2012 Annual Report
The New
Energy Frontier
Chairman’s Report
Directors’ Report
Director’s Declaration
Corporate Governance Statement
Auditor’s Independence Declaration
Independent Audit Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cashflows
Notes to the Consolidated Financial Statements
Shareholder Information
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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 this 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.
Corporate Directory
Board of Directors
Arthur Dixon AM
(Non-Executive Chairman)
Sam Willis (Managing Director)
Mark Hagan (Technical Driector)
Chris Sadler (Non-Executive Director)
Phil Thick (Non-Executive Director)
Joint Company Secretary
Mark Clements
David Hansen-Knarhoi
Place of Business
Level 3, 33 Richardson Street
West Perth WA 6005
Ph: +61 (8) 9481 7477
Fax: + 61 (8) 9486 7670
www.newstandard.com.au
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Legal Advisors
Steinepreis Paganin
Level 4, The Read Buildings
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
About New
Standard Energy
New Standard Energy is an aggressive
hydrocarbon developer with a mandate
to explore for oil and gas. Its exploration
and drilling program is active, well
funded and extensive. The company’s
exploration program is underpinned
and complemented by targeted
corporate activity to take advantage of
opportunities and to build an extensive
pipeline of exploration projects. New
Standard’s board has extensive
technical and commercial experience in
the oil and gas sector.
New Standard Energy Ltd 1
Highlights
Goldwyer Project
Merlinleigh Project
•
Execution of a binding farm-in agreement with
ConocoPhillips (COP) on 30 September 2011 for COP
to spend up to US$119m on the Goldwyer Project to
earn a 75% equity interest
• Detailed technical review completed highlighting
potential for significant conventional and
unconventional hydrocarbon resources
• MB Century Rig #14 secured on long term contract
•
•
A firm 3 well program for Goldwyer Project
A further 8 assignable drilling slots (both firm
and optional)
•
Rig capable of drilling to depths of 4,300m
•
Initial 3 well locations agreed with COP targeting the
postulated wet gas window for the Goldwyer formation
• Nicolay #1 well spudded post year end on
18 August 2012
•
First well in the Phase 1 exploration program
• Data acquisition well incorporating detailed
coring, logging and scientific analysis
•
First well to be drilled in the Kidson sub basin for
in excess of 35 years
• Native title process successfully concluded in early
August 2012 culminating in the granting of exploration
permits EP 481 and EP 482
•
•
•
Facilitates an acceleration of project planning for
on-ground exploration activities
Potential partnering assessment to be conducted
during 2H 2012
Exploration program of 1-2 wells being planned
and considered for mid-2013
Laurel Project
•
•
•
Laurel Project footprint doubled in July 2011 with
addition of Seven Lakes SPA acreage
Lawford #1 deepening and regional aerial gravity
program completed
Regional activity continues to provide significant
encouragement for Laurel play
•
•
Buru Energy Ltd (Buru) and Mitsubishi drilled
numerous successful exploration wells
Aggressive ongoing exploration and appraisal
program
Share Price Movements
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Corporate
• Major capital raising completed in December 2011 raising
$27m at 30c per share
•
$23m placement and $4m shareholder purchase plan
• Numerous institutional investors introduced to the share
register
•
Strengthening of New Standard’s balance sheet
at 30 June 2012
•
Total assets increased to $94.4m at 30 June 2012
($30.1m at 30 June 2011)
• Cash position increased to $24.9m at 30 June 2012
($4.6m at 30 June 2011)
•
Additional capital management initiatives pursued post
year end to realise a further $15.9m following sale of 5
million Buru shares at $3.18 per share
•
Significant changes and additions to the Board and senior
management completed
• Chris Sadler and Phil Thick appointed to the Board as
Non-Executive Directors
•
Ken Aitken (General Manager Operations and
Engineering) and Brett Walker (Exploration Manager)
added to the senior management team
•
Strategic investment made in ASX listed Elixir Petroleum
(Elixir, ASX: EXR) to take 13.7% equity interest via a
placement and underwriting of an entitlement issue
New Standard Energy Ltd 3
Company
Profile
New Standard Energy Limited
(New Standard or the Company)
Over the last twelve months the
Company’s primary focus has been on
the following:
is an ASX listed entity
•
(ASX: 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.
Securing a suitable joint venture
partner for its flagship Goldwyer
Project located in the onshore
Canning Basin in Western Australia,
to fund and progress an exploration
program aimed at assessing the
potential for hydrocarbon resources
in the region
Finalising the Native Title
agreements necessary to begin an
exploration drilling program on the
Merlinleigh acreage located in the
onshore Carnarvon Basin, Western
Australia
Excellent progress has been made on
achieving both of these key targets
during the past year and as a result
New Standard is now well positioned
within the emerging shale gas industry
of Australia to create real value for
its shareholders with exploration and
evaluation activities set to become more
aggressive during 2013 and beyond.
The past year has also seen a
significant strengthening of the
Company’s balance sheet, resulting in
total assets growing more than three-
fold to $94.4m as at 30 June 2012
($30.1m at 30 June 2011). This has
been largely driven by a substantial
increase in both cash on hand to
$24.9m ($4.6m at 30 June 2011) as well
as the value of our equity investments
in Buru and Elixir increasing to $48.6m
($9.8m at 30 June 2011).
In line with this growth, staff numbers
at New Standard have expanded
markedly to cater for the emergence of
multiple projects within the portfolio and
to enhance the Company’s operating
capacity. This is reflected in the higher
staffing and administration costs
incurred during the 2012 financial year
in order to meet the additional staffing
levels required to cater for a significant
period of growth. This trend, along with
general levels of expenditure across
the board, is likely to continue as the
Company’s activities increase over the
coming years. New Standard is also
operating in a very remote environment
and the Phase 1 activity with COP is
somewhat of a “voyage of discovery” to
uncover the potential of the Goldwyer
Project. As a result the expectation is
for a significant increase in the levels
of expenditure as exploration activity
unfolds over the coming months and
years.
New Standard Energy Ltd 5
Oil and Gas Assets
The following table provides an overview of the Company’s exploration portfolio holdings as at 30 June 2012:
Australian Oil and
Gas Exploration
Type
Canning Basin
Interest Operator
Joint Venture Partner
EP 417
Exploration permit
50% New Standard Onshore
Pty Ltd
Buru Energy Limited,
Green Rock Energy Limited
STP-SPA-0017
Special Prospecting
60% New Standard Onshore
Green Rock Energy Limited
EP 443
EP 450
EP 451
EP 456
Application
Area 1/09-0
Application
Area 2/09-0
Application
Area 5/09-0
Carnarvon Basin
EP 481
EP 482
Pty Ltd
Exploration permit
25% New Standard Onshore
Pty Ltd
Exploration permit
25% New Standard Onshore
Pty Ltd
Exploration permit
25% New Standard Onshore
Pty Ltd
Exploration permit
25% New Standard Onshore
Pty Ltd
Application area
100% New Standard Onshore
Pty Ltd
Application area
100% New Standard Onshore
Pty Ltd
Application area
100% New Standard Onshore
Pty Ltd
Exploration permit
100% New Standard Onshore
Pty Ltd
Exploration permit
100% New Standard Onshore
Pty Ltd
ConocoPhillips
(Canning Basin) Pty Ltd
ConocoPhillips
(Canning Basin) Pty Ltd
ConocoPhillips
(Canning Basin) Pty Ltd
ConocoPhillips
(Canning Basin) Pty Ltd
-
-
-
-
-
US Oil and Gas
Exploration
Type
Colorado County Project
Interest Operator
Joint Venture Partner
Brasher #1
Working interest in mineral rights
32.5% AKG Energy LLC
Burleson Energy Limited,
AKG Energy LLC and
minority interests
Heintschel #1
Working interest in mineral rights
32.5% AKG Energy LLC
Heintschel #2
Working interest in mineral rights
32.5% AKG Energy LLC
D Truchard #1
Working interest in mineral rights
32.5% AKG Energy LLC
Joann #1
Working interest in mineral rights
33.68% AKG Energy LLC
As above
As above
As above
As above
Moeller Project
Moeller #1
Working interest in mineral rights
38.5% AKG Energy LLC
Burleson Energy Limited,
AKG Energy LLC and
minority interests
Wharton County
Project
Working interest in mineral rights
36% AKG Energy LLC
As above
6 Annual Report 2012
Australian Shale Gas and Tight Gas Portfolio
New Standard Energy is an emerging oil and gas explorer, with a core focus on Western Australian, onshore, unconventional
hydrocarbon projects.
With a gross net acreage of 13.82 million acres (59,400 km2) across Western Australia, New Standard is strategically positioned
within the rapidly expanding shale gas industry in Australia. In September 2011 New Standard secured top tier partner
ConocoPhillips to fund and progress the company’s flagship Goldwyer Project, located in the onshore Canning Basin.
New Standard retains the following interests in its onshore projects in Western Australia:
–
–
–
a 25% operated interest in the Goldwyer Project in the Canning Basin targeting a liquids prone shale resource;
100% ownership of its emerging Merlinleigh Project (onshore Carnarvon Basin) which is prospective for conventional and
unconventional hydrocarbon resources; and
operated interests of between 50% and 60% in its Laurel Project within the Canning Basin targeting an emerging regional
resource play
The Company’s early position in this rapidly emerging sector has positioned it to assess and participate in strategic exploration
and corporate activity. Large project equities of between 25% and 100% provide New Standard and its shareholders with both
significant exposure to value creation and corporate/project flexibility to progress projects along the value creation curve.
New Standard’s board and senior management has been significantly expanded to reflect the growth and development of
its exploration program to ensure it possesses significant technical skills, expertise and success in hydrocarbon exploration,
project development and corporate strategy. The ability to operate the early phases of exploration has been a key driver of this
staff expansion and provides New Standard with a human resource base and skillset to help achieve the company’s corporate
objectives.
WA Gas Market: An Overview
Western Australia is currently well positioned to extract value from the attractive exploration environment for shale and tight gas
opportunities within the state. WA has some of the most favourable onshore outlooks across the country, with the Canning Basin
potentially holding one of the largest hydrocarbon resources in the World.
As the expected worldwide demand for gas increases, petroleum companies are continuing to explore undeveloped onshore
prospects (including Western Australia) with the aim of tapping major energy resources. Looking locally, there has been an
increasing, and sustained, upward pressure on WA gas prices. Limited existing supply in the WA energy market has led to an
opening for the development of shale and tight gas opportunities. A major contributing factor in this growing pressure has been
spurred by the forecast decline of the North-West Shelf domestic gas supply and the increasing costs of incremental supply
especially within the offshore fields of Western Australia.
With domestic gas prices likely to remain high, a clear opportunity for shale gas and tight gas resources is emerging in Western
Australia, with New Standard at the forefront of unlocking such value. With a substantial acreage position ahead of the growing
curve New Standard is well positioned for the rise in the WA energy market.
Growing infrastructure in the Kimberley region is a key contributing factor in the shale development, with multiple LNG
developments and large players positioning to extract maximum value from the emerging market.
Western Australia aside, natural gas is also poised to play a critical role in the Australian Government’s planning for the national
energy sector in the next decade. The Government’s draft Energy White Paper on reform outlines how gas could account for
approximately 44 per cent of Australia’s electricity supply by 2050 – nearly triple the 15 per cent it accounted for in 2009-10.
New Standard Energy Ltd 7
Goldwyer Project: Canning Basin, Western Australia
New Standard 25% operated interest
The Goldwyer Project covers in excess of 48,000km2 of prospective acreage in the Canning Basin 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 all work requirements
related to the permits and reached a key company milestone signing oil and gas super major ConocoPhillips as joint venture
partner for the project.
Following months of planning and preparation, Phase 1 of the Goldwyer Project reached a major execution phase in August 2012
as New Standard commenced drilling at the first exploration well location Nicolay #1. Nicolay #1 is the first of three vertical wells
planned to target the potential wet gas window of the Goldwyer formation within the Project acreage.
The Goldwyer Project participants (New Standard and COP) have jointly identified and agreed the three drilling locations for
the Phase 1 exploration program with the campaign focussed on data acquisition to provide initial validation of the potential
for a substantial resource play across the Goldwyer Project acreage. Data will be acquired through a combination of full coring
throughout the Goldwyer formation, sophisticated mud-logging and a comprehensive suite of electric wireline logs.
Following data acquisition, a detailed set of scientific studies and analysis will be undertaken in specialised laboratories to fully
assess the Goldwyer formation’s prospectivity in addition to reservoir evaluation to be undertaken on site to gather detailed
information on reservoir pressures and fracture potential of the formations of interest. This information will assist to identify which
section(s) within the Goldwyer formation has the most prospective characteristics and help refine the target zones as a result. It will
also contribute valuable information to facilitate the early design of Phase 2 work should a decision be made to proceed.
New Standard’s large acreage position in a strong and growing energy market
8 Annual Report 2012
Large contiguous acreage position with the potential for a liquids rich wet gas window of substantial size
Three initial drilling locations targeting the potential liquids rich gas zones at varying depths across three separate permits
New Standard Energy Ltd 9
The information being acquired through the Phase 1 drilling program and subsequent scientific analyses and reservoir evaluation
is aimed at obtaining a comprehensive, modern data set in order to more fully appraise the potential for the presence of a regional
hydrocarbon resource of significant scale and prospectivity. In particular, the data being sought is aiming to establish the following
attributes that are important for successful shale plays:
• Quality of the source rock (TOC, Kerogen type, Maturity, Gas to Condensate Ratio, Rock Evaluation)
• Quality of the reservoir (Facies, GRI Porosity, Saturation, Permeability)
• Containment (Seal, Faults, Burial History, Residence Time)
•
Brittle and breakable rock (Mineralogy, Contiguous Thickness, Depth, Pressure, Stress Regime)
Establishment of encouraging results for each of these aspects during Phase 1 will help provide the basis for making a decision to
proceed to Phase 2 of the farm-in program.
In summary, the Goldwyer Joint Venture has commenced the first modern exploration program for in excess of 35 years in the remote
parts of the southern Canning Basin. The commencement of drilling at Nicolay #1 was a landmark event for New Standard and its
shareholders as the company commenced the process of systematically exploring and evaluating a potential world class hydrocarbon
resource in conjunction with joint venture partner ConocoPhillips - a global leader in the unconventional hydrocarbon sector.
Merlinleigh Project: Carnarvon Basin, Western Australia
New Standard 100% operated interest
The Merlinleigh Project is based around the 5,500km2 (1.36 million acres) held by the Company in the onshore Carnarvon Basin.
New Standard owns a 100% operated interest in the project which is presently comprised of two exploration permits; EP481 and
EP482. A significant milestone for the project’s progression came in August 2012 with the signing and finalisation of Native Title
agreements and State Deeds paving the way for the application areas to be converted to exploration permits. The exploration
permits are strategically located adjacent to the Dampier to Bunbury Natural Gas Pipeline which supplies gas to a large number of
industrial, mining and domestic customers in Western Australia.
The project lies within the Merlinleigh sub-basin of the greater Carnarvon Basin and comprises the majority of the mature
geological settings within the proven working petroleum system. The Merlinleigh Project has attractive potential for unconventional
hydrocarbons as evidenced by the encouraging presence of thick, organic rich source rocks with excellent TOC measurements,
elevated hydrocarbon readings on historical logs and evidence of gas bleeding from various associated cores.
During the second half of the year New Standard’s technical team undertook a significant amount of in-house work that was
primarily focussed on the following:
•
•
•
•
Further assessing the unconventional potential of the numerous shales and source rocks within the project area;
Refining the potential target areas of interest for the unconventional resource plays within the large 1.36 million acre holding to
a primary zone of interest covering 1,100km2 zone;
Refining the conventional targets and enhancing their prospectivity based on seismic reprocessing and further analysis of
sand quality and hydrocarbon composition apparent from previous wells; and
Ensuring potential drilling prospects are ranked on the basis they provide attractive targets for both unconventional and
conventional tests.
