerton Energy Limited (“Somerton”) for a
total cost of $25,323,000 by the issue of shares valued at $15,132,000 and payment of a cash consideration
of $9,612,000. Assets acquired were exploration and evaluation of $20,963,000 including cash on hand of
$7,081,000 and a deferred tax liability of $2,008,000. The Somerton acquisition was completed on 26 July 2012
and has materially increased the oil and gas opportunities available to the Company in the Otway Basin (a focus
area) and provided exposure to the Gippsland Basin.
In August 2012 the Company (via Somerton) increased its strategic holding in Bass Strait Oil Company Limited
(“Bass”) to 16.7%. This interest may increase to 19.9% following the finalisation of a pro rata rights issue that a
Group company has underwritten. Bass has a portfolio of assets in the Gippsland and Otway Basins which are
complementary to the Group’s interest in the area.
The Board announced in August 2012 that the head office of the Company will be relocated from Perth to
Adelaide effective from the beginning of 2013. This move locates the management closer to the Company’s
core assets and joint venture partners.
8. Dividends
The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way
of dividends since the end of the previous financial year, or to the date of this report.
9. Environmental Regulation
The Group is a party of various exploration and development licences or permits. In most cases, the contracts
specify the environmental regulations applicable to oil and gas operations in the respective jurisdiction.
The Group aims to ensure that it complies with the identified regulatory requirements in each jurisdiction
in which it operates. There have been no significant known breaches of the environmental obligations of the
Group’s licences.
10. Likely Developments
Other than disclosed elsewhere in the Annual Report, further information about likely developments in the
operations of the Group and the expected results of those operations in future financial years has not been
included in this report because disclosure of the information would likely result in unreasonable prejudice to
the consolidated entity.
34
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
11. Directors’ Interests
The relevant interest of each Director in ordinary shares and options over shares issued by the parent entity as
notified by the Directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act
2001, at the date of this reports is as follows:
Cooper Energy Limited
Ordinary Shares
Performance Rights
935,527
300,000
176,608
405,933
1,647,713
-
-
-
Mr D.P. Maxwell
Mr J.W. Schneider
Mr H.M. Gordon
Mr L.J. Shervington
12. Share Options
Unissued shares under options
At the date of this report, unissued ordinary shares of the parent entity under option are:
Expiry Date
31 August 2012
31 December 2012
Exercise price
Number of Shares
100 cents
100 cents
120,000
200,000
All options expire on the earlier of the expiry date or, if deemed by the Board, on termination of the
employee’s employment.
These options do not entitle the holder to participate in any share issue of the parent entity or any other
body corporate.
13. Events after Financial Reporting Date
Subsequent to 30 June 2012 a wholly owned subsidiary of the Company increased its holding in Bass Strait Oil
Company from 18,070,272 shares to 74,296,214 shares by participating in a placement of 56,205,942 shares
for $843,089.
In addition, the wholly owned subsidiary undertook to sub-underwrite the issue of 28,862,795 shares at 1.5
cents per share in a 1 for 6 non renounceable entitlement issue in Bass Strait Oil Company. The maximum
amount that can be called in terms of the sub-underwriting agreement is $432,942 in September 2012.
14. Indemnification and Insurance of Directors and Officers
Indemnification
The parent entity has agreed to indemnify the following current Directors and past Directors of the parent
entity and of the subsidiaries, where applicable, Mr L.J Shervington; Mr G.G. Hancock; Mr C.R. Porter; Mr
S.H. Abbott; Mr M.T. Scott, Mr D.P. Maxwell, Mr J.W. Schneider, Mr H.M. Gordon, Mr I.E. Gregory and Mr J.A
Baillie, against all liabilities (subject to certain limited exclusions) to persons (other than the Group or a related
body corporate) which arise out of the performance of their normal duties as a Director or Executive Director
unless the liability relates to conduct involving a lack of good faith. The parent entity has agreed to indemnify the
Directors and Executive Directors against all costs and expenses incurred in defending an action that falls within
the scope of the indemnity and any resulting payments.
35
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Statutory Report (continued)
For the year ended 30 June 2012
14. Indemnification and Insurance of Directors and Officers (continued)
Insurance premiums
During the financial year, the parent entity has paid insurance premiums of $67,000 in respect of Directors’ and
Officers’ liability and legal insurance contracts for current and former Directors and Officers including senior
employees of the Parent entity.
The insurance premium relates to costs and expenses incurred by the relevant Officers in defending
proceedings, whether civil or criminal and whatever their outcome and other liabilities that may arise from their
position, with the exception of conduct involving a wilful breach of duty or improper use of information or position
to gain a personal advantage.
The insurance policy outlined above does not contain details of premiums paid in respect of individual Directors,
Officers and senior employees of the parent entity.
15. Auditor’s Independence Declaration
The auditor’s independence declaration is set out on page 94 and forms part of the Directors’ report for the
financial year ended 30 June 2012.
16. Non-Audit Services
The amounts paid to the auditor of the Group, Ernst & Young and its related practices for non-audit services
provided during the year was $20,000 (2011: $ nil).
Rounding
The Group is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and in accordance with
that Class Order, amounts in the financial report have been rounded to the nearest thousand dollars, unless
otherwise stated.
This report is made in accordance with a resolution of the Directors.
Mr David P. Maxwell
Managing Director
Dated at Perth this 30 August 2012.
36
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Consolidated Statement of Comprehensive Income
For the year ended 30 June 2012
Continuing Operations
Revenue from oil sales
Cost of sales
Gross profit
Other revenue
Depreciation
Administration and other expenses
Profit/(Loss) before income tax
Taxes
Income tax expense
Petroleum Resource Rent Tax
Total income tax credit/(expenses)
Consolidated
Notes
4
4
4
4
4
5
5
5
2012
$’000
59,606
(27,684)
31,922
4,667
(203)
(15,380)
21,006
(6,978)
12,233
5,255
2011
$’000
39,121
(16,248)
22,873
5,092
(115)
(33,338)
(5,488)
(4,861)
-
(4,861)
Net profit/(loss) after tax from continuing operations
26,261
(10,349)
Discontinued operations
Impairment of exploration assets held for sale after income tax
11
Total income/(loss) for the period
(17,880)
8,381
-
(10,349)
Total profit/(loss) for the period attributable to members
8,381
(10,349)
Other comprehensive income/(expenditure)
Fair value movements on available for sale investments
Other comprehensive expenditure for the period net of tax
(1,995)
(1,995)
-
-
Total comprehensive income/(loss) for the period attributable to members
6,386
(10,349)
Basic earnings/(loss) per share from continuing operations
Diluted earnings/(loss) per share from continuing operations
6
6
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
cents
8.9
8.9
2.8
2.8
cents
(3.5)
(3.5)
(3.5)
(3.5)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
37
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Consolidated Statement of Financial Position
As at 30 June 2012
Consolidated
ASSETS
Current Assets
Cash and cash equivalents
Term deposits at banks
Trade and other receivables
Materials
Prepayments
Exploration assets classified as held for sale
Total Current Assets
Non-Current Assets
Available for sale financial assets
Term deposits at banks
Oil properties
Exploration and evaluation
Deferred tax asset
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Income tax payable
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained profits
TOTAL EQUITY
Notes
7
7
8
9
10
11
12
7
13
14
5
15
5
16
18
18
18
2012
$’000
59,010
-
11,973
189
197
71,369
33
71,402
13,203
2,451
19,188
42,546
12,233
89,621
2011
$’000
51,891
19,070
16,076
273
72
87,382
-
87,382
-
1,397
17,846
21,300
-
40,543
161,023
127,925
12,332
3,706
16,038
4,150
3,890
8,040
7,817
45
7,862
3,786
1,414
5,200
24,078
13,062
136,945
114,863
113,877
608
22,460
136,945
98,657
2,127
14,079
114,863
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
38
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Consolidated Statement of Changes in Equity
For the year ended 30 June 2012
Issued
Capital
$’000
Reserves
$’000
Retained
Earnings
$’000
Total Equity
$’000
Balance at 1 July 2011
Profit for the period
Other comprehensive income/(expenditure)
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Share based payments
Shares issued
Balance at 30 June 2012
Balance at 1 July 2010
Loss for the period
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Share based payments
Shares issued
Balance at 30 June 2011
98,657
2,127
-
-
-
-
15,220
113,877
-
(1,995)
(1,995)
476
-
608
98,657
2,012
-
-
-
-
-
-
115
-
14,079
8,381
-
8,381
-
-
22,460
114,863
8,381
(1,995)
6,386
476
15,220
136,945
24,428
(10,349)
(10,349)
125,097
(10,349)
(10,349)
-
-
115
-
98,657
2,127
14,079
114,863
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
39
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Consolidated Statement of Cash Flows
For the year ended 30 June 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Income tax paid
Interest received – other entities
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Transfers of/(Placements on) term deposits
Payment for available for sale financial assets
Payments for exploration and evaluation
Investments in oil properties
Cash outflow associated with the acquisition
of controlled entities
Consolidated
Notes
2012
$’000
2011
$’000
58,079
(19,625)
(4,168)
4,798
39,084
15,552
(15,198)
(18,489)
(11,175)
(2,531)
39,934
(27,962)
(5,637)
4,540
10,875
(20,255)
-
(21,003)
(6,984)
-
7
12
17
Net cash flows from/(used in) investing activities
(31,841)
(48,242)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for shares
Net cash flow from financing activities
NET INCREASE/(DECREASE) IN CASH HELD
Net foreign exchange differences
CASH AND CASH EQUIVALENTS AT 1 JULY 2011
CASH AND CASH EQUIVALENTS AT 30 JUNE 2012
7
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
-
-
7,243
(124)
51,891
59,010
(2,772)
(2,772)
(40,139)
(243)
92,273
51,891
40
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements
For the year ended 30 June 2012
1. Corporate Information
The consolidated financial report of Cooper Energy Limited (the parent entity) for the year ended 30 June 2012
was authorised for issue in accordance with a resolution of the Directors on 30 August 2012.
Cooper Energy Limited is a company limited by shares incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in note 6 of the Directors Report.
2. Summary of Significant Accounting Policies
a) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian Accounting Standards.
The financial report has also been prepared on a historical cost basis, except for available for sale financial
assets which have been measured at fair value. Cooper Energy Limited is a for profit company.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated under the option available to the Group under ASIC Class Order 98/0100.
The Group is an entity to which the class order applies.
Significant event and transaction
During the year, legislation extending the Petroleum Resource Rent Tax (PRRT) to onshore oil and gas operations
in Australia was passed into law.
As a result of transition to the PRRT regime, the Company expects to be granted a deductible temporary
difference of approximately $43,689,000 that will be available to offset against future PRRT taxable profits.
An estimated deferred tax asset of $12,233,000 in respect of this deductible temporary difference has been
recognised on the basis deductions from future augmentation of the deductible temporary difference will offset
future PRRT taxable profit. Accordingly, a corresponding benefit to income tax expense of $12,233,000 was
recognised.
Had an alternative approach been used to assess recovery of the deferred tax asset, whereby future
augmentation was not included in the assessment, the estimated deferred tax asset recognised would have
been lower, with a corresponding adjustment to the benefit taken to income tax expense.
It was determined that the approach adopted provides the most meaningful information on the implications of
transition of the PRRT regime, whilst ensuring compliance with AASB 112 Income Taxes.
As a result of the acquisition of Somerton Energy Limited, the Group expects to be incurring an additional
temporary difference of approximately of $4,336,000 that will result in a deferred tax liability of $1,214,000 which
was recognised as a liability on acquisition.
The existing temporary differences are based on existing estimates made by the Company. The Company will
be required to lodge specific PRRT compliance documents with the Australian Taxation Office which will assist in
confirming the company’s temporary difference amounts. These documents are not required to be lodged with
the relevant government departments until August 2013. As such the existing temporary differences may
be subject to change during future reporting periods.
41
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
b) Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board.
From 1 July 2011 the Consolidate Entity has adopted all accounting standards and interpretations applicable
for the first time for entities with years ending 30 June 2012:
Adoption of these standards interpretation did not have any effect on the financial position or performance of
the Consolidated Entity.
Application
date of
standard
Application
date for
Group
1 January
2011
1 July 2011
1 January
2011
1 July 2011
1 January
2011
1 July 2011
Title
Amendments to Australian Accounting Standards
[AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031
and Interpretations 2, 4, 16, 1039 & 1052]
Makes numerous editorial changes to a range of Australian
Accounting Standards and Interpretations.
In particular, it amends AASB 8 Operating Segments to require an
entity to exercise judgement in assessing whether a government
and entities known to be under the control of that government are
considered a single customer for the purposes of certain operating
segment disclosures. It also makes numerous editorial amendments
to a range of Australian Accounting Standards and Interpretations,
including amendments to reflect changes made to the text of IFRS
by the IASB.
Amendments to Australian Accounting Standards arising from the
Annual Improvements Project
[AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13]
Emphasises the interaction between quantitative and qualitative
AASB 7 disclosures and the nature and extent of risks associated
with financial instruments.
Clarifies that an entity will present an analysis of other comprehensive
income for each component of equity, either in the statement of
changes in equity or in the notes to the financial statements.
Provides guidance to illustrate how to apply disclosure principles in
AASB 134 for significant events and transactions.
Clarifies that when the fair value of award credits is measured based
on the value of the awards for which they could be redeemed, the
amount of discounts or incentives otherwise granted to customers
not participating in the award credit scheme, is to be taken
into account.
Amendments to Australian Accounting Standards
[AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134,
137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127,
132 & 1042]
This Standard makes numerous editorial amendments to a range
of Australian Accounting Standards and Interpretations, including
amendments to reflect changes made to the text of IFRS by
the IASB.
These amendments have no major impact on the requirements of
the amended pronouncements.
Reference
AASB
2009-12
AASB
2010-4
AASB
2010-5
42
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Reference
Title
Application
date of
standard
Application
date for
Group
AASB 1054 Australian Additional Disclosures
1 July 2011
1 July 2011
AASB
2010-6
AASB 124
(Revised)
This standard is as a consequence of phase 1 of the joint
Trans-Tasman Convergence project of the AASB and FRSB.
This standard, with AASB 2011-1 relocates all Australian specific
disclosures from other standards to one place and revises disclosures
in the following areas:
(a) Compliance with Australian Accounting Standards.
(b) The statutory basis or reporting framework for financial statements.
(c) Whether the entity is a for-profit or not-for-profit entity.
(d) Whether the financial statements are general purpose or
special purpose.
(e) Audit fees.
(f) Imputation credits.
Amendments to Australian Accounting Standards – Disclosures on
Transfers of Financial Assets [AASB 1 & AASB 7]
The amendments increase the disclosure requirements for
transactions involving transfers of financial assets but which are not
derecognised and introduce new disclosures for assets that are
derecognised but the entity continues to have a continuing exposure
to the asset after the sale.
The revised AASB 124 Related Party Disclosures (December 2009)
simplifies the definition of a related party, clarifying its intended
meaning and eliminating inconsistencies from the definition, including:
(a) The definition now identifies a subsidiary and an associate with the
same investor as related parties of each other.
(b) Entities significantly influenced by one person and entities
significantly influenced by a close member of the family of that person
are no longer related parties of each othe.r
(c) The definition now identifies that, whenever a person or entity has
both joint control over a second entity and joint control or significant
influence over a third party, the second and third entities are related
to each other.
A partial exemption is also provided from the disclosure requirements
for government-related entities. Entities that are related by virtue of
being controlled by the same government can provide reduced related
party disclosures.
1 July 2011
1 July 2011
1 January
2011
1 July 2011
43
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
b) Statement of compliance (continued)
The following table lists all applicable Standards/Interpretations issued but not yet effective for 30 June 2012
year end for which the Group has elected not to early adopt. The impact of the adoption of these new and
revised standards onwards and interpretations onwards has not been determined by the Group. The table is
accurate as at 30 August 2012.
Amendments to Australian Accounting Standards – Presentation of Other
Comprehensive Income
[AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]
This Standard requires entities to group items presented in other comprehensive income on
the basis of whether they might be reclassified subsequently to profit or loss and those that
will not.
1 July 2012
Application date for Group
1 July 2012
Consolidated Financial Statements
AASB 10 establishes a new control model that applies to all entities. It replaces parts of
AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for
consolidated financial statements and UIG-112 Consolidation – Special Purpose Entities.
