More annual reports from New Standard Energy Limited:
2020 ReportFor personal use only CONTENTS
Chairman Letter
Directors’ Report
Director’s Declaration
Corporate Governance Statement
Auditor’s Independence 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
2
3
14
15
21
22
26
27
28
29
30
52
CORPORATE DIRECTORY
BOARD OF DIRECTORS
PLACE OF BUSINESS
LEGAL ADVISORS
Kunfang Liu
Xiaofeng Liu
Ming Li
Chee Ho Ho
Peng Zhang
| Non-Executive Chairman
| Managing Director
| Non-Executive Director
| Non-Executive Director
| Non-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:
COMPANY SECRETARY
AUDITORS
Ming Li
ASX CODE
NSE
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco, Western Australia 6008
Murcia Pestell Hillard Pty Ltd
Suite 183, Level 6 ,
580 Hay Street
Perth, Western Australia 6000
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth, Western Australia 6000
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth, Western Australia, 6000
For personal use only CHAIRMAN’S LETTER
Dear Shareholders
During the financial year your Board has maintained its focus on identifying new opportunities, meeting its obligations and
reducing costs for New Standard Energy Limited (New Standard or Company). To show leadership with regards costs, the
directors continue to forgo all forms of remuneration.
The main events during the year can be summarised as follows:
•
•
•
•
Litigation that was commenced against the Company in 2013 in relation to Precision Catering was successfully
settled without any material impact on New Standard;
A capital raising to fund the Company for the short term was successfully completed;
A rehabilitation plan for historic exploration wells drilled by the Company has been submitted to the
Department of Mines, Industry Regulation and Safety (DMIRS); and
Mr Xiaofeng Liu was appointed as the Managing Director.
Your Company expects to achieve the following outcomes during the next year:
•
•
•
•
Secure a major new project to drive the Company into the future;
Continue exploration for oil and gas in Western Australia;
Commence rehabilitation of disturbance from historic exploration activities; and
Increase the share price.
I thank all involved for their hard work, considerable and tireless efforts to achieve these goals.
We look forward to continuing to pursue opportunities to rebuild the company, rebuild
shareholder value and thank you for supporting the Company.
Yours sincerely
Kunfang Liu
Non-Executive Chairman
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 2
For personal use only 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 2018.
OPERATIONAL AND FINANCIAL REVIEW
PROJECTS
WESTERN AUSTRALIA PROJECTS
New Standard owns 100% of EP481 and EP482 which are located in the Carnarvon Basin in Western Australia. These permits were due to expire on
15 August 2018 however the Company lodged applications for renewal of the Permits with the Department of Mines, Industry Regulation and Safety
(DMIRS) in May 2018. In September 2018 DMIRS confirmed the extension of term for EP 481 to 15 August 2020. The tenure of EP 482 remain in full
force and effect until the renewal is determined. Subject to sourcing of additional funding, the Company plans to continue exploration activities on both
permits.
In consultation with DMIRS, the Company engaged a consulting firm to assess its rehabilitation obligations regarding historic exploration activities carried
out on permits EP 481, EP450, EP 451 and EP 456 (Permits). The Company has submitted a rehabilitation proposal to DMIRS for approval. The
Company has received directions from DMIRS to rehabilitate the Permits by 15 August 2020 and 30 November 2019 respectively.
CORPORATE & FINANCE
New Standard ended the financial year with a cash position of $383,515. At the end of the period the Company held 2,128,000 shares in Sundance
Energy Australia Limited (ASX: SEA), of which 1,528,000 are held in escrow, with a market value of approximately $116,000. The Company has no
debt.
New Standard continues to review and reduce overheads wherever possible. Directors’ fees remain suspended and no Directors’ fees have been paid
since February 2015.
New Standard accepted the resignations of Non-Executive Chairman, Mr Hui Song, Managing Director and Company Secretary, Mr Hua Li, Directors
Messrs Ning Han and Dongbo Zhang. The Company also appointed Mr Kunfang Liu as Non-Executive Chairman, Mr Ming Li as Non-Executive
Director and Company Secretary and Messrs Chee Ho Ho and Peng Zhang as Director.
In January 2018, the Company announced that the litigation between New Standard Onshore Pty Ltd (NSO) (a wholly owned subsidiary of NSE) and
Precision Catering & Equipment Pty Ltd had been settled and the proceedings dismissed by the Supreme Court of Western Australia. The terms of the
settlement are confidential but have no material impact on either New Standard or NSO.
In June 2018, New Standard completed a placement of shares at an issued price of 0.6 cents per share that raised $429,851. The placement was
made to new sophisticated investors introduced by the Board of Directors. Funds from the placement will be allocated to identifying new opportunities,
exploration, rehabilitation and working capital.
New Standard has also continued to review other opportunities for the Company to recover and grow both in the oil and gas sector and in other areas.
3 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
DIRECTORS’ 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 Kunfang Liu
Mr Xiaofeng Liu
Mr Ming Li
Managing Director
(Appointed 27 November 2017
originally appointed Non-Executive Director on
16 December 2015)
Qualifications
B.Sc (Petroluem Geology Exploration)
Experience
Mr Liu is the Chief Geologist of Huizhou Energy
Investment (Beijing) Co., Ltd and a resident of
Beijing. He has 26 years’ experience in the oil
field including extensive experience in seismic
interpretation, reservoir description and
prediction and well deployment. He was
previously the Director of the Oil and Gas
Centre at Beijing Orion Energy Technology &
Development Co., Ltd and Technical Director of
Beijing Oriental Cisco Reservoir Technology
Co., Ltd.
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
Nil
Nil
Non-Executive Chairman
(Appointed 21 December 2017)
Qualifications
B.E., MEOG, MBA
Experience
Mr Liu is the chairman of Beijing Geology &
Petroleum Technology Co., Ltd. He has 12
years’ experience in planning and implementing
the National Project of Sidetracking Horizontal
Wells’ Drilling and Completion Technology for
Heavy Oil and High Boiled Oil; and 17 years’
experience in taking charge of Science and
Technology Development & Management of
Petroleum Science and Technology.
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
Nil
Nil
Mr Chee Ho Ho
Non-Executive DIrector
(Appointed 21 December 2017)
Qualifications
BSc (Hons)
Experience
Mr Ho has more than 25 years’ experience in
the areas of management, operations, billing
and technology. Mr Ho’s experience includes
several years of leading a technology team in a
mid-sized telecommunication company, during a
period of industry deregulation. He holds a
Bachelor of Science (Hons) in Cybernetics and
Computer Science from University of Reading in
UK. He was awarded the Ford Motor Company
award for project and has completed various
leadership courses in Australia.
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
Nil
Nil
Non-Executive Director and
Company Secretary
(Appointed 21 December 2017)
Qualifications
MCS, M.Comm
Experience
Mr Li has a Master of Commerce Degree from
Sydney University, and Master of Computer
Studies Degree from the University of
Wollongong. He has 12 years’ experience in
equity investment for energy companies in
Mainland China, Hong Kong and Australia, also
has 10 years’ experience in oil and gas buying
and selling.
