NEW STANDARD
ENERGY LIMITED
ACN 119 323 385
ANNUAL FINANCIAL REPORT
For the Financial Year Ended 30 June 2011
2011
Level 3
33 Richardson Street
WEST PERTH WA 6005
Ph: +61 (8) 9481 7477
Fax: +61 (8) 9486 7670
Web: www.newstandard.com.au
NEW STANDARD ENERGY LIMITED
ACN 119 323 385
ANNUAL FINANCIAL REPORT
For the Financial Year Ended 30 June 2011
CORPORATE
DIRECTORY
Board of Directors
arthur Dixon aM (non-executive chairman)
Sam Willis (Managing Director)
Mark Hagan (technical Director)
ian paton (non-executive Director)
Company Secretary
Mark clements
Place of Business
level 3
33 richardson Street
WeSt pertH Wa 6005
ph: +61 (8) 9481 7477
fax: +61 (8) 9486 7670
Web: www.newstandard.com.au
Auditors
BDo audit (Wa) pty ltd
38 Station Street
Subiaco Wa 6008
Legal Advisors
Steinepreis paganin
level 4, next Building
16 Milligan Street
pertH Wa 6000
Share Registry
Security transfer registrars pty ltd
alexandra House
Suite 1, 770 canning Highway
applecroSS Wa 6153
ASX Code: NSE
CONTENTS
Page
corporate Directory ................................................................. 1
company profile ....................................................................... 2
chairman’s report .................................................................... 8
Directors’ report .................................................................... 10
Director’s Declaration ............................................................ 21
corporate Governance Statement ........................................ 22
auditor’s independence Declaration .................................... 29
independent audit report .................................................... 30
consolidated Statement of comprehensive income ............ 32
consolidated Statement of financial position ..................... 33
consolidated Statement of changes in equity ..................... 34
consolidated Statement of cashflows .................................. 35
notes to the consolidated financial Statements ................. 36
Shareholder information ....................................................... 69
Competent Person: The information in this report is based on
information reviewed by Dr Mark Hagan (BSc Hons, PhD) who
is a Petroleum Geologist and Geophysicist with more than 35
years experience in the industry. Dr Hagan is Technical Director
of New Standard Energy and consents to the inclusion in the
report of the matters based on his information in the form
and context in which it appears.
annual financial report 2011
1
COMPANY PROFILE
OIL AND GAS ASSETS
new Standard energy limited (New Standard, the Company, Parent Entity) is an aSX listed entity (aSX code: nSe) with
onshore oil and gas exploration assets in the canning Basin in the north-West of Western australia, the onshore carnarvon
Basin in the Mid-West of Western australia and in colorado county and Wharton county in the onshore texas Gulf coast
region, uSa.
over the last twelve months the company’s primary focus has been on the following:
•
•
understanding and progressing the large australian shale gas and tight gas portfolio in Western australia with a view
to strategically positioning the company at the forefront of this emerging sector; and
undertaking a successful initial drilling campaign on the conventional colorado country project in the uSa to establish
cash flow and build a meaningful business.
excellent progress has been made on achieving both of these objectives during the period and new Standard is now well
placed to extract value from further exploration and development activity across its asset portfolio in 2012 and beyond.
the following table provides an overview of the company’s exploration portfolio holdings at 30 June 2011:
Australian Oil and Gas
Exploration
Type
Interest Operator
Joint Venture Partner
Canning Basin
ep417
ep 443
ep 450
ep 451
ep 456
exploration permit
65%
new Standard onshore pty ltd
Buru energy limited,
Green rock energy
limited
exploration permit
exploration permit
100%
100%
new Standard onshore pty ltd
new Standard onshore pty ltd
exploration permit
100%
new Standard onshore pty ltd
exploration permit
100%
new Standard onshore pty ltd
application area 1/09-0
application area
100%
new Standard onshore pty ltd
application area 2/09 -0
application area 5/09 -0
application area
application area
100%
100%
new Standard onshore pty ltd
new Standard onshore pty ltd
Carnarvon Basin
Stp-epa 0014
application area
100%
new Standard onshore pty ltd
Stp-epa 0015
application area
100%
new Standard onshore pty ltd
US Oil and Gas
Exploration
Colorado County Project
- Brasher #1 (32.5%)
- Heintschel #1 (32.5%)
- Heintschel #2 (32.5%)
- D truchard #1 (32.5%)
- Joann #1 (33.68%)
Working interest in
Mineral rights
32.5%
aKG energy llc
Working interest in
Mineral rights
33.68%
aKG energy llc
Moeller Project
- Moeller #1 (38.5%)
Working interest in
Mineral rights
38.5%
aKG energy llc
Wharton County Project Working interest in
36%
aKG energy llc
Mineral rights
-
-
-
-
-
-
-
-
-
Burleson energy limited,
aKG energy llc and
minority interests
Burleson energy limited,
aKG energy llc and
minority interests
Burleson energy limited,
aKG energy llc and
minority interests
Burleson energy limited,
aKG energy llc and
minority interests
2
neW StanDarD enerGy liMiteD
Australian Shale Gas and Tight Gas Portfolio
new Standard has amassed one of the largest shale and
tight gas portfolios in australia via its 100% operated
equity interests in its flagship Goldwyer project in the
canning Basin, the emerging laurel project in the canning
Basin and the Merlinleigh project in the carnarvon Basin.
all projects, whilst at early stage, are highly prospective for
large, strategic onshore hydrocarbon resources in Western
australia.
Goldwyer Project – Canning Basin, Western
Australia
the Goldwyer project covers in excess of 45,000 kms2 of
prospective acreage across ep’s 443, 450, 451 and 456 as
well as application areas 1/09-0, 2/09-0 and 5/09-0. During
the financial year new Standard met the required work
commitments across the permits forming the Goldwyer
project through the acquisition of in excess of 13,000 line
kms of aerial gravity data. additional technical work
concentrated on structural mapping, seismic interpretation
and basin modeling for thermal maturity profiling and
burial history to provide a more comprehensive technical
understanding of the merits of the Goldwyer project. this
work was undertaken alongside the analysis of data from in
excess of 50 historic wells that have penetrated the Goldwyer
formation and provided an enhanced appreciation of the
potential for liquids to be associated with a large strategic
gas resource. this information had a significant impact
on the technical prospectivity of the project and provided
the impetus for engagement with numerous interested
parties expressing an interest in potential joint venture
arrangements for the Goldwyer project.
independent confirmation from netherland Sewell and
associates (NSAI), riSc pty ltd (RISC) and the uS Government
Department of the energy information agency (EIA)
was also forthcoming during the period. these reports
provided further supportive and independent reviews in
relation to the prospectivity and potential scale of the
Goldwyer project in the canning Basin.
as a result of the work undertaken by new Standard to
enhance the understanding of the technical merits of the
Goldwyer project and the emergence of these positive
independent reviews, a significant level of engagement
with potential partners was experienced both in late 2010
and early 2011, leading to exhaustive due diligence being
undertaken by various parties. this process culminated in
a non-binding Heads of agreement with conocophillips
being agreed and announced on July 13, 2011 followed by
binding agreements being executed and announced on 30
September, 2011, that formalise a farm-in agreement for
exploration funding of up to uS$109.5m being committed
by conocophillips in return for the rights to earn up to a 75%
interest in the Goldwyer acreage. further information on
this agreement can be found in the section on subsequent
events in this report.
New Standard’s Goldwyer shale acreage highlighting the prospective shale gas window.
annual financial report 2011
3
Laurel Project – Canning Basin, Western Australia
the laurel project is located in the northern canning Basin
in the fitzroy trough and comprises a 65% operated interest
in ep417 and a 60% operated
interest in the Seven lakes Special
prospecting authority (Seven Lakes
SPA) that was successfully awarded
in July 2011. the laurel project
provides a second substantial asset
for new Standard in the canning
Basin and
is emerging as an
attractive regional play following
the recent exploration success being
experienced by Buru energy ltd
(aSX: Bru) and its joint venture partners in the region.
“New Standard has
amassed one of the
largest shale and tight
gas portfolios in
Australia”
fund (subject to an expenditure cap of $4m) 27.5% of the
costs of drilling, coring, fracture stimulation, flow testing
and planned deepening of the lawford #1 well located
on ep417. in return Green rock will earn a 15% per cent
interest in ep417. Green rock has
also committed to fund 22.5% of
the costs of a second (but yet to be
agreed) well to earn an additional
5% in ep417. at the date of this
report the lawford #1 well was
being deepened by the ep417 joint
venture.
as outlined above the laurel project
footprint was significantly enhanced
subsequent to the end of the period with the successful
application and award of the Seven lakes Spa area (Stp-
Spa-0017) immediately adjacent to ep417 in which new
Standard will have a 60% operated interest. this addition
to the portfolio more than doubled the laurel project
acreage in the region for new Standard.
the laurel project was enhanced during the period via the
successful farm-in agreement reached with Green rock
energy ltd (Green Rock) (aSX: GrK) on ep417 pursuant
to which Green rock will pay $750,000 in back costs and
New Standard’s Laurel Project permit area EP 417 and the Seven Lakes SPA hold potentially prospective tight gas plays.
4
neW StanDarD enerGy liMiteD
Merlinleigh Project – Carnarvon Basin, Western
Australia
During the year new Standard completed the required
geochemical surveys to meet the work commitments
on the Merlinleigh project pursuant to the terms of the
two special prospecting authority (SPA) areas in the
onshore carnarvon Basin. the acreage is centrally located
alongside the major gas infrastructure of the Dampier to
Bunbury gas pipeline which provides a strategic position
from which to service the growing domestic markets
of the MidWest and pilbara mining centres as well as
the burgeoning export lnG markets being developed
in Western australia. following completion of the
geochemical surveys and internal technical studies, new
Standard elected to exercise its options attaching to
the Spa areas. as a result the Merlinleigh project areas
have now been refined to focus on the core areas of
interest within the basin. the two acreage areas are now
registered as application areas and the company is actively
progressing native discussions with the traditional owners
in the region in an effort to have the permits granted in
early 2012.
Significant technical work continues to be undertaken
by new Standard to enhance the technical merits of the
Merlinleigh project. the company continues to assess its
alternatives in relation to progressing exploration work in
2012 on the basis native title agreement can be reached
and the permits granted to new Standard.
Maturity map of the top Wooramel group showing New Standard’s acreage and
prospects within the limits of the maturity envelope.
annual financial report 2011
5
Conventional Onshore United States Portfolio
the onshore exposure in colorado county and Wharton
county in texas, uSa provides a further diversification of
risk and reward. the projects are located within a very
mature oil and gas production region of the texas Gulf
coast – one of the richest onshore hydrocarbon provinces
in the world. the primary focus currently remains at
the colorado county project where the exploration and
development targets are lower risk, the exploration
costs are lower and more controllable than those of the
australian portfolio and the infrastructure and end user
markets are both well established. these factors combine
to provide an attractive combination of risk to compliment
the more frontier environments of the canning Basin and
carnarvon Basin in Western australia.
a primary aim for the company in participating in the
uSa projects was to provide access to shorter term cash
flow opportunities whilst also maintaining a meaningful
exposure to sufficient upside. the initial drilling campaign
has delivered encouraging results and the company has
achieved its aim of becoming a producer from an onshore
project with significant upside potential. of the initial
exploration wells drilled, four are currently tied into
production (Heintschel #1, Heintschel #2, D.truchard #1
and Joann #1) and generating monthly cashflow.
considerable technical work continues to be undertaken
on the producing wells in the Heintschel field and this
work has focused on identifying the source of the water
being produced (to mitigate water production in future
development wells) in addition to designing alternative
fracs for future Heintschel development wells that will
optimise the volume of the reservoir connected to the
wellbore.
in conjunction with these studies, independent expert
consultants DeGoyler and Mcnaughton have been
commissioned to provide a view on the reserves and
resources contained in the Heintschel field. results from
this assessment are expected in H2 2011 and will provide
valuable input for future development plans for the
Heintschel field. the company continues to assess its
strategic alternatives for the most appropriate method of
value extraction and realisation for the uS portfolio.
Heintschel field schematic highlighting significant sand packages.
6
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NON-CORE ASSETS
SUMMARY
the company inherited a portfolio of tungsten and
coal exploration assets as a result of the merger with
Hawk resources limited (Hawk) in 2008. new Standard
completed the successful divestment of these assets during
the period.
“New Standard remains
well positioned in a
rapidly emerging sector
in Australia”
large equity positions
corporately new Standard remains well positioned in
a rapidly emerging sector in australia and is well placed
in technically attractive
with
projects providing the opportunity to effectively progress
exploration on its portfolio of assets in the coming
twelve months. new Standard has also negotiated and
established good working relationships and partnerships
both domestically here in australia and overseas in the
united States providing the ability to access relevant
technical skills, expertise and experience as well as
significant financial resources to assist with progressing its
exploration efforts efficiently.
the company is well positioned to extract value from within
the current exploration portfolio and will continue to
assess and progress other opportunities, both conventional
and unconventional, on an ongoing basis in an effort to
further enhance the potential for ongoing new Standard
shareholder wealth creation.
Merlinleigh project site visit with Traditional Owners.
annual financial report 2011
7
CHAIRMAN’S REPORT
Dear new Standard Shareholders,
i am delighted to present this year’s annual report and particularly honoured to have been asked to join the
board of new Standard during the year to assume the role of non-executive chairman as the company moves
into an exciting new growth period.
We can look back on a year of success and forward with a good deal of confidence. as a result of the successful
planning and execution over the past 12 months, we find ourselves well positioned with an attractive portfolio
of projects in a rapidly emerging sector and an exciting opportunity to deliver further shareholder value.
the past year has seen the achievement of what the new Standard team has worked so hard to deliver:
an agreement with a high quality partner to explore and appraise our flagship Goldwyer project in the
canning Basin. on 13 July this year, we announced we had executed a non-binding Heads of agreement with
conocophillips (canning Basin) pty ltd (“conocophillips”) to farm into the various exploration permits and
application areas comprising the Goldwyer project, and in so doing entered into a period of exclusivity to allow
full due diligence and negotiation of the agreements in detail.
i am delighted to report that as announced on 30 September 2011, binding agreements have now been
executed within the agreed deadline and as a result, conocophillips has the right to earn and retain a 75%
working interest in the Goldwyer project in return for completing four phases of exploration work involving the
expenditure of up to $uS109 million over four years. in our view this is truly a company changing transaction
that will help underpin the ability to aggressively tackle a very large, challenging and exciting project that has
the potential to add significant value for all new Standard shareholders.
although some appreciation for the potential value of shale and tight gas is starting to emerge domestically,
it currently appears that overseas interests have a much greater appreciation for this potential. Having said
this, the positions taken by numerous global majors within the coal seam gas sector in recent years has seen
enormous value creation for early movers in the sector, and it is our view that this kind of activity could replicate
itself in the shale and tight gas sector here in australia as it develops. i therefore welcome conocophillips’
interest in our Goldwyer project and look forward to a constructive and mutually-rewarding future with them.
the board is extremely satisfied that we have secured a world-class partner with world-class expertise to join
us in a world-class project.
Whilst the Goldwyer has demanded significant attention in recent times, the laurel project is also emerging
as a second project with substantial potential scale in the canning Basin that is highly prospective for both
conventional and unconventional resources. the laurel formation is the primary target within the laurel project
and forms an emerging regional resource play in the fitzroy trough, where Buru energy has recently drilled
two wells that have both encountered significant hydrocarbons and successfully flowed gas and condensate to
surface - which is always an encouraging sign. the laurel project has recently reached an important milestone
with the commencement of drilling activities to deepen the lawford #1 well on ep417 in an effort to test the
laurel formation and extend the growing prospectivity of this exciting regional play.
the Merlinleigh project rounds out new Standard’s current australian portfolio as a very large acreage
position that dominates the Merlinleigh sub-basin within the onshore carnarvon basin in Western australia.
the Merlinleigh project is highly prospective for conventional targets as well as a broader regional resource
8
neW StanDarD enerGy liMiteD
play within the shales that are present across the acreage. Most importantly the Merlinleigh project has the
tremendous advantage of location. it is very near the Dampier-Bunbury natural Gas pipeline and perfectly
positioned between the world class mining centre of the pilbara region, the emerging Mid-West resource
province and other major users and utilities in and around perth to the south. the technical data is currently
being reviewed to build a conceptual exploration program and provide the basis for more substantial
discussions with investors seeking participation. these discussions are able to be progressed now that the
conocophillips negotiations have been concluded and we anticipate that the Merlinleigh project will receive
significant additional focus during the coming year.
all three australian project areas require the co-operation of native title owners and i am especially pleased
to note the good relationships, constructive discussions and on-the-ground assistance we have enjoyed with
the various groups and their representatives. We look forward to maintaining and further building on these
good working relationships with all these important stakeholders.
the value of the uS assets the company holds in colorado and Wharton counties in texas are currently under
review as the operator, aKG energy, investigates optimum completion design and fraccing procedures, and
we wait to receive an independent report on resources and reserves within the Heintschel field. We are now
benefitting from four wells producing cash flow whilst we evaluate our alternatives to move forward, and we
remain of the view that significant potential upside remains within the uS portfolio.
new Standard is entering the next 12 months with the prospect of having exploration activity planned on
all four projects within the portfolio. We will naturally have to increase staff to manage these activities and
a key focus will be to build the team where necessary, but the board remains conscious of the need to utilise
shareholder funds carefully whilst maximising returns along the way.
Whilst the majority of our attention has recently been focused on completing the conocophillips transaction
and progressing the other projects in the current portfolio, moving forward additional resources will be
allocated to identifying and assessing opportunities beyond those we have at present, to ensure a pipeline of
value-adding prospects continues to emerge as earlier ones crystallize and mature. this remains one of new
Standard’s key competitive advantages and a cornerstone of the ability to continue to deliver significant value
creation.
finally, i would like to sincerely thank all our shareholders for their on-going support and loyalty, our various
advisors who have assisted during the year and my fellow directors and all the staff of new Standard who have
formed such a dedicated and professional team.
We look forward an active and rewarding 2012.
Arthur Dixon AM
non-executive chairman
annual financial report 2011
9
DIRECTORS’ REPORT
the Directors of new Standard submit herewith the annual financial report of the company and the entities it controlled
at the end of, or during the financial year ended 30 June 2011. in order to comply with the provisions of the Corporations
Act 2001, the Directors report as follows:
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 the period stated.
Name
Particulars
Mr Arthur Dixon AM
non-executive chairman (appointed 1 May 2011)
age
Qualifications
experience
69
B.e.
arthur Dixon graduated from Melbourne university as a chemical engineer. arthur is a 40 year
oil and gas year veteran with Shell and of that, more than 20 years in the lnG business. He has
served on the boards of australia lnG Ship operating company (alSoc), Brunei lnG, Brunei Shell
tankers and Shell international Gas and has considerable experience working with joint venture
partners.
arthur currently advises selected clients, conducts executive training courses on lnG and is
chairman of the Board of the australian centre for natural Gas Management, a joint venture
between the university of Western australia and curtin university of technology. arthur was
made a Member of the order of australia in January 2008.
current and former Directorships in
listed entities in the last 3 years
nil
relevant interests in shares and
options
36,000 fully paid ordinary shares
Mr Sam Willis
Managing Director (appointed 28 July 2008)
age
Qualifications
experience
39
B.com
prior to his role at new Standard, Sam worked in the corporate advisory and financial markets
fields for over 10 years where his primary duties involved assisting companies achieve an aSX
listing, providing general corporate advice, M&a assessment, deal co-ordination and structuring
and capital raising for unlisted and listed companies.
Sam has also previously worked as a private client advisor with Hartleys, in an advisory capacity
with red Dingo (venture capital), and as an investment analyst with both Deutsche Bank and
Schroders investment Management in london.
current and former Directorships in
listed entities in the last 3 years
Base resources limited (aSX: BSe)
northern energy corporation ltd (aSX: nec) (resigned 28 february, 2011)
relevant interests in shares and
options
8,270,864 fully paid ordinary shares
2,625,000 options exercisable at $0.225 on or before 30 June 2012
2,625,000 options exercisable at $0.275 on or before 30 June 2012
10
neW StanDarD enerGy liMiteD
Dr Mark Hagan
technical Director (appointed 28 July 2008)
age
Qualifications
experience
65
B.Sc, ph.D
Mark holds a ph.D in Geology from the university of Western australia (1974) and has over 30
years experience in oil and gas exploration and production with expertise in the integration and
operation of all technical, operational and marketing aspects of oil and gas business ventures.