The work completed to date has confirmed the presence of a working petroleum system in the Merlinleigh Basin which is
supported by evidence from the Kennedy Range #1 well drilled as a basin centre test in 1967. KR #1 included a coring program
and further analysis of the well completion data, logs and cores taken from this well confirms the presence of thick, organic rich
shales with TOC ranges of between 2-4% over significant thicknesses of up to 300m.
The immediate future plans for the Merlinleigh include undertaking a thorough review of potential partnering alternatives during 2H
of 2012 whilst accelerating planning and preparations for an exploration program with the aim of being able to commence such
activity mid 2013 should a decision be made to do so.
The three Phase 1 vertical well locations and the target zones for the Goldwyer formation
Top Wooramel
Depth Map for the
Merlinleigh Project
New Standard Energy Ltd 11
Laurel Project: Canning Basin, Western Australia
New Standard 50% - 60% operated interests
The Laurel Project is located in the northern Canning Basin in the Fitzroy Trough and comprises a 50% operated interest in EP 417
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 deepened the Lawford #1 exploration well on EP 417 during the year and completed an aerial gravity survey post
year end pursuant to the work commitments forming part of the SPA application over the Seven Lakes SPA area immediately
adjacent to EP 417. This gravity survey also encompassed the EP 417 acreage in an effort to enhance the regional database and
facilitate more detailed reviews of the prospectivity of the permits in light of recent exploration successes in the region.
From a regional perspective, the Laurel play continues to be progressed through additional exploration and appraisal drilling by
Buru and its joint venture partner Mitsubishi to the north-west of New Standard’s Laurel Project. Any ongoing success from this
continued activity should provide solid ongoing encouragement regarding the potential of the emerging Laurel play across the
region.
Conventional Onshore United States Portfolio
New Standard 32.5% - 38% working interest
New Standard continues to receive monthly income from its equity stake in the Colorado County project in onshore Texas. The
project is self-sufficient in terms of covering associated holding costs from the four producing wells in Joann #1, Heintschel #1,
Heintschel #2 and D. Truchard #1 – all of which are continuing to produce modest levels of income.
New Standard elected not to participate in the horizontal well currently being drilled by the joint venture partners in the Heintschel
field given the US assets no longer represent a core portfolio holding in light of New Standard’s clear focus on the unconventional
resource projects in the Australian portfolio.
The horizontal well currently being drilled by New Standard’s joint venture partners is the first attempt to enhance the potential
economics of the Heintschel field using horizontal drilling and a multi-stage fracture stimulation program. A successful outcome
from this horizontal well should help enhance the potential economics of the field and therefore the value of the project overall.
New Standard will continue to assess its alternatives and potential ability to crystallise value during H2, 2012 as results from this
current drilling and testing program become evident.
Equity Investments
Buru Energy Limited
New Standard’s strategic stake in Buru was secured following the Acacia Fairway transaction in August 2009. This transaction
has resulted in New Standard owning a 6.4% equity investment (15 million shares) in Buru at 30 June 2012. Post year end New
Standard sold 5 million shares at $3.18 per share and retains a further 10 million shares.
Elixir Petroleum
New Standard’s recent investment into Elixir Petroleum for a 13.7% corporate equity stake in the company offers exposure to a
100% owned Moselle Project in the Paris Basin in France. The Moselle Project spans an area of 5,360km² and is the largest single
exploration block in onshore France, and has the potential for both conventional and unconventional exploration opportunities.
This opportunistic investment positively met assessment criteria, project evaluation and the long term strategy goals for New
Standard. The investment has been made more attractive by a minimal ongoing financial and management commitment.
Summary
Corporately New Standard remains well positioned in a rapidly emerging energy sector in Australia and is in a strong financial
position with large equity positions in technically attractive projects. As a result, 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.
12 Annual Report 2012
The Laurel Play will continue to emerge as an exciting regional play on the back of Buru/Mitsubishi exploration
The Laurel Project’s Gravity Survey area covering 100% of EP 417 and the Seven Lakes SPA
New Standard Energy Ltd 13
Chairman’s Report
Dear New Standard Shareholders,
I am delighted to present this year’s
annual report to you after completing
my first full year as non-executive
Chairman.
During the past year the board
and shareholders of New Standard
have participated in a tremendous
transformation, and we are beginning
to realise the benefits of that carefully
planned growth and progress. Your
company has experienced strong
growth in market capitalisation together
with significant expansion of staff
numbers in order to meet the challenges
of developing New Standard as an
emerging onshore operator in the oil
and gas sector whilst still diligently
pursuing new opportunities. During this
period the balance sheet and access
to capital have also been strengthened
significantly.
The business is continuing to evolve
with a portfolio of assets centered on the
emerging unconventional hydrocarbon
sector – specifically shale gas and tight
gas. New Standard has amassed a
very large acreage position in both the
onshore Canning and Carnarvon basins
in Western Australia.
The key strategic drivers behind this
portfolio have been the technical
prospectivity of the assets alongside
the attractive commercial backdrop of
the Western Australian energy markets,
both domestic and export.
The flagship Goldwyer Project has
been a key driver of the past twelve
months’ growth following the successful
execution of a binding farm-in
agreement with ConocoPhillips in
September 2011. This agreement has
paved the way for the planning and
commencement of the agreed Phase 1
exploration activity which includes the
following activity:
• drilling, coring and logging of three
vertical wells;
• detailed scientific core analysis of
the cores from each well; and
•
formation evaluation tests (if
warranted)
The aim of the Phase 1 work program
is to obtain a detailed, modern data
set to allow us to assess the technical
prospectivity of the Goldwyer formation.
In particular, we believe the information
being sought will provide sufficient
encouragement for ConocoPhillips to
commit to Phase 2 of the program which
will focus more on the ability to extract
hydrocarbons.
The combination of acreage size,
technical prospectivity and quality
of partner provide New Standard
shareholders with exposure to a unique
opportunity in the Goldwyer Project.
Whilst there are still large inherent risks
at this early stage of exploration, the
opportunity is tremendously exciting.
While much attention has been focused
on the Goldwyer Project, New Standard
has also been working hard to progress
the Merlinleigh Project along the value
creation pathway.
The technical analysis conducted
by New Standard indicates that the
Merlinleigh has the potential to host a
significant amount of hydrocarbons from
both a conventional and unconventional
perspective. This combined with the
ideal location, immediately adjacent
to Western Australia’s major gas
infrastructure (the Dampier to Bunbury
Natural Gas Pipeline), creates a
compelling opportunity for New
Standard to pursue. The Merlinleigh
presents an attractive opportunity
to create a commercial project in a
relatively short period of time should
early stage exploration efforts prove
successful.
14 Annual Report 2012
In this regard the Merlinleigh Project
took a large step forward with the recent
granting of exploration permits EP 481
and EP 482, following the successful
negotiation and execution of native title
agreements and State Deeds with the
relevant parties. Our ability to establish
a strong relationship with the Gnulli
claim group and traditional owners in
the region was an important component
of the permit conversion and allowed
us to establish a new precedent
in Western Australia which was
particularly pleasing. We appreciate the
understanding and co-operation of the
traditional owners and look forward to
continuing that relationship.
New Standard has been liaising with
stakeholders across all of its projects to
ensure they are aware of the activities
we are conducting. This communication
and consultation is something on
which we remain particularly focused
and we continue to commit substantial
resources towards these efforts. As
part of this process New Standard
was instrumental in developing, and is
a founding signatory to, the Western
Australian Code of Practice developed
by the onshore working group in
conjunction with APPEA.
Protecting the health and safety of
our people, our stakeholders and the
surrounding environment is at the
forefront of everything we do, and our
commitment to the Code of Practice is
representative of that principle.
In relation to our staff I would like to
pay particular tribute to the dedication,
enthusiasm and professionalism of
our Executive Directors as well as the
ongoing efforts of all our staff. We are
fortunate to have a wonderful team
of people that is working very hard
to deliver results above and beyond
expectations and for that I am sincerely
grateful to the entire team.
The board has been expanded in the
past year to ensure the company has
directors with the right skills and vision
to create value for shareholders as we
experience the significant challenges
and opportunities inherent with being
a growing company. The appointment
of Phil Thick and Chris Sadler to the
New Standard board provides valuable
additional skills and complements the
technical and corporate expertise within
the New Standard board and I thank
them for their contributions. Ian Paton
also left us during the year and I would
like to acknowledge his contribution as
a non-executive Director and Chairman
over past years.
There is little doubt that New Standard
shareholders are faced with some
exciting times ahead. Despite
the numerous challenges that will
undoubtedly arise in the coming
months, New Standard is attractively
positioned with a three well program
in the Goldwyer Project currently
underway, the ongoing emergence
of the Merlinleigh Project from within
the portfolio and the benefit of a
strengthening capital base from which
to pursue corporate and exploration
activity.
We appreciate the ongoing support
of our shareholders and all our
stakeholders and look forward to the
coming twelve months which will see the
unfolding of the next chapter in the New
Standard story.
Yours Sincerely,
Arthur Dixon AM
Chairman
New Standard Energy Ltd 15
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 2012.
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.
Mr Arthur Dixon AM
Mr Sam Willis
Dr G. Mark Hagan
Non-Executive Chairman
(Appointed 1 May 2011)
Managing Director
(Appointed 28 July 2008)
Technical Director
(Appointed 28 July 2008)
Age
70
Qualifications
B.E.
Experience
Arthur Dixon graduated from
Melbourne University as a Chemical
Engineer. Arthur is a 40 year oil and
gas 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
86,000 fully paid ordinary shares
450,000 options exercisable at $0.385
on or before 20 December 2014
Age
40
Qualifications
B.Com
Experience
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 February, 2011)
Relevant interests in shares and
options
11,130,762 fully paid ordinary shares
2,500,000 options exercisable at $0.385
on or before 20 December 2014
300,000 options exercisable at $0.430
on or before 20 December 2014
1,500,000 options exercisable at $0.430
on or before 20 December 2014
Age
66
Qualifications
B.Sc, Ph.D
Experience
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
4,088,893 fully paid ordinary shares
1,750,000 options exercisable at $0.385
on or before 20 December 2014
1,000,000 options exercisable at $0.430
on or before 20 December 2014
16 Annual Report 2012
Mr Chris Sadler
Mr Phil Thick
Mr David Hansen-Knarhoi
Non-Executive Director
(Appointed 20 April 2012)
Non-Executive Director
(Appointed 11 July 2012)
Age
50
Qualifications
BCA, MBA
Experience
Chris has considerable experience in
both the corporate finance and energy
sectors, through his role on the Eastern
Star Gas board prior to the takeover
by Santos, and involvement in various
mergers and acquisitions as a
non-executive director at Gloucester
Coal, Mitre 10 and Austock.
With approximately 20 years’
experience in investment banking,
working for Deutsche Bank, JP
Morgan, SG Warburg and Salomon
Brothers in Melbourne, London,
New York and Sydney, Chris brings
extensive experience in mergers and
acquisitions, corporate restructurings,
equity and debt financings.
Current and Former Directorships in
listed entities in the last 3 years
Gloucester Coal Limited (ASX: GCL)
(resigned June, 2009)
AMA Group Limited (ASX: AMA)
(resigned November, 2009)
Eastern Star Gas Limited (ASX: ESG)
(resigned November, 2011)
Austock Group Limited (ASX: ACK)
(resigned February, 2012)
Relevant interests in shares and
options
100,000 fully paid ordinary shares
Age
53
Qualifications
B.Eng. (Hons) FAICD
Experience
Phil has extensive experience in the
downstream oil sector and particularly
in the areas of logistics, terminals and
transport through his experience at
Coogee Chemicals and Shell. Phil also
brings a valuable understanding of the
WA energy market as a result of his
most recent role as Managing Director
at Coogee Chemicals – a company
that remains a significant end user of
energy in the WA market.
Phil is a Civil Engineer from the
University of Western Australia and
a Fellow of the Australian Institute of
Company Directors. He commenced
his career in Perth with Alcoa
before joining Shell in 1986. A 20
year career with Shell saw stints in
London and in most cities around
Australia, culminating in 8 years in
Melbourne, where Phil was on the
Board of Shell Australia Limited.
He was also Chairman of Shell
Fiji Limited and a Director of the
Australian Institute of Petroleum
Current and Former Directorships in
listed entities in the last 3 years
Syngas Limited (ASX: SYS) (resigned
June, 2010)
Argosy Minerals Limited (ASX: AGY)
MHM Metals Limited (ASX: MHM)
Relevant interests in shares and
options
100,000 fully paid ordinary shares
Chief Financial Officer and Joint
Company Secretary
(Appointed 7 September 2011)
Experience
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.
Mr Mark Clements
Joint Company Secretary (Appointed
28 July 2008)
Experience
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.
New Standard Energy Ltd 17
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. In addition, resources were applied to reviewing and securing exploration permits for the
Merlinleigh Project in the onshore Carnarvon Basin and maintaining investments in onshore development in the Texas Gulf region,
Southern USA.
Operating Results
The consolidated entity’s net profit attributable to members of New Standard for the year ended 30 June 2012 after applicable
income tax was $205,129 (2011: loss of $79,081).
A summary of consolidated revenues and results for the year by reportable segment is set out below:
Australia – oil and gas exploration
United States – oil and gas exploration
Total segment revenue/result
Segment
revenues
30 June 2012
Segments
results
30 June 2012
-
-
-
-
-
-
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 oil and gas exploration permits. The New Standard group is subject to
environmental regulations under relevant Australian and Western Australian legislation in relation to its oil and gas exploration
activities, particularly with the Western Australian Department of Mines and Petroleum and the Western Australian Department of
Environment and Conservation. The Directors actively monitor compliance with the regulations and as the date of this report, the
Directors are not aware of any material breaches in respect of the regulations.
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:
Number of
Shares under Option
500,000
500,000
6,250,000
3,750,000
300,000
300,000
300,000
300,000
Date
of Issue
29/03/2011
29/03/2011
20/12/2011
20/12/2011
24/04/2012
24/04/2012
09/05/2012
09/05/2012
Exercise
Price of Options
Expiry
Date of Options
$0.225
$0.275
$0.385
$0.430
$0.810
$0.905
$0.535
$0.600
30/06/2013
30/06/2013
20/12/2014
20/12/2014
24/04/2015
24/04/2015
09/05/2015
09/05/2015
Item
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
18 Annual Report 2012
During the year and up to the date of the report 7,250,000 unlisted $0.225 options and 7,250,000 unlisted $0.275 options were
exercised prior to expiry.
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 16 July 2012, the Company announced the appointment of Phil Thick as a Non-Executive Director of New Standard Energy Ltd.
Mr Thick’s appointment completed New Standard’s board expansion and skills enhancement program, and provides substantial
downstream and development experience to the company at an important time in its corporate history.
On 16 July 2012, the Company also announced the appointment of Ken Aitken as General Manager of Operations and
Engineering for the Company. Mr Aitken has primary responsibility as Project Manager for the Goldwyer operations and will also
assume responsibility for the engineering and operations planning for the emerging Merlinleigh Project.
On 2 August 2012 New Standard sold 5 million Buru Energy Limited shares at a price of $3.18c per share to realise cash proceeds
of $15.9 million before costs. The share sale proceeds increased the Company’s cash position to in excess of $40 million and
provides a more stable and balanced mix of cash and investments on the balance sheet. The transaction is tax effective and no
taxation liability is expected to arise given the current carried forward losses available to the Company.