Current and Former Directorships in listed
entities in the last 3 years
Nil
Relevant interests in shares and options
Nil
Nil
Fully paid ordinary
shares
Options over
fully paid ordinary shares
Mr Peng Zhang
Non-Executive Director
(Appointed 21 December 2017)
Qualifications
M.Acct, AICPA
Experience
Mr Zhang holds an America Institute of Certified
Public Accountants (AICPA) license, and holds
an Accounting Master Degree from the
University of Texas, Dallas in the United States.
Mr Zhang has held multiple management
positions and is experienced in auditing and
consulting for both private and publicly listed
companies in Mainland China, Hong Kong,
America and Australia. He has more than 5
years finance and consulting experience
including working for Ernst and Young and BDO.
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
Nil
Nil
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 4
For personal use only
DIRECTORS’ REPORT
Mr Hui Song
Mr Ning Han
Non-Executive Chairman
(Appointed 12 September 2016,
originally appointed Non-Executive Director
on 16 December 2015,
resigned 21 December 2017)
Qualifications
Nil
Experience
Mr Song is the founding director of Huizhou
Energy Investment (Beijing) Co., Ltd. He brings
23 years’ experience in capital markets,
business administration, investment banking,
mergers and corporate restructures. Mr Song
has over seven years of experience in oil
exploration and development.
Current and Former Directorships in listed
entities in the last 3 years
Nil
Relevant interests in shares and options
Fully paid ordinary
shares
291,197,025
Options over
fully paid ordinary shares
Nil
Non-Executive Director
(Appointed 12 November 2015,
resigned 21 December 2017)
Qualifications
Nil
Experience
Mr Han is an electrical engineer and studied at
Beijing University of Technology, China, Inha
University, Korea and Stevens Institute of
Technology, USA. He is presently the co-
founder and Chief Operating Officer of Shanghai
Insight Information Technology Co. Ltd and has
experience in corporate transactions and capital
markets.
Current and Former Directorships in listed
entities in the last 3 years
Nil
Relevant interests in shares and options
Fully paid ordinary
shares
65,650,000
Options over
fully paid ordinary shares
Nil
Mr Hua Li
Mr Dongbo Zhang
Managing Director and Company Secretary
(Originally appointed 12 September 2016,
resigned 21 December 2017)
Non-Executive Director
(Appointed 12 September 2016,
resigned 21 December 2017)
Qualifications
LLB, M.A.Sc (UNSW)
Experience
Mr Li has significant experience in business
management and international trade with many
large enterprises in China. Most recently, Mr Li
was General Manager of Beijing Hanrende
Trade Co., Ltd, a company which trades silicon
steel, other metal materials and power products
within China.
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
Nil
Nil
Qualifications
B.E., Master of Marketing (UNSW)
Experience
Mr Zhang specialises in international trading
and has experience in investment and project
management in China, Hong Kong, Australia
and New Zealand. Mr Zhang is currently
a director of Top Education Group, Fortune
City Development Ltd and Tristar United
Investment Ltd.
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
Nil
Nil
5 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
The principal activities of the Company during the course of the year were the exploration for oil and gas in the Carnarvon Basin in Western Australia.
OPERATING RESULTS
The consolidated entity’s net loss attributable to members of New Standard for the year ended 30 June 2018 after applicable income tax was $961,307
(2017: loss of $909,235).
FUTURE DEVELOPMENTS
The Company is working to secure a major new project to drive the Company into the future.
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 $961,307 for the year ended 30 June 2018 (2017: loss $909,235). A total of $79,177 (2017: $433,699) exploration
and evaluation costs were invested in the year ended 30 June 2018 relating to New Standard’s Australian assets.
The net assets of the Group have decreased by $116,896 from $470,049 at 30 June 2017 to $353,153 as at 30 June 2018. This net decrease is
mainly due to reduction of available cash at bank.
Year ended 30 June from continuing and discontinued operations
Revenue
Depreciation
Operating loss before tax from continuing operations
Operating loss after tax from continuing operations
Net assets
SHARES UNDER OPTION
2018
$
3,543
(112,034)
(566,981)
(566,981)
353,153
2017
$
1,032
(35,602)
(892,881)
(892,881)
470,049
There were no unissued ordinary shares in the Company under option at the date of this report.
Refer to the note 23 to the financial statements for details of options granted. No options were granted during the year ended 30 June 2018.
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, Industry Regulation and Safety and the Western Australian Department of Environment and
Conservation. The Directors actively monitor compliance with the regulations and as the date of this report, the Directors are not aware of any material
breaches in respect of the regulations.
GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS
Given the nature and location of the Group’s operations in Australia, both the Energy Efficiency Opportunities Act 2006 and the National Greenhouse and
Energy Reporting Act 2007 are not expected to have a material impact.
EVENTS SUBSEQUENT TO YEAR END
There has been no other matter or circumstance that has arisen since the end of the year that requires disclosure other than the below.
(a) The Company has received directions from DMIRS to rehabilitate historic exploration activities carried out on permit EP 481 by 15 August 2020 and
on permits EP450, EP 451 and EP 456 by 30 November 2019 respectively.
(b)
In September 2018 DMIRS confirmed the extension of term for EP 481 to 15 August 2020.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 6
For personal use only
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.
Directors
Mr Kunfang Liu (i)
Mr Xiaofeng Liu (ii)
Mr Ming Li (i)
Mr Chee Ho Ho (i)
Mr Peng Zhang (i)
Mr Hui Song (iii, iv)
Mr Hua Li (iii, iv)
Mr Ning Han (iii, iv)
Mr Dongbo Zhang (iii, iv)
Board meetings
Held while
director
Attended
Circular
resolution
passed
2
2
2
2
2
–
–
–
–
2
2
2
–
2
–
–
–
–
2
5
2
2
2
3
3
3
3
Total
4
7
4
2
4
3
3
3
3
(i)
(ii)
(iii)
(iv)
Messrs Liu, Li, Ho and Zhang were appointed as Non-Executive Chairman and Non-Executive Directors respectively on 21 December 2017.
Mr Liu resigned as Non-Executive Director and was appointed Managing Director of the Company effective 27 November 2017.
Messrs Song, Li and Zhang was appointed as Non-Executive Chairman, Managing Director and Non-Executive Director respectively on 12 September 2016.
Messrs Song, Li, Han and Zhang resigned as a Non-Executive Chairman and Non-Executive Directors respectively on 21 December 2017.
There were no formal Audit or Remuneration committees held during the year. The Board attended to these committee responsibilities when required.
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.
During the year the Director & Officer insurance expired, the Company is committed to ensure the insurance policy is organised 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.
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.
The Board of Directors has considered the position and 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 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 DECLARATION
A copy of the auditor’s independence declaration under s.307C of the Corporations Act 2001 in relation to the audit of the full year is included on page 21.