The new control model broadens the situations when an entity is considered to be
controlled by another entity and includes new guidance for applying the model to specific
situations, including when acting as a manager may give control, the impact of potential
voting rights and when holding less than a majority voting rights may give control.
Consequential amendments were also made to other standards via AASB 2011-7.
1 January 2013
Application date for Group
1 July 2013
Joint Arrangements
AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly- controlled
Entities – Non-monetary Contributions by Ventures. AASB 11 uses the principle of control
in AASB 10 to define joint control, and therefore the determination of whether joint control
exists may change. In addition it removes the option to account for jointly controlled entities
(JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement
is dependent on the nature of the rights and obligations arising from the arrangement.
Joint operations that give the venturers a right to the underlying assets and obligations
themselves is accounted for by recognising the share of those assets and obligations.
Joint ventures that give the venturers a right to the net assets is accounted for using
the equity method.
Consequential amendments were also made to other standards via AASB 2011-7 and
amendments to AASB 128.
1 January 2013
Application date for Group
1 July 2013
AASB 2011-9
Summary
Application date of
Standard
AASB 10
Summary
Application date of
Standard
AASB 11
Summary
Application date of
Standard
44
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
AASB 12
Summary
Application date of
Standard
AASB 13
Summary
Application date of
Standard
AASB 119
Summary
Disclosure of Interests in Other Entities
AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint
arrangements, associates and structures entities. New disclosures have been introduced
about the judgments made by management to determine whether control exists, and
to require summarised information about joint arrangements, associates and structured
entities and subsidiaries with non-controlling interests.
1 January 2013
Application date for Group
1 July 2013
Fair Value Measurement
AASB 13 establishes a single source of guidance for determining the fair value of assets
and liabilities. AASB 13 does not change when an entity is required to use fair value, but
rather, provides guidance on how to determine fair value when fair value is required or
permitted. Application of this definition may result in different fair values being determined
for the relevant assets.
AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair
value. This includes information about the assumptions made and the qualitative impact of
those assumptions on the fair value determined.
Consequential amendments were also made to other standards via AASB 2011-8.
1 January 2013
Application date for Group
1 July 2013
Employee Benefits
The main change introduced by this standard is to revise the accounting for defined benefit
plans. The amendment removes the options for accounting for the liability, and requires
that the liabilities arising from such plans is recognized in full with actuarial gains and losses
being recognized in other comprehensive income. It also revised the method of calculating
the return on plan assets.
The revised standard changes the definition of short-term employee benefits. The distinction
between short-term and other long-term employee benefits is now based on whether the
benefits are expected to be settled wholly within 12 months after the reporting date.
Application date of
Standard
Consequential amendments were also made to other standards via AASB 2011-10.
1 January 2013
Application date for Group
1 July 2013
45
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
b) Statement of compliance (continued)
AASB 2012-5
Annual Improvements 2009–2011 Cycle
This standard sets out amendments to International Financial Reporting
Standards (IFRSs) and the related bases for conclusions and guidance made during
the International Accounting Standards Board’s Annual Improvements process.
These amendments have not yet been adopted by the AASB.
The following items are addressed by this standard:
AASB 1 First-time Adoption of International Financial Reporting Standards
• Repeated application of IFRS 1
• Borrowing costs
AASB 101 Presentation of Financial Statements
• Clarification of the requirements for comparative information
AASB 116 Property, Plant and Equipment
• Classification of servicing equipment
AASB 132 Financial Instruments: Presentation
• Tax effect of distribution to holders of equity instruments
AASB 134 Interim Financial Reporting
Interim financial reporting and segment information for total assets and liabilities
1 January 2013
Application date for Group
1 July 2013
Amendments to Australian Accounting Standards to Remove Individual Key
Management Personnel Disclosure Requirements
[AASB 124]
This Amendment deletes from AASB 124 individual key management personnel disclosure
requirements for disclosing entities that are not companies.
1 July 2013
Application date for Group
1 July 2013
Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial
Assets and Financial Liabilities
AASB 2012-2 principally amends AASB 7 Financial Instruments: Disclosures to require
disclosure of information that will enable users of an entity’s financial statements to evaluate
the effect or potential effect of netting arrangements, including rights of set-off associated
with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s
financial position.
1 January 2013
Application date for Group
1 July 2013
Summary
Application date of
Standard
AASB 2011-4
Summary
Application date of
Standard
AASB 2012-2
Summary
Application date of
Standard
46
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Notes to the Financial Statements (continued)
For the year ended 30 June 2012
AASB 1053
Summary
Application of Tiers of Australian Accounting Standards
Tier 1: Australian Accounting Standards
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements
This Standard establishes a differential financial reporting framework consisting of two Tiers
of reporting requirements for preparing general purpose financial statements:
(a)
(b)
Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1
and substantially reduced disclosures corresponding to those requirements.
The following entities apply Tier 1 requirements in preparing general purpose
financial statements:
(a)
For-profit entities in the private sector that have public accountability (as defined in
this Standard)
The Australian Government and State, Territory and Local Governments
(b)
The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose
financial statements:
(a)
(b)
(c)
For-profit private sector entities that do not have public accountability
All not-for-profit private sector entities
Public sector entities other than the Australian Government and State, Territory and
Local Governments.
Consequential amendments to other standards to implement the regime were introduced
by AASB 2010-2, 2011-2, 2011-6, 2011-11 and 2012-1.
1 July 2013
Application date for Group
1 July 2013
Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Financial Liabilities.
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation
to address inconsistencies identified in applying some of the offsetting criteria of AASB 132,
including clarifying the meaning of “currently has a legally enforceable right of set-off” and
that some gross settlement systems may be considered equivalent to net settlement.
1 January 2014
Application date for Group
1 July 2015
Application date of
Standard
AASB 2012-3
Summary
Application date of
Standard
47
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
b) Statement of compliance (continued)
AASB 9
Summary
Financial Instruments
AASB 9 includes requirements for the classification and measurement of financial assets.
It was further amended by AASB 2010-7 to reflect amendments to the accounting for
financial liabilities.
These requirements improve and simplify the approach for classification and measurement
of financial assets compared with the requirements of AASB 139. The main changes are
described below.
(a)
Financial assets that are debt instruments will be classified based on (1) the
objective of the entity’s business model for managing the financial assets; (2) the
characteristics of the contractual cash flows.
Allows an irrevocable election on initial recognition to present gains and losses
on investments in equity instruments that are not held for trading in other
comprehensive income. Dividends in respect of these investments that are a return
on investment can be recognised in profit or loss and there is no impairment or
recycling on disposal of the instrument.
Financial assets can be designated and measured at fair value through profit or loss
at initial recognition if doing so eliminates or significantly reduces a measurement
or recognition inconsistency that would arise from measuring assets or liabilities, or
recognising the gains and losses on them, on different bases.
Where the fair value option is used for financial liabilities the change in fair value is to
be accounted for as follows:
•
The change attributable to changes in credit risk are presented in other
comprehensive income (OCI)
The remaining change is presented in profit or loss
•
(b)
(c)
(d)
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect
of the changes in credit risk are also presented in profit or loss.
Consequential amendments were also made to other standards as a result of AASB 9,
introduced by AASB 2009-11 and superseded by AASB 2010-7 and 2010-10.
1 January 2013
Application date for Group
1 July 2013
Application date of
Standard
•
AASB ED 215 Mandatory effective date of IFRS 9 proposes to defer the mandatory effective date of
AASB 9 from annual periods beginning 1 January 2013 to annual periods beginning on or after 1 January
2015, with early application permitted. At the time of preparation, finalisation of standard is still pending
by the AASB. However, the IASB has deferred the mandatory effective date of IFRS 9 to annual periods
beginning on or after 1 January 2015, with early application permitted.
The impact of the adoption of these new and revised standards onwards and interpretations onwards has not
been determined by the Group.
c) Basis of Consolidation
The consolidated financial statements are those of the consolidated entity, comprising Cooper Energy Limited
(“the parent entity”) and its subsidiaries (“the Group”).
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using
consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that
may exist. All inter-company balances and transactions, income and expenses and profit and losses arising from
intra-group transactions, have been eliminated in full.
48
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
d) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any
non-controlling interest in the acquiree. For each business combination, the Group elects whether it measures
the non-controlling interest in the acquire at fair value or at the proportionate share of the acquiree’s identifiable
net assets. Acquisition costs incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirers previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset
or liability will be recognised in accordance with AASB 139 either in profit or loss or as a change to other
comprehensive income. If the contingent consideration is classified as equity it will not be remeasured.
Subsequent settlement is accounted for within equity. In instances where the contingent consideration
does not fall within the scope of AASB 139, it is measured in accordance with the appropriate AASB.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed.
If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is
recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquire are assigned to those units.
Where goodwill forms part of the cash generating unit and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured
based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
e) Jointly controlled assets
The Group has an interest in joint ventures that are jointly controlled assets. A joint venture is a contractual
arrangement whereby two or more parties undertake an economic activity that is subject to joint control.
A jointly controlled asset involves use of assets and other resources of the venturers rather than establishment
of a separate entity.
49
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
e) Jointly controlled assets (continued)
The Group’s interest in joint ventures which are unincorporated joint venture assets are accounted for by
recognising its proportionate share in assets that it controls and liabilities that it incurs from joint ventures.
In addition, expenses incurred by the Group and sale of the Group’s entitlement to production are recognised in
the Group’s financial statements on a pro rata basis to the Group’s interest.
f) Foreign currency
The functional and presentation currency of the Company is Australian Dollars.
Translation of foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency of the transacting entity at
the exchange rates ruling at the date of transaction. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated at the rates of exchange ruling at that date. Exchange differences
in the consolidated financial statements are taken to the income statement.
Translation of the financial result of foreign operations
There is one entity within the Group that has a functional currency of Euros. The assets and liabilities of this entity
is translated into the presentation currency of the Group at the rate of exchange ruling at the respective reporting
date. The income statements are translated at the average exchange rates for the reporting period, or at the
exchange rates ruling at the date of transactions. Exchange differences arising on translation were taken to the
foreign currency translation reserve in equity.
g) Investments
Investments are classified as available-for-sale and are initially recognised at fair value plus any directly
attributable transaction costs. The classification depends on the purpose for which the investments were
acquired. Designation will be re-evaluated at each financial year-end.
After initial recognition, investments are remeasured to fair value. Changes in the fair value of available-for-
sale investments are recognised as a separate component of equity until the investment is sold, collected or
otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative change
in fair value previously reported in equity is included in earnings.
For investments that are actively traded in organised financial markets, fair value is determined by reference to
stock exchange quoted market bid prices at the close of business on the Consolidated Statement of Financial
Position date. Where investments are not actively traded, fair value is established by using other market
accepted valuation techniques.
h) Revenue and cost recognition
Revenue is recognised and measured at fair value of consideration received or receivable to the extent that
it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.
The following specific recognition criteria must also be met before revenue is recognised:
Revenues and costs from production sharing contracts
Revenue earned and production costs incurred from a production sharing contract are recognised when title
to the product passes to the customer and is based upon the Group’s share of sales and costs relating to oil
production that are allocated to the Group under the contract.
50
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Interest revenue
Interest revenue is recognised as interest accrues (using the effective interest method, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net
carrying amount of the financial asset.
i) Depreciation and amortisation
Oil properties and other plant and equipment, other than freehold land, are depreciated to their residual values at
rates based on the expected useful lives of the assets concerned.
Oil properties are amortised on the Units of Production basis using the best estimate of proved developed
producing (PDP) reserves. No amortisation is charged on areas under development where production has
not commenced.
Depreciation on property plant and equipment is calculated at between 7.5% and 37.5% per annum using the
diminishing value method over their estimated useful lives.
j) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the end
of the reporting period. These benefits included wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave. Liabilities are to be settled within twelve months of the reporting date are
recognised in respect of employees’ services up to the reporting date and are measured at the amount expected
to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the
leave is taken and are measured at the rates paid or payable.
The general provisions for long service leave is recognised and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date using
the projected credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures, and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms of maturity and currencies that match, as closely
as possible, the estimated future cash outflows. Employees’ accumulated long services leave is ascribed to
individual employees at the rates payable as and when they become entitled to long service leave.
k) Share-based payments
The Group provides benefits to employees and Directors of the Group in the form of share-based payment
transactions, whereby employees render services in exchange for rights over shares (“equity-settled
transactions”). There is currently two plans in operation to provide these benefits.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the
date at which they are granted and are recorded as an expense, with a corresponding increase in reserves, on a
straight-line basis over the vesting period of the related instrument.
The fair value is determined using a binomial model that takes into account the exercise price, the term of the
option, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option, the
share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and
the risk-free interest rate for the term of the option. The fair value of the options granted excludes the impact of
any non-market vesting conditions (for example, profitability and sales growth targets).
51
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
k) Share-based payments (continued)
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects:
1. the extent to which the vesting period has expired; and
2. the Group’s best estimate of the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect of
these conditions is included in the determination of fair value at grant date. The Consolidated Statement
of Comprehensive Income charge or credit for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only
conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any modification that increases the total fair value of
the share-based payment arrangement, or is otherwise beneficial to the employees as measured at the date
of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted
for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the original award, as described in the
previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of
diluted earnings per share.
l) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on
the use of a specific asset or assets and the arrangements conveys a right to use the asset.
Finance lease, which transfer to the Group substantially all the risks and benefits incidental to ownership of the
lease item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between the finance charges
and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised as an expense in profit or loss.
Capitalised lease assets are depreciated over the shorter of the estimate useful life of the asset and the lease
term if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the Consolidated Statement of Comprehensive
Income on or a straight-line basis over the lease term. Operating lease incentives are recognised as a liability
when received and subsequently reduced by allocating lease payments between rental expense and reduction
of the liability.
52
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
m) Management fees
Revenue is recognised when the Group’s right to receive payment is established or service are rendered.
n) Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the Consolidated Statement of Financial Position date.
Deferred income tax is provided on all temporary differences at the Consolidated Statement of Financial Position
date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
•
•
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss: or
when the taxable temporary difference is associated with investments in subsidiaries, associates or
interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be
utilised, except:
•
•
when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss: or
when the deductible temporary difference is associated with investments in subsidiaries, associates
or interest in joint ventures, in which case a deferred tax asset is only recognised to the extent that it
is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be
accessible against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each Consolidated Statement of Financial
Position date and reduced to the extent that it’s no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are assessed at each Consolidated Statement of Financial Position
date and are recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that were expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or
substantively enacted at the Consolidated Statement of Financial Position date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
53
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
n) Income tax (continued)
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exits to offset current
tax assets against current tax liabilities and the deferred tax asset and liabilities relate to the same taxable entity
and the same taxation authority.
o) Other taxes
Goods and Services Taxes (“GST”)
Revenues, expenses and assets are recognised net of the amount of Goods and Services Taxes
(“GST”) except:-
•
•
where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the Consolidated Statement of Financial Position.
Cash flows are included in the Cash Flow Statement on a net basis and the net GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
Petroleum Resource Rent Tax (PRRT)
PRRT is considered, for accounting purposes, to be a tax based on income. Accordingly, current and deferred
PRRT expense is measured and disclosed on the same basis as income tax.
p) Exploration and evaluation expenditure
Exploration and evaluation expenditure is accounted for in accordance with the area of interest method and is
capitalised to the extent that:-
i.
ii.
iii.
the rights to tenure of the areas of interest are current and the Group controls the area of interest in which
the expenditure has been incurred; and
such costs are expected to be recouped through successful development and exploration of the area of
interest, or alternatively by its sale; or
exploration and evaluation activities in the area of interest have not at the reporting date:-
a.
reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves; and
active and significant operations in, or in relation to, the area of interest are continuing.
b.
An area of interest refers to an individual geological area where the potential presence of an oil or a natural
gas field is considered favourable or has been proven to exist, and in most cases will comprise an individual
prospective oil or gas field.
54
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Exploration and evaluation expenditure which does not satisfy these criteria is written off. Specifically, costs
carried forward in respect of an area of interest that is abandoned or costs relating directly to the drilling of a
dry well that is plugged and abandoned are written off in the year in which the decision to abandon is made.