On 13 August 2012, the Company announced it had successfully converted its Merlinleigh Special Prospecting Authority acreage
to granted exploration permits after securing native title agreement with the Gnulli Native Title Claim Group (Gnulli) and executing
all necessary agreements and State Deeds with both the Gnulli and Western Australian Department of Mines and Petroleum
(DMP). The execution of these documents triggered an offer for the grant of two exploration permits from the DMP with New
Standard formally accepted via its wholly owned subsidiary New Standard Onshore Pty Ltd. The granting of the exploration
permits paves the way for access to the Merlinleigh Project acreage and provides the ability for on ground exploration activity to
commence during 2013.
On 20 August 2012, the Company announced that its Nicolay #1 well was spudded on Saturday 18th August 2012, commencing
the first of a three well drilling program on the Goldwyer Project in the Canning Basin. With a target depth of approximately 3,450
metres, the primary objective of the vertical Nicolay #1 well is to gather a comprehensive, modern data set over a large section
of the Goldwyer formation (primary target) via a detailed program consisting of mud logging, full coring and electric wireline logs
to be taken over a significant thickness of prospective Goldwyer formation. Information regarding the secondary targets of the
overlying Bongabinni and Nita formations will also be gathered. Following data acquisition, a detailed set of scientific studies and
analyses will be undertaken to fully assess the Goldwyer formation’s prospectivity in addition to targeted reservoir evaluation to
be undertaken on site to gather detailed information on reservoir pressures and fracture potential of the Goldwyer formation. This
information will assist in identifying which section(s) within the Goldwyer formation has the most prospective characteristics and
help refine and delineate potential future target zones as a result.
On 7 September 2012, S&P Dow Jones Indices announced the changes in the S&P/ASX indices, effective after the close of trading
on 21 September 2012, as a result of the September quarterly review. At this rebalance, the S&P/ASX 300 index hierarchy was
reviewed and New Standard Energy Ltd was added to this index.
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, 9 Board meetings were held. There were 3 remuneration committee
meetings and 2 audit committee meetings. There were no nomination committee meetings.
Directors
Held
Attended
Held
Attended
Held
Attended
Board of Directors
Audit Committee
Remuneration Committee
Mr A Dixon, AM
Mr S Willis
Dr M Hagan
Mr I Paton
Mr C Sadler
Mr P Thick
9
9
9
8
1
-
9
9
9
8
1
-
2
2
1
2
-
-
2
2
1
1
-
-
3
-
-
3
-
-
3
-
-
2
-
-
New Standard Energy Ltd 19
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 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.
During the year no fees were paid or payable to the auditor or related entity for non-audit services.
Auditor’s Independence Declaration
A copy of the auditor’s independences declaration under s.307C of the Corporation Act 2001 in relation to the audit of the full year
is included on page 42.
Remuneration Report - Audited
This remuneration report sets out the remuneration arrangements for New Standard Energy Limited (New Standard) for the year
ended 30 June 2012. This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the
Corporations Act 2001.
Details of key management personnel
The remuneration report details the remuneration arrangements for key management personnel (‘KMPs’) who are defined as those
persons having authority and responsibility for planning, directing and controlling the major activities of the Group, and comprise
the Directors (whether executive or otherwise) of the Company and other executives. Details of KMP are set out below:
Name
Executives
S Willis
M Hagan
D Hansen-Knarhoi
B Walker
M Gracey
P Achour
Non-executive
A Dixon AM
C Sadler
I Paton (i)
M Clements (ii)
Position
Appointed during the period
Managing Director
Technical Director
Chief Financial Officer and Joint Company Secretary
Exploration Manager
Commercial and Legal Manager
Health, Safety and Environment Manager
Chairman
Director
Director
Joint Company Secretary
7 September 2011
7 May 2012
3 January 2012
20 April 2012
(i) Mr Paton resigned as non-executive director on 7 May, 2012
(ii) Mr Clements ceased to be KMP on 7 September, 2011.
20 Annual Report 2012
Changes since the end of the reporting period
Mr Phil Thick was appointed to the board as a non-executive director on 11 July 2012.
Remuneration Committee
New Standard has adopted a Remuneration Committee as a sub-committee of the Board. The Remuneration Committee is
responsible for oversight of the remuneration policy and system and reporting of such to the Board. It is also responsible for
evaluating the performance of the Executive Directors and monitoring performance of the executive management team. The
Board, upon recommendation of the Remuneration Committee, determines the remuneration of the Executive Directors and
approves the remuneration of the executive management team.
The objective of the Remuneration Committee is to ensure that remuneration policies and systems attract and retain executives
and directors who will create value for shareholders. As part of this process the Remuneration Committee may seek advice
from independent remuneration consultants. During the 2012 financial year the Remuneration Committee made use of available
consultants (see below for details).
The Corporate Governance Statement provides further information on the role of this committee.
Use of Remuneration Consultants
To ensure the remuneration committee is fully informed when making remuneration decisions, it may seek external remuneration
advice. Any such advice is usually from independent sources with some expertise in their relevant field and that are sufficiently
independent to allow independent and un-biased advice to be provided to the Remuneration Committee.
During the 2012 financial year the Remuneration Committee engaged the services of the following consultants:
•
PJ Kinder Consulting Pty Ltd was engaged to provide advice in relation to executive director remuneration packages and
non-executive director and Board committee fees. Under the terms of the engagement, PJ Kinder Consulting Pty Ltd provided
remuneration recommendations and was paid $11,500 for these services.
During the year the Company experienced a large amount of growth in terms of both size and staffing structure. As a result the
Executive Management team and the Board formed the view that the incumbent remuneration structure that was in place during
the 2012 Financial Year had been outgrown and a review of the remuneration policy and structure was warranted to ensure the
Company was in line with best practice to assist secure and retain quality staff.
As a result the Godfrey Remuneration Group Pty Ltd (Godfrey) were engaged post 30 June 2012 to review the structure of the
Company’s remuneration components, advise on the policy positioning objectives and to provide recommendations in respect of
executive long-term incentive plan design. In addition Godfrey provided their 2012 resources KMP remuneration guide. Under the
terms of the engagement, Godfrey was paid $55,715 for these services.
In order to ensure the Remuneration Committee is provided with advice, and as required, remuneration recommendations,
free from undue influence by members of the KMP to whom the recommendations may relate, the engagement of the above
consultants by the remuneration committee was based on an agreed set of protocols that would be followed by each external
remuneration consultant, members of the remuneration committee and members of KMP. Those protocols included:
•
•
•
external remuneration consultants were engaged by, and reported directly to, the Remuneration Committee. The agreement
for the provision of remuneration consulting services was executed by a member of the Remuneration Committee under
delegated authority on behalf of the board.
reports containing the remuneration recommendations are provided directly to the Remuneration Committee; and
external remuneration consultants were permitted to speak to management throughout the engagement to understand
company processes, practices and other business issues and obtain management perspectives. However, the external
remuneration consultants were prohibited from providing advice or recommendations to KMP before the advice or
recommendations was given to members of the Remuneration Committee and not in any case unless the external
remuneration consultants had approval to do so from members of the Remuneration Committee.
As a consequence, the board is satisfied that the recommendations were made free from undue influence from any members of
the KMP.
Voting and comments made at the Company’s 2011 Annual General Meeting
New Standard received less than 2% of ‘no’ votes on its Remuneration Report for the 2011 financial year. The Company did not
receive any specific feedback at the AGM or throughout the year on its remuneration practices, however, as outlined above an
independent review has been commissioned to ensure that as the Company grows and experiences increased staffing levels to
manage the scale of it.
New Standard Energy Ltd 21
Remuneration Policy
New Standard is committed to the close alignment of remuneration to shareholder return, particularly that of the executives. To
this end, the Company’s remuneration system is designed to attract, motivate and retain people by identifying and rewarding high
performers and recognising their contribution to the continued growth and success of the Company.
Key objectives of the Company’s remuneration policy are to ensure that remuneration practices:
•
•
•
•
•
facilitate the achievement of the Company’s objectives;
provide strong linkage between executive incentive rewards and creation of value for shareholders;
attract, retain and motivate employees of the required capabilities;
are simple to understand and implement, openly communicated and are equitable across the Company; and
comply with applicable legal requirements and appropriate standards of governance.
Developments for 2012 Financial Year – A Revised Remuneration Structure on its Way for 2013
The Company has undergone considerable corporate and commercial change during the financial year and this has been
reflected in the changes to the Company’s remuneration policy and practices.
In conjunction with remuneration specialist Godfrey the Company commenced a major review of the structure of the Company’s
remuneration components during the 2012 financial year. This review is ongoing and yet to be finalised but Godfrey’s advice has
provided guidance and assisted to design a revised remuneration system to ensure the continued ability of the Company to attract
and retain people of the required capability. As a result the Company is currently in the process of finalising the development and
implementation of a revised remuneration policy and structure that it intends to implement for the 2013 financial year.
Whilst still incomplete it is currently envisaged that this revised remuneration policy and structure will reflect the following broad
remuneration practices to ensure Policy target remuneration package positioning:
•
•
•
A performance based remuneration system;
A Short-Term Incentive Plan (“STIP”) with performance criteria assigned for both individual and Company performance; and
A Long-Term Incentive Plan (“LTIP”) utilising Quantum Rights consisting of Performance Rights with performance hurdles
linked to absolute total shareholder return (“TSR”) and Retention Rights linked to tenure.
Key Principles of Executive Remuneration
Remuneration comprises fixed remuneration, and variable (or 'at-risk') remuneration, which is determined by individual and
Company performance. The Company targets total fixed remuneration (“TFR”) at the 50th market percentile and total remuneration
package (“TRP”), including 'at target' variable remuneration, at the 75th market percentile, for the executive management team. As
a consequence, the Company’s executives have a higher proportion of remuneration at risk than industry averages.
Questions and answers about intended executive remuneration under the remuneration structure being revised are set out below,
noting these are indicative only and may be subject to change as the revised policy has not been finalised at the date of this report:
Remuneration mix
What is the balance
between fixed and ‘at risk’
remuneration?
The mix of fixed and at-risk remuneration varies depending on the organisational level of executives,
and also depends on the performance of the Company and individual executives. More senior
positions have a greater proportion of their remuneration at-risk.
If overall Company performance fails to meet a minimum standard, no executives will be entitled
to receive any at-risk remuneration. For all executives, it is therefore possible that no at-risk
remuneration will be earned and that fixed remuneration will represent 100 per cent of total
remuneration.
TFR includes a base salary plus superannuation. Allowances and other benefits may be provided
and are as agreed, including leased motor vehicles and additional superannuation, provided that no
extra cost is incurred by the Company.
In order to attract and retain people of the requisite capability to key roles located in regional
positions, an additional market allowance or other similar tax effective structure may be paid. Any
such market allowance, while fixed in nature, would not generally form part of TFR for the purposes
of calculating at-risk remuneration entitlements.
TFR is reviewed annually. Any adjustments to the TFR for the Executive Directors must be
approved by the Board after recommendation by the Remuneration Committee. The Executive
Directors determine the TFR of other senior executives within the guidelines of the remuneration
policy. The Company seeks to position the fixed remuneration at the 50th percentile of salaries for
comparable companies within the energy industry, utilising datasets and specific advice provided by
independent remuneration consultants.
Fixed remuneration
What is included in fixed
remuneration?
When and how is fixed
remuneration reviewed?
22 Annual Report 2012
STIP
What is the STI Plan?
Why does the Board
consider an STI is
appropriate?
Does the STI take into
account different levels of
performance compared to
objectives?
The STI is the cash component of the at-risk remuneration, payable based on a mix of Company and
individual annual performance standards.
At-risk remuneration strengthens the link between pay and performance. The purpose of these
programs is to rewards executives for annual performance relative to expectations of their role
accountabilities, required behaviours and KPI’s as well as the delivery of annual business plans. A
reward structure that provides at-risk remuneration is also necessary as a competitive remuneration
package in the Australian and global marketplace for executives.
The size of any payment is linked to the extent of achievement. Levels of performance required for
target levels of STI should be set such that they are challenging but achievable.
Required performance levels for each performance criteria are set at three levels being:
•
•
•
Threshold - A performance level that is below optimal but nevertheless acceptable. It is the
minimum for which a small STI award would be payable. The STI Plan is designed such that
there is an 80% probability the executive will achieve or exceed this level of achievement.
Target - A performance level that represents a challenging but achievable level of performance.
The STI Plan is designed such that there is a 50% to 60% probability the executive will achieve
or exceed this level of achievement.
Stretch - A performance level that is clearly at the upper limit of what may be achievable. The
STI Plan is designed such that there is a 10% to 20% probability the executive will achieve or
exceed this level of achievement.
The probabilities of achievement are set at these levels such that, over time, awards approximately
equal to the target level would become payable, assuming performance to role. The achievement of
this target level of award would support 75th percentile total remuneration package policy objective
for executives.
What are the performance
criteria?
Performance criteria are assigned for both individual and Company performance and may vary from
year to year.
Reflecting the importance attached to role clarity within New Standard, Individual Performance
Criteria will be drawn directly from the role accountabilities in the participant’s role description and
demonstrated adherence to New Standard’s values.
Corporate performance criteria are set at the commencement of each financial year and may vary
from time to time to include other aspects of performance for which there is shared accountability
and which the Company wishes to emphasise.
Each performance criteria may be allocated a weighting for each year that reflects the relative
importance of each performance criteria for the year.
What is the value of the STI
award opportunity?
Executive Directors and other executives have a target STI opportunity of 10% of TFR, with a
minimum opportunity (if only threshold level is met) of 5% and a maximum opportunity (if the stretch
targets are achieved) of 20% of TFR.
How is STI assessed?
These percentages are set based on external advice to achieve the remuneration policy intent of
75th percentile total remuneration package market positioning.
Individual performance criteria - are assessed using a performance rating scale. In making the
assessment in respect of a particular area of accountability, consideration is given to the extent
to which the behaviours and performance indicators identified in the role description have been
modelled and observed. This assessment is undertaken by the participant’s manager and then
signed-off by the manager-once-removed. In the case of the Executive Directors, the assessment is
undertaken by the Remuneration Committee and approved by the Board.
Corporate performance criteria – the Board and/or the Executives will determine the extent to which
each corporate performance criteria has been achieved.
LTIP
What is the LTI Plan (LTIP)?
The LTIP is the equity component of at-risk remuneration and is linked to the Company’s TSR
performance over a 3 year period.
The LTIP aims to reward participants for New Standard’s TSR performance in absolute terms such
that LTI awards only become valuable to the recipient upon achievement of absolute TSR hurdles as
set by the Remuneration Committee.
How often are LTIP awards
made?
The LTIP operates on the basis of a series of cycles. Each cycle commences on 15 September
and is followed by a 3 year performance period, with a test date on the 3rd anniversary of the
commencement of the cycle. As a result, the LTIP awards may occur annually with the first cycle of
the LTIP scheduled to begin on 15 September 2012.
Why does the Board
consider an LTIP is
appropriate?
The Company believes that a LTIP can:
•
•
attract executives with the requisite capability;
retain key talent;
• maintain a stable leadership team; and
•
explicitly align and link the interests of New Standard’s leadership team and shareholders.
What types of equity may
be granted under the LTIP?
Under the LTIP both Performance Rights and Retention Rights may be granted to eligible
participants as a percentage of TFR as outlined in the table below.
Role
Managing Director
Direct Reports
Target Retention
LTI
%
Target Performance
LTI
%
0%
20%
90%
40%
Total
LTI
%
90%
60%
All rights are a right granted to acquire one share in New Standard, subject to satisfying either
performance or retention criteria that will be established and agreed from time to time.
A participant is not entitled to participate in or receive any dividends or other shareholder benefits
until the right has vested and a share has been allocated and transferred to the participant.