He spent over 18 years in uSa/europe on worldwide projects in a variety of positions and was
ultimately responsible for exploration activities in europe, africa, South america and asia for
Sun oil company – a large uS based integrated oil company. Mark was on the Board of Sun
exploration and production company from 1989 to 1991 during which time new discoveries were
made in diverse exploration spheres and oil production rose to 70,000 barrels/day.
Since returning to australia in 1991, Mark has been an independent consultant, mainly on projects
in the australia/asia region and is past chairman of empire oil and Gas nl (1999-2002) – an aSX
listed exploration company.
current and former Directorships in
listed entities in the last 3 years
nil
relevant interests in shares and
options
2,166,456 fully paid ordinary shares
3,625,000 options exercisable at $0.225 on or before 30 June 2012
3,625,000 options exercisable at $0.275 on or before 30 June 2012
Mr Ian Paton
non-executive Director (appointed 28 July 2008; appointed chairman 1 July 2009 to 1 May 2011)
age
Qualifications
experience
59
B.Sc (Hons), M pet eng, MBa
ian has been working as an international petroleum consultant specialising in engineering and
Geoscience from 2000 until the present. among numerous other roles, ian has been most recently
focussed on coogee resources projects in the timor Sea where he has identified and developed
significant oil discoveries resulting from exploration success. production from these discoveries
will approach 40,000 barrels/day.
prior to his consulting role ian was technical Director at amity oil where he discovered two
commercial gas fields in turkey. ian also held positions as technical manager of conoco oceania
where he ran all operations in australia and pnG as well as holding the role of exploration and
development manager at Santos where he was responsible for oil field developments in South
australia and leading Santos into the north-west shelf where he oversaw numerous discoveries.
current and former Directorships in
listed entities in the last 3 years
nil
relevant interests in shares and
options
1,000,000 fully paid ordinary shares
1,000,000 options exercisable at $0.225 on or before 30 June 2012
1,000,000 options exercisable at $0.275 on or before 30 June 2012
Mr Mark Clements
company Secretary (appointed 28 July 2008)
the Joint company Secretary is Mark clements. Mark has a Bachelor of commerce degree from
the university of Western australia and is a fellow of the institute of chartered accountants of
australia. Mark is also a member of the australian institute of company Directors and an affiliated
member of the institute of chartered Secretaries in australia. He has over 15 years management,
corporate administration, finance and accounting experience working for a number of listed and
unlisted public companies for which he has held the role of company Secretary for over 10 years.
Mark previously worked for an international accounting firm.
Mr David Hansen-Knarhoi
chief financial officer (appointed 7 September 2011)
the chief financial officer is David Hansen-Knarhoi. David has a Bachelor of commerce degree
from the university of Western australia. David is a fellow of the institute of chartered accountants
of australia and a member of the institute of Directors of the united Kingdom. He has over 17
years management, corporate administration, finance and accounting experience working for a
number of listed and unlisted public companies both in australia and the united Kingdom.
annual financial report 2011
11
PRINCIPAL ACTIVITIES
the principal activities of the company during the course
of the year were the continued exploration for oil and
gas in the canning Basin in north-west Western australia
and investment in onshore development in the texas
Gulf region, Southern uSa. in addition, resources were
applied to reviewing and securing additional exploration
opportunities resulting in the Merlinleigh project in the
onshore carnarvon Basin being secured.
OPERATING RESULTS
the consolidated entity’s net loss attributable to members
of new Standard for the year ended 30 June 2011 after
applicable income tax was $79,081 (2010: profit of
$3,298,537).
a summary of consolidated revenues and results for the
year by reportable segment is set out below:
Segment
revenues
30 June 2011
$
Segment
results
30 June 2011
$
australia - oil and gas
exploration
united States - oil and
gas exploration
tungsten
total segment revenue/
result
-
-
-
-
-
-
(4,200)
(4,200)
Segment results are adjusted earnings before interest, tax,
depreciation and amortisation, which is the measure of
segment result that is reported to the Managing Director
to assess the performance of the operating segments.
FUTURE DEVELOPMENTS
the company intends to pursue its current stated
objectives as an oil and gas explorer.
DIVIDENDS
no dividend has been declared or paid during the financial
year and the Directors do not recommend the payment
of any dividend in respect of the current or preceding
financial years.
ENVIRONMENTAL REGULATIONS
the economic entity holds participating interests in mining
and exploration tenements. the authorities granting such
tenements require the tenement holder to comply with
the terms of the grant of the tenement and all directions
given to it under those terms of the tenement. there have
been no known breaches of the tenement conditions, and
no such breaches have been notified by any government
agencies during the year ended 30 June 2011.
Greenhouse gas and energy data reporting requirements
Given the nature and location of the Group’s operations
in australia and the uSa, both the energy efficiency
opportunities act 2006 and the national Greenhouse and
energy reporting act 2007 are not expected to have a
material impact.
SHARE OPTIONS
Share options on issue at year end or exercised during the
year:
Details of unissued ordinary shares of the company under
option at the date of this report are as follows:
Item
unlisted
options
unlisted
options
unlisted
options
unlisted
options
Number of
Shares under
Option
Exercise Price
of Options
Expiry Date of
Options
7,250,000
$0.225
30 June 2012
7,250,000
$0.275
30 June 2012
500,000
$0.225
30 June 2013
500,000
$0.275
30 June 2013
During the year and up to the date of this report the
company issued 500,000 unlisted $0.225 options exercisable
on or before 30 June 2013 and 500,000 unlisted $0.275
options exercisable on or before 30 June 2013. 4,000,000
unlisted $0.125 options and 4,000,000 $0.15 options were
exercised prior to expiry and 50,000 unlisted $0.35 options
and 50,000 unlisted $0.50 options and 100,000 unlisted
$0.75 options lapsed without exercise.
at 30 June 2011, 16,500,000 unlisted options were on
issue and of these, 1,000,000 unlisted $0.20 options were
exercised on 20 July 2011. refer to the notes to the
financial statements for details of options granted during
the period.
PROCEEDINGS ON BEHALF OF THE COMPANY
no person has applied for leave of the court under Section
327 of the Corporations Act 2001 to bring proceedings on
behalf of the company or intervene in any proceedings to
which the company is a party for the purpose of taking
responsibility on behalf of the company for all or any part
of those proceedings.
the company was not a party to any proceedings during
the year.
EVENTS SUBSEQUENT TO YEAR END
on 13 July 2011, the company announced that it had
entered into a non-binding Heads of agreement (Heads
of agreement) and exclusive negotiating period with
conocophillips australia SH4 pty ltd (conocophillips),
an affiliate of global energy company conocophillips
[nySe:cop].
the Heads of agreement sets the framework for
conocophillips to farm-in and
jointly explore, new
Standard’s flagship Goldwyer project in the canning Basin,
Western australia. the project comprises the following
permit interests in Western australia’s canning Basin:
12
neW StanDarD enerGy liMiteD
Granted exploration permits (eps) 443, 450, 451 and 456;
and application areas 1/09-0, 2/09-0 and 5/09-0.it also
contains an agreed set of core commercial principles which
will form the basis for negotiating and completing binding
and definitive agreements.
to uS$109.5M over
these core commercial principles envisage conocophillips
funding up
four phases of
unconventional hydrocarbon exploration work, including
the drilling, coring and evaluation of multiple wells. in
return for funding the phased work program conocophillips
will have the right to earn up to a 75% working interest in
the Goldwyer project which would reduce new Standard’s
working interest from 100% to 25%.
conocophillips must complete all four phases of work to
earn and retain the 75% working interest. in the event that
conocophillips elects not to complete all four proposed
phases of work a 100% operated working interest in the
Goldwyer project will revert to new Standard.
conocophillips will also make an upfront payment of a$1M
to new Standard in consideration of prior costs.
the phased nature of the exploration program provides
for initial drilling, coring and evaluation of multiple wells
to be undertaken following which conocophillips will be
required to decide if it wishes to proceed with further
exploration, appraisal and pilot development work in
subsequent phases. this structure provides conocophillips
with the option to withdraw at the completion of each
phase of work on the basis that any working interest (or
associated rights) is returned to new Standard.
the timing of the proposed work programs will be
consistent with permit and work commitment revisions
to be sought and agreed with the government. Subject
to necessary approvals and rig availability, new Standard
envisages that phase 1 work would be carried out in 2012
assuming binding agreements are successfully executed.
the Heads of agreement contemplates that new Standard
will remain as operator, although conocophillips would
have the right to assume operatorship of the Goldwyer
project at its election. an integral part of the proposed
farm-in arrangement is the proposed provision of technical
support by conocophillips to new Standard to enhance
the operating arrangement. new Standard believes
that conocophillips’ participation will inject invaluable
and world class technical knowledge and resources to
ensure the Goldwyer project is explored and appraised in
conjunction with a world leader in global shale plays.
Both parties have committed to an exclusive period to
negotiate the proposed transaction with a target of
executing binding agreements as soon as possible, but no
later than 30 September 2011. the binding agreements will
also be subject to any outstanding government approvals.
new Standard has agreed to notify conocophillips of any
approaches in relation to its interest in the Goldwyer
project during this exclusivity period, and to provide
conocophillips with a right to match any offers that relate
to new Standard’s interest in the Goldwyer project.
on 20 July 2011 1,000,000 unlisted $0.20 options were
exercised raising a total of $200,000.
other than the above, there has been no other matter or
circumstance that has arisen since the end of the year that
requires disclosure.
DIRECTORS’ MEETINGS
the following table sets out the number of Directors’
meetings held during the financial year and the number
of meetings attended by each Director whilst in office.
During the financial year, 7 Board meetings were held.
there were 3 remuneration committee meetings and 2
audit committee meetings. there were no nomination
committee meetings.
Directors
Mr a Dixon
aM
Mr S Willis
Dr M Hagan
Mr i paton
Board of directors
Audit
Remuneration
Committee
Committee
Held Attended Held Attended Held Attended
2
7
7
7
2
7
7
7
0
2
2
2
0
2
2
2
1
3
3
3
1
1
1
3
INDEMNIFICATION OF OFFICERS AND AUDITORS
During or since the financial year the company has
indemnified and entered into Deeds of indemnity and
access with each of the current Directors to indemnify the
Director or any related body corporate against a liability
incurred as a Director. the Deeds provide for the company
to pay all damages and costs which may be awarded
against the Directors.
the company has paid premiums to insure each of the
Directors against liabilities for cost and expenses incurred
by them in defending any legal proceedings arising out of
their conduct while acting in the capacity of a Director of
the company, other than conduct involving a wilful breach
of duty in relation to the company. this cover has also
been extended to cover the activity in the uSa through
the wholly owned subsidiary, new Standard energy inc.
the contract of insurance prohibits disclosure of the nature
of the liability and the amount of the premium.
NON-AUDIT SERVICES
the company may decide to employ the auditor on
assignments additional to their statutory duties where the
auditor’s expertise and experience with the company and/
or the consolidated entity are important.
Details of the amounts paid or payable to the auditor
BDo audit (Wa) pty ltd for audit and non-audit services
provided during the year are set out below.
the Board of Directors has considered the position and,
in accordance with the advice received from the audit
committee is satisfied that the provision of the non-
audit services is compatible with the general standard of
independence for auditors imposed by the corporations
act 2001. the Directors are satisfied that the provision of
annual financial report 2011
13
non-audit services by the auditor, as outlined below, did
not compromise the auditor’s independence requirements
of the corporations act 2001 for the following reasons:
- all non-audit services have been reviewed by the
audit committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
- none of the services undermine the general principle
relating to auditor independence as set out in apeS 110
code of ethics for professional accountants, including
reviewing or auditing the auditor’s own work, acting
in a management or a decision-making capacity for
the company, acting as advocate for the company or
jointly sharing economic risk and rewards.
in the form of a written report detailing market levels
of remuneration for comparable executive roles. the
executive remuneration review process for the year is
still under consideration at the date of this report and
is being conducted with the benefit of an independent
advisory group and remuneration review to assist the
Board and remuneration committee. as a result, executive
remuneration for the coming financial year may vary from
the structure and levels outlined in this report.
executive remuneration generally consists of a fixed
remuneration plus superannuation, a short term incentive
(cash) and a long term incentive portion (shares funded by
non-recourse loans) as appropriate.
During the year no fees were paid or payable to the auditor
Non-Executive Director Remuneration
or related entity for non-audit services.
AUDITOR’S INDEPENDENCE DECLARATION
a copy of the auditor’s independence declaration under
s.307c of the Corporation Act 2001 in relation to the
audit of the full year is included on page 25.
REMUNERATION REPORT (AUDITED)
the remuneration report is set out under the following
main headings:
a principles used to determine the nature and amount of
remuneration
B Details of remuneration
c Service agreements
D Share-based compensation
e additional information
the information provided in this remuneration report
has been audited as required by section 308(3c) of the
corporations act 2001.
A Principles used to determine the nature and amount of
remuneration
the Board policy for determining the nature and amount
of remuneration of Directors and executives is agreed
by the Board of Directors as a whole. the Board obtains
professional advice where necessary to ensure that the
company attracts and retains talented and motivated
Directors and employees who can enhance company
performance through their contributions and leadership.
Executive Director Remuneration
in determining the level and make-up of executive
remuneration, the Board along with the remuneration
committee negotiates a remuneration to reflect the
market salary for a position and individual of comparable
responsibility and experience. the company has established
a remuneration committee to determine and recommend
the level of appropriate executive Director remuneration
each year. remuneration is regularly compared with the
external market by participation in industry salary surveys
and during recruitment activities generally. if required,
the Board and the remuneration committee may engage
an external consultant to provide independent advice
non-executive Directors’ fees are paid within an aggregate
limit which is approved by the shareholders from time to
time. on 26 november 2010, shareholders approved to
increase the total aggregate fixed sum per annum to be paid
to the Directors (excluding salaries of executive directors)
from $250,000 to $400,000. retirement payments, if
any, are agreed to be determined in accordance with the
rules set out in the Corporations Act 2001 at the time of
the Directors retirement or termination. non-executive
Directors’ remuneration may include an incentive portion
consisting of bonuses and/or options, as considered
appropriate by the Board, which may be subject to
shareholder approval in accordance with the aSX listing
rules.
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 amount of Director fees being paid
by comparable companies with similar responsibilities
and the experience of the non-executive Directors when
undertaking the annual review process.
the company determines the maximum amount for
remuneration,
share-based
remuneration, for Directors.
thresholds
including
for
Performance Based Remuneration
as part of each executive’s remuneration package there is
a short term incentive (Sti) based component of up to 20%
of base salary payable in cash each year. the remuneration
committee considers the appropriate targets and key
performance indicators (Kpis) to link the Sti plan and the
level of payout if targets are met. this includes setting any
maximum payout under the Sti plan, and minimum levels
of performance to trigger payment of Sti. the intention
is to facilitate goal congruence between executives with
that of the business and shareholders.
for the year ended 30 June 2011, the Kpis linked to Sti
plans were based on capital management, partner,
contractor and stakeholder relations, resource base and
asset management, office and employee operations,
management of technical team and database and corporate
governance, weighted depending on the accountabilities
of the role and impact on the Group’s performance.
14
neW StanDarD enerGy liMiteD
the remuneration committee is responsible for assessing whether the Kpis are met. to help make this assessment, the
committee utilises the assistance of external remuneration consultants. the Sti target annual payment is reviewed annually.
the remuneration committee has assessed that the Kpi’s for the year ended 30 June 2011 had been achieved. executives
are entitled to a cash bonus for the year ended 30 June 2011 of $112,667 representing 20% of the executive’s base salary.
the financial statements as at 30 June 2011 include a provision for this amount.
the remuneration committee has the discretion to adjust Sti’s downwards in light of unexpected or unintended
circumstances.
as part of each executive’s remuneration package there is a long term incentive (lti) based component. the lti component
is up to 30% of the applicable base salary based on the company’s share price performance over the period in both
absolute and relative terms. Subject to any necessary shareholder approvals, the lti component will be payable in shares
via the employee Share plan.
the lti component will be measured on the following basis:
LTI Benchmark
LTI Amount Due
LTI
Weighting %
50%
LTI Item
absolute return
(Share price +
Dividends)
Shares provide
company’s
an
absolute return of 10% or more over
the 12 month period from 1 July to
30 June based on 12 month VWap
50%
relative return
(Share price +
Dividends versus
agreed index
benchmark)
company’s Shares outperform the
S&p/aSX 300 energy accumulation
index over the 12 month period from
1 July to 30 June based on 12 month
VWap
lti amount will be 1% of base salary for every
1% of absolute return, capped at a maximum
of 15% of base salary. absolute return of
<10% will not trigger an lti amount under
this item.
1% of base salary for every 1% of
outperformance over and above the energy
accumulation index, capped at a maximum
of 15% of base salary. relative return of less
than the benchmark will not trigger an lti
amount under this item.
the lti components have been assessed for the 2011 financial year and the performance hurdles outlined above have been
met and exceeded for the period. as a result, and subject to shareholder approval, lti components equal to the full 30%
of base salary have been provided for as at 30 June 2011 for the executive team. this has resulted in a total of $169,000
being accrued for executive ltis that are due including $72,000 for Sam Willis (subject to shareholder approval), $72,000
for Mark Hagan (subject to shareholder approval) and $25,000 for Marcus Gracey.
Employee Share Plan
the purpose of implementing the plan is to reward key officers and personnel for both services rendered over the past
12 months and importantly, to provide a platform to reward key personnel going forward. the plan provides the ability
to negotiate an incentive component of remuneration packages for the recruitment and retention of officers and key
personnel to the company. the major aim of the plan is to align mid to long term interests of key officers and personnel
with those of shareholders and to do so in a tax effective manner.
the issue of any securities pursuant to the plan will be undertaken by way of provision of a non-recourse, interest free loan
to be used for the purposes of subscribing for new Shares in the company based on a price that will be not less the volume
weighted average price at which Shares were traded on the aSX over the 5 trading days up to and including the trading
day before the date of the offer. the issue of any securities to Directors or related parties will be subject to the requisite
approvals required.
Relationship between the remuneration policy and company performance
the tables below set out summary information about the company’s earnings and movements in shareholder wealth for
the period from June 2007 to June 2011:
30 June 2011
30 June 2010
30 June 2009
30 June 2008
30 June 2007
revenue
net profit/(loss) before tax
net profit/(loss) after tax
Share price at end of year
Basic earnings/(loss) cents per share
Diluted earnings/(loss) cents per share
annual financial report 2011
$
179,353
(79,081)
(79,081)
$0.19
(0.04)
(0.04)
$
216,444
3,298,537
3,298,537
$0.215
2.34
1.91
$
792,289
(5,025,880)
(5,025,880)
$0.05
(3.75)
(3.75)
$
330,068
(134,291)
(134,291)
$0.24
(0.43)
(0.43)
$
5,187
(13,354)
(13,354)
n/a
(0.20)
(0.20)
15
no dividends have been declared or paid.
B Details of Remuneration
the details of the remuneration of Directors and Key Management personnel of the Group (as defined by aaSB 124
related party Disclosures) are set out below:
Mr a Dixon aM
Mr S Willis
Dr M. Hagan
Mr i paton
Mr M Gracey
Mr M clements
Mr David Hansen-Knarhoi
non-executive chairman
(appointed 1 May 2011)
executive Director
(appointed 28 July 2008)
technical Director
(appointed 28 July 2008)
non-executive Director
(appointed as non-executive Director 28 July 2008: appointed non-
executive chairman 1 July 2009: retired as non-executive chairman 1 May
2011)
commercial & legal Manager
(appointed 1 february 2011)
company Secretary
(appointed 28 July 2008)
chief financial officer
(appointed 7 September 2011)
the above are among the five highest paid executives.
Details of Remuneration for Year Ended 30 June 2011
the remuneration for each Director of the consolidated entity during the year was as follows:
Short –term employment benefits
Post-
employment
Equity
Directors
Salary,
Fees and
Commissions
$
2010
Short-term
Incentive(1)
Paid
$
Mr a Dixon aM
11,000
-
Mr S Willis
Dr M Hagan
Mr i paton
240,000
240,000
100,637
45,600
43,764
-
2011
Short-term
Incentive(1)
Accrued/
Paid
$
-
48,000
48,000
-
591,637
89,364
96,000
-
-
-
-
-
2010
Long-term
Incentive
Received as
Compensation(2)
$
2011
Long-term
Incentive/
Options
Accrued/Paid(2)
$
Superannuation
Contribution
$
Total
$
11,000
481,913
486,827
100,637
Remuneration
Consisting
Of Options
%
-
-
-
-
-
-
76,313
83,063
-
-
72,000
72,000
-
159,376
144,000
1,080,377
Key Management Personnel
Mr M Gracey
Mr M clements
84,098
83,750
167,848
note:
-
-
-
16,667
-
16,667
7,568
-
7,568
-
-
-
35,546
143,879
-
83,750
7.7
-
35,546
227,629
(1) During the period Mr Willis and Dr Hagan were paid a cash bonus of $45,600 and $43,764 respectively following
achievement of Kpi’s for the year ended 30 June 2010 and shareholder approvals received at the annual general meeting
held on 26 november 2010.