If exploratory wells encounter shows of oil and gas, the well costs remain capitalised on the Consolidated
Statement of Financial Position as long as sufficient progress in assessing the reserves and the economic
and operating viability of the project is being made. A regular review is undertaken of each area of interest to
determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
Where a discovered oil or gas field enters the development phase the accumulated exploration and evaluation
expenditure is transferred to oil properties.
q) Oil properties
Oil properties are carried at cost including construction, installation of infrastructure such as roads and the cost
of development of wells.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated
Statement of Comprehensive Income during the financial period in which they are incurred.
r) Provision for restoration
The Group records the present value of its share of the estimated cost to restore operating locations. The nature
of restoration activities includes the obligations relating to the reclamation, waste site closure, plant closure,
production facility removal and other costs associated with the restoration of the site.
A restoration provision is recognised after the construction of the facility and then reviewed on an annual basis.
When the liability is recorded the carrying amount of the production assets is increased by the asset retirement
costs and depreciated over the producing life of the asset. Over time, the liability is increased for the change in
the present value based on a risk adjusted pre-tax discount rate appropriate to the risks inherent in the liability.
The unwinding of the discount is recorded as an accretion charge within finance costs.
Any changes in the estimate of the provision for restoration arising from the annual renewal is recorded by
adjusting the carrying amount of the production asset and then depreciated over the producing life of the asset.
The liability is correspondingly adjusted for the change in the present value on the risk adjusted pre-tax discount
rate with the unwinding of the adjusted discount recorded as an accretion change within finance costs.
These estimated costs, whilst based on anticipated technological and legal requirements, assume no significant
changes will occur in relevant State and Federal legislation.
s) Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated
Statement of Comprehensive Income during the financial period in which they are incurred.
55
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
s) Property, plant and equipment (continued)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Consolidated
Statement of Financial Position date. The carrying values of property, plant and equipment are reviewed for
impairment at each reporting date, with recoverable amount being estimated when events or changes in
circumstances indicate that the carrying value may be impaired. The recoverable amount of property, plant and
equipment is the higher of fair value less cost to sell and value in use. For an asset that does not generate largely
independent cash flows, recoverable amount is determined for the cash generating unit to which the asset
belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An asset’s or cash generating unit’s carrying amount is written down immediately to its recoverable amount if the
asset’s or cash generating unit’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are
included in the statement of comprehensive income.
An item of property, plant and equipment is de-recognised upon disposal or when no further future economic
benefits are expected from its use. Any gains or losses arising on de-recognition of the asset (calculates as
the difference between the net disposal proceeds and the net carrying amount of the asset) is included in the
statement of comprehensive income in the period the asset is de-recognised.
t) Impairment of non-current assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
u) Cash and cash equivalents
Cash and short term deposits in the Consolidated Statement of Financial Position comprise cash at bank and
short term deposits with an original maturity of six months or less. For the purposes of the Statement of Cash
Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash
within 90 days from date of investment, net of outstanding bank overdrafts.
v) Trade and other receivables
Trade receivables, which generally have 30 to 90 day terms, are recognised and carried at original invoice
amount less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to
collect the debts. Financial difficulties of the debtor, default payments or debts more than 90 days overdue
are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying
amount, compared to the present value of estimated future cash flows, discounted at the original effective
interest rate. Bad debts are written off when identified.
The Group’s share of cash held in non operated joint ventures is classified as a receivable.
56
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
w) Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of these goods and services.
x) Provisions
General
Provisions are recognised when the Group has a legal or constructive obligation to make a future sacrifice of
economic benefits to other entities as a result of past transactions or other past events, it is probable that a
future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of
the obligation.
Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a
whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Restructuring Provisions
Restructuring provisions are recognised only when general recognition criteria for provisions are fulfilled.
Additionally, the Group follows a detailed formal plan about the business or part of the business concerned,
the location and number of employees affected, a detailed estimate of the associated costs and appropriate
timeline. The employees affected have a valid expectation that the restricting is being carried out or the
implementation has been initiated already.
y) Contributed equity
Issued and paid up capital is recognised as the fair value of the consideration received by the Group.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of
the share proceeds received.
z) Earnings per share
Basic earnings per share are calculated as net profit attributable to members divided by the weighted average
number of ordinary shares.
Diluted earnings per share is calculated as net profit attributable to members adjusted for the after tax effect
of dilutive potential ordinary shares that have been recognised as expenses during the period divided by the
weighted average number of ordinary shares and dilutive potential ordinary shares.
57
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
aa) Judgements in applying accounting policies and key sources of estimation uncertainty
(i) Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements,
apart from those involving estimations, which have the most significant effect on the amounts recognised in the
financial statements:
Determination of recoverable hydrocarbons
Estimates of recoverable hydrocarbons impact the asset impairment assessment, depreciation and amortisation
rates and decommissioning and restoration provisions.
Estimates of recoverable hydrocarbons are evaluated and reported by Competent Persons in accordance with
the Company’s Hydrocarbon Guidelines (www.cooperenergy.com.au/policies). A technical understanding of the
geological and engineering processes enables the recoverable hydrocarbon estimates to be determined by using
forecasts of production, commodity prices, production costs, exchange rates, tax rates and discount rates.
Recoverable hydrocarbon estimates may change from time to time if any of the forecast assumptions
are revised.
Taxation
The Group’s accounting policy for taxation requires management’s judgment in relation to the types of
arrangements considered to be a tax on income in contrast to an operating cost.
Judgement is also made in assessing whether deferred tax assets and certain deferred tax liabilities are
recognised on the Consolidated Statement of Financial Position.
Deferred tax assets, including those arising from un recouped tax losses, capital losses, and temporary
differences arising from the Petroleum Resource Rent Tax (Imposition – General) Act 2011, are recognised only
where it is considered more likely than not they will be recovered, which is dependent on the generation of
sufficient future taxable profits.
Judgements are also required about the application of income tax legislation. These judgments and assumptions
are subject to risk and uncertainty, hence there is a possibility changes in circumstances will alter expectation,
which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the Consolidated
Statement of Financial Position and the amount of other tax losses and temporary differences not yet
recognised.
In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities
may require adjustment, resulting in a corresponding credit or charge to the Consolidated Statement of
Comprehensive Income.
Operating lease commitments
The Group has entered into a commercial property lease. The Group has determined that is does not retain
any of the significant risks and rewards of ownership of this property and has thus classified the lease as an
operating lease.
58
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
(ii) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions
of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Recoverability of trade and other receivables
The future recoverability of part of trade receivables from the sale of hydrocarbons is dependent on the average
spot price for oil and the currency exchange rate for the Australian dollar to the United States Dollar at the date
of export from Australia.
Factors that could impact on the future recoverability of the trade receivables are the movement in the daily spot
Australian dollar to the United States Dollar and the spot price for crude oil which are both publically
quoted prices.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of
factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully
recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of oil reserves, future technological changes
which could impact the cost of extraction, future legal changes (including changes to environmental restoration
obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the
future, this will reduce profits and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not
yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable oil reserves. To the extent that it is determined in the future that this capitalised expenditure should
be written off, this will reduce profits and net assets in the period in which this determination is made.
Impairment of capitalised development expenditure
The future recoverability of capitalised development expenditure is dependent on a number of factors, including
the level of oil reserves and future technological changes which could impact the cost of extraction, future legal
changes (including changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised development expenditure is determined not to be recoverable in the future, this will
reduce profits and net assets in the period in which this determination is made.
Provisions for decommissioning and restoration costs
Decommissioning and restoration costs are a normal consequence of oil extraction and the majority of this
expenditure is incurred at the end of a well’s life. In determining an appropriate level of provision consideration is
given to the expected future costs to be incurred, the timing of these expected future costs (largely dependent
on the life of the well), and the estimated future level of inflation.
59
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
2. Summary of Significant Accounting Policies (continued)
aa) Judgements in applying accounting policies and key sources of estimation uncertainty (continued)
The ultimate cost of decommissioning and restoration is uncertain and costs can vary in response to many
factors including changes to the relevant legal requirements, the emergence of new restoration techniques or
experience at other wells. The expected timing of expenditure can also change, for example in response to
changes in oil reserves or to production rates.
Changes to any of the estimates could result in significant changes to the level of provisioning required, which
would in turn impact future financial results.
Share-based payments transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by an external valuer using
a binominal model and applying the calculation criteria detailed in note 2 (j).
3. Segment Reporting
Identification of reportable segments and types of activities
The Group operates throughout the world and prepares reports internally and externally by continental
geographical segments. Within each segment, the costs of operations and income are prepared firstly by legal
entity and then by joint venture. Revenue and outgoings are allocated by way of their natural expense and
income category. These reports are drawn up on a quarterly basis. Resources are allocated between each
segment on an as needs basis. Selective reporting is provided to the Board quarterly while the annual and
bi-nnual results are reported to the Board. The Managing Director is the chief operating decision maker.
The following are the current geographical segments:
Australian Business Unit
Exploration and evaluation for oil and gas, development, production and sale of crude oil in a number of areas
in the Cooper Basin located in South Australia. Revenue is all derived from the sale of crude oil to a consortium
of buyers made up of Santos Limited and its subsidiaries; Delhi Petroleum Pty Ltd and Origin Energy Resources
Limited. Interest income is earned from the placement of funds with various Australian Banks for periods of up to
six months.
African Business Unit
Exploration and evaluation for oil and gas in the Bargou, Nabeul and Hammamet permit area off the coast of
Tunisia. No income is derived from these units.
Asian Business Unit
The Asian business unit involved the production and sale of crude oil from the Tangai-Sukananti KSP. It is
located on the island of Sumatra Indonesia. Revenue is derived from the sale of crude oil to PT Pertamina EP.
The Company has announced its intention to dispose of the equity interest in the Sumbagsel PSC.
European Business Unit
The Company has announced its intention to dispose of the equity interest in the MUA 1, 2 and 3 in Poland.
Other prospective opportunities outside of these geographical segments are also considered from time to time
and, if they are secured, will then be attributed to the continental geographical segment where they are located.
60
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Accounting Policies and inter-segment transactions
The accounting policies used by the Group in reporting segments internally is the same as those contained
in note 2 to the accounts and in the prior period.
The following table presents revenue and segment results for reportable segments for the years ended
30 June 2012 and 2011.
Australian
Business
Unit
$’000
African
Business
Unit
$’000
Asian
Business
Unit
$’000
European
Business
Unit
$’000
Consolidated
$’000
Year ended 30 June 2012
Revenue
Other revenue
Total consolidated revenue
Depreciation of property
Amortisation of:
- Development costs
- Exploration costs
Share based payments
Exploration costs written off
Segment result
Income tax
Net Profit
Segment liabilities
Segment assets
Non Current Assets
Cash flow from:
- Operating activities
- Investing activities
- Financing
Capital Expenditure
Year ended 30 June 2011
Revenue
Other revenue
Total consolidated revenue
Depreciation of property
Amortisation of:
- Development costs
- Exploration costs
Share based payments
Exploration costs written off
Segment result
Income tax expense
Net Loss
Segment liabilities
Segment assets
Non Current Assets
Cash flow from:
- Operating activities
- Investing activities
- Financing
Capital Expenditure
58,234
4,667
62,901
(143)
(6,414)
(2,604)
(476)
(1,648)
21,684
23,516
136,728
66,878
41,018
(18,067)
-
(18,418)
38,653
4,831
43,484
(115)
(3,157)
(1,065)
(115)
(1,624)
12,779
12,546
99,006
12,370
18,850
(28,083)
(2,772)
(7,828)
-
-
-
-
-
-
-
(84)
(84)
196
20,625
20,154
(275)
(5,562)
-
(5,562)
-
-
-
-
-
-
-
(10,130)
(10,130)
516
15,371
20,330
(1,425)
(11,356)
-
(11,356)
1,372
-
1,372
(60)
(504)
-
-
-
(966)
298
3,262
2,589
(1,319)
(3,833)
-
(3,833)
468
261
729
-
-
-
-
(7,553)
(7,938)
-
2,960
2,189
(1,417)
(3,149)
-
(3,149)
-
-
-
-
-
-
-
-
204
68
408
-
(340)
(4,379)
-
(4,379)
-
-
-
-
-
-
-
-
(199)
-
10,588
5,654
(5,133)
(5,654)
-
(5,654)
59,606
4,667
64,273
(203)
(6,918)
(2,604)
(476)
(1,732)
21,006
5,255
26,261
24,078
161,023
89,621
39,084
(31,841)
-
(32,192)
39,121
5,092
44,213
(115)
(3,157)
(1,065)
(115)
(19,306)
(5,488)
(4,861)
(10,349)
13,062
127,925
40,543
10,875
(48,242)
(2,772)
(27,987)
61
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
4. Revenues and Expenses
Profit before income tax expense includes the following revenues and expenses
whose disclosure is relevant in explaining the performance of the entity:
Consolidated
Revenues from oil operations
Oil sales
Total revenue from oil sales
Other revenue
Interest revenue
Other income
Joint venture fees
Total other revenue
Cost of sales
Production expenses
Royalties
Amortisation of exploration
areas under production
Amortisation of development
costs in areas of production
Total cost of sales
Depreciation
Depreciation of property, plant and equipment
Total depreciation
Administration and other expenses
Exploration and evaluation write-offs
Impairment of available for sale investment
General administration
Realised and unrealised foreign
currency translation (loss)/gain
Finance cost – accretion
of rehabilitation cost
Total other expenses
Profit/(loss) before tax
Employee benefits expense
Director and employee benefits
Share based payments
Lease payments
Minimum lease payment – operating lease
62
2012
$’000
59,606
59,606
3,687
778
202
4,667
(13,109)
(5,053)
(2,604)
(6,918)
(27,684)
(203)
(203)
(1,732)
-
(13,524)
(17)
(107)
(15,380)
21,006
(6,550)
(476)
(7,026)
(344)
2011
$’000
39,121
39,121
4,858
-
234
5,092
(8,133)
(3,893)
(1,065)
(3,157)
(16,248)
(115)
(115)
(19,306)
(2,772)
(9,779)
(1,442)
(39)
(33,338)
(5,488)
(4,465)
(115)
(4,580)
(431)
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
5. Income Tax
The major components of income tax expense are:
Consolidated
2012
$’000
2011
$’000
Consolidated Statement of Comprehensive Income
Current income tax
Current income tax charge
Adjustments in respect of prior year income tax
Deferred income tax
Origination and reversal of temporary differences
Income tax expense
Petroleum Resource Rent Tax - deferred tax
Total tax credit/(expenses)
Numerical reconciliation between tax expense and pre-tax net profit
Accounting profit/(loss) before tax from continuing operations
Income tax using the domestic corporation tax rate of 30% (2011: 30%)
Increase/(Decrease) in income tax expense due to:
Non deductible expenditure
Adjustments in respect to current income tax of previous years
Non Australian taxation jurisdictional subsidiaries
Income tax expense
(8,001)
173
(7,828)
850
850
(6,978)
12,233
5,255
21,006
(6,301)
(560)
173
(290)
(677)
(6,978)
(5,505)
22
(5,483)
622
622
(4,861)
-
(4,861)
(5,488)
(1,646)
(6,355)
22
(174)
(6,507)
(4,861)
63
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Notes to the Financial Statements (continued)
For the year ended 30 June 2012
5. Income Tax (continued)
Tax Consolidation
The parent entity and its 100% owned Australian resident subsidiary at the year end formed a tax consolidated
group effective from 1 April 2007. Cooper Energy Limited is the head entity of the tax consolidated group that
provides for the allocation of income tax liabilities between each other should the head entity default on its tax
payment obligations. No amounts have been recognized in the financial statements in respect of this agreement
on the basis that the possibility of default is remote. The Australian resident subsidiary has no current or deferred
tax liability and does not carry on any other business following the withdrawal from the Seruway PSC
in November 2008.
Members of the tax consolidated group have not entered into a tax funding agreement. Hence, no
compensations are receivable or payable for any deferred tax asset or current tax payable (receivable) assumed
by the head entity.
Unrecognised temporary differences
At 30 June 2012, there are no unrecognised temporary differences associated with the Group’s investments in
subsidiaries or joint ventures, as the Group has no liability for additional taxation should unremitted earnings be
remitted (2011 $ nil).
As a result of transition to PRRT regime, the Company expects to be granted a deductible temporary difference
of approximately $15,253,000 that will be available to offset against future PRRT taxable profits. An estimated
deferred tax asset of $4,271,000 in respect of this deductible temporary difference has not been recognised on
the basis deductions from future augmentation of the deductible temporary difference will be sufficient to offset
future PRRT taxable profit.