Was a grant made during
the 2012 Financial Year?
No – the remuneration structure in place for 2012 incorporated the historical Share Purchase Plan as
approved by shareholders at the Annual General meeting dated 26 November 2010.
The intention is to finalise an LTIP as part of a broader remuneration review based on
recommendations being provided by Godfrey following the independent review commissioned
post 30 June 2012. At this stage it is envisaged that the LTIP will involve Quantum Rights and an
allocation will be agreed for eligible LTIP participants for the cycle commencing 15 September
2012. Any such awards that may involve allocations to Executive Directors will be put before the
shareholders at the 2012 Annual General Meeting.
What are the LTIP
performance conditions?
The Company uses absolute TSR as the sole LTIP performance criteria to determine the proportion of
Performance Rights which vest.
The Board considers that absolute TSR is an appropriate performance hurdle because it ensures
that a proportion of each participant’s remuneration is linked to shareholder value and ensures that
participants only receive a benefit where there is a corresponding direct benefit to shareholders.
Absolute TSR performance rights
The proportion of Absolute TSR Performance Rights which vest will be determined on the basis of
New Standard’s TSR on the following scale:
New Standard 3-year TSR
Less than 33%
33%
Between 33% and 52%
52%
>52% and <73%
73% or greater
Percentage of absolute TSR
performance rights that vest
Nil
25%
Pro rata between 25% and 50%
50%
Pro rata between 50% and 100%
100%
What are the LTIP Retention
conditions?
The Company uses a retention period of 3 years as the standard benchmark for vesting of Retention
Rights.
24 Annual Report 2012
What happens to Quantum
Rights granted under the
LTIP when an executive
ceases employment?
What happens in the event
of a change of control?
Where an executive who holds Quantum Rights ceases to be employed by a Group member (and is
not immediately employed by another Group member) for any reason other than a qualifying reason,
all unvested Quantum Rights of that participant are automatically forfeited.
Where an eligible employee who holds Quantum Rights ceases to be employed by a Group member
because of a qualifying reason, then the Board must determine, in its absolute discretion, the number
of unvested Quantum Rights of a participant (if any) that will remain on foot and become capable of
vesting in accordance with LTIP rules.
The Board will generally exercise its discretion in the following manner:
• Quantum Rights granted in the cycle beginning on the 15 September immediately prior to the
participant ceasing to be employed by a Group member will be forfeited in the same proportion
as the remainder of the cycle year bears to the full year; and
•
all other Quantum Rights that are not forfeited on the participant ceasing to be employed by a
Group member will continue to be held by the participant and will be tested for vesting on the
test date for the relevant Quantum Right.
Qualifying reasons include but are not limited to death, total and permanent disablement, retirement
or redundancy.
In the event of a change of control, all issued Quantum rights will immediately fully vest.
Executive Remuneration Outcomes for 2012
Whilst a lot of work has been done to revise the remuneration policy and structure, the 2012 Executive remuneration pertains to the
existing structure that has been in place for the past 3 years following shareholder approval received at the Annual General meeting
on 26 November 2010. As outlined previously, the 2012 remuneration structure is currently under review and revision but, for the sake
of clarity, the following is a summary of the existing remuneration structure which has given rise to the 2012 incentive awards.
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 2012, 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.
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 2012 had been achieved or substantially achieved. Executives
are entitled to a cash bonus for the year ended 30 June 2012 of $203,315 representing up to 20% of the executive’s base salary.
The financial statements as at 30 June 2012 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 is measured on the following basis:
LTI Item
Absolute Return
(Share Price + Dividends)
LTI Weighting
%
50%
Relative Return
(Share Price + Dividends versus
agreed index benchmark)
50%
LTI Benchmark
LTI Amount Due
Company’s Shares provide an abso-
lute return of 10% or more over the 12
month period from 1 July to 30 June
based on 12 month VWAP
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 sal-
ary 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 bench-
mark will not trigger an LTI Amount
under this item.
New Standard Energy Ltd 25
The LTI components have been assessed for the 2012 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 will be provided for in the year ended 30 June 2013 for the executive team.
The table below sets out summary information about the Company’s assets and share price movements for the period from June
2008 to June 2012:
30 June 2012
$
30 June 2011
$
30 June 2010
$
30 June 2009
$
30 June 2008
$
0.535
0.19
0.215
0.05
0.24
94,362,875
30,430,324
19,792,879
12,319,396
3,504,671
Share price
Total Assets
Short Term Incentives
At the end of 2012, a review of the performance of each executive was undertaken against each of their 2012 individual
performance measures as explained above. STI entitlements earned for 2012 performance are accrued in 2012 and paid in the
2013 financial year.
The following table outlines the STI that was earned for the 2012 financial year:
2012
Executive Directors
Mr S Willis
Dr M Hagan
Key Management Personnel
Mr M Gracey
Mr D Hansen-Knarhoi
Mr P Achour
Mr B Walker
Total
Long Term Incentives
STI Amount
$
59,400
59,220
40,500
29,195
15,000
Ineligible
203,315
The following table outlines the LTI shares issued to Executive Directors and KMP in the 2012 financial year via interest free
non-recourse loans pursuant to the Employee Share Plan as approved by shareholders at the Annual General Meeting dated 26
November 2010:
2012
Executive Directors
Mr S Willis
Dr M Hagan
Key Management Personnel
Mr M Gracey
Total
Shares
Number
Loan Amount
($)
Vested @
30 June 2012
Forfeited
Nature of
Shares
234,898
234,898
72,000
72,000
100%
100%
0%
0%
Ordinary Shares
Ordinary Shares
77,786
25,000
100%
0%
Ordinary Shares
547,582
169,000
The terms and conditions of the Employee Share Plan and associated loans are set out in Note 27.
The remuneration for each Executive Director and KMP of the Company for the years ending 30 June 2011 and 2012
was as follows:
26 Annual Report 2012
Salary
$
Cash bonus(i)
$
Super-
annuation
$
Share Based
Payments-
Options(ii)
$
Share Based
Payments-
LTI Shares(iii)
$
Total
$
Value of
options as
proportion of
remuneration
%
Proportion
performance
related
%
2012
Executive Directors
Mr S Willis
307,293
129,400
33,326
518,436
30,464
1,018,919
Dr M Hagan
272,328
129,220
Key Management
Personnel
Mr M Clements
12,450
-
-
-
358,592
30,464
790,604
-
-
12,450
Mr M Gracey
206,422
65,500
22,342
237,469
11,210
542,942
Mr D Hansen-
Knarhoi
Mr P Achour
Mr B Walker
Total
2011
Executive Directors
Mr S Willis
Dr M Hagan
Key Management
Personnel
Mr M Clements
Mr M Gracey
Total
Notes
150,125
68,286
41,881
29,195
15,000
-
13,511
6,146
3,769
88,155
24,393
30,820
-
-
-
280,987
113,824
76,470
1,058,785
368,315
79,094
1,257,865
72,138
2,836,197
240,000
240,000
93,600
91,764
83,750
84,098
-
16,667
647,848
202,031
-
-
-
-
-
-
7,568
7,568
10,546
10,546
-
-
-
-
-
333,600
331,764
83,750
118,879
867,993
51%
45%
-
39%
31%
21%
40%
43%
-
-
-
8%
1%
16%
20%
-
14%
10%
13%
-
16%
28%
28%
-
14%
24%
(i) During the period, Mr Willis and Dr Hagan were each paid a discretionary cash bonus of $70,000, and Mr Gracey was paid a discretionary cash
bonus of $25,000. These bonuses were tied to the successful completion of a major farmout agreement with ConocoPhillips to jointly explore the
Company’s flagship Goldwyer project in the Canning Basin, which has added significant shareholder value.
The remaining cash bonuses have been accrued at 30 June 2012 as STI amounts resulting from KPI achievements for the year ended 30 June
2012. Bonus payments are pro-rated for KMP who commenced part way through the year.
(ii) The amounts included under Share Based Payments for options are non-cash items that are subject to vesting conditions and not freely
tradeable.
In the year ending 30 June 2012, options were granted to Mr Willis, Dr Hagan, Mr Gracey and Mr Hansen-Knarhoi as approved by shareholders
on 30 November 2011. The options were issued as a tool to incentivise high quality executive personnel and help align the long term interests of
management and shareholders. The pro-rata value of these options for the year ended 30 June 2012, using the Black-Scholes options pricing
model, was $518,436, $358,592, $209,357 and $88,155 respectively.
Mr Achour was granted options in the year ended 30 June 2012, in accordance with his employment contract. The pro-rata value of these
options for the year ended 30 June 2012, using the Black-Scholes options pricing model, was $24,393.
Mr Walker was granted options in the year ended 30 June 2012, in accordance with his employment contract. The pro-rata value of these options
for the year ended 30 June 2012, using the Black-Scholes options pricing model, was $30,820.
Mr Gracey was granted options in the year ended 30 June 2011, in accordance with his employment contract. The pro-rata value of these
options for the year ended 30 June 2012 using the Black-Scholes options pricing model, was $28,112.
(iii) Mr Willis and Dr Hagan’s LTI component of their executive consultancy agreements were achieved for the year ended 30 June 2011. As a result
the Company allotted and issued a total of 469,796 fully paid ordinary shares (Shares) to each of Mr Willis and Dr Hagan, under the Employee
Share Plan (Share Plan) as approved by shareholders on 30 November 2011. The pro-rata value of these share options for the year ended 30
June 2012, using the Black-Scholes options pricing model, was $30,464 each.
Mr Gracey’s LTI component of his employment contract was achieved for year ended 30 June 2011. As a result the Company allotted and issued
a total of 77,786 fully paid ordinary shares (Shares), to Mr M Gracey under the Employee Share Plan (Share Plan). The pro-rata value of these
share options for the year ended 30 June 2012, using the Black-Scholes options pricing model, was $11,210.
New Standard has provided interest free limited recourse loans for the full amounts to purchase these Shares on the terms set out in the Share
Plan (Loan), and the loans are 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
New Standard Energy Ltd 27
Non-executive remuneration
Shareholders approve the maximum aggregate remuneration for non-executive directors. Fees paid to non-executive directors are
recommended by the Remuneration Committee and the Board is responsible for ratifying any recommendations, if appropriate.
As approved at the Annual General Meeting on 26 November 2010, the aggregate limit of fees payable per annum is $400,000 in
total.
All directors have their indemnity insurance paid by the Company.
Non-executive directors’ receive a fixed fee remuneration consisting of a cash fee and statutory superannuation contributions
made by the company and additional fees for committee roles as set out below:
Base fees
Chairman
Other non-executive directors
Additional fees
Company secretarial services
2012
66,000
55,000
43,802
Non-Executive remuneration for the year ended 30 June 2012 and comparative 2011 remuneration:
Non-Executive Director
Salary and fees
$
Non-cash benefit
$
Superannuation
$
Options(ii)
$
Total
$
2012
A. Dixon
C Sadler (i)
I Paton
Total
2011
A Dixon
I Paton
Total
60,550
9,811
45,833
116,194
11,000
100,637
111,637
-
-
-
-
-
-
-
5,450
883
-
6,333
-
-
-
95,906
161,906
-
-
10,694
45,833
95,906
218,433
-
-
-
11,000
100,637
111,637
(i) Appointed 20 April 2012
(ii) The fair value of options is calculated at the date of grant using the Black-Scholes option pricing model and recognised over the period in which
the minimum service conditions are fulfilled (the vesting period).
Equity Instruments
Options
The terms and conditions for each grant of options affecting remuneration in the previous, this or future reporting periods are as
follows. Options are exercisable on a one for one basis.
28 Annual Report 2012
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l
New Standard Energy Ltd 29
Executive Service Agreements
The employment arrangements of the KMPs are formalised in standard employment agreements. It is the Group’s policy that
employment contracts with KMP, with the exception of the Managing Director, are unlimited in term but capable of termination on
three months written notice (or payment in lieu thereof).
The Board determined the amount of compensation payable to KMP under each agreement and these compensation levels are
reviewed annually in conjunction with independent advice where deemed appropriate.
The following Agreements were in place at 30 June 2012:
Mr S Willis is subject to an employment agreement based upon the following terms;
(i) Annual salary of $330,000 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. If the company terminates the employment contract it is
required to make a termination payment of up to 9 months pay.
Mr M Hagan is subject to a consultancy agreement based upon the following terms;
(i) Annual fees of $329,000 invoiced monthly.
(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 consultancy agreement.
Mr M Gracey is subject to an employment agreement based upon the following terms;
(i) Annual salary of $225,000 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 P Achour is subject to an employment agreement based upon the following terms;
(i) Annual salary of $150,000 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 B Walker is subject to an employment agreement based upon the following terms;
(i) Annual salary of $330,000 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.
End of audited Remuneration Report
This Report of Directors, incorporating the Remuneration Report is signed in accordance with a resolution of the Board of Directors.
Arthur Dixon AM
Chairman
Dated: 19 September 2012
30 Annual Report 2012
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 2012 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 Financial Reporting Standards; and
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
19 September 2012
32 Annual Report 2012
Corporate Governance Statement
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” (Recommendations)
where considered appropriate for
company of New Standard’s size and
nature.
This document describes how New
Standard has addressed 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.
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 consists of five directors of whom
three are considered independent. The
remaining directors do not meet the
Company’s criteria for independence.
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.
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 and Key
Management Personnel;
• Controlling and approving financial
reporting, capital structures and
material contracts;
•
•
Ensuring that a sound system of
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; and
Principle 3 – Promote ethical and responsible decision-making
“Actively promote ethical and responsible decision-making”
New Standard is aware that law and regulations alone are no guarantee of fair practice and thus to ensure the integrity of its
operations, it has adopted a code of ethics and conduct to sustain its corporate culture.
New Standard’s ethical rules demand high standards of integrity, fairness, equity and honesty from all Directors and Key
Management Personnel 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 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;
Provide a framework for the Company to achieve a diverse and skilled workforce.
Diversity Policy
The Board is committed to having an appropriate blend of diversity on the Board and in all areas of the Group’s business. The
Board has established a policy regarding gender, age, ethnic and cultural diversity. Details of the policy are available on the
Company’s website.
The Company and all its related bodies corporate are committed to workplace diversity.
The Company recognises the benefits arising from employee and Board diversity, including a broader pool of high quality
employees, improving employee retention, accessing different perspectives and ideas and benefiting from all available talent.
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background.
To the extent practicable, the Company will address the recommendations and guidance provided in the ASX Corporate
Governance Council’s Principles and Recommendations.
The Diversity Policy does not form part of an employee’s contract of employment with the Company, nor gives rise to contractual
obligations. However, to the extent that the Diversity Policy requires an employee to do or refrain from doing something and at all
times subject to legal obligations, the Diversity Policy forms a direction of the Company with which an employee is expected to
comply.
The key objectives of the Diversity Policy are to achieve:
•
•
•
•
•
a diverse and skilled workforce, leading to continuous improvement in service delivery and achievement of corporate goals;
a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;
improved employment and career development opportunities for women;
a work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and
perspectives through improved awareness of the benefits of workforce diversity and successful management of diversity; and
awareness in all staff of their rights and responsibilities with regards to fairness, equity and respect for all aspects of diversity,
(collectively, the Objectives).
The Diversity Policy does not impose on the Company, its directors, officers, agents or employee any obligation to engage in, or
justification for engaging in, any conduct which is illegal or contrary to any anti-discrimination or equal employment opportunity
legislation or laws in any State or Territory of Australia or of any foreign jurisdiction.
Diversity Reporting
The Group’s gender diversity as at the end of the reporting period is as follows:
30 June 2012
30 June 2011
Female
Male
Female
Male
Gender representation
No
Board representation
Group representation
-
8
%
-
33
No
4
16
%
100
67
No
-
2
%
-
17
No
4
10
%
100
83
34 Annual Report 2012
The following senior positions within the Group are currently held by female employees:
• Human Resources Manager; and
•
Senior Geologist.