7 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
DIRECTORS’ 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 2018.
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.
REMUNERATION COMMITTEE
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, 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.
There was no Remuneration Committee during the year due to the size and nature of the Company.
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.
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 2017 ANNUAL GENERAL MEETING
The Company received 86% of “yes” votes on its remuneration report for the 2017 financial year. The Company did not receive any specific feedback
at the AGM or throughout the year on its remuneration practices.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 8
For personal use only DIRECTORS’ REPORT
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
H Li
X Liu
Non-Executives
K Liu
M Li
C Ho
P Zhang
H Song
N Han
D Zhang
Position
Director
Director
Director
Director
Director
Director
Director
Director
Director
EXECUTIVE REMUNERATION OUTCOME FOR 2018
Overview
*Appointed/resigned
during the year
Resigned as Managing Director
on 27 November 2017
Resigned as Non-Executive
Director on 21 December 2017
Appointed as Managing Director
on 27 November 2017*
Appointed 21 December 2017*
Appointed 21 December 2017*
Appointed 21 December 2017*
Appointed 21 December 2017*
Resigned 21 December 2017
Resigned 21 December 2017
Resigned 21 December 2017
During the year, the Company’s growth plans continues to be impacted by the oil prices and associated effect on the oil industry’s commercial landscape.
The Company continues to focus on reducing operational, corporate costs and overheads and identifying new opportunities to increase the Company’s
value.
The Company’s retained its workforce to a total of two employees as at 30 June 2018. During the year, the Company’s non-executive directors agreed to
continue suspending all fees until market conditions improve.
The Company did not engage an independent remuneration consultant to review the structure of the Company’s remuneration components in 2018.
The Remuneration Committee considers the present policy remains appropriate for the financial year ended 30 June 2018.
Base Package Salaries
There were no increment in base salary packages during the 2017/18 financial year for KMP.
Short Term Incentives
There have been no STIP entitlements earned or accrued for performance in the year ended 30 June 2017 and 30 June 2018.
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 2018:
Share price
Total assets
Net profit/(loss) before tax
from continued operation
30 June 2018
30 June 2017
30 June 2016
30 June 2015
30 June 2014
$
0.004
567,997
$
0.004
726,226
$
0.004
686,766
$
0.012
$
0.140
7,675,891
117,371,505
(566,981)
(892,881)
(7,680,264)
(38,793,185)
(6,116,652)
9 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
DIRECTORS’ REPORT
%
%
0
%
0
%
0
%
0
%
1
6
%
0
0
1
%
2
5
d
e
t
a
l
e
r
n
o
i
t
r
o
p
o
r
P
e
c
n
a
m
r
o
f
r
e
p
$
–
l
a
t
o
T
6
5
6
,
9
2
6
5
6
,
9
2
9
1
8
,
1
6
5
9
2
,
1
0
1
3
3
0
,
3
2
7
4
1
,
6
8
1
2 7
e
v
i
t
n
e
c
n
I
)
i
i
(
s
t
h
g
R
i
s
n
o
i
t
p
O
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
–
I
T
L
t
s
o
P
s
t
i
f
e
n
e
b
t
n
e
m
y
o
p
m
e
l
-
r
e
p
u
S
n
o
i
t
a
u
n
n
a
s
t
i
f
e
n
e
b
m
r
e
t
g
n
o
L
t
n
e
m
y
o
p
m
e
l
s
t
i
f
e
n
e
b
t
n
e
m
y
o
p
m
e
m
r
e
t
l
t
r
o
h
S
)
i
(
e
v
a
e
l
l
a
u
n
n
A
r
e
h
t
O
s
u
n
o
b
h
s
a
C
y
r
a
l
a
S
$
–
–
–
–
4
7
2
,
2
6
3
3
0
,
3
2
7
0
3
,
5
8
$
–
–
–
–
–
–
–
$
–
3
7
5
,
2
3
7
5
,
2
1
1
0
,
5
3
5
7
,
1
–
4
6
7
,
6
$
–
–
–
8
5
0
,
4
3
1
8
,
8
1
–
1
7
8
,
2
2
$
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
$
–
3
8
0
,
7
2
3
8
0
,
7
2
0
5
7
,
2
5
5
5
4
,
8
1
–
5
0
2
,
1
7
.
r
a
e
y
e
h
t
g
n
i
r
u
d
i
d
a
p
d
n
a
r
a
e
y
e
h
t
g
n
i
r
u
d
n
e
k
a
t
,
d
e
u
r
c
c
a
e
v
a
e
l
l
a
u
n
n
a
e
h
t
g
n
s
u
i
t
n
a
r
g
f
o
e
t
a
d
e
h
t
t
a
d
e
t
l
a
u
c
a
c
l
s
i
s
t
h
g
i
r
e
v
i
t
n
e
c
n
i
f
o
e
u
a
v
l
r
i
a
f
e
h
T
.
n
a
P
l
I
T
L
e
h
t
h
t
i
w
e
c
n
a
d
r
o
c
c
a
n
i
,
5
1
0
2
e
n
u
J
0
3
d
e
d
n
e
s
r
a
e
y
e
h
t
n
i
d
e
t
n
a
r
g
e
r
e
w
s
t
h
g
i
r
e
v
i
t
n
e
c
n
I
.
8
1
0
2
e
n
u
J
0
3
d
n
a
7
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
n
i
d
e
t
n
a
r
g
s
t
h
g
i
r
e
v
i
t
n
e
c
n
i
o
n
s
a
w
e
r
e
h
T
e
h
t
f
o
e
v
i
t
i
a
c
d
n
i
r
o
o
t
d
e
t
l
a
e
r
t
o
n
s
i
n
o
i
t
a
r
e
n
u
m
e
r
s
a
d
e
d
u
c
n
l
i
t
n
u
o
m
a
e
h
T
.
7
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
n
i
s
t
h
g
i
r
e
v
i
t
n
e
c
n
i
e
s
e
h
t
f
o
e
u
a
v
l
a
t
a
r
-
o
r
p
e
h
t
s
i
d
e
s
o
c
s
d
i
l
e
u
a
v
l
e
h
T
.
d
o
i
r
e
p
)
g
n
i
t
s
e
v
(
t
n
e
m
e
r
u
s
a
e
m
e
h
t
r
e
v
o
i
d
e
s
n
g
o
c
e
r
d
n
a
l
l
e
d
o
m
n
o
i
t
a
u
m
S
o
l
r
a
C
e
i
t
n
o
M
.
7
1
0
2
r
e
b
m
e
c
e
D
1
2
e
v
i
t
c
e
f
f
e
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
a
s
a
d
e
n
g
s
e
r
i
i
L
r
M
.
7
1
0
2
r
e
b
m
e
v
o
N
7
2
e
v
i
t
c
e
f
f
e
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
e
h
t
i
d
e
t
n
o
p
p
a
s
a
w
d
n
a
r
o
t
c
e
r
i
i
D
g
n
g
a
n
a
M
e
h
t
s
a
d
e
n
g
s
e
r
i
i
L
.
