ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2013
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CORPORATE INFORMATION
Jupiter Energy Limited
ABN 65 084 918 481
Directors
Geoffrey Gander (Executive Chairman/Chief Executive Officer)
Alastair Beardsall (Non-Executive Director)
Baltabek Kuandykov (Non-Executive Director)
Scott Mison (Executive Director)
Company Secretary
Scott Mison
Registered Office & Principal Place of Business
Level 2, 28 Kings Park Road
West Perth WA 6005
PO Box 1282
Western Australia 6872
Telephone
Facsimile
Email
Website
+61 8 9322 8222
+61 8 9322 8244
info@jupiterenergy.com
www.jupiterenergy.com
Solicitors
Steinepreis Paganin
Level 4,
16 Milligan Street
Perth WA 6000
Auditors
Ernst & Young
11 Mounts Bay Road
Perth WA 6000
Bankers
National Australia Bank Ltd
UB13.03, 100 St Georges Terrace
Perth WA 6000
Stock Exchange Listing
Nomad
FinnCap Ltd
60 New Broad St
London, EC2M 1JJ
United Kingdom
Share Registry
Computershare Investor Services Pty Ltd
Level 2, 45 St George’s Terrace
Perth WA 6000
Telephone
Facsimile
Website
1300 557 010 (only within Australia)
+61 8 9323 2000
+61 8 9323 2033
www.computershare.com
Jupiter Energy Limited shares are listed on the Australian Securities Exchange under the code JPR, on the AIM Market
under the code JPRL and on the Kazakh Stock Exchange (KASE) under the code AU_JPRL.
ii
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
Contents of Financial Report
Chairman’s Letter ................................................................................................................................................ 1
Directors' Report ................................................................................................................................................. 2
Corporate Governance Statement .................................................................................................................... 23
Auditor Independence Declaration ................................................................................................................... 29
Consolidated Jupiter Energy Limited Financial Statements
Consolidated Statement of Comprehensive Income ...................................................................................... 31
Consolidated Statement of Financial Position ............................................................................................... 32
Consolidated Statement of Cash Flows ......................................................................................................... 33
Consolidated Statement of Changes in Equity ............................................................................................. 34
Notes to the Consolidated Financial Statements .............................................................................................. 35
Directors' Declaration ........................................................................................................................................ 73
Independent Audit Report to the members of Jupiter Limited ........................................................................... 74
ASX Additional Information................................................................................................................................ 76
ii
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CHAIRMAN’S LETTER
Dear Shareholder,
I am pleased to present the 2013 Annual Report for Jupiter Energy Limited (Jupiter Energy or the Company).
Over the past twelve months, the Company has continued to focus on the development of the Block 31 licence area
with the drilling of three exploration wells in the southern extension of the permit (known locally as West Zhetybai)
and with ongoing trial production from three wells in the northern area of the permit. More detail on this activity is
contained in the Operations Review section of this report.
The prospectivity of our 100% owned licence area continues to improve and on 11 September 2013 the Company
announced the results from three independent reserve reports; the outstanding, post period end highlight was that
the independent reserve reports for the Akkar East and West Zhetybai fields, prepared as part of the Kazakh State
Reserves process, estimated that the combined C1+C2 reserves of these two fields now stands at approximately
102.5 million barrels of recoverable oil, an almost threefold increase from the 2012 State approved C1+C2 figure of
37 million barrels.
The Competent Persons Report prepared by McDaniel and Associates estimated reserves from the mid Triassic as
follows:
• Proved Reserves: 1P 9.7 mmbbls
• Proved plus Probable Reserves: 2P 19.2 mmbbls
• Proved plus Probable plus Possible: 3P 28.7 mmbbls
As part of the work undertaken by McDaniel to establish the commercial threshold of the mid-Triassic reserves, the
Net Present Value of the proved+probable reserves using a discounted cashflow model with a discount rate of 10%
was calculated as $US304.6m (~$US15.9/bbl) pre-tax and $US222.5m (~$US11.6/bbl) after tax.
Also during September 2013, the Company gained all the necessary approvals to complete its listing on the Kazakh
Stock Exchange (KASE), meaning the Company’s shares will shortly be able to be traded on KASE. With Jupiter
Energy’s shares already listed on London’s AIM Market (AIM) and the Australian Stock Exchange (ASX), the
Company now has access to investment communities in most of the key jurisdictions that have an interest in Central
Asia.
Our two major shareholders, the Waterford Group and Soyuzneftegas Capital Limited, continue to show great
support for the Company, participating in both the August 2012 Rights Issue and May 2013 issue of $US9m of
Series A Convertible Notes. Waterford Group also participated in the September 2013 Series B Convertible Notes.
Their holdings remain at 29.5% and 19.8% respectively and the total number of shares on issue as of the date of this
report totals 153,377,693.
I believe that the Company has a pivotal 12 months ahead of it with a need to focus on both exploration and
appraisal drilling as well as to start the building of the requisite infrastructure to allow the Akkar East oilfield to move
into Full Field Development phase – a key step in the Company achieving its first sale of export oil.
The Board remains confident of the prospectivity of the licence area and that the two oilfields that have already been
discovered on Block 31 can be both developed into significant producers.
Finally, I would like to take this opportunity to thank all our employees and shareholders for their continued support
over the past twelve months.
Sincerely
Geoff Gander
Chairman/CEO
1
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT
Your Directors submit their report for the year ended 30 June 2013.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until the date of this report
are as follows. Directors were in office for this entire period unless otherwise stated.
Names, qualifications experience and special responsibilities
Geoffrey Anthony Gander (50)
B.COM
Executive Chairman/CEO
Appointed 27 January 2005
Alastair Beardsall (59)
Non-Executive Director
Appointed 5 October 2010
Baltabek Kuandykov (65)
Non-Executive Director
Appointed 5 October 2010
Mr Gander graduated from the University of Western Australia in
1984 where he completed a Bachelor of Commerce Degree.
Mr Gander is responsible for Group Corporate Development, Group
Investor Relations and the overall Operational Leadership of the
Company.
Other Current Directorships of Listed Companies
None
Former Directorships of Listed Companies in last three years
None
Mr Beardsall has been involved in the oil industry for more than 30
years starting in 1980 with Schlumberger, the oil-field services
company. From 1992 he began working for independent oil
companies, with increasing responsibility for specific exploration,
development and production ventures. Between 2003 and 2009, he
was Executive Chairman of Emerald Energy plc; Emerald grew,
from a market capitalisation of less than £8 million, until in October
2009 Emerald was acquired by Sinochem Resources UK Limited, in
a transaction that valued Emerald at £532 million.
Other Current Directorships of Listed Companies
Sterling Energy Plc – (AIM)
Former Directorships of Listed Companies in last three years
None.
Mr Kuandykov has considerable experience in the oil and gas
industry in the region, having served as President of Kazakhoil
(predecessor of the Kazakh State oil company KazMunaiGas). He
was also seconded by the Kazakh Government to work with
Chevron Overseas Petroleum on CIS projects. Mr Kuandykov also
has extensive government experience in Kazakhstan, having
served as Deputy Minister of Geology, Head of the Oil and Gas
Directorate at the Ministry of Geology, and was Deputy Minister of
Energy and Fuel Resources
Other Current Directorships of Listed Companies
Chagala Group Limited (LSE)
Former Directorships of Listed Companies in last three years
None
2
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
Scott Adrian Mison (37)
B.Bus, CA, ACSA
Executive Director
Appointed 31 January 2011
Company Secretary
Appointed 29 May 2007
Mr Mison holds a Bachelor of Business degree majoring in
Accounting and Business Law, is a Member of the Institute of
Chartered Accountants in Australia and Chartered Secretaries
Australia.
Mr Mison is also CFO/Company Secretary of IDM International
Limited and is a board member of Wheelchair Sports WA Inc.
Other Current Directorships of Listed Companies:
Intermet Resources Ltd.
Former Directorships of Listed Companies in last three years:
None.
Interests in the shares and options of the company and related bodies corporate
At the date of this report, the interest of the Directors in the shares and options of Jupiter Energy Limited were:
Director
G Gander
A Beardsall
B Kuandykov
S Mison
Number of
ordinary shares
3,147,224
1,250,000
-
391,234
Performance
Rights
2,166,667
2,166,667
2,166,667
500,000
In compliance with Corporations Law, none of the Directors’ shareholdings in the Company is subject to hedging.
Each Director must disclose any changes via formal ASX, AIM and KASE announcement within 5 working days of
that change. Any changes in Directors’ shareholdings are also confirmed at each Board meeting.
3
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
CORPORATE STRUCTURE
Jupiter Energy Limited is a company limited by shares that is incorporated and domiciled in Australia. Jupiter Energy
Limited has prepared a consolidated financial report incorporating the entities that it controlled during the financial
year, which are outlined in note 28 of the financial statements.
PRINCIPLE ACTIVITIES
The principal activities of the consolidated entity during the course of the financial year included:
• Exploration for oil and gas in Kazakhstan: and
• Appraisal, development and production of oil and gas properties in Kazakhstan.
EMPLOYEES
The consolidated entity employed 50 employees as at 30 June 2013 (2012: 39 employees).
DIVIDENDS
No dividends in respect of the current or previous financial year have been paid, declared or recommended for
payment.
FINANCIAL REVIEW
Operating Results
The consolidated loss for the year after income tax was $4,885,829 (2012: $4,295,102).
Review of Financial Condition
At the end of the 2013 financial year, cash resources were $4,131,731 (2012: $395,445). Assets increased to
$72,091,204 (2012: $44,297,607) and equity increased to $54,573,145 (2012: $38,468,617).
CAPITAL RAISING / CAPITAL STRUCTURE
During the year the following capital raisings occurred:
-
-
- A 1 for 4 non renounceable Rights Issue was announced in June 2012. This offer was priced at $0.40 per
share and raised approximately $11,613,016 (before costs). The issue was fully underwritten by Waterford
Petroleum Limited and Soyuzneftegas Capital Limited.
In August Soyuzneftegas Capital Limited converted its $US3.45m Convertible Notes in exchange for
8,215,000 shares.
In December 2012, the Group raised US$3m via promissory notes repayable on 31 December 2013
(December 2013 Promissory Notes). These notes were converted to Convertible Notes on 30 May 2013.
In March 2013, the Group raised US$3m via promissory notes repayable on 31 March 2014 (March 2014
Promissory Notes).
In May 2013, the Group raised US$9m through the issue of Convertible Notes with a coupon of 12% and an
exercise price of $1.25 and expiring 31 May 2016. The net cash raised was US$6m before costs, as the
December 2013 Promissory Notes were converted to Convertible Notes.
-
-
Post year end the following capital raising occurred:
In September 2013, the Group raised US$6.5m through the issue of Series B Convertible Notes with a coupon of
12% and an exercise price of $1.25 and expiring 31 September 2016. The net cash raised was US$3.5m before
costs, as the March 2014 Promissory Notes were converted to Convertible Notes.
4
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
Summary of share and share options on issue
At the date of this report, the unissued ordinary shares of Jupiter Energy Limited under Performance Rights are as
follows:
Date of Vesting
Vesting Conditions
Number under
Performance Rights
31 December 2013 Share Price Performance from a base
7,000,001
level of $0.919
Summary of Conditions relating to the vesting of the Performance Rights:
The Performance Rights for each holder shall vest in proportion to the % increase in the Share price of the Company
above $0.735 subject to a minimum increase of 25%, i.e. Performance Rights will start vesting at $0.919. For 100%
of the Performance Rights to vest, the share price of the Company needs to reach $1.47 (Vesting Conditions). In
respect of the Vesting Conditions, the % increase in the Share price of the Company will be calculated by reference
to the volume weighted average price of Shares in the 20 consecutive trading days immediately prior to the Vesting
Date.
OPERATING REVIEW
This section provides details on the operations of the past 12 months. The key operational events for the year were
the drilling, completion and production testing of Jupiter Energy’s fifth, sixth and seventh operated wells (J-55, J-58
and J-59) on the southern extension area of Block 31 and the ongoing trial production from the J-50, J-51 and J-52
wells. Details on all these wells are outlined below as are details on other work carried out over the course of the
year.
Well Operations
J-50, J-51 and J-52 Trial Production
The J-50, J-51 and J-52 wells all have their trial production licences in place and during year the Company received
cash of $US7.549m from the sale of approximately 194,300 barrels of oil at an average price of $US38.85 per barrel.
All oil sales were made into the domestic market, as is required under Trial Production, and made through
predominantly two local traders. All sales were made on a pre-paid basis, with oil collected by the traders from the
well head.
The Company announced during April 2013 that the J-50 well had been shut in and an application made for a new
gas emissions permit. The improved production from J-50 after the installation of an Electric Submersible Pump in
October 2012 meant that the gas emission limit originally approved for 2013 was exceeded earlier than expected.
The J-50 well is currently forecasted to return to production in January 2014. In the meantime the J-51 and J-52
wells continue to produce at a cumulative rate of approximately 650 barrels of oil per day (bopd).
J-53
The J-53 well is located 2.8 km southeast of the J-52 well. The well has been shut in awaiting remedial work to
address a water influx that has reduced the overall commercial performance.
The work will be carried out a soon as is feasible and it is hoped to bring the well onto Trial Production during 2014.
5
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
The Trial Production Licences for the J-50, J-51, J-52 and J-53 wells have a term of three years and the next step
post Trial Production will be the implementation of the necessary surface infrastructure required to develop the
discoveries for long term production.
J-55 (Southern Extension)
The J-55 well was the Company’s fifth exploration well and the second of its two 2012 commitment wells on Block
31. The well is located 5.7 km southeast of the J-53 well and is the first well that the Company has drilled on the
southern area extension. This area was granted to the Company in 2011 and is located to the south of the already
discovered Akkar East oil accumulation.
The J-55 well took a total of 55 days to drill and reached a total depth of 3,400m on 29 September 2012.
Hydrocarbon shows while drilling, including a core in the reservoir zone, and subsequent open hole wireline logs all
indicated hydrocarbons in the Triassic reservoir. The open hole logs indicated good levels of oil saturation and
porosity.
Analysis by independent consulting firm Reservoir Evaluation Services LLC (“RES”) confirmed some 112m of gross
reservoir and approximately 60m of net pay at the Middle Triassic carbonate reservoir unit, the primary reservoir
objective in the well. The reservoir is located on a separate structure to the Akkar East field. Cut offs of 3.8% porosity
and 50% oil saturation were used in the analysis, with a correction for mud filtrate displacement.
Initial testing of the J-55 well produced oil with a high water cut post perforation and stimulation of both the T2B and
T2A horizons; the origins of the water still needs to be determined with further remedial work.
An application for a Trial Production licence will be submitted for the J-55 well as soon as the State Reserves Report
for the Southern Extension area has been approved by the relevant authorities. This is expected to occur during the
1st quarter of 2014. An application for further testing work on the well may also be submitted prior to the Trial
Production Licence being received.
J-58 (Southern Extension)
The J-58 well was the Company’s sixth exploration well and is located 3.8km southeast of the J-55 discovery well
and is the second well that the Company drilled on the southern area extension. The well took a total of 37 days to
drill and reached a total depth of 3,320m on 28 November 2012; the performance of the drilling operation was better
than anticipated with the well reaching final depth ahead of schedule.
Hydrocarbon shows while drilling, including a core in the reservoir zone, and subsequent open hole wireline logs all
indicated hydrocarbons in the Triassic reservoir. The open hole logs indicated good levels of oil saturation and
porosity.