The Company’s proposed diversity objectives for the 2013 financial year are as follows:
(i) Appointment of a diversity officer to:
(a)
assess and proactively monitor gender diversity at all levels of the Company’s business and report to the Board; and
(b) assess and monitor the implementation and effectiveness of the Company’s diversity initiatives and programs.
(ii) Update recruitment policies and procedures to reflect the Company’s position on diversity;
(iii) Undertake an annual review of maternity and paternity leave and flexible working arrangements to ensure roles are
appropriate to maintain career development.
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 guidelines of good corporate governance and its 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 engage independent counsel and other advisers
as it determines necessary to carry out its duties.
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.
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 and 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.
New Standard Energy Ltd 35
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:
•
•
•
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 consists of five (5) members, 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 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 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.
Consequently, the Board ensures that executive 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 in any securities incentive scheme with thresholds approved by shareholders;
statutory superannuation.
New Standard has devised a framework for remuneration that aligns the interest of the Company’s shareholders with that of the
Board and Key Management Personnel. 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 Board and Key Management Personnel.
36 Annual Report 2012
For the Board and Key Management Personnel:
•
•
•
•
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.
New Standard is committed in providing the right remuneration structure so that Board and Key Management Personnel are not
unaware to shareholder value. The structure provides long and short term incentive designed to retain and motivate Board and
Key Management Personnel in bringing more value to the Company.
A summary of how the Company has addressed it’s compliance with the corporate governance principles and recommendations is
outlined below:
Principle
No.
Recommendation
Compliance
Reason for Non-compliance
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.
Not applicable
Not applicable
Not applicable
The Company now complies with
this recommendation.
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.
A definition of Director independence
can be accessed at www.
newstandard.com.au. During the
year The Board consisted of two
independent Directors and two non-
independent Directors. Subsequent to
year end, an additional independent
director was appointed.
The chair should be an
independent Director.
The Chairman is an independent
director.
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
Not applicable
The Board should establish a
nomination committee.
The Board has not established a
Nomination Committee.
1.
1.1
1.3
2.
2.1
2.2
2.3
2.4
2.5
Disclose the process for evaluating
the performance of the Board, its
committee and individual Directors.
The performance evaluation of Non-
Executive and Executive Directors
occurs by way of a review by the
Remuneration Committee which
engages independent remuneration
consultants for advice.
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 consists of five
(5) members, the Company does
not have a Nomination Committee
because it would not be a more
efficient mechanism than the full
Board for focusing the Company on
specific issues.
Not applicable
New Standard Energy Ltd 37
Principle
No.
2.6
3.
3.1
3.2
3.3
3.4
3.5
Recommendation
Compliance
Reason for Non-compliance
Provide the information indicated in
the Guide to reporting on Principle 2.
Not applicable
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.
The Board now consists of a majority
of independent directors.
The Directors are entitled to take
independent professional advice at
the 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.
Promote ethical and responsible decision-making
Establish a code of conduct and
disclose 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.
Companies should establish a policy
concerning diversity and disclose the
policy or a summary of that policy. The
policy should include requirements for
the board to establish measureable
objectives for achieving gender
diversity and for the board to assess
annually both the objectives and
progress in achieving them.
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.
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.
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
The Company has a diversity policy
which can be accessed at
www.newstandard.com.au
Not applicable
This information has been disclosed
in the Annual Report.
Not applicable
This information has been disclosed
in the Annual Report.
Not applicable
Provide the information indicated in
the Guide to reporting on Principle 3.
The information has been disclosed
in the Annual Report.
Not applicable
38 Annual Report 2012
Principle
No.
Recommendation
Compliance
Reason for Non-compliance
4.
4.1
4.2
4.3
4.4
5.
5.1
5.2
6.
6.1
Safeguard integrity in financial reporting
The Board should establish an audit
committee.
The Board has established an Audit
Committee.
Not applicable
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 consists of
five members, inclusive of the Joint
Company Secretaries, the majority of
which are independent non-executive
directors and is chaired by an
independent non-executive director
who is not Chair of the Board.
The two Joint Company Secretaries
are also members of the Audit
Committee.
Due to the size of the Board the Audit
Committee does not consist only of
non-executive directors.
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 information has been disclosed
in the Annual Report.
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 encourage 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
6.2
Provide the information indicated in
the Guide to reporting on Principle 6.
The information has been disclosed
in the Annual Report.
Not applicable
Principle
No.
Recommendation
Compliance
Reason for Non-compliance
7.
7.1
7.2
7.3
7.4
8.
8.1
8.2
8.3
8.4
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.
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
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 effectiveness
of the companies’ management of
material business risks.
The Board receives assurance in
the form of a declaration from the
Managing Director and Chief Financial
Officer.
Not applicable
The information has been disclosed
in the Annual Report.
Not applicable
The Board should establish a
Remuneration Committee.
The Board has established a
Remuneration Committee.
The remuneration committee should
be structured so that it:
•
•
•
consists of a majority of
independent directors
is chaired by an independent
director
has at least three members
Companies should clearly distinguish
the structure of Non-Executive
Directors’ remuneration from that
of Executive Directors and senior
executives.
During the year the Remuneration
Committee consisted of four
members, including a majority of
independent nonexecutive directors
and was chaired by an independent
non-executive director. Subsequent
to year end an additional member
was appointed to the Remuneration
Committee. The two Joint Company
Secretaries are also members of
the Remuneration Committee. The
Remuneration Committee may seek
external advice where appropriate.
The structure of Non-Executive
Directors’ remuneration is clearly
distinguished from that of Executive
Directors and Key Management
Personnel, as described in the
Directors’ Report in the Annual
Report.
Not applicable
Not applicable
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
40 Annual Report 2012
Financial Statements 2012
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
45
46
47
48
Notes to the Financial Statements
49-83
New Standard Energy Ltd 41
Auditor’s Independence Declaration
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 AUDITOR’S REPORT
TO THE MEMBERS OF NEW STANDARD ENERGY LIMITED
Report on the Financial Report
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
We have audited the accompanying financial report of New Standard Energy Limited, which
comprises the consolidated statement of financial position as at 30 June 2012, the
consolidated statement of comprehensive income, the consolidated statement of changes in
19 September 2012
equity and the consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information,
and the directors’ declaration of the consolidated entity comprising the company and the
The Directors
entities it controlled at the year’s end or from time to time during the financial year.
New Standard Energy Limited
Level 3, 33 Richardson Street
Directors’ Responsibility for the Financial Report
West Perth WA 6005
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
Dear Sirs,
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
DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
NEW STANDARD ENERGY LIMITED
statements comply with International Financial Reporting Standards.
As lead auditor of New Standard Energy Limited for the year ended 30 June 2012, I declare
Auditor’s Responsibility
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
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
• any applicable code of professional conduct in relation to the audit.
is free from material misstatement.
This declaration is in respect of New Standard Energy Limited and the entities it controlled
An audit involves performing procedures to obtain audit evidence about the amounts and
during the period.
disclosures in the financial report. The procedures selected depend on the auditor’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 entity’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
Peter Toll
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
Director
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
BDO Audit (WA) Pty Ltd
a basis for our audit opinion.
Perth, Western Australia
Independence
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.
42 Annual Report 2012
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.
Independent Audit Report
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 AUDITOR’S REPORT
38 Station Street
TO THE MEMBERS OF NEW STANDARD ENERGY LIMITED
Subiaco, WA 6008
PO Box 700 West Perth WA
38 Station Street
6872
Subiaco, WA 6008
Australia
PO Box 700 West Perth WA
6872
Australia
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
Report on the Financial Report
INDEPENDENT AUDITOR’S REPORT
We have audited the accompanying financial report of New Standard Energy Limited, which
TO THE MEMBERS OF NEW STANDARD ENERGY LIMITED
comprises the consolidated statement of financial position as at 30 June 2012, the
INDEPENDENT AUDITOR’S REPORT
consolidated statement of comprehensive income, the consolidated statement of changes in
TO THE MEMBERS OF NEW STANDARD ENERGY LIMITED
equity and the consolidated statement of cash flows for the year then ended, notes
Report on the Financial Report
comprising a summary of significant accounting policies and other explanatory information,
and the directors’ declaration of the consolidated entity comprising the company and the
Report on the Financial Report
We have audited the accompanying financial report of New Standard Energy Limited, which comprises
entities it controlled at the year’s end or from time to time during the financial year.
the consolidated statement of financial position as at 30 June 2012, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
We have audited the accompanying financial report of New Standard Energy Limited, which comprises
Directors’ Responsibility for the Financial Report
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
the consolidated statement of financial position as at 30 June 2012, the consolidated statement of
other explanatory information, and the directors’ declaration of the consolidated entity comprising the
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
company and the entities it controlled at the year’s end or from time to time during the financial year.
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
The directors of the company are responsible for the preparation of the financial report that
other explanatory information, and the directors’ declaration of the consolidated entity comprising the
gives a true and fair view in accordance with Australian Accounting Standards and the
Directors’ Responsibility for the Financial Report
company and the entities it controlled at the year’s end or from time to time during the financial year.
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,
The directors of the company are responsible for the preparation of the financial report that gives a true
Directors’ Responsibility for the Financial Report
whether due to fraud or error. In Note 1, the directors also state, in accordance with
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
such internal control as the directors determine is necessary to enable the preparation of the financial
The directors of the company are responsible for the preparation of the financial report that gives a true
report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors
statements comply with International Financial Reporting Standards.
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
such internal control as the directors determine is necessary to enable the preparation of the financial
the financial statements comply with International Financial Reporting Standards.
report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors
Auditor’s Responsibility
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
Auditor’s Responsibility
the financial statements comply with International Financial Reporting Standards.
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
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
Auditor’s Responsibility
require that we comply with relevant ethical requirements relating to audit engagements and
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
plan and perform the audit to obtain reasonable assurance about whether the financial report
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
reasonable assurance about whether the financial report is free from material misstatement.
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
is free from material misstatement.
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
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
the financial report. The procedures selected depend on the auditor’s judgement, including the
disclosures in the financial report. The procedures selected depend on the auditor’s
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
judgement, including the assessment of the risks of material misstatement of the financial
In making those risk assessments, the auditor considers internal control relevant to the entity’s
the financial report. The procedures selected depend on the auditor’s judgement, including the
report, whether due to fraud or error. In making those risk assessments, the auditor
preparation of the financial report that gives a true and fair view in order to design audit procedures that
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
considers internal control relevant to the entity’s preparation of the financial report that
In making those risk assessments, the auditor considers internal control relevant to the entity’s
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
preparation of the financial report that gives a true and fair view in order to design audit procedures that
gives a true and fair view in order to design audit procedures that are appropriate in the
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
as evaluating the overall presentation of the financial report.
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
policies used and the reasonableness of accounting estimates made by the directors, as well
our audit opinion.
as evaluating the overall presentation of the financial report.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
Independence
our audit opinion.
a basis for our audit opinion.
In conducting our audit, we have complied with the independence requirements of the Corporations Act
Independence
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has
Independence
been given to the directors of New Standard Energy Limited, would be in the same terms if given to the
In conducting our audit, we have complied with the independence requirements of the Corporations Act
directors as at the time of this auditor’s report.
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 auditor’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)
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
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
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
a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or
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)
Territory other than Tasmania.
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
Territory other than Tasmania.
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.
New Standard Energy Ltd 43
Opinion
In our opinion:
(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 entity’s financial position as at 30
June 2012 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001; and
(b) The financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year
ended 30 June 2012. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of New Standard Energy Limited for the year ended
30 June 2012, complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Peter Toll
Director
Perth, Western Australia
Dated this 19th day of September 2012
44 Annual Report 2012
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2012
Revenue from Continuing operations
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
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)/benefit
Note
2
3
3
4
Consolidated Entity
2012
$
2011
$
844,077
179,353
-
-
1,491,960
33,226
(1,013,121)
(480,894)
(1,594,229)
(1,051,712)
(138,462)
(135,607)
(66,485)
(46,283)
-
5,839
(16,497)
(25,321)
(1,450,301)
(3,454,500)
3,659,629
(661)
10
(19,164)
(38,763)
(10,546)
(79,081)
-
Profit/(loss) attributable to owners of the Parent entity
205,129
(79,081)
Other comprehensive income
Changes in the fair value of available for sale financial assets
Exchange differences on translation of foreign operations
Deferred tax liability
Other comprehensive income for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
36,476,637
3,675,000
349,800
(1,507,735)
(13,289,842)
-
23,536,595
2,167,265
23,741,724
2,088,184
Owners of the Company
23,741,724
2,088,184
Earnings/(loss) per Share for profit/(loss) from continuing
Operations attributable to the ordinary shareholders of the Company
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
24
24
0.08
0.07
(0.04)
(0.04)
Cents Per Share Cents Per Share
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
New Standard Energy Ltd 45
Consolidated Statement of Financial Position
As at 30 June 2012
Current Assets
Cash and cash equivalents
Available for sale financial assets
Trade and Other Receivables
Total Current Assets
Non-Current Assets
Exploration and evaluation expenditure
Development Assets – Oil and Gas properties
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Borrowings
Trade and other payables
Total Current Liabilities
Non-Current Liabilities
Deferred Tax Liability
Borrowings
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Note
Consolidated Entity
2012
$
2011
$
22(a)
24,890,855
4,552,777
8
7
9
10
11
13
12
15
14
48,551,637
9,825,000
1,697,830
651,455
75,140,322
15,029,232
16,799,094
12,493,737
1,968,020
2,467,248
455,439
111,731
19,222,553
15,072,716
94,362,875
30,101,948
74,805
13,656
856,145
1,048,817
930,950
1,062,473
9,630,213
195,967
9,826,180
-
26,172
26,172
10,757,130
1,088,645
83,605,745
29,013,303
16
17
17(d)
53,626,937
24,226,520
32,218,622
7,231,726
(2,239,814)
(2,444,943)
83,605,745
29,013,303
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
46 Annual Report 2012
Consolidated Statement of Changes In Equity
For the year ended 30 June 2012
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 2011
24,226,520
(2,444,943)
1,774,034
7,275,000
(1,817,308)
29,013,303
Profit/(loss) for the year
Unrealised profit/(loss) on
translation of foreign operations
Unrealised gain on available for
sale financial assets
Deferred Tax Liability
Total comprehensive Income
Transactions with owners in their
capacity as owners;
Issue of shares, net of transaction
costs
Share based payments
-
-
-
-
-
205,129
-
-
-
205,129
29,400,417
-
-
-
-
-
-
-
-
-
1,450,301
-
-
-
205,129
349,800
349,800
36,476,637
(13,289,842)
-
-
36,476,637
(13,289,842)
23,186,795
349,800
23,741,724
-
-
-
-
29,400,417
1,450,301
Equity as at 30 June 2012
53,626,937
(2,239,814)
3,224,335
30,461,795
(1,467,508)
83,605,745
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;
Issue of shares, net of transaction
costs
Share based payments
-
-
-
-
(79,081)
-
-
(79,081)
7,557,904
-
-
-
-
-
-
-
-
10,545
-
-
-
(79,081)
(1,507,735)
(1,507,735)
3,675,000
-
3,675,000
3,675,000
(1,507,735)
2,088,184
-
-
-
-
7,557,904
10,545
Equity as at 30 June 2011
24,226,520
(2,444,943)
1,774,034
7,275,000
(1,817,308)
29,013,303
The above consolidated statement of changes of equity should be read in conjunction with the accompanying notes.