7
1
0
2
r
e
b
m
e
v
o
N
7
2
e
v
i
t
c
e
f
f
e
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
i
D
g
n
g
a
n
a
M
d
e
t
n
o
p
p
a
i
s
a
w
d
n
a
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
s
a
d
e
n
g
s
e
r
i
i
u
L
r
M
r
M
.
6
1
0
2
r
e
b
m
e
t
p
e
S
3
2
e
v
i
t
c
e
f
f
e
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
a
s
a
d
e
n
g
s
e
r
i
i
k
c
h
T
r
M
.
6
1
0
2
l
y
u
J
1
3
e
v
i
t
c
e
f
f
e
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
i
D
e
v
t
u
c
e
x
E
-
n
o
N
a
i
d
e
t
n
o
p
p
a
s
a
w
d
n
a
r
o
t
c
e
r
i
i
D
g
n
g
a
n
a
M
e
h
t
.
6
1
0
2
t
s
u
g
u
A
5
e
v
i
t
c
e
f
f
e
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
D
e
h
t
s
a
s
a
d
e
n
g
s
e
r
i
i
k
c
h
T
r
M
d
e
n
g
s
e
r
i
s
i
l
l
i
W
r
M
i
.
e
v
e
c
e
r
y
a
m
l
i
a
u
d
v
d
n
i
i
e
h
t
t
a
h
t
)
y
n
a
f
i
(
t
i
f
e
n
e
b
e
d
u
c
n
l
i
t
i
f
e
n
e
b
e
v
a
e
l
l
a
u
n
n
A
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
)
i
i
i
(
i
u
L
X
r
M
)
v
i
(
i
L
H
r
M
l
a
t
o
T
7
1
0
2
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
)
v
(
i
k
c
h
T
P
r
M
)
v
i
(
i
L
H
r
M
e
m
a
N
8
1
0
2
)
i
v
(
s
i
l
l
i
W
S
r
M
l
a
t
o
T
s
e
t
o
N
)
i
(
)
i
i
(
)
i
i
i
(
)
v
i
(
)
v
(
)
i
v
(
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 10
:
w
o
e
b
l
d
e
t
a
t
s
s
a
e
r
e
w
7
1
0
2
e
n
u
J
0
3
d
n
a
8
1
0
2
e
n
u
J
0
3
d
e
d
n
e
s
r
a
e
y
e
h
t
r
o
f
y
n
a
p
m
o
C
e
h
t
f
o
P
M
K
d
n
a
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
h
c
a
e
r
o
f
n
o
i
t
a
r
e
n
u
m
e
r
e
h
T
s
e
l
b
a
T
n
o
i
t
a
r
e
n
u
m
e
R
For personal use only
DIRECTORS’ REPORT
NON-EXECUTIVE REMUNERATION 2018
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.
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
2018
2017
–
–
–
–
–
–
The Non-Executive Chairman and the Non-Executive Directors have agreed to suspend all their fees starting from 1 February 2015 and remain
suspended to date. As a result the 2018 remuneration outlined below reflects no Non-Executive Chairman and Non-Executive Directors fee paid in
2017/18.
Non-executive remuneration for the year ended 30 June 2018 and comparative 2017 remuneration:
Salary and fees
Superannuation
Options (i)
Total
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Messrs Liu, Li, Ho and Zhang were appointed Non-Executive Chairman and Non-Executive Directors respectively on 21 December 2017.
Mr Song and Mr Zhang were appointed Non-Executive Chairman and Non-Executive Director respectively on 12 September 2016.
Messrs Song, Han and Zhang resigned on 21 December 2017.
Mr Liu resigned as Non-Executive Director and was appointed Managing Director of the Company effective 27 November 2017.
Mr Dixon resigned as the Non-Executive Chairman effective 12 September 2016.
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.
11 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
2018
Mr K Liu (i)
Mr M Li (i)
Mr C Ho (i)
Mr P Zhang (i)
Mr H Song (ii)(iii)
Mr N Han (iii)
Mr D Zhang (ii)(iii)
Total
2017
Mr H Song (ii)(iii)
Mr N Han (iii)
Mr X Liu (iv)
Mr D Zhang (ii)(iii)
Mr A Dixon (v)
Total
Notes
(i)
(ii)
(iii)
(iv)
(v)
For personal use only
DIRECTORS’ REPORT
EQUITY INSTRUMENTS
OPTIONS
There were no grant of options affecting remuneration in the current or future reporting periods.
INCENTIVE RIGHTS
During the year ended 30 June 2018, no Performance Rights and Retention Rights were granted to executives as part of their remuneration packages.
There were no balance held by the executive as at 30 June 2018.
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.
Balance at
start of year
During the year
Balance at end of year
Granted
Vested
Lapsed
Others
TOTAL
Vested
Unvested
Name
Mr K Liu (i)
Ordinary shares
Unlisted options
Mr X Liu (ii)
Ordinary shares
Unlisted options
Mr M Li (i)
Ordinary shares
Unlisted options
Mr C Ho (i)
Ordinary shares
Unlisted options
Mr P Zhang (i)
Ordinary shares
Unlisted options
Mr H Song (iii)(iv)
–
–
–
–
–
–
–
–
–
–
Ordinary shares
291,197,025
Unlisted options
Mr H Li (iii)(iv)
Ordinary shares
Unlisted options
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
291,197,025
–
–
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
n/a
–
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 12
For personal use only DIRECTORS’ REPORT
Balance at
start of year
Name
Mr N Han (iv)
Ordinary shares
65,650,000
Unlisted options
Mr D Zhang (iii)(iv)
Ordinary shares
Unlisted options
–
–
–
During the year
Balance at end of year
Granted
Vested
Lapsed
Others
TOTAL
Vested
Unvested
–
–
–
–
n/a
–
–
n/a
n/a
–
–
n/a
–
–
–
–
65,650,000
–
–
–
n/a
–
n/a
–
n/a
–
n/a
–
Note
(i) Messrs Liu, Li, Ho and Zhang were appointed as Non-Executive Chairman and Non-Executive Directors respectively on 21 December 2017.
(ii) Mr Liu resigned as Non-Executive Director and was appointed Managing Director of the Company effective 27 November 2017.
(iii) Messrs Song, Li and Zhang were appointed as Non-Executive Chairman, Managing Director and Non-Executive Director respectively on 12 September 2016.
(iv) Messrs Song, Li, Han and Zhang resigned as the Non-Executive Chairman and Non-Executive Directors effective 21 December 2018. The balance reflects the shares
held at time of resignation.
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
China International Economic Huizhou Energy Investment (Beijng) Co., Ltd. (Huizhou), of which Mr Hui Song is a Director, fully underwrote the rights
issue completed on 23 November 2016. Pursuant to the Underwriting Agreement, the Company agreed to pay Huizhou an underwriting fee of 4% of the
value of the underwritten shares which amounted to $38,209. The amount was fully paid during the year. There are no outstanding payable to Huizhou.
