CONTENTS
Chairman Letter
Directors’ Report
Director’s Declaration
Corporate Governance Statement
Auditor’s Indepedence Declaration
Independent Audit Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Shareholder Information
1
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71
CORPORATE DIRECTORY
Board of Directors
Place of Business
Legal Advisors
Arthur Dixon AM
Phil Thick
Sam Willis
H.C. Kip Ferguson III | Non-Executive Director
| Non-Executive Director
Jeffrey Swanson
| Non-Executive Chairman
| Managing Director
| Executive Director
6 Outram Street
West Perth, Western Australia 6005
+61 8 9481 7477
Ph:
+61 8 9324 3366
Fax:
www.newstandard.com.au
Web:
Murcia Pestell Hillard Pty Ltd
Suite 183, Level 6
580 Hay Street
Perth, Western Australia 6000
Company Secretary
Auditors
Share Registry
Mark Clements
ASX Code
OTCQX Code
NSE
NWSTF
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco, Western Australia 6008
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth, Western Australia, 6000
CHAIRMAN’S LETTER
The 2014/15 year was a dramatic one
for New Standard Energy, as it has been
for nearly all companies in the oil and gas
sector in Australia and internationally. It
started out positively with a decision to
transform the business early in 2014 from
a pure explorer to one with several tiers of
opportunity – production, development and
exploration – in three regions – US Eagle
Ford, Cooper Basin in South Australia
and the Canning and Carnarvon Basins
in Western Australia.
This decision was soundly based, and
initially proved a success as we brought
into production the first two wells that we
drilled in the Eagle Ford shale, ahead of
target and under budget. These were in
addition to the five producing wells we
had bought, and our primary focus quickly
became the US assets, delivering
immediately, for the first time, revenue from
production. Capital was carefully managed
with additional funding supplied under a
Reserves Based Loan (where the available
drawdown was a function of the certified
reserves) and under which we were able
to increase 1P reserves by 133%. Our
business model was starting to deliver
growth and value and the equity value
returning to New Standard shares.
However OPEC’s decision to hold
production levels steady in November 2014
led to a precipitous fall in oil prices globally
and by January the WTI price had dropped
to US$45 per barrel – down from as high
as US$106 in early 2014. Unfortunately
this delivered a large systemic shock to
the energy sector globally and completely
undermined our growth strategy.
The Company had to make quick and
decisive changes, cutting staff numbers
significantly and reducing overheads.
We drilled our next two wells in November
and December, again ahead of target and
under budget, taking advantage of the
falling costs for contractors and service
providers. We made a decision not to
complete these wells, but rather defer the
fracture stimulations into CY2015 in the
hope that oil prices would turn around.
Unfortunately this did not happen.
It became clear in late CY2014 that New
Standard’s ability to raise equity in the new
oil price reality had significantly diminished
and we did not have the balance sheet to
develop our three tier asset portfolio. We
were not willing to go into further debt and
had limited access to other sources of
capital. So we embarked on a process of
looking for partners or buyers for our
Western Australian assets and our newly
acquired share of PEL570 in the Cooper
Basin in South Australia.
In October 2014 New Standard announced
a substantial upgrade of reserves for the
Eagle Ford leases and also finalised a deal
for Santos to farm-in to the Company’s
Cooper assets. This was an excellent deal
that injected much needed cash for our US
drilling programme and brought Santos’s
substantial experience into the Cooper JV
as Operator. It also substantially reduced
our capital commitments in PEL570.
By the end of 2014 it had become obvious
that oil prices were likely to continue to
decline and remain at low levels. New
Standard entered into discussions with
the Company’s lenders, Credit Suisse,
who agreed to continue to support the
Company but on the understanding that
we look for buyers or partners for our US
assets and committed to a plan to pay out
or largely reduce our debt. We therefore
had no alternative but to market our US
assets and we commenced this in earnest
in January 2015. At the same time we were
in discussions with Sundance Energy
Australia about a potential corporate
transaction or a sale of our US and part
of our Australian assets and sought
independent advice from reconstruction
specialists to ensure the Board was well
supported and advised.
In February we made further substantial
cuts to cost and overheads and reduced
staff numbers to a bare minimum. The
Directors agreed to suspend all Director
fees and the Managing Director agreed to
a 50 per cent salary cut. We reduced staff
count to just two staff in Perth and two in
Houston.
By the end of March it was clear that we
were unlikely to be able to find the right
partner for our US business at the right
price given the difficult environment and
Credit Suisse agreed to lend the Company
up to another US$3 million to keep New
Standard sound whilst we further pursued
the opportunity with Sundance. This deal
was finally agreed at the end of June when
documents were executed and was
completed in early August.
The Sundance agreement included the
sale of all of the Company’s US assets
and its 17.5% stake in PEL570 in the
Cooper Basin. In return for this
Sundance paid out New Standard’s debt
in full and took over all US creditors and
New Standard received 6 million SEA
shares. The transaction was worth
approximately A$24 million and
importantly eliminated all New Standard
debt and provided sufficient ongoing
liquidity to allow the Company to survive
and explore options for progression of its
Western Australian onshore assets. We
had secured a vital lifeline.
The Company is now undertaking a
strategic review to thoroughly assess the
status of the remaining portfolio, the energy
market outlook, the equity market for small
oil and gas explorers and the best path for
rebuilding shareholder wealth. Part of this
review is likely to include the
relinquishment and rationalisation of some
of our larger permits areas. This process is
designed to reduce our acreage to a more
manageable size and cut holding costs
while still retaining the most prospective
areas for future exploration.
It has certainly been a tough period for
shareholders but despite the magnitude
of the global oil crisis we have survived
and can now focus on recovery.
I thank the team for their considerable and
tireless efforts through a very trying twelve
month period and we look forward to
rebuilding the Company over the next
year or more.
The staff and our directors have worked
tirelessly throughout the past financial year.
Reducing staff numbers is never easy but
our staff have been accepting of the issues
confronting the Company.
As a company, our focus has shifted,
but our core intention to create shareholder
value has not changed. We have embarked
on a journey to re-assess our Western
Australia portfolio and seek opportunities
to progress those projects in addition to
remaining open to assessing other
alternatives for rebuilding shareholder
value.
I look forward to providing updates to
investors as those opportunities are
progressed.
Yours sincerely
Arthur Dixon AM
Chairman
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 1
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 2015.
OPERATIONAL AND FINANCIAL REVIEW
PROJECTS
US EAGLE FORD
New Standard made its newly acquired Atascosa Project the core focus
of its operations throughout the 2014/15 year. The Peeler Ranch-5H and
6H wells were drilled, fracture stimulated, completed and brought into
production on time and under budget.
The Peeler Ranch-5H and 6H wells recorded 24-hour Initial Production
(24IP) of 705 and 758 BOEPD respectively, incorporating 656 and 716
barrels of oil. In comparison, the previous well drilled on the acreage,
the Peeler Ranch-4H, which was drilled in August 2013, delivered 24IP
of 735 BOEPD (615 barrels of oil).
Following on from the 24IP results, the 30-day Initial Production (30IP)
rates for the Peeler Ranch-5H and 6H wells were 417 and 374 BOEPD
respectively, with oil cuts in excess of 90 per cent, which was in line with
the Company’s expectations for the wells.
In late March 2015 New Standard reached agreement with the owners
of the Eppright lease to extend that lease for twelve months through until
March 2016. This secured the Company’s tenure while pushing back all
drilling commitments into 2016 including the requirement to fracture
stimulate and complete the Lagunillas-3H well.
Minimal operations required to maintain the Peeler leases continued
until the assets were sold to Sundance Energy Australia post year end as
announced in June 2015.
COOPER BASIN, SOUTH AUSTRALIA
New Standard commenced the year with a 52.5 per cent position in
PEL570 in the Cooper Basin in South Australia. Ambassador Oil and Gas
owned the remaining 47.5 per cent and New Standard was the operator.
These positive results from the Peeler Ranch-5H and 6H supported
New Standard’s strategy to increase its reserves base and they provided
a major contribution to the upgraded reserves report announced to the
market on October 28, 2014. These wells contributed to an 83 per cent
increase in net 2P reserves to 4.89 million BOE.
During the year Drillsearch Energy Limited (ASX:DLS) acquired 100
per cent of Ambassador and took over its 47.5 per cent non-operated
interest in PEL570. New Standard remained committed for up to $42.5
million to earn its 52.5 per cent stake and retained its intention to farm-
out or farm-down that commitment during 2015.
The upgraded independent reserves report from Netherland, Sewell &
Associates Inc (NSAI) increased 1P, 2P and 3P reserves by 133 per
cent, 83 per cent and 33 per cent respectively.
Peeler Ranch-7H spudded on 25 October and the Lagunillas Camp-3H
well in the Allright Project area followed immediately after. Peeler Ranch-
7H was completed on 12 November 2014 and reached a total depth
(TD) of 4,603 metres with a total vertical depth (TVD) of 2,950 metres.
Lagunillas Camp-3H was completed on 10 December 2014 reaching a
TD of 4,312 metres with TVD of 2,593 metres. The laterals for both wells
were successfully drilled centrally within the target zones. The wells were
drilled much quicker than planned which resulted in actual costs being
lower than planned.
Both wells were drilled and designed to be completed as Type III wells,
which are based on attractive offset wells by other operators that use
longer laterals and higher proppant concentrations during hydraulic
fracture stimulation to target significant increases in Initial Production
rates and Estimated Ultimate Recovery.
In response to the decline in global oil prices, hydraulic fracturing
operations for these two wells were deferred pending recovery of the
market and to take advantage of significant cost reductions from
service providers.
In alignment with its strategy to mitigate capital commitment and risk
within its Australian portfolio, New Standard reached agreement in
October 2014 to divest a portion of its interest in PEL 570 to Santos
Limited (ASX:STO), significantly reducing its exploration expenditure
commitments while retaining exposure to the development of the large
and prospective permit. Santos farmed into New Standard’s share of
PEL570 and took over the operatorship.
The Santos deal closed in November 2014, following which New
Standard retained a 17.5 per cent working interest in PEL 570 in return
for a cash consideration of $7.5 million coupled with a commitment from
Santos to meet 75 per cent of New Standard’s remaining expenditure
commitments associated with its $42.5 million earn-in obligations.
Towards the end of the year Santos put in place detailed plans and
budgets for an extensive 3D seismic programme and for the drilling of
the first well, the Washington-1 exploration well, which was spudded in
August 2015.
New Standard sold its remaining interest in PEL570 post year end to
Sundance Energy Australia as announced in June 2015.
2 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
CANNING AND CARNARVON BASINS, WESTERN AUSTRALIA
In June 2014 New Standard advised that the Southern Canning Joint Venture (SCJV) had agreed to delay drilling of the Brooke North-1 well until
late 2015. In line with this, the Company deferred all of its Canning and Carnarvon Basin drilling activity.
As announced, delays in receiving various stakeholder approvals required for the drilling of the Brooke North-1 well made it impossible to drill the
well prior to the wet season. New Standard, with the support of its SCJV partners (ConocoPhillips Australia and PetroChina Company Limited),
held discussions with the Western Australian State Government and the Department of Mines and Petroleum (DMP) to ensure these delays were
understood and that it retained tenure of the SCJV permits.
Alongside the decision to transition to producer and developer in early 2014, New Standard engaged Miro Advisors to commence a formal process for
the farm-out of its Western Australian exploration acreage.
Included in the farm-out process was the Merlinleigh Project, located in the onshore Carnarvon Basin, the Laurel Project and the Southern Canning
Project (SCP), located in the Canning Basin.
The inclusion of the SCP in the farm-out process was enabled after New Standard negotiated agreement with its SCJV partners ConocoPhillips and
PetroChina to resume 100 per cent ownership of the SCP.
The restructure removed the requirement for New Standard to spend more than $10 million to drill a third well to complete Phase 1 of the SCJV
agreement with ConocoPhillips and PetroChina. The terms of the restructure also stipulated that no claims would be made by the SCJV partners
for any monies spent to date or any outstanding work that was yet to be performed pursuant to the Farm-Out Agreement.
The farm-out process with Miro was significantly impacted by the unexpected crash in the global oil price which resulted in many companies retreating
away from early exploration investment and concentrating on development and production assets. Discussions with some parties are ongoing.
As part of the strategic review that is currently underway, New Standard continues to work closely alongside the Department of Mines and Petroleum to
manage its commitments and maintain its permits where appropriate.
CORPORATE
In May 2014 New Standard finalised an agreement to establish an enhanced debt facility, with Credit Suisse’s middle market direct lending group
in New York, to fund the Company’s production development at its Atascosa Project, Texas, USA. This was to be underpinned by additional reserves
growth to be delivered from future drilling and supplemented by equity capital to be contributed along the way.
In October 2014 New Standard announced a substantial upgrade to reserves following an independent reserves report by NSAI. This gave the
Company the capacity to make additional draws from its debt facility with Credit Suisse as and when required to support the cost of the planned
drilling programme.
The two well drilling campaign commenced in October 2014 was funded by a combination of cashflow from producing wells, an additional debt draw
down, existing capital and cash receipts from the farm-out of PEL 570 to Santos. It was contemplated that additional equity capital would be sourced in
Q4, 2014 and plans were well advanced to do so upon closing of the PEL570 deal with Santos, when OPEC’s decision to hold production rates steady
in November 2014 caused a precipitous collapse in global oil prices and in the process destroyed investor appetite for energy sector capital raisings.
New Standard continued to prudently manage its capital and commitments to ensure the most efficient use of company funds and to keep debt as
low as possible. This included mitigating capital expenditure in Australia, particularly with respect to its West Australian and South Australian assets,
with the PEL570 programme altered and deferred to minimise expenditure.
In the fourth quarter of 2014 New Standard completed a major restructure of the Australian business to significantly reduce overheads and align
resources with the new business direction. This restructure saw the reduction of more than 60 per cent of staff in order to keep costs and overheads
down in line with the US focused strategy.
In November 2014 the Company successfully applied for the trading of its securities to commence on the OTCQX market under the ticker code NWSTF.
Also in November, New Standard locked in additional hedging that put the Company in the position of having 80 per cent of its oil production hedged
at an average price of US$78 per barrel. As the global oil price continued to fall this strategy proved to be critical for the Company’s cash-flow.
In March 2015 New Standard’s lenders made available US$3 million of additional debt funding for operational needs if required and the company
drew down part of this over the following months. In light of the difficult environment, the New Standard board engaged with expert independent
restructuring specialists to ensure appropriate advice and guidance through very challenging corporate and market conditions.
Corporately, New Standard continued to aggressively manage administration costs by further cutting its workforce to a total of just four employees
across Australia and the United States. The Company’s directors also agreed to suspend all directors’ fees until market conditions improve and the
Managing Director agreed to reduce his salary by 50 per cent in line with these changes.
In March and April 2015 respectively Non-Executive Directors Chris Sadler and Greg Channon resigned from the Board and were not replaced.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 3
DIRECTORS’ REPORT
DIVESTMENTS
New Standard’s strategy at the beginning of the financial year was focussed
on growing value through accelerating the Eagle Ford drilling programme,
looking for opportunities to expand acreage in the US and drive reserves up,
funded by revenue and the reserves based-lending facility. At the same time
it was minimising expenditure on the Cooper Basin assets and looking to mitigate
the capital commitments there by finding a farm-in partner or selling part of the
Company’s interest. The Western Australian assets were put on hold whilst partners
were sought for their further development.
As the global oil price started to decline rapidly, from US$95 per barrel in October 2014 to
US$45 per barrel in January 2015, New Standard had to make quick and decisive changes
to its strategy. This was reinforced by the Company’s lenders as it became clear that there
was significant risk of going into default on its loan.
In January 2015 the Company commenced a process of looking at all options for farm-out or divestment
of all assets, separately or jointly. Unfortunately this occurred, as with many other companies, at a
time when buyers and investors were remaining cautious waiting to see what happened with the oil
price. As a result the Company was unable to secure the right deal on any of its individual assets.
At the same time New Standard was in discussions with Sundance Energy around purchase of its US
and Cooper Basin assets. This deal, which was effectively for a total consideration of A$24 million, was
finalised at the end of June 2015 and completed following shareholder approval in early August. The
closing of the deal saw New Standard divest all of its US interests and the remainder of its interest in
PEL570 in the Cooper Basin alongside extinguishment of all New Standard debt.
The New Standard Board strongly believed that under the circumstances and broader market environment
(both global oil and equity markets) the transaction with Sundance Energy was in the best interests of both
the Company and shareholders. The Board was also of the view that should the transaction not proceed,
there was a significant risk that the Company would be unable to continue in its current corporate capacity.
This was fully supported by expert independent restructuring advice that drew identical conclusions.
Under the terms of the transaction, Sundance issued New Standard six million of its shares, the majority of
which are freely tradable. Based on the 5 day VWAP of Sundance shares of 53 cents on 25th June, 2015,
which was the day the transaction was announced, the scrip component of the consideration was valued
at A$3.18 million.
In conjunction with this transaction, Sundance also purchased the Company’s shareholding in
Elixir Petroleum Limited (ASX: EXR) for approximately $243,000.
4 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
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 Phil Thick
Relevant interests in shares and options
Fully paid
ordinary shares
Options over
fully paid
ordinary shares
Incentive
rights
2,690,000
150,000
exercisable at $0.39
expiring
12 December 2015
150,000
exercisable at $0.44
expiring
12 December 2015
1,000,000
exercisable at $0.40
expiring 2 April 2016
1,000,000
exercisable at $0.50
expiring 2 April 2016
1,800,000
performance rights
with vesting based on
absolute TSR and
measurement date
14 September 2016
3,700,000
performance rights
with vesting based on
absolute TSR and
measurement date
14 September 2017
Non-Executive Chairman
(Appointed 1 May 2011)
Age
73
Qualifications
B.E. (Chem)
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 was also formerly 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
Fully paid
ordinary shares
Options over
fully paid
ordinary shares
389,212
Nil
Managing Director
(Appointed 2 April 2013)
(Originally appointed
Non-Executive Director
on 16 July 2012)
Age
56
Qualifications
B.E. (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
Discovery Africa Ltd (ASX:DAF)
(until April 2014)
Argosy Minerals Ltd (ASX:AGY)
(until April 2014)
MHM Metals Ltd (ASX:MHM)
(until December 2013)
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 5
DIRECTORS’ REPORT
Mr Sam Willis
Mr H.C. Kip Ferguson III
Mr Jeffrey Swanson
Non-Executive Director
(Appointed 11 February 2014)
Non-Executive Director
(Appointed 24 June 2014)
Age
50
Qualifications
Age
59
Qualifications
University of Texas at Austin
– Bachelor degree in Geology
Southern Methodist University
– BBA – Cox School of Business
Experience
Experience
Executive Director
(10 December 2013)
(Originally appointed
Managing Director
on 28 July 2008, became
Non-Executive Director
on 1 July 2013)
Age
43
Qualifications
B.Com
Experience
Mr Willis is an experienced company director
in the resources and energy sectors and
previously served as Managing Director of
New Standard for 7 years as part of his 10
year involvement with the company.