Analysis by independent consulting firm RES confirmed some 152.8m of gross reservoir and approximately 75.6m of
net pay at the Middle Triassic T2B carbonate reservoir unit, the primary reservoir objective in the well. In addition
RES analysis also confirmed an additional 120.1m of gross reservoir and approximately 52m of net pay at the Middle
Triassic T2A carbonate reservoir unit. Cut offs of 3.8% porosity and 50% oil saturation were used in the analysis,
with a correction for mud filtrate displacement.
Initial production testing of the J-58 well from a 5.5m unstimulated zone in the lower T2B Triassic over a 7 day period
with a 9mm choke size, resulted in a flow rate of approximately 1,300 bopd. Testing of the T2A horizon was then
carried out and results indicated that no additional inflow from this horizon was achieved. The well was brought back
onto production from the T2B horizon for a short period and then shut in on the day that the approved Production
Testing period expired.
An application for a Trial Production Licence will be submitted for the J-58 well as soon as the State Reserves
Report for the Southern Extension area has been approved by the relevant authorities. This is expected to occur
during the 1st quarter of 2014. An application for further testing work on the well may also be submitted prior to the
Trial Production Licence being received.
6
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
J-59 (Southern Extension)
The J-59 well was the Company’s seventh exploration well and is located 3.8km southeast of the J-58 discovery well
and is the third well that the Company has drilled on the southern area extension, alongside the J-55 and J-58 wells.
The well took a total of 52 days to drill and reached a total depth of 3,191m on 20 February 2013; the performance of
the drilling operation was in line with expectations. Hydrocarbon shows while drilling, including a core in the reservoir
zone, and subsequent open hole wireline logs all indicated hydrocarbons in the Triassic reservoir. The open hole
logs indicated good levels of oil saturation and porosity.
Analysis by independent consulting firm RES confirmed some 102.8m of gross reservoir and approximately 42.8m of
net pay at the Middle Triassic T2B carbonate reservoir unit, the primary reservoir objective in the well. In addition
RES analysis also confirmed an additional 64.6m of gross reservoir and approximately 40.4m of net pay at the
Middle Triassic T2A carbonate reservoir unit. Cut offs of 3.8% porosity and 50% oil saturation were used in the
analysis, with a correction for mud filtrate displacement.
The permit for testing of the T2B horizon of the J-59 well was issued prior to the completion of the extended testing
program on the J-58 well, this overlap of 90 day testing permits resulted in less of the approved 90 day testing period
for J-59 being used effectively. The completion and testing of J-59 was commenced in June 2013 and in the limited
time available the key focus was to establish the parameters required to provide the required information to enable
the completion of the State Reserves Report for the Southern Extension area.
During testing oil was recovered to surface and bottom hole samples taken before the 90 day production period
expired.
An application for a Trial Production Licence will be submitted for the J-59 well as soon as the State Reserves
Report for the Southern Extension area has been approved by the relevant authorities. This is expected to occur
during the 1st half of 2014. An application for further testing work on the well may also be submitted prior to the Trial
Production Licence being received.
Independent Reserve Reports
The Company is required to complete a Final Reserves Report for the Akkar East oilfield as part of the process of
applying for a Full Field Development licence. This report must be prepared by an approved, independent, Kazakh
institute and submitted to the relevant authorities for approval.
In addition, as part of the Trial Production application process for the J-55, J-58 and J-59 wells, a Preliminary
Reserves Report needs to be completed for the Southern Extension area. This report must also be prepared by an
approved, independent, Kazakh institute and submitted to the relevant authorities for approval.
Both these reports are prepared using the Kazakh classification system of reserves which has been developed from
the Russian reserves system which is based on the analysis of geological attributes.
In December 2012, the Company also appointed an independent reserves engineering company to undertake an
audit of the producing Mid Triassic T2B horizon using the Petroleum Resource Management System (“PRMS”)
classification system. Under this classification system, reserves are defined as those quantities of oil which are
estimated to be commercially recovered from a known accumulation from a given date forward.
The results of these three reports were released to shareholders on 11 September 2013 and are detailed in the
“Significant Events after the Balance Sheet Date” section below.
7
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
Forward Plan for Drilling Activity
The Company is currently reviewing the funding plan for the coming twelve months. Assuming the funding is in
place, it is expected that there will be a combination of exploration, appraisal and early development wells drilled.
The next exploration well (J-54) is a large structural closure mapped using 3D seismic to the north of the producing
East Akkar field. The prospect is believed to be a separate accumulation and the prognosis is that it is structurally up
dip of Akkar East. The Company estimates a potential resource of over 20 million barrels of oil associated with this
prospect.
The Company considers that the main risk associated with the proposed J-54 well is an adequate top seal to trap
oil. Assuming success, it is believed that the reservoir quality and flow rates should be similar to that found in the
Akkar East field. The current plan is to drill the J-54 well during the 1st quarter of 2014.
Details on the Exploration and Production Licences
The Company expects to submit an application for a further two year extension to the Block 31 Exploration Licence
in 2014. The Exploration Licence had an initial 6 year term (ending December 2012) and already has had its 1st two
year extension approved to December 2014. This further extension, should it be approved, will take the exploration
period through to December 2016.
The Block 31 contract also has the right to a 25 year Production Licence and it is the Company’s intention to
continue exploring on the southern section of Block 31 whilst also applying, during 2015, for a Production Licence for
the already discovered Akkar East field in the northern section of Block 31.
Prospectivity
As outlined in the Forward Plan for Drilling Activity section of this report, the drilling of J-54 during the 1st quarter of
calendar 2014 has the potential, assuming success, for an a further upgrade of Block 31 reserves. The Company
believes the prospectivity of Jupiter Energy’s Block 31 continues to improve and the Board are confident that further
additions to the reserves are achievable.
Production
As outlined above, the J-50, J-51, J-52 and J-53 wells already have their respective Trial Production Licences
approved and it is expected that wells J-55, J-58 and J-59 will have their application for Trial Production licences
approved during 2014.
Total barrels sold under Trial Production during the 2012/13 financial year totalled 194,300 for revenues of
A$5,778,057 This represents a 443% increase in revenues achieved in the 2011/12 financial year ($1,063,086).
Board and Staffing
An integrated operating team that has proven in-country experience as well as the capacity to operate major assets
is a critical component to success in Kazakhstan. The continued building of such a team has been a major priority
over the course of several years and the past 12 months has been no exception.
The Board is confident that the Company is well prepared for continued growth over the coming years.
8
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Independent Reserve Reports
On 11 September 2013 the Company announced the details of three independent reserve estimations that had been
carried out on the various accumulations on the Block 31 permit.
Two of these reports were State Reserve Reports prepared by independent consulting firm RES. The first of these
reports was the Akkar East Reserves Report and this report was prepared as part of the process of moving the
Akkar East field into Full Field Development. This review of the Akkar East field was a follow on to the 2012
Preliminary Reserves report prepared by RES submitted as part of the process required to enable the J-50, J-51, J-
52 and J-53 wells to be granted their respective Trial Production Licences (TPL’s). The Preliminary Reserves report
was approved by the Kazakh authorities in June 2012.
The second report was the Southern Extension area (known locally as West Zhetybai) Preliminary Reserves Report
and this report is the first step towards the granting of TPL’s for the J-55, J-58 and J-59 wells.
In summary, the Akkar East accumulation covers the area delineated by the J-51, J-52 and J-53 wells and the Oil-In-
Place (OIP) for this area has been estimated at ~129 mmbbls with recoverable reserves estimated at ~32.6 mmbbls.
The C1 reserves have been estimated at ~10.7 mmbbls and C2 reserves at ~21.9 mmbbls. The recoverable
reserves are based on a recovery factor of 27.2%.
The J-50 well is part of the Akkar North accumulation and the estimated recoverable reserves for this area are ~8.6
mmbbls (C1 - ~4 mmbbls and C2 - ~4.6 mmbbls) bringing the total recoverable reserves in the area delineated by
the wells J-50, 51, 52 and 53 to ~41.2 mmbbls; C1 reserves of ~14.7 mmbbls and C2 reserves of ~26.5 mmbbls.
Estimated reserves from the T31, T32 (both formerly known as the Z Sand), T2A and T2B horizons were used in
these calculations. The Akkar East Reserves Report has now been submitted to the relevant authorities; the
approval process is expected to take three months.
The West Zhetybai accumulation covers the area delineated by the J-55, J-58 and J-59 wells and reserves have
been evaluated for the T31, T32, T2A and T2B horizons. The OIP for this area has been estimated at ~232 mmbbls
(from all four horizons) with recoverable reserves estimated at ~61.2 mmbbls. The C1 reserves have been estimated
at ~2.3 mmbbls and C2 reserves at ~58.9 mmbbls; the recoverable reserves are based on a recovery factor of
27.2%.
The higher proportion of C2 to C1 reserves indicates the need for (i) further testing of the J-55 and J-59 wells and (ii)
general appraisal of the area which may include the drilling of additional wells.
RES has submitted the West Zhetybai Preliminary Reserves Report to the relevant authorities; approval is expected
to take three months.
The third report was a Competent Persons Report (CPR) that was prepared using the Society of Petroleum
Engineers Petroleum Resources Management System (PRMS) classification system; reserves are defined as those
quantities of oil which are estimated to be commercially recoverable from a known accumulation from a given date
forward.
McDaniel & Associates (McDaniel) were engaged to complete this independent reserves audit of only the mid
Triassic horizon as identified by wells J-50, J-51, J-52, J-53, J-55, J-58 and J-59.
One of the underlying differences between the Kazakh State Reserves classification system and PRMS classification
system is that PRMS also considers the commercial uncertainties rather than only geological attributes and therefore
the lack of established commercial oil flow from the J-53, J-55 and J-59 wells resulted in the reserve calculations
based primarily on production from the T2B horizon from wells J-50, J-51, J-52 and J-58.
9
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
The results, by reserve category, were:
• Proved Reserves: 1P 9.7 mmbbls
• Proved plus Probable Reserves: 2P 19.2 mmbbls
• Proved plus Probable plus Possible: 3P 28.7 mmbbls
As part of the work undertaken by McDaniel to establish the commercial threshold of the mid-Triassic reserves, the
Net Present Value of the proved+probable reserves using a discounted cashflow model with a discount rate of 10%
was calculated as $US304.6m (~$US15.9/bbl) pre-tax and $US222.5m (~$US11.6/bbl) after tax.
Shareholders are encouraged to read the 11 September 2013 announcement in full as it contains more details on
the differing reserve classification methodologies used by RES in preparing the State Reserve Reports and by
McDaniel in preparing the CPR.
In summary, the results of both independent reserve audits confirmed the prospectivity of the Block 31 permit.
Capital Raising
On 23 September 2013, the Company announced details regarding the issue of $US6.5million of Series B
Convertible Notes, issued on 20 September 2013. The key terms of these Convertible Notes were as follows:
• Term: 3 years
• Conversion Price: $US1.25 per share (maximum of 5.2 million shares may be issued)
• Coupon Rate: 12% per annum, with the interest accruing from and including the Issue Date until the earlier
of the Conversion Date, Redemption Date or Maturity Date of the Note.
• The Convertible Notes may be redeemed by Jupiter at any time with a minimum of 12 months interest
payable if the Convertible Notes are redeemed within the 1st 12 months of their Term
• The issue of the Convertible Notes is carried out under Jupiter’s 15% capacity in accordance with ASX
Listing Rule 7.1
The breakdown of subscriptions for the Convertible Notes is as follows:
• Waterford Petroleum Limited: $US1.5m
• Mid Ocean Limited $US0.5m
• Mobile Energy Limited: $US4m
• Other Private Investors: $US0.5m
The net cash proceeds of the fundraising was $US3.305m, following the repayment of $US3m of Promissory Notes
held by Mobile Energy Limited and the payment of a fee of 3% of the proceeds of the raising ($US195,000) by the
Company to Waterford Petroleum Limited for its role in arranging the funding.
The net cash proceeds of the fundraising will be used for the following purposes:
• Remedial work on J-53: ~$US150,000;
• Further testing of the J-59 well: ~$US350,000 and
• General working capital: ~$US2.805m.
The holders of Series A Convertible Notes issued on 31 May 2013 have also agreed to convert their notes to Series
B Convertible Notes, effective from 20 September 2013.
This means that all interest payable on the entire $US15.5m Convertible Notes now outstanding will be deferred and
accrue from and including the Issue Date of the Series B Convertible Notes until the earlier of the Conversion Date,
Redemption Date or Maturity Date of the Note.
10
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Except as otherwise set out in this report, the Directors are unaware of any significant changes in the state of affairs
or principal activities of the consolidated entity that occurred during the period under review.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Directors will continue to pursue oil and gas exploration and production opportunities in the Republic of
Kazakhstan.
As Jupiter Energy Limited is listed on the Australian Stock Exchange and London’s AIM Market (AIM), it is subject to
the continuous disclosure requirements of the ASX Listing Rules and the AIM Rules for Companies which require
immediate disclosure to the market of information that is likely to have a material effect on the price or value of
Jupiter Energy Limited’s securities. The requirement for continuous disclosure is also required for the KASE.
ENVIRONMENTAL REGULATION
The consolidated entity is committed to achieving the highest standards of environmental performance. Standards
set by the Government of Kazakhstan are comprehensive and highly regulated. The consolidated entity strives to
comply not only with all Kazakh government regulations, but also maintain worldwide industry standards.
To maintain these high standards the Company is committed to a locally developed environmental monitoring
programme. This monitoring programme will continue to expand as and when new regulations are implemented and
adopted in Kazakhstan.
HEALTH & SAFETY
The Company has developed a comprehensive Health and Safety policy for its operations in Kazakhstan and has
the appropriate personnel in place to monitor the performance of the Company with compliance under this policy.
The Company outsources many of its key drilling functions and as part of any contract entered into with third parties,
a commitment to Health & Safety and a demonstrated track record of success in this area is a key performance
indicator in terms of deciding on which companies will be contracted.
11
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
DIRECTORS’ REPORT (continued)
MEETINGS OF DIRECTORS
The number of meetings of the Directors held during the year and the number of meetings attended by each Director
was as follows:
Board of Directors
Number
attended
Number
eligible to
attend
7
7
7
7
7
7
7
7
Current Directors
G Gander
A Beardsall
B Kuandyukov
S Mison
Committee membership
Due to the small number and geographical spread of the Directors, it was determined that the Board would
undertake all of the duties of properly constituted Audit & Compliance and Remuneration Committees.
Competent Persons Statements
General
Keith Martens, BSc Geology and Geophysics, with over 35 years' oil & gas industry experience, is the qualified
person who has reviewed and approved the technical information contained in this report. Keith Martens has no
material interest in the Company.
Independent Reserves (PRMS)
The information in this report which relates to the proven, probable and possible reserve estimations of the Mid
Triassic is based on information compiled by McDaniel & Associates (“McDaniel”), a Canadian based oil & gas
consulting company that specialises in oil & gas reserve estimations. McDaniel has used the Petroleum Resources
Management System (PRMS) classification system in determining their reserve estimations. McDaniel has sufficient
experience which is relevant to oil & gas reserve estimation and to the specific permit in Kazakhstan to qualify
as competent to verify the information pertaining to the Mid Triassic reserves. McDaniel has given and not withdrawn
its written consent to the inclusion of the Mid Triassic reserve estimations in the form and context in which they
appear in this report. McDaniel has no financial interest in the Company.