New Standard Energy Ltd 47
Consolidated Statement of Cash Flows
For the year ended 30 June 2012
Cash Flows From Operating Activities
Interest received
Interest Paid
Payments to suppliers and employees
Other income
Note
Consolidated Entity
2012
$
2011
$
741,745
179,353
(8,765)
-
(4,159,388)
(1,254,722)
321,903
-
Net cash provided by/(used in) operating activities
22(b)
(3,104,505)
(1,075,369)
Cash Flows From Investing Activities
Payments for plant and equipment
Reimbursement of prior exploration expenditure
Cash receipts offset against development expenditure
Payment for exploration expenditure
Payments for purchase of equity investments
Payment for purchase/ proceeds from sale of legal subsidiary
net of cash acquired/disposed
(108,529)
3,649,874
(34,362)
300,000
1,019,159
1,281,343
(8,267,066)
(6,924,810)
(2,250,770)
-
-
33,226
Net cash (used in) investing activities
(5,957,333)
(5,344,603)
Cash Flows From Financing Activities
Proceeds from issue of equity securities
Proceeds from sale of financial assets
Repayment of borrowings
Payment for share issue costs
30,825,000
7,947,500
-
2,001,960
(13,652)
-
(1,424,583)
(389,596)
Net cash flows provided by financing activities
29,386,764
9,559,864
Net (decrease)/increase in cash and cash equivalents
20,324,926
3,139,892
Cash and cash equivalents at beginning of the financial year
Exchange rate adjustments
4,552,777
1,578,480
13,152
(165,595)
Cash and cash equivalents at the end of the financial year
22(a)
24,890,855
4,552,777
The above consolidated statement of cashflows should be read in conjunction with the accompanying notes.
48 Annual Report 2012
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 comply with other requirements of the law.
The financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the Directors on 18 September 2012.
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 Company has adopted a new accounting treatment for director and employee loans to align with the guidance provided
by the International Financial Reporting Interpretations Committee which considers that the non-recourse nature of such
loans, secured against issued shares in the Company should not be recognised in the financial statements until repaid.
The effect of the change in accounting policy is that the director and employee loan balance reported at 30 June 2011 of
$328,376 secured against 1,269,902 issued shares, has been derecognised during the period ended 30 June 2012.
The accounting policies set out below have been applied in preparing the financial statements for the year ended
30 June 2012.
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 2012 and the results of all subsidiaries for the year then ended.
New Standard Energy Limited and 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 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.
New Standard Energy Ltd 49
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 1.
Summary of Accounting Policies (continued)
(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.
50 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 1.
Summary of Accounting Policies (continued)
(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 environment 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.
New Standard Energy Ltd 51
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 1.
Summary of Accounting Policies (continued)
(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 2012.
(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 recognised 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.
52 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 1.
Summary of Accounting Policies (continued)
(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.
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally of 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) 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 an appropriate valuation model.
The above policy is applied to all equity-settled share-based payments.
New Standard Energy Ltd 53
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 1.
Summary of Accounting Policies (continued)
(l)
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.
(m) Government Grants
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will
be received and the group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to
match them with the costs that they are intended to compensate.
(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 1(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
4-5 years
(ii)
Plant and equipment
3-15 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.
54 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
1.
Summary of Accounting Policies (continued)
(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.
(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
recognised in other comprehensive income.
(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)
(ii)
assets and liabilities for each statement of financial position presented are translated at the closing rate
at reporting date;
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
New Standard Energy Ltd 55
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 1.
Summary of Accounting Policies (continued)
(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.
(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
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2012
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 2015)
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 2015 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 $36,476,637 of such gains in other comprehensive income.
The Group has not yet decided when to adopt AASB 9.
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.
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.
56 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
1.
Summary of Accounting Policies (continued)
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 119 Employee Benefits
(effective from 1 January 2013)
In September 2011, the AASB released a revised standard on accounting for employee benefits. It requires the
recognition of all measurements of defined benefits liabilities/assets immediately in other comprehensive income and
the calculation of a net interest expense or income by applying the discount rate to the net defined benefit liability
or asset. This replaces the expected return on plan assets that is currently included in profit or loss. The standard
also introduces a number of additional disclosures for defined benefit liabilities/assets and could affect the timing of
the recognition of termination benefits. The amendments will have to be implemented retrospectively. The Group is
continuing to assess the impact of the standard.
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 $16,799,094. Details of the impairment can be found in
note 9.
Deferred tax balances
The Group has carried forward losses which have been recognised as deferred tax assets as it is probable that the
company will derive future assessable income of a nature and amount sufficient to enable the benefit to be realised.
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.
New Standard Energy Ltd 57
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
1.
Summary of Accounting Policies (continued)
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 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 2012 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
Other Income
Total Revenue
Consolidated Entity
2012
$
814,536
29,541
844,077
2011
$
179,353
-
179,353
As detailed in Note 1(h) well revenues of $1,351,556 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
Unrealised foreign exchange gain
Share based payments
Impairment of exploration expenditure
Impairment of fixed assets
Project Expenses
-
33,226
-
1,491,960
5,839
10
(1,450,301)
(10,546)
-
-
(25,321)
(661)
(19,164)
(38,763)
58 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
4.
(a)
Income Tax Expense
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:
Profit/(loss) from continuing operations before income tax expense
Consolidated Entity
2012
$
2011
$
-
(3,659,629)
-
-
(3,454,500)
(3,454,500)
(79,081)
(79,081)
Tax expense (benefit) calculated at 30%
(1,036,350)
(23,724)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income
Gain on sale of investments
Share based payments
Other permanent differences
Entertainment
Difference in overseas tax rate
Benefit of tax losses not previously recognised
Deferred tax liability not previously recognised
Deferred tax asset not previously recognised
-
435,090
6,802
2,527
(826)
(6,870,026)
4,488,479
(685,325)
139,511
3,164
707
-
(7,303)
-
-
-
(3,659,629)
112,355
Tax losses and timing differences not recognised
-
(112,355)
Income tax (expense)/benefit
(3,659,629)
-
(c)
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
(d)
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
-
-
-
-
-
-
-
-
5,435,926
2,012,285
685,325
8,133,536
183
701,315
4,488,295
5,189,795
New Standard and its wholly owned Australian subsidiaries entered into a tax consolidated group effective 1 July 2008. The
company has recognised deferred tax assets for the year ended 30 June 2012 as it is probable that the Company will derive
future assessable income of a nature and amount sufficient to enable the benefit to be realised.
The potential tax benefit will only be obtained if the Company derives future assessable income of a nature and an amount
sufficient to enable the benefit to be realised; and
i.
ii.
the Company continues to comply with the conditions for deductibility imposed by the law; and
no changes in tax legislation adversely affect the relevant company in realising the benefit.
New Standard Energy Ltd 59
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 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
2012
$
2011
$
1,543,294
85,427
-
1,425,908
3,054,629
961,516
7,568
-
10,546
979,630
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 is set out below.
2012
Balance
1.7.2011
Granted as
Compensation(1)
Net Change
Other(2)
Balance
30.6.2012
Vested and
Exercisable
Unvested
Mr A Dixon AM
-
750,000
-
750,000
450,000
300,000
Mr S Willis
Dr M Hagan
Mr I Paton
Mr C Sadler
5,250,000
4,000,000
(5,250,000)
4,000,000
2,500,000
1,500,000
7,250,000
2,750,000
(7,250,000)
2,750,000
1,750,000
1,000,000
2,000,000
-
-
-
Mr M Gracey
1,000,000
1,750,000
Mr M Clements
Mr D Hansen-Knarhoi
Mr P Achour
Mr B Walker
-
-
-
-
-
750,000
300,000
600,000
(2,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
2,750,000
1,600,000
1,150,000
-
750,000
300,000
600,000
-
450,000
-
-
-
300,000
300,000
600,000
15,500,000
10,900,000
(14,500,000)
11,900,000
6,750,000
5,150,000
2011
Mr A Dixon AM
Mr S Willis
Dr M Hagan
Mr I Paton
Mr M Gracey
Mr M Clements
Balance
1.7.2010
Granted as
Compensation(1)
Net Change
Other
Balance
30.6.2011
Vested and
Exercisable
Unvested
-
5,250,000
7,250,000
2,000,000
-
-
-
-
-
-
1,000,000
-
14,500,000
1,000,000
-
-
-
-
-
-
-
-
-
5,250,000
5,250,000
7,250,000
7,250,000
2,000,000
2,000,000
-
-
-
-
1,000,000
-
-
-
1,000,000
-
15,500,000
14,500,000
1,000,000
60 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
5.
Key Management Personnel Compensation (continued)
Notes:
(1) On 9 May 2012, the Company issued a total of 600,000 unlisted options as part of an incentive component of an employment
agreement for the senior executive role of Exploration Manager, Mr B Walker. The options have been issued in different tranches
and 50% have an exercise price of 53.5c and the balance have an exercise price of 60.0c. All options expire on 9 May 2015 if not
exercised before. The options are non-transferrable and cannot be exercised until such time as employment periods of 12 and 24
months have been served.
On 24 April 2012, the Company issued a total of 300,000 unlisted options as part of an incentive component of an employment
agreement for the senior executive role of HSEC Manager, Mr P Achour. The options have been issued in different tranches and
50% have an exercise price of 81.0c and the balance have an exercise price of 90.5c. All options expire on 24 April 2015 if not
exercised before. The options are non-transferrable and cannot be exercised until such time as employment periods of 6 and 12
months have been served.
On 20 December 2011, the Company issued a total of 10,000,000 unlisted options as approved by shareholders on 30 November
2011. The options were issued as an incentive tool to incentivise high quality executive personnel and help align the long term
interests of management and shareholders. The options have been issued in different tranches and 6,250,000 have an exercise
price of 38.5c and the balance have an exercise price of 43.0c. All options expire on 20 December 2014 if not exercised before.
The options are non-transferrable and cannot be exercised until such time as employment periods of 6 and 12 months have been
served.
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.
All options were issued under the Company’s Employee Share Option Scheme. Provision also exists for immediate lapse in the
event employment is terminated for fraud or wilful misconduct.
(2) All options exercised prior to 30 June 2012 expiry date.
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.
2012
Balance
1.7.2011
Options
Exercised(4)
Granted as
Compensation (3)
Net Change
Other(4)
Balance
30.6.2012
Balance held
nominally at
30.6.2012
Mr A Dixon AM
36,000
-
-
50,000
86,000
86,000
Mr S Willis
Dr M Hagan
Mr I Paton
Mr C Sadler
Mr M Gracey
Mr M Clements
Mr D Hansen-Knarhoi
Mr P Achour
Mr B Walker
8,270,864
5,250,000
2,166,456
7,250,000
1,000,000
2,000,000
-
10,000
420,000
-
-
-
-
-
-
-
-
-
234,898
234,898
-
-
77,786
-
-
-
-
(2,625,000)
11,130,762
11,130,762
(5,062,461)
4,588,893
4,588,893
(3,000,000)
100,000
-
(420,000)
80,000
-
-
-
100,000
87,786
-
-
100,000
87,786
-
80,000
80,000
-
-
-
-
11,903,320
14,500,000
547,582
(10,877,461)
16,073,441
16,073,441
2011
Mr A Dixon AM
Mr S Willis
Dr M Hagan
Mr I Paton
Mr M Gracey
Mr M Clements
Balance
1.7.2010
Options
Exercised
Granted as
Compensation
Net Change
Other
Balance
30.6.2011
Balance held
nominally at
30.6.2011
-
6,800,000
1,650,000
-
-
50,000
8,500,000
-
-
-
-
-
-
-
-
36,000
36,000
36,000
345,864
376,456
-
-
-
1,125,000
8,270,864
8,270,864
140,000
2,166,456
2,166,456
1,000,000
1,000,000
1,000,000
10,000
370,000
10,000
420,000
10,000
420,000
722,320
2,681,000
11,903,320
11,903,320
New Standard Energy Ltd 61
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
5.
Key Management Personnel Compensation (continued)
Notes:
(3) On 15 December 2011, the Company allotted and issued a total of 469,796 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 30 November 2011.
On 5 October 2011, the Company allotted and issued a total of 77,786 fully paid ordinary shares (Shares) to Legal and
Commercial Manager, Mr M Gracey, under the Share Plan.
New Standard has provided interest free limited recourse loans for the full amounts to purchase these Shares on the terms set
out in the Share Plan (Loan), and the loans are 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.
(4) On 1 June 2012, Executive Directors, Mr S Willis and Dr M Hagan, sold a total of 7,687,461 fully paid ordinary shares so as to
cover the cost of the option exercise, as well as some of the primary tax liabilities associated with the share sales.
Mr I Paton resigned as Director on 7 May 2012. On 23 March 2012, prior to resignation, Mr I Paton sold 350,000 fully paid ordinary shares.
Mr Sadler was appointed Director on 20 April 2012 and purchased 100,000 fully paid ordinary shares, on market, on 18 June 2012.
Mr Hansen-Knarhoi was appointed CFO and Joint Company Secretary on 7 September 2011 and held 30,000 fully paid ordinary
shares at the time of his appointment.
Mr Hansen-Knarhoi purchased a further 50,000 shares through the Shareholder Share Purchase Plan on 5 December 2011.
Mr Dixon purchased 50,000 shares through the Shareholder Share Purchase Plan on 5 December 2011.
Mr Clements ceased to be KMP on 7 September 2011.
(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
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
Research & Development Tax Concession Receivable
Receivables from Joint Ventures
Other
Consolidated Entity
2012
$
2011
$
55,609
55,609
36,257
36,257
31,844
270,313
493,951
535,744
365,978
1,697,830
51,978
508,520
-
-
90,957
651,455
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 23 for the Group’s risk
management objectives and policies.
62 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
8.
Available For Sale Financial Assets
Listed Securities
Equity Securities
Consolidated Entity
2012
$
2011
$
48,551,637
9,825,000
The Company’s holding in Buru Energy Limited (ASX: BRU) of 15,000,000 fully paid ordinary shares has remained
unchanged in the year ended 30 June 2012. Subsequent to financial year end, the Company sold 5,000,000 fully paid
ordinary shares in BRU - refer to note 30 for further details.
On the following dates, the Company acquired fully paid ordinary shares in Elixir Petroleum Ltd (ASX: EXR):
9/03/2012
15/03/2012
5/04/2012
5/04/2012
Shares
2,334,610
6,400,000
19,416,049
9,928,407
$
140,077
400,000
1,213,503
496,420
38,079,066
2,250,000
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 2012
was $3.120 (30 June 2011: $0.655) for Buru Ltd and $0.046 for Elixir Petroleum Ltd. Refer to note 23 for the Group’s risk
management objectives and policies.
9.
Exploration And Evaluation Expenditure
Movement in Exploration and Evaluation Expenditure
Balance at beginning of the year
Expenditure incurred
Expenditure impaired;
Lanagan 2
Expenditure recovered(1)
Expenditure transferred to development assets
Balance at end of the year
Consolidated Entity
2012
$
2011
$
12,493,737
6,959,308
11,042,652
4,329,001
-
(2,653,951)
-
(661)
(300,000)
(2,577,255)
16,799,094
12,493,737
Notes:
(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. In the year ended 30 June 2012 a total of $1m was received pursuant to this agreement,
made up of $450,000 in back costs and $550,000 from the additional 12.5% contribution to well costs in excess of the 15% equity being
earned. This follows receipt of $300,000 back costs in the year ended 30 June 2011.
On 30 September 2011 the Company announced that it had entered into a farm-in agreement with ConocoPhillips (Canning Basin) Pty
Ltd (COP) to jointly explore the Company’s Flagship Goldwyer Project in the Canning Basin. The Farm-in requires COP to fund up to
US$119m over four phases of unconventional hydrocarbon exploration work, including drilling, coring and evaluation of multiple wells,
plus an upfront payment of $1m to the Company in consideration of prior costs, in order to earn up to a 75% working interest in the
Goldwyer Project. In the year ended 30 June 2012, $1m has been received pursuant to this agreement.