Mr Willis provides New Standard with in excess
of 15 years’ experience and expertise in capital
markets, corporate finance and executive board
involvement with emerging small and mid-cap
companies.
Mr Willis has also held previous roles as a
private client advisor with Hartleys and
investment analyst at both Deutsche Bank and
Schroders Investment Management in London.
Current and Former Directorships in listed
entities in the last 3 years
Base Resources Ltd (ASX:BSE)
Elixir Petroleum Ltd (ASX:EXR)
Kip currently serves as the Executive Vice
President of Exploration for strategic alliance
partner Magnum Hunter Resources Corporation
(NYSE: MHR). Kip brings more than 26 years of
exploration and development experience in
several major U.S. basins to New Standard.
As a third-generation geologist and earning his
degree in Geology from the University of Texas
at Austin, Kip has an excellent foundation of
technical background and experience in the
oil and gas sector. Kip was also formerly the
President of Sharon Resources, Inc.
Kip’s practical experience in the development of
oil and gas fields will be critical to New Standard
as it seeks to unlock the value across its
Australian acreage positions. Kip has published
case studies and papers on the study and
analysis of using advanced drilling and
completion technology for unconventional
resources.
Current and Former Directorships in listed
entities in the last 3 years
Nil
Relevant interests in shares and options
Relevant interests in shares and options
Fully paid
ordinary shares
Options over
fully paid
ordinary shares
Nil
Nil
Fully paid
ordinary shares
Options over
fully paid
ordinary shares
Incentive
rights
10,700,000
Nil
1,000,000
performance rights
with vesting based on
absolute TSR and
measurement date
14 September 2016
1,200,000
performance rights
with vesting based on
absolute TSR and
measurement date
14 September 2017
6 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
Jeffrey Swanson has more than 34 years of oil
and gas experience, with strong commercial and
operational experience in both conventional and
shale oil and gas exploration and production in
the US, as well as extensive knowledge of the
service provider sector.
Jeffrey is a leader in the development and
application of innovation and technology to the
exploration and production businesses of the oil
and gas industry. He founded, and is Chairman,
CEO and President of GrailQuest Corp, a
company set up in 2002 as a software and
service provider to meet various needs in the
oil and gas industry.
As a consultant, Jeffrey has broad experience
internationally, primarily in South and Latin
America where he consulted for Petroleos De
Venezuela, Pemex, Exxon, Mobil, Kerr McGee,
Pennzoil and others. He is also Chairman, CEO
and President of Durango Resources Corp, an
oil and gas operator and producer
predominantly in Texas, and a Non-Executive
Director at Magnum Hunter Resources
Corporation (NYSE: MHR).
Current and Former Directorships in listed
entities in the last 3 years
Magnum Hunter Resources Corporation
(NYSE:MHR)
Relevant interests in shares and options
Fully paid
ordinary shares
Options over
fully paid
ordinary shares
Nil
Nil
Mr Greg Channon
Mr Chris Sadler
Non-Executive Director
(Appointed 24 June 2014,
resigned 10 April 2015)
Non-Executive Director
(Appointed 23 April 2012,
resigned 3 March 2015)
Age
52
Qualifications
BSc (Hons)
Experience
Age
53
Qualifications
BCA, MBA
Experience
Mr Channon is a geologist with more than
29 years of experience in the oil and gas
industry and provides New Standard with
vast technical and operational knowledge and
experience, particularly in the Cooper Basin.
Greg worked for Santos Ltd for 13 years with
geological responsibility for its Cooper Basin
program. He has since held a number of senior
roles with oil and gas listed companies,
including at CEO and Managing Director level.
Greg brings extensive experience in both
onshore and offshore exploration and production
management, leasing, mergers and acquisitions
and farm-in/farm-out agreements and is
currently the Vice President of New Business
at Pathfinder Energy Pty Ltd.
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
Current and Former Directorships in listed
entities in the last 3 years
Austock Group Limited (ASX: ACK)
(resigned February, 2012)
Sirocco Energy Ltd (ASX:SCY)
Statesman Resources (TSX:SRR)
Relevant interests in shares and options
Fully paid
ordinary shares
Options over
fully paid
ordinary shares
Nil
Nil
Eastern Star Gas Ltd (ASX:ESG)
(resigned November 2011)
Relevant interests in shares and options
Fully paid
ordinary shares
Options over
fully paid
ordinary shares
100,000
150,000
exercisable at $0.39
expiring
12 December 2015
150,000
exercisable at $0.44
expiring
12 December 2015
Mr Mark Clements
Company Secretary
(Appointed 28 July 2008)
Qualifications
B.Com, FCA, MAICD
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 20 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. Mark previously worked for an
international accounting firm.
Mr David Hansen-Knarhoi
Chief Financial Officer and
Joint Company Secretary
(Appointed 7 September 2011,
resigned 5 May 2015)
Qualifications
B.Com, CA, CSA (Cert)
Experience
David has a Bachelor of Commerce degree
from the University of Western Australia. David
is a member of the Institute of Chartered
Accountants of Australia, an affiliated member
of the Governance Institute of Australia and a
member of the Institute of Directors of the
United Kingdom. He has over 19 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.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 7
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
The principal activities of the Company during the course of the year were the management, operation and development of oil and gas producing
and prospective properties in the Eagle Ford Shale in Texas, USA, and the exploration for oil and gas in the Cooper Basin in South Australia and
the Carnarvon Basin and Canning Basin in Western Australia.
OPERATING RESULTS
The consolidated entity’s net loss attributable to members of New Standard for the year ended 30 June 2015 after applicable income tax was $79.7 million
(2014: loss of $2 million).
FUTURE DEVELOPMENTS
The Company will complete a strategic review to thoroughly assess the potential value in the onshore Canning and Carnarvon Basins, through the
Southern Canning, Laurel and Merlinleigh Projects in Western Australia, to underpin additional corporate activity.
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.
FINANCIAL SUMMARY
The Group reported a loss after tax of $79.7 million for the year ended 30 June 2015. Whilst this is significantly higher than the $2 million loss after tax
for the previous year, an impairment assessment was carried out during the year with a total $34.3 million capitalised exploration and development
expenditure impaired and the discontinued operations for the year with a total of $46.9 million.
The Group’s net revenue from continuing operations was nil (2014: nil) for the year ended 30 June 2015 due to the disposal of the Atascosa Project in the
Eagle Ford Shale, Texas to Sundance Energy Australia Ltd (Sundance). As these assets were held for sale at the end of the 2015, the comparative
amounts have been recalculated so that comparisons can be made to the prior financial year.
Finance costs for the year of $0.5 million related to the establishment of a US$45 million reserves based lending facility to support growth of the
Atascosa Project. At reporting date US$14.9 million had been drawn down against this facility. On 10 August 2015 the Company announced the
completion of transaction with Sundance and the satisfaction of all the remaining conditions precedent. Under the agreement Sundance has directly
acquired New Standard's Colorado County Project in the US and indirectly acquired its Atascosa Project and interest in Cooper Basin permit PEL 570
through the purchase of NSE Texas LLC and New Standard Energy PEL 570 Pty Ltd, inclusive of the associated assets and liabilities which includes
the lending facility of US$14.9 million.
A total of $6.1 million (2014: $13.2 million) exploration, evaluation and development costs were invested in the year ended 30 June 2015 relating to
New Standard’s Australian assets. This was offset by $1.9 million (2014: $6 million) research and development claim relating to activities undertaken
in the Canning and Carnarvon Basins during the 2013/14 financial year. During the year the disposal of Outback Energy Hunter Pty Ltd, NSE PEL570
Pty Ltd, NSE Texas LLC and the Colorado Asset resulted in an offset of $19.7 million.
The net assets of the Group have decreased by $73.3 million from $80.3 million at 30 June 2014 to $7 million as at 30 June 2015. This net decrease
is substantially due to the impairment of capitalised exploration and development expenses and the sale of Eagle Ford and Cooper Basin assets to
Sundance.
Year ended 30 June from continuing and discontinued operations
Revenue
Depletion, depreciation & impairment
Operating loss before tax from continuing operations
Operating loss after tax from continuing operations
Operating loss after tax from discontinued operations
Net assets
2015
93,454
(288,893)
(38,793,185)
(32,760,954)
(46,955,903)
7,045,633
2014
991,553
(393,518)
(5,722,577)
(1,647,543)
(394,075)
80,268,735
8 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
SHARES UNDER OPTION
Details of unissued ordinary shares in the Company under option at the date of this report are as follows:
Item
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Number of Shares under
Option
Date of Issue
Exercise Price of Options
Expiry Date of Options
300,000
300,000
500,000
500,000
500,000
500,000
100,000
100,000
75,000
75,000
500,000
500,000
12-Dec-12
12-Dec-12
12-Dec-13
12-Dec-13
12-Dec-13
12-Dec-13
13-Feb-14
13-Feb-14
27-May-14
27-May-14
06-Aug-14
06-Aug-14
$0.390
$0.440
$0.400
$0.400
$0.500
$0.500
$0.519
$0.581
$0.224
$0.248
$0.167
$0.187
12-Dec-15
12-Dec-15
01-Apr-16
01-Apr-16
01-Apr-16
01-Apr-16
12-Dec-17
12-Dec-17
26-May-17
26-May-17
05-Aug-17
05-Aug-17
No option holder has any right under the options to participate in any other share issue of the Company or any other entity. During the year and up to the
date of the report no options were exercised prior to expiry.
Refer to the note 30 to the financial statements for details of options granted during the period.
ENVIRONMENTAL REGULATIONS
The New Standard group is subject to environmental regulations under relevant Australian legislation in relation to its oil and gas exploration activities,
particularly with the Western Australian Department of Mines and Petroleum, the Western Australian Department of Environment and Conservation, and
Department of State Development in South Australia. 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.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of the Court under Section 237 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 purposes 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 10 August 2015 the Company announced the completion of transaction with Sundance Energy Ltd (Sundance) and the satisfaction of all the remaining
conditions precedent. Under the agreement Sundance has directly acquired New Standard's Colorado County Project in the US and indirectly acquired its
Atascosa Project and interest in Cooper Basin permit PEL 570 through the purchase of NSE Texas LLC and New Standard Energy PEL 570 Pty Ltd,
inclusive of the associated assets and liabilities. The transaction has eliminated all of the Group's debt and provides sufficient ongoing liquidity to allow the
Company to complete a strategic review to assess the status of the remaining portfolio.
Sundance has issued 6 million ordinary shares of which a portion will be escrowed for up to 6 months to meet potential warranty claims post-completion.
As at the completion on 10 August 2015 the market value of 6 million Sundance ordinary shares was $2,850,000.
Since 6 August 2015 to 29 September 2015 1,102,000 Sundance shares have been sold on the market for a total of $378,644. Further sale may occur
dependent on the parameters for sale of shares as agreed by the Board.
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 2015 ANNUAL REPORT | 9
DIRECTORS’ REPORT
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, thirteen Board meetings were held. There were three audit committee meetings and one remuneration committee
meeting.
Directors
Mr A Dixon AM
Mr P Thick
Mr S Willis
Mr. H.C. Ferguson
Mr J Swanson
Mr G Channon (i)
Mr C Sadler (i)
(i)
Board of Directors
Audit Committee
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
13
13
13
13
13
10
8
13
13
13
12
12
9
8
3
3
n/a
n/a
n/a
n/a
2
3
3*
–
–
–
–
2
1
n/a
n/a
n/a
n/a
n/a
1
1
–
–
–
–
–
1
*attended by invitation
Mr Channon and Mr Sadler resigned as Non-executive Directors on 10 April 2015 and 3 March 2015 respectively.
Whilst there is currently no formal nomination committee established, when required a sub-committee of the Board is delegated the responsibility for
identifying suitable candidates for Board appointments. The sub-committee will engage independent external recruitment consultants as required.
INDEMNIFICATION OF OFFICERS AND AUDITORS
During and 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 Group’s activities in the USA.
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 its related entities for any non-audit services.
AUDITOR’S INDEPENDENCE DECELERATION
A copy of the auditor’s independences declaration under s.307C of the Corporations Act 2001 in relation to the audit of the full year is included on page
29.
10 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
REMUNERATION REPORT (AUDITED)
This remuneration report sets out the remuneration arrangements for New Standard Energy Limited (New Standard) for the year ended 30 June 2015.
This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the Corporations Act 2001.
REMUNERATION POLICY
New Standard is committed to the close alignment of executive remuneration to shareholder return. 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.
The Company’s remuneration policy and structure reflects 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.
REMUNERATION COMMITTEE
New Standard has adopted a Remuneration Committee as a sub-committee of the Board and does not include Directors that are either Executive or not
Independent. 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.
In determining competitive remuneration rates, the Remuneration Committee seeks independent advice on local and international trends among
comparative companies and industry generally. It examines terms and conditions for employee incentive schemes, benefit plans and share plans.
Independent advice is obtained to confirm that executive remuneration is in line with market practice and is reasonable in the context of Australian
executive reward practices.
BOARD REMUNERATION
Shareholders approve the maximum aggregate remuneration for non-executive directors. The board determines actual payments to directors and reviews
their remuneration annually, based on independent external advice with regard to market practice, relativities, and the duties and accountabilities of
directors. A review of directors’ remuneration is conducted annually to benchmark overall remuneration including retirement benefits.
KEY PRINCIPLES OF EXECUTIVE REMUNERATION
Remuneration for the executive management team 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. If target at-risk remuneration is earned, the proportion of total
remuneration represented by fixed and at-risk remuneration would be:
Role
Managing Director
Direct Reports
Fixed remuneration
(TFR)
Variable remuneration
(at risk)
50%
59%
50%
41%
Total
100%
100%
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 11
DIRECTORS’ REPORT
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. Any adjustments to the TFR for other senior executives must be approved by the Remuneration Committee after
recommendation by the Managing Director within guidelines approved by the Board. 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.
SHORT TERM INCENTIVE PLAN (STIP)
The STIP 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 executive performance. The purpose of these programs is to reward 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.
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. The performance criteria for the Managing Director are set by
the Board and for other executives are set by the Managing Director and reviewed by the Board.
Corporate performance criteria are set by the Board 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 criterion may be allocated a weighting for each year that reflects the relative importance of each performance criterion for the year.
LONG TERM INCENTIVE 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.
The proportion of Absolute TSR Performance Rights which vest will be determined on the basis of New Standard’s TSR on the following scale:
Increase in TSR over 3 year period
Percentage of absolute TSR performance rights that vest
Less than 33%
33%
Between 33% and 52%
52%
Between 52% and 73%
73% or greater
Nil
25%
Pro rata between 25% and 50%
50%
Pro rata between 50% and 100%
100%
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 and the first cycle of the LTIP began on
15 September 2012.
Under the LTIP Performance Rights may be granted to the Managing Director and other key employees as a percentage of TFR. In addition key
employees also may be granted Retention Rights as an encouragement to stay with the Company for the longer term, as it is viewed as important for
a relatively new company to maintain continuity of key management personnel where possible. Details of Performance and Retention Rights are outlined
in the table below.
Role
Managing Director
Direct Reports
Target retention LTI
(% of TFR)
Target performance LTI
(% of TFR)
0%
20%
90%
40%
Total
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.
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 and positive benefit to shareholders.
12 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
The Company uses a retention period of 3 years as the standard benchmark for vesting of Retention Rights.
USE OF INDEPENDENT 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.
VOTING AND COMMENTS MADE AT THE COMPANY’S 2014 ANNUAL GENERAL MEETING
The Company received 93% of “yes” votes on its remuneration report for the 2014 financial year. The Company did not receive any specific feedback at
the AGM or throughout the year on its remuneration practices.
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
P Thick
S Willis
Position
Managing Director
Executive Director
D Hansen-Knarhoi
Chief Financial Officer and Joint Company Secretary
M Gracey
G Carlsen
P Achour
Non-executives
A Dixon
J Swanson
K Ferguson III
G Channon
C Sadler
Business Development Manager & General Counsel
Exploration and Operations Manager
Health, Safety and Environment Manager
Chairman
Director
Director
Director
Director
EXECUTIVE REMUNERATION OUTCOME FOR 2015
Overview
Resigned/redundant*
during the year
5 May 2015*
5 May 2015*
5 May 2015*
8 January 2015*
10 April 2015
3 March 2015
During the year, the Company’s growth plans were severely impacted by the rapid decline in world oil prices and associated effect on the oil industry’s
commercial landscape. The size and pace of the macro shift in world oil markets largely caught the industry by surprise and the Company reacted quickly
to this change by focussing on reducing operational and corporate costs and overheads.
There was a significant downsizing of employee numbers in 2015 such that the Company’s workforce reduced to a total of two employees as at 30 June
2015 following several redundancies. During the year, the Company’s directors agreed to suspend all director’s fees until market conditions improve and
the Managing Director agreed to reduce his salary by 50% in line with these changes.
The Company did not engage an independent remuneration consultant to review the structure of the Company’s remuneration components in 2015. The
Remuneration Committee considers the present policy remains appropriate for the financial year ended 30 June 2015.
Base Package Salaries
Given market conditions, increases in base salary packages for KMP were minimal in the 2014/15 financial year, and the Managing Director’s base salary
was reduced by half.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 13
DIRECTORS’ REPORT
Short Term Incentives
There have been no STIP entitlements earned or accrued for performance in the year ended 30 June 2015. The STIP entitlements earned in the year
ended 30 June 2014 have been reflected in the remuneration table below.
For the year ended 30 June 2015, the KPIs linked to the STIP were based on capital management, partner, contractor and stakeholder relations,
operational, environmental and safety performance in the field, 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 size of any payment is linked to the extent of achievement. Levels of performance required for target levels of STI are 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 STIP award would be
payable. The STIP 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 STIP is designed such that there is a 50% to
60% probability the executive will achieve of exceed this level of achievement.
Stretch – a performance level that is clearly at the upper limit of what may be achievable. The STIP is designed such that there is a 10% to 20%
probability the executive will achieve or exceed this level of achievement.
The Managing Director and other executives have a target STIP 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. These percentages are based on external advice to achieve the
remuneration policy intent of 75% percentile total remuneration package market positioning.
The Remuneration Committee is responsible for assessing whether the KPIs are met. The STIP target annual payment is reviewed annually. The
Remuneration Committee has the discretion to adjust STI’s downwards in light of unexpected or unintended circumstances.
Long Term Incentives
The Incentive Rights granted under the LTIP have a 3 year measurement period. Performance Rights are measured against New Standard’s share price
performance and will vest on a sliding scale against pre-determined absolute TSR targets after a 3 year measurement period. Retention Rights are linked
to tenure and will vest if a 3 year continuous period of service is completed. Any Performance Rights or Retention Rights that do not vest after the
measurement period will immediately lapse.
Absolute TSR is calculated by reference to share price growth over the measurement period. New Standard believes 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 and positive benefit to shareholders.
Of the Incentive Rights that were tested against their vesting conditions during the year ended 30 June 2015, all Retention Rights vested and all
Performance Rights lapsed.
Options are issued to provide long term incentives for KMP to deliver long term shareholder returns. KMP are granted options which only vest if certain
tenure requirements are met.