Kazakh State Approved Reserves
The information in this report which relates to the C1 and C2 Block 31 reserve estimations is based on information
compiled by Reservoir Evaluation Services LLP (“RES”), a Kazakh based oil & gas consulting company that
specialises in oil & gas reserve estimations. RES has used the Kazakh Reserve classification system in determining
their estimations. RES has sufficient experience which is relevant to oil & gas reserve estimation and to the specific
permit in Kazakhstan to qualify as competent to verify the information pertaining to the C1 and C2 reserve
estimations. RES has given and not withdrawn its written consent to the inclusion of the C1 and C2 reserve
estimations in the form and context in which they appear in this report. RES has no financial interest in the
Company.
12
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited)
This remuneration report outlines the Director and executive remuneration arrangements of the Company and the
Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. 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 Company and the Group, directly or
indirectly, including any Director (whether executive or otherwise) of the parent company, and includes the three
executives in the Company and the Group.
For the purposes of this report, the term 'executive' encompasses the chief executive, senior executives, general
managers and secretaries of the Company and the Group.
Details of key management personnel (including the three highest executives of the Company and the
Group)
(i) Directors
Geoff Gander
Alastair Beardsall
Baltabek Kuandykov
Scott Mison
(ii) Executives
Keith Martens
John Kroshus
Chairman / CEO (Executive)
Director (Non-Executive)
Director (Non-Executive)
Director / CFO / Company Secretary (Executive)
Technical Consultant
Technical Consultant (appointed August 2012, resigned July 2013)
There were no other changes after reporting date and before the date the financial report was authorised for issue.
Remuneration Philosophy
The remuneration policy of the Group has been designed to align Directors and executives interests with the
shareholder and business objectives by providing a fixed remuneration component and offering long term incentives
based on a key performance area – the material improvement in share price performance. The Board of the Group
believes the remuneration policy to be appropriate to attract and retain the best executives and Directors to run and
manage the Company, as well as create goal congruence between Directors, executives and shareholders.
The Board's policy for determining the nature and amount of remuneration for Board members and senior executives
of the Company is as follows:
*
*
*
The remuneration policy, setting the terms and conditions for the executive directors and other senior
executives, was developed by the Board after a review of similar listed and unlisted companies with
activities in overseas jurisdictions and taking into account the experience and skill set required to
successfully develop operations in these jurisdictions from early stage development. The Company does
not have a remuneration committee. The Board is of the opinion that due to the nature and size of the
Company, the functions performed by a Remuneration Committee can be adequately handled by the full
Board.
All executives receive a base salary (which is based on factors such as length of service and experience),
superannuation, fringe benefits and performance incentives.
The Board reviews executive packages annually by reference to the Company's performance, executive
performance and comparable information from industry sectors and other listed companies in similar
industries.
Executives are eligible to participate in the Company’s long term performance rights plan.
13
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
The executive Directors and executives receive a superannuation guarantee contribution as required by the
government which is currently 9.25%, and do not receive any other retirement benefits.
The remuneration paid to Directors and executives is valued at the cost to the Company and expensed. Shares
given to Directors and executives are valued as the difference between the market price of those shares and the
amount paid by the Director or executive. Options are valued using the Black & Scholes methodology. Performance
Rights are valued using a hybrid employee share option model. The hybrid model incorporates a trinomial option
valuation and a Monte Carlo simulation.
Remuneration Structure
Non-Executive Director Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and
retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. The Board determines payments to the non-executive Directors and reviews their
remuneration annually, based on market practice, duties and accountability. Independent external advice is sought
when required. The maximum aggregate amount of fees that can be paid to non-executive Directors is subject to
approval by shareholders at the Annual General Meeting. Total remuneration for all non-executive Directors, is not to
exceed $350,000 per annum as approved by shareholders at the Annual General Meeting held on 15 November
2010. Fees for non-executive Directors are not linked to performance of the Company. However, to align Directors'
interests with shareholder interests, the non-executive Directors have been issued Performance Rights which have
vesting conditions that are specifically linked to share price performance. Non-executive Directors are also
encouraged to hold shares in the company.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst Directors is reviewed annually. The Board considers the fees paid to non-executive directors of
comparable companies and the potential value provided via the allocation of Performance Rights when undertaking
the annual review process.
Each Director receives a fee for being a Director of the Company. Directors who are called upon to perform extra
services beyond the director’s ordinary duties may be paid additional fees for those services.
Executive Remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Group so as to:
-
-
-
-
reward executives for Company, business unit and individual performance;
align the interests of executives with those of shareholders;
link reward with the strategic goals and performance of the Company; and
ensure total remuneration is competitive by market standards.
14
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
Structure
In determining the level and make-up of executive remuneration, the Board reviews remuneration packages
provided by similar listed and unlisted companies with activities in overseas jurisdictions and taking into account the
experience and skill set required to successfully develop operations in these jurisdictions from early stage
development as well as the salary levels of local workers in that jurisdiction. It is the Board’s policy that employment
contracts are entered into with the Chief Executive Officer and all key management personnel.
Fixed Remuneration
The fixed remuneration of executives is comprised of a base salary and superannuation. The fixed remuneration of
executives is reviewed annually.
Variable remuneration – Short Term Incentives (STI)
The Group operates a STI program for its Kazakh based employees, which is based on a cash bonus subject to the
attainment of clearly defined Branch and individual measures.
Actual STI payments awarded to each employee depends on the extent to which specific targets are met. The
targets consist of a number of key performance indicators (KPIs) covering financial and non-financial Branch and
individual measures of performance.
Directors are not eligible for participation in the STI program.
Variable Remuneration – Long Term Incentives (LTI)
Objective
The objectives of long term incentives are to:
-
-
-
-
align executives remuneration with the creation of shareholder wealth;
recognise the ability and efforts of the Directors, employees and consultants of the Company who have
contributed to the success of the Company and to provide them with rewards where deemed appropriate;
provide an incentive to the Directors, employees and consultants to achieve the long term objectives of the
Company and improve the performance of the Company; and
attract persons of experience and ability to employment with the Company and foster and promote loyalty
between the Company and its Directors, employees and consultants.
Structure
Long term incentives granted to Directors and senior executives are delivered in the form of Performance Rights,
issued under the Performance Rights Plan.
Company Performance
Due to the current embryonic stage of the Company’s growth it is not appropriate at this time to evaluate the
Company’s financial performance using generally accepted measures such as EBITDA and profitability; this
assessment will be developed over the next few years.
15
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
The following information provides a summary of the Company’s financial performance for the last five years:
Loss before income tax
Earnings per share (cents)*
Last share price at Balance Date*
Market capitalisation
2013
$
(4,885,829)
(3.25)
0.55
82.7m
2012
$
(4,295,102)
(3.70)
0.415
48.2m
2011
$
(4,889,671)
(5.25)
0.72
83.4m
2010
$
(5,512,070)
(8.25)
0.51
30.1m
2009
$
(2,610,253)
(10.80)
0.36
8.7m
*The earnings per share and last share price have been adjusted for all periods to reflect the 15:1 share consolidation approved on 12 August 2011.
Relationship of Reward and Performance
The value of Performance Rights will represent a significant portion of an executive’s salary package. The ultimate
value to the executives of the Performance Rights depends on the share price of Jupiter Energy Ltd. The share
price is the key performance criteria for the long term incentive as the realised value arising from Performance
Rights issued is dependent upon an increase in the share price to above the minimum vesting price for the
Performance Rights.
Below is a summary of performance conditions for Performance Rights:
The number of Performance Rights vest in proportion to the percentage increase in share price above $0.735 at
vesting date. If the share price is less than $0.919 (minimum vesting price) no Performance Rights vest. For 100% of
the Performance Rights to vest, the share price of the Company needs to reach $1.47.
In respect of the Vesting Condition, the % increase in the Share price of the Company will be calculated by reference
to the volume weighted average price of Shares in the 20 consecutive trading days immediately prior to the Expiry
Date (31 December 2013). No Performance Rights vest if the calculated share price is less than the minimum
vesting price at vesting date. The minimum vesting price was set based on 25% premium to the Company’s share
price at the original grant date.
16
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives
Table 1: Remuneration for the year ended 30 June 2013
Short-term benefits
Post-employmen
t benefits
Share-based
payment
Cash
salary and
Consulting fees
$
Cash
bonus
$
Other
$
Super-
annuation
$
Performance
Rights
$
Total
$
Remuneration
consisting of
Performance
Rights
%
Performance
related
%
40,000
40,415
80,415
296,990
130,000
157,200
290,190
874,380
954,795
-
-
-
-
-
-
-
-
-
-
-
-
120,429
-
-
38,567
158,996
158,996
-
-
-
16,000
-
236,611
236,611
473,222
236,611
52,054
276,611
277,026
553,637
670,030
182,054
85.54%
85.41%
85.54%
85.41%
35.31%
28.59%
35.31%
28.59%
-
-
-
14,194
157,200
342,951
-
4.14%
-
4.14%
16,000
16,000
302,859
776,081
1,352,235
1,905,872
Name
Non-executive director
A Beardsall
B Kuandykov
Total non-executive directors
Executive directors
G Gander (a)
S Mison (b)
Other key management
personnel
K Martens
J Kroshus
Total executives
Totals
(a): Other relates to living expenses covering cost of apartment/office in London as per service agreement.
(b): Fees relate to CFO, Company Secretary and Director Fees.
Table 2: Remuneration for the year ended 30 June 2012
Short-term benefits
Post-employment
benefits
Share-based
payment
Cash
salary and
Consulting fees
$
Cash
bonus
$
Other
$
Super-
annuation
$
Performance
Rights
$
Total
$
40,000
40,000
80,000
-
49,135 (a)
49,135
-
-
-
-
-
-
119,203 (b)
-
48,000
-
164,462
164,462
328,924
188,021
32,891
204,462
253,597
458,059
617,211
164,558
261,987
131,667 (c)
107,875
146,936
-
-
-
-
-
-
-
-
-
-
107,875
146,936
Name
Non-executive director
A Beardsall
B Kuandykov
Total non-executive directors
Executive directors
G Gander
S Mison
Other key management
personnel
K Martens
H Wolski
(resigned 30 November 2011)
G Kulumbetov
(appointed 8 August 2011;
resigned 4 June 2012)
Total executives
Totals
-
48,000
48,000
(a): Relates to a one off cash bonus for work completed outside his duties as a non-executive director.
(b): Other relates to living expenses covering cost of apartment/office in London as per service agreement.
(c): Fees relate to CFO, Company Secretary and Director Fees
169,863
818,328
898,328
-
119,203
119,203
-
-
49,135
-
220,912
549,836
169,863
1,206,443
1,664,502
17
Remuneration
consisting of
Performance
Rights
%
80.44
64.85
Performance
related
%
80.44
84.23
30.46
19.99
30.46
19.99
-
-
-
-
-
-
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
Compensation Options: Granted and vested during the year ended 30 June 2013
During the 2013 and 2012 year, there were no options granted. 866,669 unlisted options lapsed on 31 December
2012. No options, listed or unlisted, were exercised during the year.
Share issued on Exercise of Compensation Options
There were no shares issued on the exercise of compensation options during the financial years ended 30 June
2013 or 30 June 2012.
Performance Rights
On 9 November 2012, 5,066,666 Performance Rights were approved by shareholders to Directors and executives.
The number of Performance Rights vest in proportion to the percentage increase in share price at vesting date
$0.919 (minimum vesting price). For 100% of the Performance Rights to vest, the share price of the Company needs
to reach $1.47. In respect of the Vesting Condition, the percentage increase in the Share price of the Company will
be calculated by reference to the volume weighted average price of Shares in the 20 consecutive trading days
immediately prior to the Vesting Date (31st December 2013). No Performance Rights vest if the calculated share
price is less than the minimum vesting price at vesting date.
The fair value of Performance Rights granted to Directors is estimated as at the grant date using a Monte Carlo
simulation option pricing model taking into account the terms and conditions upon which the instruments were
granted.
The following table lists the inputs to the models for the period ended 30 June 2013:
Performance Rights
Grant date
Number of Performance Rights
Share price
Exercise price
Dividend Yield
Expected volatility
Risk-free interest rate
Expected life
Weighted average fair value
Total amount
Expensed to 30 June 2013
During the current year, no Performance Rights vested.
9 November 2012
5,066,666
51 cents
0 cents
0.0%
75.0%
2.72%
1.14 year
11.04 cents
$559,360
$359,589
18
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
Table 3: Compensation Performance Rights: Granted and vested during the year ended 30 June 2013
Granted
Grant Date
Fair Value
per right at
grant date
$
Terms & Conditions for each Grant
Exercise price
per right
$
Expiry
Date
9 Nov 2012
9 Nov 2012
9 Nov 2012
9 Nov 2012
$0.51
$0.51
$0.51
$0.51
$0.00
$0.00
$0.00
$0.00
31 Dec 2013
31 Dec 2013
31 Dec 2013
31 Dec 2013
Original Grant
Directors
A Beardsall
B Kuandykov
G Gander
S Mison
Total
Number
1,500,000
1,500,000
1,500,000
366,666
4,866,666
First
Exercise
Date
31 Dec 2013
31 Dec 2013
31 Dec 2013
31 Dec 2013
Vested
Number
%
-
-
-
-
-
-
-
-
-
Table 4: Compensation Performance Rights: Granted and vested during the year ended 30 June 2012
Granted
Number
Grant /
Modification
Date
Fair Value
per right at
grant date
$
Terms & Conditions for each Grant
Exercise price
per right
$
Expiry
Date
First
Exercise
Date
Vested
Number
%
Original Grant
Directors
A Beardsall
B Kuandykov
G Gander
S Mison
666,667
666,667
666,667
133,334
26 August 2011
26 August 2011
26 August 2011
26 August 2011
$0.27
$0.27
$0.27
$0.27
$0.00
$0.00
$0.00
$0.00
21 August 2012
21 August 2012
21 August 2012
21 August 2012
21 August 2012
21 August 2012
21 August 2012
21 August 2012
Total
2,133,335
Modification *
A Beardsall
B Kuandykov
G Gander
S Mison
-
-
-
-
14 May 2012
14 May 2012
14 May 2012
14 May 2012
$0.19(i)
$0.19(i)
$0.19(i)
$0.19(i)
$0.00
$0.00
$0.00
$0.00
31 Dec 2013
31 Dec 2013
31 Dec 2013
31 Dec 2013
31 Dec 2013
31 Dec 2013
31 Dec 2013
31 Dec 2013
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
*The only modification was the expiry vesting date was extended from 21 August 2012 to 31 December 2013. All other terms and conditions
remained the same.
(i) Represents the incremental fair value, between the original and modified awards at modification date.
-
-
19
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
Service agreements
Remuneration and other terms of employment for the Executive Chairman/CEO, Company Sec/CFO, and all other
key management positions held in Kazakhstan have been formalised in service agreements. The main provisions of
the agreements in relation to Directors holding management roles are set out below.
Geoff Gander, Executive Chairman (Effective – 1 July 2012)
Base Terms
• This agreement was effective from 1 July 2012 and was for a term of 1.5 years (to December 31 2013).
• Base Salary of GBP200,000 including Director Fees and the current Superannuation Levy of 9%.
• Living expenses of GBP 75,000 per year, covering the cost of an apartment/office in London.
• Mr Gander has been issued, after shareholder approval in August 2011, 666,667 Performance Rights.
• At a General Meeting on 14 May 2012, shareholders approved an extension of the expiry date of the
Performance Rights from 21 August 2012 to 31 December 2013.
• An additional allocation of 1.5m Performance Rights was approved by shareholders at the 2012 AGM.