On 12 April 2012 the Company received $160,000 from the Department of Mines & Petroleum (DMP) under its Exploration Incentive
Scheme for exploration activities undertaken in EP417 in the Canning Basin.
The Company has submitted a Research & Development Tax Concession claim for $493,951 relating to applicable works undertaken in
the year ended 30 June 2011 in the Canning and Carnarvon Basins.
The exploration expenditure incurred during the year largely relates to the Company’s oil and gas permits and application areas in
Australia and working interest in the Colorado County Project in onshore Texas.
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.
New Standard Energy Ltd 63
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
10. Development Assets – Oil and Gas Properties
Development Assets
At cost
Accumulated amortisation
Net carrying value
Development Assets
2012
Cost
At 1 July 2011
Transfer from Exploration Projects
Additions
Impairment
Revenue offset
Foreign exchange movement
At 30 June 2012
Provision for future restoration costs
At 1 July 2011
Disposals
At 30 June 2012
Accumulated amortisation
At 1 July 2011
Charge for the Year
Disposals
Foreign exchange movement
At 30 June 2012
Net carrying value
At 1 July 2011
At 30 June 2012
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
Consolidated Entity
2012
$
2011
$
1,968,020
-
2,467,248
-
1,968,020
2,467,248
Tangible Costs
$
Intangible Costs
$
Prepaid Drilling,
Completion and
Lease Acquisition
Costs
$
796,173
-
10,321
-
-
-
806,494
1,671,075
-
842,007
-
(1,351,556)
-
1,161,526
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
796,173
806,494
1,671,075
1,161,526
-
796,173
-
-
-
-
796,173
-
1,781,082
1,352,402
-
(1,462,409)
-
1,671,075
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
796,173
1,671,075
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
2,467,248
-
852,328
-
(1,351,556)
-
1,968,020
-
-
-
-
-
-
-
-
2,467,248
1,968,020
-
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.
64 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 11.
Property, Plant And Equipment
Property, plant and equipment
Accumulated depreciation
Net book amount
Year ended 30 June 2012
Opening net book amount
Additions
Disposals
Depreciation expense
Closing net book amount
Year ended 30 June 2011
Opening net book amount
Additions
Disposals
Depreciation expense
Closing net book amount
12.
Trade And Other Payables
Current
Trade payables
Sundry payables and accrued expenses
Consolidated Entity
2012
$
2011
$
613,545
226,628
(158,106)
(114,897)
455,439
111,731
Furniture and
equipment
$
Motor Vehicles
$
Leasehold
Improvements
$
59,645
197,759
(13,921)
(46,930)
196,553
63,462
30,248
-
(34,065)
59,645
48,335
225,194
-
(16,823)
256,706
3,751
3,737
(2,576)
(2,732)
2,180
14,959
39,541
24,568
4,400
-
(19,164)
(6,165)
48,335
(6,053)
3,751
Total
$
111,731
426,690
(16,497)
(66,485)
455,439
102,989
74,189
(19,164)
(46,283)
111,731
Consolidated Entity
2012
$
2011
$
262,410
593,735
505,540
543,277
856,145
1,048,817
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 23 for the Group’s risk management objectives and policies.
13. Current Liabilities – Borrowings
Finance lease-vehicle
74,805
74,805
13,656
13,656
Finance leases have been taken out on the purchase of four vehicles. These vehicles have been separated into current and
non-current liabilities as required by AASB117.
14. Other Non-Current Liabilities
Finance lease-vehicle
195,967
195,967
26,172
26,172
Finance leases have been taken out on the purchase of four vehicles. These leases have been separated into current and
non-current liabilities as required by AASB117.
New Standard Energy Ltd 65
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
15. Non-Current Liabilities – Deferred Tax Liability
Consolidated Entity
2012
$
2011
$
Income statement
Accrued revenue/income
Property, plant & equipment
Foreign currency translation
Capitalised exploration expenditure
Equity
Financial assets held for sale
Deferred tax assets
Unused tax losses
- Australia
- US
Unexpired capital raising costs
Accrued income/revenue
Deductible temporary differences
Total deferred tax assets
Net deferred tax liability
Reconciliation of movement in deferred tax liabilities:
Opening balance
Debited (credited) to income statement
Debited (credited) to equity
Closing balance
42,357
15,070
109,779
5,630,134
13,289,842
19,087,182
(7,296,710)
(1,498,960)
(421,550)
(42,357)
(197,392)
(9,456,969)
9,630,213
-
(3,659,629)
13,289,842
9,630,213
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
As provided by AASB112, deferred tax assets and liabilities have been set off because:
a) there is a legally recognised right to set off current tax assets and liabilities;
b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on the same taxable entity as the consolidated entity is part of a tax consolidated group.
16.
Issued Capital
305,022,751 fully paid ordinary shares (2011: 198,975,169)
53,626,937
24,226,520
(a) Fully paid ordinary shares
2011
Balance at beginning of financial year
No.
$
143,028,723
16,668,616
On 30 July 2010, issue of shares pursuant to Tranche 1 of a Placement
13,679,307
1,983,500
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
66 Annual Report 2012
16,189,643
17,355,176
722,320
7,200,000
378,691
421,309
-
2,347,500
2,516,500
-
990,000
47,336
62,664
(389,596)
198,975,169
24,226,520
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 16.
Issued Capital (continued)
2012
Balance at beginning of financial year
Fully Paid ordinary shares issued pursuant to;
Share Purchase Plan (i)
Placement (i)
No.
$
198,975,169
24,226,520
13,333,333
4,000,000
76,666,667
23,000,000
On 20 July 2011, issue of shares following the exercise of 1,000,000 20c options
1,000,000
200,000
On 5 October 2011, issue of shares pursuant to employee share plan
77,786
-
On 15 December 2011, issue of shares pursuant to employee share plan
469,796
-
On 10 January 2012, issue of shares following exercise of 750,000 22.5c options.
750,000
168,750
On 24 February 2012, issue of shares following the exercise of 250,000 22.5c options
and 250,000 27.5c options.
On 23 March 2012, issue of shares following exercise of 500,000 27.5c options.
On 14 May 2012, issue of shares following exercise of 250,000 27.5c options.
On 1 June 2012, issue of shares following exercise of 6,250,000 22.5c options
and 6,250,000 27.5c options.
Less: Issue costs
Balance at end of financial year
500,000
500,000
250,000
125,000
137,500
68,750
12,500,000
3,125,000
-
(1,424,583)
305,022,751
53,626,937
(i) On 26 October 2011, the Company announced it had reached an agreement for a $27 million capital raising (Capital Raising) via a $23
million two tranche placement of 76,666,667 shares at $0.30 per share to institutional and sophisticated investors (Placement) together
with a Share Purchase Plan (SPP) at the same price for existing shareholders capped at $4 million. Euroz Securities acted as Lead
Manager to the Placement.
The Placement was made in two tranches:
Tranche one comprising the Placement of 29,000,000 shares to raise $8.7 million, was issued under the Company’s available 15%
capacity; and
Tranche two comprising the Placement of 47,666,667 shares to raise $14.3 million was issued following receipt of shareholder approval
at a general meeting held on 1 December, 2011.
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 shareholder purchase plan (SPP). Shares under the SPP were offered
at $0.30 per share, which was the same price offered to the Placement participants. Applications totalling $1.838 million pursuant to the
SPP were accepted and 6,125,016 fully paid ordinary shares were allotted and issued.
On 6 February 2012, the Company placed the Share Purchase Plan shortfall shares (SPP Shortfall) with Institutional and Sophisticated
Investors. The placement of the SPP Shortfall resulted in the issue of 7,208,317 fully paid ordinary shares at $0.30 per share, raising
$2.16m (prior to costs).
The proceeds from the capital raising are being applied to accelerate New Standard’s Merlinleigh and other Australian tight gas and
shale projects, fund working capital and strengthen the Company’s balance sheet for future growth opportunities.
Refer to Note 23 for the Group’s Risk Management Objectives and Policies.
(b) Terms and Conditions of Issued Capital
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 employees as remuneration during the period including the employee
option plan are disclosed in Note 27 of the consolidated financial statements.
New Standard Energy Ltd 67
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
17.
Reserves And Accumulated Losses
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
Deferred tax liability
Balance at end of year
Nature and purpose of reserve
Consolidated Entity
2012
$
2011
$
3,224,335
1,774,034
(1,467,508)
(1,817,308)
32,218,622
7,231,726
7,275,000
3,600,000
36,476,637
3,675,000
(13,289,842)
-
30,461,795
7,275,000
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
1,774,034
1,763,489
Add: Issue of options
- Directors
-
Employees
Balance at the end of year
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 gain/(loss) on translation of foreign operation
Balance at the end of the year
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
18. Dividends
There have been no dividends paid or proposed in the 2011 or 2012 financial years.
1,033,863
-
416,438
10,545
3,224,335
1,774,034
(1,817,308)
(309,573)
349,800
(1,507,735)
(1,467,508)
(1,817,308)
(2,444,943)
(2,365,862)
205,129
(79,081)
(2,239,814)
(2,444,943)
68 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 19. 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 is 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 year
Longer than 5 years
Australian Exploration Permits
Goldwyer Project
Consolidated Entity
2012
$
5,931,719
42,630,000
5,100,000
2011
$
17,431,434
44,055,000
-
53,661,719
61,486,434
The above commitments reflect minimum work programs and costs as revised by the DMP on 23 September 2011.
Additional commitments or liabilities may arise from time to time following the completion of certain exploration activities,
however no such allowances can be made at the reporting date given the inherent uncertainties involved.
On 30 September 2011, the Company announced that it had executed a binding farm-out agreement with ConocoPhillips
(Canning Basin) Pty Ltd (COP) to explore and evaluate the shale gas potential of the Goldwyer Project in the Canning
Basin, Western Australia. Under the farm-out agreement it is anticipated that, subject to completion of the farm-in work
contemplated under the agreement, the expenditure commitments relating to EP 443, 450, 451 and 456 will be substantially
met by COP via its funding of up to US$119m over four phases of shale exploration work to earn and retain a 75% interest in
the Goldwyer Project.
As part of the Goldwyer phase 1 exploration activities undertaken, the Company has entered into contracts for rig and
camp services that extend beyond activities contemplated in the DMP minimum work commitments, It is intended for the rig
and camp services to be deployed to Merlinleigh for a drilling exploration program, however, unless otherwise negotiated,
contract termination costs of $2.6m may be incurred if the rig and camp services contracts are terminated upon completion
of the Goldwyer phase 1 exploration program.
Merlinleigh Project
On 13 August 2012, the Company announced that it had converted its Merlinleigh Special Prospecting Authority acreage to
granted exploration permits EP 481 and 482. The above table incorporates the expenditure commitments associated with
the grant of EP481 and 482.
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 year
Longer than 5 years
Consolidated Entity
2012
$
131,826
59,063
-
190,889
2011
$
109,160
181,270
-
290,430
New Standard Energy Ltd 69
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
20.
Segment Reporting
Segment Results
Australia
Oil and Gas
Exploration
$
United States
Oil and Gas
Exploration
$
Total
$
Tungsten
$
The segment information provided to the Managing Director for the reportable segments for the year ended 30 June 2012
are as follows:
30 June 2012
Total Segment Revenues
Profit Before Tax
Total Segment Assets
Total Segment Liabilities
30 June 2011
Total Segment Revenues
Profit Before Tax
Total Segment Assets
Total Segment Liabilities
-
-
11,055,429
(26,909)
-
-
7,172,978
(359,175)
-
-
-
-
-
(4,200)
-
-
-
-
-
-
7,711,685
18,767,114
(15,000)
(41,909)
-
-
-
(4,200)
7,803,726
14,976,704
(326,062)
(685,237)
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.
(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)
70 Annual Report 2012
Consolidated Entity
2012
$
-
814,536
29,541
844,077
2011
$
-
179,353
-
179,353
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
20.
Segment Reporting (continued)
A reconciliation of adjusted segment loss to profit/loss before income tax from continuing operations is provided as
follows:
Adjusted Segment Profit/(loss)
(Loss) per above segments
Intersegment eliminations
Interest
Gain on sale of financial assets
Gain on sale of subsidiary
Share based payments
Other non-segment and corporate
Consolidated Entity
2012
$
2011
$
-
-
(4,200)
2,218
814,536
179,353
-
-
(1,450,301)
1,491,960
33,226
(10,546)
(2,818,735)
(1,771,092)
Profit/(loss) before income tax from continuing operations
(3,454,500)
(79,081)
(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
18,767,114
14,976,704
48,551,637
9,825,000
24,890,855
4,552,777
2,153,269
747,467
Total assets as per the statement of financial position
94,362,875
30,101,948
(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:
41,909
685,237
Other non-segment and corporate
10,715,221
403,408
Total liabilities as per the statement of financial position
10,757,130
1,088,645
New Standard Energy Ltd 71
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
21.
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
2012
$
2011
$
72,138
1,378,163
1,450,301
-
10,546
10,546
(i) The Company issued the following fully paid ordinary shares, funded via non-recourse loans, pursuant to the Employee Share Plan
during the period to Key Management Personnel (KMP) and as approved by shareholders at the Annual General Meeting held 30
November 2011 (refer note 27(g) for details) where these KMP were directors of the Company. All loans are outstanding at balance date.
05 October 2011: 77,786 shares to Mr Gracey, Commercial & Legal Manager funded via a non-recourse loan for $25,000. The fair value
at grant date of $11,210 was calculated using the Black Scholes pricing model that took into account the term, the underlying value of
the shares, the exercise price, the expected dividend yield, the impact of dilution and the risk-free interest rate.
Model inputs used to value the share options granted included:
-
exercise price: $0.3214 per share
- market price of shares at grant date: $0.295
-
-
-
-
expected volatility of the Company’s shares: 85%
risk-free interest rate: 3.04%
time to maturity: 2.25 years
dividend yield: 0%
15 December 2011: 234,898 shares to both of Mr Willis, Managing Director and Dr Hagan, Technical Director funded via non-recourse
loans for $72,000 each. The fair value of each at grant date of $30,464 was calculated using the Black Scholes pricing model that took
into account the term, the underlying value of the shares, the exercise price, the expected dividend yield, the impact of dilution and the
risk-free interest rate.
Model inputs used to value the share options granted included:
-
exercise price: $0.3065 per share
- market price of shares at grant date: $0.295
-
-
-
-
expected volatility of the Company’s shares: 85%
risk-free interest rate: 3.04%
time to maturity: 2.04 years
dividend yield: 0%
(ii) On 20 December 2011, the Company issued 6,250,000 unlisted options exercisable at 38.5 cents (tranche 1) and 3,750,000 unlisted
options exercisable at 43 cents (tranche 2) pursuant to the Employee Share Option Plan as approved by shareholders at the Annual
General Meeting held 30 November 2011 to Key Management Personnel as follows:
Name
Mr Dixon AM
Mr Willis
Dr Hagan
Mr Gracey
Title
Chairman
Managing Director
Technical Director
Commercial & Legal Manager
Mr Hansen-Knarhoi
CFO & Joint Company Secretary
Tranche 1
Options
450,000
2,500,000
1,750,000
1,100,000
450,000
Tranche 2
Options
300,000
1,500,000
1,000,000
650,000
300,000
TOTAL
6,250,000
3,750,000
72 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
21.