Franking Tax Credits
At 30 June 2012 the parent entity had franking tax credits of $36,970,914 (2011: $31,384,156). The fully franked
dividend equivalent is $86,265,466 (2011 $73,229,697).
64
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Deferred income tax from corporate tax
Deferred income tax at the 30 June relates to the following:
Deferred tax liabilities
Trade and other receivables
Oil property
Exploration and evaluation
Deferred tax assets
Oil properties
Equity raising costs
Trade and other payables
Provision for employee entitlements
Provisions
Unrealised currency translation loss
Consolidated Statement of
Financial Position
Consolidated Statement of
Comprehensive Income
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2,090
2,363
195
4,648
-
-
467
134
1,102
10
1,977
2,698
275
4,950
28
200
29
303
385
219
1,713
1,164
(113)
335
80
(28)
(200)
438
(169)
716
(209)
(708)
194
22
-
213
(2)
(105)
(12)
(224)
Deferred tax income/(expense)
850
(622)
Deferred tax liability from corporate tax
2,935
3,786
Deferred income tax from petroleum resource rent tax
Deferred income tax 30 June relates to the following:
Deferred tax liabilities
Exploration and evaluation
Deferred tax assets
Oil properties
As represented on the Consolidated Statement
of Financial Position, deferred tax asset
As represented on the Consolidated Statement
of Financial Position, net deferred tax liability
1,215
1,215
12,233
12,233
12,233
-
-
-
-
-
4,150
3,786
12,233
-
65
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Notes to the Financial Statements (continued)
For the year ended 30 June 2012
6. Earnings Per Share
Basic earnings per share amounts are calculated by dividing net profit/(loss) for the year attributable to ordinary
equity holders of the parent by the weighted average of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on the conversion of all the dilutive potential options
into ordinary shares.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Net profit/(loss) attributable to ordinary equity holders
of the parent from continuing operations
Consolidated
2012
$’000
2011
$’000
26,261
(10,349)
2012
Thousands
2011
Thousands
Weighted average number of ordinary shares for basic earnings per share
294,972
292,576
Effect of dilution:
Share options
-
-
Weighted average number of ordinary shares adjusted for the effect of dilution
294,972
292,576
Basic earnings/(loss) per share for the period (cents per share)
Diluted earnings/(loss) per share for the period (cents per share)
8.9
8.9
(3.5)
(3.5)
There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of completion of these financial statements.
If the performance rights are vested in full, then 5,855,831 shares would be issued over the next three years.
66
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
7. Cash and Cash Equivalents and Term Deposits
Current Assets
Cash at bank and in hand
Short term deposits at banks (i)
Consolidated
2012
$’000
12,010
47,000
59,010
2011
$’000
6,891
45,000
51,891
Term deposits at the bank (ii)
-
19,070
Non-Current Assets
Term deposits at bank (iii)
2,451
1,397
(i) Short term deposits at the banks are in Australian Dollars and are for periods of up to 90 days and earn interest at money market
interest rates.
(ii) Term deposits of $nil(2011: $18,162,000) at the bank are in Australian Dollars and are for periods exceeding 90 days but not
longer than one year and earn interest at money market interest rates. An amount of $nil (2011: $ 908,000) is the translated
Australian Dollar value at year end for a twelve month United States Dollar term deposit pledged to underwrite a performance bond
issued by a wholly owned subsidiary.
(iii) The non current term deposit at bank is in United States Dollars and matures on 15 May 2014 at a fixed interest rate of 1%. The
term deposit has been pledged to the bank to underwrite a performance bond issued by a wholly owned subsidiary. The carrying
value of the term deposit approximates its fair value.
The Group does not have any finance facilities as of 30 June 2012 (2011: nil).
67
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
7. Cash and Cash Equivalents and Term Deposits (continued)
Reconciliation of net profit/(loss) after tax to net cash flows from operations.
NET PROFIT/(LOSS) FOR THE YEAR
Adjustments for:
Amortisation of development costs in areas of production
Amortisation of exploration areas under production
Depreciation of property, plant and equipment
Exploration and evaluation written off
Impairment of non-current asset
Share based payments
Finance cost – accretion of rehabilitation cost
Unrealised foreign currency translation loss
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Increase)/decrease in deferred tax assets
(Decrease)/increase in deferred tax liabilities
(Decrease)/increase in trade and other payables
(Decrease)/increase in current tax liability
(Decrease)/increase in provisions
Increase in available for sale reserve
Net cash from operating activities
8. Trade and Other Receivables (Current)
Trade receivable (i)
Related party receivables (ii)
Related party receivables – Joint Ventures (iii)
Interest receivable
Consolidated
2012
$’000
2011
$’000
8,381
(10,349)
6,918
2,604
203
19,612
-
88
107
(50)
485
84
(125)
(12,233)
364
4,515
3,660
2,476
1,995
3,157
1,065
115
19,306
2,772
115
39
243
(7,074)
(273)
42
-
(622)
1,858
(154)
635
-
39,084
10,875
Consolidated
2012
$’000
9,278
629
1,696
370
2011
$’000
8,443
326
6,604
703
11,973
16,076
(i) Trade receivables are non-interest bearing and are generally on 30-90 days terms.
There are no past due or impaired receivables and have a history of past default.
(ii) All related payments are current within agreed terms of trade and do not exceed 180 days.
(iii) Related party payments for joint ventures are for work to be undertaken in the near term and are within contractual
arrangements.
(iv) Due to the short-term nature of the trade and other receivables, the carrying value approximates fair value.
68
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
9. Materials (Current)
Stores and materials
10. Prepayments (Current)
Insurance
Consolidated
2012
$’000
189
2011
$’000
273
197
72
11. Exploration Assets Held for Sale and Discontinued Operations
During the year the Board resolved to dispose of its exploration assets in Indonesia and Poland. Management
is in the process of obtaining expressions of interest from third parties for the Company’s equity holding in each
of these exploration activities. The tenements were all impaired as management has no basis to attribute a fair
value on a going concern basis.
The losses from the exploration assets classified as held for sale are presented on a separate line in the
Consolidated Statement of Comprehensive Income.
The producing operation at Sukananti KSO has not been reclassified as held for sale.
Exploration and Evaluation
Impairment loss recognised on the remeasurement to fair value
Net assets directly associated with disposal group
(Loss)/Profit for the year from discontinued operations
Impairment loss recognised on the remeasurement to fair value
(Loss)/Profit for the year from discontinued operations
Basis (loss)/earnings per share from discontinued operations
Diluted (loss)/earnings per share from discontinued operations
Consolidated
2012
$’000
17,880
(17,880)
-
-
(17,880)
(17,880)
(6.1)
(6.1)
2011
$’000
-
-
-
-
-
-
-
-
69
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
12. Available for Sale Investment (Non-Current)
Shares at fair value
A reconciliation of the movement during the year is as follows:-
Opening balance
Purchases
Acquisition of investment
Impairment
Movement in available for sale investment reserve
Closing balance
Consolidated
2012
$’000
13,203
-
15,198
-
-
(1,995)
13,203
2011
$’000
-
-
-
2,772
(2,772)
-
-
Subsequent to the year end the value of investments available for sale increased from $13,203,000 to
$18,104,000 at the date of this report.
70
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
13. Oil Properties (Non-Current)
Transferred
Exploration
and
Evaluation
$’000
Plant and
Equipment
$’000
Development
$’000
Total
$’000
Consolidated
As at 1 July 2010
Cost
Accumulated depreciation
Year end 30 June 2011
Carrying amount at 30 June 2010
Additions
Depreciation
Carrying amount at 30 June 2011
As at 30 June 2011
Cost
Accumulated depreciation
Year end 30 June 2012
Carrying amount at 1 July 2011
Additions
Acquisition of Subsidiary
Depreciation
Carrying amount at 30 June 2012
As at 30 June 2012
Cost
Accumulated depreciation
727
(393)
334
334
16
(115)
235
477
(242)
235
235
22
83
(203)
137
323
(186)
137
8,304
(4,693)
3,611
3,611
1,023
(1,065)
3,569
9,327
(5,758)
3,569
3,569
3,088
-
(2,604)
4,053
27,233
36,264
(15,973)
11,260
(21,059)
15,205
11,260
15,205
5,939
(3,157)
6,978
(4,337)
14,042
17,846
33,172
42,976
(19,130)
(25,130)
14,042
17,846
14,042
7,874
-
(6,918)
14,998
17,846
10,984
83
(9,725)
19,188
12,415
41,046
53,784
(8,362)
4,053
(26,048)
(34,596)
14,998
19,188
71
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
14. Exploration and Evaluation (Non-Current)
Regions of focus
Africa
Asia
Australia
European
Consolidated
2012
$’000
20,154
859
21,533
-
2011
$’000
13,430
1,298
918
5,654
Total exploration and evaluation
42,546
21,300
Reconciliations of the carrying amounts of capitalised exploration at the
beginning and end of the financial year are set out below:-
Carrying amount at 1 July
Expenditure
21,300
22,983
Fair value of exploration acquired on the acquisition of Somerton Energy Limited
20,963
Transferred to oil properties
Unsuccessful exploration wells written off (i)
Exploration expenditure classified as held for sale
Carrying amount at 30 June
(3,088)
(1,732)
(17,880)
42,546
19,601
22,028
-
(1,023)
(19,306)
-
21,300
(i) Exploration write offs relate to exploration wells that were plugged and abandoned as dry holes, during the year.
(ii) Recoverability is dependent on the successful development and commercial exploration or sale of the respective areas of interest.
15. Trade and Other Payables (Current)
Trade payables (i)
Other payables (i)
Accruals
Related party payables – Joint Ventures (ii)
1,132
2,349
2,852
6,333
5,999
12,332
551
2,263
986
3,800
4,017
7,817
(i) Trade and other payables are non-interest bearing and are normally settled on 30-90 day terms.
(ii) Related party payments are accrued expenditure incurred on joint ventures.
72
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
16. Provisions (Non-Current)
Consolidated
Long service leave provision
Redundancy provision
Restoration provision
Movement in carrying amount of the restoration provision:
Carrying amount at 1 July
Additional provision
Increase through accretion
Carrying amount at 30 June
2012
$’000
64
586
3,240
3,890
1,281
1,852
107
3,240
2011
$’000
133
-
1,281
1,414
549
693
39
1,281
The Restoration Provision is the present value of the Group’s share of the estimated cost to restore operating
locations. The nature of restoration activities includes the obligations relating to the reclamation, waste site
closure, plant closure, production facility removal and other costs associated with the restoration of the site.
The Redundancy Provision is an estimate of the amount that may be payable to Perth based employees who
do not relocate to the Adelaide in 2013.
17. Business Combinations
On 6 June 2012 Cooper Energy Limited (the Company) pursuant to an off market takeover offer dated 7 May
2012 acquired 92.74% of the shares in Somerton Energy Limited (Somerton) and then invoked the Compulsory
Acquisition provisions of the Corporations Act 2001 (Cth) to acquire 100% of the share capital in Somerton in
July 2012.
The purpose of the acquisition was to increase the Company’s Australian exploration interests including
exploration tenements in the Otway Basin in South Australia and Gippsland Basin in Victoria.
The consideration for the acquisition of Somerton comprised the following;
1) One Cooper Share for every 2.8 Somerton Shares (all shares alternative); or
2) One Cooper Share for every 4.73 Somerton Shares plus 9 cents for each Somerton share
(shares and cash alternative).
Somerton shareholders who did not elect their preferred option received the all shares alternative as
consideration.
73
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Notes to the Financial Statements (continued)
For the year ended 30 June 2012
17. Business Combinations (continued)
The Company has recognised the fair values and identifiable assets and liabilities of
Somerton Energy Limited as follows;
Fair value at
acquisition date
$’000’s
Carrying value
$’000’s
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Total current assets
Non-current assets
Available for sale financial assets
Term deposits at bank
Property, plant and equipment
Exploration and evaluation expenditure
Total non-current assets
Total Assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liability
Provisions
Total non-current liabilities
Total Liabilities
Total identifiable net assets at fair value
Acquisition-date fair-value of consideration transferred:
Shares issued at fair value
Cash Consideration
Accrual (minority interest not yet acquired)
The cash outflow on acquisition is as follows:
Net Cash acquired with the subsidiary
Cash Paid
7,081
116
200
7,397
325
15
20
9,885
10,245
17,642
2,008
18
2,026
1,215
156
1,371
3,397
7,081
116
200
7,397
325
15
20
20,963
21,323
28,720
2,008
18
2,026
1,215
156
1,371
3,397
25,323
15,132
9,612
579
25,323
7,081
(9,612)
(2,531)
Transaction costs attributable to acquisition of Somerton
1,005
The assessed fair values of shares issued as consideration were determined by theprevailing share price on
the date of acquisition.
The consolidated statement of comprehensive income includes a net loss of $320,000 as a result of the
acquisition of Somerton Energy Limited. If the acquisition of Somerton occurred at the beginning of the reporting
period, the consolidated statement of comprehensive income would have included a net loss of $3,533,000.
74
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
18. Contributed Equity and Reserves
Share capital
Ordinary shares
Issued and fully paid
Consolidated
2012
$’000
2011
$’000
113,877
98,657
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par
value shares. Accordingly, the Parent does not have authorised capital nor par value in respect of its issued shares.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Movement in ordinary shares on issue
At 1 July 2011
Issuance of shares to a consultant
Issue of shares for the acquisition of Somerton Energy Ltd
At 30 June 2012
Thousands
$’000
292,576
215
34,538
327,329
98,657
88
15,132
113,877
Share options
The Group has a share based payment option scheme under which options to subscribe for the parent entity’s
shares have been granted to key management personnel and senior employees (refer note 22).
Reserves
Consolidation
reserve
$’000
Share based
payment
reserve
$’000
Option
premium
reserve
$’000
Consolidated
At 30 June 2010
Share-based payments
At 30 June 2011
Other comprehensive income
Share-based payments
At 30 June 2012
(541)
-
(541)
-
-
(541)
2,528
115
2,643
-
476
3,119
25
-
25
-
-
25
Available
for sale
investment
reserve
$’000
-
-
-
(1,995)
-
(1,995)
Total
$’000
2,012
115
2,127
(1,995)
476
608
75
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
18. Contributed Equity and Reserves (continued)
Nature and purpose of reserves
Consolidation reserve
The reserve comprises the premium paid on acquisition of minority shareholdings in a controlled entity.
Share based payment reserve
This reserve is used to record the value of equity benefits provided to employees and Directors as part
of their remuneration.
Option premium reserve
This reserve is used to accumulate amounts received from the issue of options. The reserve can be used to
pay dividends or issue bonus shares.
Available for sale investment reserve
This reserve is used to capture the market to market movement in the value of shares held in companies
listed on a public exchange.
Retained earnings
Movement in retained earnings were as follows:
Balance 1 July
Net profit/(loss) for the year
Balance at 30 June
Consolidated
2012
$’000
14,079
8,381
22,460
2011
$’000
24,428
(10,349)
14,079
Capital Management
When managing capital, Management’s objective is to ensure the entity continues as a going concern as well
as maintain optimal return to shareholders. Management also aims to maintain a capital structure that ensures
the lowest cost of capital available to the entity commensurate with the business risk. Capital includes equity
attributable to the equity holders of the parent.
As the equity market is constantly changing, management may issue new shares to provide for future exploration
or development activities. Management has no current plans to issue further shares or to borrow any funds.
19. Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise cash and short term deposits, receivables, available for sale
investments and payables.
The Group manages its exposure to key financial risks in accordance with its risk management policy with the
objective to ensure that the financial risks inherent in oil and gas exploration activities are identified and then
managed or kept as low as reasonably practicable.
76
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
The main financial risks that arise in the normal course of business for the Group’s financial instruments are
foreign currency risk, credit risk and liquidity risk. The Group uses different methods to measure and manage
different types of risks to which it is exposed. These include monitoring exposure to foreign exchange risk
and assessments of market forecast for interest rate, foreign exchange and commodity prices. Liquidity risk is
monitored through the development of future rolling cash flow forecasts.
It is, and has been, throughout the period under review, the Board’s policy that no speculative trading in financial
instruments be undertaken.