The termination provisions are as follows:
Employer - initiated
termination with reason
Employer - initiated
termination without reason
Termination for serious
misconduct
Employee – initiated
termination
Notice period
1 or 3 months
Payment in lieu of
notice
1 or 3 months
Treatment of Performance
Rights
Unvested rights forfeited
3 months
3 months
Unvested rights forfeited
None
1 or 3 months
None
None
Unvested rights forfeited
Unvested rights forfeited
Scott Mison, CFO / Company Secretary / Executive Director (Effective – 1 July 2012)
Base Terms
• This agreement was effective from 1 July 2012 and was for a term of 1. 5 years (to 31 December 2013).
• Base Salary of A$90,000.
• Director fees of A$40,000.
• Mr Mison has been issued, after shareholder approval in August 2011, 133,334 Performance Rights.
• At a General Meeting on 14 May 2012, shareholders approved an extension of the expiry date of the
Performance Rights from 21 August 2012 to 31 December 2013.
• An additional allocation of 366,666 Performance Rights was approved by shareholders at the 2012 AGM.
20
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
The termination provisions are as follows:
Employer - initiated
termination with reason
Employer - initiated
termination without reason
Termination for serious
misconduct
Employee – initiated
termination
Notice period
1 or 3 months
Payment in lieu of
notice
1 or 3 months
Treatment of Performance
Rights
Unvested rights forfeited
3 months
3 months
Unvested rights forfeited
None
1 or 3 months
None
None
Unvested rights forfeited
Unvested rights forfeited
Keith Martens, Technical Consultant (Effective – 1 July 2011)
Base Terms
• This agreement is effective from 1 July 2011. The term is on a rolling month basis.
• Fee is $2,000 (excluding GST) per full working day.
The termination provisions are as follows:
Employer - initiated
termination with reason
Employer - initiated
termination without reason
Termination for serious
misconduct
Employee – initiated
termination
Notice period
1 month
1 month
None
1 month
Payment in lieu of
notice
1 month
1 month
None
None
End of Remuneration Report (Audited)
21
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into Deeds of Indemnity with the Directors, indemnifying them against certain liabilities
and costs to the extent permitted by law.
The Company has also agreed to pay a premium in respect of a contract insuring the Directors and Officers of the
Company against certain liabilities and costs to the extent permitted by law. Full details of the cover and premium
are not disclosed as the insurance policy prohibits the disclosure.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Jupiter
Energy Limited adhere to strict principles of corporate governance. The Company’s corporate governance statement
is included on page 23 of this annual report.
AUDITOR INDEPENDENCE
The Directors received the declaration included on page 29 of this annual report from the auditor of Jupiter Energy
Limited.
NON-AUDIT SERVICES
There were no non-audit services provided by the entity’s auditors, Ernst & Young during the year.
This report has been made in accordance with a resolution of the Directors.
G A Gander
Director
Perth, Western Australia
27 September 2013
22
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Jupiter
adhere to strict principles of corporate governance.
The Board of Directors of Jupiter Energy Limited is responsible for the overall corporate governance of the
consolidated entity, guiding and monitoring the business and affairs of Jupiter on behalf of the shareholders by whom
they are elected and to whom they are accountable.
The Company’s corporate governance principles and policies are structured with reference to the Corporate
Governance Councils best practice recommendations, which are as follows:
Principle 1. Lay solid foundations for management and oversight
Principle 2. Structure the Board to add value
Principle 3. Promote ethical and responsible decision making
Principle 4. Safeguard integrity in financial reporting
Principle 5. Make timely and balanced disclosure
Principle 6. Respect the rights of shareholders
Principle 7. Recognise and manage risk
Principle 8. Remunerate fairly and responsibly
The Board’s Corporate Governance Charter includes procedures for compliance with the ASX Listing Rules
continuous disclosure requirements, trading in the Company’s securities, the management of risk, and a Code of
Conduct. Jupiter’s corporate governance practices were in place throughout the year ended 30 June 2013.
BOARD OF DIRECTORS
Role of the Board
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies,
practices, management and operations of the Company. It is required to do all things that may be necessary to be
done in order to carry out the objectives of the Company.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board
include the following:
• To set the strategic direction for the Company and monitor progress of those strategies;
• Establish policies appropriate for the Company;
• Monitor the performance of the Company, the Board and management;
• Approve the business plan and work programmes and budgets;
• Authorise and monitor investment and strategic commitments;
• Review and ratify systems for health, safety and environmental management; risk and internal control;
codes of conduct and regulatory compliance;
• Report to shareholders, including but not limited to, the Financial Statements of the Company; and
• Take responsibility for corporate governance.
23
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT (continued)
Composition of the Board
To add value to the Company the Board has been formed so that it has effective composition, size and commitment
to adequately discharge its responsibilities and duties given its current size and scale of operations.
The names of Directors of the Company in office at the date of this statement are set out in the Directors’ Report.
Information regarding Directors’ experience and responsibilities are included in the Directors’ Report section of this
Annual Report.
The number of Directors is specified in the Constitution of the Company as a minimum of three up to a maximum of
ten.
The preferred skills and experiences for a Director of the Company include:
• Exploration for oil and gas accumulations;
• Development and production operations of hydrocarbon accumulations;
• Financing of operations
• Business Development; and
• Public Company financial reporting and administration.
Chairman of the Board
The Chairman of the Board should be a Non-Executive Director and the Chairman will be elected by the Directors.
Mr Geoff Gander, however is an Executive Chairman and is not independent. Given his skills, experience and
knowledge of the Company, the Board considers that it is appropriate for him to be Chairman.
Independent Directors
The Board considers that a Director is independent if that Director complies with the following criteria:
• Apart from Director’s fees and shareholding, independent Directors should not have any business dealings
which could materially affect their independent judgment;
• Must not have been in an Executive capacity in the Company in the last 3 years;
• Must not have been in an advisory capacity to the Company in the last 3 years;
• Must not be a significant customer or supplier for the Company;
• Must not be appointed through a special relationship with a Board member;
• Must not owe allegiance to a particular group of shareholders which gives rise to a potential conflict of
interest;
• Must not hold conflicting cross Directorships; and
• Must not be a substantial shareholder or a nominee of a substantial shareholder (as defined under section 9
of the Corporations Act).
Using the ASX Best Practice Recommendations on the assessment of the independence of Directors. The Board
considers that of a total of four Directors, only one is considered independent.
Mr Geoff Gander is an Executive Chairman of the Company and is not considered to be independent. However, his
experience and knowledge of the Company makes his contribution to the Board such that it is appropriate for him to
remain on the Board.
Mr Baltabek Kuandykov is an independent Non-Executive Director of the Company. His oil industry experience,
especially within Kazakhstan, makes his contribution to the Board important and significant.
Mr Alastair Beardsall is a Non-Executive Director of the Company and is not considered to be independent as he
was a nominee Director by The Waterford Group, a substantial shareholder. However, his experience and
knowledge of the Company makes his contribution to the Board such that it is appropriate for him to remain on the
Board.
24
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT (continued)
Mr Scott Mison is an executive director / CFO / Company Secretary of the Company and is not considered to be
independent. However, his experience and knowledge of the Company makes his contribution to the Board such that
it is appropriate for him to remain on the Board.
Retirement and Rotation of Directors
Retirement and rotation of Directors are governed by the Corporations Act 2001 and the Constitution of the
Company. Each year one third Directors must retire and offer themselves for re-election. Any casual vacancy filled
will be subject to shareholder vote at the next Annual General Meeting of the Company.
Independent Professional Advice
Each Director has the right to seek independent professional advice at the Company’s expense after consultation
with the Chairman. Once received the advice is to be made immediately available to all Board members.
Access to Employees
Directors have the right of access to any employee. Any employee shall report any breach of corporate governance
principles or Company policies to a Director and/or Company Secretary/CFO who shall remedy the breach. If the
breach is not rectified to the satisfaction of the employee, they shall have the right to report any breach to an
independent Director without further reference to senior managers of the Company.
Insurance
The Directors review the requirements for insurance cover for the associated risks for its field operations, including
drilling, production and storage of hydrocarbons and other activities and procures insurance cover at levels and
costs they feel are appropriate.
Directors and officers insurance for Directors will be arranged by the Company at Company expense.
Share Ownership
Directors are encouraged to own Company shares.
Board Meetings
The following points identify the frequency of Board Meetings and the extent of reporting from management at the
meetings:
• A minimum of four meetings are to be held per year;
• Other meetings will be held as required, meetings can be held by telephone link; and
•
Information provided to the Board includes all material information on: operations, budgets, cash flows,
funding requirements, shareholder movements, broker activity in the Company’s securities, assets and
liabilities, disposals, financial accounts, external audits, internal controls, risk assessment, new venture
proposals, and health, safety and environmental (HSE) reports.
The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company
during the financial year are set out in the Directors’ Report.
Board Performance Review
There was no evaluation conducted during the financial year.
25
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT (continued)
Other Areas for Board Review
• Reporting to shareholders and the market to ensure trade in the Company’s securities takes place in an
efficient, competitive and informed market; and
Insurance, both corporate and joint venture related insurances.
•
Board Committees
Audit Committee
The Company does not have an audit committee. The Board is of the opinion that due to the nature and size of the
Company, the functions performed by an audit committee can be adequately handled by the full Board.
The CEO and the CFO declare in writing to the Board that the Company’s financial statements for the year ended 30
June 2013 present a true and fair view, in all material aspects, of the Company’s financial condition and operational
results and are in accordance with relevant accounting standards. This representation is made by the CEO and the
CFO prior to the Director’s approval of the release of the annual and six monthly accounts. This representation is
made after enquiry of, and representation by, appropriate levels of management.
A non-executive Director meets with the Auditors without Executives present to go through the financial statements
prior to sign off on the accounts.
Jupiter Energy Limited has requested the external auditors to attend the annual general meeting to be available to
answer shareholders questions regarding the audit.
Nomination Committee
The Board of Directors of the Company does not have a nomination committee. The Board is of the opinion that due
to the nature and size of the Company, the functions performed by a nomination committee can be adequately
handled by the full Board.
Remuneration Committee
The Company does not have a remuneration committee. The Board is of the opinion that due to the nature and size
of the Company, the functions performed by a remuneration committee can be adequately handled by the full Board.
Remuneration levels for Directors, Secretaries, Senior Executives of the Company, and relevant group Executives of
the consolidated entity (“the Directors and Senior Executives”) are competitively set to attract and retain
appropriately qualified and experienced Directors and Senior Executives.
The remuneration structures explained below are designed to attract suitably qualified candidates, reward the
achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The
remuneration structures take into account:
•
•
•
the capability and experience of the Directors and Senior Executives
the Directors and Senior Executives ability to control the relevant segment/s’ performance
the consolidated entity’s performance including:
o
o
the consolidated entity’s earnings
the growth in share price and returns on shareholder wealth
•
the amount of incentives within each Directors and Senior Executives remuneration
For details of remuneration paid to Directors and officers for the financial year please refer to the Directors’ Report
on page 17.
26
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT (continued)
Risk Management
The risks involved in oil and gas exploration Company and the specific uncertainties for the Company continue to be
regularly monitored and the full Board of the Company meets on an annual basis to formally review such risks. All
proposals reviewed by the Board include a consideration of the issues and risks of the proposal.
The potential exposures, including financial, reputation, and HSE, with running the Company have been managed by
the Board and senior management in Kazakhstan who together have significant broad-ranging industry experience.
Additionally, it is the responsibility of the Board to assess the adequacy of the Company’s internal control systems
and that its financial affairs comply with applicable laws and regulations and professional practices. The CEO and
the CFO declare in writing to the Board that the financial reporting risk management and associated compliance
controls have been assessed and found to be operating efficiently and effectively. This representation is made by the
CEO and CFO prior to the Director’s approval of the release of the annual and six monthly accounts. This
representation is made after enquiry of, and representation by, appropriate levels of management.
PROMOTION OF ETHICAL AND RESPONSIBLE DECISION-MAKING
Code of Conduct
The goal of establishing the Company as a significant Australian-based petroleum exploration and production
Company is underpinned by its core values of honesty, integrity, common sense and respect for people. The
Company desires to remain a good corporate citizen and appropriately balance, protect and preserve all
stakeholders’ interests.
The Board has adopted a Code of Conduct for Directors and employees of the Company. The Company’s goal of
achieving above average wealth creation for our shareholders should be enhanced by complying with this Code of
Conduct which provides principles to which Directors and employees should be familiar and to which they are
expected to adhere and advocate.
It is the responsibility of the Board to ensure the Company performs under this Code and for its regular review.
Diversity
The Board has not adopted a separate diversity policy, however is committed to workplace diversity and recognizes
the benefits arising from recruitment, development and retention of talented, diverse and motivated workforce. The
Company is not of a sufficient size to justify measurable objectives at this stage. As at 30 June 2013, there were
sixteen women in the Groups workforce, two of which held key executive positions.
Trading in Company Securities by Directors, officers and employees
Trading of shares is covered by, amongst other things, the Corporations Act, the ASX Listing Rules, the AIM Listing
Rules and the KASE Listing Rules. The Board has established a Securities Trading Policy that establishes strict
guidelines as to when a Director, officer or an employee can deal in Company shares. The policy prohibits trading in
the Company’s securities whilst the Directors, officer or employee is in the possession of price sensitive information.
For details of shares held by Directors and Officers please refer to the Directors’ Report on page 3.
27
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT (continued)
SHAREHOLDER COMMUNICATION
The Board aims to ensure that shareholders and the general investing community have equal access to the
Company’s information.
The Company has policies and procedures that are designed to ensure compliance with ASX, AIM and KASE Listing
Rules disclosure requirements and to ensure accountability at a senior management level for that compliance. This
disclosure policy includes processes for the identification of matters that may have material effect on the price of the
Company’s securities, notifying them to the ASX and posting them on the Company’s website.
The Company also has a strategy to promote effective communication with shareholders and encourage effective
participation at general meetings through a policy of open disclosure to shareholders, regulatory authorities and the
broader community of all material information with respect to the Company’s affairs including, but not limited to:
• Company’s activities
• Conflicts of interest and related party transactions;
• Executive remuneration;
• The grant of options and details of Share Option and Performance Rights Plans;
• The process for performance evaluation of the Board, its committees, individual Directors and key
managers;
• The link between remuneration paid to Directors and Executives and corporate performance; and
• The use of clear and concise text in all communications.
following
The
(www.jupiterenergy.com):
information
is communicated
to shareholders and available on
the Company web site
• The Annual Report and notices of meetings of shareholders;
• Quarterly reports reviewing the operations, activities and financial position of the Company;
• All documents that are released to the ASX, AIM and KASE are made available on the Company’s website;
and
• All other information on the Company’s website is updated on an ongoing basis.