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 2018 are provided below.
Name
Mr X Liu (i)
Mr K Liu (ii)
Mr M Li (ii)
Mr C Ho (ii)
Mr P Zhang (ii)
Engagement
Term of
contract
Notice period by either party
Employee
Ongoing
4 weeks
No notice required for termination by Company for cause
Employee
Employee
Employee
Employee
Ongoing
Ongoing
Ongoing
Ongoing
None
None
None
None
Termination
benefit
4 weeks
None
None
None
None
Note
(i) Mr Liu resigned as Non-Executive Director and was appointed Managing Director of the Company effective 27 November 2017.
(ii) Messrs Liu, Li, Ho and Zhang were appointed as Non-Executive Chairman and Non-Executive Directors respectively on 21 December 2017.
End of Audited Remuneration Report
This Report of Directors, incorporating the Remuneration Report is signed in accordance with a resolution of the Board of Directors.
Xiaofeng Liu
Managing Director
26 September 2018
13 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only 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 2018 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 Liu 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.
Kunfang Liu
Non-Executive Director
26 September 2018
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 14
For personal use only 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 26 September 2018.
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
POLICIES AND PROCEDURES
· Code of Conduct
· Shareholder Communications
· Continuous Disclosure Policy
· Securities Trading Policy
· Diversity 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 Board meetings and/or regular informal 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;
15 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
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.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 16
For personal use only
CORPORATE GOVERNANCE STATEMENT
Principle 1: Lay solid foundations for management and oversight (cont’d)
Diversity
Retirement and rotation of directors
Retirement and rotation of directors are governed by the Corporations
Act 2001 and the Constitution of the Company. Each year, one third 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.
One director was re-elected in the 2017 Annual General Meeting. It is
intended for all current directors appointed during the year to stand for
election at the Company’s 2018 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.
During the year the insurance expired, the Company is committed to
ensure the insurance policy is organised as soon as possible.
Board meetings
The frequency of board meetings and the extent of reporting from
management at board meetings are as follows:
·
·
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.
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 two full-time employee, being the
Managing Director and a finance manager who are males. The
Company contracts consultants who consists of both female and 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 2018 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.
17 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
CORPORATE GOVERNANCE STATEMENT
Principle 2: Structure the Board to add value
Composition of the Board
Independence of Chair of the Board
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 Directors’ 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 fulfil 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 (5) directors of whom four (4) are considered
independent, Messrs Kunfang Liu, Ming Li, Chee Ho Ho and Peng
Zhang. Mr Xiaofeng Liu served in an executive roles from
27 November 2017 and therefore does 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.
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.
Principle 3: Act ethically and responsibly
Code of Conduct
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;
The Current Chair of the Company, Mr Liu, is an independent director.
The Board considers Mr Liu’s role as Non-Executive Chairman
essential to the success of the Group in its current stage, wherein the
Group continues to refine its focus on the strategic development of the
business.
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.
· Encouraging the reporting of illegal and unethical behavior;
· 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.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 18
For personal use only
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 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 whole Board of directors is tasks with 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 Board 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.
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.
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.
19 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
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.
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.
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.
The Board monitors and reviews 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 Managing Director 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.
Principle 8: Remunerate fairly and responsibly
The whole Board forms the Remuneration Committee.
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
incentives may include options and/or performance rights granted at
the discretion of the Remuneration Committee and subject to obtaining
CORPORATE GOVERNANCE STATEMENT
The Board has required management to design, implement and
maintain risk management and internal control systems to manage the
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.
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.
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 whole Board 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.
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.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 20
For personal use only
AUDITORS’ INDEPENDENCE DECLARATION
21 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
INDEPENDENCE AUDIT REPORT
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 22
For personal use only
23 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 24
For personal use only
25 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the financial year ended 30 June 2018
Continuing operations
Other revenue
Total revenue and other income
Depreciation expenses
Administrative expenses
Share based payments
Foreign exchange gain
Impairment of exploration and evaluation and development expenditure
Gain/(Loss) on investment in available-for-sale
Fair value loss on available-for-sale financial assets
Loss before income tax expense
Income tax benefit
Loss after income tax for the year from continuing operations
Discontinued operations
Loss on sale of subsidiary
Loss attributable to owners of the Parent entity
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Changes in the fair value of available-for-sale financial assets
Exchange differences on translation of foreign operations
Other comprehensive income 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)
Note
2
3
3
23
8
4
16
12
12
14
14
14
14
2018
$
3,543
3,543
(112,034)
(379,313)
–
–
(79,177)
–
–
(566,981)
–
(566,981)
(394,326)
(961,307)
29,792
388,338
418,130
(543,177)
2017
$
1,032
1,032
(35,602)
(300,117)
(85,307)
(823)
(433,699)
42,500
(80,865)
(892,881)
–
(892,881)
(16,354)
(909,235)
–
16,354
16,354
(892,881)
(543,177)
(892,881)
Cents Per Share
Cents Per Share
(0.08)
(0.08)
(0.05)
(0.05)
(0.15)
(0.15)
–
–
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 26
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018
Current Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial asset
Total Current Assets
Non-Current Assets
Available-for-sale financial asset
Exploration and evaluation and development expenditure
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Total Current Liabilities
Non-Current Liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
20(a)
6
7
7
8
9
10
11
12
13
2018
$
2017
$
383,515
22,754
45,600
451,869
116,128
–
–
116,128
567,997
214,844
214,844
–
214,844
460,157
22,099
37,200
519,456
94,736
–
112,034
206,770
726,226
256,177
256,177
–
256,177
353,153
470,049
69,164,123
29,792
(68,840,762)
353,153
68,737,842
(99,911)
(68,167,882)
470,049
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
27 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
$
–
–
–
29,792
29,792
–
–
–
$
–
–
–
–
–
–
–
–
Total
$
470,049
(572,969)
–
29,792
(543,177)
426,281
–
–
Total
$
427,040
(892,881)
–
(892,881)
850,583
–
221,855
470,049
–
–
–
–
–
–
–
–
–
–
–
–
388,338
–
388,338
–
–
–
–
–
16,354
16,354
–
–
–
(388,338)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2018
Issued Capital
Accumulated
Losses
Share Based
Payment Reserve
Translation
Reserve
Foreign Currency
Available for Sale
Financial Assets
Reserve
$
$
$
$
68,737,842
(68,167,882)
288,427
(388,338)
2018
Equity as at 1 July 2017
Loss for the year
Realised profit on translation
of foreign operations
Unrealised gain on available for sale
financial assets
Total comprehensive loss
Transactions with owners
in their capacity as owners;
–
–
–
–
(572,969)
(388,338)
–
(961,307)
Issue of shares, net of transaction costs
426,281
–
Other comprehensive loss
Share based payments
–
–
288,427
(288,427)
–
Equity as at 30 June 2018
69,164,123
(68,840,762)
29,792
353,153
Issued Capital
Accumulated
Losses
Share Based
Payment Reserve
Translation
Reserve
Foreign Currency
Available for Sale
Financial Assets
Reserve
$
$
$
$
67,887,259
(67,693,403)
637,876
(404,692)
–
–
–
(892,881)
(16,354)
(909,235)
2017
Equity as at 1 July 2016
Loss for the year
Realised profit on translation
of foreign operations
Total comprehensive loss
Transactions with owners
in their capacity as owners;
Issue of shares, net of transaction costs
850,583
–
Other comprehensive loss
Share based payments
–
–
Equity as at 30 June 2017
68,737,842
(68,167,882)
434,756
(434,756)
–
85,307
288,427
The above consolidated statement of changes of equity should be read in conjunction with the accompanying notes.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 28
For personal use only
CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 30 June 2018
Cash Flows From Operating Activities
Payments to suppliers and employees
Interest received
Interest paid
Note
2018
$
2017
$
(387,543)
(337,956)
3,543
–
1,032
–
Net cash (used in) operating activities
20(b)
(384,000)
(336,924)
Cash Flows From Investing Activities
Payment for exploration, evaluation and development
Proceeds from sale of available-for-sale financial instrument
Net cash provided by/(used in) investing activities
Cash Flows From Financing Activities
Proceeds from issue of shares
Payment for share issue cost to related party for prior period capital raising
Net cash flows provided by/(used in) financing activities
(80,714)
–
(80,714)
426,281
(38,209)
388,072
(432,479)
107,500
(324,979)
888,792
–
888,792
Net increase/(decrease) in cash and cash equivalents
(76,642)
226,889
Cash and cash equivalents at beginning of the financial period
Exchange rate adjustments
Cash and cash equivalents at the end of the financial period
20(a)
460,157
–
383,515
233,268
–
460,157
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
29 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
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 26 September 2018.