16
neW StanDarD enerGy liMiteD
Mr Willis and Dr Hagan are entitled to a cash bonus for the year ended 30 June 2011 of $48,000 each representing 20% of
their base salary, as all Kpi measurements were successfully met.
Mr Gracey is entitled to a cash bonus pro rata for the year ended 30 June 2011 of $16,667.
(2) the amounts detailed above as equity based compensation for Messer’s Willis and Hagan related to shares issued
following achievement of lti for the years ended 30 June 2010 (issued on 4 January 2011) and the year ended 30 June
2011 which are to be issued subject to shareholder approval. refer to note D Share Based compensation for further
information.
on 4 January 2011 Mr Willis and Dr Hagan were issued fully paid ordinary shares to the value of $76,313 and $83,063
respectively upon achievement of lti’s for the year ended 30 June 2010 and approved by shareholder at the general
meeting held 26 november 2010.
Mr Willis and Dr Hagan’s lti component of their executive consultancy agreements have been achieved for the year ended
30 June 2011. as a result, resolutions will be put before shareholders at the 2011 annual General Meeting to seek approvals
for the issue of fully paid ordinary shares with a value of $72,000 for Mr Willis and $72,000 for Dr Hagan in accordance with
the terms of the employee Share Scheme.
Mr Gracey’s lti component of his employment contract has been achieved for the year ended 30 June 2011. as a result,
subsequent to year end Mr Gracey is entitled to enter into a loan agreement with the company in accordance with the
terms of the employee Share Scheme for shares to the value of $25,000. the financial statements as at 30 June 2011 include
a provision for this amount.
Mr Gracey was also granted options during the year in accordance with his employment contract. the pro rata value of
these options as at 30 June 2011 using the Black-Scholes option pricing model was $10,546.
the pro rata value of options granted and vested to 30 June 2011 are included in equity – long-term incentive options. the
total value of options at grant date is set out at D Share Based compensation. these amounts do not reflect cash payments
and represent accounting treatment for options received by directors or key management personnel during the period.
a company in which Mr M clements (company Secretary) is a director and shareholder was paid $83,750 for accounting
and company secretarial services during the year. Mr M clements nor any associates received options as compensation.
other than the executive Directors, the commercial and legal Manager and the company Secretary, there were no other
Key Management personnel or executives for the year ended 30 June 2011.
Details of the new Standard energy ltd employee Share Scheme are set out in the notes to the consolidated financial
statements at note 24.
Details of Remuneration for Year Ended 30 June 2010
the remuneration for each Director of the consolidated entity during the year was as follows:
Short –term
employment
benefits
Post-employment
Equity
Salary, Fees and
Commissions
$
Superannuation
Contribution
$
Options
Received as
Compensation(1)
$
-
-
-
-
-
-
92,524
20,191
27,882
140,597
-
-
Remuneration
Consisting of
Options
%
46.3
7.3
9.1
-
Total
$
199,758
274,566
304,758
779,082
84,671
84,671
Directors
Mr i paton
Mr S Willis
Dr M Hagan
107,234
254,375
276,876
638,485
Key Management Personnel
Mr M clements
note:
84,671
84,671
(1) the pro rata value of options granted and vested during the year to 30 June 2010. the total value of options at grant
date is set out at D Share Based compensation. these amounts do not reflect cash payments and represent accounting
treatment for options received by directors during the period.
annual financial report 2011
17
a company in which Mr M clements (company Secretary) is a director and shareholder was paid $84,671 for accounting
and company secretarial services during the year. Mr M clements nor any associates received options as compensation.
the amounts detailed above as equity based compensation for Messer’s Willis and Hagan related to options that were issued
partly as recompense for options already held prior to the merger with Hawk. refer to note D Share Based compensation
for further information.
other than the executive Directors and the company Secretary, there were no other Key Management personnel or
executives for the year ended 30 June 2010.
C Executive Services Agreements
the remuneration committee reviews and agrees executive Service agreements for Key Management personnel on a
periodic basis. the remuneration committee is also assisted, where appropriate, by external consultants specialising in
remuneration reviews and other employment issues.
the following executive consultancy agreements were in place at 30 June 2011 and as at the date of this report;
the existing executive consultancy agreements with Mr Sam Willis and Dr Mark Hagan are as follows;
(i) Monthly fees of $20,000 on a five day a week basis and $20,000 on a four day a week basis for Mr Sam Willis
and Dr Mark Hagan respectively,
(ii) a short term incentive cash bonus of up to 20% of annual fees subject to achievement of agreed upon Kpi’s,
(iii) a long term incentive share component of up to 30% of annual fees based upon achievement of relative and
absolute share price performance.
(iv) 3 month notice period of termination of consultancy agreement.
these agreements and executive remuneration packages are still under review as at the date of this report and therefore
remain subject to revision for the 2012 financial year. these reviews are being conducted with the benefit of an
independent advisory group and remuneration review to assist the Board and remuneration committee. as a result,
executive remuneration for the coming financial year may vary from the structure and levels outlined in this report.
Mr M Gracey is subject to an employment agreement based upon the following terms;
(i) annual salary of $220,000 inclusive of superannuation.
(ii) a short term incentive cash bonus of up to 20% of annual salary subject to achievement of agreed upon
Kpi’s.
(iii) a long term incentive share component of up to 30% of annual salary based upon achievement of relative and
absolute share price performance.
(iv) 12 week notice period of termination of employment agreement.
Mr D Hansen-Knarhoi is subject to an employment agreement based upon the following terms;
(i) annual salary of $200,000 inclusive of superannuation.
(ii) a short term incentive cash bonus of up to 20% of annual salary subject to achievement of agreed upon
Kpi’s.
(iii) a long term incentive share component of up to 30% of annual salary based upon achievement of relative and
absolute share price performance.
(iv) 12 week notice period of termination of employment agreement.
Mr M clements is subject to a service agreement for company secretarial and accounting services based upon monthly fees
of $4,000, renewed automatically for successive 1 month periods unless either party gives the other party at least 30 days
prior written notice of its intention not to renew the agreement.
18
neW StanDarD enerGy liMiteD
D Share-based Compensation
the terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting periods
are as follows;
Directors
and Key
Management
Personnel
Grant date
Number of
Options
granted
Exercise
Price
of
Options
No.
$
Expiry Date
of Options
Vesting
Date
Vested &
Exercisable
Vested
(1)
Lapsed
without
exercise
Value per
option at
grant date
Value of
options at
grant date
No.
%
No.
$
$
Mr S Willis(3)
18/07/2008
18/07/2008
2,625,000
2,625,000
0.225
0.275
30/06/2012
30/06/2012
08/08/2009
08/08/2009
2,625,000
2,625,000
100%
100%
Dr M Hagan(3)
18/07/2008
18/07/2008
3,625,000
3,625,000
0.225
0.275
30/06/2012
30/06/2012
08/08/2009
08/08/2009
3,625,000
3,625,000
100%
100%
Mr i paton
18/07/2008
18/07/2008
3/12/2009
3/12/2009
Mr M Gracey(2) 29/03/2011
29/03/2011
29/03/2011
29/03/2011
250,000
250,000
750,000
750,000
250,000
250,000
250,000
250,000
0.225
0.275
0.225
0.275
0.225
0.225
0.275
0.275
30/06/2012
30/06/2012
30/06/2012
30/06/2012
08/08/2009
08/08/2009
03/12/2009
03/12/2009
250,000
250,000
750,000
750,000
100%
100%
100%
100%
30/06/2013
30/06/2013
30/06/2013
30/06/2013
01/02/2012
01/08/2012
01/02/2012
01/08/2012
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.098
0.087
0.098
0.087
0.098
0.087
0.062
0.058
0.037
0.052
0.029
0.043
256,725
227,850
354,525
314,650
24,450
21,700
46,827
43,774
9,345
12,940
7,127
10,742
note:
(1)
all options were issued for nil consideration.
(2)
on 29 March 2011, the company issued a total of 1,000,000 unlisted options as part of an incentive component
of an employment agreement for the senior executive role of legal and commercial Manager for Mr Gracey. the options
have been issued in different tranches and 50% have an exercise price of 22.5c and the balance have an exercise price of
27.5c. all options expire on 30 June 2013 if not exercised before. the options are non-transferrable and cannot be exercised
until such time as employment periods of 12 and 18 months have been served. provision also exists for immediate lapse in
the event employment is terminated for fraud or wilful misconduct.
(3)
on 8 august 2009.
of the options granted on 18 July 2008, 50% vested upon relisting as new Standard energy ltd and 50% vested
fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account
the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield and the risk-free interest rate for the term of option.
Details of Options
Details of options over ordinary shares in the company provided as remuneration to each director of new Standard are set
out below. When exercisable, each option is convertible into one ordinary share of new Standard. further information on
the options is set out in note 26 to the financial statements.
2011
Directors and Key
Management Personnel
Number of Options
granted during the year
Number of Options
vested during the year
Number of Options
lapsed during the year
Value at
date of lapse
Mr a Dixon aM
Mr i paton
Mr S Willis
Dr M Hagan
Mr M Gracey
2011
No.
-
-
-
-
1,000,000
1,000,000
2011
No.
-
-
-
-
-
-
2011
No.
-
-
-
-
-
-
$
-
-
-
-
-
-
annual financial report 2011
19
in addition to the above it was agreed as part of arthur Dixon’s appointment in May 2011 that a package of options
would be agreed during the first 6 months of his tenure as non-executive chairman of the company. at the date of this
report the quantum and terms of arthur Dixon’s options package had not been agreed, however it is anticipated that such
agreement will be reached in the near future and that the requisite shareholder approvals for the issue of such options
will be sought at the 2011 aGM.
2010
Directors and Key
Management Personnel
Number of Options
granted during the year
Number of Options
vested during the year
Number of Options
lapsed during the year
Value at
date of lapse
2010
No.
1,500,000
-
-
1,500,000
2010
No.
2,000,000
2,625,000
3,625,000
8,250,000
2010
No.
-
(150,000)
-
(150,000)
$
-
-
-
-
Mr i paton
Mr S Willis
Dr M Hagan
E Additional Information
for each grant of options included in the tables in the remuneration report, the percentage of the available grant that
vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and
performance criteria is set out below. all the options granted have now met their vesting conditions hence the minimum
value of the option yet to vest is nil and the maximum value of the options yet to vest is nil.
the Board currently does not have a policy in relation to limiting exposure to risk in relation to directors holding
securities.
Options
2011
no options vested during the 2011 financial year.
2010
Directors
Mr i paton
Mr S Willis
Dr M Hagan
Year
Granted
Vested
%
Lapsed
%
Forfeited
%
Financial years
in which options
may vest
Minimum total
value of grant
yet to vest
$
Maximum total
value of grant
yet to vest
$
2009
2010
2009
2009
100
100
100
100
-
-
3%
-
-
-
-
-
2010
2010
2010
2010
-
-
-
-
-
-
-
-
End of audited Remuneration Report
Signed in accordance with a resolution of the Directors made pursuant to s.298 (2) of the Corporations Act 2001.
on behalf of the Directors
Arthur Dixon AM
non-executive chairman
27 September 2011
20
neW StanDarD enerGy liMiteD
DIRECTOR’S DECLARATION
in the directors’ opinion:
(a) the financial statements and notes are in accordance with the corporations act 2001, including:
(i) complying with accounting Standards, the corporations regulations 2001 and other mandatory professional
reporting requirements, and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its’ performance
for the financial year ended on that date, and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable; and
(c) the consolidated entity has included in the notes to the financial statements an explicit and unreserved statement of
compliance with international reporting Standards; and
(d) the remuneration disclosures included in the Director’s report (as part of the remuneration report) for the year
ended 30 June 2011, comply with section 300a of the corporations act 2001.
the directors have been given the declarations by the chief executive officer and chief financial officer required by section
295a of the corporations act 2001.
this declaration is made in accordance with a resolution of the directors.
Arthur Dixon AM
non-executive chairman
27 September 2011
annual financial report 2011
21
CORPORATE GOVERNANCE
STATEMENT
on 2 august 2007, the aSX corporate Governance council
released the ‘the revised corporate Governance principles
and recommendations’
(second edition corporate
Governance Guidelines) (‘guidelines’).
in fulfilling its obligations and responsibilities to its various
stakeholders, the Board of new Standard is a strong
advocate of corporate governance. the Board has adopted
corporate governance policies and practices consistent
with the aSX corporate Governance council’s “corporate
Governance principles and recommendations 2nd edition”
(recommendations) where considered appropriate for
company of new Standard’s size and nature.
this document describes the progress by new Standard
in addressing those guidelines. it is structured to address
the council’s guidelines and eight corporate governance
principles.
Principle 1 – Lay solid foundations for management
and oversight
“Companies should establish and disclose the respective
roles and responsibilities of the Board and Management.”
the main function of the Board is to set strategic objectives
for the company, supervising and guiding management
through the implementation process. the aim is for the
Board to provide the entrepreneurial leadership required
for the company to evolve within a framework of prudent
and effective risk management.
new Standard has adopted a formal board charter
delineating the roles, responsibilities, practices and
expectations of the Board collectively, the individual
directors and senior management.
the Board of new Standard ensures that each member
understands its roles and responsibilities and ensures
regular meeting so as to retain full and effective control of
the company.
the Board specifically emphasises on the following:
•
Setting the strategic aims of new Standard and
overseeing management’s performance within that
framework;
• Making sure that the necessary resources (financial
and human) are available to the company and its
senior executives to meet its objectives;
• overseeing management’s performance and the
progress and development of the company’s strategic
plan;
Selecting and appointing a suitable chief executive
officer/Managing Director with the appropriate skills
to help the company in the pursuit of its objectives;
Determining the remuneration policy for the
Board members, company Secretary and Senior
Management;
•
•
22
•
•
•
•
•
•
•
controlling and approving financial reporting,
capital structures and material contracts;
ensuring that a sound system risk management and
internal controls is in place;
Setting the company’s values and standards;
undertaking a formal and rigorous review of the
corporate Governance policies; to ensure adherence
to the aSX corporate Governance council principles;
ensuring that the company’s obligations to
shareholders are understood and met;
ensuring the health, safety and well-being
of employees in conjunction with the senior
management team, developing, overseeing and
reviewing the effectiveness of the company’s
occupational health and safety systems to assure the
well-being of all employees;
ensuring an adequate system is in place for the
proper delegation of duties for the effective
operative day to day running of the company
without the Board losing sight of the direction that
the company is taking.
Principle 2 - Structure the Board to add value
“Have a board of an effective composition, size and
commitment to adequately discharge its responsibilities
and duties.”
the Board has been structured so as to provide an
adequate mix of proficient directors that lead the Board
with enterprise, integrity and judgement. the Board acts
in the best interest of the company and its stakeholders.
the Board is directed on the principles of transparency,
accountability and responsibility.
the aSX corporate Governance council guidelines
recommend that ideally the Board should constitute of a
majority of independent directors. the Board consisted of
three directors for the majority of the year ended 30 June
2011; only one of whom was independent. the Board
increased to four members effective 1 May 2011 upon
the appointment of non-executive chairman, Mr arthur
Dixon aM. Mr ian paton and Mr Dixon aM are considered
to be independent directors. the remaining directors do
not meet the company’s criteria for independence.
Dr Mark Hagan and Mr Sam Willis are executive
directors.
Given the size and nature of the company the Board feels
the composition of the Board is appropriate at this stage.
the Board endeavours to review this policy from time to
time.
Principle 3 - Promote ethical and responsible
decision-making
“Actively promote ethical and responsible decision-
making”
new Standard is aware that law and regulations alone
is no guarantee of fair practice and thus to ensure the
neW StanDarD enerGy liMiteD
integrity of its operations, it has adopted a code of ethics
and conduct to sustain its corporate culture.
engage independent counsel and other advisers as it
determines necessary to carry out its duties.
new Standard’s ethical rules demands high standards of
integrity, fairness, equity and honesty from all Directors,
Senior Management and employees. new Standard
expects its employees to understand that the company
acts morally and that the main goal of the company is to
maximise shareholders value.
the code of ethics and conduct include the following
issues:
the cfo reports in writing on the propriety of compliance
on internal controls and reporting systems and ensures
that they are working efficiently and effectively in all
material respects.
the committee also advises on the modification and
maintenance of the company’s risk management systems,
the company’s risk profile, compliance and control and an
assessment as to their effectiveness.
•
•
•
•
•
•
•
the avoidance of conflicts of interest;
employees behaviour towards the use of company
property;
confidentiality;
fair dealing with customers, suppliers, employees
and competitors;
protection and proper use of the company’s assets;
compliance with laws and regulations;
encouraging the reporting of illegal and unethical
behaviour.
Diversity policy
the company values diversity and recognises the benefits
it can bring to the organisation’s ability to achieve its
goals. accordingly the company is developing a diversity
policy. this policy will outline the company’s diversity
objectives in relation to gender, age, cultural background
and ethnicity. it will include requirements for the board
to establish measurable objectives for achieving diversity,
and for the board to assess annual both the objectives,
and the company’s progress in achieving them.
Principle 4 - Safeguard integrity in financial
reporting
“Have a structure to independently verify and safeguard
the integrity of the company’s financial reporting”
new Standard has a financial reporting process which
includes half year and full- year results which are signed
off by the Board before they are released to the market.
the audit committee has been developed as per the
its
guidelines of good corporate governance and
responsibilities are delineated in the audit committee
charter.
the audit committee provides assistance to the Board of
directors in fulfilling its corporate governance and oversight
responsibilities, as well as advise on the modification
and maintenance of the company’s financial reporting,
internal control structure, external audit functions, and
appropriate ethical standards for the management of the
company.
in discharging its oversight role, the committee is
empowered to investigate any matter brought to its
attention with full access to all books, records, facilities,
and personnel of the company and the authority to
Principle 5 - Make timely and balanced disclosure
“Promote timely and balanced disclosure of all material
matters concerning the company.”
new Standard has adopted a formal policy dealing with
its disclosure responsibilities. the Board has designated
the company Secretary as the person responsible for
overseeing and coordinating disclosure of information
to the aSX as well as communicating with the aSX. in
accordance with the aSX listing rules the company
immediately notifies the aSX of information:
•
•
concerning the company that a reasonable person
would expect to have a material effect on the price
or value of the company’s securities; and
that would, or would be likely to, influence persons
who commonly invest in securities in deciding whether
to acquire or dispose of the company’s securities.
the policy also addresses the company’s obligations to
prevent the creation of a false market in its securities.
new Standard ensures that all information necessary for
investors to make an informed decision is available on its
website.
the Managing Director has ultimate authority and
responsibility for approving market disclosure which, in
practice, is exercised in consultation with the Board, cfo/
company Secretary.
the Board has designated the company Secretary as
the person responsible for overseeing and coordinating
disclosure of information to the aSX.
in addition, the Board will also consider whether there are
any matters requiring continuous disclosure in respect of
each and every item of business that it considers.
Principle 6 - Respect the rights of shareholders
“Respect the rights of shareholders and facilitate the
effective exercise of those rights”
new Standard is aware that regular and constructive
two-way communications between the company and
its shareholders can help investors understand what the
Board of directors is planning to achieve and how the
company intends to set about achieving its objectives.
the company respects the rights of its shareholders and
to facilitate the effective exercise of those rights, the
company is committed to:
annual financial report 2011
23
•
•
•
communicating effectively in a timely and accurate
way with shareholders through releases to the
market via aSX, website communication, annual
reports, the general meetings of the company and
any information mailed to shareholders;
sending a notice of any general meetings to which
they are entitled to attend together with an
explanatory memorandum of proposed resolutions
(as appropriate). if shareholders cannot attend the
General Meeting, they are entitled to lodge a proxy
in accordance with the corporations act and the
company’s constitution.
giving shareholders ready access to balanced and
understandable information about the company and
corporate proposals;
• making it easy for shareholders to participate in
general meetings of the company; and
•
requesting the external auditor to attend the
annual general meeting and be available to answer
shareholder questions about the conduct of the audit
and the preparation and content of the auditor’s
report.
the address made by the chairman and/or the Managing
Director to the annual General Meeting is released to
the aSX. all aSX announcements are accessible via the
company’s website.