28
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Jupiter Energy
Limited
In relation to our audit of the financial report of Jupiter Energy Limited for the financial year ended
30 June 2013, 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
R J Curtin
Partner
Perth
27 September 2013
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RC:DR:JUPITER:048
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
30
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
Revenue
Cost of sales
Gross profit
Other income
(Loss) / gain on derivative financial instrument
General and administrative costs
Operating loss
Finance income
Finance costs
Loss before tax
Income tax expense
Loss after income tax
Note
Consolidated
2013
A$
2012
A$
5,778,057
(4,869,004)
909,053
(694,342)
(161,442)
(4,499,291)
(4,446,022)
1,063,086
(898,654)
164,432
131,418
761,813
(4,659,544)
(3,601,881)
34,779
(474,586)
24,475
(717,696)
(4,885,829)
(4,295,102)
-
-
(4,885,829)
(4,295,102)
4
5
Other comprehensive income net of tax
Foreign currency translation
5,816,477
1,337,981
Total comprehensive profit / (loss) for the period
930,648
(2,957,121)
Earnings per share for loss attributable to the
ordinary equity holders of the Company:
Basic loss per share (cents)
Diluted loss per share (cents)
24
24
(3.25)
(3.25)
(3.70)
(3.70)
The consolidated statement of comprehensive income is to be read in conjunction with the notes of the financial statements
31
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Inventories
Total Current Assets
Non-Current Assets
Trade and other receivables
Oil and gas properties
Plant and equipment
Exploration and evaluation expenditure
Other financial assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Deferred revenue
Other financial liabilities
Derivative liability
Provisions
Total Current Liabilities
Non-current Liabilities
Provisions
Other financial liabilities
Derivative liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Share based payment reserve
Foreign currency translation reserve
Accumulated losses
Total Equity
Note
Consolidated
2013
A$
2012
A$
6
7
8
9
7
10
11
12
13
14
15
17
17
16
16
17
17
18
19
19
4,131,731
1,119,496
264,717
59,087
5,575,031
3,818,391
25,908,977
1,617,097
34,710,757
460,951
66,516,173
72,091,204
2,678,639
1,642,837
3,280,160
763,177
86,574
8,451,387
452,942
8,613,730
-
9,066,672
17,518,059
395,445
527,566
460,496
53,320
1,436,827
2,401,889
14,225,282
926,336
25,014,521
292,752
42,860,780
44,297,607
1,124,623
1,192,039
-
-
90,957
2,407,619
356,594
2,789,897
274,880
3,421,371
5,828,990
54,573,145
38,468,617
85,633,935
5,248,370
1,069,490
(37,378,650)
54,573,145
71,236,136
4,472,289
(4,746,987)
(32,492,821)
38,468,617
The consolidated statement of financial position is to be read in conjunction with the notes of the financial statements.
32
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Net cash flows (used in) operating activities
Cash flows from investing activities
Payments for exploration and evaluation expenditure
Payments for plant and equipment
Net Cash flows (used in) investing activities
Cash flows from financing activities
Proceeds from issues of shares
Proceeds from unsecured loan
Proceeds from convertible notes
Fee on issue of convertible note
Transactions cost from issue of shares and convertible
notes
Interest paid
Net cash flows from financing activities
Net increase / (decrease) in cash held
Effects of exchange rate changes
Cash at beginning of the year
Cash at end of the year
6
Note
Consolidated
2013
A$
2012
A$
9,250,333
(11,257,385)
34,779
(1,972,273)
26
3,244,141
(5,996,508)
24,476
(2,727,891)
(16,634,046)
(843,706)
(17, 477,752)
(13,255,794)
(752,218)
(14,008,012)
11,613,015
5,760,840
6,189,480
(281,988)
(501,217)
(148,378)
22,631,752
3,181,727
554,559
395,445
4,131,731
-
-
3,487,987
-
(44,475)
(379,091)
3,064,421
(13,671,482)
98,679
13,968,248
395,445
The statement of cash flows is to be read in conjunction with the notes of the financial statements.
33
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
Share Based
Payment
Reserve
Issued capital
A$
A$
Foreign
Currency
Translation
Reserve
A$
Accumulated
Losses
A$
Total
A$
71,280,610
-
-
-
3,922,453
-
-
-
(6,084,968)
-
1,337,981
1,337,981
(28,197,719)
(4,295,102)
-
(4,295,102)
40,920,376
(4,295,102)
1,337,981
(2,957,121)
-
549,836
-
-
549,836
(44,474)
71,236,136
-
4,472,289
-
(4,746,987)
-
(32,492,821)
(44,474)
38,468,617
CONSOLIDATED
As at 1 July 2011
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions by owners recorded
directly in equity:
Share based payments
Shares issued
- Costs of issue
At 30 June 2012
As at 1 July 2012
Loss for the period
Other comprehensive income
Total comprehensive income
71,236,136
-
-
-
4,472,289
-
-
-
(4,746,987)
-
5,816,477
5,816,477
(32,492,821)
(4,885,829)
-
(4,885,829)
38,468,617
(4,885,829)
5,816,478
930,649
Transactions by owners recorded
directly in equity:
Share based payments
Shares issued
- Costs of issue
-
14,899,015
(501,217)
776,081
-
-
-
-
-
-
-
-
776,081
14,899,015
(501,217)
At 30 June 2013
85,633,934
5,248,370
1,069,490
(37,378,650)
54,573,145
The statements of changes in equity are to be read in conjunction with the notes of the financial statements.
34
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
1
CORPORATE INFORMATION
The financial report of Jupiter Energy Limited for the year ended 30 June 2013 was authorised for issue in accordance
with a resolution of the directors on 27 September 2013
Jupiter Energy Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Stock Exchange and on London’s AIM Market (as CDI’s). Jupiter Energy Limited is a for profit entity.
The nature of the operations and principal activities of the Group are described in the Directors Report on pages 2 to 12 of
this 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, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report has also been prepared on a historical cost basis except for certain
financial instruments measured at fair value. The financial report is presented in Australian dollars.
The amounts contained within this report have been rounded to nearest $1 (where rounding is applicable) under the
option available to the Company under ASIC Class Order 98/100.
Going Concern
At 30 June 2013, the Group has a net working capital deficiency of $2.8 million, which includes Promissory Notes of $3.28
million repayable on 31 December 2013. Subsequent to year end, the Group raised US$6.5m through the issue of Series
B Convertible Notes with a coupon of 12% and an exercise price of $1.25 and expiring 31 September 2016. The net cash
raised was US$3.5m before costs, as the Promissory Notes were converted to Convertible Notes.
The consolidated financial statements have been prepared on a going concern basis with the Directors of the opinion that
the Group can meet its obligations as and when they fall due.
(b) Statement of compliance
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
From 1 July 2012, the Group has adopted the following Standards and Interpretations, mandatory for annual periods
beginning on 1 July 2012. Adoption of these standards and interpretations did not have any significant effect on the
financial position or performance of the Group
AASB 2013-2 Amendments to AASB 1038 – Regulatory Capital
AASB 2010-8 Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets [AASB
112]
AASB 2011-9 Amendments to Australian Accounting Standards -Presentation of Other Comprehensive Income
[AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]
35
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have
not been adopted by the Group for the annual reporting period ending 30 June 2013. These are outlined in the following table.
Reference
Title
Summary
AASB 10
Consolidated Financial
Statements
AASB 12
Disclosure of Interests in
Other Entities
AASB 13
Fair Value Measurement
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 this and
other standards via AASB 2011-7 and AASB 2012-10.
AASB 12 includes all disclosures relating to an entity's
interests in subsidiaries, joint arrangements, associates and
structured 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, structured entities and
subsidiaries with non-controlling interests.
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.
Application
date for
Group
1 July 2013
Application
date of
standard
1 Jan 2013
Impact on
Group
financial
report
The group has
not yet
determined
the financial
impact of the
change.
1 January
2013
1 January
2013
1 July 2013
1 July 2013
The group has
not yet
determined
the financial
impact of the
change.
The group has
not yet
determined
the financial
impact of the
change.
AASB 119
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 recognised in full with
actuarial gains and losses being recognised in other
comprehensive income. It also revised the method of
calculating the return on plan assets.
1 January
2013
The group has
not yet
determined
the financial
impact of the
change.
1 July 2013
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.
Consequential amendments were also made to other
standards via AASB 2011-10.
36
Application
date for
Group
1 July 2013
1 July 2013
1 July 2013
1 July 2013
1 July 2013
Impact on
Group
financial
report
The group has
not yet
determined
the financial
impact of the
change.
The group has
not yet
determined
the financial
impact of the
change.
The group has
not yet
determined
the financial
impact of the
change.
The group has
not yet
determined
the financial
impact of the
change.
The group has
not yet
determined
the financial
impact of the
change.
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
Application
date of
standard
1 January
2013
Reference
Title
Summary
AASB 2012-2
AASB 2012-5
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 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,
when all the offsetting criteria of AASB 132 are not met.
Amendments to Australian
Accounting Standards
arising from Annual
Improvements 2009-2011
Cycle
AASB 2012-5 makes amendments resulting from the 2009-
2011 Annual Improvements Cycle. The standard addresses a
range of improvements, including the following:
► Repeat application of AASB 1 is permitted (AASB 1)
► Clarification of the comparative information requirements
when an entity provides a third balance sheet (AASB 101
Presentation of Financial Statements).
1 January
2013
AASB 2012-9
Amendment to AASB 1048
arising from the withdrawal
of Australian Interpretation
1039
AASB 2012-9 amends AASB 1048 Interpretation of Standards
to evidence the withdrawal of Australian Interpretation
1039 Substantive Enactment of Major Tax Bills in Australia.
1 January
2013
AASB 2011-4
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. It also removes the individual
KMP disclosure requirements for all disclosing entities in
relation to equity holdings, loans and other related party
transactions.
AASB 1053
Application of Tiers of
Australian Accounting
Standards
This standard establishes a differential financial reporting
framework consisting of two tiers of reporting requirements for
preparing general purpose financial statements:
(a)
(b)
Tier 1: Australian Accounting Standards
Tier 2: Australian Accounting Standards - Reduced
Disclosure Requirements
Tier 2 comprises the recognition, measurement and
presentation requirements of Tier 1 and substantially reduced
disclosures corresponding to those requirements.
1 July 2013
1 July 2013
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)
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.
(b)
(c)
Consequential amendments to other standards to
implement the regime were introduced by AASB 2010-2,
2011-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11.
AASB 2012-3
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
The group has
not yet
determined
the financial
impact of the
change.
1 July 2014
37
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
Application
date of
standard
1 Jan 2015
Application
date for
Group
1 July 2015
Impact on
Group
financial
report
The group has
not yet
determined
the financial
impact of the
change.
Reference
Title
Summary
AASB 9
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.
(b) 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.
(c)
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.
(d) 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
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.
Further amendments were made by AASB 2012-6 which
amends the mandatory effective date to annual reporting
periods beginning on or after 1 January 2015. AASB 2012-6
also modifies the relief from restating prior periods by
amending AASB 7 to require additional disclosures on
transition to AASB 9 in some circumstances.
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.
38
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of Jupiter Energy Limited and its subsidiaries
as at 30 June each year ('the Group').
Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies
so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether a group controls another entity.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies.
Subsidiaries and special purpose entities are fully consolidated from the date on which control is obtained by the
Group and cease to be consolidated from the date on which control is transferred out of the Group.
Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances
and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.
Unrealised losses are eliminated unless costs cannot be recovered.
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. Where there is loss of control of a subsidiary, the
consolidated financial statements include the results for the part of the reporting period during which Jupiter Energy
Limited has control.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of
accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the
liabilities assumed and any non-controlling interest in the acquisition. The identifiable assets acquired and the
liabilities assumed are measured at their acquisition date fair values.
(d) 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:
Share-based payment 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 using a Black and Scholes model,
trinomial and Monte Carlo using the assumptions detailed in note 21.
Exploration and evaluation
The Group's accounting policy for exploration and evaluation is set out in note 2(f). The application of this policy
necessarily requires management to make certain estimates and assumptions as to future events and circumstances,
in particular the assessment of whether economic quantities of reserves may be found. Any such, estimates and
assumptions may change as new information becomes available. If, after having capitalised expenditure under the
Group’s policy, management concludes that the Group is unlikely to recover the expenditure by future exploitation or
sale, then the relevant capitalised amount will be written off to the income statement.
39
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provision for restoration
Costs of site restoration are provided over the life of the facility from when exploration commences and are included
in the costs of that stage. Site restoration costs include the dismantling and removal of plant, equipment and building
structures, waste removal, and rehabilitation of the site in accordance with clauses of the permits. Such costs have
been determined using estimates of future costs, current legal requirements and technology on an undiscounted
basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and
future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed
within one year of abandoning the site.
Units of production depreciation of oil and gas properties
Oil and gas properties are depreciated using the units of production (UOP) method over total proved developed
hydrocarbon reserves. This results in a depreciation/amortisation charge proportional to the depletion of the
anticipated remaining production from the field.
Each items’ life, which is assessed annually, has regard to both its physical life limitations and to present
assessments of economically recoverable reserves of the field at which the asset is located. These calculations
require the use of estimates and assumptions, including the amount of recoverable reserves. The calculation of the
UOP rate of depreciation could be impacted to the extent that actual production in the future is different from current
forecast production based on total proved reserves. Changes to proved reserves could arise due to changes in the
factors or assumptions used in estimating reserves, including:
• The effect on proved reserves of differences between actual commodity prices and commodity price
assumptions
Or
• Unforeseen operational issues
Changes are accounted for prospectively.
Recoverability of oil and gas properties
The Group assesses each asset or cash generating unit (CGU) (excluding goodwill, which is assessed annually
regardless of indicators) every reporting period to determine whether any indication of impairment exists. Where an
indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the
higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and
assumptions such as long-term oil prices (considering current and historical prices, price trends and related factors),
discount rates, operating costs, future capital requirements, decommissioning costs, exploration potential, reserves
operating performance (which includes production and sales volumes). These estimates and assumptions are subject
to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections,
which may impact the recoverable amount of assets and/or CGUs
Production start date
The group assesses each well to determine when the well moves into the production stage. This is when the well is
substantially completed and ready for intended use. The group considers various criteria in determining the
production start date, including but not limited to, results of well testing, the ability of the well to sustain ongoing
production, installation of the relevant well infrastructure and receiving the relevant regulatory approvals.
When the well moves into the production stage the capitalisation of certain development costs ceases and costs
incurred are expensed as a production cost. It also at this point when that the well commences depreciation. Any
proceeds received from oil sales prior to the production start date as part of any well testing, are capitalised to the
asset.
40
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length
transaction between knowledgeable and willing parties. Fair value for oil and gas assets is generally determined as
the present value of estimated future cash flows arising from the continued use of the assets, which includes
estimates such as the cost of future expansion plans and eventual disposal, using assumptions that an independent
market participant may take into account. Cash flows are discounted to their present value using a discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Management has
assessed its CGUs as being an individual field, which is the lowest level for which cash inflows are largely
independent of those of other assets.
(e) Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment
losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the
part is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of
the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are
recognised in profit or loss as incurred.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Plant and equipment – over 3 to 10 years
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each
financial year end.
Disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits
are expected to be derived from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
(f)
Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These
costs are only carried forward to the extent that they are expected to be recouped through the successful
development of the area or where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves. 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.
Costs of evaluation, seismic and unsuccessful exploration in the area of interest are expensed as incurred even if
activities in this area of interest are continuing. Accumulated costs in relation to an abandoned area are written off in
full against profit in the year in which the decision to abandon the area is made.
When a discovered oil or gas field enters the development phase the accumulated exploration and evaluation
expenditure is transferred to oil and gas assets – assets in development.
41
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Oil and Gas Properties
Oil and gas properties are usually single oil or gas fields being developed for future production or which are in the
production phase. Where several individual oil fields are to be produced through common facilities, the individual oil
field and the associated production facilities are managed and reported as a single oil and gas asset.
Assets in development
When the technical and commercial feasibility of an undeveloped oil or gas field has been demonstrated, the field
enters its development phase. The costs of oil and gas assets in the development phase are separately accounted for
as tangible assets and include past exploration and evaluation costs, development drilling and plant and equipment
and any associated land and buildings. When commercial operation commences the accumulated costs are
transferred to oil and gas assets – producing assets.
Producing assets
The costs of oil and gas assets in production are separately accounted for as tangible assets and include past
exploration and evaluation costs, pre-production development costs and the ongoing costs of continuing to develop
reserves for production and to expand or replace plant and equipment and any associated land and buildings.
Producing assets are depreciated over proved reserves on a unit of production basis.
(h)
Impairment of assets
At each reporting date, the company reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the
asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the
income statement.