Company Performance
The table below sets out summary information about the Company’s continuing business assets, profitability and share price movements for the 5 years to
30 June 2015:
30 June 2015
30 June 2014
30 June 2013
30 June 2012
30 June 2011
Share price
Total assets
$
0.012
7,675,891
Net profit/(loss) before tax
(38,793,185)
Remuneration Tables
$
0.140
117,371,505
(5,722,577)
$
0.120
83,675,665
30,308,167
$
0.535
94,362,875
(3,454,500)
$
0.190
30,430,324
(79,081)
The remuneration for each Executive Director and KMP of the Company for the years ended 30 June 2015 and 30 June 2014 was as stated in the
following page:
14 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
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T
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 15
DIRECTORS’ REPORT
Notes
(i)
(ii)
(iii)
(iv)
(v)
The cash bonuses included for 2015 relate to amounts accrued at 30 June 2014 as STIP amounts resulting from KPI achievements for the year ended 30 June 2014 and were
paid during 2015. Bonus payments are pro-rated for KMP who commenced part way through the year and a retention bonus was made to Mr Sam Willis. No STIP amounts
have been earned or accrued for in 2015.
Other benefits include redundancy termination benefits and outstanding annual leave paid to employees who were made redundant during the year.
The amounts included under Share Based Payments for options are non-cash items that are subject to vesting conditions, are not freely tradeable and require exercising before
they have any tangible value for KMP.
Incentive rights were granted in the years ended 30 June 2014 and 30 June 2015, in accordance with the LTI Plan. The fair value of incentive rights is calculated at the date of
grant using the Monte Carlo Simulation model and recognised over the measurement (vesting) period. The value disclosed is the pro-rata value of these incentive rights in the
year ended 30 June 2015. The amount included as remuneration is not related to or indicative of the benefit (if any) that the individual may receive.
Mr Hansen-Knarhoi, Mr Gracey and Mr Carlsen were made redundant effective 5 May 2015 and Mr Achour was made redundant effective 8 January 2015. The redundancy
payments associated are outlined in the ‘Other’ column.
NON-EXECUTIVE REMUNERATION 2015
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 fee
Chairman
Other non-executive directors
Additional fees
Company secretarial services
2015
66,000
60,000
36,000
2014
92,011
60,000
48,000
In response to the falling oil price environment, Mr Dixon and the Non-Executive Directors have agreed to suspend all directors’ fees until market
conditions improved starting from 1 February 2015 to date and as a result the 2015 remuneration outlined below reflects an applicable pro-rata of
the full fees.
Non-Executive remuneration for the year ended 30 June 2015 and comparative 2014 remuneration:
2015
Mr A Dixon
Mr K Ferguson III (ii)
Mr J Swanson
Mr G Channon (iii)
Mr C Sadler (iii)
Total
2014
Mr A Dixon
Mr C Sadler (iii)
Dr G Hagan
Mr S Willis
Mr K Ferguson III
Mr G Channon (ii)
Mr J Swanson
Total
Salary and fees
Superannuation
Options (i)
$
49,128
–
35,000
33,059
35,000
152,187
84,220
57,523
26,964
164,868
–
–
–
$
4,667
–
–
3,141
–
7,808
7,790
2,546
–
–
–
–
–
$
–
–
–
–
10,260
10,260
–
21,932
–
–
–
–
–
Total
$
53,795
–
35,000
36,200
45,260
170,255
92,010
82,001
26,964
164,868
–
–
–
333,575
10,336
21,932
365,843
In accordance with the Company’s remuneration policy, non-executive directors are not eligible for any performance based remuneration and as such no
shares or incentive rights were issued.
16 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
Notes
(i)
(ii)
(iii)
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).
Mr Ferguson III is not paid by the Company for his Non-executive Director services to the Company because his executive role at Magnum Hunter Resources (MHR) includes
fulfilling such a role, and therefore it is MHR policy that no additional remuneration should be provided.
Mr Channon and Mr Sadler resigned as Non-executive Directors on 10 April 2015 and 3 March 2015 respectively and each received a pro-rata fixed remuneration of $60,000
per annum.
EQUITY INSTRUMENTS
OPTIONS
The terms and conditions for each grant of options affecting remuneration in the current or future reporting periods are as follows. Options are exercisable
on a one for one basis.
Grant date
Vesting date
Expiry date
Exercise price
Value per option
at grant date
12 Dec 2012 (A)
12 Dec 2012 (B)
2 Apr 2013 (C)
2 Apr 2013 (D)
2 Apr 2013 (E)
2 Apr 2013 (F)
6 Aug 2014 (G)
6 Aug 2014 (H)
12 Dec 2013
12 Dec 2014
2 Apr 2014
2 Apr 2015
2 Apr 2014
2 Apr 2015
6 Aug 2015
6 Aug 2016
12 Dec 2015
12 Dec 2015
1 Apr 2016
1 Apr 2016
1 Apr 2016
1 Apr 2016
5 Aug 2017
5 Aug 2017
(i)
500,000 options on issue to M.Gracey vested on 6 August 2015
$0.39
$0.43
$0.40
$0.40
$0.50
$0.50
$0.12
$0.12
$0.156
$0.147
$0.064
$0.064
$0.055
$0.055
$0.054
$0.051
%
vested
100%
100%
100%
100%
100%
100%
0% (i)
0%
The number of options over ordinary shares in the company provided as remuneration to directors and key management personnel are shown below. The
options carry no dividend or voting rights.
Balance at start of year
During the year
Balance at end of year
Vested
Unvested
Granted
Vested
Exercised
Lapsed
Vested
Unvested
Name and
Grant date
Mr P Thick
12 Dec 2012 (A)
150,000
–
12 Dec 2012 (B)
–
150,000
2 Apr 2013 (C)
500,000
–
2 Apr 2013 (D)
–
500,000
2 Apr 2013 (E)
500,000
–
2 Apr 2013 (F)
Mr C Sadler (i)
–
500,000
–
150,000
12 Dec 2012 (A)
150,000
12 Dec 2012 (B)
Mr M Gracey (ii)
6 Aug 2014 (G)
6 Aug 2014 (H)
–
–
–
–
–
–
–
–
–
–
–
–
150,000
–
500,000
–
500,000
–
150,000
–
–
–
–
500,000
500,000
1,300,000
TOTAL
Notes
(i) Mr Sadler resigned on 3 March 2015.
(ii) Mr Gracey was made redundant effective 5 May 2015 and 500,000 options vested on 6 August 2015.
1,000,000
1,300,000
1,300,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
150,000
150,000
500,000
500,000
500,000
500,000
150,000
150,000
–
–
–
–
–
–
–
–
–
–
500,000
500,000
2,600,000
1,000,000
All options were issued for nil consideration. No options were exercised during the year.
Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the
risk-free interest rate for the term of the option. Refer to note 30 to the Consolidated Financial Statements for further details.
Value at exercise date is calculated as the underlying share price at the exercise date less the exercise price of the option, multiplied by the number of
options exercised. There were no options issued as remuneration that were exercised in the current financial year.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 17
DIRECTORS’ REPORT
INCENTIVE RIGHTS
During the year ended 30 June 2015, Performance Rights and Retention Rights were granted to executives as part of their remuneration packages.
The fair value of the rights is determined based on the market price of the company’s shares at the grant date, with an adjustment made to take into
account the vesting conditions and expected dividends during that period that will not be received by the directors and key management personnel.
Type of
incentive rights
Performance rights (A) (iii)
Performance rights (B)
Performance rights (C)
Performance rights (D)
Performance rights (E)
Performance rights (F)
Performance rights (G)
Retention rights (H) (iii)
Retention rights (I)
Retention rights (J)
Retention rights (K)
Note
Grant date
28 Jun 2013
14 Feb 2014
14 Feb 2014
14 Feb 2014
14 Feb 2014
14 Feb 2014
16 Dec 2014
28 Jun 2013
14 Feb 2014
14 Feb 2014
16 Dec 2014
Minimum vesting
hurdles (i)
Vesting date (ii)
Fair value of each
incentive rights
$0.6651
$0.2920
$0.2920
$0.2920
$0.2920
$0.2920
$0.1820
3 years tenure
3 years tenure
3 years tenure
3 years tenure
14 Sep 2015
14 Sep 2016
14 Sep 2016
14 Sep 2016
14 Sep 2016
14 Sep 2016
14 Sep 2017
14 Sep 2015
14 Sep 2016
14 Sep 2016
14 Sep 2017
$0.014
$0.076
$0.077
$0.080
$0.081
$0.088
$0.050
$0.120
$0.105
$0.101
$0.050
(i) On the vesting date the performance rights will be tested against the absolute TSR criteria, and the retention rights tested against tenure criteria. Only those rights that satisfy the
criteria will vest, and the remainder will immediately lapse.
(ii) The minimum vesting hurdle for Performance Rights is 10% compound average growth rate (CAGR) in the NSE share price, which represents 33% absolute total shareholder return
(TSR) over a 3 year measurement period. Should this minimum hurdle be achieved only 25% of the Performance Rights will vest.
(iii) Performance rights and retention rights lapsed without exercise on 14 September 2015.
The table below outlines movements in Incentive Rights during the year and the balance held by each executive as at 30 June 2015.
Type of incentive rights
Balance at
start of year
No.
Granted
Vested
Lapsed
During the year
Balance at
end of year
No.
Maximum
value yet to
vest
$
Name and
Grant date
Mr P Thick
14 Feb 2014
Performance rights (D)
1,800,000
–
16 Dec 2014
Performance rights (G)
–
3,700,000
Mr S Willis
14 Feb 2014
Performance rights (F)
1,000,000
–
16 Dec 2014
Performance rights (G)
–
1,200,000
Mr D Hansen-Knarhoi (i)
28 Jun 2013
28 Jun 2013
14 Feb 2014
14 Feb 2014
Performance rights (A)
Retention rights (H)
Performance rights (B)
Retention rights (J)
220,000
55,000
460,000
115,000
–
–
–
–
16 Dec 2014
Performance rights (G)
16 Dec 2014
Retention rights (K)
–
–
960,000
240,000
Mr M Gracey (i)
28 Jun 2013
28 Jun 2013
14 Feb 2014
14 Feb 2014
Performance rights (A)
Retention rights (H)
Performance rights (B)
Retention rights (J)
192,000
48,000
440,000
110,000
–
–
–
–
16 Dec 2014
Performance rights (G)
16 Dec 2014
Retention rights (K)
–
–
960,000
240,000
18 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,800,000
3,700,000
1,000,000
1,200,000
220,000
55,000
460,000
115,000
960,000
240,000
192,000
48,000
440,000
110,000
960,000
240,000
58,417
88,094
35,441
28,571
290
–
14,167
–
11,822
–
253
–
13,569
–
11,822
–
INCENTIVE RIGHTS (cont’d)
Type of incentive rights
Balance at
start of year
No.
Granted
Vested
Lapsed
During the year
Balance at
end of year
No.
Maximum
value yet to
vest
$
Name and
Grant date
Mr G Carlsen (i)
14 Feb 2014
Performance rights (C)
14 Feb 2014
Retention rights (J)
500,000
125,000
–
–
16 Dec 2014
Performance rights (G)
16 Dec 2014
Retention rights (K)
–
–
1,040,000
260,000
Mr P Achour (i)
28 Jun 2013
28 Jun 2013
14 Feb 2014
14 Feb 2014
TOTAL
Performance rights (A)
Retention rights (H)
Performance rights (E)
Retention rights (I)
140,000
35,000
300,000
75,000
–
–
–
–
5,615,000
8,600,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
125,000
15,460
–
1,040,000
12,808
260,000
–
140,000
35,000
300,000
75,000
184
–
9,772
–
–
14,215,000
300,670
Notes
(i) Mr Hansen-Knarhoi, Mr Gracey and Mr Carlsen were made redundant effective 5 May 2015 and Mr Achour was made redundant effective 8 January 2015.
EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL
The table below shows the number of options, rights, and shares held in The Company during the financial year by Key Management Personnel, including
their close family members and entities related to them.
During the year
Balance at end of year
Granted
Vested
Lapsed
Others
TOTAL
Vested
Unvested
Balance at
start of year
Name
Mr A Dixon
Unlisted options
750,000
Performance rights
Retention rights
–
–
Ordinary shares
389,212
Mr P Thick
Unlisted options
2,300,000
–
–
–
–
–
Performance rights
1,800,000
3,700,000
Retention rights
–
Ordinary shares
2,500,000
Mr S Willis
Unlisted options
4,000,000
–
–
–
Performance rights
1,000,000
1,200,000
Retention rights
–
Ordinary shares
10,700,000
Mr C Sadler (i)
Unlisted options
300,000
Performance rights
Retention rights
–
–
Ordinary shares
100,000
–
–
–
–
–
–
–
–
–
n/a
–
–
–
n/a
–
–
–
n/a
–
–
–
n/a
(750,000)
–
–
n/a
–
–
–
–
–
–
–
–
–
–
(4,000,000)
–
–
n/a
–
–
–
n/a
–
–
–
–
–
–
–
–
n/a
190,000
2,690,000
5,500,000
–
–
2,200,000
–
10,700,000
–
–
–
389,212
–
–
–
n/a
–
–
–
n/a
2,300,000
2,300,000
–
–
–
n/a
–
–
–
n/a
5,500,000
–
n/a
–
2,200,000
–
n/a
–
–
–
n/a
300,000
300,000
–
–
100,000
–
–
n/a
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 19
DIRECTORS’ REPORT
EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL (cont’d)
Balance at
start of year
Name
Mr D Hansen-
Knarhoi (ii)
During the year
Balance at end of year
Granted
Vested
Lapsed
Others
TOTAL
Vested
Unvested
(750,000)
–
–
–
–
–
n/a
81,662
Unlisted options
750,000
Performance rights
680,000
Retention rights
Ordinary shares
170,000
296,124
–
960,000
240,000
–
Mr M Gracey (ii)
Unlisted options
2,750,000
1,000,000
Performance rights
632,000
Retention rights
Ordinary shares
158,000
273,640
Mr G Carlsen (ii)
Unlisted options
–
960,000
240,000
–
–
Performance rights
500,000
1,040,000
Retention rights
Ordinary shares
125,000
140,000
Mr P Achour (ii)
Unlisted options
300,000
Performance rights
440,000
Retention rights
Ordinary shares
110,000
69,349
260,000
–
–
–
–
–
–
–
–
n/a
–
–
–
n/a
–
–
–
n/a
–
–
–
n/a
(2,750,000)
–
–
n/a
–
–
–
n/a
–
–
–
n/a
–
1,640,000
410,000
377,786
1,000,000
1,592,000
398,000
273,640
–
1,540,000
385,000
140,000
–
–
–
–
–
–
–
–
(300,000)
–
–
–
–
440,000
110,000
69,349
–
–
–
n/a
–
–
–
n/a
–
–
–
n/a
–
–
–
n/a
–
1,640,000
410,000
n/a
1,000,000
1,592,000
398,000
n/a
–
1,540,000
385,000
n/a
–
440,000
110,000
n/a
Notes
(i) Mr Sadler resigned on 3 March 2015.
(ii) Mr Hansen-Knarhoi, Mr Gracey and Mr Carlsen were made redundant effective 5 May 2015 and Mr Achour was made redundant effective 8 January 2015.
LOANS TO KEY MANAGEMENT PERSONNEL
On 15 August 2012, the Company issued the following fully paid ordinary shares, funded via non-recourse loans, pursuant to the Employee Share Plan to
Key Management Personnel (KMP). The fair values were 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.
Name
Title
No. of shares
Non-recourse
loan value
Fair value at
grant date
Interest
Mr Gracey
Mr Hansen-Knarhoi
Business Development
Manager & General Counsel
CFO and
Joint Company Secretary
Mr Achour
HSE Manager
123,601
$67,500
$27,514
Interest not charged
89,399
$48,822
$19,900
Interest not charged
40,410
253,410
$22,069
$138,391
$8,995
Interest not charged
$56,409
100%
On 31 December 2014 the non-recourse loans expired and the fully paid ordinary shares were returned to the Company pursuant to the agreement.
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There were no other transactions with key management personnel during the year ended 30 June 2015.
20 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
EMPLOYMENT ARRANGEMENTS FOR KEY MANAGEMENT PERSONNEL
The employment arrangements of the KMPs are formalised in standard employment agreements. Details for the termination provisions contained in the
agreements that were in place at 30 June 2015 are provided below.
Name
Mr P Thick
Engagement
Term of
contract
Notice period by either party
Employee
Ongoing
12 weeks
Mr S Willis
Consultancy
Ongoing
30 days
No notice required for termination by Company for cause
No notice required for termination by Company for cause
Mr A Dixon
Mr K Ferguson III
Mr J Swanson
Employee
Employee
Employee
Ongoing
Ongoing
Ongoing
None
None
None
End of Audited Remuneration Report
Termination
benefit
9 months
None
None
None
None
This Report of Directors, incorporating the Remuneration Report is signed in accordance with a resolution of the Board of Directors.
Arthur Dixon AM
Chairman
30 September 2015
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 21
DIRECTORS’ DECLARATION
In the directors’ opinion:
(a)
the financial statements and notes are in accordance with the Corporations Act 2001, including
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the financial year
ended on that date; and
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
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 Mr Thick who performs both the Chief Executive Officer and the Chief Financial Officer
functions as required by section 295A of the Corporations Act 2001.
(b)
(c)
(d)
This declaration is made in accordance with a resolution of the directors.
Arthur Dixon AM
Chairman
30 September 2015
22 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
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 a company of New Standard’s size and complexity.
The 3rd edition of the ASX Corporate Governance Principles and Recommendations was introduced on 27 March 2014 and took effect for a listed entity’s
first full financial year ending on or after 1 July 2014. Accordingly this Corporate Governance Statement has been prepared on the basis of disclosure
under the 3rd edition of these principles with a table included at the back of this statement detailing the Company’s compliance with these principles during
the period.
This statement describes how New Standard has addressed the Council’s guidelines and eight corporate governance principles and where the Company’s
corporate governance practices depart from a recommendation, the Company discloses the reason for adoption of its own practices on an “if not, why not”
basis.
Given the size and stage of development of the Company and the cost of strict compliance with all the recommendations, the Board has adopted a range
of modified procedures and practices which it considers appropriate to enable it to meet the principles of good corporate governance. At the end of this
statement is a checklist setting out the recommendations with which the Company does or does not comply. The information in this statement is current
as at 30 September 2015.
The following governance-related documents can be found on the Company’s website at www.newstandard.com.au under the section marked
“Governance”.
CHARTERS
Board
Audit Committee
Nominee Committee
Remuneration Committee
POLICIES AND PROCEDURES
Board Performance Evaluation
Code of Conduct
Shareholder Communications
Continuous Disclosure Policy
Securities Trading Policy
Diversity Policy
Donation and Sponsorship Policy
Risk Management Policy
Health & Safety Policy
Environment Policy
Indigenous and Community Policy
Principle 1: Lay solid foundations for management and oversight
Role and Responsibilities of the Board and Management
Role of the Board
The main function of the Board is to lead and oversee the management
and strategic direction of the Company. The Board regularly measures
the performance of Management in implementation of the strategy
through regular Board meetings.