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 2018.
GOING CONCERN
During the year the consolidated entity incurred a net loss after income tax from continuing operations for the year ended 30 June 2018 of
$566,981 (2017: $892,881), incurred net cash outflows from operating and investing activities of $464,714 (2017: outflow $661,903) for
continuing operations, and had net working capital of $237,025 at 30 June 2018.
The ability of the consolidated entity to continue as a going concern is dependent on securing additional funding through capital raisings as and
when required to continue to meet its working capital requirements in the next 12 months. These conditions indicate a material uncertainty that
may cast significant doubt about the consolidated entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its
assets and discharge its liabilities in the normal course of business.
The Directors believe that they will be able to raise additional capital as required and that the Group will continue as a going concern and as a
result the financial report has been prepared on a going concern basis. In arriving at this position the Directors have considered the following
pertinent matters:
· The Company holds 2.13 million fully paid ordinary Sundance Energy (ASX:SEA) shares, including escrowed shares, which can be used by
·
the Group as a future funding source;
In response to reserve the Company’s cash flow, the Non-Executive Chairman and all Non-Executive Directors have agreed to suspend the
Non-Executive Chairman and all Non-Executive Directors’ fees until market conditions improve starting from 1 February 2015 and remain
suspended to date and until the consolidated entity has the financial capacity to pay the Non-Executive Chairman and Non-Executive
Directors’ fees;
· The Company has received the financial support through a loan facility from its major shareholder if required;
· The Company has recently completed a capital raising to sophisticated investors in June 2018 and has the proven ability to raise capital as
and when required; and
· Should it be required the Directors are satisfied that they will be able to raise additional funds by either a form of equity raising, implementing
strategic joint ventures or by asset sale to fund ongoing exploration commitments and for working capital.
However, should the consolidated entity not be able to continue as a going concern, it may be required to realise its assets and discharge its
liabilities other than in the ordinary course of business, and at amounts that different from those stated in the financial statements. The financial
report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or 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.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 30
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
(b)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid investments with
original maturities of three months or less.
(c)
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,
less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets
unless collection is not expected for more than 12 months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing
the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective
evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in
payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment
allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. Cash flows relating to short-term receivable are not discounted if the effect of discounting is immaterial.
(d)
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
(i)
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
(ii)
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the statement of 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.
(e)
Impairment of assets
At each reporting date, the entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
(f)
Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss
for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current
tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax base of those items.
Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are
not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a
result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from goodwill.
31 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and
joint ventures except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
(g)
Exploration and evaluation expenditure
Exploration for and evaluation of hydrocarbon resources is the search for hydrocarbon resources after the entity has obtained legal
rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the
hydrocarbon resources. Accordingly, exploration and evaluation expenditures are those expenditures incurred by the Company in
connection with the exploration for and evaluation of hydrocarbon resources before the technical feasibility and commercial viability of
extracting a hydrocarbon resource is demonstrable.
Accounting for exploration and evaluation expenditures is assessed separately for each ‘area of interest’. An ‘area of interest’ is an
individual geological area which is considered to constitute a favourable environmental for the presence of a hydrocarbon resource or
has been proved to contain such a resource.
Expenditure incurred on activities that precede exploration of hydrocarbon resources, including all expenditure incurred prior to securing
legal rights to explore an area, is expensed as incurred. For each area of interest the expenditure is recognised as an exploration and
evaluation asset where the following conditions are satisfied:
(a)
(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.
(h)
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.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 32
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
(h)
Non-current assets (or disposal groups) held for sale and discontinued operations (cont’d)
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 consolidated statement of financial position. The liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the consolidated statement of financial position.
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 consolidated statement of profit or loss and other comprehensive income.
(i)
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 financial 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.
(j)
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.
33 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
(j)
Share-based payments (cont’d)
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.
(k)
Property, plant and equipment
Owned assets
Items of property, plant and equipment are recognised at cost less accumulated depreciation (see below) and impairment losses (where
applicable)..
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.
(l)
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.
(m)
Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the Company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account amounts
unpaid on ordinary shares and any reduction in earnings per share that will arise from the exercise of options outstanding during the
financial year.
(n)
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.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 34
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
(o)
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.
(p)
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
all resulting exchange differences are recognised in other comprehensive income.
(iii)
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.
(q)
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.
(r)
Adoption of new and revised accounting standards
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the
preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2018. All other new standards and
interpretations effective from 1 July 2017 were adopted with the main impact being disclosure changes. Changes to accounting policies
due to the adoption of these standards and interpretations are not considered significant for the Group.