(i)
Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less
an allowance for any uncollectible amounts.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written
off when identified.
(j) Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with
an original maturity of three months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts.
(k)
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price
in the ordinary course of business less any estimated selling costs.
Cost includes those costs incurred in bringing each component of inventory to its present location and condition.
42
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l)
Trade and other payables
Trade payables and other payables are carried at amortised costs and due to their short-term nature are not
discounted. They 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. The amounts are unsecured and are usually paid within 30 days of recognition.
(m) Financial liabilities
Financial liabilities within the scope of AASB 139 are classified as financial liabilities at fair value through profit or
loss, loans and borrowings, or as derivatives designated, as appropriate. The Group determines the classification of
its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly
attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and
borrowings and derivative financial instruments.
Derivative Financial Instruments
Derivatives are fair valued using appropriate valuation techniques. Such techniques may include using recent arm’s
length market transactions; reference to the current fair value of another instrument that is substantially the same; a
discounted cash flow analysis or other valuation techniques.
(n)
Share-based payment transactions
Share-based compensation benefits are provided to directors and executives.
Options
The fair value of options granted to directors and executives is recognised as an employee benefit expense with a
corresponding increase in contributed equity. The fair value is measured at grant date and recognised over the
vesting period during which the directors and/or executives becomes entitled to the options.
The fair value at grant date is determined using an option pricing model that takes into account the exercise price, the
term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option,
the share price at grant date and expected price volatility of the underlying share, the expected divided yield and the
risk-free interest rate for the term of the option.
Performance Rights
The cost of performance rights are measured by reference to the fair value at the date at which they are granted. The
fair value is determined using a Monte Carlo methodology, which considers the incorporation of market based
hurdles. Non market conditions are not factored into the fair value of the performance rights at grant. Probability
factors are assigned to the vesting expense as to whether non market conditions will be met.
43
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Share-based payment transactions
Share-based compensation benefits are provided to directors and executives.
Options
The fair value of options granted to directors and executives is recognised as an employee benefit expense with a
corresponding increase in contributed equity. The fair value is measured at grant date and recognised over the
vesting period during which the directors and/or executives becomes entitled to the options.
The fair value at grant date is determined using an option pricing model that takes into account the exercise price, the
term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option,
the share price at grant date and expected price volatility of the underlying share, the expected divided yield and the
risk-free interest rate for the term of the option.
Performance Rights
The cost of performance rights are measured by reference to the fair value at the date at which they are granted. The
fair value is determined using a Monte Carlo methodology, which considers the incorporation of market based
hurdles. Non market conditions are not factored into the fair value of the performance rights at grant. Probability
factors are assigned to the vesting expense as to whether non market conditions will be met.
(o) Revenue recognition
Sales revenue
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
and can be measured reliably. Incidental revenue generated during the development stage of an asset, is offset
against the carrying value of the asset, rather than recognised in the statement of comprehensive income.
Interest
Revenue is recognised as the 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.
(p) Convertible Note
A Convertible Note is split into two components: a debt component and a component representing the embedded
derivatives in the Convertible Note. The debt component represents the Group’s liability for future interest coupon
payments and the redemption amount. The embedded derivatives represent the value of the option that note holders
have to convert into ordinary shares in the Company.
44
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(q)
Income tax
The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense is based
on the profit adjusted for any non-assessable or disallowed items.
Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be
credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no
adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law.
(r) Other taxes
Revenues, expenses and assets are recognised net of the amount of 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 balance sheet.
Cash flows are included in the Cash Flow Statement on a gross basis and the 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.
(s) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
45
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude
any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted
average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
(u) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance
cost.
Employee leave benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
expected to be settled within 12 months of the reporting date are recognised in provisions in respect of
employees' services up to the reporting date. They are measured at the amounts expected to be paid when the
liabilities are settled. Liabilities for non accumulating sick leave are recognised when the leave is taken and are
measured at the rates paid or payable.
Restoration
Costs of site restoration are provided over the life of the facility from when exploration commences and are
included in the costs of that stage. Site restoration costs include the dismantling and removal of plant, equipment
and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the permits.
Such costs have been determined using estimates of future costs, current legal requirements and technology on
an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly the costs have been determined on the basis that the restoration will be
completed within one year of abandoning the site.
46
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(v)
Foreign Currency Transactions and Balances
(i) Functional and presentation currency
Both the functional and presentation currency of Jupiter Energy Limited and its Australian subsidiaries are
Australian dollars ($). The Singapore subsidiaries' functional currency is United States Dollars which is translated
to the presentation currency. The functional currency of the Branch of the Singapore subsidiary is Tenge (see
below for consolidated reporting).
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.
(iii) Translation of Group Companies’ functional currency to presentation currency
The results of the Singapore subsidiaries are translated into Australian Dollars (presentation currency) as at the
date of each transaction. Assets and liabilities are translated at exchange rates prevailing at reporting date.
Exchange variations resulting from the translation are recognised in the foreign currency translation reserve in
equity
On consolidation, exchange differences arising from the translation of the net investment in the Singapore
subsidiaries and its Branch are taken to the foreign currency translation reserve. If a Singapore subsidiary was
sold, the proportionate share of exchange differences would be transferred out of equity and recognised in the
statement of comprehensive income.
(w) Segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenue and incur expenses (including revenues and expenses relating to transactions with other components of
the same entity), whose operating results are regularly reviewed by the Board of Directors (the chief operating
decision makers) to make decisions about resources to be allocated to the segment and assess its performance
and for which discrete financial information is available. Management will also consider other factors in
determining operating segments such as the existence of a line manager and the level of segment information
presented to the executive management team.
Operating segments are identified based on the information provided to the chief operating decision makers,
being the Board of Directors. Currently the Group has only one operating segment, being the Group.
47
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(x) Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of
funds.
Where funds are borrowed specifically to finance a project, the amount capitalised represents the actual
borrowing costs incurred. Where surplus funds are available for a short term out of money borrowed specifically
to finance a project, the income generated from the temporary investment of amounts is also capitalised and
deducted from the total capitalised borrowing cost. Where the funds used to finance a project form part of
general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant
general borrowings of the Group during the period.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Even though exploration and evaluation assets can be qualifying assets, they generally do not meet the
―probable economic benefits test and also are rarely debt funded. Any related borrowing costs are therefore
generally recognised in profit or loss in the period they are incurred.
3
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial instruments comprise receivables, borrowings, payables, cash and short-term deposits.
Risk Exposures and Responses
The main purpose of these financial instruments is to provide finance for the Group’s operations. The Group has various other
financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The main
risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, foreign currency risk and credit
risk.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews the risks identified
below, including the setting of limits for trading in derivatives, hedging cover of foreign currency and interest rate risk, credit
allowances, and future cash flow forecast projections.
Interest rate risk
The Group’s exposure to market risk for changes in interest rates is only on short term deposits and cash and cash
equivalents.
At balance date, the Group had the following mix of financial assets and liabilities exposed to interest rate risk:
48
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
3
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
At balance date, the Group had the following mix of financial assets and liabilities exposed to interest rate risk:
Financial Assets
Cash and cash equivalents
Net exposure
Consolidated
2013
$
2012
$
4,131,731
4,131,731
395,445
395,445
The following table summarises the sensitivity of the fair value of the financial instruments held at balance date, if interest rates
had moved, with all other variables held constant, post tax profit would have been affected as follows:
Post – tax gain / (loss)
+ 1%
-1%
Foreign currency risk
Consolidated
2013
$
41,317
(41,317)
2012
$
3,954
(3,954)
The Group has transactional currency exposures. Such exposure arises from sales or purchases by an operating entity in
currencies other than the functional currency.
At balance date, the Group had the following exposure to United States Dollars (USD), Kazakhstan Tenge (KZT), Great Britain
Pound (GBP) and Singapore Dollars (SGD) foreign currency that is not designated in cash flow hedges:
USD
KZT
SGD
GBP
Financial Assets
Cash and cash equivalents
-
-
-
-
Liquidation Fund
Trade and other receivables
Other debtors
Financial Liabilities
Trade and other payables
Other financial liabilities
Derivative
Net exposure
Consolidated
2013
$
2012
$
3,029,199
798,661
1,859
281,854
418,349
-
-
4,529,922
341,630
-
-
4,200
244,151
-
-
589,981
-
(11,893,890)
(763,177)
(12,657,067)
(8,127,145)
-
(2,789,897)
(274,880)
(3,064,777)
(2,474,796)
49
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
3
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The following table summarises the sensitivity of financial instruments held at balance date to movement in the exchange rate
of the Australian dollar to the United States dollar, Singapore dollar and Kazakhstan Tenge, with all other variables held
constant. The 5% sensitivity is based on reasonably possible changes, over a financial year, using the observed range of
actual historical rates for the preceding 5 periods.
Post – tax gain / (loss)
+5%
-5%
Credit risk
Consolidated
2013
$
2012
$
(406,357)
406,357
(123,740)
123,740
Credit risk represents the loss that would be recognised if counterparties fail to perform as
contracted.
Part of the Group's receivables balances are represented by GST input tax credits, which are
received on a quarterly basis, and deposits held in trust in respect of leases for office premises.
With respect to credit risk arising from the financial assets of the Group, which comprise cash
and cash equivalents and trade receivables, the Group’s exposure to credit risk arises from
default of the counter party, with a maximum exposure equal to the carrying amount of these
instruments.
There are no significant concentrations of credit risk within the Group.
Liquidity Risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
use of bank overdrafts, bank loans, finance leases and hire purchase contracts.
The contractual maturities of the Group’s financial liabilities are shown in the table below.
Undiscounted cash flows for the respective years are presented.
Financial Assets
Within one year
After one year but not more
than five years
More than five years
Financial Liabilities
Within one year
After one year to two years
More than two years
Net Exposure
Consolidated
2013
$
2012
$
-
527,566
-
418,349
418,349
(3,280,160)
(9,376,907)
(12,657,067)
(12,238,718)
2,401,889
292,752
3,222,207
(2,316,661)
(3,064,777)
-
(5,381,438)
(2,159,231)
50
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
3
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Management and the Board monitor the Group’s liquidity on the basis of expected cash flow. The information that is
prepared by senior management and reviewed by the Board includes monthly and annual cash flow budgets.
Fair value
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
All of the Group’s other financial liabilities are carried at amortised cost, where the carrying value approximates the fair value.
The fair value of the derivative was determined using the level 2 method.
Equity Price Risk
The Group has exposure in equity risk through the convertible notes, which is susceptible to market price risk arising from
uncertainties about future values of the Company’s share price.
At the reporting date, the exposure to market price risk at fair value was $763,177. A decrease in the company’s share price by
10% could have an impact of approximately $76,318 on profit and loss or equity attributable to the Group, depending on
whether the decline is significant or prolonged. An increase in the company’s share price by 10% could have an impact of
approximately $76,318 on profit and loss or equity attributable to the Group, depending on whether the decline is significant or
prolonged.
4.
EXPENSES
Administration and compliance expenses
Consulting fees
Depreciation and amortisation expenses
Directors fees
Legal fees
Occupancy expenses
Share based payments
Foreign currency loss
Total expenses
Consolidated
2013
$
2,795,630
210,989
142,201
239,450
108,405
226,536
776,081
-
4,499,291
2012
$
2,846,275
252,673
241,723
321,147
112,022
335,868
549,836
-
4,659,544
During the year, employee benefits were $970,780. This is included in administration and compliance expenses.
51
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
5.
TAXATION
Prima facie income tax on operating (loss) is reconciled to the income tax benefit provided in the financial statements as
follows:
Prima facie income tax benefit on operating (loss) at the Australian tax rate
of 30% (2012: 30%)
Non deductible expenditure:
- Effect of tax rates in foreign jurisdictions
- Share Based payments
- Administration expenses
Temporary differences and tax losses not
bought to account as a deferred tax asset
Income tax expense
Deferred Income Tax
Deferred income tax at 30 June relates to the following:
Consolidated
Deferred tax liabilities
Deferred tax assets
Unrealised FX (gain) / loss
Unrealised derivative (gain) / loss
Share issue costs
Revenue tax losses – Australia
Revenue tax losses – Kazakhstan
Deferred tax assets not recognised
Deferred tax (income)/expense
Net deferred tax recognised in Balance Sheet
Consolidated
2013
$
2012
$
(1,465,749)
(1,288,531)
203,065
232,825
-
1,029,859
523,042
164,951
6,619
593,919
-
-
-
-
213,444
48,433
145,455
6,580,747
1,655,650
(8,643,729)
-
-
32,989
228,544
52,136
5,910,644
1,349,193
(7,573,506)
-
-
The Consolidated Group has tax losses of $8,643,729 (2012: $7,573,506) that are available indefinitely for offset against future
taxable profits of the companies in which the losses arose.
The potential deferred tax asset will only be realised if:
(a) The relevant Company derives future assessable income of a nature and an amount sufficient to enable the asset to
be realised, or the asset can be utilised by another Company in the consolidated entity in accordance with Division
170 of the Income Tax Assessment Act 1997;
(b) The relevant Company and/or consolidated entity continues to comply with the conditions for deductibility imposed by
the Law; and
(c) No changes in tax legislation adversely affect the relevant Company and/or consolidated entity in realising the asset.
52
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
6.
CASH ASSETS
Cash at bank and in hand
Consolidated
2013
$
4,131,731
4,131,731
2012
$
395,445
395,445
The bank accounts are at call and pay interest at a weighted average interest rate of 1.54% at 30 June 2013 (2012:
0.30%)
7.
RECEIVABLES
Current
Trade receivables
VAT receivable
Other debtors
Non-current
VAT receivable
Consolidated
2013
$
23,222
1,084,938
11,336
1,119,496
2012
$
23,911
492,319
11,336
527,566
3,818,391
2,401,889
The Group’s exposure to credit and currency risks is disclosed in Note 3. The majority of the non-current other debtor balance
is VAT receivable which will be offset against future taxes payable on oil revenue.
At 30 June, the aging analysis of receivables is as follows:
2013
2012
Total
4,937,887
2,929,455
0 – 30
Days
23,222
23,911
31 – 60
days
-
150,926
61 - 90
days
-
11,336
90+
days
4,914,665
2,743,282
There are no receivables as at 30 June 2013 that are impaired.
8.
OTHER CURRENT ASSETS
Prepayment
Other
9.
INVENTORIES
Raw Material
Crude oil
Provision of obsolete items
Consolidated
2013
$
58,815
205,902
264,717
2012
$
336,995
123,501
460,496
59,750
16,805
(17,468)
59,087
58,113
11,265
(16,058)
53,320
53
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
10.
OIL AND GAS PROPERTIES
Cost as at 1 July 2012
Additions
Transferred from exploration and evaluation assets
Disposals
Net exchange differences
Cost as at 30 June 2013
Depletion and impairment as at 1 July 2012
Charge for the year
Provision for impairment
Disposals
Depletion and impairment as at 30 June 2013
Net book value as at 30 June 2013
Consolidated
$
14,323,277
-
9,782,935
-
2,493,525
26,599,737
(97,995)
(592,765)
-
-
(690,760)
25,908,977
During the year, costs associated with J51 and J53 were transferred to oil and gas properties as during the
year these wells were granted a trial production licence and are producing.
11.