New Standard has adopted a formal board charter delineating the
roles, responsibilities, practices and expectations of the Board
collectively, the individual directors and senior management.
The Board of New Standard ensures that each member understands
its roles and responsibilities and ensures regular meeting so as to
retain full and effective control of the Company.
The Board responsibilities are as follows:
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 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;
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 23
CORPORATE GOVERNANCE STATEMENT
Principle 1: Lay solid foundations for management and oversight (cont’d)
Role of the Board (cont’d)
Setting the Company’s values and standards;
Terms of appointment
Non-Executive Directors
Undertaking a formal and rigorous review of the Corporate
Governance policies to ensure adherence to the ASX Corporate
Governance Council principles;
To facilitate a clear understanding of roles and responsibilities all non-
executive directors have signed letter of appointment. This letter of
appointment letter includes acknowledgement of:
Ensuring that the Company’s obligations to shareholders are
understood and met;
Ensuring the health, safety and well-being of employees in
conjunction with the senior management team, developing,
overseeing and reviewing the effectiveness of the Company’s
occupational health and safety systems to assure the well-being of
all employees;
Ensuring an adequate system is in place for the proper delegation
of duties for the effective operative day to day running of the
Company without the Board losing sight of the direction that the
Company is taking.
Establishing a diversity policy and setting objectives for achieving
diversity.
Delegation to Management
Other than matters specifically reserved for the Board, responsibility for
the operation and administration of the Company has been delegated
to the Managing Director. This responsibility is subject to an approved
delegation of authority which is reviewed regularly and at least
annually.
Internal control processes are designed to allow management to
operate within the parameters approved by the Board and the
Managing Director cannot commit the Company to additional activities
or obligations in excess of these delegated authorities without specific
approval of the Board.
Election of Directors
The Board is responsible for overseeing the selection process of new
directors, and will undertake appropriate checks before appointing a
new director, or putting forward a candidate for election as a director.
All relevant information is to be provided in the Notice of Meeting
seeking the election or re-election of a director including:
biographical details including qualifications and experience;
other directorships and material interests;
term of office;
statement by the board on independence of the director;
statement by the board as to whether it supports the election or re-
election; and
any other material information.
director responsibilities under the Corporations Act, Listing Rules,
the Company’s Constitution and other applicable laws;
corporate governance processes and Company policies;
board and board committee meeting obligations;
conflicts and confidentiality procedures;
securities trading and required disclosures;
access to independent advice and employees;
confidentiality obligations;
directors fees;
expenses reimbursement;
directors and officers insurance arrangements;
other directorships and time commitments; and
board performance review.
Managing Director
The Managing Director has a signed executive services agreement.
For further information refer to the audited Remuneration Report.
Role of Company Secretary
The Company Secretary is accountable to the Board for:
advising the Board and committees on corporate governance
matters;
the completion and distribution of board and committee papers;
completion of board and committee minutes; and
the facilitation of director induction processes and ongoing
professional development of directors.
All directors have access to the Company Secretary who has a direct
reporting line to the Chairman.
24 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
Principle 1: Lay solid foundations for management and oversight (cont’d)
Diversity
Retirement and rotation of directors
The Board values diversity in all aspects of its business and is
committed to creating a working environment that recognises and
utilizes the contribution of its employees. The purpose of this is to
provide diversity and equality relating to all employment matters. The
Company’s policy is to recruit and manage on the basis of ability and
qualification for the position and performance, irrespective of gender,
age, marital status, sexuality, nationality, race/cultural background,
religious or political opinions, family responsibilities or disability. The
company opposes all forms of unlawful and unfair discrimination.
The Board acknowledges the absence of female participation on the
Board of Directors. However, the Board has determined that the
composition of the current Board represents the best mix of Directors
that have an appropriate range of qualifications and expertise, can
understand and competently deal with current and emerging business
issues and can effectively review and challenge the performance of
management.
The Company has not set or disclosed measurable objectives for
achieving gender diversity. Due to the size of the Company, the Board
does not deem it practical to limit the Company to specific targets for
gender diversity as it operates in a very competitive labour market
where positions are sometimes difficult to fill. However, every
candidate suitably qualified for a position has an equal opportunity of
appointment regardless of gender, age, ethnicity or cultural
background.
The Company currently only has one full-time employee, being the
Managing Director who is male. The Company contracts four
consultants, two of whom are female and two of whom are male.
Performance review
Board and board committees
A review of the Board’s performance and effectiveness is conducted
annually and the performance of individual directors is undertaken
regularly. The Board has the discretion for these reviews to be
conducted either independently or on a self-assessment basis.
The review focuses on:
strategic alignment and engagement;
board composition and structure;
processes and practices;
culture and dynamics; Relationship with management; and
personal effectiveness.
A formal review of the Board’s performance and effectiveness in
respect of the financial year ended 30 June 2015 did not occur.
Managing Director and senior executives
Performance evaluation of the Managing Director, senior executives
and employees is undertaken annually through a performance
appraisal process which involves reviewing and assessment of
performance against agreed corporate and individual key performance
indicators and deliverables.
For further information refer to the audited Remuneration Report.
Retirement and rotation of directors are governed by the Corporations
Act 2001 and the Constitution of the Company. Each year, one third of
directors must retire and may offer themselves for re-election. Any
casual vacancy filled will be subject to shareholder vote at the next
Annual General Meeting of the Company. It is intended that Mr Willis
will stand for re-election by rotation at the Company’s 2015 Annual
General Meeting.
Independent Professional Advice
Each director of the Company or a controlled entity has the right to
seek independent professional advice at the expense of the Company
or the controlled entity; however prior approval of the Chairman is
required which will not be unreasonably withheld.
Access to employees
Directors have the right of access to any employee. Any employee
shall report any breach of corporate governance principles or Company
policies to the Managing Director who shall remedy the breach. If the
breach is not rectified to the satisfaction of the employee, they shall
have the right to report any breach to an independent director without
further reference to senior executives of the Company.
Directors’ and officers’ liability insurance
Directors’ and officers’ liability insurance is maintained by the Company
for the Directors and senior executives at the Company’s expense.
Board meetings
The frequency of board meetings and the extent of reporting from
management at board meetings are as follows:
a minimum of nine scheduled meetings are to be held per year;
other meetings will be held as required;
meetings can be held where practicable by electronic means;
information provided to the Board includes all material information
related to the operations of the Company including exploration,
development and production operations, budgets, forecasts, cash
flows, funding requirements, investment and divestment
proposals, business development activities, investor relations,
financial accounts, taxation, external audits, internal controls, risk
assessments, people and health, safety and environmental reports
and statistics;
the Chairman of the appropriate board committee reports to the
next subsequent board meeting the outcomes of that meeting and
the minutes of those committee meetings are also tabled.
The number of directors’ meetings (including meetings of committees
of directors) and the number of meetings attended by each of the
directors of the Company during the financial year are set out in the
Directors’ Report.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 25
CORPORATE GOVERNANCE STATEMENT
Principle 2: Structure the Board to add value
Composition of the Board
Composition of the Board (cont’d)
The names of the directors of the Company and their qualifications are
set out in the section headed “Information on Directors” in the current
financial year’s Director’s Report.
The composition of the Board has been structured so as to provide
New Standard with an adequate mix of directors with industry
knowledge, technical, commercial and financial skills together with
integrity and judgment considered necessary to represent shareholders
and fulfill the business objectives 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
the Board should constitute of a majority of independent directors and
that the Chairperson should be independent. The Board currently
consists of five directors of whom one is considered independent,
being Mr Arthur Dixon (Independent Chairman – appointed 1 May
2011). During the financial year ended 30 June 2015, the Board was
comprised of two additional independent directors, Mr Craig Sadler and
Mr Greg Channon, until their resignations in March and April
respectively. Mr Kip Ferguson III and Mr Jeff Swanson are not
considered independent due to their association with Magnum Hunter
Resources Corporation (NYSE:MHR), the largest shareholder of New
Standard (17%). Mr Phil Thick and Mr Sam Willis serve in executive
roles and therefore do not meet the criteria for an independent director.
The detailed skills matrix of the Board for a company of New
Standard’s size and complexity is not considered necessary.
Principle 3: Act ethically and responsibly
The principal business of the Company at present is exploration and
new business opportunities, therefore requiring a skillset of geological
and geophysical expertise, executive management, financial and
commercial skills.
Given the significant transformation the Company has recently
undergone the Board composition is under review to better align with
the new direction of the Company.
Nomination of other Board Members
Membership of the Board of Directors is reviewed on an on-going basis
by the Chairperson of the Board to determine if additional core
strengths are required to be added to the Board in light of the nature of
the Company’s businesses and its objectives. The Board does not
have a separate Nomination Committee and does believe it is
necessary in a Company of New Standard’s size.
Director induction and ongoing professional development
The Company does not have a formal induction program for Directors
but does provide Directors with information pack detailing policies,
corporate governance and various other corporate requirements of
being a director of an ASX Listed company. Due to the size and nature
of the business, Directors are expected to already possess a level of
both industry and commercial expertise before being considered for a
directorship of the Company. Directors are provided with the
opportunity to access employees of the business and any information
as they require about the business including being given access to
regular news articles and publications where considered relevant.
Code of Conduct
Encouraging the reporting of illegal and unethical behavior;
Directors, officers, employees and consultants to the Company are
required to observe high standards of behavior and business ethics in
conducting business on behalf of the Company and they are required
to maintain a reputation of integrity on the part of both the Company
and themselves. The Company does not contract with or otherwise
engage any person or party where it considers integrity may be
compromised.
New Standard’s ethical rules demands 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;
Provide a framework for the Company to achieve a diverse and
skilled workforce.
Conflicts of Interest
Directors are required to disclose to the Board actual or potential
conflicts of interest that may or might reasonably be thought to exist
between the interests of the director or the interests of any other party
in so far as it affects the activities of the Company and to act in
accordance with the Corporations Act if conflict cannot be removed or if
it persists. That involves taking no part in the decision making process
or discussions where that conflict does arise.
Trading in Company Securities
Directors are required to make disclosure of any share trading. The
Company policy in relation to share trading is that officers are
prohibited to trade whilst in possession of unpublished price sensitive
information concerning the Company or within a period of the release
of results i.e. the blackout period. That is information which a
reasonable person would expect to have a material affect on the price
or value of the Company’s shares. An officer must receive authority to
acquire or sell shares with the directors or the Company Secretary prior
to doing so to ensure that there is no price sensitive information of
which that officer might not be aware. The undertaking of any trading in
shares must be notified to the ASX.
26 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
Principle 4: Safeguard integrity in 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 Managing Director 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 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.
Principle 5: Make timely and balanced disclosure
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.
Principle 6: Respect the rights of shareholders
The Board’s fundamental responsibility to shareholders is to work
towards meeting the Company’s objectives so as to add value for
them. The Board maintains an investor relation program which will
inform shareholders of all major developments affecting the Company
by:
preparing half yearly and yearly financial reports;
preparing quarterly cash flow reports and reports as to activities;
making announcement in accordance with the listing rules and the
continuous disclosure obligations;
posting all of the above on the Company’s website;
annually, and more regularly if required, holding a general meeting
of shareholders and forwarding to them the annual report, if
requested, together with notice of meeting and proxy form; and
voluntarily releasing other information which it believes is in the
interest of shareholders.
The Company has established procedures for the selection,
appointment and rotation of its external auditor. The Board is
responsible for the initial appointment of the external auditor and the
appointment of a new external auditor when any vacancy arises, as
recommended by the Audit Committee. Candidates for the position of
external auditor must demonstrate complete independence from the
Company through the engagement period. The Board may otherwise
select an external auditor based on criteria relevant to the Company’s
business and circumstances. The performance of the external auditor
is reviewed on an annual basis by the Audit Committee and any
recommendations are made to the Board.
The Company’s external auditor attends each Annual General meeting
and is available to answer questions from shareholders relevant to the
conduct of the external audit, the preparation and content of the
Auditor’s Report, the accounting policies adopted by the Company and
the independence of the auditor.
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.
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.
The Annual General Meeting enables shareholders to discuss the
annual report and participate in the meetings either by attendance or
by written communication. The Company provides all shareholders with
a Notice of Meeting so they can be fully informed and be able to vote
on all resolutions at the Annual General Meeting. Shareholders are
able to discuss any matter with the directors and/or the auditor of the
Company who is also invited to attend the Annual General Meeting.
Shareholders have the option to receive all Company and share
registry communications electronically, and may also communicate
with the Company by emailing the Company via its website. All
shareholders have the ability to request copies of ASX releases, all of
which are published and available on the Company’s website
immediately after they are released to ASX.
The Company regularly reviews its stakeholder communication policy
and endeavours to maintain a program appropriate for a company of its
size and complexity.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 27
CORPORATE GOVERNANCE STATEMENT
Principle 7: Recognise and manage risk
The Board has adopted a Risk Management Policy, which sets out the
Company’s risk profile. Under the policy, the Board is responsible for
approving the Company’s policies on risk oversight and management
and satisfying itself that management has developed and implemented
a sound system of risk management and internal control.
material business risks of the Company. The Board also requires
management to report to it confirming that those risks are being
managed effectively. The Board has received a report from
management as to the effectiveness of the Company’s management of
its material business risks for the Reporting Period.
Under the policy, the Board delegate’s day-to-day management of risk
to the Managing Director, who is responsible for identifying, assessing,
monitoring and managing risks. The Managing Director is also
responsible for updating the Company’s material business risks to
reflect any material changes, with the approval of the Board.
The Managing Director has provided a declaration to the Board in
accordance with section 295A of the Corporations Act and has assured
the Board that such declaration 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 risks.
In fulfilling the duties of risk management, the Managing Director may
have unrestricted access to Company employees, contractors and
records and may obtain independent expert advice on any matter they
believe appropriate, with the prior approval of the Board.
The Board does not have a separate Risk Management Committee but
has mandated the Audit Committee to monitor and review the integrity
of financial reporting and the Company’s internal financial control
systems. A report by management on the effectiveness of the internal
financial control is provided to the Audit Committee on an annual basis.
In addition, the following risk management measures have been
adopted by the Board to manage the Company’s material business
risks:
Establishment of financial control procedures and authority limits
for management;
Approval of an annual budget;
Adoption of a compliance procedure for the purpose of ensuring
compliance with the Company’s continuous disclosure obligations;
and
Adoption of a corporate governance manual which contains other
policies to assist the Company to establish and maintain its
governance practices.
Maintenance and review of a risk register to identify the
Company’s material business risks and risk management
strategies for these risks. The risk register is reviewed half yearly
and updated as required. Management reports to the Board on
material business risks at each Board meeting.
The Board has required management to design, implement and
maintain risk management and internal control systems to manage the
Principle 8: Remunerate fairly and responsibly
The Company has a Remuneration Committee that is currently made
up of two members, Mr Arthur Dixon, independent Chairman and Mr
Mark Clements (Company Secretary). Mr Clements is in an executive
role and therefore is not considered independent. During the period Mr
Craig Sandler and Mr Greg Channon were also independent directors
who were members of the Committee and Mr David Hansen-Knarhoi
as an executive was not considered independent.
Details of remuneration, including the Company’s policy on
remuneration, are contained in the “Remuneration Report” which forms
part of the Directors’ Report. The Company’s policy is to remunerate
non-executive directors at a fixed fee for time, commitment and
responsibilities. Remuneration for non-executive directors is not linked
to individual performance. From time-to-time the Company may grant
options to non-executive directors. The grant of options is designed to
recognise and reward efforts as well as to provide non-executive
directors with additional incentive to continue those efforts for the
benefit of the Company. The maximum aggregate amount of fees
(including superannuation payments) that can be paid to non-executive
directors is subject to approval by the shareholders at general meeting.
Pay and rewards for executive directors and senior executives consists
of a base salary and performance incentives. Long term performance
28 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
Internal Audit
The Company does not have an internal audit function as the Board
believes the business is neither the size nor complexity that requires
such a function. The Audit Committee meets at least twice a year and
is responsible for monitoring the effectiveness of internal controls, risk
management procedures and governance.
Sustainability Risks
The Company has a detailed risk matrix which it regularly reviews and
which highlights critical risk factors the Company faces at any particular
time. The principal risks highlighted are what would typically be
expected for a small listed exploration company and include;
Reliance on key executives
Inability to access new exploration capital
Volatility in oil prices and applicable exchange rates (mainly USD)
Unsuccessful exploration results
Exposure to other operators, be it through Joint Venture
agreements or actions of those operators in an operational sense
Legislature changes in jurisdictions the Company operates in (e.g.
hydraulic fracturing ban in France)
As the Company expands its activities either within existing projects or
with the addition of new projects, it is expected that the sustainability
risks will change accordingly. These Board reviews the overall
sustainability of both the oil and gas exploration business and more
specifically, the Company, in its normal course of business and
therefore does not produce a separate sustainability report.
incentives may include options and/or performance rights granted at
the discretion of the Remuneration Committee and subject to obtaining
the relevant approvals. The grant of options and/or performance rights
is designed to recognise and reward efforts as well as to provide
additional incentive and may be subject to the successful completion of
performance hurdles. Executives are offered a competitive level of
base pay at market rates (for comparable companies) and are
reviewed annually to ensure market competitiveness.
There are no termination or retirement benefits for non-executive
directors (other than for superannuation).
The Company’s Remuneration Committee Charter includes a
statement regarding the Company’s policy on prohibiting transactions
in associated products which limit the risk of participating in unvested
elements under any equity based remuneration schemes.
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 incentives designed to retain and motivate Board and Key
Management Personnel in bringing more value to the Company.