Principle 7 - Recognise and Manage Risk
“Companies should establish a sound system of risk
oversight and management and internal control”
new Standard’s policy is to regularly review processes
and procedures to ensure the effectiveness of its internal
systems control, so as to keep the integrity and accuracy of
its reporting and financial results at a high level at all times.
internal controls are devised and enforced to ensure, as far
as practicable in the given circumstances, the orderly and
efficient conduct of the business. they include measures to
safeguard the assets of the company, prevent and detect
fraud and error, ensure the accuracy and completeness of
accounting records and ensure the timely preparation of
reliable financial information.
the Board’s charter clearly establishes that it is responsible
for ensuring there is a sound system for overseeing and
managing risk. as the whole Board only consisted of three
(3) members for the majority of the year ended 30 June
2011 and four (4) from 1 May 2011, the company does
not have a risk Management committee because it would
not be a more efficient mechanism than the full Board for
focusing the company on specific issues.
the Managing Director and company Secretary/cfo are
required to state to the Board, in writing, that to the best
of their knowledge the integrity of the financial statements
is founded on a sound system of risk management and
internal compliance and control which operates efficiently
and effectively in all material respects.
the Managing Director, technical Director and company
Secretary/cfo are also required to report monthly to the
Board on the areas they are responsible for, including
material business risks and provide an annual written
report to the Board summarizing the effectiveness of the
companies’ management of material business risks.
Principle 8 - Remunerate fairly and responsibly
“Companies should ensure that the level and
composition of remuneration is sufficient and reasonable
and that its relationship to performance is clear.”
the company is committed to remunerating its executives
in a manner that is market-competitive and consistent
with best practice as well as supporting the interests of
shareholders.
the Board ensures
that executive
consequently,
remuneration follows the guidelines of good governance
and the criteria for remuneration are as follows:
•
•
•
fixed salary that is determined from a review of the
market and reflects core performance requirements
and expectations;
participation
thresholds approved by shareholders;
in any share/option scheme with
statutory superannuation.
new Standard has devised a framework for remuneration
that aligns the interest of the company’s shareholders with
that of the executives. the aim is to make the structure
agreeable to both parties. the elements of consideration
are as follows:
for the Shareholders:
•
•
•
they should see that there is an economic profit in
the remuneration structure;
the structure is one that focuses on the continued
growth of share price and sustained returns on
assets;
attracts and retains high calibre executives.
for the executives:
•
•
•
•
their capability and experience should be rewarded;
the arrangement for reward should be clear and
understandable;
their active contribution should be rewarded;
reward is competitive, tax effective and linked with
growth in shareholder value.
the Board has extablished a remuneration committee
which consists of three members including two independent
non-executive directors, the committee may seek external
advice where appropriate.
new Standard is committed in providing the right
remuneration structure so that executives are not unaware
to shareholder value. the structure provides long and short
term incentive designed to retain and motivate executives
in bringing more value to the company.
24
neW StanDarD enerGy liMiteD
NEW STANDARD ENERGY LIMITED
(ACN 119 323 385)
CORPORATE GOVERNANCE STATEMENT CONT’D
a summary of how the company has addressed the compliance with the corporate governance principles and
A summary of how the Company has addressed the compliance with the corporate governance principles and recommendations is outlined
recommendations is outlined below:
below:
Recommendation
Compliance
Reason for Non-compliance
Principal
No
1.
1.1
Lay solid foundations for
management and oversight
Establish the functions reserved to the
Board and those delegated to senior
executives and disclose those
functions.
1.2
Disclose the process for evaluating the
performance of senior executives.
Provide the information indicated in
the Guide to reporting on Principle 1.
Structure the board to add
value
A majority of the Board should be
independent of Directors.
The Board has adopted a formal charter
setting out the responsibilities of the Board.
This charter can be accessed at:
www.newstandard.com.au. Any functions
not reserved for the Board and not expressly
reserved for members by the Corporations
Act and ASX Listing Rules are reserved for
senior executives.
The Board and remuneration committee
meets at least once annually to review the
performance of executives. The senior
executives’ performance is assessed against
the performance of the company as a whole.
A performance evaluation has been
completed during the reporting period in
accordance with the process detailed in 1.2
above.
Not applicable
Not applicable
Not applicable
the majority of
A definition of Director independence can be
accessed at www.newstandard.com.au.
During
the year New
Standard had one independent Director and
two non independent Directors. However,
effective 1 May 2011, New Standard had two
independent directors.
Given the size and nature of the
the
the Board
Company
composition
is
appropriate at this stage.
feels
the Board
of
The chair should be an independent
Director.
The position of Chairman was fulfilled by an
independent director for the year ended 30
June 2011.
Not applicable
The roles of Chair and Chief Executive
Officer should not be exercised by the
same individual.
New Standard’s Chairman and Managing
Director is not the same person.
Not applicable
The Board should establish a
nomination committee.
The Board has established a Nomination
Committee.
Not applicable
Disclose the process for evaluating the
performance of the Board, its
committee and individual Directors.
The performance evaluation of Board
members occurs by way of an informal
review by the full Board (in the absence of
the
for
relevant Board member) and
executive
remuneration
committee which also reports to the Board.
directors,
the
Not applicable
1.3
2.
2.1
2.2
2.3
2.4
2.5
annual financial report 2011
25
24
2.6
Provide the information indicated in
the Guide to reporting on Principle 2.
NEW STANDARD ENERGY LIMITED
(ACN 119 323 385)
The skills, experience and expertise relevant
to the position held by each Director is
disclosed in the Directors’ Report which
forms part of the Annual Report.
independent
The Board consists of two
directors, Mr Arthur Dixon AM and Mr Ian
Paton.
Not applicable
to
are entitled
take
The Directors
the
independent professional advice at
expense of the Company. The period of
office held by each Director is disclosed in
the Directors’ Report which forms part of this
Annual Report.
The Company has adopted a Board Code of
Conduct and a Company Code of Conduct,
both of which can be accessed at
www.newstandard.com.au.
Not applicable
Promote ethical and
responsible decision-making
Establish a code of conduct and
disclose the code for a summary of the
code as to:
•
the practice necessary to
maintain confidence in the
Company’s integrity;
the practices necessary to take
into account their legal obligations
and the reasonable expectations
of their stakeholders;
the responsibility and
accountability of individuals for
reporting and investigating reports
of unethical practices.
•
•
The Company is developing a diversity policy.
policy
Companies should establish a policy
concerning diversity and disclose the
policy or a summary of that policy.
The
include
requirements for the board to establish
measureable objectives for achieving
gender diversity and for the board to
assess annually both the objectives
and progress in achieving them.
should
Companies should disclose in each
annual report the measureable
objectives for achieving gender
diversity set by the board in
accordance with the diversity policy
and progress in achieving them.
information will be disclosed in the
This
Annual Report.
Companies should disclose in each
annual report the proportion of women
employees in the whole organisation,
women in senior executive positions
and women on the board.
This information will be disclosed in the
Annual Report.
The Company values diversity and
recognises the benefits it can bring to
the organisation’s ability to achieve its
goals.
the
Company is developing a diversity
policy.
Accordingly
A diversity policy being developed will
outline
diversity
the Company’s
objectives in relation to gender, age,
cultural background and ethnicity. It
will include requirements for the board
to establish measurable objectives for
achieving diversity, and for the board
to assess annual both the objectives,
and
in
the Company’s progress
achieving them.
The Company values diversity and
recognises the benefits it can bring to
the organisation’s ability to achieve its
goals. Accordingly the Company is
to
developing a diversity policy
facilitate a greater number of women
employees
in
senior executive positions and on the
board.
the organisation,
in
Provide the information indicated in
the Guide to reporting on Principle 3.
The information has been disclosed in the
Annual Report.
Not applicable
Safeguard integrity in
financial reporting
The Board should establish an audit
committee.
The Board has established an Audit
Committee.
Not applicable
3.
3.1
3.2
3.3
3.4
3.5
4.
4.1
26
25
neW StanDarD enerGy liMiteD
4.2
4.3
4.4
5.
5.1
5.2
6.
6.1
6.2
7.
7.1
7.2
NEW STANDARD ENERGY LIMITED
(ACN 119 323 385)
The Audit Committee consists of
three
members, two independent non-executive
directors and the Company Secretary and is
chaired by an independent director.
Due to the size of the Board the Audit
Committee does not consist only of
non executive directors.
The audit committee should be
structured so that it:
•
consists only of Non-Executive
Directors;
consists of a majority of
independent Directors;
is chaired by an independent
chair, who is not chair of the
Board;
•
•
• has at least three members.
The Audit Committee should have a
formal charter.
The formal charter can be accessed at
www.newstandard.com.au.
Not applicable
Provide the information in the Guide to
reporting on Principle 4.
The members of the Audit Committee for the
financial year ended 30 June 2011 were Mr
Arthur Dixon AM, Mr Ian Paton and Mr Mark
Clements. The Audit Committee met twice
during the year, before sign off of the annual
and half year financial statements.
Not applicable
Make timely and balanced
disclosure
Establish written policies and
procedures designed to ensure
compliance with ASX Listing Rule
disclosure requirements and to ensure
accountability at a senior executive
level for that compliance and disclose
those policies or a summary of those
policies.
The Company has adopted a Disclosure
Policy which can be accessed at
www.newstandard.com.au.
Not applicable
Provide the information indicated in
the Guide to reporting on Principle 5.
The information has been disclosed in the
Annual Report.
Not applicable
Respect the rights of
shareholders
Design a communications policy for
promoting effective communication
with shareholders and encouraging
their participation at general meetings
and disclose that policy or a summary
of that policy.
The Company has adopted a Shareholder
Communications Policy which can be
accessed at www.newstandard.com.au.
Not applicable
Provide the information indicated in
the Guide to reporting on Principle 6.
The information has been disclosed in the
Annual Report.
Not applicable
Recognise and manage risk
Establish policies for the oversight and
management of material business risk
and disclose a summary of those
policies.
The Board should require
management to design and implement
the risk management and internal
control system to manage the
Company’s material business risks
and report to it on whether those risks
are being managed effectively. The
Board should disclose that
management has reported to it as to
the effectiveness of the Company’s
management of its material business
risks.
Not applicable
Not applicable
The Company has adopted a Risk
Management Policy which can be accessed
at www.newstandard.com.au. This policy
outlines the material risks faced by the
Company as identified by the Board.
The Managing Director, Technical Director
and Chief Financial Officer report monthly to
the board on the areas they are responsible
for, including material business risks and
provide an annual written report to the Board
summarising
the
companies’ management
of material
business risks.
the effectiveness of
annual financial report 2011
26
27
NEW STANDARD ENERGY LIMITED
(ACN 119 323 385)
7.3
7.4
8.
8.1
The Board should disclose whether it
has received assurance from the Chief
Executive Officer (or equivalent) and
the Chief Financial Officer (or
equivalent) that the declaration
provided in accordance with section
295A of the Corporations Act is
founded on a sound system of risk
management and internal control and
that the system is operating effectively
in all material respects in relation to
financial reporting risks.
Companies should provide the
information indicated in the Guide to
reporting on Principle 7.
Remunerate fairly and
responsibly
The Board should establish a
Remuneration Committee.
The Board receives assurance in the form of
a declaration, from Mr Sam Willis (Managing
Director) and Mr Mark Clements (Company
Secretary
the duties of Chief
Financial Officer).
fulfilling
Not applicable
The information has been disclosed in the
Annual Report.
Not applicable
The Board has extablished a Remuneration
Committee.
Not applicable
8.2
The remuneration committee should
be structured so that it:
•
•
•
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%$'!1)%,/.'2-')#'%#./0/#./#&'
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The Remuneration Committee consists of
three members,
independent non-
two
executive directors, Mr Ian Paton and Mr
Arthur Dixon AM and Company Secretary,
Mr Mark Clements. The Remuneration
Committee may seek external advice where
appropriate.
Not applicable
8.3
8.4
Companies should clearly distinguish
the structure of Non-Executive
Directors’ remuneration from that of
Executive Directors and senior
executives.
The structure of Non-Executive Directors’
remuneration is clearly distinguished from
that of Executive Directors and Senior
Executives, as described in the Directors’
Report which forms part of this Annual
Report.
Not applicable
Companies should provide the
information indicated in the guide to
reporting on Principle 8.
The information has been disclosed in the
Annual Report.
Not applicable
28
27
neW StanDarD enerGy liMiteD
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
27 September 2011
The Directors
New Standard Energy Limited
Level 3, 33 Richardson Street
West Perth WA 6005
Dear Sirs,
DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF NEW STANDARD
ENERGY LIMITED
As lead auditor of New Standard Energy Limited for the year ended 30 June 2011, I declare that, to
the best of my knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of New Standard Energy Limited and the entities it controlled during
the period.
Peter Toll
Director
BDO Audit (WA) Pty Ltd
Perth, Western Australia
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
annual financial report 2011
29
ï
ï
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITORí S REPORT
TO THE MEMBERS OF NEW STANDARD ENERGY LIMITED
Report on the Financial Report
We have audited the accompanying financial report of New Standard Energy Limited, which
comprises the consolidated statement of financial position as at 30 June 2011, 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 directorsí declaration of
the consolidated entity comprising the company and the entities it controlled at the yearí s end or
from time to time during the financial year.
Directorsí 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 control as the directors determine is necessary to enable the preparation
of the financial report that is free from material misstatement, whether due to fraud or error. In
Note 1, 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.
Auditorí 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 auditorí s judgement, 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 control relevant to the
entityí s preparation of the financial report that gives a true and fair view 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 entityí s internal control. 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 confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of New Standard Energy Limited, would be in the same terms
if given to the directors as at the time of this auditorí s report.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
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neW StanDarD enerGy liMiteD
Opinion
In our opinion the financial report of New Standard Energy Limited is in accordance with the
Corporations Act 2001, including:
(a) the financial report of New Standard Energy Limited is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the consolidated entityí s financial position as at 30 June
2011 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
(b) the financial report also complies with International Financial Reporting Standards as disclosed
in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directorsí report for the year ended 30
June 2011. 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 New Standard Energy Limited for the year ended 30
June 2011 complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Peter Toll
Director
Perth, Western Australia
Dated this the 27th day of September 2011
annual financial report 2011
31
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
Note
CONSOLIDATED ENTITY
2011
$
2010
$
Revenue from Continuing operations
Gain on sale of nSex, net of transaction costs
Gain on sale of available-for-sale financial assets
Gain on sale of subsidiary
Expenses from Continuing operations
administrative expenses
employee benefit expenses
occupancy expenses
Depreciation expense
forgiveness of nSex loan
exploration costs impaired
unrealised foreign exchange gain/(loss)
fixed assets impaired
project expenses
Share based payments
Profit/(loss) before income tax expense
income tax expense
Profit/(loss) attributable to owners of the
Parent entity
Other comprehensive income
changes in the fair value of available for sale financial assets
exchange differences on translation of foreign operations
2
3
3
3
4
179,353
-
1,491,960
33,226
(480,894)
(1,051,712)
(135,607)
(46,283)
-
(661)
10
(19,164)
(38,763)
(10,546)
(79,081)
-
216,444
5,652,156
-
-
(303,426)
(617,955)
(65,314)
(38,831)
(242,493)
(866,833)
29,846
-
-
(465,057)
3,298,537
-
(79,081)
3,298,537
3,675,000
(1,507,735)
3,600,000
(309,573)
Other comprehensive income for the year
2,167,265
3,290,427
Total comprehensive income for the year
2,088,184
6,588,964
Total comprehensive income for the year
is attributable to:
owners of the company
Earnings/(loss) per Share for profit/(loss) from continuing
Operations attributable to the ordinary share holders of the
Company
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
23
2,088,184
6,588,964
Cents Per
Share
Cents Per
Share
(0.04)
(0.04)
2.34
1.91
the above consolidated statement of comprehensive income should be read in conjunction with the accompanying
notes.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
Current Assets
cash and cash equivalents
available for sale financial assets
other current assets
Total Current Assets
Non-Current Assets
exploration and evaluation expenditure
oil & gas properties
property, plant and equipment
other non-current assets
Total Non-Current Assets
Total Assets
Current Liabilities
trade and other payables
Total Current Liabilities
Non-Current Liabilities
other non-current liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
issued capital
reserves
accumulated losses
Total Equity
Note
21(a)
8
7
9
10
11
12
13
14
CONSOLIDATED ENTITY
2011
$
2010
$
4,552,777
9,825,000
651,455
1,578,480
6,660,000
408,758
15,029,232
8,647,238
12,493,737
2,467,248
111,731
328,376
11,042,652
-
102,989
-
15,401,092
11,145,641
30,430,324
19,792,879
1,062,473
1,062,473
436,209
436,209
26,172
26,172
-
-
1,088,645
436,209
29,341,679
19,356,670
15
16
16(d)
24,385,896
7,400,726
(2,444,943)
16,668,616
5,053,916
(2,365,862)
29,341,679
19,356,670
the above consolidated statement of financial position should be read in conjunction with the accompanying notes.
annual financial report 2011
33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
CONSOLIDATED ENTITY
Issued
Capital
Accumulated
Losses
Share Based
Payment Reserve
Available for
Sale Financial
Assets Reserve
Foreign Currency
Translation
Reserve
$
$
$
$
$
Total
$
Equity as at 1 July 2010
16,668,616
(2,365,862)
1,763,489
3,600,000
(309,573)
19,356,670
profit/(loss) for the year
unrealised loss on
translation of foreign
operations
unrealised gain on available
for sale financial assets
Total comprehensive
Income
Transactions with owners in
their capacity as owners;
-
-
-
-
(79,081)
-
-
(79,081)
issue of shares, net of
transaction costs
7,717,280
Share based payments
-
-
-
-
-
-
-
-
179,545
-
-
-
(79,081)
(1,507,735)
(1,507,735)
3,675,000
-
3,675,000
3,675,000
(1,507,735)
2,088,184
-
-
-
-
7,717,280
179,545
Equity as at 30 June 2011
24,385,896
(2,444,943)
1,943,034
7,275,000
(1,817,308)
29,341,679
CONSOLIDATED ENTITY
Issued
Capital
Accumulated
Losses
Share Based
Payment Reserve
Available for
Sale Financial
Assets Reserve
Foreign Currency
Translation
Reserve
$
$
$
$
$
Total
$
Equity as at 1 July 2009
16,373,883
(5,664,399)
1,298,432
profit for the year
unrealised loss on
translation of foreign
operations
unrealised gain on
available for sale
financial assets
Total comprehensive
Income
Transactions with owners
in their capacity as
owners;
-
-
-
-
3,298,537
-
-
3,298,537
issue of shares, net of
transaction costs
294,733
Share based payments
-
-
-
-
-
-
-
-
465,057
-
-
-
-
-
12,007,916
3,298,537
(309,573)
(309,573)
3,600,000
-
3,600,000
3,600,000
(309,573)
6,588,964
-
-
-
-
294,733
465,057
Equity as at 30 June 2010 16,668,616
(2,365,862)
1,763,489
3,600,000
(309,573)
19,356,670
the above consolidated statement of changes of equity should be read in conjunction with the accompanying notes.
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
Cash Flows From Operating Activities
interest received
payments to suppliers and employees
other income
CONSOLIDATED ENTITY
Note
2011
$
2010
$
179,353
(1,254,722)
-
211,731
(842,757)
4,713
net cash used in operating activities
21(b)
(1,075,369)
(626,313)
Cash Flows From Investing Activities
payments for plant and equipment
reimbursement of prior exploration expenditure
payment for exploration expenditure
payment for purchase/ proceeds from sale of legal subsidiary net
of cash acquired/disposed
(34,362)
300,000
(5,643,467)
(37,279)
277,052
(5,145,073)
33,226
2,769,362
net cash used in investing activities
(5,344,603)
(2,135,938)
Cash Flows From Financing Activities
proceeds from issue of equity securities
proceeds from sale of financial assets
payment for share issue costs
net cash flows provided by financing activities
7,947,500
2,001,960
(389,596)
9,559,864
297,142
(2,410)
294,732
Net (decrease)/increase in cash and cash equivalents
3,139,892
(2,467,519)
cash and cash equivalents at beginning of the financial year
exchange rate adjustments
Cash and cash equivalents at the end of the financial year
21(a)
1,578,480
(165,595)
4,552,777
4,008,455
37,544
1,578,480
the above statement of cashflows should be read in conjunction with the accompanying notes.
annual financial report 2011
35
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES
Corporate Information
new Standard energy limited (new Standard) is a company limited by shares incorporated in australia whose shares are publicly
traded on the australian Securities exchange.