The primary responsibility for the identification and control of financial risks rests with the Managing Director and
the Chief Financial Officer, under the authority of the Board. The Board is apprised of these and other risks at
Board meetings and agrees any policies that may be taken to manage any of the risks identified below.
Details of the significant accounting policies and methods adopted, including criteria for recognition, the basis
of measurement and the basis on which income and expenses are recognised , in respect of each financial
instrument are disclosed in Note 2 to the financial statements.
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial
instruments recognised in the financial statements.
Consolidated
Financial assets
Cash and cash equivalents
Term deposits
Available for sale investments
Trade and other receivables
Financial liabilities
Trade and other payables
Carrying amount
Fair value
2012
$’000
2011
$’000
2012
$’000
2011
$’000
59,010
2,451
13,203
11,973
51,891
20,467
-
16,076
59,010
2,451
13,203
11,973
51,891
20,467
-
16,076
12,332
7,817
12,332
7,817
The financial assets and liabilities of the Group are recognised in the consolidated statement of financial position
in accordance with the accounting policies set out in note 2.
The valuation technique for determining and disclosing the fair value of the available for sale investments is the
quoted prices on a prescribed equity stock exchange and hence is a level 1 fair value hierarchy.
The following summarises the significant methods and assumptions used in estimating the value of financial
instruments:
Trade and other receivables
The carrying value is a reasonable approximation of their values due to the short-term nature of
trade receivables.
77
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
19. Financial Risk Management Objectives and Policies (continued)
Risk Exposure and Response
Market Risk
Foreign currency risk
The Group has transactional currency exposure arising from all its sales which are denominated in United States
dollars, whilst almost all its costs are denominated in the Group’s functional currency of Australian dollars.
In addition the Group operates internationally and is exposed to foreign exchange risk arising from various
currency exposures, to the United States Dollars, Euro’s and Polish Zloties. Transaction exposures, where
possible, are netted off across the Group to reduce volatility and provide a natural spread.
The Group may from time to time have cash denominated in United States Dollars, Euro’s and Polish Zloties.
Currently the Group has no foreign exchange hedge programmes in place. The Chief Financial Officer manages
the purchase of foreign currency to meet exploration requirements, which cannot be netted off against US
Dollar’s receivables.
The majority of financial assets are denominated in US Dollars are as follows:-
Financial assets
Cash
Term deposits at bank
Trade and other receivables (current and non current)
Financial liabilities
Trade and other payables
Consolidated
2012
$’000
317
2,429
10,812
2011
$’000
85
908
15,356
561
956
The following table summarises the sensitivity of financial instruments held at the year end, to movements in
the exchange rates for the Australian dollar to the foreign currency, with all other variables held constant.
The 13% sensitivity in 2012 is based on the median changes over the previous two financial years.
If the Australian dollar were higher at the balance date
If the Australian dollar were lower at the balance date
Impact on after tax profit
2012
$’000
(1,505)
1,955
2011
$’000
(1,771)
2,300
78
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
If the Australian dollar were higher at the balance date
If the Australian dollar were lower at the balance date
Impact on other
comprehensive income
2012
$’000
-
-
2011
$’000
-
-
Price risk
Commodity price risk arises from the sale of oil denominated in US dollars. The Group does not sell forward any
of its oil and has no financial instruments at report date that relates to commodity prices.
Credit risk
Credit risk arises from the financial assets of the Group which comprise cash and cash equivalents and trade
and other receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with
a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed
in each applicable note.
The Group trades only with recognised creditworthy third parties. The Group has had no exposure to bad debts.
The Group has a concentration of credit risk with trade receivables due from three entities which have traded
with the Group since 2003.
Cash and cash equivalents and term deposits are held at three financial institutions that have a Standard &
Poors AA credit rating. Trade receivables are settled on 30 to 90 day terms.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet all financial
commitments in a timely and cost-effective manner. The Managing Director and Chief Financial Officer review the
liquid position on a weekly basis including cash flow forecasts to determine the forecast liquidity position
and maintain appropriate liquidity levels.
Trade and other payables amounting to $12,332,000 (2011: $7,817,000) are payable within normal terms of 30
to 90 days.
Interest rate risk
The Group has no borrowings at 30 June 2012 (2011: $ nil) nor has the Group drawn and repaid any loans from
a financial institution during the reporting period.
It has no undrawn credit facilities with any financial institution.
If the interest rate were 1% higher at the balance date
If the interest rate were 1% lower at the balance date
Impact on after tax profit
2012
$’000
550
(550)
2011
$’000
641
(641)
79
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
19. Financial Risk Management Objectives and Policies (continued)
Risk Exposure and Response (continued)
Market Risk (continued)
Interest rate risk (continued)
Any fluctuation of the interest rate either up or down will have no impact on the principal amount of the cash
on term deposit at the banks. The Group does not invest in financial instruments that are traded on any
secondary market.
Share price risk
Share price risk arises from the movement of share prices on a prescribed stock exchange. The Group has
available for sale investments the fair value of which fluctuates as a result of movement in the share price.
Impact on available for
sale investment reserve
Impact on profit before tax
2012
$’000
2011
$’000
2012
$’000
2011
$’000
If the share price were 35% higher at the balance date
5,319
If the share price were 35% lower at the balance date
-
-
-
-
(5,319)
-
-
20. Commitments And Contingencies
Consolidated
Operating lease commitments under non-cancellable office lease
not provided for in the financial statements and payable:
Within one year
After one year but not more than five years
After more than five years
Total minimum lease payments
2012
$’000
358
1,580
-
1,938
2011
$’000
340
1,913
-
2,253
The Parent entity leases a suite of offices from which it conducts its operations.
The lease is for seven years with an option to renew after that date.
80
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
21. Interest in Joint Venture Assets
The group has interests in a number of joint ventures which are involved in the exploration and/or production
of oil in Australia, Tunisia, Indonesia and Poland. The Group has the following interests in joint ventures in the
following major areas:
a) Joint Ventures in which Cooper Energy Limited is the operator/manager
Australia
PEL 110
PEL 495
PEL 186
PEP151
Indonesia
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Sukananti KSO
Oil and gas exploration and production
Sumbagsel PSC
Oil and gas exploration
Tunisia
Bargou Exploration Permit
Oil and gas exploration
Nabeul Exploration Permit
Oil and gas exploration
b) Joint Ventures in which Cooper Energy Limited is not the operator/manager
Australia
PEL 90
PEL 92
PEL 93
PEL 100
PEP 150
PEP 168
PEP 171
Tunisia
Oil and gas exploration
Oil and gas exploration and production
Oil and gas exploration and production
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Hammamet Exploration Permit Oil and gas exploration
Poland
MUA 1, 2, & 3
Oil and gas exploration
Ownership interest
2012
2011
20%
65%
33.33%
75%
55%
100%
30%
85%
25%
25%
30%
20%
50%
-
-
55%
100%
85%
85%
25%
25%
30%
19.167%
19.167%
20%
50%
25%
35%
40%
-
-
-
35%
40%
81
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
21. Interest in Joint Venture Assets (continued)
Other than detailed on the previous page, the Groups’ ongoing funding obligation to each Joint Venture is no
greater than the ownership interest in that joint venture. The share of assets, liabilities and expenses of the joint
venture which are included in the financial statements, are as follows:-
Consolidated
2012
$’000
2011
$’000
1,729
189
98
2,016
19,188
42,546
61,734
814
814
6,929
273
-
7,202
17,846
21,300
39,146
4,017
4,017
62,936
42,331
59,606
13,109
5,053
2,604
6,918
1,732
39,121
8,133
3,893
1,065
3,157
19,306
ASSETS
Current Assets
Trade and other receivables
Materials
Prepayments
Total Current Assets
Non-Current Assets
Oil properties
Exploration and evaluation
Total Non-Current Assets
LIABILITIES
Trade and other payables
Total Current Liabilities
NET ASSETS
Revenue
Production expenses
Royalties
Amortisation of exploration areas under production
Amortisation of development costs in areas of production
Exploration and development write offs
Refer to note 20 for details of joint venture contingencies.
82
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
22. Related Parties
The Group has a related party relationship with its subsidiaries, joint ventures (see note 21) and with its key
management personnel (refer to disclosure for key management personnel below).
Key management personnel disclosures
The following were key management personnel of the Group at any time during the reporting period and
unless otherwise indicated were key management personnel for the entire period.
Non-Executive Director’s
Mr L.J. Shervington (Chairman)
Mr J.W. Schneider
Executive Director
Mr D.P. Maxwell
Mr H.M. Gordon
Mr N. Fearis (Alternate Director to Mr Shervington from
4 November 2011 to 19 March 2012
Non-Executive Director’s who resigned during the year
Executive Director’s who resigned during the year
Mr C.R. Porter
Mr S.H. Abbott
Senior Employees at year end
Mr G.G. Hancock
Mr J.A. Baillie (Chief Financial Officer)
Mr A.A. Warton (Development Manager)
Mr S.K. Twartz (Exploration Manager)
Mr S.F. Blenkinsop (Legal and Commercial Manager)
Senior Employees who resigned during the year
Mr M.T. Scott (Chief Operating Officer)
The key management personnel compensation included in General Administration (see note 4) are as follows:
Short-term benefits
Long-term benefits
Post-employment benefits
Performance Rights
Early Termination payments
Share-based payments
Total
Consolidated
2011
$
3,416,525
63,653
139,866
-
-
105,217
3,725,261
2012
$
2,100,002
86,428
104,953
342,266
402,950
-
3,036,599
Individual Directors’ and Executives’ compensation disclosures
Information regarding individual Directors’ and Executives’ compensation and some equity instruments
disclosures is provided in the Remuneration Report section of the Directors’ report on pages 15 to 36.
Apart from the details disclosed in this note, no Director has entered into a material contract with the parent
entity or the Group since the end of the previous financial year and there were no material contracts involving
Directors’ interest existing at year-end.
83
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
22. Related Parties (continued)
Individual Directors’ and Executives’ compensation disclosures (continued)
During the year Lexwan Pty Ltd, a company controlled by Mr Maxwell, was engaged to provide strategic
consultancy services to the Company. Fees paid for these services totalled $135,483. The contract with
Lexwan Pty Ltd was terminated on the 11 October 2011.
Options over equity instruments
The movement during the reporting period in the number of options over ordinary shares in Cooper Energy
Limited held, directly, indirectly or beneficially, by each key management person, including their related parties,
is as follows:
Held at
1 July 2011
Granted
Expired /
lapsed at
maturity
or on
termination
Held at
30 June
2012
Vested
during the
year
Vested and
exercisable
Directors
Mr G.G. Hancock
3,000,000
-
3,000,000
Executives
Mr J.A. Baillie
Mr M.T. Scott
600,000
5,000,000
-
-
600,000
5,000,000
Held at
1 July 2010
Granted
Expired /
lapsed at
maturity
or on
termination
-
-
-
-
-
-
-
-
-
Held at
30 June
2012
Vested
during the
year
Vested and
exercisable
Directors
Mr G.G. Hancock
3,000,000
Executives
Mr M.T. Scott
Mr J.A. Baillie
6,900,000
675,000
-
-
-
-
3,000,000
1,000,000
3,000,000
1,900,000
5,000,000
1,666,667
5,000,000
75,000
600,000
166,667
600,000
Performance rights
The movement during the reporting period in the number of performance rights granted but not exercisable
over ordinary shares in Cooper Energy Limited held, directly, indirectly or beneficially, by each key management
person, including their related parties, is as follows:
84
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Held at
1 July 2011
Granted
Forfeited
on
termination
Vested
during the
year
Exercisable
Held at
30 June
2012
-
1,647,713
-
-
-
-
732,605
569,021
529,788
454,952
-
-
-
-
-
-
-
-
-
-
-
1,647,713
-
-
-
-
732,605
569,021
529,788
454,952
Directors
Mr D.P. Maxwell
Executives
Mr S. Twartz
Mr A. Warton
Mr S.F. Blenkinsop
Mr J.A, Baillie
Movement in shares
The movement during the reporting period in the number of ordinary shares in Cooper Energy Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July 2011
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2012
405,933
525,933
2,600,001
60,000
-
-
-
-
-
-
-
935,527
300,000
176,608
751,500
160,933
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
405,933
Resigned
Resigned
Resigned
935,527
300,000
176,608
Resigned
158,000
2,933
Directors
Mr L. J. Shervington
Mr C.R Porter
Mr G.G. Hancock
Mr S.H. Abbott
Mr D.P. Maxwell
Mr J.W. Schneider
Mr H.M. Gordon
Executives
Mr M.T. Scott
Mr S.F. Blenkinsop
85
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
22. Related Parties (continued)
Movement in shares (continued)
Held at
1 July 2010
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2011
405,933
525,933
2,600,001
60,000
751,500
75,933
207,865
-
-
-
-
-
85,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
405,933
525,933
2,600,001
60,000
751,500
160,933
Resigned
Directors
Mr L. J. Shervington
Mr C.R Porter
Mr G.G. Hancock
Mr S.H. Abbott
Executives
Mr M.T. Scott
Mr S.F. Blenkinsop
Mr C.D. Todd
Shares held by key management personnel’s related parties
The movement during the reporting period in the number of ordinary shares in Cooper Energy Limited held,
directly, indirectly or beneficially, by each key management person’s related parties, is a follows:
Held at
1 July 2011
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2012
525,933
740,000
875,001
60,000
-
-
-
-
-
-
-
-
-
-
-
-
Resigned
Resigned
Resigned
Resigned
Held at
1 July 2010
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2011
525,933
875,001
60,000
740,000
-
-
-
-
-
-
-
-
-
-
-
-
525,933
875,001
60,000
740,000
Directors
Mr C.R Porter
Mr M.T. Scott
Mr G.G. Hancock
Mr S.H. Abbott
Directors
Mr C.R Porter
Mr G.G. Hancock
Mr S.H. Abbott
Executives
Mr M.T. Scott
86
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
Subsidiaries
The Group financial statements include the financial statements of Cooper Energy Limited and the subsidiaries
listed in the following table.
Name
Country of incorporation
Equity interest
Cooper Energy Sukananti Limited
British Virgin Islands
Cooper Energy Sumbagsel Limited
British Virgin Islands
CE Tunisia Bargou Ltd
CE Hammamet Ltd
CE Nabeul Ltd
Cooper Energy (Seruway) Pty Ltd
Worrior (PPL 207) Pty Ltd
CE Poland Pty Ltd
Somerton Energy Limited
Essential Petroleum Exploration Pty Ltd
CE Poland Coopertief UA
CE Polska sp z.o.o.
British Virgin Islands
British Virgin Islands
British Virgin Islands
Australia
Australia
Australia
Australia
Australia
Netherlands
Poland
2012
%
100%
100%
100%
100%
100%
100%
100%
100%
92.7%
100%
99%
100%
2011
%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
99%
100%
Joint Venture
During the reporting period, the Group provided geological and technical services to joint ventures it manages
at a cost of $202,000 (2011: $234,000). At the end of the financial period, $nil was outstanding for these
services (2011: $98,000).
An impairment assessment is undertaken each financial year by examining the financial position of the related
party and their investment in the respective joint venture’s that are prospecting for hydrocarbons to determine
whether there is objective evidence that a related party receivables is impaired. When such objective evidence
exists, the Group recognises an allowance for the impairment loss.
23. Share Based Payment Plans
On 16 December 2011 shareholders of the parent entity approved the establishment of an Employee
Performance Rights Plan whereby the Board can, subject to certain conditions, issue performance rights
to employees to acquire shares in the parent entity.
The first issue under the plan was made on the 20 January 2012.
The performance rights were issued for no consideration. The right extends to the holder the right to be vested
with shares in the parent entity.
Vesting of the performance rights will be in three equal tranches over the term of the right to be determined in
the fourth calendar quartile of each year.
87
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
23. Share Based Payment Plans (continued)
The vesting test is two parts. Up to 25% of the eligible rights to vest are determined from the absolute total
shareholder return of the parent entity’s share price against its own share price at the date of the grant of the
right. If the return is less than 5% no rights will vest. If the return is between 5% and 25% the rights that will vest
will be 6.25% and 12.5% of the eligible rights. If the return is greater than 25% up to 25% of the eligible rights
will vest.