AUDITOR’S INDEPENDENCE DECLARATION
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 29
INDEPENDENCE AUDIT REPORT
30 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 31
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the financial year ended 30 June 2015
Continuing operations
Revenue from continuing operations
Gain on investments
Other revenue
Total revenue and other income
Production and lease operating expenses
Depletion, depreciation and accretion expenses
Administrative expenses
Share based payments
Foreign exchange gain
Impairment of exploration and evaluation and development expenditure
Loss on investment in available-for-sale
Loss on investment in associate
Loss before income tax expense
Income tax benefit
Loss for the year from continuing operations
Discontinued operations
Gain on sale of subsidiary
Loss for the year from discontinued operations
Loss attributable to owners of the Parent entity
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the year
Total comprehensive loss for the year
Total comprehensive loss for the year is attributable to:
Owners of the Company
Loss per share for loss from
Continuing operations attributable to the ordinary shareholders of the Company
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Discontinued operations attributable to the ordinary shareholders of the
Company
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
2015
$
–
–
93,454
93,454
–
(288,893)
(6,028,552)
(346,447)
2,237,772
(34,314,456)
(146,063)
–
(38,793,185)
6,032,231
(32,760,954)
264,081
(47,219,984)
(79,716,857)
Restated
2014
$
–
41,768
949,785
991,553
–
(393,518)
(4,939,883)
(198,479)
10,763
–
–
(1,193,013)
(5,722,577)
4,075,034
(1,647,543)
–
(394,075)
(2,041,618)
6,147,308
6,147,308
(73,569,549)
(2,398,729)
(2,398,729)
(4,440,347)
(73,569,549)
(4,440,347)
Cents Per Share
Cents Per Share
(8.48)
(8.48)
(12.16)
(12.16)
(0.49)
(0.49)
(0.11)
(0.11)
Note
2
2
2
3
3
3
30
8
28
10
4
26
27(a)
18
18
18
18
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
32 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
Current Assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Assets classified as held for sale
Other assets
Total Current Assets
Non-Current Assets
Derivative financial instruments
Exploration and evaluation and development expenditure
Oil and Gas properties
Investment in associate
Property, plant and equipment
Deferred tax asset
Other assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Total Current Liabilities
Non-Current Liabilities
Borrowings
Deferred tax liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
(Accumulated losses)/Retained earnings
Total Equity
Note
23(a)
6
7
27(b)
7
8
9
10
11
14
12
13
13
14
15
16
17
2015
$
2014
$
440,894
64,370
–
2,367,890
–
2,873,154
–
4,500,000
–
–
302,737
–
–
4,802,737
7,675,891
630,258
–
630,258
–
–
–
630,258
8,625,765
2,862,295
48,157
–
203,797
11,740,014
119,961
54,408,596
36,891,767
389,531
708,984
12,931,384
181,268
105,631,491
117,371,505
8,132,416
138,700
8,271,116
9,186,312
19,645,342
28,831,654
37,102,770
7,045,633
80,268,735
67,011,182
3,428,661
(63,394,210)
7,045,633
67,011,182
839,916
12,417,637
80,268,735
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
Issued Capital
Accummulated
Losses
Share Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
$
$
$
$
Total
$
67,011,182
12,417,637
4,162,865
(3,322,949)
80,268,735
(79,716,857)
–
(79,716,857)
–
–
–
–
(79,716,857)
6,147,308
6,147,308
6,147,308
(73,569,549)
2015
Equity as at 1 July 2014
Loss for the year
Unrealised profit on translation
of foreign operations
Total comprehensive (loss)/income
Transactions with owners
in their capacity as owners;
Other comprehensive loss
Share based payments
–
–
–
–
–
Equity as at 30 June 2015
67,011,182
(63,394,210)
3,905,010
(3,905,010)
–
346,447
604,302
–
–
–
346,447
2,824,359
7,045,633
2014
Equity as at 1 July 2013
Loss for the year
Unrealised profit on translation
of foreign operations
Total comprehensive loss
Transactions with owners
in their capacity as owners;
Issued Capital
$
Retained
Earnings
$
Share Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
$
$
Total
$
53,626,937
14,459,255
3,964,386
(924,220)
71,126,358
–
–
–
(2,041,618)
–
(2,041,618)
–
–
–
–
198,479
–
(2,041,618)
(2,398,729)
(2,398,729)
(2,398,729)
(4,440,347)
–
–
13,384,245
198,479
Issue of shares, net of transaction costs
13,384,245
Share based payments
–
–
–
Equity as at 30 June 2014
67,011,182
12,417,637
4,162,865
(3,322,949)
80,268,735
The above consolidated statement of changes of equity should be read in conjunction with the accompanying notes.
34 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 30 June 2015
Cash Flows From Operating Activities
Oil & Gas sales
Payments to suppliers and employees
Interest received
Interest Paid
Cash flows from operating activities
of discontinued operations
Net cash used in operating activities
Cash Flows From Investing Activities
Payments for oil and gas properties
Reimbursement of exploration expenditure
Cash receipts offset against development expenditure
Payment for exploration, evaluation and development
Payments for acquisition of subsidiary net of cash acquired
Payments for purchase of equity investments
Payments for plant and equipment
Proceeds from sale of plant and equipment
Proceeds from sale of subsidiary
Proceeds from sale of available-for-sale financial instrument
Cash flows from investing activities
of discontinued operations
Net cash used in investing activities
Cash Flows From Financing Activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of shares
Cash flows from financing activities
of discontinued operations
Net cash flows (used in)/provided by financing activities
Note
27(c)
23(b)
28
27(c)
27(c)
2015
$
7,768,433
(10,351,152)
67,267
(2,376,755)
(1,005,446)
(5,897,653)
(15,827,341)
1,889,670
–
(4,299,814)
–
–
–
116,639
6,972,955
243,468
10,202,901
(701,522)
7,106,446
(352,850)
–
(7,970,155)
(1,216,559)
2014
$
1,820,022
(6,857,843)
1,105,594
(15,498)
-
(3,947,725)
(14,958,808)
6,030,755
580,092
(10,044,617)
(18,476,419)
(1,003,860)
(75,320)
–
–
–
–
(37,948,177)
9,135,234
(73,667)
151,999
–
9,213,566
Net decrease in cash and cash equivalents
(7,815,734)
(32,682,336)
Cash and cash equivalents at beginning of the financial period
Exchange rate adjustments
Cash and cash equivalents at the end of the financial period
23(a)
8,625,765
(369,137)
440,894
41,536,690
(228,589)
8,625,765
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
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. The address of the Company’s registered office and principal place of business is 6 Outram Street, West Perth
WA 6005.
STATEMENT OF COMPLIANCE
The financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and Interpretations and complies with other requirements of the law.
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 30 September 2015.
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. New Standard Energy Limited is a for-profit entity for the purpose of preparing the financial statements.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2015.
GOING CONCERN
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the
realisation of assets and the settlement of liabilities in the normal course of business.
During the year the consolidated entity incurred a net loss after income tax from continuing and discontinued operations for the year ended of
$79,716,857 and incurred net cash outflows from operating and investing activities of $6,599,175 for continuing operations.
The ability of the consolidated entity to continue as a going concern is dependent upon decisions around acreage retention or relinquishment,
renegotiation of work commitments with the regulators and future capital raisings to fund ongoing exploration commitments and for working
capital. The Directors believe that they will be able to raise additional capital as required and are in the process of evaluating the consolidated
entity’s cash requirements.
The Directors believe that the consolidated entity will continue as a going concern. As a result the financial report has been prepared on a going
concern basis. However, should the consolidated entity be unsuccessful in undertaking additional raisings, there is a material uncertainty that
may cast significant doubt as to whether the consolidated entity will be able to continue as a going concern. No adjustments have been made
relating to the recoverability and classification of liabilities that might be necessary should the Consolidated Entity not continue as a going
concern.
PRINCIPALS OF CONSOLIDATION
(a)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group
is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group.
They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and
other comprehensive income, statement of changes in equity and statement of financial position respectively.
(b)
Associates
Associates are all entities over which the group has significant influence but not control or joint control. This is generally the case where
the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of
accounting after initially being recognised at cost.
(c)
Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The
classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.
The Group has joint operations.
Joint operations
The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held
or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate
headings.
36 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(c)
Joint arrangements (cont’d)
Joint ventures
Interests in joint ventures are accounted for using the equity method after initially being recognised at cost in the consolidated statement
of financial position.
(d)
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group’s
share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s share of movements in other
comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint
ventures are recognised as a reduction in the carrying amount of the investment.
When the group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other
unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the other entity.
Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent of the group’s
interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the
policies adopted by the Group.
(e)
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.
(f)
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.
(g)
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 cash flows 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.
(h)
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.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(i)
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.
(j)
Exploration and evaluation expenditure
Exploration for and evaluation of hydrocarbon resources is the search for hydrocarbon resources after the entity has obtained legal
rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the
hydrocarbon resources. Accordingly, exploration and evaluation expenditures are those expenditures incurred by the Company in
connection with the exploration for and evaluation of hydrocarbon resources before the technical feasibility and commercial viability of
extracting a hydrocarbon resource is demonstrable.
Accounting for exploration and evaluation expenditures is assessed separately for each ‘area of interest’. An ‘area of interest’ is an
individual geological area which is considered to constitute a favourable environmental for the presence of a hydrocarbon resource or
has been proved to contain such a resource.
Expenditure incurred on activities that precede exploration of hydrocarbon resources, including all expenditure incurred prior to securing
legal rights to explore an area, is expensed as incurred. For each area of interest the expenditure is recognised as an exploration and
evaluation asset where the following conditions are satisfied:
(a)
(b)
The rights to tenure of the area of interest are current; and
At least one of the following conditions is also met:
i.
ii
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
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.
(k)
Development expenditure
Development expenditure is accumulated in respect of each separate area of interest. Development expenditure relates to costs
incurred to access a hydrocarbon resource after the technical feasibility and commercial viability of extracting the hydrocarbon 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.
38 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(k)
Development expenditure (cont’d)
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(h).
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.
(l)
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.
(m)
Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their
carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits,
financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are
specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current
asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held
for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be
recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately
from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from
other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a
separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of
business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are
presented separately in the income statement.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(n)
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.
(o)
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 with a corresponding increase in equity. The total amount to be
expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the
impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of
each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting
conditions. The above policy is applied to all equity-settled share-based payments.
(p)
Revenue recognition
Revenue from the sale of oil and gas related products are recognised when the significant risks and rewards of ownership has
transferred to the buyer and can be measured reliably. In the case of oil, this is usually at the time of lifting. Interest income is
recognised in profit or loss as it accrues and takes into account 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.
40 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(q)
Property, plant and equipment
Owned assets
Items of property, plant and equipment are recognised at cost less accumulated depreciation (see below) and impairment losses (see
Impairment 1(h)).
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 useful life and depreciation method applied to an asset are reassessed at least annually. The estimated useful lives for
each class of assets in the current and comparative periods are as follows:
Class of fixed asset
Motor Vehicles
Plant and equipment
Estimated useful live
4-5 years
1-15 years depending on the nature of the asset
Leasehold improvements
3-10 years depending on the nature of the asset
The useful life and depreciation method applied to an asset are reassessed at least annually.
(r)
Oil and gas properties
These properties represent the accumulation of all exploration, evaluation and development expenditure, pre-production development
costs and ongoing costs of continuing to develop reserves for production incurred by or on behalf of the entity in relation to areas of
interest. When further development expenditure is incurred in respect of a property after the commencement of production, such
expenditure is carried forward as part of the cost of that property only when expected future economic benefits are to be received,
otherwise such expenditure is classified as part of the cost of production
Depletion / depreciation / amortisation
Oil and gas properties are depleted using the units of production method. Depletion is not charged until commencement of production.
Changes in factors such as estimates of proved and probable reserves that effect unit of production calculations do not give rise to prior
year financial period adjustments and are dealt with on a prospective basis
(s)
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.
(t)
Borrowings
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at
amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit or loss
over the period of the borrowing using the effective interest rate method. Borrowings are classified as current liabilities, unless the entity
has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
(u)
Derivatives
Currently the Group uses certain hedging derivatives to mitigate commodity price risk. These derivatives are initially measured at fair
value on the date a derivative contract is entered into and are subsequently remeasured to their fair value monthly. The accounting
treatment for subsequent changes in fair values is that the changes are recorded in profit or loss, together with any changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk.
(v)
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.
(w)
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.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(w)
Earnings per share (cont’d)
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.
(x)
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.
(y)
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.
(z)
Foreign currency translation
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.
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.
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 profit or loss and other comprehensive income are translated at
average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions), and
(iii)
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and
other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign
operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences is
reclassified to profit or loss, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entities and translated at the closing rate.
42 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(aa)
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.
(bb)
Adoption of new and revised accounting standards
The nature and effect of each new and revised standards on the Group’s consolidated financial report at 30 June 2015 are described
below.
AASB 132 Offsetting Financial Assets and Financial Liabilities and AASB 2012-3 Amendments to Australian Accounting Standards
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation to address inconsistencies identified in
applying some of the offsetting criteria of AASB 132, including clarifying the meaning of "currently has a legally enforceable right of set-
off" and that some gross settlement systems may be considered equivalent to net settlement. Adoption of AASB 2012-3 did not impact
the Group financial statements.
Amendments AASB 2013-3 to AASB 136 Recoverable Amount Disclosures for Non-Financial Assets
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments include the requirement to
disclose additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value
less costs of disposal. The Group have disclosed the required information on the significant assets or liabilities carried at recoverable
amount.
AASB 1031 Materiality
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued December 2013)
that contain guidance on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed. AASB 2014-1
Part C issued in June 2014 makes amendments to eight Australian Accounting Standards to delete their references to AASB 1031.
Adoption of the amendment did not impact the Group financial statements.
AASB 2013-9 (Part B) Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments
The Standard contains three main parts and makes amendments to a number Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 and also makes minor
editorial amendments to various other standards.
Part C makes amendments to a number of Australian Accounting Standards, including incorporating Chapter 6 Hedge Accounting into
AASB 9 Financial Instruments. Adoption of AASB 2013-9 did not impact the Group financial statements.
AASB 2014-1 (Part A) Annual Improvements 2010-2012 Cycle
AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting Standards arising from the issuance by the
International Accounting Standards Board (IASB) of International Financial Reporting Standards (IFRSs) Annual Improvements to
IFRSs 2010–2012 Cycle and Annual Improvements to IFRSs 2011–2013 Cycle.
Annual Improvements to IFRSs 2010–2012 Cycle addresses the following items:
AASB 2 – Clarifies the definition of 'vesting conditions' and 'market condition' and introduces the definition of 'performance
condition' and 'service condition'.
AASB 3 – Clarifies the classification requirements for contingent consideration in a business combination by removing all
references to AASB 137.
AASB 8 – Requires entities to disclose factors used to identify the entity's reportable segments when operating segments have
been aggregated. An entity is also required to provide a reconciliation of total reportable segments' asset to the entity's total
assets.
AASB 116 & AASB 138 – Clarifies that the determination of accumulated depreciation does not depend on the selection of the
valuation technique and that it is calculated as the difference between the gross and net carrying amounts.
AASB 124 – Defines a management entity providing KMP services as a related party of the reporting entity. The amendments
added an exemption from the detailed disclosure requirements in paragraph 17 of AASB 124 for KMP services provided by a
management entity. Payments made to a management entity in respect of KMP services should be separately disclosed.
Adoption of AASB 2014-1 did not impact the Group financial statements.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(bb)
Adoption of new and revised accounting standards (cont’d)
AASB 2014-1 (Part A) Annual Improvements 2011-2013 Cycle
AASB13 – Clarifies that the portfolio exception in paragraph 52 of AASB 13 applies to all contracts within the scope of AASB
139 or AASB 9, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in AASB
132.
AASB 140 – Clarifies that judgment is needed to determine whether an acquisition of investment property is solely the
acquisition of an investment property or whether it is the acquisition of a group of assets or a business combination in the
scope of AASB 3 that includes an investment property. That judgment is based on guidance in AASB 3.AASB 119 (Part B)
Employee Benefits; and
Adoption of AASB 2014-1 did not impact the Group financial statements.
AASB 119 Defined Benefits Plans: Employee Contributions and Amendments to Australian Accounting Standards (Part B)
AASB 2014-Part B makes amendments in relation to the requirements for contributions from employees or third parties that are set out
in the formal terms of the benefit plan and linked to service.
The amendments clarify that if the amount of the contributions is independent of the number of years of service, an entity is permitted to
recognise such contributions as a reduction in the service cost in the period in which the related service is rendered, instead of
attributing the contributions to the periods of service.
Adoption of amendment did not impact the Group.
AASB 1053 Application of Tiers of Australian Accounting Standards.
The Standard makes amendments to AASB 1053 Application of Tiers of Australian Accounting Standards to:
clarify that AASB 1053 relates only to general purpose financial statements;
make AASB 1053 consistent with the availability of the AASB 108 Accounting Policies, Changes in Accounting Estimates and
Errors option in AASB 1 First-time Adoption of Australian Accounting Standards;
clarify certain circumstances in which an entity applying Tier 2 reporting requirements can apply the AASB 108 option in AASB
1; permit an entity applying Tier 2 reporting requirements for the first time to do so directly using the requirements in AASB 108
(rather that applying AASB 1) when, and only when, the entity had not applied, or only selectively applied, applicable
recognition and measurement requirements in its most recent previous annual special purpose financial statements; and
specify certain disclosure requirements when an entity resumes the application of Tier 2 reporting requirements.
Adoption of amendment did not impact the Group.
(cc)
Standards and interpretations issued not yet effective
The following new/amended accounting standards and interpretations have been issued, but are not mandatory for financial years
ended 30 June 2015. They have not been adopted in preparing the financial statements for the year ended 30 June 2015 and are
expected to impact the entity in the period of initial application. In all cases the entity intends to apply these standards from application
date as indicated in the table below.
Application
date of
standard
1 January
2018
Application
date for
Group
1 July 2018
Reference / Title
Summary
AASB 9
Financial
Instruments
for classification and measurement, a single,
AASB 9 (December 2014) is a new Principal standard which replaces AASB
139. This new Principal version supersedes AASB 9 issued in December
2009 (as amended) and AASB 9 (issued in December 2010) and includes a
model
forward-looking
‘expected loss’ impairment model and a substantially-reformed approach to
hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 January 2018.
However, the Standard is available for early application. The own credit
changes can be early applied in isolation without otherwise changing the
accounting for financial instruments.
The final version of AASB 9 introduces a new expected-loss impairment
model that will require more timely recognition of expected credit losses.
Specifically, the new Standard requires entities to account for expected
credit losses from when financial instruments are first recognised and to
recognise full lifetime expected losses on a more timely basis.
44 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(cc)
Standards and interpretations issued not yet effective (cont’d)
Reference / Title
Summary
Application
date of
standard
Application
date for
Group
AASB 9 (cont’d)
issued
included
in December 2013
Amendments to AASB 9 (December 2009 & 2010 editions and AASB 2013-
9)
the new hedge accounting
requirements, including changes to hedge effectiveness testing, treatment of
hedging costs, risk components that can be hedged and disclosures.
AASB 9 includes requirements for a simpler approach for classification and
measurement of financial assets compared with the requirements of AASB
139.
The main changes are described below.
a. Financial assets that are debt instruments will be classified based on (1)
the objective of the entity's business model for managing the financial
assets; (2) the characteristics of the contractual cash flows.
b. Allows an irrevocable election on initial recognition to present gains and
losses on investments in equity instruments that are not held for trading
in other comprehensive
these
investments that are a return on investment can be recognised in profit
or loss and there is no impairment or recycling on disposal of the
instrument.
income. Dividends
in respect of
c. Financial assets can be designated and measured at fair value through
profit or loss at initial recognition if doing so eliminates or significantly
reduces a measurement or recognition inconsistency that would arise
from measuring assets or liabilities, or recognising the gains and losses
on them, on different bases.
Where the fair value option is used for financial liabilities the change in fair
value is to be accounted for as follows:
The change attributable to changes in credit risk are presented in other
comprehensive income (OCI); and
The remaining change is presented in profit or loss.
AASB 9 also removes the volatility in profit or loss that was caused by
changes in the credit risk of liabilities elected to be measured at fair value.
This change in accounting means that gains caused by the deterioration of
an entity’s own credit risk on such liabilities are no longer recognised in profit
or loss.
Consequential amendments were also made to other standards as a result
of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7,
AASB 2010-10 and AASB 2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments arising from the
issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB
9 (December 2009) and AASB 9 (December 2010)) from 1 February 2015
and applies to annual reporting periods beginning on after 1 January 2015.