Related Party Disclosures (continued)
Valuation of the unlisted options issued was calculated using the Black-Scholes pricing model, and no monetary consideration was
received by the employees. Key terms are as follows:
Strike Price
Time until expiry
Volatility
Risk free
Value per option
KMP’s Options
(Tranche 1)
Director Options
(Tranche 1)
KMP’s Options
(Tranche 2)
Directors Options
(Tranche 2)
$0.385
3 years
85%
3.02%
$0.147
$0.385
3.06 years
85%
3.02%
$0.156
$0.430
3 years
85%
3.02%
$0.139
$0.430
3.06 years
85%
3.02%
$0.148
On 24 April 2012, the Company issued 150,000 unlisted options exercisable at 81.0 cents (tranche 1) and 150,000 unlisted options
exercisable at 90.5 cents (tranche 2) to Mr Achour pursuant to the Employee Share Option Plan. All options are exercisable on or before
24 April 2015.
On 9 May 2012, the Company issued 300,000 unlisted options exercisable at 53.5 cents (tranche 1) and 300,000 unlisted options
exercisable at 60.0 cents (tranche 2) to Mr Walker as part of an incentive component of an employment agreement in his role as
Exploration Manager. All options are pursuant to the Employee Share Option Plan and are exercisable on or before 9 May 2015.
22. 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:
Consolidated Entity
2012
$
2011
$
Cash and cash equivalents
24,890,855
4,552,777
(b)
Reconciliation of Net Profit / (Loss) After Tax to Net Cash Flows
From Operating Activities
Profit / (loss) after income tax
205,129
(79,081)
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
Bad Debt written down
Income tax expense/(benefit)
(Increase)/decrease in assets:
Receivables
Other current assets
Increase/(decrease) in liabilities:
Current payables
Net cash used in operating activities
1,450,301
-
-
16,497
-
66,485
(5,839)
449
(3,659,629)
10,546
(33,226)
(1,491,960)
19,164
661
46,283
-
-
-
(1,066,509)
20,134
(15,925)
(45,708)
(131,523)
513,877
(3,104,505)
(1,075,369)
New Standard Energy Ltd 73
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
23.
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
Float Interest Rate
Total Carrying Amount
2012
$
2011
$
2012
$
2011
$
24,890,855
4,552,777
24,890,855
4,552,777
Note
21 (a)
24,890,855
4,552,777
24,890,855
4,552,777
Weighted average interest rate
5.23%
4.86%
(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
74 Annual Report 2012
Consolidated Entity
2012
$
2011
$
75,140,322
15,029,232
(930,950)
(1,062,473)
74,209,372
13,966,759
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
23.
Financial Risk Management Objectives And Policies (continued)
(c) Currency Risk
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.
The Company also has a joint venture with ConocoPhilips (Canning Basin) Pty Ltd (COP) to explore and evaluate the shale
gas potential of the Goldwyer Project in the Canning Basin, Western Australia. Under the agreement, COP expenditure
commitment limits have been set in US dollars. As associated expenditures are predominantly incurred in AU dollars,
movements in the AUD/USD exchange rate expose the Company to foreign exchange gains or losses when received funds
are converted to AU dollars. To minimise this exposure, the Company has entered into foreign exchange put option contract
to protect against an upward movement in the AUD/USD exchange rate, and as such, a sensitivity analysis has not been
performed.
(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 position 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.
2012
Available for sale financial assets
Consolidated Entity
Level 1
$
Level 2
$
Level 3
$
Total
$
Listed equity securities
48,551,637
2011
Available for sale financial assets
Listed equity securities
9,825,000
-
-
-
-
48,551,637
9,825,000
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.
New Standard Energy Ltd 75
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 23.
Financial Risk Management Objectives And Policies (continued)
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)
Consolidated Entity
2012
$
2011
$
-
3,366,211
Cash at Bank and short term bank deposits (AA-)
24,231,974
-
Cash at Bank and short term bank deposits (A+)
Cash at Bank and short term bank deposits (A)
Cash at Bank and short term bank deposits (A-1)
Total
(f )
Price Risk
-
1,000,000
658,881
-
-
186,566
24,890,855
4,552,777
The Group is exposed to equity securities price risk. This arises from investments held by the Group in other listed
exploration companies and classified on the Statement of Financial Position as available-for-sale financial assets. The
Group monitors its available-for-sale financial assets on a regular basis including daily monitoring of ASX listed prices and
ASX releases.
The table below summarises the impact of a 10% increase/decrease in the listed share price of available-for-sale financial
assets on the pre-tax profit for the year and on equity
Consolidated Entity
2012
Impact on Pre-Tax Profit
Impact on Other Components of Equity
Increase
$
-
Decrease
$
-
Increase
$
4,855,164
Decrease
$
(4,855,164)
(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 regularly monitors capital 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 its exploration activities and currently has no debt
facilities in place.
Equity
Net Cash/(Debt)
Surplus
76 Annual Report 2012
Consolidated Entity
2012
$
2011
$
83,605,745
29,013,303
24,620,083
4,512,949
108,225,828
33,526,252
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
24.
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
2012
Cents
Per Share
0.08
0.07
2011
Cents
Per Share
(0.04)
(0.04)
$
$
205,129
(79,081)
2012
No.
2011
No.
Weighted average number of ordinary shares used in the calculation of basic EPS
254,509,608
183,865,943
Weighted average number of ordinary shares used in the calculation of diluted EPS
273,856,594
207,165,314
25.
Interests In Joint Venture Operations
The Consolidated Entity has an interest in the following joint ventures as at 30 June 2012 whose principal activities were oil
and gas exploration.
Permit
EP417
EP443
EP450
EP451
EP456
Application Area 1/09-0
Application Area 2/09-0
Application Area 5/09-1
STP-SPA-0017
2012 Interest
Operator
50%
25%
25%
25%
25%
25%
25%
25%
60%
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
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
2012
2011
5,296
95,678
100,974
11,952
57,563
69,515
7,246,176
3,241,587
7,246,176
3,241,587
Share of total assets of joint venture operations
7,347,150
3,311,102
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.
New Standard Energy Ltd 77
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
26.
Subsidiaries
Name of Entity
Parent Entity
New Standard Energy Limited
Subsidiaries
New Standard Onshore Pty Ltd
New Standard Energy Inc
27.
Share Based Payments
Employee Share Scheme
Ownership Interest
Country of
Incorporation
2012
%
2011
%
Australia
Australia
Delaware, USA
100
100
100
100
Outlined below is a summary of the key terms of the Company’s current Employee Share Plan. This plan will be replaced in
the year ending 30 June 2013. Refer to the Director’s Report for further details of the intended 2013 structure.
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;
(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.
78 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 27.
Share Based Payments (continued)
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;
(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; and
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).
(i) 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.
(ii) 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 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.
New Standard Energy Ltd 79
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 27.
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
Shares issued to key management personnel
Options issued to key management personnel
Options issued other employees
Consolidated Entity
2012
$
60,929
972,934
11,210
380,836
24,393
2011
$
-
-
-
10,546
-
1,450,301
10,546
Exercise
price
$
Balance at
start of
the year
No.
Granted
during
the year
No.
Exercised
during
the year
No.
Forfeited
during
the year
No.
Balance at
the end of
the year
No.
Vested and
exercisable
at end of
the year
No.
Grant date
2012
Expiry date
3 December 2009
30 June 2012
0.225 7,250,000
- 7,250,000
3 December 2009
30 June 2012
0.275 7,250,000
- 7,250,000
29 March 2011
29 March 2011
30 June 2013
0.225
500,000
30 June 2013
0.275
500,000
-
-
-
-
-
-
-
-
-
-
- 6,250,000
- 3,750,000
-
-
-
-
300,000
300,000
300,000
300,000
-
-
-
-
-
-
-
-
500,000
250,000
500,000
250,000
- 6,250,000 3,125,000
- 3,750,000 1,875,000
-
-
-
-
300,000
300,000
300,000
300,000
-
-
-
-
15,500,000 11,200,000 14,500,000
- 12,200,000 5,500,000
0.25
0.44
0.25
-
0.42
0.39
20 December 2011 20 December 2014
20 December 2011 20 December 2014
0.385
0.430
24 April 2015
0.810
24 April 2015
0.905
9 May 2015
0.535
9 May 2015
0.600
24 April 2012
24 April 2012
9 May 2012
9 May 2012
Weighted Average
exercise price
2011
3 December 2009
30 June 2012
0.225 7,250,000
3 December 2009
30 June 2012
0.275 7,250,000
-
-
-
-
- 7,250,000 7,250,000
- 7,250,000 7,250,000
3 December 2009
30 June 2011
0.125 4,000,000
- 4,000,000
3 December 2009
30 June 2011
0.150 4,000,000
- 4,000,000
29 March 2011
29 March 2011
30 June 2013
0.225
30 June 2013
0.275
-
-
500,000
500,000
-
-
-
-
-
-
-
-
500,000
500,000
-
-
-
-
Weighted Average
exercise price
22,500,000 1,000,000 8,000,000
- 15,500,000 14,500,000
0.21
0.25
0.14
-
0.25
0.25
The weighted average remaining contractual life of share options outstanding at the end of the year was 2.39 years
(2011 – 1.06 years)
80 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 27.
Share Based Payments (continued)
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 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.
2012
Fair value of share options and assumptions for the year ended 30 June 2012:
Fair value at grant date of $0.385 and $0.430 options
Share price
Exercise price
Expected volatility
(expressed as a weighted average volatility used in the modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
Fair value at grant date of $0.810 and $0.905 options
Share price
Exercise price
Expected volatility
(expressed as a weighted average volatility used in the modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
Fair value at grant date of $0.535 and $0.600 options
Share price
Exercise price
Expected volatility
(expressed as a weighted average volatility used in the modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
$0.139 - $0.156
$0.295
$0.385 - $0.430
85%
3 years
0%
3.02%
$0.285 - $0.301
$0.610
$0.810 - $0.905
85%
3 years
0%
3.05%
$0.257 - $0.270
$0.500
$0.535 - $0.600
85%
3 years
0%
2.62%
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.
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 modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling 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.
New Standard Energy Ltd 81
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 28. Contingencies
There were no material contingent liabilities or contingent assets for the Company or the Group as at 30 June 2012 or as at
the date of the report other than those disclosed at Note 19 Commitments for Expenditure.
29.
Parent Entity Information
The following details information related to the parent entity, New Standard Energy Limited, as at 30 June 2012. 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
2012
$
2011
$
73,198,756
29,824,786
21,452,746
99,818
94,651,502
29,924,604
897,840
9,826,180
408,016
26,172
10,724,020
434,188
62,786,779
33,545,738
(12,563,947)
(13,291,876)
33,704,649
9,236,554
83,927,481
29,490,416
727,929
(1,320,279)
36,476,637
3,675,000
37,204,566
2,354,721
There were no material contingent liabilities or assets for the parent entity as at 30 June 2012, or as at the date of the report,
other than those already disclosed elsewhere in the report.
82 Annual Report 2012
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012
Notes to and Forming Part of the Consolidated Financial Statements
For the year ended 30 June 2012
30.
Events After The Reporting Date
On 16 July 2012, the Company announced the appointment of Phil Thick as a Non-Executive Director of New Standard
Energy Ltd. Mr Thick’s appointment completed New Standard’s board expansion and skills enhancement program, and
provides substantial downstream and development experience to the company at an important time in its corporate history.
On 16 July 2012, the Company also announced the appointment of Ken Aitken as General Manager of Operations and
Engineering for the Company. Mr Aitken has primary responsibility as Project Manager for the Goldwyer operations and will
also assume responsibility for the engineering and operations planning for the emerging Merlinleigh Project.
On 2 August 2012 New Standard sold 5 million Buru Energy Limited shares at a price of $3.18 per share to realise cash
proceeds of $15.9 million before costs. The share sale proceeds increased the Company’s cash position to in excess of
$40 million and provide a more stable and balanced mix of cash and investments on the balance sheet. The transaction is
tax effective and no taxation liability is expected to arise given the current carried forward losses available to the Company.
On 13 August 2012, the Company announced it had successfully converted its Merlinleigh Special Prospecting Authority
acreage to granted exploration permits after securing native title agreement with the Gnulli Native Title Claim Group (Gnulli)
and executing all necessary agreements and State Deeds with both the Gnulli and Western Australian Department of Mines
and Petroleum (DMP). The execution of these documents triggered an offer for the grant of two exploration permits from the
DMP which New Standard formally accepted via its wholly owned subsidiary New Standard Onshore Pty Ltd. The granting
of the exploration permits paves the way for access to the Merlinleigh Project acreage and provides the ability for on ground
exploration activity to commence during 2013.
On 20 August 2012, the Company announced that its Nicolay #1 well was spudded on Saturday 18th August 2012,
commencing the first of a three well drilling program on the Goldwyer Project in the Canning Basin. With a target depth
of approximately 3,450 metres, the primary objective of the vertical Nicolay #1 well is to gather a comprehensive, modern
data set over a large section of the Goldwyer formation (primary target) via a detailed program consisting of mud logging,
full coring and electric wireline logs to be taken over a significant thickness of prospective Goldwyer formation. Information
regarding the secondary targets of the overlying Bongabinni and Nita formations will also be gathered. Following data
acquisition, a detailed set of scientific studies and analysis will be undertaken to fully assess the Goldwyer formation’s
prospectivity in addition to targeted reservoir evaluation to be undertaken on site to gather detailed information on reservoir
pressures and fracture potential of the Goldwyer formation. This information will assist in identifying which section(s) within
the Goldwyer formation has the most prospective characteristics and help refine and delineate potential future target zones
as a result.
On 7 September 2012, S&P Dow Jones Indices announced the changes in the S&P/ASX indices, effective after the close
of trading on 21 September 2012, as a result of the September quarterly review. At this rebalance, the S&P/ASX 300 index
hierarchy was reviewed and New Standard Energy Ltd was added to this index.
Other than the above, there has been no other matter or circumstance that has arisen since the end of the year that requires
disclosure.
New Standard Energy Ltd 83
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2012 Shareholder Information
As at 21 September 2012
The shareholder information set out below was applicable as at 21 September 2012.
1.
Distribution of Shareholders
(a) Analysis of number of shareholders by size of holding.
Category of holding
Holders
Number of shares
% of capital
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
192
622
531
1,495
324
3,164
84,339
1,975,951
4,545,580
58,148,595
240,577,382
305,331,847
0.03%
0.65%
1.49%
19.04%
78.79%
100.00%
(b) There are 197 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
J P Morgan Nominees Aust Ltd
National Nominees Ltd
HSBC Custody Nominees Aust Ltd
Phoenix Props Int PL
TC Inv Pte Ltd
Deck Chair Holdings PL
Young Alan
Harris Richard J & S E
Carossa Holdings PL
Willis Samuel J C & Willis C M
Tilpa PL
Harris Richard & Susan
Bond Street Custs Ltd
Citicorp Nominees PL
William Taylor Nominees PL
Citicorp Nominees PL
Paton Ian Mark
Blackburne Bruce
Bayrunner PL
Total
3.
Substantial Shareholders
Holding
18,057,930
16,818,640
15,866,625
12,936,176
9,508,453
8,250,000
7,600,000
6,905,252
5,650,834
5,400,000
5,150,000
4,770,000
4,402,166
3,346,862
2,904,237
2,700,000
2,586,339
2,500,000
2,150,000
2,069,000
%
5.91
5.51
5.20
4.24
3.11
2.70
2.49
2.26
1.85
1.77
1.69
1.56
1.44
1.10
0.95
0.88
0.85
0.82
0.70
0.68
139,572,514
45.71
As at 21 September 2012, the Company has received substantial notices from the following shareholders:
Name of Shareholder
Acorn Capital Limited
Buru Energy Limited
No of shares
19,831,543
18,057,930
% of Issued Capital
at the Time of Notice
7.01
7.88
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 21 September 2012.
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.
84 Annual Report 2012
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