Statement of compliance
the financial statements are general purpose financial statements which have been prepared in accordance with the corporations
act 2001, australian accounting Standards and interpretations and complies with other requirements of the law.
accounting Standards include australian equivalents to international financial reporting Standards (‘a-ifrS’). compliance with
a-ifrS ensures that the financial statements and notes of the Group complies with international financial reporting Standards
(‘ifrS’).
the financial statements were authorised for issue by the Directors on 27 September 2011.
Basis of preparation
the consolidated financial statements have been prepared on the basis of historical cost convention, as modified by the revaluation
of available –for-sale financial assets.
the accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2011.
Presentation of financial statements
the Group applies revised aaSB 101 Presentation of Financial Statements (2007), which became effective as of 1 January 2009.
as a result, the Group presents in the consolidated statement of changes in equity, whereas all non-owner changes are presented in
the consolidated statement of comprehensive income. this presentation has been applied in these financial statements as of and for
the year ended on 30 June 2011.
comparative information has been re-presented so that it is also in conformity with the revised standard. Since the accounting policy
only impacts presentation aspects, there is no impact on earnings per share.
Reverse Acquisition Accounting
on 28 July 2008 the merger between new Standard energy limited (formerly Hawk resources limited) and new Standard exploration
ltd (formerly new Standard energy ltd) became effective. this transaction was accounted for using the guidelines as set out in aaSB
3 ‘Business combinations’.
in applying the requirements of aaSB 3 ‘Business combinations’ to the Group, new Standard exploration ltd, which was neither the
legal parent nor legal acquirer, is deemed to be the accounting acquirer of the Group and consolidated financial information was
presented on that basis.
in line with the guidelines of that standard, the transaction had been accounted for as a reverse acquisition:
(i) the assets and liabilities of the legal subsidiary, “new Standard exploration ltd”, were recognised and measured in the
consolidated financial statements at pre-combination carrying amounts.
(ii) the retained earnings and other equity balances recognised in the consolidated financial statements were the retained
earnings and other equity balances of the legal subsidiary “new Standard exploration ltd” immediately before the business
combination.
(iii) the amount recognised as issued equity in the consolidated financial statements was the fair value of the notional number of
equity instruments that the shareholder of new Standard exploration pty ltd would have had to issue to new Standard energy
limited (nSe) to give the owners of nSe the same percentage ownership in the combined entity.
Principals of Consolidation
(a) Subsidiaries
the consolidated financial statements incorporate the assets and liabilities of all subsidiaries of new Standard energy limited
(“company” or “parent entity”) as at 30 June 2011 and the results of all subsidiaries for the year then ended. new Standard
energy limited as its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial
and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. the existence and
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neW StanDarD enerGy liMiteD
effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. they are de-consolidated from
the date that control ceases.
the acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group.
intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. unrealised
losses are also eliminated unless the transaction proves evidence of the impairment of the asset transferred. accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
non-controlling interest in the results and equity of subsidiaries are shown separately in the consolidated statement of
comprehensive income and statement of financial position respectively.
(b) Cash and cash equivalents
cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid investments
with original maturities of three months or less.
(c) Trade receivables
trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. trade receivables are generally due for settlement within 30 days. they are presented as
current assets unless collection is not expected for more than 12 months after the reporting date.
collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. an allowance account (provision for impairment of trade receivables) is used
when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of
the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade
receivable is impaired. the amount of the impairment allowance is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest rate. cash flows relating to short-term
receivable are not discounted if the effect of discounting is immaterial.
(d) Goods and services tax
revenues, expenses and assets are recognised net of the amount of goods and services tax (GSt), except:
(i) where the amount of GSt incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
(ii)
for receivables and payables which are recognised inclusive of GSt.
the net amount of GSt recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
cash flows are included in the statement of cashflows on a gross basis. the GSt component of cash flows arising from investing
and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
(e) Impairment of assets
at each reporting date, the entity reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. if any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the entity estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
recoverable amount is the higher of fair value less costs to sell and value in use. in assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
if the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. an impairment loss is recognised in the profit
or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating
unit) in prior years. a reversal of an impairment loss is recognised in the profit or loss.
annual financial report 2011
37
(f) Income tax
current tax
current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or tax loss for the period. it is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or
refundable).
Deferred tax
Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.
Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against
which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets
and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets
and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit.
furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches,
associates and joint ventures except where the consolidated entity is able to control the reversal of the temporary differences
and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with these investments and interests are only recognised to the extent that it is
probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they
are expected to reverse in the foreseeable future.
(g) Exploration and Evaluation Expenditure
exploration for and evaluation of hydrocarbon resources is the search for hydrocarbon resources after the entity has obtained
legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of
extracting the hydrocarbon resources. accordingly, exploration and evaluation expenditures are those expenditures incurred by
the company in connection with the exploration for and evaluation of hydrocarbon resources before the technical feasibility
and commercial viability of extracting a hydrocarbon resource is demonstrable.
accounting for exploration and evaluation expenditures is assessed separately for each ‘area of interest’. an ‘area of interest’ is
an individual geological area which is considered to constitute a favourable environmental for the presence of a hydrocarbon
resource or has been proved to contain such a resource.
expenditure incurred on activities that precede exploration of hydrocarbon resources, including all expenditure incurred prior
to securing legal rights to explore an area, is expensed as incurred. for each area of interest the expenditure is recognised as an
exploration and evaluation asset where the following conditions are satisfied:
(a) the rights to tenure of the area of interest are current; and
(b) at least one of the following conditions is also met:
i.
the expenditure is expected to be recouped through the successful development and commercial exploitation of an
area of interest, or alternatively by its sale; and
ii.
exploration and evaluation activities in the area of interest have not, at reporting date, reached a stage which
permits a reasonable assessment of the existence or otherwise of ‘economically recoverable reserves’ and active and
significant operations in, or in relation to, the area of interest are continuing. economically recoverable reserves are
the estimated quantity of product in an area of interest that can be expected to be profitably extracted, processed
and sold under current and foreseeable conditions.
exploration and evaluation assets include:
•
•
•
•
acquisition of rights to explore;
topographical, geological, geochemical and geophysical studies;
exploratory drilling, logging and coring; and
activities in relation to evaluating the technical feasibility and commercial viability of extracting the hydrocarbon
resource.
General and administrative costs are expensed as incurred.
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neW StanDarD enerGy liMiteD
(h) Development Expenditure
Development expenditure is accumulated in respect of each separate area of interest. Development expenditure relates to costs
incurred to access a mineral resource after the technical feasibility and commercial viability of extracting the mineral resource
from the area of interest has been demonstrated. Development expenditure related to an area of interest is carried forward to
the extent that they are expected to be recouped either through sale or successful exploitation of the area of interest.
When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated cost in respect of that
area is written off in the financial period the decision is made. each area of interest is reviewed at the end of each accounting
period and accumulated cost written off to the extent that they will not be recoverable in the future. impairment of assets is
discussed at note 1(e).
capitalisation of development expenditure ceases once the production commences, at which point it is transferred into property,
plant and equipment, and amortised on a units of production basis over the life of economically recoverable reserves.
although production revenue has been received during the period, sufficient information has not been obtained from further
technical analysis to form a definitive view regarding the economically recoverable reserves associated with the producing wells
and field. at the date of this report the results of an independent resource and reserves assessment remains incomplete and
technical analysis regarding the quality of the reservoir completion techniques utilised for the producing wells has yet to be
fully determined. as a result the Directors deem that it is appropriate under the circumstances to continue to classify the uS oil
and Gas properties as development assets as at 30 June 2011.
(i) Business Combinations
the acquisition method of accounting is used to account for all business combinations. consideration is measured at the fair
value of the assets transferred, liabilities incurred and equity interests issued by the group on acquisition date. consideration
also include the acquisition date fair values of any contingent consideration arrangements, any pre-existing equity interests in
the acquiree and share-based payment awards of the acquiree that are required to be replaced in a business combination. the
acquisition date is the date on which the group obtains control of the acquiree. Where equity instruments are issued as part
of the consideration, the value of the equity instruments is their published market price at the acquisition date unless, in rate
circumstances, it can be demonstrated that the published price at acquisition date is not fair value and that other evidence and
valuation methods provide a more reliable measure of fair value.
identifiable assets acquired and liabilities and contingent liabilities assumed in business combinations are, with limited exceptions,
initially measure at their fair values at acquisition date. Goodwill represents the excess of the consideration transferred and
the amount of the non-controlling interest in the acquiree over fair value of the identifiable net assets acquired. if the
consideration and non-controlling interest of the acquire is less than the fair value of the net identifiable assets acquired, the
difference is recognized in profit or loss as a bargain purchase price, but only after a reassessment of the identification and
measurement of the net assets acquired.
for each business combination, the group measures non-controlling interests at either fair value or at the non-controlling
interest’s proportionate share of the acquiree’s identifiable net assets.
acquisition-related costs are expensed when incurred.
Where the group obtains control of a subsidiary that was previously accounted for as an equity accounted investment in
associate or jointly controlled entity, the group remeasures its previously held equity interest in the acquiree as its acquisition
date fair value and the resulting gain or loss is recognized in profit or loss. Where the group obtains control of a subsidiary that
was previously accounted for as an available-for-sale investment, any balance on the available-for-sale reserve related to that
investment is recognised in profit or loss as if the group had disposed directly of the previously held interest.
Where settlement of any part of the cash consideration is deferred, the amounts payable in future are discounted to present
value as the date of exchange using the entity’s incremental borrowing rate as the discount rate.
assets and liabilities from business combinations involving entities or businesses under common control are accounted for at
the carrying amounts recognised in the group’s controlling shareholder’s consolidated financial statements.
(j) Investments and Other Financial Assets
classification
the Group classifies its financial assets in the following categories: loans and receivables, and available-for-sale financial assets.
the classification depends on the purpose for which the investments were acquired. Management determines the classification
of its investments at initial recognition.
annual financial report 2011
39
available-for-sale financial assets
available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either
designated in this category or not classified in any of the other categories. they are included in current assets as management
may dispose of the investment within 12 months of the reporting date. investments are designated as available-for-sale if they
do not have fixed maturities and fixed or determinable payments and management intends to hold them for the short term.
available for sale assets are subsequently carried at fair value with movements in fair value are recognised in equity.
investments are recognised and derecognised on trade date where the purchase sale or sale of an investment is under a contract
whose terms require delivery of the investment within the time frame established by the market concerned; and are initially
measured at fair value, net of the transaction costs.
loans and receivables
trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. loans and receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method less impairment.
interest is recognised by applying the effective interest rate.
impairment of financial assets
financial assets are assessed for indicators of impairment at each reporting date. financial assets are impaired where there is
objective evidence that as a result of one or more events that occurred after the initial recognition of the financial assets carried
at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the original effective interest rate (if applicable).
the carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable
is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are
credited against the allowance account. changes in the carrying amount of the allowance account are recognised in profit or
loss.
impairment of available for sale financial assets
in the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security
below its cost is considered as an indicator that the securities are impaired. if any such evidence exists for available-for-sale
financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less
any impairment loss on that financial asset previously recognised in profit or loss - is reclassified from equity and recognised
in profit or loss as a reclassification adjustment. impairment losses recognised in profit or loss on equity instruments classified
as available-for-sale are not reversed through profit or loss. if there is evidence of impairment for any of the group’s financial
assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows, excluding future credit losses that have not been incurred. the cash flows are discounted
at the financial asset’s original effective interest rate. the loss is recognised in profit or loss.
(k) Goodwill
Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business
combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised. Goodwill is subsequently measured at its cost less any impairment losses.
for the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (cGu’s), or groups
of cGu’s, expected to benefit from the synergies of the business combination. cGu’s (or groups of cGu’s) to which goodwill
has been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that
goodwill might be impaired.
(l)
Share-Based Payments
equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the
equity instrument at the grant date and recognised over the vesting period. fair value is measured by use of a Black Scholes
model.
the above policy is applied to all equity-settled share-based payments.
40
neW StanDarD enerGy liMiteD
(m) Revenue
revenue is measured at the fair value of the consideration received or receivable.
interest revenues
interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that
asset’s net carrying amount.
(n) Property, Plant and Equipment (other than Oil & Gas Properties)
owned assets
items of property, plant and equipment are recognised at cost less accumulated depreciation (see below) and impairment losses
(see impairment note (e)).
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
of property, plant and equipment.
Depreciation/amortisation
Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful life of an item of property, plant and
equipment.
the estimated useful lives for each class of assets in the current and comparative periods are as follows:
(i) Motor Vehicles
5 years
(ii) plant and equipment
5 -15 years depending on the nature of the asset
the useful life and depreciation method applied to an asset are reassessed at least annually.
(o) Trade and Other Payables
trade payables and other accounts payable are recognised when the entity becomes obliged to make future payments resulting
from the purchase of goods and services. they are recognised initially at fair value and subsequently at amortised cost. the
amounts are unsecured and are normally settled within 30 days of recognition.
(p) Leases
the lease of a vehicle where the Group, as lessee, has substantially all the risks and rewards of ownership has been classified
as a finance lease. the finance lease has been capitalised at the lease’s inception at the fair value of the leased vehicle. the
corresponding rental obligations, net of finance charges, have been included in other short-term payables and long-term
borrowings. each lease payment is allocated between the liability and finance cost. the finance cost is charged to the profit or
loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
period. the vehicle acquired under the finance lease is being depreciated over the asset’s useful life.
(q) Earnings per Share
Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the company, excluding any costs
of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account
amounts unpaid on ordinary shares and any reduction in earnings per share that will arise from the exercise of options
outstanding during the financial year.
(r) Segment Reporting
the Group has applied aaSB 8 operating Segments. aaSB 8 requires a ‘management approach’ under which segment
information is presented on the same basis as that used for internal reporting purposes. this has resulted in an increase in the
number of reportable segments presented, as the previously reported geographical segments have been disaggregated into
separate segments within the Group.
operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker. the chief operating decision-maker has been identified as the Managing Director that makes strategic
decisions.
annual financial report 2011
41
(s) Provisions
provisions are recognised when the consolidated entity has a present obligation as a result of a past event, the future sacrifice
of economic benefits is probable, and the amount of the provision can be reliably estimated.
the amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can
be measured reliably.
(t) Foreign Currency Translation
(i) functional and presentation currency
items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). the consolidated financial statements are
presented in australian dollars, which is new Standard energy limited’s functional and presentation currency.
(ii) transactions and balances
foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in profit or loss.
non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. translation differences on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss.
for example, translation differences on non-monetary assets and liabilities such as equities held at fair value through
profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-
monetary assets such as equities classified as available-for-sale financial assets are included in the fair value reserve in
equity.
(iii) Group companies
the results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each statement of financial position presented are translated at the closing rate at reporting
date
(ii)
income and expenses for each item in the statement of comprehensive income are translated at average exchange
rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions), and
(iii) all resulting exchange differences are recognised in other comprehensive income.
on consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings
and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of
such exchange differences is reclassified to profit or loss, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entities and translated at the closing rate.
(u) Joint Ventures
a joint venture is either an entity or operation over which whose activities the entity has joint control, established by contractual
agreement.
Jointly controlled operations and assets
interests in unincorporated joint ventures are reported in the financial statements by including the entity’s share of assets
employed in joint ventures, the share of liabilities incurred in relation to the joint ventures and its share of revenue and
expenses.
42
neW StanDarD enerGy liMiteD
(v) 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 proceeds.
(w) Standards and Interpretations Issued not yet Effective
new accounting standards and interpretations
certain new accounting standards have been published that are not mandatory for 30 June 2011 reporting periods. the Group
has not applied any of the following in preparing this financial report:
AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9
(effective from 1 January 2013)
aaSB 9 financial instruments addresses the classification and measurement of financial assets and is likely to affect the Group’s
accounting for its financial assets. the standard is not applicable until 1 January 2013 but is available for early adoption. the
Group is yet to assess its full impact. However, initial indications are that it may affect the Group’s accounting for its available-
for-sale financial assets, since aaSB 9
only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments
that are not held for trading. fair value gains and losses on available-for-sale debt investments, for example, will therefore
have to be recognised directly in profit or loss. in the current reporting period, the Group recognised $3,600,000 of such gains
in other comprehensive income. the Group has not yet decided when to adopt aaSB 9.
Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards
(effective from 1 January 2011)
in December 2009 the aaSB issued a revised aaSB 124 related party Disclosures. it is effective for accounting periods beginning
on or after 1 January 2011 and must be applied retrospectively. the amendment removes the requirement for government-
related entities to disclose details of all transactions with the government and other government-related entities and clarifies
and simplifies the definition of a related party. the Group will apply the amended standard from 1 July 2011. the Group is not
a government related entity. the amendment is therefore not expected to have any impact on the Group’s or parent entity’s
financial statements.
AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement
(effective from 1 January 2011)
in December 2009, the aaSB made an amendment to interpretation 14 the limit on a Defined Benefit asset, Minimum funding
requirements and their interaction. the amendment removes an unintended consequence of the interpretation related to
voluntary prepayments when there is a minimum funding requirement in regard to the entity’s defined benefit scheme. it
permits entities to recognise an asset for a prepayment of contributions made to cover minimum funding requirements. the
Group does not make any such prepayments. the amendment is therefore not expected to have any impact on the Group’s or
the parent entity’s financial statements. the Group intends to apply the amendment from 1 July 2011.
AASB 2010-6 Amendments to Australian Accounting Standards - Disclosures on Transfers of Financial Assets
(effective for annual reporting periods beginning on or after 1 July 2011)
amendments made to aaSB 7 financial instruments: Disclosures in november 2010, introduce additional disclosures in respect
of risk exposures arising from transferred financial assets. the amendments are not expected to have any significant impact on
the Group’s disclosures. the Group intends to apply the amendment from 1 July 2011.
AASB 10 Consolidated Financial Statements
(effective for the annual reporting periods commencing on or after 1 January 2013)
aaSB 10 introduces certain changes to the consolidation principles, including the concept of de facto control and changes in
relation to the special purpose entities. the Group is continuing to assess the impact of the standard.
AASB 11 Joint Arrangements
(effective for the annual reporting periods commencing on or after 1 January 2013)
aaSB 11 introduces certain changes to the accounting for joint arrangements. Joint arrangements will be classified as either
joint operations (where parties with joint control have rights to assets and obligations for liabilities) or joint ventures (where
parties with joint control have rights to the net assets of the arrangement). Joint arrangements structured as a separate vehicle
will generally be treated as joint ventures and accounted for using the equity method. the Group is continuing to assess the
impact of the standard.
annual financial report 2011
43
AASB 13 Fair Value Measurement
(effective for annual reporting periods commencing on or after 1 January 2013)
aaSB 13 establishes a single framework for measuring fair value of financial and non-financial items recognised at fair value
on the balance sheet or disclosed in the notes to the financial statements. the Group is continuing to assess the impact of the
standard.
AASB 1054 Australian Additional Disclosures
(effective for annual reporting periods beginning on or after 1 July 2011)
aaSB 1054, issued in May 2011, moves additional australian specific disclosure requirements for for-profit entities from various
australian accounting Standards into this Standard as a result of trans-tasman convergence project. aaSB 1054 australian
additional Disclosures removes the requirement to disclose each class of capital commitments contracted for at the end of
the reporting period (other than commitments for the supply of inventories). When the standard is adopted for the first time
for the financial year ending 30 June 2012, the financial statements will no longer include disclosures about capital and other
expenditure commitments as these are no longer required by aaSB 1054.
AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting
Standards arising from Reduced Disclosure Requirements
(effective from 1 July 2013)
on 30 June 2010 the aaSB officially introduced a revised differential reporting framework in australia. under this framework,
a two-tier differential reporting regime applies to all entities that prepare general purpose financial statements. the Group is
listed on the aSX and is not eligible to adopt the new australian accounting Standards - reduced Disclosure requirements. the
two standards will therefore have no impact on the financial statements of the entity.