AASB 2014-3 amends AASB 11 to provide guidance on the accounting for
acquisitions of interests in joint operations in which the activity constitutes a
business. The amendments require:
(a) the acquirer of an interest in a joint operation in which the activity
constitutes a business, as defined in AASB 3 Business Combinations, to
apply all of the principles on business combinations accounting in AASB
3 and other Australian Accounting Standards except for those principles
that conflict with the guidance in AASB 11; and
(b) the acquirer to disclose the information required by AASB 3 and other
Australian Accounting Standards for business combinations. This
Standard also makes an editorial correction to AASB 11
AASB 2014-3
Amendments to
Australian
Accounting
Standards –
Accounting for
Acquisitions of
Interests in Joint
Operations
[AASB 1 & AASB
11]
1 January
2016
1 July 2016
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(cc)
Standards and interpretations issued not yet effective (cont’d)
Reference / Title
Summary
AASB 2014-4
Amendments to
AASB 16 and
AASB 38
Clarification of
Acceptable
Methods of
Depreciation and
Amortisation
(Amendments to
AASB 16 and
AASB 38)
AASB 15
Revenue from
Contracts with
Customers
AASB 2014-10
Amendments to
Australian
Accounting
Standards – Sale
or Contribution of
Assets between an
Investor and its
Associate or Joint
Venture
AASB 116 and AASB 138 both establish the principle for the basis of
depreciation and amortisation as being the expected pattern of consumption
of the future economic benefits of an asset.
The IASB has clarified that the use of revenue-based methods to calculate
the depreciation of an asset is not appropriate because revenue generated
by an activity that includes the use of an asset generally reflects factors
other than the consumption of the economic benefits embodied in the asset.
The amendment also clarified that revenue is generally presumed to be an
inappropriate basis for measuring the consumption of the economic benefits
embodied in an intangible asset. This presumption, however, can be
rebutted in certain limited circumstances.
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with
Customers, which replaces IAS 11 Construction Contracts, IAS 18 Revenue
and related Interpretations (IFRIC 13 Customer Loyalty Programmes, IFRIC
15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of
Assets from Customers and SIC-31 Revenue—Barter Transactions Involving
Advertising Services).
The core principle of IFRS 15 is that an entity recognises revenue to depict
the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance obligations in
the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation
Early application of this standard is permitted.
AASB 2014-5 incorporates the consequential amendments to a number
Australian Accounting Standards (including Interpretations) arising from the
issuance of AASB 15.
The International Accounting Standards Board (IASB) in its July 2015
meeting decided to confirm its proposal to defer the effective date of IFRS 15
(the international equivalent of AASB 15) from 1 January 2017 to 1 January
2018. The amendment to give effect to the new effective date for IFRS 15 is
expected to be issued in September 2015. At this time, it is expected that the
AASB will make a corresponding amendment to AASB 15, which will mean
that the application date of this standard for the Group will move from 1 July
2018 to 1 July 2019.
AASB 2014-10 amends AASB 10 Consolidated Financial Statements and
AASB 128 to address an inconsistency between the requirements in AASB
10 and those in AASB 128 (August 2011), in dealing with the sale or
contribution of assets between an investor and its associate or joint venture.
The amendments require:
(a) a full gain or loss to be recognised when a transaction involves a
business (whether it is housed in a subsidiary or not); and
(b) a partial gain or loss to be recognised when a transaction involves
assets that do not constitute a business, even if these assets are
housed in a subsidiary.
AASB 2014-10 also makes an editorial correction to AASB 10.
AASB 2014-10 applies to annual reporting periods beginning on or after 1
January 2016. Early adoption permitted.
46 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
Application
date of
standard
1 January
2016
Application
date for
Group
1 July 2016
1 January
2018
1 July 2019
1 January
2016
1 July 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
(cc)
Standards and interpretations issued not yet effective (cont’d)
Reference / Title
Summary
Application
date of
standard
1 January
2016
Application
date for
Group
1 July 2016
1 January
2016
1 July 2016
The subjects of the principal amendments to the Standards are set out
below:
AASB 5 Non-current Assets Held for Sale and Discontinued Operations:
Changes in methods of disposal – where an entity reclassifies an asset (or
disposal group) directly from being held for distribution to being held for sale
(or vice versa), an entity shall not follow the guidance in paragraphs 27–29
to account for this change.
AASB 7 Financial Instruments: Disclosures:
Servicing contracts – clarifies how an entity should apply the guidance
in paragraph 42C of AASB 7 to a servicing contract to decide whether a
servicing contract is ‘continuing involvement’ for the purposes of
applying the disclosure requirements in paragraphs 42E–42H of AASB
7.
Applicability of the amendments to AASB 7 to condensed interim
financial statements – clarify that the additional disclosure required by
the amendments to AASB 7 Disclosure–Offsetting Financial Assets and
Financial Liabilities is not specifically required for all interim periods.
However, the additional disclosure is required to be given in condensed
interim financial statements that are prepared in accordance with AASB
134 Interim Financial Reporting when its inclusion would be required by
the requirements of AASB 134.
AASB 119 Employee Benefits:
Discount rate: regional market issue - clarifies that the high quality corporate
bonds used to estimate the discount rate for post-employment benefit
obligations should be denominated in the same currency as the liability.
Further it clarifies that the depth of the market for high quality corporate
bonds should be assessed at the currency level.
AASB 134 Interim Financial Reporting:
Disclosure of information ‘elsewhere in the interim financial report’ –amends
AASB 134 to clarify the meaning of disclosure of information ‘elsewhere in
the interim financial report’ and to require the inclusion of a cross-reference
from the interim financial statements to the location of this information.
The Standard makes amendments to AASB 101 Presentation of Financial
Statements arising from the IASB’s Disclosure Initiative project. The
amendments are designed to further encourage companies to apply
professional judgment in determining what information to disclose in the
financial statements. For example, the amendments make clear that
materiality applies to the whole of financial statements and that the inclusion
of immaterial information can inhibit the usefulness of financial disclosures.
The amendments also clarify that companies should use professional
judgment in determining where and in what order information is presented in
the financial disclosures.
The Standard completes the AASB’s project to remove Australian guidance
on materiality from Australian Accounting Standards.
1 July 2015
1 July 2015
AASB 2015-1
Amendments to
Australian
Accounting
Standards –
Annual
Improvements to
Australian
Accounting
Standards 2012–
2014 Cycle
AASB 2015-2
Amendments to
Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 101
AASB 2015-3
Amendments to
Australian
Accounting
Standards arising
from the
Withdrawal of
AASB 1031
Materiality
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or
future reporting periods and on foreseeable future transactions.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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.
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 and development 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 $4,500,000.
The ultimate recoupment of costs carried forward for development assets is dependent either upon the successful development and commercial
exploitation, or sale, of the respective areas of interest. If the asset is successfully developed it will be transferred and reclassified as a
production asset. The production asset will then be accounted within Oil and Gas properties to which its carrying value will be depleted as
production value is extracted from the asset.
Determination of hydrocarbon reserves
Estimates of recoverable quantities of proven, probable and possible reserves reported include judgemental assumptions regarding commodity
prices, exchange rates, discount rates, capital costs and production and operating costs for future cash flows. It also requires interpretation of
complex and difficult geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reservoirs, and
their anticipated recoveries. The economic, geological and technical factors used to estimate reserves may change from period to period.
Changes in reported reserves can impact asset carrying values and the recognition of deferred tax assets due to changes in expected future
cash flows. Reserves are integral to the amount of amortisation charged to the profit or loss.
Determination of fair values on intangible assets acquired in business combinations
On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial position at their fair
values. In measuring fair value management uses estimates about expected future cash flows generated from the use or eventual sale (less
costs) of the asset. Details of acquired assets and liabilities are given in note 29.
Units of production depletion of oil and gas assets
Oil and gas properties are depleted using the method units of production over the total provided and undeveloped reserves. This results in a
depletion charge proportional to the depletion of the anticipated remaining production.
The economic life of the well, which is assessed annually, has regard to present assessments of economically recoverable reserves of the field at
which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves and
estimates of future capital expenditure. The calculation of the depletion rate could be impacted to the extent that actual production in the future is
different from the current forecast production based on total proved reserves, or future capital expenditure estimates.
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.
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.
48 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
1.
Summary of accounting policies (cont’d)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)
Impairment
The carrying amounts of the Group’s assets are reviewed at the end of the reporting period to determine whether there is any indication of
impairment. If any such indication exists, the assets recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an assets or its cash-generating unit exceeds its recoverable amount. The
recoverable amount of an asset is the greater of its fair value less cost to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. For an asset that does not generate independent cash inflows, the recoverable amount is determined
for the cash generating unit to which the assets belong.
2.
Revenue
Revenue:
Oil and Gas sales revenue (net of royalties) (i)
Interest revenue
Other income consisted of the following items:
Gain on investments
Other income
Total Revenue
(i) On 29 June 2015, the Group announced the disposal of assets to Sundance Resources Ltd.
The transaction was approved by shareholders on 4 August 2015 and the sale completed on
10 August 2015. In accordance with AASB 5 the revenue of New Standard Energy Texas LLC
and New Standard Energy PEL 570 Pty Ltd are disclosed as discontinued operations. Refer to
note 27 for further information.
3.
Expenses
Production and operating expense (i)
Sales taxes (i)
Lease operating expenses (i)
Total production and operating expenses
Depletion, depreciation and accretion expenses
Depreciation
Depletion and accretion (i)
Total depletion, depreciation and amortisation expense
Administrative expenses
Employee benefit expenses
Professional fees
Occupancy expenses
Other administrative expenses
Total administrative expenses
(i) On 29 June 2015, the Group announced the disposal of assets to Sundance Resources Ltd.
The transaction was approved by shareholders on 4 August 2015 and the sale completed on
10 August 2015. In accordance with AASB 5 the expenses of New Standard Energy Texas LLC
and New Standard Energy PEL 570 Pty Ltd are disclosed as discontinued operations. Refer to
note 27 for further information.
2015
$
–
76,604
–
16,850
93,454
–
–
–
288,893
–
288,893
4,468,357
547,206
668,190
344,799
6,028,552
Restated
2014
$
–
934,785
41,768
15,000
991,553
–
–
–
393,518
–
393,518
3,474,294
534,295
568,506
362,788
4,939,883
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
2015
$
Restated
2014
$
4.
(a)
Income tax expenses
The components of tax expense comprise:
Current tax
Deferred tax
(Unders)/overs
Deferred tax expense/(benefit) included in income tax expense comprises:
Decrease in deferred tax assets
Increase in deferred tax liabilities
(b)
The prima facie tax from ordinary activities before income tax is
reconciled to the income tax expense as follows:
Loss before tax
Tax benefit calculated at 30%
Tax effect of amount which are not deductible/(taxable) in calculating taxable income:
Share based payments
Other permanent difference
Entertainment
Difference in overseas tax rate
Deferred tax asset not previously recognised
Tax losses and timing differences not recognised
Income tax benefit
The Company will have no tax payable due to prior year losses carried forward and tax
deductible exploration expenditure.
New Standard Energy Limited and its wholly owned Australian controlled entities elected
to enter into the tax consolidation legislation from 1 July 2008. On adoption
of the tax consolidation legislation, the entities in the tax consolidated group entered
into a tax sharing agreement which, in the opinion of the Directors, limits the joint and
several liability of the wholly owned entities in the case of a default by the head entity,
New Standard Energy Limited.
(c)
Unrecognised temporary differences
Deferred tax assets (note 14)
Deferred tax liabilities (note 14)
Unrecognised net deferred tax asset
5.
Auditors’ remuneration
Auditor of the parent entity
BDO Audit (WA) Pty Ltd
BDO USA LLP
–
(6,713,958)
681,727
(6,032,231)
12,931,384
(19,645,342)
(6,713,958)
(38,793,185)
(11,637,956)
103,934
33
3,609
(243,775)
–
(11,774,155)
5,741,924
(6,032,231)
22,524,918
16,413,880
6,111,038
87,796
–
87,796
–
(4,075,034)
–
(4,075,034)
(12,931,384)
8,856,350
(4,075,034)
(6,116,652)
(1,834,996)
59,544
37,265
8,636
(20,491)
(2,670,366)
(4,420,408)
345,374
(4,075,034)
–
–
–
61,760
38,889
100,649
50 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
6.
Trade and other receivables
Current
Trade receivables
Other receivables
Transfer to Asset held for sale (i)
(i) On 29 June 2015, the Group announced the disposal of assets to Sundance Resources Ltd.
The transaction was approved by shareholders on 4 August 2015 and the sale completed on
10 August 2015. In accordance with AASB 5 the assets of New Standard Energy Texas LLC
and New Standard Energy PEL 570 Pty Ltd are disclosed as discontinued operations. Refer to
note 27 for further information.
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 24 for the Group’s risk management objectives and policies.
7.
Derivative financial instruments
Current
Commodity put options
Transfer to Asset held for sale (i)
Non Current
Commodity put options
Transfer to Asset held for sale (i)
(i) On 29 June 2015, the Group announced the disposal of assets to Sundance Resources Ltd.
The transaction was approved by shareholders on 4 August 2015 and the sale completed on
10 August 2015. In accordance with AASB 5 the assets of New Standard Energy Texas LLC
and New Standard Energy PEL 570 Pty Ltd are disclosed as discontinued operations. Refer to
note 27 for further information.
8.
Exploration, evaluation and development expenditure
Balance at beginning of the year
Acquisition from business combination (note 29)
Acquisition of exploration assets
Revenue offset
Expenditure incurred
Expenditure impaired (i)
Foreign exchange movement
Expenditure recovered (ii)
Disposal of exploration assets (iii)
Transfer to Asset held for sale (iii)
Balance at end of the year
2015
$
2014
$
718,587
64,370
(718,587)
64,370
2,282,212
580,083
–
2,862,295
619,262
(619,262)
293,076
(293,076)
–
48,157
–
119,961
–
168,118
54,408,596
39,814,318
–
–
(142,270)
3,560,779
(34,314,456)
2,531,731
(1,889,670)
(6,708,874)
(12,945,836)
4,500,000
8,129,391
6,400,000
(287,347)
6,789,699
–
(406,710)
(6,030,755)
–
–
54,408,596
(i) During the year the Company recognised a non-cash impairment charge of
$34.3 million relating to the carried forward capitalised exploration expenditure
associated with its exploration assets based in Western Australia. The
impairment of the exploration, evaluation and development expenditure has
arisen as a result of the decrease in valuations being attributed to oil and gas
companies globally and the potential relinquishment of licences and
applications for exemptions of minimum expenditure requirements that have
yet to be approved. The Company has taken a conservative view of the
carrying value for the projects at 30 June 2015 considering no exploration
expenditure, other than rental and incidental land costs, has been budgeted for
the financial year ended 30 June 2016. This charge has been recognised in the
consolidated statement of profit or loss and other comprehensive income.
(ii) The Company received a Research & Development Tax Concession claim for
$1,889,670 (2014: $6,030,755) relating to applicable works undertaken in the
year ended 30 June 2014 in the Canning and Carnarvon Basins.
(iii) During the year, the Group announced the disposed of Outback Energy Hunter
Pty Ltd, NSE PEL570 Pty Ltd, NSE Texas LLC and the Colorado Asset. The
transaction was approved by shareholders on 4 August 2015 and the sale
completed on 10 August 2015. In accordance with AASB 5 the assets and
liabilities of New Standard Energy Texas LLC and New Standard Energy PEL
570 Pty Ltd are disclosed as discontinued operations. Refer to note 26 and 27
for further information.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
8.
Exploration, evaluation and development expenditure (cont’d)
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. These include if substantive expenditure has been incurred on exploration and evaluation of resources and this has not
led to the discovery of commercially 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.
The Consolidated Entity has interests in the following wholly-owned and non-wholly owned oil and gas exploration and development assets:
Operator: New Standard Onshore Pty Ltd
Principal activity: Exploration, of hydrocarbons
Country: Australia
Area
Carnarvon Basin
Asset
EP481
EP482
Percentage
Interest
100%
100%
Area
Canning Basin
Asset
Percentage
Interest
EP443
EP450
EP451
EP456
STP–EPA-0006
STP-EPA-0007
STP-EPA-0010
STP-EPA-0092
EP417
STP-EPA-0109
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
9.
Oil and gas properties
At cost
Accumulated depletion
Transfer to Asset Held for Sale (i)
Net carrying value
A reconciliation of movements in oil and gas properties during the period is as follows:
At cost
Opening balance
Acquisitions from business combination
Additions
Foreign exchange movement
Closing balance
Accumulated depletion
Opening balance
Depletion
Foreign exchange movement
Closing balance
2015
$
2014
$
58,672,511
(3,607,930)
(55,064,581)
37,804,717
(912,950)
–
–
36,891,767
37,804,717
–
12,443,655
8,424,139
58,672,511
(912,950)
(2,488,139)
(206,841)
(3,607,930)
–
23,290,622
15,456,854
(942,759)
37,804,717
–
(912,950)
–
(912,950)
(i) On 29 June 2015, the Group announced the disposal of assets to Sundance Resources Ltd. The transaction was approved by shareholders on
4 August 2015 and the sale completed on 10 August 2015. In accordance with AASB 5 the asset of New Standard Energy Texas LLC and
New Standard Energy PEL 570 Pty Ltd are disclosed as discontinued operations. Refer to note 27 for further information.
52 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
10.
Investment in associate
On 3 September 2014 New Standard Energy reduced their equity holding in Elixir Petroleum Limited to 11.78% (2014: 28.23%) resulting in the
investment being classified as an available-for-sale investment.
(a)
Movement in carrying amount
Carrying amount at the beginning of the period
Transfer (to)/from available-for-sale investment (refer to note 28)
Share of net loss in associate
Carrying amount at the end of period
(b)
Summarised financial information of associates
2015
$
389,531
(389,531)
–
–
2014
$
–
1,582,544
(1,193,013)
389,531
On 3 September 2014 New Standard Energy did not recognise the equity investment in Elixir Petroleum Limited as an investment in associate
and therefore there is no comparative data for the period.
2014
Ownership
%
Elixir Petroleum
28.23
Assets
$
2,428,124
Liabilities
$
727,035
Revenues
$
Loss*
$
–
(1,193,013)
* Portion of losses recognised from the date of Elixir Petroleum Limited being recognised as an investment in associate
11.
Property, plant and equipment
Property, plant and equipment
Accumulated depreciation
Closing net book amount
2014
Balance at 1 July 2013
Additions
Disposals
Depreciation expense
Balance at 30 June 2014
2015
Additions
Disposals
Depreciation expense
Balance at 30 June 2015
2015
$
844,943
(542,206)
302,737
Furniture and
equipment
$
Motor
vehicles
$
Leasehold
improvements
$
513,833
30,378
–
(184,038)
360,173
787
(45,851)
(93,322)
221,787
189,871
368,420
–
–
(61,939)
127,932
–
(72,290)
(55,642)
–
–
–
(147,541)
220,879
–
–
(139,929)
80,950
2014
$
1,403,933
(694,949)
708,984
Total
$
1,072,124
30,378
–
(393,518)
708,984
787
(118,141)
(288,893)
302,737
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
12.