PLANT AND EQUIPMENT
Year ended 30 June 2013
At 1 July 2012 net of accumulated depreciation
Additions
Depreciation charge for the year
Disposals
Reclassifications
Net exchange differences
At 30 June 2013 net of accumulated depreciation
At 30 June 2013
Cost
Accumulated depreciation
Net carrying amount
Year ended 30 June 2012
At 1 July 2011 net of accumulated depreciation
Additions
Depreciation charge for the year
Disposals
Reclassifications
Net exchange differences
At 30 June 2012 net of accumulated depreciation
At 30 June 2012
Cost
Accumulated depreciation
Net carrying amount
54
$
926,336
843,706
(142,201)
-
-
10,745
1,617,096
2,040,995
(423,899)
1,617,096
398,851
752,218
(241,723)
-
-
16,990
926,336
1,254,140
(327,804)
926,336
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
12.
EXPLORATION & EVALUATION EXPENDITURE
Consolidated
2013
$
2012
$
Exploration expenditure carried forward in respect of areas of interest in:
Exploration and evaluation expenditure at cost
34,710,757
25,014,521
Movements during the year
Balance at beginning of year
Expenditure incurred during the year
Reclassification to oil and gas properties
Foreign exchange translation
Balance at end of year
25,014,521
16,627,189
(9,782,935)
2,851,982
34,710,757
25,319,806
12,856,785
(14,241,140)
1,079,070
25,014,521
Oil sales revenue capitalised into exploration and evaluation expenditure for the year was $1,506,193 (2012: $355,535).
13.
OTHER FINANCIAL ASSETS
Liquidation fund
Other
418,349
42,602
460,951
244,151
48,601
292,752
The Group has a deposit for the purpose of a Liquidation fund in the amount of $418,349. The deposit is to be
used for land restoration when required. Under the laws of Kazakhstan, the deposit must be replenished in the
amount of 1% of the annual investments.
55
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
14.
PAYABLES
Trade creditors
Accrued expenses
Other payables
15.
DEFERRED REVENUE
As at 1 July
Deferred during the year
Released during the year
Foreign exchange translation
At 30 June
Consolidated
2013
$
889,235
364,154
1,425,250
2,678,639
2012
$
675,335
36,889
412,399
1,124,623
1,192,039
9,424,424
(9,093,730)
120,104
1,642,838
-
2,358,621
(1,166,582)
(5,000)
1,192,039
The deferred revenue refers to an amount received in advance for oil sales. As at 30 June 2013, there is 8,546 tonnes of oil to
be delivered under contracts.
16.
PROVISIONS
Current
Annual leave
Non - current
Provision for rehabilitation
86,574
86,574
452,942
452,942
90,957
90,957
356,594
356,594
The Group accrues provisions for the forthcoming costs of rehabilitation of the territory. On the basis of forecasts the
cost of rehabilitation of the oilfield would be $452,942.
Movements in rehabilitation provision
Carrying amount at beginning of the year
Unwinding of discount rate
Foreign exchange translation
Provision for the year
Carrying amount at the end of year
356,594
21,334
31,305
43,709
452,942
230,552
13,362
8,641
104,039
356,594
56
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
17.
OTHER FINANCIAL LIABILITIES
Current
Unsecured loans
Derivative liability
Non-Current
Convertible note
Derivative liability
Promissory Notes
Consolidated
2013
$
2012
$
3,280,160
763,177
4,043,337
8,613,730
-
8,613,730
-
-
-
2,789,897
274,880
3,064,777
On 31 December 2012, Jupiter entered into a new unsecured loan agreement (the “Loan”) with Mobile Energy Limited.
The Loan was for $US3 million via 3 Promissory Notes, each with exactly the same terms and each with a face value of
$US1m. The Loan was repayable on 31 December 2013 or at such time that the Company raises additional funding of a
minimum of $20 million via debt, equity or other funding. The Loan had a coupon rate of 15% per annum, payable quarterly in
arrears, with the first interest payment due on 31 March 2013. On 31 May 2013, the loan was converted to Convertible Notes
(Series A) on the terms as below.
On 28 March 2013, Jupiter entered into a second unsecured loan agreement with Mobile Energy Limited. The Loan is for
$US3 million via 3 Promissory Notes, each with exactly the same terms and each with a face value of $US1m. The Loan was
repayable on 31 March 2014 or at such time that the Company raised additional funding of a minimum of $20 million via debt,
equity or other funding. The Loan had a coupon rate of 15% per annum, payable quarterly in arrears, with the first interest
payment due on 30 June 2013. Subsequent to year end, the Promissory Notes were converted into Convertible Notes (Series
B), refer to note 27 for further details of the terms and conditions.
Convertible Notes
On 2 August 2012, Soyuzneftegas Capital Limited (SNG) converted convertible notes. The final conversion price was $0.40,
therefore issuing 8,215,000 shares.
US$9m Convertible Notes (Series A):
On 31 May 2013, Jupiter issued US$9m Series A convertible notes.
The key terms of the Convertible Notes are as follows:
• Term: 3 years
• Conversion Price: $US1.25 per share (maximum of 7.2 million shares may be issued)
• Coupon Rate: 12% per annum, payable quarterly in arrears
• The Convertible Notes may be redeemed by Jupiter at any time with a minimum of 12 months interest payable if the
Convertible Notes are redeemed within the 1st 12 months of their Term
• The issue of the Convertible Notes was carried out under Jupiter’s 15% capacity in accordance with ASX Listing Rule
7.1
The breakdown of subscriptions for the Convertible Notes were as follows:
• Waterford Petroleum Limited: $US3m
• SNG Investments Limited: $US2m
• Midocean Holdings Limited: $US1m
• Mobile Energy Limited: $US3m
57
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
17.
OTHER FINANCIAL LIABILITIES (continued)
The net cash proceeds of the fundraising was $US5.7m, following the repayment of US$3m of the December 2013 Promissory
Notes held by Mobile Energy Limited and the payment of a fee of 3% of the proceeds of the raising ($US270,000) by the
Company to Waterford Petroleum Limited for its role in arranging the funding.
Subsequent to year end, the Convertible Notes (Series A) were converted into Convertible Notes (Series B), refer to note 27 for
further details of the terms and conditions.
Valuation of Convertible Notes
The Notes have an embedded derivative in the form of a call option for the holder to convert the Notes at US$1.25 into Jupiter
ordinary shares.
The convertible equity feature of the Notes has been separated from the liability component of the Notes for financial reporting
purposes. The call option to convert the notes into shares does not meet the definition of an equity instrument, as the exercise
price is denominated in foreign currency to the company’s functional currency. The convertible call option is classified as a
Derivative liability and measured at fair value through the income statement.
The Derivative component of the Notes was valued using the Black Scholes option valuation methodology. The Black Scholes
option valuation methodology calculates the expected benefit from acquiring the shares outright less the present value of
paying the exercise price for the options at expected exercise date.
58
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
18.
CONTRIBUTED EQUITY
Shares issued and fully paid
Ordinary shares (a)
Share options (b)
(a) Movements in ordinary share capital:
Balance 30 June 2011
1 for 15 reconstruction
Cost of issue - Rights Issue
Issue of shares – share based payment *
Balance 30 June 2012
Issue of shares
Issue of shares – conversion of convertible notes
Cost of issue
Balance 30 June 2013
(b) Movements in options
Balance as at 1 July 2012
1 for 15 construction
Expired during the period
Balance 30 June 2013
Consolidated
2013
$
85,339,736
294,198
85,633,934
2012
$
70,941,937
294,199
71,236,136
Number of
Shares
$
1,737,934,742
(1,622,071,255)
-
266,667
116,130,154
29,032,539
8,215,000
-
153,377,693
70,986,412
-
(44,475)
-
70,941,937
11,613,016
3,286,000
(501,217)
85,339,736
866,669
-
(866,669)
-
-
13,000,000
(12,133,331)
866,669
Terms and conditions:
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at shareholders’ meetings.
(c) Movement in performance rights
Balance as at 1 July 2012
Cancelled during year
Granted during the year
Balance as at 30 June 2013
2,133,335
(200,000)
5,066,666
7,000,001
10,000,000
(10,000,000)
2,133,335
2,133,335
59
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
18.
CONTRIBUTED EQUITY (continued)
Capital risk management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to
maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital
structure that ensures the lowest cost of capital available to the entity.
In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares, enter into joint ventures or sell assets.
The entity does not have a defined share buy-back plan.
No dividends were paid in 2012 and nil are expected to be paid in 2013.
The Company is not subject to any externally imposed capital requirements.
19.
RESERVES
Foreign currency
translation
reserve
CONSOLIDATED
Share based
payments
reserve
At 30 June 2012
Share based payment
Foreign currency translation
At 30 June 2013
$
(4,746,987)
-
5,816,477
1,069,490
$
4,472,289
776,081
-
5,248,370
Total
$
(274,698)
776,081
5,816,477
6,317,860
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
Share based payments reserve
The share based payments plan reserve is used to record the value of equity benefits provided to eligible
employees as part of their remuneration. Refer to note 21 for further details of this plan.
60
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
20.
KEY MANAGEMENT PERSONNEL
This note is to be read in conjunction with the Remuneration Report, which is included in the Directors Report on pages 13
to 21.
(a) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other
Termination benefits
Share-based payments
Shareholdings
Consolidated
2013
$
2012
$
954,795
16,000
158,996
-
776,081
1,905,872
947,463
48,000
119,203
-
549,836
1,664,502
The number of shares in the Company held by each Key Management Personnel of Jupiter Energy Limited during the financial
year, including their personally-related entities, is set out below:
2013
Directors
G Gander
A Beardsall
B Kuandykov
S Mison
Executives
K Martens
J Kroshus
2012
Directors
G Gander
A Beardsall
B Kuandykov
S Mison
Executives
K Martens
H Wolski
Balance
1 July 2012
Granted as
Remuneration
On Exercise of
Options
Net Change
Other
Balance
30 June 2013
2,551,113
1,000,000
-
312,987
-
-
-
-
-
-
-
-
Balance
1 July 2011
Granted as
Remuneration
On Exercise of
Options
38,266,668
10,000,000
-
4,694,812
4,138,420
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
596,111
250,000
-
78,251
3,147,224
1,250,000
-
391,238
-
-
-
-
Net Change
Other*
Balance
30 June 2012
(35,715,555)
(9,000,000)
-
(4,381,825)
2,551,113
1,000,000
-
312,987
(4,138,420)
-
-
-
*Change relates to the consolidation of shares and options which occurred during the year.
61
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
20.
KEY MANAGEMENT PERSONNEL (continued)
Option Holdings
The number of options in the Company held by each Key Management Personnel of the consolidated entity during the financial
year, including their personally-related entities, is set out below:
2013
(i) Unlisted Options
Directors
G Gander
A Beardsall
B Kuandykov
S Mison
Executives
K Martens
J Kroshus
Balance at
beg of
period
1 July 2012
Granted as
Remune-
ration
Options
Exercised
Net Change
Other *
Not Vested
& Not
Exercisable
Vested &
Exercisable
Balance at
end of
period
30 June
2013
-
-
-
66,667
133,333
-
-
-
-
-
-
-
-
-
-
-
-
-
(66,667)
(133,333)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*Change relates to the expiry of options which occurred during the year.
2012
Balance at
beg of
period
1 July 2011
Granted as
Remune-
ration
Options
Exercised
Net Change
Other **
Not Vested
& Not
Exercisable
Vested &
Exercisable
Balance at
end of
period
30 June
2012
(ii) Unlisted Options
Directors
G Gander
A Beardsall
B Kuandykov
S Mison
Executives
K Martens
H Wolski
-
-
-
1,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(933,333)
-
-
-
66,667
(1,866,667)
-
133,333
-
-
-
-
-
-
-
-
-
-
66,667
133,333
-
**Change relates to the consolidation of shares and options which occurred during the year.
62
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
20.
KEY MANAGEMENT PERSONNEL (continued)
Performance Rights Holdings
The number of Performance Rights in the Company held by each Director of Jupiter Energy Limited and each of the specified
Executives of the consolidated entity during the financial year, including their personally-related entities, is set out below:
2013
Balance at beg
of period
1 July 2012
Granted as
Remune-
ration
Rights
Exercised
Net Change
Other *
Not Vested
& Not
Exercisable
Vested &
Exercisable
Balance at
end of
period
30 June
2013
Directors
G Gander
A Beardsall
B Kuandykov
S Mison
Executives
K Martens
J Kroshus
2012
Directors
G Gander
A Beardsall
B Kuandykov
S Mison
Executives
K Martens
H Wolski
666,667
666,667
666,667
133,334
1,500,000
1,500,000
1,500,000
366,666
-
-
-
200,000
-
-
-
-
-
-
-
-
-
-
2,166,667
2,166,667
2,166,667
500,000
2,166,667
2,166,667
2,166,667
500,000
-
(200,000)
-
-
-
-
-
-
-
-
-
-
Balance at
beg of
period
1 July 2011
Granted as
Remune-
ration
Rights
Exercised
Net Change
Other *
Not Vested
& Not
Exercisable
Vested &
Exercisable
Balance at
end of
period
30 June
2012
10,000,000
-
-
-
666,667
666,667
666,667
133,334
-
-
-
-
-
-
-
-
-
-
(10,000,000)
-
-
-
666,667
666,667
666,667
133,334
666,667
666,667
666,667
133,334
-
-
-
-
-
-
-
-
-
-
-
-
* Relates to rights cancelled.
(b) Transactions between the Group and other related parties
Consultancy fees
During the year, consulting fees of $115,637 (2012: $136,649) were accrued and paid under normal terms and conditions to
Meridian Petroleum LLP, of which Mr. Kuandykov is a director, for the provision of geological services at normal commercial
rates.
63
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
21.
SHARE BASED PAYMENTS
Employee Share Option Plan (ESOP) and Performance Rights Plan
Included under expenses in the income statement is $776,081 (2012: $549,836), and relates, in full, to equity-settled share-
based payment transactions for employees.
Options
The fair value of the options is estimated at the date of grant using the Black -Scholes option pricing model.
No options were granted during the year ended 30 June 2013 (2012: Nil)
During the year ended 30 June 2013, no options were exercised over ordinary shares (2012: Nil).
The following table illustrates the number and weighted average exercise prices (WAEP) of share options issued under the
ESOP:
2013
Number of
Options
WAEP
$
Number of
Options
2012
WAEP
$
Outstanding at the beginning of the year
Reconstruction of options (1:15)
Granted
Cancelled / forfeited
Exercised
Expired
Outstanding at year end
Exercisable at year end
866,669
-
-
-
-
(866,669)
-
-
2.08
-
-
-
-
2.08
-
-
13,000,000
(12,133,331)
-
-
-
-
866,669
866,669
0.14
-
-
-
-
-
2.08
2.08
64
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
21.
SHARE BASED PAYMENTS (continued)
Performance Rights
The Jupiter Energy Performance Rights Plan was established whereby Jupiter Energy Limited may, at the discretion of the
Jupiter Energy Limited Board, grant performance rights over unissued shares of Jupiter Energy Limited to directors,
executives, employees and consultants of the consolidated entity. The rights are issued for nil consideration, will not be quoted
on the ASX, cannot be transferred and are granted at the discretion of the Jupiter Energy Board.
The Performance Rights Plan was approved by shareholders at the November 2009 Annual General Meeting.
On 9 November 2012, 5,066,666 performance rights were approved by shareholders to directors and executives. The number
of performance rights vest in proportion to the percentage increase in share price at vesting date $0.919 (minimum vesting
price). For 100% of the performance rights to vest, the share price of the Company needs to reach $1.47. In respect of the
Vesting Condition, the percentage increase in the Share price of the Company will be calculated by reference to the volume
weighted average price of Shares in the 20 consecutive trading days immediately prior to the Vesting Date (31st December
2013). No performance rights vest if the calculated share price is less than the minimum vesting price at vesting date.
The fair value of performance rights granted to directors is estimated as at the grant date using a Monte Carol simulation
option pricing model taking into account the terms and conditions upon which the instruments were granted.