AASB 2010-8 Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets
(effective from 1 January 2012)
in December 2010, the aaSB amended aaSB 112 income taxes to provide a practical approach for measuring deferred tax
liabilities and deferred tax assets when investment property is measured using the fair value model. aaSB 112 requires the
measurement of deferred tax assets and liabilities to reflect the tax consequences that would follow from the way management
expects to recover or settle the carrying amount of the relevant assets or liabilities, that is through use or through sale. the
amendment introduces a rebuttable presumption that investment property which is measured at fair value is recovered entirely
by sale. the amendment is not expected to have any significant impact on the Group’s financial statements. the Group intends
to apply the amendment from 1 July 2012.
Critical accounting judgements and key source of estimation uncertainty
in the application of the Group’s accounting policies, which are described in note 1, management is required to make judgements,
estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. the
estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstance, the results of which form the basis of making the judgements. actual results may differ
from these estimates.
the estimates and underlying assumptions are reviewed on an ongoing basis. revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Key sources of estimation uncertainty and significant judgements
the following are the key assumptions concerning the future, and other key sources of estimation uncertainty and significant
judgements at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year.
carrying value of exploration expenditure
the recoverability of the carrying amount of the exploration and evaluation assets is dependent upon the successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest. the carrying amount of exploration
expenditure at the reporting date was $12,493,737 following an impairment adjustment of $661. Details of the impairment
can be found in note 9.
Deferred tax assets
the Group has carried forward tax losses which have not yet been recognised as deferred tax assets as it is not considered
sufficiently probable that these losses will be recouped by means of future profits taxable in the appropriate jurisdictions.
44
neW StanDarD enerGy liMiteD
Share-based payment transactions
the Group measures the cost of equity-settled transactions with directors and 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-Scholes model.
rehabilitation and decommissioning obligations
the Group estimates the future rehabilitation costs of production facilities, wells and pipelines at different stages of the
development and construction of assets or facilities. in most instances, removal of assets occurs many years into the
construction of assets or facilities. in most instances, removal of assets occurs many years into the future. this requires judgemental
assumptions regarding removal date, future environmental legislation, the extent of restoration activities, the future removal
technology available and liability specific discount rates to determine the present value of these cash flows. as at 30 June 2011
the carrying value of rehabilitation obligations have not been calculated given the preliminary stage of development.
impairment
assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts exceed
their recoverable amounts. the assessment of the carrying amount often requires estimates and assumptions such as discount
rates, exchange rates, commodity prices, future capital requirements and future operating performance.
recoverability of development assets
the ultimate recoupment of costs carried forward for development assets is dependent upon the successful development and
commercial exploitation, or sale, of the respective areas of interest.
2.
REVENUE
revenue from continuing operations consisted of the following items:
interest revenue
Well income
Total Revenue
CONSOLIDATED ENTITY
2011
$
179,353
-
179,353
2010
$
211,731
4,713
216,444
as detailed in note 1(h) well revenues of $1,462,409 have been capitalised and offset against the development expenditure incurred to
date on the development wells producing the revenue. this amount is reflected at note 10.
3.
PROFIT / (LOSS) FROM OPERATIONS
profit/(loss) before income tax has been arrived at after crediting/
(charging) the following gains and losses:
Gain on sale of subsidiary
Gain on sale of available-for-sale financial assets
Gain on disposal of nSex, net of transaction costs
unrealised foreign exchange gain
Share based payments
impairment of exploration expenditure
impairment of fixed assets
project expenses
CONSOLIDATED ENTITY
2011
$
33,226
1,491,960
-
10
(10,546)
(661)
(19,164)
(38,763)
2010
$
-
-
5,652,156
29,846
(465,057)
(866,833)
-
-
annual financial report 2011
45
4.
INCOME TAX EXPENSE
(a) The components of tax expense comprise:
current tax
Deferred tax
(b) The prima facie tax from ordinary activities before income tax is
reconciled to the income tax expense as follows:
CONSOLIDATED ENTITY
2011
$
-
-
2010
$
-
-
profit/(loss) before tax
tax expense (benefit) calculated at 30%
(79,081)
(23,724)
3,298,537
989,561
tax effect of amounts which are not deductible (taxable) in calculating
taxable income
Gain on sale of investments
forgiveness of nSex loan
Goodwill impaired
Share based payments
other permanent differences
Difference in overseas tax rate
prior year tax losses applied against income tax expense
tax losses and timing differences not recognised
income tax expense
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in the statement of
financial position for the following items;
unused tax losses
(i) australia
(ii) united States
Deductible temporary differences
Unrecognised deferred tax liabilities
Deferred tax liabilities have not been recognised in the statement of
financial position for the following items;
(i) foreign currency translation
(ii) financial assets held for sale
(iii) capitalised exploration expenditure
139,511
3,164
707
(7,303)
-
112,355
112,355
-
5,435,926
2,012,285
685,325
8,133,536
183
701,315
4,488,295
5,189,795
(941,260)
(214,499)
-
139,517
287,718
(3,058)
(395,358)
(137,379)
(137,379)
-
4,931,483
1,497,166
103,294
6,531,943
8,954
-
3,312,796
3,321,750
new Standard and its wholly owned australian subsidiaries entered into a tax consolidated group effective 1 July 2008. the
company has unrecognised deferred tax assets in the form of carried forward tax losses. the deferred tax assets arising from these
balances has not been recognised as an asset because recovery of tax losses is not probable at this point in time.
the potential tax benefit will only be obtained if the relevant company derives future assessable income of a nature and an
amount sufficient to enable the benefit to be realised; and
i. the relevant company continues to comply with the conditions for deductibility imposed by the law; and
ii. no changes in tax legislation adversely affect the relevant company in realising the benefit.
46
neW StanDarD enerGy liMiteD
5.
KEY MANAGEMENT PERSONNEL COMPENSATION
(a) Key management personnel compensation
Directors and other Key Management Personnel
Short term employee benefits
post employment benefits
non-monetary benefits
Share based payments
CONSOLIDATED ENTITY
2011
$
961,516
7,568
-
338,922
1,308,006
2010
$
723,156
-
-
140,597
863,753
Detailed remuneration disclosures are provided in the remuneration report included in the Director’s report.
(b) Equity instrument disclosures relating to key management personnel
(i) options provided as remuneration and shares
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and
conditions of the options can be found in section D of the audited remuneration report of the Directors report.
(ii) option holdings
the number of options over ordinary shares in the company held during the financial year by Key Management personnel
are set out below.
2011
Balance
1.7.2010
-
5,250,000
7,250,000
2,000,000
-
-
14,500,000
Granted as
Compensation(1)
-
-
-
-
1,000,000
-
1,000,000
Net Change
Other
-
-
-
-
-
-
-
Balance
30.6.2011
-
5,250,000
7,250,000
2,000,000
1,000,000
-
15,500,000
Vested and
Exercisable
-
5,250,000
7,250,000
2,000,000
-
-
14,500,000
Balance
1.7.2009
500,000
5,400,000
7,250,000
-
13,150,000
Granted as
Compensation(2)
1,500,000
-
-
-
1,500,000
Net Change
Other(3)
-
(150,000)
-
-
(150,000)
Balance
30.6.2010
2,000,000
5,250,000
7,250,000
-
14,500,000
Vested and
Exercisable
2,000,000
5,250,000
7,250,000
-
14,500,000
Unvested
-
-
-
-
1,000,000
-
1,000,000
Unvested
-
-
-
-
-
Mr a Dixon aM
Mr S Willis
Dr M Hagan
Mr i paton
Mr M Gracey
Mr M clements
2010
Mr i paton
Mr S Willis
Dr M Hagan
Mr M clements
note:
(1) on 29 March 2011, the company issued a total of 1,000,000 unlisted options as part of an incentive component of an
employment agreement for the senior executive role of legal and commercial Manager, Mr M Gracey. the options have been
issued in different tranches and 50% have an exercise price of 22.5c and the balance have an exercise price of 27.5c. all options
expire on 30 June 2013 if not exercised before.
the options are non-transferrable and cannot be exercised until such time as employment periods of 12 and 18 months have
been served. provision also exists for immediate lapse in the event employment is terminated for fraud or wilful misconduct.
(2) issued on 3 December 2009 following shareholder approval.
(3) expired without exercise on 14 May 2010.
annual financial report 2011
47
5.
KEY MANAGEMENT PERSONNEL COMPENSATION (continued)
(iii) Share holdings
the number of shares in the company held during the financial year by Key Management personnel of the Group are set out
below. there were no shares granted during the reporting period as compensation.
2011
Balance held
nominally at
30.6.2011
36,000
8,270,864
2,166,456
1,000,000
10,000
420,000
11,903,320
Balance
1.7.2010
Options
Exercised
Granted as
Compensation(iii)
Net Change
Other
Balance
30.6.2011
Mr a Dixon aM(i)
Mr S Willis
Dr M Hagan
Mr i paton
Mr M Gracey(ii)
Mr M clements
2010
-
6,800,000
1,650,000
-
-
50,000
8,500,000
-
-
-
-
-
-
-
-
345,864
376,456
-
-
-
722,320
36,000
1,125,000
140,000
1,000,000
10,000
370,000
2,681,000
Balance
1.7.2009
Options
Exercised
Net Change
Other
Balance
30.6.2010
Mr i paton
Mr S Willis
Dr M Hagan
Mr M clements
note.
-
5,920,000
1,650,000
50,000
7,620,000
-
-
-
-
-
-
880,000
-
-
880,000
-
6,800,000
1,650,000
50,000
8,500,000
36,000
8,270,864
2,166,456
1,000,000
10,000
420,000
11,903,320
Balance held
nominally at
30.6.2010
-
6,800,000
1,650,000
50,000
8,500,000
(i) Mr Dixon aM was appointed as chairman on 1 May 2011 and held 36,000 fully paid ordinary shares at the time of his
appointment.
(ii) Mr Gracey was appointed as commercial and legal Manager on 1 february 2011 and held 10,000 fully paid ordinary shares
at the time of his appointment.
(iii) on 4 January 2011, the company allotted and issued a total of 722,320 fully paid ordinary shares (Shares) to Managing
Director, Mr Sam Willis and technical Director, Dr Mark Hagan, under the employee Share plan (Share plan) as approved by
shareholders on 26 november 2010.
new Standard has granted Mr Willis and Dr Hagan an interest free limited recourse loan for the full amount to purchase
these Shares on the terms set out in the Share plan as summarised in the notice of annual General Meeting dated 25
october 2010 (Loan).
the loan is repayable in full by 31 December 2013 (Loan Repayment Date).
as set out in the Share plan, all or part of the loan may be repaid prior to the loan repayment Date. the issued Shares are
subject to certain restrictions, including restrictions on transfer until the loan is repaid in full. in addition, the loan must
be repaid early in certain circumstances as set out in the Share plan.
(c) Other transactions with key management personnel
other than above there have been no transactions with related parties during the year other than loans between subsidiaries.
48
neW StanDarD enerGy liMiteD
6.
AUDITORS REMUNERATION
auditor of the parent entity –
(a) Audit Services
BDo audit (Wa) pty ltd
7.
TRADE AND OTHER RECEIVABLES
Current
Goods and services tax recoverable
prepayments
other
CONSOLIDATED ENTITY
2011
$
36,257
36,257
2010
$
35,419
35,419
CONSOLIDATED ENTITY
2011
$
51,978
508,520
90,957
651,455
2010
$
-
400,269
8,489
408,758
the average credit period on trade and other receivables is 30 days. no interest is charged on prepayments and receivables. the
consolidated entity has financial risk management policies in place to ensure that all receivables are received within the credit timeframe.
Due to the short term nature of these receivables, their carrying value is assumed to be approximately their fair value. none of the
receivables are past due or impaired. refer to note 22 for the Group’s risk management objectives and policies.
refer note 5(b) for details regarding loans receivable to related parties which are in accordance with the company’s employee Share
plan.
8.
AVAILABLE FOR SALE FINANCIAL ASSETS
Listed Securities
equity Securities
CONSOLIDATED ENTITY
2011
$
2010
$
9,825,000
6,660,000
on 10 May 2011, the company sold 3 million Buru energy limited (aSX: Bru) shares at $0.67 per share to realise a gain of $1,491,960. the
remaining holding as at 30 June 2011 is 15 million Bru shares.
the fair value of available for sale securities is based on quoted market price at the end of the reporting period. the quoted market price
used for available for sale financial assets held by the Group is the current bid price which as at 30 June 2011 was $0.655 (30 June 2010:
$0.37). refer to note 22 for the Group’s risk management objectives and policies.
annual financial report 2011
49
9.
EXPLORATION AND EVALUATION EXPENDITURE
CONSOLIDATED ENTITY
Movement in Exploration and Evaluation Expenditure
Balance at beginning of the year
acquisition /(disposal) of exploration expenditure from
business combination
expenditure incurred
expenditure impaired;
lanagan 2
coal & tungsten permits
expenditure recovered(1)
expenditure transferred to development assets
Balance at end of the year
Note
2011
$
11,042,652
-
4,329,001
(661)
-
(300,000)
(2,577,255)
2010
$
8,120,114
(410,957)
4,200,328
-
(866,833)
-
-
12,493,737
11,042,652
(1) on 17 March 2011 the company announced that it had entered into a farm-in agreement with Green rock energy ltd (Green
rock; aSX code: GrK). GrK has agreed to partner new Standard in ep417 by paying $750,000 in back costs and contributing 27.5%
of the costs of drilling, coring, fracture stimulation, flow testing and planned completion of the lawford #1 well located on ep417.
in return Green rock will earn a 15% per cent interest in ep417. Green rock has also committed to fund 22.5% of the costs of
a second (but yet to be agreed) well to earn an additional 5% in ep417. at 30 June 2011 a total of $300,000 had been received
pursuant to this agreement.
the exploration expenditure incurred during the year largely relates to the company’s oil and gas permits and working interest in
the colorado county project.
the Board assesses impairment of all exploration expenditure at each reporting date by evaluating the conditions specific to the
company and to the particular asset that may lead to impairment. these include if substantive expenditure has been incurred
on exploration and evaluation of resources and this has not led to the discovery of commercial viable quantities of resources or
sufficient data exists to indicate that the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full
from successful development or by sale.
the ultimate recoupment of exploration expenditure carried forward is dependent on successful development and exploitation,
or alternatively sale, of the respective area of interest.
10. DEVELOPMENT ASSETS
Development Assets
at cost
accumulated amortisation
net carrying value
CONSOLIDATED ENTITY
2011
$
2,467,248
-
2,467,248
2010
$
-
-
-
50
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10. DEVELOPMENT ASSETS (continued)
Tangible Costs
$
Intangible Costs
$
Prepaid Drilling,
Completion
and Lease
Acquisition
Costs
$
Development Assets
2011
Cost
at 1 July 2010
transfer from exploration projects
additions
impairment
revenue offset
foreign exchange movement
at 30 June 2011
Provision for future restoration costs
at 1 July 2010
Disposals
at 30 June 2011
Accumulated amortisation
at 1 July 2010
charge for the year
Disposals
foreign exchange movement
at 30 June 2011
Net carrying value
at 1 July 2010
at 30 June 2011
-
796,173
-
-
-
-
796,173
-
-
-
-
-
-
-
-
-
1,781,082
1,352,402
-
(1,462,409)
-
1,671,075
-
-
-
-
-
-
-
-
-
796,173
-
1,671,075
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
-
2,577,255
1,352,402
-
(1,462,409)
-
2,467,248
-
-
-
-
-
-
-
-
-
2,467,248
the ultimate recoupment of development assets carried forward is dependent on successful development and exploitation, or
alternatively sale, of the respective area of interest.
11.
PROPERTY, PLANT AND EQUIPMENT
property, plant and equipment
accumulated depreciation
net book amount
Year ended 30 June 2011
opening net book amount
additions
Disposals
Depreciation expense
closing net book amount
Year ended 30 June 2010
opening net book amount
additions
Depreciation expense
CONSOLIDATED ENTITY
2011
$
226,628
(114,897)
2010
$
204,203
(101,214)
111,731
102,989
Furniture and
equipment
$
63,462
30,248
-
(34,065)
59,645
Furniture and
equipment
$
52,358
37,279
(26,175)
Motor Vehicles
$
14,959
39,541
-
(6,165)
48,335
Motor Vehicles
$
18,967
-
(4,008)
Leasehold
Improvements
$
24,568
4,400
(19,164)
(6,053)
3,751
Leasehold
Improvements
$
33,216
-
(8,648)
Total
$
102,989
74,189
(19,164)
(46,283)
111,731
Total
$
104,541
37,279
(38,831)
102,989
51
closing net book amount
63,462
14,959
24,568
annual financial report 2011
12. OTHER NON-CURRENT ASSETS
loans receivable from related parties
Directors
other Key Management personnel
CONSOLIDATED ENTITY
2011
$
303,376
25,000
328,376
2010
$
-
-
-
non-recourse loans were issued or accrued relating to the issue of shares following achievement of lti for the years ended 30 June
2010 which were issued on 4 January 2011 and 30 June 2011 which are to be issued subject to shareholder approval. in the event
shareholder approval is not granted this amount would reduce by $144,000.
13.
TRADE AND OTHER PAYABLES
Current
trade payables
finance lease-vehicle
Sundry payables and accrued expenses
CONSOLIDATED ENTITY
2011
$
505,540
13,656
543,277
2010
$
436,209
-
-
1,062,473
436,209
the average credit period on purchases is 30 days. no interest is charged on the trade payables.
the consolidated entity has financial risk management policies in place to ensure that all payables are paid within the credit time
frame. refer to note 22 for the Group’s risk management objectives and policies.
14. OTHER NON-CURRENT LIABILITIES
Borrowings
finance lease-vehicle
CONSOLIDATED ENTITY
2011
$
26,172
26,172
2010
$
-
-
a finance lease was taken out on the purchase of a vehicle on 18 June 2011. the finance lease has been separated into current
and non-current liabilities as required by aaSB117.
52
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15.
ISSUED CAPITAL
198,975,169 fully paid ordinary shares (2010:
143,028,723)
(a) Fully paid ordinary shares
2010
Balance at beginning of financial year
14 May 2010 – exercise of 1,485,714 $0.20 options
less: issue costs
Balance at end of financial year
2011
Balance at beginning of financial year
on 30 July 2010, issue of shares pursuant to tranche 1 of a
placement
on 2 September 2010, fully paid ordinary shares issued
pursuant to a Share purchase plan
on 8 September 2010, issue of shares pursuant to tranche 2
of a placement
on 4 January 2011, issue of shares pursuant to employee
share plan
on 3 June 2011, issue of shares following the exercise of
3,600,000 12.5c options and 3,600,000 15c options
on 15 June 2011, issue of shares following the exercise of
378,691 12.5c options
on 23 June 2011, issue of shares following the exercise of
21,309 12.5c options and 400,000 15c options
less: issue costs
Balance at end of financial year
(b) Terms and Conditions of Issued Capital
CONSOLIDATED ENTITY
2011
$
2010
$
24,385,896
16,668,616
No.
$
141,543,009
1,485,714
-
16,373,883
297,143
(2,410)
143,028,723
16,668,616
No.
$
143,028,723
16,668,616
13,679,307
16,189,643
17,355,176
722,320
7,200,000
378,691
421,309
-
198,975,169
1,983,500
2,347,500
2,516,500
159,376
990,000
47,336
62,664
(389,596)
24,385,896
ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of
shares held. at the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
(c) Options
information on options granted to Directors and promoters/consultants as remuneration during the period including the
employee option plan are disclosed in note 26 of the consolidated financial statements.
on 22 July 2010, the company announced it had reached an agreement for a $6.5 million capital raising (capital raising) via
a $4.5 million two tranche placement of 31.0 million shares at $0.145 per share to institutional and sophisticated investors
(placement) together with a fully underwritten $2.0 million Share purchase plan (Spp). euroz Securities acted as lead Manager
to the placement and underwriter to the Spp.
the placement was made in two tranches:
• tranche one comprising the placement of 13,679,307 shares to raise $a2.0 million, was issued under the company’s available
15% capacity, and
• tranche two comprising the placement of 17,355,176 shares to raise $a2.5 million, was issued following receipt of
shareholder approval at a general meeting held on Monday 6 September, 2010.
new Standard directors participated in tranche two of the placement, following shareholder approval at the general
meeting.
in conjunction with the placement, new Standard offered eligible shareholders the opportunity to acquire additional shares
in the company up to a maximum of $15,000 per shareholder under a share purchase plan (Spp). Shares under the Spp were
offered at a$0.145 per share, which is the same price offered to the placement participants.
as a result of the demand to participate in the Spp, the maximum amount to be raised under the Spp was increased to $2.35
million. applications totally $2.347 million were accepted and 16,189,643 fully paid ordinary shares were allotted and issued.
refer to note 22 for the group’s risk management objectives and policies.
annual financial report 2011
53
16. RESERVES AND ACCUMULATED LOSSES
available for sale financial assets reserve
Share based payments reserve
foreign currency translation reserve
(a) Movements in Available for sale financial assets reserve
Balance at beginning of year
revaluation of financial assets available for sale
Balance at end of year
Nature and purpose of reserve
the available for sale investments revaluation reserve represents the
unrealised gain or loss on the market value of available for sale financial
assets
(b) Movements in share based payments reserve
Balance at the beginning of the year
add: issue of options
- Directors
-
-
Balance at the end of year
promoters/consultants
employees
Nature and purpose of reserve
the share based payments reserve represents the value of options
issued to employees, directors and promoters.