35 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
(s)
Standards and interpretations issued not yet effective
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the
potential impact of such pronouncements on the Group when adopted in future periods, are discussed below:
Application
date of
standard
1 January
2018
Application
date for
Group
1 July 2018
1 January
2018
1 July 2018
Reference / Title
Summary
AASB 9
Financial
Instruments and
associated
Amending
Standards
AASB 15
Revenue from
Contracts with
Customers
The Standard will be applicable retrospectively (subject to the provisions on
hedge accounting outlined below) and includes revised requirements for the
classification and measurement of financial instruments, revised recognition
and derecognition requirements for
financial instruments and simplified
requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain
simplifications to the classification of financial assets, simplifications to the
accounting of embedded derivatives, upfront accounting for expected credit
loss, and the irrevocable election to recognise gains and losses on investments
in equity instruments that are not held for trading in other comprehensive
income. AASB 9 also introduces a new model for hedge accounting that will
allow greater flexibility in the ability to hedge risk, particularly with respect to
hedges of non-financial items.
The directors anticipate that the adoption of AASB 9 will not have a material
impact on the Group’s financial instruments.
When effective, this Standard will replace the current accounting requirements
applicable to revenue with a single, principles-based model. Except for a
limited number of exceptions, including leases, the new revenue model in
AASB 15 will apply to all contracts with customers as well as non-monetary
exchanges between entities in the same line of business to facilitate sales to
customers and potential customers.
The core principle of the Standard is that an entity will recognise 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 the goods or services. To achieve this objective, AASB 15
provides the following five-step process:
·
·
·
·
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the
contract(s); and
·
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate
the contracts that existed in each prior period presented per AASB 108:
Accounting Policies, Changes in Accounting Estimates and Errors (subject to
certain practical expedients in AASB 15); or recognise the cumulative effect of
retrospective application
initial
application. There are also enhanced disclosure requirements regarding
revenue.
incomplete contracts on the date of
to
The directors anticipate that the adoption of AASB 15 will not have a material
impact on the Group's financial statements as the Group does not generate
any revenue.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 36
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
(bb)
Standards and interpretations issued not yet effective (cont’d)
Reference / Title
Summary
AASB 16
Leases
this Standard will
When effective,
the current accounting
requirements applicable to leases in AASB 117: Leases and related
Interpretations. AASB 16 introduces a single lessee accounting model that
eliminates the requirement for leases to be classified as operating or finance
leases.
replace
Application
date of
standard
1 January
2019
Application
date for
Group
1 July 2019
The main changes introduced by the new Standard includes:
·
·
·
·
recognition of a right-to-use asset and liability for all leases (excluding
short-term leases with less than 12 months of tenure and leases relating
to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property,
Plant and Equipment in profit or loss and unwinding of the liability in
principal and interest components;
variable lease payments that depend on an index or a rate are included
in the initial measurement of the lease liability using the index or rate at
the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to
separate non-lease components and instead account for all components
as a lease; and
additional disclosure requirements.
transitional provisions of AASB 16 allow a
·
The
to either
retrospectively apply the Standard to comparatives in line with AASB 108 or
recognise the cumulative effect of retrospective application as an adjustment
to opening equity on the date of initial application.
lessee
Although the directors anticipate that the adoption of AASB 16 will have a
non-material impact the Group's financial statements. It is impractical at this
stage to provide a reasonable estimate of such impact
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.
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 Company has taken a conservative view taking into
consideration the market condition and that no exploration expenditure, other than rental and incidental land costs were incurred during the year
with no expenditure budgeted for the financial year ended 30 June 2018 that the carrying amount of exploration and evaluation expenditure be
fully impaired for all projects at 30 June 2018.
The ultimate recoupment of costs carried forward for exploration and evaluation 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.
37 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
Summary of accounting policies (cont’d)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
Contingencies
The Company is continuing to assess its potential rehabilitation obligations and associated costs with respect to its historical drilling activities.
Given the likely amount of outflow of economic benefits is not probable, the matter has been considered a contingent liability and a provision in
relation to the potential rehabilitation obligations has not been recognised. The timing and amount of recognition of a provision related to potential
rehabilitation obligations is considered a significant judgement.
The Due Diligence Defect claims associated with the Sundance sale of the Eagleford asset were disputed by the Group and the likely outflow of
economic benefits is not probable and as such a provision has not been recognised in relation to the claim. This is considered a significant
judgement consistent to the rehabilitation commentary.
Deferred tax balances
The Group has carried forward tax losses which will not be recognised as deferred tax assets as it is not probable that the company will derive
future assessable income of a nature and amount sufficient to enable the benefit to be realised.
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:
Interest revenue
Total Revenue
3.
Expenses
Depreciation expenses
Administrative expenses
Employee benefit expenses
Professional fees
Occupancy expenses
Other administrative expenses
Total administrative expenses
2018
$
3,543
3,543
2017
$
1,032
1,032
112,034
35,602
35,942
182,142
34,687
126,542
379,313
130,631
54,049
30,912
84,525
300,117
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 38
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
4.
(a)
Income tax expenses
The components of tax expense comprise:
Current tax
Deferred tax
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
Permanent differences arising for discontinued operations
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
Deferred tax liabilities
Unrecognised net deferred tax asset
5.
Auditors’ remuneration
Auditor of the parent entity
BDO Audit (WA) Pty Ltd
2018
$
2017
$
–
–
–
–
–
–
(961,307)
(288,392)
–
6,866
–
–
–
–
(281,526)
281,526
–
–
–
–
–
–
–
(909,235)
(272,771)
25,592
–
–
–
–
4,906
(242,273)
242,273
–
6,497,775
–
6,497,775
6,506,419
–
6,506,419
30,000
30,000
38,376
38,376
39 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
6.
Trade and other receivables
Current
Trade receivables
Other receivables
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 21 for the Group’s risk management objectives and policies.
7.
Available-for-sale financial investments
Listed securities
Current
Sundance Energy Australia Ltd (i)
Carrying amount at the end of period
Non-current
Sundance Energy Australia Ltd (i)
Carrying amount at the end of period
(i)
The Company held 600,000 freely tradable fully paid ordinary SEA shares and 1.53 million SEA
shares on escrow pursuant to the share sale agreement as at 30 June 2018. Refer to note 24 for
further details.
8.
Exploration and evaluation expenditure
Balance at beginning of the year
Expenditure incurred
Expenditure impaired (i)
2018
$
2017
$
–
22,754
22,754
–
22,099
22,099
45,600
45,600
116,128
116,128
37,200
37,200
94,736
94,736
–
79,177
(79,177)
–
433,699
(433,699)
Balance at end of the year
(i)
–
During the year the Company recognised a full non-cash impairment charge of $79,177 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
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 2018 considering no exploration expenditure, other than rental and incidental land costs, has been
budgeted for the financial year ended 30 June 2019. This charge reflects the steps and measures followed pursuant to the Australian Accounting Standards (AASB6)
when testing for impairment indicators. This charge has been recognised in the consolidated statement of profit or loss and other comprehensive income
–
The Board assess impairment of all exploration expenditure at each reporting date by evaluating the conditions specific to the Company and 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 of by sale.
In September 2018, the Company received a permit extension from DMIRS for EP 481. In May 2018 the Company submitted an application for renewal for EP 482.