The second part is for the remaining 75% of the eligible rights to vest and is determined from the absolute total
shareholder return of the parent entity’s share price against a weighted basket of absolute total shareholder
returns of peer companies listed on the Australian Stock Exchange. If the return is less than 50% of peer
companies no rights will vest. If the return is between 50% and 75% rights the eligible rights that will vest will
be 37.5% and 56.25%. If the return is greater than 75% up to 75% of the eligible rights will vest.
Rights that do not qualify for vesting in any one year can be carried forward to the following year for testing of
vesting eligibility.
There are no participating rights or entitlements inherent in the rights and holders will not be entitled to
participate in new issues of capital offered to shareholders during the period of the rights. All rights are settled
by physical delivery of shares.
Information with respect to the number of performance rights granted to employees is as follows:
Granted in the year
ended
Number of rights granted
Average share price at
commencement date of
grant (cents)
Average contractual life
of rights at grant date in
years
30 June 2012
5,855,831
$0.365
3
The number and weighted average exercise prices of performance rights held by employees is as follows:
Balance at beginning of year
- granted
- exercised
- expired and not exercised
- forfeited following employee resignation
Balance at end of year
Exercisable at end of year
Number of rights
Number of rights
2012
2011
5,855,831
-
-
-
5,855,831
nil
-
-
-
-
-
-
During the financial year, no rights were vested or exercised (2011: nil).
88
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
The fair value of services received in return for the performance rights granted are measured by reference to
the fair value of performance rights granted. The estimate of the fair value of the services received is measured
based on the Black-Scholes methodology to produce a Monte-Carlo simulation model that allowed for the
incorporation of market based performance hurdles that must be met before the shares vests to the holder.
Fair value assumptions
Fair value at measurement date
Share price
Risk free interest rate
Expected volatility
Dividend Yield
24. Auditor’s Remuneration
20 January 2012
26.1 cents
36.5 cents
3.27%
40%
0%
Consolidated
2012
$
2011
$
The auditor of Cooper Energy Limited is Ernst & Young
Amounts received or due and receivable by Ernst & Young Australia for:
Auditing and review of financial reports of the entity and the consolidated group
171,650
173,675
Other services
20,000
191,650
-
173,675
Amounts received or due and receivable by related practices of Ernst & Young Australia for:
Auditing and review of financial reports of an entity in the consolidated group
-
-
191,650
173,675
89
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Notes to the Financial Statements (continued)
For the year ended 30 June 2012
25. Parent Entity Information
Parent Entity
Information relating to Cooper Energy Limited
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Issued capital
Retained profits
Option premium reserve
Unrealised (loss)/gain on available for sale financial assets
Share based payment reserve
Total shareholders’ equity
Profit/(loss) or loss of the parent entity
Total comprehensive income of the parent entity
Commitments and Contingencies
Operating lease commitments under non-cancellable office lease
not provided for in the financial statements and payable:
Within one year
After one year but not more than five years
After more than five years
Total minimum lease payments
2012
$’000
64,472
160,598
15,223
21,878
113,877
23,694
25
(1,995)
3,119
138,720
9,143
23,694
358
1,580
-
1,938
2011
$’000
79,735
128,422
7,346
12,545
98,657
14,551
25
-
2,644
115,877
(9,765)
14,551
340
1,913
-
2,253
The parent entity leases a suite of offices from which it conducts its operations.
The lease is for seven years with an option to renew after that date.
26. Events after the Reporting Period
Subsequent to 30 June 2012 a wholly owned subsidiary of the Company increased its holding in Bass Strait Oil
Company from 18,070,272 shares to 74,296,214 shares by participating in a placement of 56,205,942 shares
for $843,089.
In addition, the wholly owned subsidiary undertook to sub-underwrite the issue of 28,862,795 shares at 1.5
cents per share in a 1 for 6 non renounceable entitlement issue in Bass Strait Oil Company. The maximum
amount that can be called in terms of the sub-underwriting agreement is $432,942 in September 2012.
90
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Directors’ Declaration
In accordance with a resolution of the Directors of Cooper Energy Limited, I state that:
In the opinion of the Directors:
(a)
the financial statements and notes of the consolidated entity are in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of
its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
(b)
(c)
(d)
the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in note 2b;
there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and
when they become due and payable; and
this declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2012.
Signed is accordance with a resolution of the Directors.
Mr David P. Maxwell
Director
30 August 2012
91
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Independent audit report to the members of Cooper Energy Limited
Report on the financial report
We have audited the accompanying financial report of Cooper Energy Limited, which comprises the
consolidated statement of financial position as at 30 June 2012, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity comprising the company and the entities it
controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
controls as the directors determine are necessary to enable the preparation of the financial report that is free
from material misstatement, whether due to fraud or error. In Note 2(b), the directors also state, in accordance
with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply
with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of
the financial report in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act 2001.
We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is
included in the directors’ report.
92
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Opinion
In our opinion:
a. the financial report of Cooper Energy Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(b).
Report on the remuneration report
We have audited the Remuneration Report included in pages 16 to 32 of the directors’ report for the year
ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Cooper Energy Limited for the year ended 30 June 2012, complies
with section 300A of the Corporations Act 2001.
Ernst & Young
G A Buckingham
Partner
Perth
30 August 2012
93
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Auditor’s Independence Declaration to the Directors of Cooper Energy Limited
In relation to our audit of the financial report of Cooper Energy Limited for the year ended 30 June 2012, 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.
Ernst & Young
G A Buckingham
Partner
Perth
30 August 2012
94
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Securities Exchange and Shareholder Information
As at 31 August 2012
Listing
The company’s shares are quoted on the Australian Securities Exchange under the code of “COE”.
Number of Shareholders
There were 5,669 shareholders. All issued shares carry voting rights. On a show of hands every member at a
meeting of shareholders shall have one vote and upon a poll each share shall have one vote.
Distribution of Shareholding
Size of Shareholding
Number of holders
Number of Shares
% of issued capital
1-1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
1,008
1,654
1,014
1,788
205
5,669
Distribution of Unquoted Options on Issue
320,967
4,886,954
8,417,914
55,701,028
259,367,394
328,694,257
0.10
1.49
2.56
16.95
78.90
100.00
ASX Code
Expiry Date
Exercise Price
Number of Shares Number of holders
COEAS
31 December 2012
$1.00
100,000
1
Unquoted Performance Rights
Performance Rights
Number of Performance Rights Held
Number of Holders
Active
Cancelled
Total
4,089,030
2,019,780
6,108,811
10
4
14
Unmarketable Parcels
There were 1,016 members, representing 329,025 shares, holding less than a marketable parcel of 1,021 shares
in the company.
95
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Securities Exchange and Shareholder Information (continued)
As at 31 August 2012
Twenty Largest Shareholders
Rank
Name
Units at
31 Aug 2012
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BEACH ENERGY LIMITED
ZERO NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
49,841,007
45,950,825
28,164,366
16,934,470
7,922,599
6,536,866
CAIRNGLEN INVESTMENTS PTY LTD
6,152,565
CITICORP NOMINEES PTY LIMITED
5,242,032
BNP PARIBAS NOMS PTY LTD
3,354,571
CAIRNGLEN INVESTMENTS PTY LTD
3,071,721
JP MORGAN NOMINEES AUSTRALIA LIMITED
2,798,521
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
KAVEL PTY LTD
TOKEN NOMINEES PTY LTD
KELLYVALE NOMINEES PTY LTD
MIRRABOOKA INVESTMENTS LIMITED
2,783,617
2,768,482
2,651,050
2,571,303
2,500,000
CELTIC TRUST COMPANY LTD
2,258,525
BFQ NOMINEES PTY LTD
BFQ NOMINEES PTY LTD
BRESRIM PTY LTD
2,225,000
2,165,728
1,610,970
15.16
13.98
8.57
5.15
2.41
1.99
1.87
1.59
1.02
0.93
0.85
0.85
0.84
0.81
0.78
0.76
0.69
0.68
0.66
0.49
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
197,504,218
60.09
Substantial Shareholder
Beach Energy Limited holds 31,270,694 shares which represents 9.51% of issued share capital.
Paradice Investment Management Pty Limited holds 26,763,434 shares which represents 8.14% of issued share
capital.
National Australia Bank Limited holds 21,888,112 shares which represent 6.66% of issued share capital.
Kinetic Investment Partners Limited holds 20,924,029 shares which represents 6.37% of issued share capital.
Acorn Capital Limited holds 16,738,831 shares which represents 5.09% of issued share capital.
96
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Securities Exchange and Shareholder Information (continued)
As at 31 August 2012
Share Registry
All shareholding related enquiries should be directed only to the company’s registry :-
Computershare Investor Services Pty Limited
GPO BOX 2975
Melbourne VICTORIA 3001
Other contact details are
Telephone: 1300 557 010
08 9323 2033
Facsimile:
webqueries@computershare.com.au
Email:
All written queries should include your Holder Identification Number (HIN) or Security holder Reference Number
(SRN) as it appears on your Holding Statement along with your current address.
It is very important that shareholders notify Computershare immediately, in writing, of any change to their registered address.
Any change in name should also be notified to Computershare in writing and attach a certified copy of the relevant
marriage certificate or deed poll.
Publications and further information
The Annual Report will be mailed in October 2012 to those shareholders who have advised the company that they
wish to receive a copy. Shareholders can also request the half-year report in March 2013.
Further information about the company can be obtained from the company’s website at www.cooperenergy.com.au.
Annual General Meeting
The 11th Annual General Meeting will be held at 10:00am (AWST) on Friday, 9 November 2012 at the Hyatt Regency
Perth, 99 Adelaide Terrace, Perth WA 6000. Full details of the meeting are contained in the Notice of Annual
General Meeting.
Shareholders’ calendar
2012 full year results announcement
Annual General Meeting
Half-year end
2012 Half-year announcement
Full year end
2013 full year results announcement
Quarterly Reporting Calendar
2012/13 First quarter activities report
2012/13 Second quarter activities report
2012/13 Third quarter activities report
2012/13 Fourth quarter activities report
31 August 2012
9 November 2012
31 December 2012
28 February 2013
30 June 2013
30 August 2013
31 October 2012
31 January 2013
30 April 2013
31 July 2013
97
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance
For the year ended 30 June 2012
This statement reports on Cooper Energy’s (“Company”) key governance framework, principles and practices as
at 31 August 2012. These principles and practices are reviewed regularly and revised as appropriate to reflect
changes in law and best practice in corporate governance.
ASX corporate governance principles and recommendations
Cooper Energy, as a listed entity, must comply with the Corporations Act 2001 (Cth) (“Corporations Act”), the
ASX Limited (“ASX”) Listing Rules (“ASX Listing Rules”) and other Australian laws.
ASX Listing Rule 4.10.3 requires ASX listed companies to report on the extent to which they have followed the
Corporate Governance Principles and Recommendations (“ASX Principles”) released by the ASX Corporate
Governance Council. The ASX Principles require the Board to consider carefully the development and adoption
of appropriate corporate governance policies and practices founded on the ASX Principles.
Compliance with ASX corporate governance principles and recommendations
Details of the Company’s compliance with the ASX Principles are set out in this report.
For further information on the Company’s Corporate Governance Policies please refer to Cooper Energy’s
website www.cooperenergy.com.au under Corporate Policies.
98
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
ASX Principles Compliance
1.
Lay solid foundations for management and oversight
1.1
Companies should establish the functions reserved to the Board and those delegated
to senior executives and disclose those functions.
COMPLY
Board role and responsibilities
The Board of Directors is accountable to shareholders for the performance of Cooper Energy and is responsible
for the corporate governance practices of the Company. The Board’s principal objective is to maintain and build
the Company’s capacity to generate value for shareholders taking into account the interests of its employees,
customers, suppliers, lenders and the wider community while ensuring that the Company’s overall activities are
properly managed. Cooper Energy’s corporate governance practices provide the structure which enables this
objective to be pursued, whilst ensuring that the business and affairs of the Company are conducted ethically and in
accordance with the Company’s constitution and relevant law.
The roles and responsibilities of the Board are formalised in the Board Charter. The Board Charter defines in
detail the matters that are reserved for the Board and its committees, and those that the Board has delegated to
management. The central role of the Board is to oversee and approve the Company’s strategic direction, to select
and appoint a Managing Director (“MD”), to oversee the Company’s management and business activities and report
to shareholders.
In addition to matters expressly required by law to be approved by the Board, the following powers are reserved to
the Board for decision:
•
strategy – providing strategic oversight and approving strategic plans and initiatives;
• Board performance and composition – evaluating the performance of non-executive directors, and determining
the size and composition of the Board as well as recommending to shareholders the appointment and removal
of directors;
•
•
•
•
•
leadership selection – evaluating the performance of, and selection of, the MD;
corporate responsibility – considering the social, safety, ethical and environmental impacts of the Company’s
activities, and setting policy and monitoring compliance with safety, corporate and social policies and practices;
financial performance – approving the Company’s annual operating plans and budget, monitoring management,
financial and operational performance;
financial reports to shareholders – approving annual and half-year reports and disclosures to the market that
contain, or relate to, financial projections, statements as to future financial performance or changes to the policy
or strategy of the Company; and
establishing procedures – ensuring that the Board is in a position to exercise its power and to discharge its
responsibilities as set out in the Board Charter.
The Board delegates responsibility for day-to-day management of Cooper Energy to the MD who is accountable to
the Board.
When appropriate, the Board may use a committee of directors to support the Board in matters that require more
intensive review. The full Board is responsible for compliance and risk management issues and the Company has a
Risk Management Policy.
The Board Charter is available in the corporate governance section of Cooper Energy’s website
99
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Statement on Corporate Governance (continued)
For the year ended 30 June 2012
ASX Principles Compliance (Continued)
Board meetings
The Board schedule is to meet formally six times a year, and additionally, from time to time, to deal with specific
matters that require attention between scheduled meetings. Meeting agendas are established by the Chairman
in conjunction with the MD and Company Secretary to ensure adequate coverage of financial, strategic and major
risk areas throughout the year. Typically, regular Board meetings include consideration of a broad range of matters,
including financial performance reviews, risk assessment, capital management, prospective acquisitions and
delegated authorities. Any director may request additional matters be added to the agenda.
Where required:
• Members of senior management attend meetings of the Board by invitation, and
• Sessions are also held for non-executive directors to meet without management present.
Copies of Board papers are circulated in advance of the meetings in either electronic or hard copy form. Directors
are entitled to request additional information where they consider the information is necessary to support informed
decision making.
Board committees and membership
The Board has currently three standing committees to assist in the discharge of its responsibilities.
These are the:
• Audit Committee;
• Remuneration and Nomination Committee; and
• Corporate Governance Committee.
The charters of all Board committees detailing the roles and duties of each are available in the corporate
governance section of Cooper Energy’s website. All Board committee charters are reviewed at least annually.
Committee members are chosen for the skills, experience and other qualities they bring to the committees.
The executive management attends, by invitation, Board committee meetings.
All papers considered by the standing committees are available on request to directors who are not on
that committee.
Following each committee meeting, generally at the next Board meeting, the Board is given a verbal update by the
Chair of each committee. In addition, minutes of all committee meetings are provided to all directors.
The Company Secretary provides secretariat services for each committee.
Professional advice, access to information and other resources
All directors have unrestricted access to Company records and information and receive detailed financial and
operational reports from the Managing Director during the year that enables them to carry out their duties.
The directors collectively, and each director individually, have the right to seek independent professional advice at
Cooper Energy’s expense to assist them to carry out their responsibilities. While prior approval of the Chairman is
required, it may not be unreasonably withheld and, in its absence, approval by the Board may be sought.
The constitution sets out rules dealing with the indemnification of and insurance cover for directors and former
directors of Cooper Energy. Any such arrangements are undertaken in accordance with limitations imposed by law.
100
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
Conflicts of interest
Directors are required to disclose any actual or potential conflict or material personal interests on appointment as a
director and are required to keep these disclosures up to date.
In the event that there is, or may be, a conflict between the personal or other interests of a director, then the director
with an actual or potential conflict of interest in relation to a matter before the Board withdraws from the meeting for
the period the matter is considered and takes no part in the discussion or decision making process.
Corporate responsibility and sustainability
Cooper Energy aims to produce positive outcomes for all stakeholders in managing its business and to maximise
financial, social and environmental value from its activities.
In practise this means having a commitment to transparency, fair dealing, responsible treatment of employees and
customers and positive links into the community.