(c) Movements in foreign currency translation reserve
Balance at the beginning of the year
unrealised loss on translation of foreign operation
Balance at the end of the year
CONSOLIDATED ENTITY
2011
$
7,275,000
1,943,034
(1,817,308)
7,400,726
3,600,000
3,675,000
7,275,000
2010
$
3,600,000
1,763,489
(309,573)
5,053,916
-
3,600,000
3,600,000
1,763,489
1,298,432
144,000
-
35,545
1,943,034
142,519
322,538
-
1,763,489
(309,573)
(1,507,735)
(1,817,308)
-
(309,573)
(309,573)
Nature and purpose of reserve
the foreign currency translation reserve represents the unrealised gain or loss upon translation of subsidiaries with a different
functional currency.
(d) Accumulated losses
Movements in Accumulated Losses
Balance at the beginning of the year
net profit/(loss) attributable to members of the company
Balance at the end of the year
CONSOLIDATED ENTITY
2011
$
(2,365,862)
(79,081)
(2,444,943)
2010
$
(5,664,399)
3,298,537
(2,365,862)
17. DIVIDENDS
there have been no dividends paid or proposed in the 2010 or 2011 financial years.
54
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18. COMMITMENTS FOR EXPENDITURE
Exploration Permits and Tenements – Commitments for Expenditure
in order to maintain current rights of tenure to australian exploration permits and tenements, the Group’s required to outlay
rentals and to meet the minimum expenditure requirements established with the Western australian Department of Mines and
petroleum (DMp). Minimum expenditure commitments may be subject to renegotiation and with approval may otherwise be
mitigated or reduced by sale, farm out or relinquishment. these work commitments or obligations are not provided for in the
accounts but are to be incurred as outlined below:
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
Australian Exploration Permits
CONSOLIDATED ENTITY
2011
$
17,431,434
44,055,000
-
2010
$
8,735,000
35,075,000
-
61,486,434
43,810,000
the above commitments reflect approvals from the DMp on 23 September 2011 for applications for Variations to the Work
commitment and 12 month Suspension and extension for permit year 3 for ep’s 443, 450, 451 and 456.
it is anticipated that expenditure commitments relating to ep 443, 450, 451 and 456 will be met by conocophillips assuming
binding agreements are executed that broadly reflect the terms outlined in the Heads of agreement announced on 13 July, 2011.
Goldwyer Project
on 13 July 2011, the company announced that it had entered into a non-binding Heads of agreement (Heads of agreement) and
exclusive negotiating period with conocophillips australia SH4 pty ltd (conocophillips), an affiliate of global energy company
conocophillips [nySe:cop].
the Heads of agreement sets the framework for conocophillips to farm-in and jointly explore, new Standard’s flagship Goldwyer
project in the canning Basin, Western australia. the project comprises the following permit interests in Western australia’s canning
Basin: Granted exploration permits (eps) 443, 450, 451 and 456; and application areas 1/09-0, 2/09-0 and 5/09-0.it also contains
an agreed set of core commercial principles which will form the basis for negotiating and completing binding and definitive
agreements.
these core commercial principles envisage conocophillips funding up to uS$109.5M over four phases of unconventional
hydrocarbon exploration work, including the drilling, coring and evaluation of multiple wells. in return for funding the phased
work program conocophillips will have the right to earn up to a 75% working interest in the Goldwyer project which would reduce
new Standard’s working interest from 100% to 25%.
conocophillips must complete all four phases of work to earn and retain the 75% working interest. in the event that conocophillips
elects not to complete all four proposed phases of work a 100% operated working interest in the Goldwyer project will revert to
new Standard.
conocophillips will also make an upfront payment of a$1M to new Standard in consideration of prior costs.
the phased nature of the exploration program provides for initial drilling, coring and evaluation of multiple wells to be undertaken
following which conocophillips will be required to decide if it wishes to proceed with further exploration, appraisal and pilot
development work in subsequent phases. this structure provides conocophillips with the option to withdraw at the completion of
each phase of work on the basis that any working interest (or associated rights) is returned to new Standard.
the timing of the proposed work programs will be consistent with permit and work commitment revisions to be sought and agreed
with the government. new Standard envisages that phase 1 work would be carried out in 2012 assuming binding agreements are
successfully executed.
the Heads of agreement contemplates that new Standard will remain as operator, although conocophillips would have the
right to assume operatorship of the Goldwyer project at its election. an integral part of the proposed farm-in arrangement is the
proposed provision of technical support by conocophillips to new Standard to enhance the operating arrangement. new Standard
believes that conocophillips’ participation will inject invaluable and world class technical knowledge and resources to ensure the
Goldwyer project is explored and appraised in conjunction with a world leader in global shale plays.
annual financial report 2011
55
18. COMMITMENTS FOR EXPENDITURE (continued)
Both parties have committed to an exclusive period to negotiate the proposed transaction with a target of executing binding
agreements as soon as possible, but no later than 30 September 2011. the binding agreements will also be subject to any
outstanding government approvals. as at the date of this report negotiations are continuing between nSe and conocophillips.
new Standard has agreed to notify conocophillips of any approaches in relation to its interest in the Goldwyer project during this
exclusivity period, and to provide conocophillips with a right to match any offers that relate to new Standard’s interest in the
Goldwyer project.
Should binding agreements be executed with conocophillips, success fees will be payable to euroz limited for up to 3.5% of
the value of conocophillips’ funding. timing of payments to euroz limited will be aligned with the provision of funding from
conocophillips.
US Exploration Permits
united States oil and gas exploration working interests do not have minimum expenditure requirements and due to the expenditure
being largely discretionary there are no amounts included in the above table.
Leases
the company entered into a 3 year operating lease agreement effective 1 february 2011 for the corporate head offices at level
3, 33 richardson Street, West perth. the lease obligation is not provided for in the consolidated Statement of financial position
but is to be incurred as outlined below:
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
CONSOLIDATED ENTITY
2011
$
109,160
181,270
-
290,430
2010
$
-
-
-
-
19.
SEGMENT REPORTING
the segment information provided to the Managing Director for the reportable segments for the year ended 30 June 2011 are
as follows:
Segment Results
30 June 2011
total Segment revenues
profit Before tax
total Segment assets
total Segment liabilities
Segment Results
30 June 2010
total Segment revenues
loss Before tax
total Segment assets
total Segment liabilities
Australia
Oil and Gas
Exploration
$
-
-
7,172,978
(359,175)
Australia
Oil and Gas
Exploration
$
-
Tungsten
$
-
(4,200)
United States
Oil and Gas
Exploration
$
-
-
-
-
7,803,726
(326,062)
Tungsten
$
-
(43,107)
(867,585)
4,843,215
(74,115)
-
-
United States
Oil and Gas
Exploration
$
4,713
(76,454)
6,199,437
(173,018)
Total
$
-
(4,200)
14,976,704
(685,237)
Total
$
4,713
(987,146)
11,042,652
(247,133)
56
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19.
SEGMENT REPORTING (continued)
Australia - Oil and Gas Exploration
canning Basin comprises of exploration associated with the Group’s interests in oil and gas permits in the canning Basin
including ep 417, 443, 450, 451 & 456.
carnarvon Basin comprises of exploration associated with the Group’s interests in oil and gas permits in the carnarvon Basin
namely in the Merlinleigh project (Stp-epa-0014 and Stp-epa-0015).
United States - Oil and Gas Exploration
colorado country comprises of exploration expenditure associated with the Group’s working interest in oil and gas projects in
the colorado county project in texas, u.S.a. including the Heintschel #1, Heintschel #2, D truchard #1 and Joann #1 wells.
Wharton county comprises of exploration expenditure associated with the Group’s interests in oil and gas in the Wharton
county project in texas, u.S.a.
Moeller comprises of exploration expenditure associated with the Group’s interest in oil and gas in the Moeller #1 well.
Tungsten
tungsten comprises of exploration expenditure associated with the Group’s interest in the tungsten projects in australia.
the Managing Director assesses the performance of the operating segments based on the results of its exploration activities.
(a) Other segment information
(i) Segment revenue
Sales between segments are carried out at arm’s length and are eliminated on consolidation. the revenue from external
parties reported to the Managing Director is measured in a manner consistent with that in the statement of comprehensive
income.
revenues from external customers are derived from the sale of gas. However these are minimal and therefore there are no
major customers to report.
Segmented revenue reconciles to total revenue from continuing operations as follows:
Total Segment Revenue
interest revenue
other income
Total revenue from continuing operations (note 2)
CONSOLIDATED ENTITY
2011
$
-
179,353
-
179,353
2010
$
4,713
211,731
-
216,444
a reconciliation of adjusted segment loss to profit/loss before income tax from continuing operations is provided as follows:
CONSOLIDATED ENTITY
Adjusted Segment Profit/(loss)
(Loss) per above segments
intersegment eliminations
interest
Gain on sale of nSex, net of transaction costs
Gain on sale of financial assets
Gain on sale of subsidiary
Share based payments
forgiveness of nSe loan
other non-segment and corporate
2011
$
(4,200)
2,218
179,353
-
1,491,960
33,226
(10,546)
-
(1,771,092)
2010
$
(987,145)
1,889,179
211,731
5,652,156
-
-
(465,057)
(242,493)
(2,759,834)
Profit/(loss) before income tax from continuing operations
(79,081)
3,298,537
annual financial report 2011
57
19.
SEGMENT REPORTING (continued)
(ii) Segment assets
the amounts provided to the Managing Director with respect to total assets are measured in a manner consistent with that of
the financial statements. these assets are allocated based on the operations of the segment and the physical location of the
asset.
investment in shares (classified as available-for-sale financial assets) held by the Group are not considered to be segment assets
but rather managed by the corporate office.
reportable segment assets are reconciled to total assets as follows:
Segment Assets
unallocated:
available-for-sale financial assets
cash
other non-segment and corporate
CONSOLIDATED ENTITY
2011
$
2010
$
14,976,704
11,042,652
9,825,000
4,552,777
1,075,843
6,660,000
1,578,480
511,747
Total assets as per the statement of financial position
30,430,324
19,792,879
(iii) Segment liabilities
the amounts provided to the Managing Director with respect to total liabilities are measured in a manner consistent with that
of the financial statements. these liabilities are allocated based on the operations of the segment.
reportable segment liabilities are reconciled to total liabilities as follows:
Segment Liabilities
unallocated:
other non-segment and corporate
Total liabilities as per the statement of financial position
CONSOLIDATED ENTITY
2011
$
685,237
403,408
1,088,645
2010
$
247,133
189,076
436,209
20. RELATED PARTY DISCLOSURES
(a) Key Management Personnel Compensation
Disclosures relating to Key Management personnel are set out at note 5.
(b) Transactions with related parties loans
other than loans to subsidiary companies, there have been no additional transactions with related parties.
Transactions with Related Parties
Share based payments(i)
option issue(ii)
note:
CONSOLIDATED ENTITY
2011
$
328,376
10,546
338,922
2010
$
-
140,597
140,597
(i) on 4 January 2011, the company issued 722,320 fully paid ordinary shares for a value of $159,676 to Mr Willis and Dr Hagan
pursuant to the employee Share plan as approved by shareholders at the annual General Meeting held 26 november 2010.
Mr Willis and Dr Hagan’s lti component of their executive consultancy agreements have been achieved for the year ended
30 June 2011. as a result, resolutions will be put before shareholders at the 2011 annual General Meeting to seek approvals
for the issue of fully paid ordinary shares with a value of $72,000 for Mr Willis and $72,000 for Dr Hagan in accordance with
the terms of the employee Share Scheme. Mr Gracey’s lti component of his employment contract has been achieved for the
year ended 30 June 2011. as a result, subsequent to year end Mr Gracey is entitled to enter into a loan agreement with the
company in accordance with the terms of the employee Share Scheme for shares to the value of $25,000.
(ii) on 29 March 2011, the company issued 500,000 unlisted $0.225 options exercisable on or before 30 June 2013 and 500,000
unlisted $0.275 options exercisable on or before 30 June 2013 to Mr Gracey as part of an incentive component of an employment
agreement in his role of legal and commercial Manager.
58
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21. NOTES TO THE CASH FLOW STATEMENTS
(a) Reconciliation of Cash and Cash Equivalents
for the purposes of the statement of cash flows, cash includes cash
on hand and in banks and investments in money market instruments,
net of outstanding bank overdrafts. cash at the end of the financial
year as shown in the cash flow statements are reconciled to the
related items in the statement of financial position as follows:
cash and cash equivalents
(b) Reconciliation of Net Profit / (Loss) After Tax to Net Cash Flows
From Operating Activities
CONSOLIDATED ENTITY
2011
$
2010
$
4,552,777
1,578,480
profit / (loss) after income tax
(79,081)
3,298,537
non-cash expenditure:
Share based payments
Gain on sale of subsidiary, net of transaction costs
Gain on sale of financial assets
loss on sale of fixed assets
impairment of exploration expenditure
Depreciation
unrealised foreign exchange gain
forgiveness of nSex loan
changes in net assets and liabilities, net of effects from
acquisition and disposal of businesses:
(increase)/decrease in assets:
receivables
other current assets
increase/(decrease) in liabilities:
current payables
10,546
(33,226)
(1,491,960)
19,164
661
46,283
-
-
465,057
(5,652,156)
-
-
866,833
38,831
(19,843)
242,493
(15,925)
(45,708)
2,500
2,503
513,877
128,932
net cash used in operating activities
(1,075,369)
(626,313)
(c) Non-cash Financing and Investing Activities
2011
there were no non-cash financing and investing activities during the year.
2010
on 3 December 2009, 4,000,000 $0.125 options exercisable at $0.125 and expiring 30 June 2011 and 4,000,000 $0.15 options
exercisable at $0.15 and expiring 30 June 2011 were issued to a consultant as part remuneration for marketing services. other
than this transaction, there were no other non-cash financing and investing activities during the year.
annual financial report 2011
59
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
the Group’s principal financial instruments comprise cash and cash equivalents and also includes available for sale financial assets
and payables. the main purpose of these financial instruments is to finance the Group’s operations. the Group has various other
financial assets and liabilities such as receivables and trade payables, which arise directly from its operations. it is, and has been
throughout the entire period, the Group’s policy is that no trading in financial instruments shall be undertaken.
the main risks arising from the consolidated entity’s financial instruments are currency risk, credit risk, price risk, liquidity risk and
cash flow interest rate risk. the Board reviews and agrees policies for managing each of these risks.
(a) cash flow interest rate risk
the Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s short-term deposits with a
floating interest rate. these financial assets with variable rates expose the consolidated entity to cash flow interest rate risk. all
other financial assets and liabilities in the form of receivables and payables are non-interest bearing. the Group does not engage
in any hedging or derivative transactions to manage interest rate risk.
the following tables set out the carrying amount of the Group’s exposure to interest rate risk and the effective weighted average
interest rate for each class of these financial instruments.
the Group has not entered into any hedging activities to cover interest rate risk. in regard to its interest rate risk, the Group
continuously analyses its exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative
investments and the mix of fixed and variable interest rates.
a sensitivity analysis has not been disclosed in relation to variable rate instruments for Group as the results are immaterial to the
statement of comprehensive income.
financial assets
cash at Bank
Total
CONSOLIDATED ENTITY
Note
Float Interest Rate
Total Carrying Amount
21 (a)
2011
$
4,552,777
4,552,777
2010
$
1,578,480
1,578,480
2011
$
4,552,777
4,552,777
2010
$
1,578,480
1,578,480
Weighted average interest rate
4.86%
4.53%
(b) liquidity risk
prudent liquidity risk management implies maintaining sufficient cash to ensure the ability to meet debt requirements. the Group
manages liquidity risk by continuously monitoring forecast and actual cash flows. the Group aims at maintaining flexibility in
funding by having in place operational plans to source further capital as required.
all trade payables are contractually due within 30 days.
liquidity risk is measured using liquidity ratios such as working capital as follows:
current assets
current liabilities
Surplus
(c) currency risk
CONSOLIDATED ENTITY
2011
$
15,029,232
(1,062,473)
2010
$
8,647,238
(436,209)
13,966,759
8,211,029
the Group has operations located in the united States where both revenues and expenditures are recorded. the statement of
financial position can be affected by movements in the uSD/auD exchange rates upon translation of the uS operations into
auD.
foreign exchange risk arises from commercial transactions and recognised assets and liabilities denominated in a currency that is
not the Group’s functional currency.
this risk arises as at times the Group is exposed to purchasing goods and services denominated in uS dollars, which is unavoidable
due to the nature of the working interest acquired in the uS oil and gas permits.
60
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22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
the Group has a wholly owned subsidiary incorporated in Delaware which operates in the united States and this entity will
continue to pay for services and costs associated with exploration in the united States in uS dollars and also anticipates receiving
income in uS dollars over time. if the cross rates between the uS dollar and the australian dollar move the consolidated entity is
exposed to corresponding foreign exchange gains or losses depending upon the direction of the movement.
at present no currency hedging is undertaken and no sensitivity analysis has been performed as the company has deemed it will
not have a material impact on the consolidated financial Statements as at 30 June 2011.
(d) fair Value
the fair value of available for sale securities is based on quoted market price at the end of the reporting period. the quoted
market price used for available for sale financial assets held by the Group is the current bid price.
the following tables classify financial instruments recognised in the statement of financial positions of the Group, according to the
hierarchy stipulated in aaSB 7 as follows:
level 1 –
the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
level 2 – a valuation technique is used using other than quoted prices within level 1 that are observable for the financial
instrument either directly (i.e. as prices) or indirectly (i.e. derived from prices); or
level 3 – a valuation technique is used using inputs that are not based on observable market data (unobservable inputs).
comparative information has not been provided as permitted by the transitional provisions of the new rules.
2011
available for sale financial assets
listed equity securities
2010
available for sale financial assets
listed equity securities
CONSOLIDATED ENTITY
Level 1
$
Level 2
$
Level 3
$
Total
$
9,825,000
-
-
9,825,000
Level 1
$
Level 2
$
Level 3
$
Total
$
6,660,000
-
-
6,660,000
the fair value of financial instruments traded in active markets is based upon quoted market price at the end of the reporting
period. the quoted market price is the quoted bid prices which are included in level 1.
(e) credit risk
credit risk is the potential that the Group will suffer a financial loss due to the unwillingness or inability of counterparty to fully
meet their contractual debts and obligations. credit risk arises from potential trading activities and holding cash. the carrying
amount of financial assets represents the maximum credit exposure.
the Group trades only with recognised, credit worthy third parties and has apportioned cash reserves amongst several financial
institutions.
the credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings:
cash at Bank and short term bank deposits (aa)
cash at Bank and short term bank deposits (a+)
cash at Bank and short term bank deposits (a-1)
total
annual financial report 2011
CONSOLIDATED ENTITY
2011
$
3,366,211
1,000,000
186,566
4,552,777
2010
$
1,289,021
289,459
-
1,578,480
61
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(f) price risk
the Group is exposed to equity securities price risk. this arises from investments held by the Group and classified on the Statement
of financial position as available-for-sale financial assets. the Group has no formal policies with respect the managing the price
risk with respect to this investment.
the assessed volatility rate is 102% for the year. the table below summarises the impact of increases/decreases in the investment
using volatility rate of 102%.