The following table lists the inputs to the models for the period ended 30 June 2013:
Performance Rights
Grant date
Number of performance rights
Share price
Exercise price
Dividend Yield
Expected volatility
Risk-free interest rate
Expected life
Weighted average fair value
Total amount
Expensed to 30 June 2013
During the current year, no performance rights vested.
9 November 2012
5,066,666
51 cents
0 cents
0.0%
75.0%
2.72%
1.14 year
11.04 cents
$559,360
$359,589
65
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
22.
COMMITMENTS FOR EXPENDITURE
Exploration Work Program Commitments
The Group has entered into a subsoil utilisation rights for petroleum exploration and extraction in Areas 1 and 2 in
Mangistauskaya Oblast in accordance with Contract No. 2272 dated 29 December 2006 with the Ministry of Energy and
Mineral Resources of the Republic of Kazakhstan.
Exploration work program commitments contracted for (but not capitalised in the accounts) that are payable:
- not later than one year
- later than one year but not later than five years
23.
AUDITORS REMUNERATION
The auditor of Jupiter Energy Limited is Ernst & Young.
Amounts received or due and receivable by Ernst & Young (Australia) for:
-
-
auditing or reviewing the financial report
reporting accountant services – AIM listing
Amounts received or due and receivable by Ernst & Young (Kazakhstan) for:
-
-
auditing or reviewing the financial report
tax compliance
Amounts received or due and receivable by Ernst & Young (Singapore) for:
-
auditing or reviewing the financial report
2013
$
-
-
-
2012
$
4,783,196
-
4,783,196
90,293
-
90,293
49,917
-
49,917
7,876
7,876
73,511
121,025
194,536
51,569
14,725
66,294
6,966
6,966
Total paid to Ernst & Young
148,086
267,796
66
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
24.
EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share are calculated by dividing the profit / (loss) attributable to equity holders of the Company by the
weighted average number of ordinary shares outstanding during the period.
The following reflects the income and data used in the basic and diluted earnings per share computations:
Net loss attributable to ordinary equity holders of the
Parent from continuing operations
Weighted average number of ordinary shares for basic
and diluted earnings per share
Consolidated
2013
2012
(4,885,829)
(4,295,102)
Number of
shares
Number of
shares
150,373,286
115,973,076
A share consolidation was completed on 30 August 2011. The weighted average number of ordinary shares for basic and
diluted earnings per share has been adjusted retrospectively for the 2012 earnings per share.
25.
SEGMENT REPORTING
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are used by the chief operating decision
makers in assessing performance and determining the allocation of resources.
The Group has identified that it has one operating segments being related to the activities in Kazakhstan, on the basis that the
operations in Australia relate to running the Corporate Head Office only.
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting segments internally are the same as those contained in Note 1 to the
accounts.
Interest revenue is derived in Australia. Non-current assets relate to capitalised exploration and evaluation expenditure located
in Kazakhstan.
67
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
26.
STATEMENT OF CASHFLOWS RECONCILIATION
(a) Reconciliation of operating (loss) after income tax to net cash (used in) operating activities
Operating (loss) after income tax:
Add/(less) non-cash items:
Depreciation / Depletion
Share based payments
(Gain) / Loss on derivative
Finance costs
Effect of foreign exchange translation
Other
Changes in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in other current
assets
Increase/ (decrease) in deferred revenue
Increase/ (decrease) in payables
Increase/(decrease) in provisions
Consolidated
2013
$
(4,885,829)
2012
$
(4,295,102)
734,966
776,081
161,442
474,586
711,481
-
(2,008,432)
(5,767)
(27,580)
450,798
1,554,016
91,965
(1,972,273)
339,178
549,836
(761,813)
717,696
(114,781)
989,016
(1,518,476)
(53,320)
(103,671)
1,192,039
174,265
155,081
(2,727,892)
For the purposes of the cash flow statement, cash includes cash on hand, at banks, and money market investments readily
convertible to cash on hand, net of outstanding bank overdrafts.
68
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
27.
EVENTS OCCURING AFTER THE BALANCE SHEET DATE
Reserve Upgrade
On 11 September 2013 the Company announced the details of three independent reserve estimations that had been carried
out on the various accumulations on the Block 31 permit.
Two of these reports were State Reserve Reports prepared by independent consulting firm RES. The first of these reports was
the Akkar East Reserves Report and this report was prepared as part of the process of moving the Akkar East field into Full
Field Development. This review of the Akkar East field was a follow on to the 2012 Preliminary Reserves report prepared by
RES submitted as part of the process required to enable the J-50, J-51, J-52 and J-53 wells to be granted their respective Trial
Production Licences (TPL’s). The Preliminary Reserves report was approved by the Kazakh authorities in June 2012.
The second report was the Southern Extension area (known locally as West Zhetybai) Preliminary Reserves Report and this
report is the first step towards the granting of TPL’s for the J-55, J-58 and J-59 wells.
In summary, the Akkar East accumulation covers the area delineated by the J-51, J-52 and J-53 wells and the Oil-In-Place
(OIP) for this area has been estimated at ~129 mmbbls with recoverable reserves estimated at ~32.6 mmbbls. The C1
reserves have been estimated at ~10.7 mmbbls and C2 reserves at ~21.9 mmbbls. The recoverable reserves are based on a
recovery factor of 27.2%.
The J-50 well is part of the Akkar North accumulation and the estimated recoverable reserves for this area are ~8.6 mmbbls
(C1 - ~4 mmbbls and C2 - ~4.6 mmbbls) bringing the total recoverable reserves in the area delineated by the wells J-50, 51, 52
and 53 to ~41.2 mmbbls; C1 reserves of ~14.7 mmbbls and C2 reserves of ~26.5 mmbbls.
Estimated reserves from the T31, T32 (both formerly known as the Z Sand), T2A and T2B horizons were used in these
calculations. The Akkar East Reserves Report has now been submitted to the relevant authorities; the approval process is
expected to take three months.
The West Zhetybai accumulation covers the area delineated by the J-55, J-58 and J-59 wells and reserves have been
evaluated for the T31, T32, T2A and T2B horizons. The OIP for this area has been estimated at ~232 mmbbls (from all four
horizons) with recoverable reserves estimated at ~61.2 mmbbls. The C1 reserves have been estimated at ~2.3 mmbbls and C2
reserves at ~58.9 mmbbls; the recoverable reserves are based on a recovery factor of 27.2%.
The higher proportion of C2 to C1 reserves indicates the need for (i) further testing of the J-55 and J-59 wells and (ii) general
appraisal of the area which may include the drilling of additional wells.
RES has submitted the West Zhetybai Preliminary Reserves Report to the relevant authorities; approval is expected to take
three months.
The third report was a Competent Persons Report (CPR) that was prepared using the Society of Petroleum Engineers
Petroleum Resources Management System (PRMS) classification system; reserves are defined as those quantities of oil which
are estimated to be commercially recoverable from a known accumulation from a given date forward.
McDaniel & Associates (McDaniel) were engaged to complete this independent reserves audit of only the mid Triassic horizon
as identified by wells J-50, J-51, J-52, J-53, J-55, J-58 and J-59.
One of the underlying differences between the Kazakh State Reserves classification system and PRMS classification system is
that PRMS also considers the commercial uncertainties rather than only geological attributes and therefore the lack of
established commercial oil flow from the J-53, J-55 and J-59 wells resulted in the reserve calculations based primarily on
production from the T2B horizon from wells J-50, J-51, J-52 and J-58.
69
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
27.
EVENTS OCCURING AFTER THE BALANCE SHEET DATE (continued)
The results, by reserve category, were:
• Proved Reserves: 1P 9.7 mmbbls
• Proved plus Probable Reserves: 2P 19.2 mmbbls
• Proved plus Probable plus Possible: 3P 28.7 mmbbls
As part of the work undertaken by McDaniel to establish the commercial threshold of the mid-Triassic reserves, the Net Present
Value of the proved+probable reserves using a discounted cashflow model with a discount rate of 10% was calculated as
$US304.6m (~$US15.9/bbl) pre-tax and $US222.5m (~$US11.6/bbl) after tax.
Shareholders are encouraged to read the 11 September 2013 announcement in full as it contains more details on the differing
reserve classification methodologies used by RES in preparing the State Reserve Reports and by McDaniel in preparing the
CPR.
In summary, the results of both independent reserve audits confirmed the prospectivity of the Block 31 permit.
Capital Raising
On 23 September 2013, the Company announced details regarding the issue of $US6.5million of Series B Convertible Notes,
issued on 20 September 2013. The key terms of these Convertible Notes were as follows:
• Term: 3 years
• Conversion Price: $US1.25 per share (maximum of 5.2 million shares may be issued)
• Coupon Rate: 12% per annum, with the interest accruing from and including the Issue Date until the earlier of the
Conversion Date, Redemption Date or Maturity Date of the Note.
• The Convertible Notes may be redeemed by Jupiter at any time with a minimum of 12 months interest payable if the
Convertible Notes are redeemed within the 1st 12 months of their Term
• The issue of the Convertible Notes is carried out under Jupiter’s 15% capacity in accordance with ASX Listing Rule
7.1
The breakdown of subscriptions for the Convertible Notes is as follows:
• Waterford Petroleum Limited: $US1.5m
• Mid Ocean Limited $US0.5m
• Mobile Energy Limited: $US4m
• Other Private Investors: $US0.5m
The net cash proceeds of the fundraising was $US3.305m, following the repayment of $US3m of Promissory Notes held by
Mobile Energy Limited and the payment of a fee of 3% of the proceeds of the raising ($US195,000) by the Company to
Waterford Petroleum Limited for its role in arranging the funding.
The net cash proceeds of the fundraising will be used for the following purposes:
• Remedial work on J-53: ~$US150,000;
• Further testing of the J-59 well: ~$US350,000 and
• General working capital: ~$US2.805m.
The holders of Series A Convertible Notes issued on 31 May 2013 have also agreed to convert their notes to Series B
Convertible Notes, effective from 20 September 2013.
70
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
27.
EVENTS OCCURING AFTER THE BALANCE SHEET DATE (continued)
This means that all interest payable on the entire $US15.5m Convertible Notes now outstanding will be deferred and accrue
from and including the Issue Date of the Series B Convertible Notes until the earlier of the Conversion Date, Redemption Date
or Maturity Date of the Note.
28.
INFORMATION ON PARENT ENTITY
(a)
Information relating to Jupiter Energy Ltd:
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Share based payment reserve
Total shareholders’ equity
Profit or (loss) of the parent entity
Total comprehensive income / (loss) of the parent entity
2013
$
3,396,958
67,645,695
(3,695,643)
(13,072,550)
85,633,935
2012
$
570,756
41,624,671
(91,277)
(3,156,054)
71,236,136
(36,309,158)
(37,239,808)
5,248,370
54,573,147
930,650
930,650
4,472,289
38,468,617
(2,957,121)
(2,957,121)
71
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
28.
INFORMATION ON PARENT ENTITY (continued)
Name of Entity
Jupiter Energy (Victoria) Pty Ltd
Jupiter Biofuels Pty Ltd
Jupiter Energy (Kazakhstan) Pty Ltd
Jupiter Energy Pte. Ltd
Jupiter Energy (Services) Pte. Ltd
Equity Holding
Country of
incorporation
Australia
Australia
Australia
Singapore
Singapore
2013
%
100
100
100
100
100
2012
%
100
100
100
100
100
(b) Details of any guarantees entered into by the parent entity in relation to the debts of its subsidiaries
There are no guarantees entered into by the parent entity.
(c) Details of any contingent liabilities of the parent entity
There are no contingent liabilities of the parent entity as at reporting date.
(d) Details of any contractual commitments by the parent entity
There are no contractual commitments by the parent entity
29.
CONTINGENT LIABILITIES
The Group has no contingent liabilities as at 30 June 2013 (30 June 2012: Nil)
72
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
Directors' Declaration
In accordance with a resolution of the directors of Jupiter Energy Limited, I state that:
1
In the opinion of the directors:
(a)
the financial statements and notes of Jupiter Energy Limited for the financial year ended 30 June 2013 are
in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 June 2013 and performance for the year
ended on that date.
(ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2011
The financial statements and notes also comply with International Financial Reporting Standards, as
disclosed in note 2(a)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
(b)
(c)
3
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 2013.
On behalf of the Board
Geoff Gander
Executive Chairman
Perth, WA 27 September 2013
73
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Jupiter Energy Limited
Report on the financial report
We have audited the accompanying financial report of Jupiter Energy Limited, which comprises the
consolidated statement of financial position as at 30 June 2013, 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, 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RC:DR:JUPITER:047
Opinion
In our opinion:
a.
the financial report of Jupiter Energy Limited is 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 2013
and of its performance for the year ended on that date; and
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.
Report on the remuneration report
We have audited the Remuneration Report included in the Directors' Report for the year ended 30 June
2013. 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 Jupiter Energy Limited for the year ended 30 June 2013,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
R J Curtin
Partner
Perth
27 September 2013
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RC:DR:JUPITER:047
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Ltd Listing Rules and not disclosed elsewhere in
this report is as follows.
SHAREHOLDINGS (as at 10 September 2013)
Substantial shareholders
WATERFORD PETROLEUM LIMITED
SOYUZNEFTEGAS CAPITAL LIMITED
45,246,108
30,373,941
29.50%
19.80%
Voting Rights
Each shareholder is entitled to receive notice of and attend and vote at general meetings of the Company. At a general
meeting, every shareholder present in person or by proxy, representative or attorney will have one vote on a show of hands
and on a poll, one vote for each share held.
DISTRIBUTION OF EQUITY SECURITY HOLDINGS
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Ordinary
Shares
210,415
1,979,342
2,667,304
13,921,088
134,599,544
153,377,693
The number of shareholders holding less than a marketable parcel of ordinary shares is 424
On-market buy back
There is no current on-market buy back.
Securities on Issue
The number of shares and options issued by the Company are set out below:
Category
Ordinary Shares
Performance Shares – expire 31 December 2013
Number
153,377,693
7,000,001
76
JUPITER ENERGY LIMITED – 2013 ANNUAL REPORT
TWENTY LARGEST SHAREHOLDERS
Name of Holder
No. of Ordinary Shares % of Issued capital
3.
1.
2.
4.
5.
6.
COMPUTERSHARE CLEARING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
VITORIA PTY LTD
GLENNBROWN PTY LTD
RACOVALIS SUPERANNUATION FUND PTY
LTD
MR ERKIN SVANBAYEV
MR GEOFFREY ANTHONY GANDER
11. MR ATHOL GEOFFREY JAMES
12. MR STEPHEN JOHN KINMOND
10.
8.
7.
9.
13.
GLENNBROWN PTY LTD
14. MR JASON NUTTMAN
15.
16.
17.
PALS INVESTMENTS PTY LTD
GAINSPELL PTY LTD
ASCENT CAPITAL HOLDINGS PTY LT
SILVERLIGHT HOLDINGS PTY LTD
NORDCO AUSTRALIA PTY LTD
MR DAMIAN RONALD GILLMAN + MRS LUCIA
GILLMAN
18.
19.
20.
TOTAL
93,358,648
13,130,086
5,483,262
3,313,817
2,625,990
2,377,779
1,333,334
950,000
750,000
625,000
608,148
505,041
465,000
389,541
385,000
333,334
308,334
306,450
300,000
291,667
60.87
8.56
3.58
2.16
1.71
1.55
0.87
0.62
0.49
0.41
0.40
0.33
0.30
0.25
0.25
0.22
0.20
0.20
0.20
0.19
127,840,431
83.36
77