Sustainable and responsible business practices within Cooper Energy are viewed as an important long term driver
of performance and shareholder value. Through such practices the Company seeks to reduce operational and
reputation risk and enhance operational efficiency while contributing to a more sustainable society.
The Company accepts that the responsibilities on the Board and management, which flow from this approach, go
beyond strict legal and financial obligations.
In particular, the Cooper Energy Board seeks to take a practical and broad view of directors’ fiduciary duties, in line
with stakeholders’ expectations.
1.2
Companies should disclose the process for evaluating the performance of
senior executives.
COMPLY
The performance of the MD is reviewed annually by the Board and the Remuneration and Nomination Committee,
which links the nature and amount of directors’ and officers’ emoluments to the consolidated entity’s financial and
operational performance. Remuneration of the MD is determined in accordance with Cooper Energy’s executive
compensation program, which is administered by the Remuneration and Nomination Committee.
Details of Cooper Energy’s remuneration practice relating to key management personnel and senior employees are
set out in full in the Directors’ Statutory Report on pages 15 to 36.
1.3
Companies should provide the information indicated in the Guide to reporting on
Principle 1.
COMPLY
101
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
2.
Structure the Board to add value
2.1
A majority of the Board should be independent directors.
DEPARTS FROM
RECOMMENDATIONS
Board composition and expertise
The Board has an expansive range of relevant industry experience, commercial, legal, technical and other skills and
expertise to meet its objectives.
The current Board composition and details on each of the director’s backgrounds including experience, knowledge
and skills are set out on page 15 of the Directors’ Statutory Report.
The Board considers that the executive and non-executive directors collectively bring the range of skills, knowledge
and experience necessary to direct the company.
In assessing the composition of the Board, the directors have regard to the following policies:
•
•
•
•
•
the Chairman should be non-executive and independent;
the role of the Chairman and MD should not be filled by the same person;
the MD should be a full-time employee of the company;
the majority of the Board should comprise directors who are both non-executive and independent; and
the Board should represent a broad range of qualifications, experience and expertise considered of benefit to
the company.
Director independence
The criteria for assessing the independence of each director are included in Cooper Energy’s Board Charter.
Broadly, directors of Cooper Energy are considered to be independent when they are independent of management
and free from any business or other relationship that could materially interfere with – or could reasonably be
perceived to interfere with – the independent exercise of their judgement.
The Board has considered the associations of each of the non-executive directors in office at the date of the
Directors’ Statutory Report and considers that all non-executive directors are considered independent.
The following directors of Cooper Energy are considered to be independent:
Name
Position
Mr L.J. Shervington
Non-Executive Chairman
Mr J.W. Schneider
Non-Executive Director
The Company recognises that the Board does not currently have a majority of directors who meet the test of
independence under Recommendation 2. The Board is mindful of the Governance Principles and the preference
for a majority of independent directors. The Board is considering the further appointment of one or more
independent Non-Executive Directors.
2.2
The chair should be an independent director.
COMPLY
The Board elects one of the independent non-executive directors to be Chairman. The Chairman is responsible for
leadership of the Board, for the efficient organisation and conduct of the Board’s function and for the promotion of
relations between Board members and between Board and management that are open, cordial and conducive to
productive co-operation.
102
COOPER ENERGY LIMITED ANNUAL REPORT 2012
Statement on Corporate Governance (continued)
For the year ended 30 June 2012
2.3
The roles of chair and Managing Director should not exercised by the
same individual.
COMPLY
As stated in 2.1 above the Company has a policy that the role of the Chairman and Managing Director should not be
filled by the same person.
2.4
The Board should establish a nomination committee.
DEPARTS FROM
RECOMMENDATIONS
The Company has a Remuneration and Nomination Committee which considers nominations for appointment to
the Board. The Board selects the most suitable candidates taking into account the diversity of experience among
the existing directors and a range of criteria such as the candidate’s background, experience, professional skills,
personal qualities and availability to commit themselves to Board activities. An important quality sought in candidates
is demonstrated experience in corporate decision-making at senior executive level.
Directors are appointed by shareholders at the AGM. If candidates are appointed by the Board between AGMs or
to fill a casual vacancy, they stand for election, in accordance with the constitution, at the next AGM of shareholders.
In addition, nominations may be proposed by shareholders under the constitution for vote at the AGM. These
nominations must be received in time to be submitted with notice of the AGM and inclusion in the proxy forms for
voting by shareholders not able to attend the AGM.
The present membership of the Committee is:
• Mr J.W. Schneider (Chairman)
• Mr L.J. Shervington
These directors are independent and non-executive members of the Board.
The Committee met four times during the financial year. The directors and MD may attend Committee meetings
by invitation.
The Company recognises that the Committee does not currently have at least three members as recommended and
will address this should one or more independent Non-Executive Directors be appointed.
Terms of appointment, induction training and continuing education
All new directors will be provided with a formal letter of appointment setting out the key terms and conditions of
the appointment, including duties, rights and responsibilities, the time commitment envisaged and the Board’s
expectations regarding their involvement with committee work.
A formal induction is provided to all new directors. It includes comprehensive meetings with the MD, key executives
and management, and information on key corporate and Board policies.
All directors are expected to maintain the skills required to discharge their obligations to the Company. Directors are
encouraged to undertake continuing professional education and where this involves industry seminars and approved
education courses, this is paid for by the Company where appropriate.
Directors’ retirement and re-election
Cooper Energy’s constitution states that at each annual general meeting (“AGM”) one third of its directors (excluding the
Managing Director and any director appointed to fill a casual vacancy) and any director who has held office for three or
more years since their last election must retire. At least one non-executive director must stand for election at each AGM.
Any director appointed to fill a casual vacancy since the date of the previous AGM must submit themselves to
shareholders for election at the next AGM. Directors who retire as required may offer themselves for re-election by
shareholders at the next AGM. Re-appointment of directors retiring by rotation or filling a casual vacancy is not automatic.
103
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
Board succession planning
The Board in conjunction with the Remuneration and Nomination Committee reviews the size and composition
of the Board and the mix of existing and desired competencies across members from time to time. Criteria
considered by the directors when evaluating prospective candidates are contained in the Board’s Charter. The
Board may engage with external search providers where appropriate.
2.5
Companies should disclose the process for evaluating the performance of the
Board, its committees and individual directors.
COMPLY
An annual Board self assessment review is conducted which includes a review of the performance of the directors
and Chairman.
The Chairman of the Board is responsible for determining the process for evaluating Board performance.
2.6
Companies should provide the information indicated in the Guide to reporting
on Principle 2.
COMPLY
3.
Promote ethical and responsible decision-making
3.1
Companies should establish a code of conduct and disclose the code or a summary
of the code as to:
COMPLY
•
•
•
the practices necessary to maintain confidence in the company’s integrity; and
the practices necessary to take into account their legal obligations and the
reasonable expectations of their stakeholders
the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices.
The Company has a Corporate Governance Committee which has the responsibility to assist the Board to meet its
oversight responsibilities in relation to the Company’s Corporate Governance practices and policies, including but
not limited to:
•
•
ensuring that directors and staff understand and have complied with the Company’s Corporate Governance
Policies, and
ensuring that the Company’s Corporate Governance Policies are current and reflect current best practice.
The directors and MD may attend Committee meetings by invitation.
The present membership of the Committee is:
• Mr L.J. Shervington (Chairman)
• Mr J.W. Schneider
These directors are independent and non-executive members of the Board.
The Committee met three times during the financial year. The directors and MD may attend Committee meetings by
invitation.
Health and safety
The Board has approved a Health and Safety Policy consistent with the Company’s commitment to ensuring the
highest standards of occupational health and safety management. The health, safety and wellbeing of Cooper
Energy’s people, contractors, suppliers and visitors are key values for the Company.
104
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
Codes of conduct
Cooper Energy has established a Code of Conduct to guide executives, management and staff in carrying out their
duties and responsibilities. The Code is subject to ongoing review to ensure that Cooper Energy’s standards of
behaviour and corporate culture reflect best practice in corporate governance. The Code is based on the following
key principles:
acting with honesty and integrity
abiding by laws and regulations
respecting confidentiality and handling information in a proper manner
•
•
•
• maintaining the highest standards of professional behaviour
•
•
avoiding conflicts of interest
striving to be a good corporate citizen and to achieve community respect
Cooper Energy also has a number of specific policies that underpin the Code of Conduct and elaborate on various
legal and ethical issues. These policies are designed to foster and maintain ethical business conduct within Cooper
Energy, and govern such things as workplace and human resources practices, handling of confidential information,
insider trading, risk management and legal compliance.
In addition, the Board has guidelines dealing with disclosure of interests by directors in participating and voting at
Board meetings where any such interests are discussed. In accordance with the Corporations Act, any director with
a material personal interest in a matter being considered by the Board must not be present when the matter is being
considered, and may not vote on the matter.
Compliance with the Code of Conduct by directors and employees will also assist the Company in effectively
managing its operating risks and meeting its legal and compliance obligations, as well as enhancing Cooper Energy’s
corporate reputation.
A copy of the Code of Conduct is available in the corporate governance section of the Company’s website.
Whistleblower policy
The Board has approved a Whistleblower Policy which documents the Company’s commitment to maintaining an open
working environment in which employees are able to report instances of unsafe work practices, unethical, unlawful or
undesirable conduct without fear of intimidation or reprisal.
A copy of the Whistleblower policy is available in the corporate governance section of the companies website.
3.2
Companies should establish a policy concerning diversity and disclose the policy or
a summary of that policy. The policy should include requirements for the board to
establish measurable objectives for achieving gender diversity and for the board to
assess annually both the objectives and progress in achieving them.
DEPARTS FROM
RECOMMENDATIONS
The Company’s policy regarding equal employment opportunity & diversity is set out on the Company’s website.
The Company’s Equal Employment Opportunity & Diversity Policy does not include measureable objectives as the
Board believes that the Company will not be able to successfully meet these given the size and stage of development
of the Company.
3.3
Companies should disclose in each annual report the measurable objectives for
achieving gender diversity set by the board in accordance with the diversity policy
and progress towards achieving them.
DEPARTS FROM
RECOMMENDATIONS
Given the size of the Company the Directors do not consider it appropriate to set measurable objectives in relation
to diversity. Notwithstanding this the Company strives to provide the best possible opportunities for current and
prospective employees of all backgrounds in such a manner that best adds to overall shareholder value and which
reflects the values, principles and spirit of the Company’s Equal Employment Opportunity & Diversity Policy.
105
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
3.4
Companies should disclose in each annual report the proportion of women employees in
the whole organisation, women in senior executive positions and women on the board.
COMPLY
For the 2012 financial year, the Company had a total of 22 women employees out of a total of 52 employees and
contractors. 1 female employee out of a total of 5 employees and contractors in senior executive positions and no
women on the Board.
3.5
Companies should provide the information indicated in the Guide to reporting
on Principle 3.
COMPLY
4.
Safeguard integrity in financial reporting
4.1
The Board should establish an audit committee.
COMPLY
The Company has an Audit Committee which has overseen throughout the year all matters concerning compliance,
internal control, accounting policies and financial reporting including reviewing the half-year and annual financial
statements. The Audit Committee monitors the relationship with the external auditor and makes recommendations
to the Board on the appointment and removal of the external auditor, the terms of engagement, and the scope
and quality of the audit. The Committee also reviews the adequacy and effectiveness of management’s control of
financial risk in relation to operational activities, financial reporting and legal and regulatory compliance.
The external auditors, directors, MD and Chief Financial Officer may attend Committee meetings by invitation.
The Committee met four times during the financial year.
4.2
The audit committee should be structured so that it:
•
•
•
•
consists of only non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not chair of the Board; and
has at least three members.
DEPARTS FROM
RECOMMENDATIONS
The present membership of the Audit Committee is:
• Mr J.W. Schneider (Chairman).
• Mr L.J. Shervington
These directors are independent and non-executive members of the Board.
The Company recognises that the Committee does not currently have at least three members as recommended
and will address this should one or more independent Non-Executive Directors be appointed.
4.3
The audit committee should have a formal charter.
COMPLY
The Audit Committee has a Charter which is available in the corporate governance section of Cooper Energy’s
website.
Approach to audit and governance
The Board is committed to the basic principles that:
• Cooper Energy’s financial reports represent a true and fair view;
• Cooper Energy’s accounting practices are comprehensive, relevant and comply with applicable accounting
standards, policies and regulations; and
the external auditor is independent and serves shareholders’ interests.
•
106
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
External auditor relationship
The Company’s independent external auditor is Ernst & Young (“EY”).
The Board monitors EY’s rotation requirements of the audit partner, currently at least every five years, and the
requirement which prohibits the reinvolvement of a previous audit partner in the audit service of Cooper Energy for two
years following their rotation.
The Board also ensures receipt of the auditor’s Declaration of Independence for the half year and annual
financial statements.
Attendance of auditor at the AGM
Cooper Energy’s external auditor attends the AGM and is available to answer questions from shareholders on:
•
•
•
•
the conduct of the audit;
the preparation and content of the auditor’s report;
the accounting policies adopted by Cooper Energy in relation to the preparation of the financial statements; and
the independence of the auditor in relation to the conduct of the audit.
4.4
Companies should provide the information indicated in the Guide to reporting on Principle 4.
COMPLY
5.
Make timely and balanced disclosure
5.1
Companies should establish written policies designed to ensure compliance and
ASX Listing Rule disclosure requirements and to ensure accountability at senior
executive level for that compliance and disclose those policies or a summary of
those policies.
COMPLY
The Board has established and adopted a Continuous Disclosure Policy to outline the disclosure obligations of the
Company as required by ASIC, ASX, the Corporations Act and the ASX Listing Rules. The Company is committed to:
complying with the general and continuous disclosure principles contained in the ASX Listing Rules and the Act;
•
• preventing the selective or inadvertent disclosure of material price sensitive information;
•
•
ensuring that shareholders and the market are provided with full and timely information about its activities; and
ensuring that all market participants have equal opportunity to receive externally available information issued by
the Company.
A copy of the Continuous Disclosure Policy is available in the corporate governance section of the Company’s website.
5.2
Companies should provide the information indicated in the Guide to reporting on Principle 5.
COMPLY
6.
Respect the rights of shareholders
6.1
Companies should design a communications policy for promoting effective
communication with shareholders and encouraging their participation at general
meetings and disclose their policy or a summary of that policy.
COMPLY
The Company has always regarded communication with shareholders as important and the Board has established and
adopted a formal Shareholder Communication Policy to ensure that shareholders are provided with current, relevant
information and are empowered through effective communication.
107
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
Cooper Energy is committed to giving all investors comprehensive, timely and equal access to information about its
activities. Similarly, prospective new investors are entitled to be able to make informed investment decisions when
considering the purchase of shares in Cooper Energy.
A wide range of communication approaches are employed by the Company and publication of all relevant
information is posted on the ASX announcements platform and Cooper Energy’s website.
Cooper Energy’s Board encourages investors to access the ASX announcements platform, use Cooper Energy’s
website, contact the Board or MD via the website email portal or by telephone, attend the AGM and keep up to
date with media articles on the Company.
A copy of the Shareholder Communication Policy is available in the corporate governance section of the
Company’s website.
6.2
Companies should provide the information indicated in the Guide to reporting on
Principle 6.
COMPLY
7.
Recognise and manage risk
7.1
Companies should establish policies for the oversight and management of material
business risks and disclose a summary of those policies.
COMPLY
Cooper Energy’s Board functions well and has mindfully undertaken all of its responsibilities with due care, focus
and diligence and continues to apply high standards of corporate and financial governance to the Company. To
ensure that directors are fully informed and have the opportunity to dissect, understand and challenge matters,
operational and administration activities, risk and financial management and corporate governance are line items at
every Board meeting.
Working with the Managing Director and the Executive Director, the Board also ensures that the Company’s
planning and approval processes, the application of strategy and the management of the risks inherent to the oil
and gas industry are all addressed appropriately in the Company’s day-to-day work activities. Shareholders will also
be aware of the Company’s commitment to clear and continuous disclosure - demonstrated by the transparency of
the Company’s timely financial reports and operational announcements.
The Board and senior executives are responsible for overseeing the implementation of the Company’s Risk
Management Policy.