Trade and other payables
Current
Trade payables
Sundry payables and accrued expenses
Transfer to Asset Held for Sale (i)
(i) On 29 June 2015, the Group announced the disposal of assets to Sundance Resources Ltd.
The transaction was approved by shareholders on 4 August 2015 and the sale completed on
10 August 2015. In accordance with AASB 5 the liabilities of New Standard Energy Texas LLC
and New Standard Energy PEL 570 Pty Ltd are disclosed as discontinued operations. Refer to
note 27 for further information.
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 24 for the
Group’s risk management objectives and policies.
13.
Borrowings
Current
Credit facility
Finance lease-vehicle (i)
Non-current
Credit facility
Finance lease-vehicle (i)
Transfer to Asset Held for Sale (ii)
(i)
Finance leases were taken out on the purchase of four vehicles. The vehicles were sold during the
year and the finance leases were fully repaid.
(ii) On 29 June 2015, the Group announced the disposal of assets to Sundance Resources Ltd.
The transaction was approved by shareholders on 4 August 2015 and the sale completed on
10 August 2015. Under the agreement Sundance has directly acquired NSE Texas LLC and New
Standard Energy PEL 570 Pty Ltd, inclusive of the associated assets and liabilities. In accordance
with AASB 5 the liabilities of New Standard Energy Texas LLC and New Standard Energy PEL 570
Pty Ltd are disclosed as discontinued operations. Refer to note 27 for further information.
14.
Deferred tax balances
Deferred tax assets
Unused tax losses
Australia
United States
Unexpired capital raising costs
US deductible temporary differences
Deductible temporary differences
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
2015
$
2014
$
3,658,761
660,867
(3,689,370)
630,258
5,124,799
3,007,617
–
8,132,416
–
–
–
19,394,449
–
(19,394,449)
–
77,550
61,150
138,700
9,125,162
61,150
–
9,186,312
3,391,830
15,248,819
146,813
3,390,329
347,127
22,524,918
(22,524,918)
1,561,557
8,634,418
222,921
687,066
1,825,422
12,931,384
–
–
12,931,384
54 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
14.
Deferred tax balances (cont’d)
Reconciliation of movement in deferred tax assets:
Opening balance
Credited to statement of profit or loss and other comprehensive income
Closing balance
Deferred tax liabilities
Capitalised exploration expenditure – Australia
Capitalised exploration – US
Business combination
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liability
Reconciliation of movement in deferred tax liabilities:
Opening balance
(Credited)/debited to statement of profit or loss and other comprehensive income
Debited to assets
Closing balance
15.
Issued capital
2015
$
2014
$
12,931,384
(12,931,384)
–
835,201
15,578,679
–
16,413,880
(16,413,880)
–
12,931,384
12,931,384
11,232,281
7,573,539
839,522
19,645,342
–
–
19,645,342
19,645,342
(19,645,342)
–
–
9,949,470
8,856,350
839,522
19,645,342
386,169,603 fully paid ordinary shares (2014: 386,169,603)
67,011,182
67,011,182
(a)
Fully paid ordinary shares
2014
Balance at 1 July 2013
On 8 January 2014, consideration on expiry of ESOP loans
On 21 January 2014, issue of shares to the previous owners of
Outback Energy Hunter Pty Ltd
On 29 January 2014, issue of shares to Magnum Hunter Corporation
On 28 March 2014, issue of shares upon vesting of Retention Rights
Balance at 30 June 2014
2015
Balance at 30 June 2015
(b)
Terms and conditions of Issue Capital
No.
$
305,331,847
–
15,000,000
65,650,000
187,756
386,169,603
53,626,937
151,995
2,400,000
10,832,250
-
67,011,182
386,169,603
67,011,182
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 and incentive rights
Information on options and incentive rights granted to Directors and employees as remuneration during the period including the Long Term
Incentive Plan (LTIP) are disclosed in note 30 of the consolidated financial statements.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
16.
Reserves
Share based payments reserve
Foreign currency translation reserve
(a)
Movements in available for sale financial assets reserve
Balance at beginning of year
Balance at end of year
Nature and purpose of reserve
The available for sale investments revaluation reserve represents the unrealised gain or
loss on the market value of available for sale financial assets. On 26 June 2015
New Standard Energy sold their equity holding in Elixir Petroleum Limited to Sundance
Resources Ltd and recognised a loss on available-for-sale investment of $146,063.
(b)
Movements in share based payments reserve
Balance at the beginning of the year
Add: Issue of options
Directors
Employees
Less: Options and/or rights expired and lapsed
Balance at the end of year
Nature and purpose of reserve
The share based payments reserve represents the value of shares and options issued
to employees and directors.
(c)
Movements in foreign currency translation reserve
Balance at the beginning of the year
Unrealised profit 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.
17.
Accumulated losses
2015
$
2014
$
604,302
2,824,359
3,428,661
–
–
4,162,865
(3,322,949)
839,916
–
–
4,162,865
3,964,386
132,335
214,112
(3,905,010)
604,302
130,466
68,013
–
4,162,865
(3,322,949)
6,147,308
2,824,359
(924,220)
(2,398,729)
(3,322,949)
Balance at the beginning of the year
Net loss attributable to members of the Company
Items of other comprehensive income recognised directly in retained earnings
Expired options / rights in prior periods
Balance at the end of the year
12,417,637
(79,716,857)
3,905,010
(63,394,210)
14,459,255
(2,041,618)
–
12,417,637
56 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
18.
Loss per share
Basic earnings / loss per share
Continuing operations
Discontinued operations
Diluted earnings / loss per share
Continuing operations
Discontinued operations
The earnings and weighted average number of ordinary shares used in the calculation
of basic and diluted earnings per share are as follows:
Loss for the year
Continuing operations
Discontinued operations
Weighted average number of ordinary shares used in the calculation of basic EPS
Weighted average number of ordinary shares used in the calculation of diluted EPS
19.
Dividends
There have been no dividends paid or proposed in the 2015 or 2014 financial years.
20.
Commitments for expenditure
2015
Cents per share
Restated
2014
Cents per share
(8.48)
(12.16)
(8.48)
(12.16)
(0.49)
(0.11)
(0.49)
(0.11)
$
$
(32,760,954)
(46,955,903)
No.
386,169,603
386,169,603
(1,647,543)
(394,075)
No.
339,504,547
339,504,547
Exploration Permits and Oil and Gas Leases – Commitments for Expenditure
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
In order to maintain current rights of tenure to Australian exploration permits and
tenements, the Group is required to meet the minimum expenditure requirements
established with the Western Australian Department of Mines and Petroleum (DMP).
The above commitments reflect the minimum work programs and costs as required by
the DMP and total $49 million. The rights of tenure to the exploration permits and
tenements may be reduced by sale, farm-out, renegotiation or relinquishment.
Leases
The Company entered into an operating lease agreement effective 13 July 2015 for
the corporate head offices at 6 Outram Street, West Perth. The lease obligation is not
provided for in the Consolidated Statement of Financial Position but is to be incurred as
outlined above.
Not longer than 1 year
Longer than 1 year and not longer than 5 year
Longer than 5 years
2015
$
27,000,000
22,000,000
–
2014
$
47,500,000
134,380,000
–
49,000,000
181,880,000
75,000
34,073
–
109,073
237,705
574,454
–
812,159
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
$
–
–
–
–
4
1
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58 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
21.
Segment reporting (cont’d)
(i) On 23 October 2014, the Group disposed of Outback Energy Hunter Pty Ltd, which held exploration assets located in the Cooper Basin, South Australia. Refer to note
26 for further information.
On 29 June 2015, the Group announced the sale of assets including NSE Texas LLC, which held the producing Eagleford asset located within the Atascosa and
Colorado counties and NSE PEL 570 Pty Ltd which held the Copper Basin asset to Sundance Resources Ltd. The transaction was approved by shareholders on
4 August 2015 and the sale completed on 10 August 2015. In accordance with AASB 5 the revenue, expenses, assets and liabilities of New Standard Energy Texas LLC
(United States) and New Standard Energy PEL 570 Pty Ltd (Australia) are disclosed as discontinued operations. Refer to note 27 for further information.
2015
$
2014
$
1,923,549
100,785
303,324
2,327,658
2,485,692
142,532
185,528
2,813,752
18,800
3,200
22,000
15,000
2,000
17,000
22.
Related party disclosure
(a)
Key Management Personnel compensation
Short term employee benefits
Post-employment benefits
Share based payments
Detailed remuneration disclosures are provided in the remuneration report included in
the Directors’ Report.
(b)
Transactions with related parties
Revenue (i)
Rental of office space
Provision of accounting services
(i) New Standard Energy (“NSE”) entered in to a services contract with Elixir Petroleum Limited (“EXR”),
to provide office space and accounting services from 1 February 2014. The contract was based on
normal commercial terms and conditions. Mr Sam Willis, NSE director, is also the Chairman of EXR
and does not receive any personal benefit from this services agreement. The contract was terminated
on 28 February 2015.
On 31 December 2014 the non-recourse loans, pursuant to the Employee Share Plan to
Key Management Personnel (KMP), lapsed. All outstanding fully paid ordinary shares
were reverted to the Company and the loans were cancelled.
23.
Notes to the Statement of Cash Flow
For the purposes of the statement of cash flows, cash includes cash on hand and in
banks less un-presented cheques 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:
(a)
Reconciliation of cash and cash equivalents
Cash and cash equivalents
440,894
8,625,765
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
23.
Notes to the Statement of Cash Flow (cont’d)
(b)
Reconciliation of net loss after tax to net cash flow from operating activities
Loss after income tax
Non-cash expenditure:
Share based payments
Depletion, depreciation and amortisation expense
Impairment of exploration and development expenditure
R&D tax concession received classified as investment activities
Loss on disposal of property, plant and equipment
Loss on investment in available-for-sale asset
Gain on disposal of subsidiary
Loss on investment in associate
Gain on foreign exchange
Income tax benefit
Net effect from discontinued operations
(Increase)/decrease in assets:
Receivables
Other current assets
Increase/(decrease) in liabilities:
Current payables
Net cash used in operating activities
2015
$
2014
$
(32,760,954)
(2,041,618)
346,447
288,893
34,314,456
(1,889,670)
118,141
146,063
(264,081)
–
(2,237,772)
(6,032,231)
3,904,091
515,713
–
–
(2,346,750)
(5,897,653)
198,479
1,308,562
–
–
–
–
–
1,193,013
(10,763)
(4,075,034)
–
(2,146,677)
(251,954)
1,878,267
(3,947,725)
(c)
Non-cash investing and financing activities
Acquisition of exploration assets and oil and gas properties
–
10,832,250
24.
Financial risk management
(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. The Group’s reserve based lending
facility has a fixed interest rate in the US, so is not exposed to market interest rate fluctuations. All other financial assets and liabilities in the
form of receivables and payables are non-interest bearing.
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
profit or loss and other comprehensive income.
Financial assets
Cash at bank
Note
23(a)
(b)
Liquidity risk
Float interest rate
Total carrying amount
2015
$
440,894
440,894
2014
$
8,625,765
8,625,765
2015
$
440,894
440,894
2014
$
8,625,765
8,625,765
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through adequate
credit facilities to meet obligations when due. The Group is primarily funded through on-going cash flow, debt funding and equity capital
raisings, as and when required. Management also regularly monitors actual and forecast cash flows to manage liquidity risk.
On 29 June 2015, the Group announced the disposal of NSE Texas LLC to Sundance Resources Ltd. The transaction was approved by
shareholders on 4 August 2015 and the sale completed on 10 August 2015. In accordance with the sale agreement, Sundance Resources Ltd
assumed the reserve based lending facility held in NSE Texas LLC. Refer to note 27 for further information.
60 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
24.
Financial risk management (cont’d)
(b)
Liquidity risk (cont’d)
Fixed rate
Expiring within one year
Expiring beyond one year
Transfer to Asset held for sale
2015
$
–
19,394,449
(19,394,449)
–
2014
$
77,550
9,125,162
–
9,202,712
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities as at
30 June 2015. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 year
$
Between 1 and 2
years
$
Between 2
and 5 years
$
Total contractual
cash flow
$
Carrying amount
of liabilities
$
2015
Trade payables
2014
Trade payables
Borrowings
Finance Lease
(c)
Currency risk
630,258
630,258
8,132,416
1,263,248
74,454
9,470,118
–
–
–
1,603,294
74,125
1,677,419
–
–
–
9,777,074
–
630,258
630,258
8,132,416
12,643,616
148,579
630,258
630,258
8,132,416
9,202,712
122,300
9,777,074
20,924,611
17,457,428
During the year 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. The Group’s exposure to foreign exchange risk at the reporting date is limited to the transfer of funding from the
Australian head office to US operations that is provided in US dollars.
During the year, the Group ended the joint venture with Conoco Philips (Canning Basin Pty Ltd (COP) and PetroChina International Investment
(Australia) Pty Ltd with no further expenditure commitments or liabilities outstanding as at 30 June 2015.
The Group announced the disposal of Outback Energy Hunter Pty Ltd, NSE PEL570 Pty Ltd, NSE Texas LLC and the Colorado Asset.
The transaction was approved by shareholders on 4 August 2015 and the sale completed on 10 August 2015. In accordance with AASB 5
the revenue of New Standard Energy Texas LLC and New Standard Energy PEL 570 Pty Ltd are disclosed as discontinued operations.
Refer to note 26 and 27 for further information.
As operational activity has since decreased significantly in the United States, foreign exchange exposure was negligible, no foreign exchange
hedge contracts were in place at year end. As such, no sensitivity analysis is required or provided.
(d)
Fair value
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of
financial instruments traded in active markets is based on quoted market prices at the reporting date and represent fair value. The fair value of
investment in associates is equal to the carrying value, and accounts for the Group’s share in the net profit or loss of the associate. The fair
value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group makes a number of
assumptions based upon observable market data existing at each reporting period. The fair value of current financial assets and liabilities
settled within 12 months approximate fair value due to their short term nature.
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:
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
24.
Financial risk management (cont’d)
(d)
Fair value (cont’d)
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).
On 3 September 2014 New Standard Energy reduced their equity holding in Elixir Petroleum Limited to 11.78% (2014: 28.23%) resulting in the
investment being classified as an available-for-sale investment (classified as investment in associate in 2014).
On 26 June 2015 New Standard Energy sold their equity holding in Elixir Petroleum Limited to Sundance Resources Ltd for $243,468.
The Group does not hold available-for-sale financial assets at the end of 30 June 2015.
2015
Capitalised exploration, evaluation
and development (i)
Total
2014
Investment in Associate
Available for sale investments
Commodity Put Options
Total
Level 1
$
Level 2
$
Level 3
$
Total
$
–
–
389,531
–
–
389,531
–
–
–
–
168,118
168,118
4,500,000
4,500,000
4,500,000
4,500,000
–
–
–
–
389,531
–
168,118
557,649
(i)
The valuation methodology undertaken by the Group was determined with ongoing discussions with interest parties. The estimated recoverable amount of the
capitalised exploration and development expenditure is classified as level 3 and is sensitive to the movements in the oil and gas prices. Refer note 8 for further
information.
(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 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. In the US, trade receivables (balances with oil and gas purchasers) have not
exposed the Group to any bad debts to date, and all purchasers are major oil companies with a credit rating of “A” or higher.
The Group has apportioned cash reserves amongst several financial institutions and the credit quality of financial assets that are neither past
due nor impaired can be assessed by reference to external credit ratings:
Cash at Bank and short term bank deposits (AA-)
Cash at Bank and short term bank deposits (A)
Cash at Bank and short term bank deposits (A)
(f)
Price risk
2015
$
436,358
4,536
–
440,894
2014
$
6,680,372
316,097
1,629,296
8,625,765
The Group’s revenues are exposed to commodity price fluctuations, in particular oil prices. The Group enters forward commodity hedges to
manage its exposure to falling spot oil prices. The Group’s commodity hedging program utilises financial instruments based on regional
benchmarks including Nymex WTI.
On 26 June 2015 the Group announced the disposal of assets to Sundance Resources Ltd. The transaction was approved by shareholders on
4 August 2015 and the sale completed on 10 August 2015. Sundance Resources Ltd assumed all debt and liabilities associated with the asset.
A sensitivity analysis is not included because based on the disposal of asset as at 30 June 2014 the sensitivity analysis is deemed not to have
a material impact on the Consolidated Profit or Loss and other Comprehensive Income.
62 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
25.
Subsidiaries
Name of entity
Parent entity
Country of
incorporation
Nature of activities
Ownership interest
2015
2014
New Standard Energy Limited
Australia
Exploration, development & production of hydrocarbons
100
100
Subsidiaries
New Standard Onshore Pty Ltd
Australia
Exploration of hydrocarbons
New Standard Energy PEL570 Pty Ltd (i)
Australia
Exploration of hydrocarbons
Outback Energy Hunter Pty Ltd (ii)
Australia
Exploration of hydrocarbons
Pathfinder Onshore Energy Pty Ltd (ii)
Australia
Exploration of hydrocarbons
New Standard Energy Inc
New Standard Energy Texas LLC (i)
New Standard Energy Colorado LLC
New Standard Energy Ventures LLC
USA
USA
USA
USA
Exploration, development of hydrocarbons
Exploration, development & production of hydrocarbons
Exploration, development & production of hydrocarbons
Exploration, development & production of hydrocarbons
100
100
–
–
100
100
100
100
100
n/a
100
100
100
100
100
100
(i) On 29 June 2015, the Group announced the sale of assets including NSE Texas LLC, which held the producing Eagleford asset and NSE PEL 570 Pty Ltd to
Sundance Resources Ltd. The transaction was approved by shareholders on 4 August 2015 and the sale completed on 10 August 2015. Refer to note 27
for further information.
(ii) On 23 October 2014, the Group disposed of Outback Energy Hunter Pty Ltd, which held exploration assets located in the Cooper Basin, South Australia.
26.
Disposal of subsidiary – gain on sale of subsidiary
On 23 October 2014, the Group disposed of Outback Energy Hunter Pty Ltd, which held exploration assets located in the Cooper Basin, South
Australia.
The following were the results of the business for the year.
3 months ended
30 Sep 2014
$
30 Jun 2014
$
–
–
–
–
–
Revenue
Operating expenses
Loss before income tax
Income tax expense /(credit)
Loss after income tax
The net assets of Outback Energy Hunter Pty Ltd at the date of disposal were as follows:
Net assets disposed
Costs associated with disposal
Gain on disposal
Total Consideration
Satisfied by cash, and net cash inflow arising on disposal
A gain of $264,081 was recognised on the disposal of Outback Energy Hunter Pty Ltd,
no tax charge or credit arose on the transaction.
–
(1,463)
(1,463)
–
(1,463)
30 Sep 2014
$
6,708,874
527,045
7,235,919
264,081
7,500,000
6,972,955
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
27.