CONSOLIDATED ENTITY
Impact on Pre-Tax Profit 2011
Impact on Other Components of Equity
Increase
$
-
Decrease
$
Increase
$
Decrease
$
-
6,793,200
(6,660,000)
(g) capital risk Management
the Group manages capital to ensure that the Group will be able to continue as a going concern. in order to maintain or adjust
the capital structure, the Group may issue new shares.
the Group defines capital as equity and net debt.
the Group defines net debt as total borrowings less cash and equity as the sum of share capital, reserves and retained earnings (or
accumulated losses) as disclosed in the statement of financial position.
the Board of Directors monitors capital on an ad-hoc basis by reviewing its future operating cashflows to ensure it maintains an
appropriate amount of capital to be able to meet its exploration programs. no formal targets are in place for return on capital,
or gearing ratios as the Group has not derived any income from their mineral exploration and currently has no debt facilities in
place.
equity
net cash/(Debt)
Surplus
23.
EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
the earnings and weighted average number of ordinary shares used in the
calculation of basic and diluted earnings per share are as follows:
profit/(loss) for the year
Weighted average number of ordinary shares used in the calculation of
basic epS
CONSOLIDATED ENTITY
2011
$
29,341,679
4,512,949
2010
$
19,356,670
1,578,480
33,854,628
20,935,150
2011
Cents
Per Share
(0.04)
(0.04)
2010
Cents
Per Share
2.34
1.91
$
$
(79,081)
3,298,537
2011
No.
2010
No.
183,865,943
140,934,319
Weighted average number of ordinary shares used in the calculation of
diluted epS
207,165,314
172,528,018
62
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24.
INTERESTS IN JOINT VENTURE OPERATIONS
the consolidated entity has an interest in the following joint ventures as at 30 June 2011 whose principal activities were oil and
gas exploration.
Permit
ep417
2011 Interest
65%
Operator
new Standard onshore pty ltd
the consolidated entity’s interest in assets / liabilities venture operations are detailed below. the amounts are included in the
financial statements under their respective categories.
Current Assets
cash and cash equivalents
other current assets
Total current assets
Non-current assets
exploration expenditure
Total non-current assets
CONSOLIDATED ENTITY
2011
$
2010
$
11,952
57,563
69,515
3,241,587
3,241,587
11,609
20,013
31,622
3,171,963
3,171,963
Share of total assets of joint venture operations
3,311,102
3,203,585
Income
operations overhead recovered
interest
other income
Total Income
Share of net income from joint venture operations
-
-
250
250
250
Details of joint venture agreements entered into during the year are provided in the review of operations.
25.
SUBSIDIARIES
Name of Entity
Parent Entity
Country of
Incorporation
new Standard energy limited
australia
Subsidiaries
tungsten australia pty ltd(1)
new Standard onshore pty ltd
new Standard energy inc
note:
(1) Disposal of Subsidiary
australia
australia
Delaware, uSa
Ownership Interest
2011
%
-
100
100
-
-
-
-
-
2010
%
100
100
100
on 28 february 2011, new Standard sold its wholly owned subsidiary, tungsten australia pty ltd for cash consideration of
$40,727.
annual financial report 2011
63
25.
SUBSIDIARIES (continued)
Effect of disposal on the financial position of the Group:
CONSOLIDATED ENTITY
exploration and evaluation expenditure
trade and other receivables
cash and cash equivalents
Deferred tax liabilities
trade and other payables
Net assets
consideration received, satisfied in cash, net of transaction costs
cash and cash equivalents disposed of
Net cash inflow
26.
SHARE BASED PAYMENTS
Employee Share Scheme
2011
$
-
392
10,744
-
(3,000)
8,136
40,727
(10,744)
29,983
outlined below is a summary of the key terms of the company’s employee Share plan.
a) Eligibility: participants in the plan may be Directors, full-time and part-time employees of the company or any of its subsidiaries
(participants).
b) Administration of Plan: the Board is responsible for the operation of the plan and has a broad discretion to determine which
participants will be offered Shares under the plan.
c) Number of Shares offered: the Board determines the number of Shares offered to participants in the plan having regard to:
(i) the seniority of the participant and the position the participant occupies with the company or any Subsidiary;
(ii) the length of service of the participant with the company and its Subsidiaries;
(iii) the record of employment of the participant with the company and its Subsidiaries;
(iv) the potential contribution of the participant to the growth and profitability of the company and its Subsidiaries; and
(v) any other matters which the Board considers relevant.
d) Offer: the Board may issue an offer to a participant to participate in the plan. the offer:
(i) will invite application for the number of Shares specified in the offer;
(ii) will specify the issue price for the Shares;
(iii) may invite applications for a loan up to the amount payable in respect of the Shares accepted by the participant in
accordance with the offer;
(iv) will specify any restriction conditions applying to the Shares;
(v) will specify an acceptance period; and
(vi) specify any other terms and conditions attaching to the Shares.
e)
Issue price: the issue price of each Share will be not less the volume weighted average price at which Shares were traded on
the aSX over the 5 trading days up to and including the trading day before the date of the offer.
f) Restriction Conditions: Shares may be subject to restriction conditions (such as a period of employment) which must be satisfied
before the Shares can be sold, transferred, or encumbered. Shares cannot be sold, transferred or encumbered until any loan in
relation to the Shares has been repaid or otherwise discharged under the plan.
g) Loan: a participant who is invited to subscribe for Shares may also be invited to apply for a loan up to the amount payable in
respect of the Shares accepted by the participant (loan), on the following terms:
(i) the loan will be interest free;
(ii) the loan made available to a participant shall be applied by the company directly toward payment of the issue price of the
Shares;
(iii) the loan repayment date and the manner for making such payments shall be determined by the Board and set out in the
offer;
64
neW StanDarD enerGy liMiteD
26.
SHARE BASED PAYMENTS (continued)
(iv) a participant must repay the loan in full by the loan repayment date but may elect to repay the loan amount in respect of
any or all of the Shares at any time prior to the loan repayment date;
(v) the company shall have a lien over the Shares in respect of which a loan is outstanding and the company shall be entitled
to sell those Shares in accordance with the terms of the plan; and
(vi) a loan will be non recourse except against the Shares held by the participant to which the loan relates.
h) Unsatisfied Restriction Condition: Where a restriction condition in relation to Shares is not satisfied by the due date, or
becomes incapable of satisfaction in the opinion of the Board, the company must, unless the restriction condition is waived
by the Board:
(i) arrange to sell the Shares as soon as reasonably practicable either on the aSX or to an investor who falls within an
exemption under Section 708 of the corporations act provided that the sale must be at a price that is no less than 80% of
the volume weighted average price at which Shares were traded on the aSX on the 10 trading days before the sale date;
and
(ii) apply the sale proceeds (Sale proceeds) in the following priority:
a. first, to pay the company any outstanding loan amount (if any) in relation to the Shares and the company’s reasonable
costs in selling the Shares;
B. second, to the extent the Sale proceeds are sufficient, to repay the participant any cash consideration paid by the
participant or loan amount repayments (including any cash dividends applied to the loan amount) made by or on
behalf of the participant. the participant acknowledges that the company is not liable to repay the participant any cash
consideration or loan amount repayments except to the extent covered by the remaining Sale proceeds; and
c.
lastly, any remainder to the company to cover its costs of managing the plan.
i) Sale of Shares to repay Loan:
(i) a loan shall become repayable in full where:
a. the participant (or, where the participant is an associate of an eligible employee, the eligible employee) ceases to be
an eligible employee for any reason (including death);
B. the participant suffers an event of insolvency;
c. the participant breaches any condition of the loan or the plan; or
D. a restriction condition in relation to Shares subject to the loan is not satisfied by the due date, or becomes incapable
of satisfaction in the opinion of the Board (and is not waived).
(ii) Where a loan becomes repayable and at that time a restriction condition in relation to Shares subject to the loan is not
satisfied, or is incapable of being satisfied in the opinion of the Board (and is not waived), the Shares must be sold and the
Sale proceeds applied to repay the loan in accordance to the plan.
(iii) Where a loan in relation to Shares becomes repayable and at that time restriction conditions in relation to the Shares have
either been satisfied or are waived, the company must give the participant a 30 day period to repay the loan, failing which
the company must sell the Shares and apply the Sale proceeds in accordance with the plan.
j) Power of Attorney: the participant irrevocably appoints each of the company and each director of the company severally as
his or her attorney to do all things necessary to give effect to the sale of the participant’s Shares in accordance with the plan.
k) Plan limit: the company must take reasonable steps to ensure that the number of Shares offered by the company under the
plan when aggregated with:
(i) the number of Shares issued during the previous 5 years under the plan (or any other employee share plan extended only
to eligible employees); and
(ii) the number of Shares that would be issued if each outstanding offer for Shares (including options to acquire unissued
Shares) under any employee incentive scheme of the company were to be exercised or accepted, does not exceed 5% of
the total number of Shares on issue at the time of an offer (but disregarding any offer of Shares or option to acquire Shares
that can be disregarded in accordance with relevant aSic class orders).
l) Restriction on transfer: participants may not sell or otherwise deal with a plan Share until the loan amount in respect of that
plan Share has been repaid and any restriction conditions in relation to the Shares have been satisfied or waived. the company
is authorised to impose a holding lock on the Shares to implement this restriction.
m) Quotation on ASX: the company will apply for each plan Share to be admitted to trading on aSX upon issue of the plan Share.
Quotation will be subject to the aSX listing rules and any holding lock applying to the Shares.
n) Rights attaching to Shares: each plan Share shall be issued on the same terms and conditions as the company’s issued Shares
(other than in respect of transfer restrictions imposed by the plan) and it will rank equally with all other issued Shares from the
issue date except for entitlements which have a record date before the issue Date.
annual financial report 2011
65
26.
SHARE BASED PAYMENTS (continued)
if there is a bonus issue to shareholders, the number of shares over which the option is exercisable may be increased by the number
of shares which the holder of the option would have received if the option had been exercised before the record date for the
bonus issue.
in the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying securities in the company, the
exercise price of the options may be reduced in accordance with listing rule 6.22.
Expenses arising from share-based payment transactions
Shares issued to directors
options issued to directors
options issued to promoters/consultants
options issued to key management personnel
CONSOLIDATED ENTITY
2011
$
328,376
-
-
10,546
338,922
2010
$
-
140,597
322,538
-
463,135
2011
Grant date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of
the year
3 December 2009
30 June 2012
3 December 2009
30 June 2012
3 December 2009
30 June 2011
3 December 2009
30 June 2011
29 March 2011
30 June 2013
29 March 2011
30 June 2013
$
0.225
0.275
0.125
0.150
0.225
0.275
No.
No.
7,250,000
7,250,000
4,000,000
4,000,000
-
-
-
-
-
-
500,000
500,000
No.
-
-
4,000,000
4,000,000
-
-
22,500,000
1,000,000
8,000,000
Weighted average exercise price
0.21
0.25
0.14
No.
No.
No.
-
-
-
-
-
-
-
-
7,250,000
7,250,000
7,250,000
7,250,000
-
-
500,000
500,000
-
-
-
-
15,500,000
14,500,000
0.25
0.25
2010
Grant date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of
the year
No.
No.
No.
No.
No.
No.
3 December 2009
30 June 2012
3 December 2009
30 June 2012
3 December 2009
30 June 2011
3 December 2009
30 June 2011
$
0.225
0.275
0.125
0.150
6,750,000
6,750,000
-
-
750,000
750,000
4,000,000
4,000,000
13,500,000
9,500,000
Weighted average exercise price
0.25
0.15
-
-
-
-
-
-
(250,000)
7,250,000
7,250,000
(250,000)
7,250,000
7,250,000
-
-
4,000,000
4,000,000
4,000,000
4,000,000
(500,000)
22,500,000
22,500,000
0.25
0.21
0.21
the weighted average remaining contractual life of share options outstanding at the end of the year was 1.06 years (2010 – 1.65 years).
options granted as part of remuneration have been valued using a Black-Scholes option pricing model, which takes into account various
factors including the option exercise price, the current level and volatility of the underlying share price, the risk-free interest rate, expected
dividends on the underlying share, current market price of the underlying share and the expected life of the option. the value of the
options at grant date issued in the year ended 30 June 2011 was calculated at $0.16 cents per option. the expected volatility has been
based on the historic volatility (based upon the life of the option) adjusted for non trading days and any expected changes to future
volatility.
66
neW StanDarD enerGy liMiteD
26.
SHARE BASED PAYMENTS (continued)
2011
fair value of share options and assumptions for the year ended 30 June 2011:
fair value at grant date of $0.225 and $0.275 options
Share price
exercise price
expected volatility (expressed as a weighted average volatility used in
the modelling under Black Scholes model)
option life (expressed as weighted average life
used in the modelling under Black Scholes model)
expected dividends
risk-free interest rate (based on government bonds)
$0.037 – $0.052
$0.160
$0.225 – $0.275
90%
2.25 years
0%
5.75%
the fair value of services received in return for share options have been fair valued based upon the fair value of equity securities
granted, measured using a Black Scholes model. the fair value of the options issued has been used as the fair value of the services
cannot be reliably measured.
2010
fair value of share options and assumptions for the year ended 30 June 2010:
fair value at grant date of $0.225 and $0.275 options
Share price
exercise price
expected volatility (expressed as a weighted average volatility used in
the modelling under Black Scholes model)
option life (expressed as weighted average life
used in the modelling under Black Scholes model)
expected dividends
risk-free interest rate (based on government bonds)
fair value at grant date of $0.125 and $0.15 options
Share price
exercise price
expected volatility (expressed as a weighted average volatility used in
the modelling under Black Scholes model)
option life (expressed as weighted average life
used in the modelling under Black Scholes model)
expected dividends
risk-free interest rate (based on government bonds)
$0.058 – $0.062
$0.110
$0.225 – $0.275
120%
2.60 years
0%
5.75%
$0.039 - $0.042
$0.086
$0.125 – $0.15
120%
1.61 years
0%
5.75%
the fair value of services received in return for share options have been fair valued based upon the fair value of equity securities
granted, measured using a Black Scholes model. the fair value of the options issued has been used as the fair value of the services
cannot be reliably measured.
27. CONTINGENCIES
there were no material contingent liabilities or contingent assets for the company or the Group as at 30 June 2011 or as at the
date of the report other than those disclosed at note 18 commitments for expenditure.
annual financial report 2011
67
28.
PARENT ENTITY INFORMATION
the following details information related to the parent entity, new Standard energy limited, as at 30 June 2011. the
information presented here has been prepared using consistent accounting policies as presented in note 1.
current assets
non-current assets
Total assets
current liabilities
non-current liabilities
Total liabilities
contributed equity
accumulated losses
reserves
Total equity
profit/(loss) for the year
other comprehensive income for the year
total comprehensive income for the year
29.
EVENTS AFTER THE REPORTING DATE
2011
$
29,824,786
99,818
29,924,604
408,016
26,172
434,188
33,545,738
(13,291,876)
9,236,554
29,490,416
(1,320,279)
3,675,000
2,354,721
2010
$
19,392,650
35,293
19,427,943
189,074
-
189,074
25,531,314
(11,971,596)
5,679,151
19,238,869
2,757,121
3,600,000
6,357,121
on 13 July 2011, the company announced that it had entered into a non-binding Heads of agreement (Heads of agreement) and exclusive
negotiating period with conocophillips australia SH4 pty ltd (conocophillips), an affiliate of global energy company conocophillips
[nySe:cop].
the Heads of agreement sets the framework for conocophillips to farm-in and jointly explore, new Standard’s flagship Goldwyer project
in the canning Basin, Western australia. the project comprises the following permit interests in Western australia’s canning Basin:
Granted exploration permits (eps) 443, 450, 451 and 456; and application areas 1/09-0, 2/09-0 and 5/09-0.it also contains an agreed set of
core commercial principles which will form the basis for negotiating and completing binding and definitive agreements.
these core commercial principles envisage conocophillips funding up to uS$109.5MM over four phases of unconventional hydrocarbon
exploration work, including the drilling, coring and evaluation of multiple wells. in return for funding the phased work program
conocophillips will have the right to earn up to a 75% working interest in the Goldwyer project which would reduce new Standard’s
working interest from 100% to 25%.
conocophillips must complete all four phases of work to earn and retain the 75% working interest. in the event that conocophillips
elects not to complete all four proposed phases of work a 100% operated working interest in the Goldwyer project will revert to new
Standard.
conocophillips will also make an upfront payment of a$1M to new Standard in consideration of prior costs.
the phased nature of the exploration program provides for initial drilling, coring and evaluation of multiple wells to be undertaken
following which conocophillips will be required to decide if it wishes to proceed with further exploration, appraisal and pilot development
work in subsequent phases. this structure provides conocophillips with the option to withdraw at the completion of each phase of work
on the basis that any working interest (or associated rights) is returned to new Standard.
the timing of the proposed work programs will be consistent with permit and work commitment revisions to be sought and agreed with
the government. new Standard envisages that phase 1 work would be carried out in 2012 assuming binding agreements are successfully
executed.
the Heads of agreement contemplates that new Standard will remain as operator, although conocophillips would have the right to
assume operatorship of the Goldwyer project at its election. an integral part of the proposed farm-in arrangement is the proposed
provision of technical support by conocophillips to new Standard to enhance the operating arrangement. new Standard believes that
conocophillips’ participation will inject invaluable and world class technical knowledge and resources to ensure the Goldwyer project is
explored and appraised in conjunction with a world leader in global shale plays.
Both parties have committed to an exclusive period to negotiate the proposed transaction with a target of executing binding agreements
as soon as possible, but no later than 30 September 2011. the binding agreements will also be subject to any outstanding government
approvals.
new Standard has agreed to notify conocophillips of any approaches in relation to its interest in the Goldwyer project during this
exclusivity period, and to provide conocophillips with a right to match any offers that relate to new Standard’s interest in the Goldwyer
project.
on 20 July 2011 1,000,000 unlisted $0.20 options were exercised raising a total of $200,000.
other than the above, there has been no other matter or circumstance that has arisen since the end of the year that requires disclosure.
68
neW StanDarD enerGy liMiteD
SHAREHOLDER INFORMATION
the shareholder information set out below was applicable as at 30 September 2011.
1. Distribution of Shareholders
(a) analysis of number of shareholders by size of holding.
Category of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Holders
77
154
140
680
240
1291
Number of Shares
4,166
507,037
1,254,195
28,451,944
169,757,827
199,975,169
% of capital
0.00%
0.25%
0.63%
14.23%
84.89%
100%
(b) there are 89 shareholders with less than a marketable parcel of ordinary shares.
2. Twenty Largest Shareholders
the names of the twenty largest shareholders by account holding of quoted ordinary shares are listed below:
Shareholder
Buru energy ltd
Deck chair Holdings pl
phoenix properties international pl
richard J and S e Harris
tc investments pte ltd
alan young
robert young
Mahsor Holdings pl
Samuel J c and c M Willis
tilpa pl
carossa Holdings pl
William taylor noM pl
Bayrunner pl
Jakana pl
teston investments pl
Xanadu Wa pl
Dennis M and a n Deniz
Venus Bay pl
Sodell investments pl
christopher and J S Murphy
Total
Holding
18,057,930
11,800,000
9,508,453
8,855,000
8,250,000
6,905,252
4,524,081
4,400,000
4,150,000
3,800,000
3,775,000
2,800,000
2,769,000
2,400,000
2,200,000
2,081,752
1,764,000
1,650,000
1,600,000
1,578,069
%
9.03
5.90
4.75
4.43
4.13
3.45
2.26
2.20
2.08
1.90
1.89
1.40
1.38
1.20
1.10
1.04
0.88
0.83
0.80
0.79
102,868,537
51.44
3. Substantial Shareholders
as at 30 September 2011, the company has received substantial notices from the following shareholders:
Name of Shareholder
Buru energy ltd
Deck chair Holdings pty ltd
No of Shares % of Issued Capital at the
Time of Notice
9.71
5.93
13,749,999
11,800,000
Note: The above details may not reconcile to the information in the Twenty Largest Shareholders list as revised substantial
shareholders notices had not been received by the Company as at 30 September 2011.
4. Voting Rights
at a general meeting of shareholders:
(a) on a show of hands, each person who is a member or sole proxy has one vote.
(b) on a poll, each shareholder is entitled to one vote for each fully paid share.
annual financial report 2011
69
NEW STANDARD
ENERGY LIMITED
ACN 119 323 385
ANNUAL FINANCIAL REPORT
2011
For the Financial Year Ended 30 June 2011
Level 3
33 Richardson Street
WEST PERTH WA 6005
Ph: +61 (8) 9481 7477
Fax: +61 (8) 9486 7670
Web: www.newstandard.com.au
NEW STANDARD ENERGY LIMITED
ACN 119 323 385
ANNUAL FINANCIAL REPORT
For the Financial Year Ended 30 June 2011