7.2
The Board should require management to design and implement the risk
management and internal control system to manage the company’s material
business risks and report to it on whether those risks are being managed
effectively. The board should disclose that management has reported to it as to the
effectiveness of the company’s management of its material business risks.
COMPLY
The Company’s approach to risk management is based on the identification, assessment, monitoring and
management of material risks that the Board and management believe that the Company may encounter. Once
the risks have been identified, the risks are then quantified in terms of their severity, the probability of occurring
and the potential impact or damage they may have if they do occur. The analysis is undertaken using a Frequency
Probability Matrix, which is a well accepted oil industry risk management technique. Once the risks have been
identified the Company can then decide on whether to avoid, manage, insure or transfer these risks.
The executive management team is responsible for implementation of the Board approved risk management
strategy and developing and enhancing the Company’s policies, processes and procedures.
108
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
In general there are a large number of risks inherent in the oil and gas industry and they can broadly be classed under
the following categories:
•
Technical
• Economic
• Commercial
• Operational
• Political
7.3
The Board should disclose whether it has received assurance from the Managing
Director (or equivalent) and the Chief Financial Officer (or equivalent) that the
declaration provided in accordance with section 295A of the Corporations Act is
founded on a sound system of risk management and internal control and that
the system is operating effectively in all material respects in relation to financial
reporting risks.
COMPLY
The Board receives regular reports about the financial condition and operational results of Cooper Energy and its
controlled entities.
The MD and Chief Financial Officer provide a formal statement to the Board confirming that the Company’s annual
financial reports present a true and fair view, in all material respects, and the group’s financial condition and operational
results have been prepared in accordance with the Corporations Act and relevant accounting standards.
The statement also confirms that the integrity of the Company’s financial statements and notes to the financial
statements, is founded on a sound system of risk management and internal compliance and control which implements
the policies approved by the Board, and that the Company’s risk management and internal compliance and control
systems, to the extent they relate to financial reporting, are operating efficiently and effectively in all material respects.
7.4
Companies should provide the information indicated in the Guide to reporting on Principle 7.
COMPLY
8.
Remunerate fairly and responsibly
8.1
The Board should establish a remuneration committee.
COMPLY
The Remuneration and Nomination Committee reviews remuneration policies and practices, approves the reward levels
for the executive management group, approves merit recognition arrangements, such as cash bonuses and the issue
of staff options/performance rights, and makes recommendations to the Board on the remuneration of the directors,
including the Managing Director. When appropriate, the Committee consults independent remuneration consultants to
ensure that Cooper Energy’s remuneration practices are consistent with market practice. The Committee also assists
in the appointment of non-executive directors to the Board.
The directors and Managing Director and Executive Director may attend Committee meetings by invitation.
Refer to 2.4 above for further information on the Remuneration and Nomination Committee.
8.2
The remuneration committee should be structured so that it:
consists of a majority of independent directors;
•
is chaired by an independent chair; and
•
has at least three members.
•
DEPARTS FROM
RECOMMENDATIONS
109
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Statement on Corporate Governance (continued)
For the year ended 30 June 2012
The present membership of the Committee is:
•
•
Mr J.W. Schneider (Chairman)
Mr L.J. Shervington
These directors are independent and non-executive members of the Board.
The Committee met four times during the financial year. The Managing Director and Executive Director may attend
Committee meetings by invitation.
The Company recognises that the Committee does not currently have at least three members as recommended
and will address this should one or more independent Non-Executive Directors be appointed.
Refer to 2.4 above for further information on the Remuneration and Nomination Committee.
8.3
Companies should clearly distinguish the structure of non-executive directors’ remuneration
from that of executive directors and senior executives.
COMPLY
The total of directors’ fees available to directors is fixed by the shareholders in General Meeting. Payments in the
current year were within the limit of $325,000.
The Remuneration and Nomination Committee determines the scale of fees for individual directors, taking account
of the responsibilities inherent in the stewardship of Cooper Energy and the demands made of directors in the
discharge of their responsibilities. The Committee may take independent external advice to ensure remuneration
accords with market practice via peer review.
The Remuneration and Nomination Committee links the nature and amount of directors’ and officers’ emoluments
to the consolidated entity’s financial and operational performance. Remuneration of the Managing Director is
determined in accordance with Cooper Energy’s executive compensation program, which is administered by the
Remuneration and Nomination Committee.
There is no scheme for retirement benefits, other than statutory superannuation to directors.
Details of Cooper Energy’s remuneration practice relating to directors’ fees and other entitlements paid to non-
executive directors, directors, key management personnel and senior employees are set out in full in the Directors’
Statutory Report on pages 15 to 36.
8.4
Companies should provide the information indicated in the Guide to reporting on
Principle 8.
COMPLY
Directors are prohibited from entering into transactions which limit the risk of participating in unvested entitlements
under any equity based remuneration scheme.
110
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Listing Rules
Listing Rule 4.10 Additional Information to be included by all entities
Set out below is a cross reference to pages in the Annual Report for items that need to be disclosed in the annual
report, as defined by the ASX listing rules.
Rule
4.10.3
4.10.4
4.10.5
4.10.6
4.10.7
4.10.8
4.10.9
4.10.10
4.10.11
4.10.12
4.10.13
4.10.14
4.10.15
4.10.16
4.10.17
4.10.18
4.10.19
4.10.20
4.10.21
Description
Page
Corporate Governance Statement
Names of substantial shareholders
Number of holders of each class of equity securities
Voting rights attached to each class of share
Distribution schedule of each class of share
Number of holders of less than a marketable share parcel
Names of 20 largest shareholders
Name of company secretary
98
96
95
95
95
95
96
16
Address and telephone number of registered office
Name, address and telephone number of share registry
Inside Cover
Inside Cover
Stock exchanges on which the shares are listed
Shares in voluntary escrow
Mining tenements and where they are held
Details of unquoted options and performance rights
Review of operations
Details of current on market buy back
First two annual reports after listing
Investment entity
Issues from Section 611 of Corporations Act
95
N/A
11
95
33
N/A
N/A
N/A
N/A
Listing Rule 5.11: Person Compiling Information about Hydrocarbons
In relation to any reported recoverable hydrocarbons, pursuant to the requirements of the ASX Listing Rules 5.11,
5.11.1, 5.12 and 5.13, the reported recoverable hydrocarbon estimates are based on information compiled by Mr
Hector Gordon. Mr Gordon is a member of the American Association of Petroleum Geologists and the Society of
Petroleum Engineers. Mr Gordon has worked in the industry as a practising petroleum geologist for over 30 years.
Mr Gordon is employed full time by Cooper Energy as an Executive Director Exploration and Production and has
consented in writing to the inclusion in the report of the matters based on the information in the form and context in
which it appears.
111
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Glossary of Terms
(Abbreviated list to cover terms used in this annual report)
Term
Explanation or Definition
Appraisal Well
or Appraisal Drilling
A well that is being drilled into a discovered hydrocarbon accumulation to further
understand the extent and size of the accumulation – usually denoted by “name-2”,
“name-3” etc.
Appraisal wells can be drilled either before or after an accumulation has been developed.
Appraisal wells can be abandoned after drilling or kept as future production wells.
An Appraisal Well usually has a chance of success greater than an Exploration Well but
less than a Development Well.
A$
Australian dollars.
Barrel or BBL or
bbl
An oil field unit of volume. One barrel at standard conditions equals 158.9 litres.
Bscf or Bcf
(gas volume)
Billions of standard cubic feet of gas. Equivalent to 1,000,000,000 standard cubic feet
(nine zeros).
Cash
Cash in bank accounts, short term deposits and bank discounted bills of exchange that
are held by the company. The most liquid of assets.
CY12 etc
Calendar Year 2012. From 1 January to 31 December.
Development Well
or Development
Drilling
A well that is being drilled into a reasonably well defined hydrocarbon accumulation. –
usually denoted by “name-2”, “name-3” etc.
Development Wells are usually planned to exploit an accumulation of known
hydrocarbons. The well usually has a chance of success greater than an Appraisal Well.
It is usually expected that after drilling a Development Well it will be kept and converted
into a Production Well.
As nothing is certain in oil field drilling, Development Wells have an element of appraisal
and as such Development Wells may also be termed Appraisal/Development Wells.
EBITDAX
Earnings before interest, tax, depreciation, amortisation and exploration. EBITDAX is an
indicator of the raw earning power of the company – essentially net production revenue.
Exploration
Permit
This is the legal instrument that allows an oil company to hold tenure or title to an area of
ground and to explore for hydrocarbons.
Cooper Energy holds Exploration Permits in Tunisia and Australia (see PELXXX). Once a
commercial discovery has been made a portion of the Exploration Permit will usually be
excised from the Exploration Permit and converted to a production area.
Exploration Well or
Exploration Drilling
Flow-Line
or Pipe-line
The first well that is drilled into a Prospect – usually denoted by “name-1”.
An exploration well is used to prove if hydrocarbons exist in a Prospect.
A cylindrical fiberglass or steel pipe used to transport oil or gas to a sales point.
Usually a flow-line goes from a well head to the facilities and a flow-line or pipe-line
from the facilities to the sales point. The terms flow-line and pipe-line can be used
interchangeably but a pipe-line is usually considered more substantial is size than a
flow-line.
112
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Glossary of Terms (continued)
Term
Explanation or Definition
Franking
Credits
In its simplest form it is corporation tax that has been paid to the Government of
Australia but not yet given as a tax credit to investors via a dividend.
FY12 etc
Financial Year 2012. Cooper Energy’s financial year is from 1 July to 30 June.
Hydrocarbon
Value Chain
The simple sequential flow of work activities from New Ventures to Exploration to
Appraisal to Development to Production to Sales. Usually all projects in the oil and
gas industry follow this route.
Lead
An immature unpenetrated/undiscovered exploration target that is not yet ready for
drilling.
A Lead may be matured into a Prospect.
Market
Capitalisation
On an undiluted basis it is defined as the number of issued shares multiplied by the
share price – it is a measure of the value the market puts on a company.
On a fully diluted basis it is defined as the number of issued shares plus the number of
options multiplied by the share price. The option price should ideally be at a price equal
or less than the current share price to be included in a fully diluted basis but this is
sometimes ignored.
MM (oil volume) or
mm (gas flow)
An oil field abbreviation for millions. This can sometime be confusing because S.I.
nomenclature uses capital M for millions.
PELXXX
Petroleum Exploration Licence as used in South Australia e.g. PEL92.
P50
(and P90, Mean,
Expected and P10)
PPLXXX
Production
When probabilistic Monte Carlo type evaluations are adopted, this is a statistical
confidence level for an estimate.
P50 is defined as 50% of estimates exceed the P50 estimate (and by definition, 50%
of estimates are less than the P50 estimate). It is a good middle estimate. Mean and
Expected (same level of measure just different names) usually lie about the P40-P30
levels in oil field evaluations and are therefore high estimates. P90 and P10 are low and
high estimates respectively.
P90 means 90% of the estimates exceed the P90 estimate. It does not mean that the
estimate has a 90% chance of occurring – that is a very different concept.
The central limit theorem indicates that the P50 estimate has more chance of occurring
than the P90 and P10 estimates.
Further explanation on statistical confidence levels can be found under Investor
Education on Cooper Energy’s website (www.cooperenergy.com.au).
Petroleum Production Licence as used in South Australia e.g. PPL207. Once a
commercial discovery has been made in a PEL the area of the discovery is excised out
of the PEL and converted to a PPL.
The volume of oil that is produced at the facilities. Production should ideally be stated
at standard and stabilised conditions but sometimes it can be stated at non-standard
or non-stabilised conditions (i.e. the oil has not been fully stabilised and still contains
some light hydrocarbon fractions or is at a pressure and temperature that is not standard
conditions).
113
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Glossary of Terms (continued)
Term
Explanation or Definition
Production Sales
The volume of produced oil that has been sold to the buyer. Usually equal to Production
minus fuel minus flare minus losses.
Production Well
An exploration, appraisal or development well that has successfully penetrated a
hydrocarbon accumulation and has subsequently been prepared so that hydrocarbons
can flow to the surface to be processed and sold.
Prospect
A reasonably mature unpenetrated/undiscovered exploration target. Usually a Prospect
is ready to drill but there is a maturity grey area between a Lead and a Prospect – the
Prospect simply being more mature than a Lead.
Proved, Probable,
Possible
In deterministic evaluations; These are maturity and existence classification categories
for recoverable hydrocarbons. Proved is usually well conformable, Probable is part of the
continuous accumulation and Possible may exist.
In probabilistic evaluations, these are uncertainty classification categories for
recoverable hydrocarbons. Proved is usually defined as the P90 estimate for the whole
discovered accumulation, Proved plus Probable is usually defined as the P50 estimate
for the whole discovered accumulation and Proved plus Probable plus Possible is
usually defined as the P10 estimate for the whole discovered accumulation.
Care should be taken not to compare deterministic definitions with probabilistic
definitions as they are not equivalent measures of recoverable hydrocarbons.
Further information on these categories can be found in the Recoverable Hydrocarbon
Reporting Guidelines on Cooper Energy’s website (www.cooperenergy.com.au).
Abbreviation of Production Sharing Contract. This is the title instrument that allows an oil
company to hold tenure to an area of ground and defines the work program associated
with the area and the oil company’s rights to any production or revenue. PSCs are used
in many countries.
In Tunisia the PSC allows the oil company to produce hydrocarbons after declaration
of a commercial discovery. In Indonesia the PSC allows the oil company to explore for
and produce hydrocarbons. Indonesia uses the PSC as the exploration and production
instrument rather than issue separate exploration permits and production concessions.
PSC
Recoverable Oil
Replacement Ratio
Defined as the amount of oil that has been added to the recoverable oil portfolio through
the financial year divided by the amount of production.
The ratio will be greater than one if more oil has been added to the portfolio than has
been produced – the best result. A ratio greater than zero but less than one means that
recoverable oil has been added to the portfolio but it is less than what was produced
– an acceptable result. A ratio of zero means no recoverable oil has been added to the
portfolio – not a good result.
It is possible to go negative if no oil has been discovered during the year and/or if
studies revise downwards the previous recoverable oil estimate – the worst result.
Unless stated otherwise Cooper Energy usually states the ratio in relation to the Proved
oil portfolio.
114
COOPER ENERGY LIMITED ANNUAL REPORT 2012 Glossary of Terms (continued)
Term
Explanation or Definition
Reserves and
Resources
They are simply both names for recoverable hydrocarbons. Depending upon the
standard adopted:
Reserves are recoverable hydrocarbon estimates that are expected to be produced and
sold in the future for economic gain. At a minimum, Reserves have usually been justified
and approved for development.
Resources are also recoverable hydrocarbon estimates but they are usually less
technically, commercially or economically mature than Reserves and usually have not
been justified for development.
All recoverable hydrocarbons (and Reserves and Resources) need a descriptive prefix
if the maturity, existence and uncertainty of the estimate is to be fully understood.
i.e. Proved Reserves.
Further information on recoverable hydrocarbon categories can be found in the
Recoverable Hydrocarbon Reporting Guidelines on Cooper Energy’s website
(www.cooperenergy.com.au).
Stabilised
Conditions
"Fresh" oil from wells is often under pressure (naturally or pumped) and usually contains
substantial dissolved gases. This oil needs to be "stabilised" prior to storage, shipment
or refining so that is becomes a safer product to handle. This means depressurising the
oil, flashing off the gases and then running it through a process in order to set the oil to
an agreed specification.
Standard
Conditions
The benchmark pressure and temperature condition for measuring hydrocarbons
in the petroleum industry – usually 60 °F (degrees Fahrenheit) and 14.7 pounds per
square inch absolute (psia).
Sales
Revenue
The Production Sales multiplied by the price that is received for each unit of sale
i.e. 1 million barrels multiplied by US$100 per barrel equals US$100 million of revenue.
Sales Revenue does not have deductions for operating costs or off-take costs.
Tscf or Tcf
(gas volume)
Trillions of standard cubic feet of gas. Equivalent to 1,000,000,000,000 standard
cubic feet (twelve zeros).
US$
United states dollars.
Unloading
Station
When oil is trucked the Unloading Station is the destination point where oil is pumped
out of the truck.
Trucks are filled up at the Loading Station at the oil facilities before driving off to the
Unloading Station.
Working Capital
Current Assets minus Current Liabilities.
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COOPER ENERGY LIMITED ANNUAL REPORT 2012