Discontinued operations and asset held for sale
Planned disposal of subsidiaries
On 29 June 2015, the Group announced the disposal of :
(i)
(ii)
(iii)
New Standard Energy Texas LLC (a wholly owned subsidiary of New Standard Energy Ltd which holds New Standard’s Atascosa
Project and associated liabilities;
New Standard Energy Texas LLC’s working interest in the Colorado County assets; and
New Standard Energy PEL 570 Pty Ltd (a wholly owned subsidiary which holds New Standard’s 17.5% share of the PEL 570 permit in
the Cooper Basin).
The transaction was approved by shareholders on 4 August 2015 and the sale completed on 10 August 2015. The results and net assets of
New Standard Energy Texas LLC and New Standard Energy PEL 570 Pty Ltd are included in the discontinued operations.
The sales proceed for the net assets above is the 6,000,000 Sundance Energy Australia Limited's (SEA) ordinary shares, the majority of which
will be freely tradable. Based on the share price of 47.5 cents as at 10 August 2015, the scrip component of the consideration is valued at
A$2,850,000.
Analysis of the loss for the year from discontinued operations
The result of the discontinued operations (New Standard Energy Texas LLC and New Standard Energy PEL 570 Pty Ltd.) included in the loss
for the year are set out below. The comparative profit or loss and cash flows from discontinued operations have been re-presented to include
those operations classified as discontinued in the current year.
note
27(b)
6
7
8
9
12
13
(a)
Loss for the year from discontinued operations
– planned disposal of subsidiaries
Revenue
Operating expenses
Impairment of asset held for sale
Loss before income tax
Income tax expense /(credit)
Loss after income tax
(b)
Net assets classified as held for sale – planned disposal of subsidiaries
The major classes of assets and liabilities of NSE Texas LLC and NSE PEL 570
Pty Ltd classified as held for sale as at 30 June 2015 are as follow:
Assets
Cash and cash equivalent
Trade and other receivables
Derivative financial instruments
Exploration and evaluation and development expenditure
Oil and Gas properties
Other Assets
Assets classified as held for sale
Liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Liabilities classified as held for sale
Net asset classified as held for sale
Impairment of asset held for sale
Less: Transaction costs directly associated with asset held for sale
2015
$
2014
$
3,192,845
(3,586,920)
–
(394,075)
–
(394,075)
5,821,128
(8,080,509)
(44,960,603)
(47,219,984)
–
(47,219,984)
673,518
718,587
912,338
12,945,836
55,064,581
936,974
71,251,834
3,689,370
19,394,449
839,522
23,923,341
47,328,493
(44,478,493)
(482,110)
2,367,890
Fair value of asset classified as held for sale (i)
(i)
The fair value for the net assets above is the 6,000,000 Sundance Energy Australia Limited's ordinary shares based on the share price of 47.5 cents as at 10 August 2015,
the scrip component of the consideration is valued at $2,850,000 less cost to sell of $482,110.
64 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
27.
Discontinued operations and asset held for sale (cont’d)
(c)
Cash flows from discontinued operations – planned disposal of subsidiaries
Net cash outflows from operating activities
Net cash inflows from investing activities
Net cash outflows from financing activities
Net cash inflows
28.
Available-for-sale financial investments
Listed securities
Equity securities in Elixir Petroleum Ltd (i)
Loss on investment in available-for-sale
Sale of available-for-sale asset (ii)
Carrying amount at the end of period
2015
$
(1,005,446)
10,202,901
(7,970,155)
1,227,300
2015
$
389,531
(146,063)
(243,468)
–
2014
$
–
–
–
–
(i) On 3 September 2014 New Standard Energy reduced their equity holding in Elixir Petroleum Limited (through dilution) to 11.78% (2014: 28.23%) resulting in the
investment being classified as an available-for-sale investment (refer note 10).
(ii) On 26 June 2015 New Standard Energy sold their equity holding in Elixir Petroleum Limited to Sundance Resources Ltd for $243,468.
29.
Business combination
There was no business combination during the year ended 30 June 2015.
In prior year the Group announced that it had entered into an agreement to acquire oil and gas assets in the Eagle Ford, Texas, US from
Magnum Hunter Resources. The transaction was settled by the issuance of 65,650,000 ordinary shares at an issue price of $0.154 each, with
further cash payments of US$15,000,000 and AUD$3,000,000. A further 45 million performance shares were also to be issued after
approximately 18 months from completion, if certain conditions are met. At the reporting date no monetary value has been assigned to these
shares as it is deemed too early for management to form an assessment. The Group completed the acquisition on the 28 January 2014 and
has been accounted for using the guidelines as set out in IFRS/AASB 3 ‘Business Combinations’.
Details of the purchase consideration and assets acquired are as follows:
Net assets acquired
Exploration assets
Oil and gas properties
Deferred tax liability
Fair value as at
28 January 2014
$
8,129,391
23,290,622
(900,000)
30,520,013
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
29.
Business combination (cont’d)
Purchase Consideration
Net cash outflow on acquisition
Shares
Total consideration paid
30.
Share based payments
Expenses arising from share-based payment transactions
Options issued to directors
Incentive rights issued to directors
Options issued to key management personnel
Incentive rights issued to key management personnel
Options issued to employees
Incentive rights issued to employees
Unlisted options
Provisional FV as at
28 January 2014
$
19,687,763
10,832,250
30,520,013
2015
$
29,394
102,941
47,101
123,888
6,182
36,941
346,447
2014
$
69,311
61,156
(28,710)
83,771
4,814
8,137
198,479
The Employee Share Option Plan (ESOP) was approved by shareholders at the 2011 annual general meeting. The ESOP is designed to
provide long-term incentives for senior managers and executives to deliver long-term shareholder returns. Under the Plan, participants are
granted Options which only vest if certain tenure requirements are met. Participation in the ESOP is at the Board's discretion and no individual
has a contractual right to participate in the Plan or to receive any guaranteed benefits. Options are granted under the Plan for no consideration,
and carry no dividend or voting rights.
Grant date
2015
Expiry date
Exercise
date
$
Balance at
start of year
No.
During the year
Granted
No.
Exercised
No.
29/Mar/11
29/Mar/11
20/Dec/11
20/Dec/11
24/Apr/12
24/Apr/12
10/Aug/12
10/Aug/12
12/Dec/12
12/Dec/12
12/Dec/13
12/Dec/13
12/Dec/13
12/Dec/13
13/Feb/14
13/Feb/14
30/Jun/15
30/Jun/15
20/Dec/14
20/Dec/14
24/Apr/15
24/Apr/15
10/Aug/15
10/Aug/15
12/Dec/15
12/Dec/15
2/Apr/16
2/Apr/16
2/Apr/16
2/Apr/16
12/Dec/17
12/Dec/17
27/May/14
26/May/17
27/May/14
26/May/17
6/Aug/14
6/Aug/14
5/Aug/17
5/Aug/17
0.225
0.275
0.385
0.430
0.810
0.905
0.745
0.835
0.390
0.440
0.400
0.400
0.500
0.500
0.519
0.581
0.224
0.248
0.167
0.187
500,000
500,000
6,250,000
3,750,000
150,000
150,000
375,000
375,000
300,000
300,000
500,000
500,000
500,000
500,000
100,000
100,000
75,000
75,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
500,000
15,000,000
1,000,000
Weighted average exercise price
0.43
0.18
66 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at
end of year
No.
Vested and
exercisable
at end of year
No.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Lapsed
No.
(500,000)
(500,000)
(6,250,000)
(3,750,000)
(150,000)
(150,000)
(375,000)
(375,000)
–
–
–
–
–
–
–
–
–
–
–
–
300,000
300,000
300,000
300,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
100,000
100,000
100,000
100,000
75,000
75,000
500,000
500,000
75,000
75,000
–
–
(12,050,000)
3,950,000
2,950,000
0.42
0.37
0.44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
30.
Share based payments (cont’d)
Exercise
date
$
Balance at
start of year
No.
Granted
No.
Exercised
No.
Lapsed
No.
During the year
Balance at
end of year
No.
Vested and
exercisable at
end of year
No.
Grant date
2014
Expiry date
29/Mar/11
30/Jun/15
29/Mar/11
30/Jun/15
20/Dec/11
20/Dec/14
20/Dec/11
20/Dec/14
24/Apr/12
24/Apr/12
9/May/12
9/May/12
24/Apr/15
24/Apr/15
9/May/15
9/May/15
10/Aug/12
10/Aug/15
10/Aug/12
10/Aug/15
12/Dec/12
12/Dec/15
12/Dec/12
12/Dec/15
12/Dec/13
12/Dec/13
12/Dec/13
12/Dec/13
2/Apr/16
2/Apr/16
2/Apr/16
2/Apr/16
13/Feb/14
12/Dec/17
13/Feb/14
12/Dec/17
27/May/14
26/May/17
27/May/14
26/May/17
0.225
0.275
0.385
0.430
0.810
0.905
0.535
0.600
0.745
0.835
0.390
0.440
0.400
0.400
0.500
0.500
0.519
0.581
0.224
0.248
500,000
500,000
6,250,000
3,750,000
300,000
300,000
300,000
300,000
375,000
375,000
300,000
300,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
500,000
500,000
500,000
100,000
100,000
75,000
75,000
Weighted average exercise price
0.42
0.44
13,550,000
2,350,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
500,000
500,000
500,000
6,250,000
6,250,000
3,750,000
3,750,000
(150,000)
150,000
150,000
(150,000)
150,000
150,000
(300,000)
(300,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
375,000
375,000
375,000
300,000
300,000
300,000
–
500,000
500,000
500,000
–
500,000
500,000
500,000
–
100,000
100,000
100,000
100,000
75,000
75,000
–
–
(900,000)
15,000,000
13,175,000
0.66
0.43
0.42
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.
2015
Fair value of share options and assumptions for the year ended 30 June 2015
Fair value at grant date of $0.167 and $0.187 options
Number of options
Share price
Exercise price
Employment vesting conditions
Expected volatility
(expressed as a weighted average volatility used in the modelling under Black Scholes model)
Option life
(expressed as weighted average life used in the modelling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
$0.044 - $0.047
1,000,000
$0.12
$0.167 - $0.187
36 months
75%
3 years
0%
2.74%
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
30.
Share based payments (cont’d)
2014
Fair value of share options and assumptions for the year ended 30 June 2014
Fair value at grant date of $0.400 and $0.500 options
Number of options
Share price
Exercise price
Employment vesting conditions
Expected volatility
(expressed as a weighted average volatility used in the modelling under Black Scholes model)
Option life
(expressed as weighted average life used in the modelling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
Fair value at grant date of $0.519 and $0.581 options
Number of options
Share price
Exercise price
Employment vesting conditions
Expected volatility
(expressed as a weighted average volatility used in the modelling under Black Scholes model)
Option life
(expressed as weighted average life used in the modelling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
Fair value at grant date of $0.224 and $0.248 options
Number of options
Share price
Exercise price
Employment vesting conditions
Expected volatility
(expressed as a weighted average volatility used in the modelling under Black Scholes model)
Option life
(expressed as weighted average life used in the modelling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
$0.055 - $0.064
2,000,000
$0.19
$0.400 - $0.500
12-24 months
75%
3 years
0%
2.88%
$0.200 - $0.220
200,000
$0.12
$0.519 - $0.581
none
80%
3 years
0%
2.98%
$0.056 - $0.060
150,000
$0.15
$0.224 - $0.248
12-24 months
80%
3 years
0%
2.85%
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.
Incentive rights
The LTIP was introduced during the 2013 financial year with effect from 15 September 2012. Under the plan, the Board may offer Incentive
Rights in the form of Performance Rights and Retention Rights. During the 2015 and 2014 financial year Performance Rights and Retention
Rights were granted to executives as part of their remuneration packages. On the vesting date the performance rights will be tested against the
absolute TSR criteria, and the retention rights tested against tenure criteria. Only those rights that satisfy the criteria will vest, and the remainder
will immediately lapse. Refer to the Director's Report for further details on the structure of the LTIP.
68 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
30.
Share based payments (cont’d)
The table below outlines movements in Incentive Rights during the 2015 and 2014 financial year and the balance held as at 30 June 2015
and 30 June 2014.
Date
Grant
Expiry
FV of
each
rights
$
Balance at
start of year
No.
During the year
Granted
No.
Vested
No.
Lapsed
No.
Balance at
end of year
No.
Type of incentive
rights
2015
Performance Rights
28/Jun/13
14/Sep/15
0.014
Retention Rights
28/Jun/13
14/Sep/15
0.120
848,000
212,000
Performance Rights
14/Feb/14
14/Sep/16
0.080
1,800,000
Performance Rights
14/Feb/14
14/Sep/16
0.088
1,000,000
Performance Rights
14/Feb/14
14/Sep/16
0.081
920,000
Performance Rights
14/Feb/14
14/Sep/16
0.076
1,400,000
Retention Rights
14/Feb/14
14/Sep/16
0.105
Retention Rights
14/Feb/14
14/Sep/16
0.101
380,000
500,000
–
–
–
–
–
–
–
–
Performance Rights
16/Dec/14
14/Sep/17
0.029
Performance Rights
16/Dec/14
14/Sep/17
0.015
Retention Rights
16/Dec/14
14/Sep/17
0.038
Performance Rights
9/Jan/15
31/Mar/15
0.039
Performance Rights
9/Jan/15
31/Dec/15
0.013
Retention Rights
9/Jan/15
31/Dec/15
0.032
2014
Performance Rights
28/Jun/13
14/Mar/14
0.002
Performance Rights
28/Jun/13
14/Sep/15
0.014
Retention Rights
28/Jun/13
14/Mar/14
0.120
Retention Rights
28/Jun/13
14/Sep/15
0.120
Performance Rights
14/Feb/14
14/Sep/16
0.080
Performance Rights
14/Feb/14
14/Sep/16
0.088
Performance Rights
14/Feb/14
14/Sep/16
0.081
Performance Rights
14/Feb/14
14/Sep/16
0.076
Retention Rights
14/Feb/14
14/Sep/16
0.105
Retention Rights
14/Feb/14
14/Sep/16
0.101
–
–
–
–
–
–
4,900,000
2,960,000
890,000
750,000
750,000
500,000
7,060,000
10,750,000
848,000
848,000
212,000
212,000
–
–
–
–
–
–
–
–
–
–
1,800,000
1,000,000
920,000
1,400,000
380,000
500,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(212,000)
–
–
–
–
–
–
–
(296,000)
(74,000)
–
–
552,000
138,000
1,800,000
1,000,000
(620,000)
300,000
–
1,400,000
(155,000)
–
–
–
–
225,000
500,000
4,900,000
2,960,000
890,000
(750,000)
–
–
–
750,000
500,000
(1,895,000)
15,915,000
(848,000)
–
–
–
–
–
–
–
–
–
–
848,000
–
212,000
1,800,000
1,000,000
920,000
1,400,000
380,000
500,000
2,120,000
6,000,000
(212,000)
(848,000)
7,060,000
31.
Contingencies
There were no material contingent liabilities or contingent assets for the Group as at 30 June 2015 or as at the date of the report.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2015
32.
Parent entity information
The following details information related to the parent entity, New Standard Energy Limited, as at 30 June 2015. 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)/retained earnings
Reserves
Total equity
Loss for the year
Other comprehensive income/(loss) for the year
Total comprehensive loss for the year
33.
Events occurring after the reporting date
2015
$
463,894
7,652,737
8,116,631
613,627
–
613,627
76,171,014
(73,102,426)
4,434,417
7,503,005
(80,272,491)
3,923,530
(76,348,961)
2014
$
13,997,699
80,692,126
94,689,825
3,127,659
11,293,431
14,421,090
76,171,014
2,333,100
1,764,621
80,268,735
(1,705,897)
(2,398,728)
(4,104,625)
(a)
On 10 August 2015 the Company announced the completion of transaction with Sundance Energy Ltd (Sundance) and the satisfaction
of all the remaining conditions precedent. Under the agreement Sundance has directly acquired New Standard's Colorado County
Project in the US and indirectly acquired its Atascosa Project and interest in Cooper Basin permit PEL 570 through the purchase of
NSE Texas LLC and New Standard Energy PEL 570 Pty Ltd, inclusive of the associated assets and liabilities.
Sundance has issued 6 million ordinary shares of which a portion will be escrowed for up to 6 months to meet potential warranty
claims post-completion. As at the completion on 10 August 2015 the market value of 6 million Sundance ordinary shares was
$2,850,000.
The transaction has eliminated all of the Group's debt and provides sufficient ongoing liquidity to allow the Company to complete a
strategic review to assess the status of the remaining portfolio.
(b)
Since 6 August 2015 1,102,000 Sundance shares have been sold on the market for a total of $378,644. Further sale may occur
dependent on the parameters for sale of shares as agreed by the Board.
70 | NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT
SHAREHOLDER INFORMATION
Directors’ Declaration
The shareholder information set out below was applicable as at 22 September 2015.
1.
Distribution of shareholders
(a)
Analysis of number of shareholder 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
402
355
1,068
387
2,405
50,465
1,289,939
3,025,251
43,853,066
337,950,882
386,169,603
0.01
0.33
0.78
11.36
87.51
100.00
(b)
There are 1,627 shareholders with less than a marketable parcel of ordinary shares.
2.
Twenty largest shareholders
The names of the twenty largest holders by account holding of quoted ordinary shares are listed below:
Rank Name of shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Magnum Hunter Resources Corporation
J P Morgan Nominees Australia Limited
Mr Chi Zhang
Citicorp Nominees Pty Limited
Buru Energy Limited
Phoenix Properties Int Pty Ltd
Mr Samuel John Corbin Willis + Mrs Catherine Meredith Willis
Mr Alan Young
McNeil Nominees Pty Limited
TC Investments Pte Ltd
Mr Richard James Harris + Mrs Susan Elizabeth Harris
USA Register Control A/C
HSBC Custody Nominees
Buru Energy Limited
Kensington Capital Management Pty Ltd
Ice Cold Investments Pty Ltd
Portdove Holdings Pty Ltd
Carossa Holdings Pty Ltd
UOB Kay Hian
Merrill Lynch (Australia) Nominees Pty Limited
Total
3.
Substantial shareholders
As at 22 September 2015, the Company has received substantial notices from the following shareholders:
Holding
%
65,650,000
17.00
22,488,156
15,491,658
14,256,220
8,853,447
8,508,453
7,125,000
6,905,252
6,850,566
6,660,000
5,560,834
4,960,905
4,317,945
4,204,483
4,000,000
3,500,000
3,000,000
2,850,000
2,731,490
2,447,465
5.82
4.01
3.69
2.29
2.20
1.85
1.79
1.77
1.72
1.44
1.28
1.12
1.09
1.04
0.91
0.78
0.74
0.71
0.63
200,361,874
51.88
Name of shareholder
Magnum Hunter Resources Corporation
4.
Unquoted securities
No of shares
% of issued capital
65,650,000
17.00
As at 22 September 2015 there were a total of 8 Performance Rights holders holding 13,110,000 Performance Rights, a total of 6 Retention
Rights holders holding 2,115,000 Retention Rights, and a total of 5 Unlisted Option holders holding 3,950,000 Unlisted Options.
5.
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.
NEW STANDARD ENERGY LTD 2015 ANNUAL REPORT | 71