The tenure of EP 482 remain in full force and effect until the renewal is determined. In the event the application is not approved the Company will have to reassess
the existing permits, including potential relinquishment of all or part of the permits.
Should the Company be unsuccessful in its renegotiation with the DMP on the above matter, there is material uncertainty which casts significant doubt on the
recoverability of the exploration and evaluation asset. 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%
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 40
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
9.
Property, plant and equipment
Property, plant and equipment
Accumulated depreciation
Closing net book amount
2017
Balance at 1 July 2016
Additions
Disposals
Depreciation expense
Balance at 30 June 2017
2018
Additions
Disposals
Depreciation expense
Balance at 30 June 2018
10.
Trade and other payables
Current
Trade payables
Sundry payables and accrued expenses
2018
$
341,582
(341,582)
–
Furniture and
equipment
$
2017
$
341,582
(229,548)
112,034
Total
$
147,636
147,636
–
–
(35,602)
112,034
–
–
(112,034)
–
2018
$
6,101
208,743
214,844
–
–
(35,602)
112,034
–
–
(112,034)
–
2017
$
49,462
206,715
256,177
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 20
for the Group’s risk management objectives and policies.
11.
Issued capital
788,059,805 fully paid ordinary shares (2017: 716,418,005)
69,164,123
68,737,842
(a)
Fully paid ordinary shares
2017
Balance at 1 July 2016
On 29 December 2016, issue of shares to shareholders for Right Issue 2-for-1
On 30 December 2016, issue of shares to Huizhou Energy Investments
Less: Transaction costs arising from issue of shares
Balance at 30 June 2017
No.
$
477,612,003
39,051,377
199,754,625
716,418,005
67,887,259
156,206
799,018
68,842,483
(104,641)
68,737,842
41 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
11.
Issued capital (cont’d)
(a)
Fully paid ordinary shares (cont’d)
2018
Balance at 1 July 2017
On 22 June 2018, issue of shares to sophisticated investors
Less: Transaction costs arising from issue of shares
Balance at 30 June 2018
(b)
Terms and conditions of Issue Capital
716,418,005
71,641,800
68,737,842
429,851
69,167,693
(3,570)
788,059,805
69,164,123
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 are disclosed in note 18 of
the consolidated financial statements.
12.
Reserves
Share based payments reserve
Foreign currency translation reserve
Available-for-sale reserve
(a)
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.
(b)
Movements in foreign currency translation reserve
Balance at the beginning of the year
Unrealised profit on translation of foreign operation
Realised profit from discontinued operations
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.
2018
$
–
–
29,792
29,792
2017
$
288,427
(388,338)
–
(99,911)
288,427
637,876
–
–
(288,427)
–
(388,338)
–
388,338
–
85,307
–
(434,756)
288,427
(404,692)
–
–
(404,692)
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 42
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
12.
Reserves (cont’d)
(c)
Movements in available for sale investments
Balance at the beginning of the year
Fair value of available-for-sale assets
Balance at the end of the 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.
13.
Accumulated losses
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
Realised foreign exchange gain from discontinued operations in prior periods
Balance at the end of the year
14.
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)/profit 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
15.
Dividends
There have been no dividends paid or proposed in the 2018 or 2017 financial years.
16.
Discontinued operations
2018
$
2017
$
–
29,792
29,792
–
–
–
(68,167,882)
(961,307)
(67,693,403)
(909,235)
288,427
–
434,756
–
(68,840,762)
(68,167,882)
2018
Cents per share
2017
Cents per share
(0.08)
(0.05)
(0.08)
(0.05)
(0.15)
–
(0.15)
–
$
$
(566,981)
(394,326)
No.
717,988,236
717,988,236
(892,881)
(16,354)
No.
596,794,863
596,794,863
During the period the Company initiated a voluntary dissolution of the US entities, New Standard Energy Inc, New Standard Energy Colorado
LLC and New Standard Energy Ventures LLC.
A loss of $394,326 which includes realised foreign exchange loss of $388,338 (refer note 12(b) for further information) was recognised on the
disposal of the US entities, no tax charge or credit arose on the transaction.
43 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
17.
Commitments for expenditure
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 $9.4 million. The rights of tenure to the exploration permits and
tenements may be reduced by sale, farm-out, renegotiation or relinquishment. In the
event the Company does not meet the minimum expenditure requirements the rights to
tenure will be relinquished and the Company will have no further obligation to the DMP
to meet the minimum expenditure requirements.
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 below.
Not longer than 1 year
Longer than 1 year and not longer than 5 year
Longer than 5 years
2018
$
9,441,130
–
–
9,441,130
2017
$
–
9,520,776
–
9,520,776
8,226
–
–
8,226
8,226
–
–
8,226
18.
Segment reporting
The segment information provided to the Managing Director for the reportable segments for the year ended 30 June 2018 are as follows:
Australia
The Group currently operates within the Carnavon geological basins.
United States
The Group ended all operations in the US.
Administration and
employment expenses
Depreciation
Impairment expenses
Loss on available-for-
sale financial assets
Fair value adjustment
Reportable loss
Other income
Other expenses
Australia
United States
Total
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
(351,250)
(448,848)
(22,933)
81,850
(374,183)
(366,998)
(112,034)
(79,177)
–
–
(542,461)
3,543
(5,130)
(35,602)
(433,699)
42,500
(80,865)
(956,514)
1,032
(35,603)
–
–
–
–
–
–
–
–
(112,034)
(79,177)
–
–
(22,933)
81,850
(565,394)
–
–
–
–
3,543
(5,130)
(35,602)
(433,699)
42,500
(80,865)
(874,664)
1,032
(35,603)
Net loss before tax
(544,048)
(991,085)
(22,933)
81,850
(566,981)
(909,235)
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 44
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
18.
Segment reporting (cont’d)
Australia
United States
Total
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
–
–
161,728
406,269
567,997
214,844
214,844
353,153
2018
$
27,083
2,573
–
29,656
131,936
594,290
726,226
256,177
256,177
470,049
2017
$
94,076
6,764
85,307
186,147
Segment assets
Exploration assets
Available for sale
financial assets
Other assets
Total assets
Segment liabilities
Other liabilities
Total liabilities
Net assets
–
–
161,728
406,269
567,997
214,844
214,844
353,153
131,936
466,312
598,248
256,177
256,177
342,071
–
–
–
–
–
–
–
–
–
127,978
127,978
–
–
127,978
19.
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
China International Economic Hui Zhou Energy Investment (Beijing) Co., Ltd (Huizhou),
of which Mr Song is a Director, fully underwrote the rights issue completed on 23
November 2016. Pursuant to the Underwriting Agreement, the Company agreed to pay
Huizhou an underwriting fee of 4% of the value of the Underwritten Shares which
amounted to $38,209. The full amount was repaid during the year. As at 30 June 2018
the Company does not owe Huizhou.
20.
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
383,515
460,157
45 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
20.
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
Depreciation expense
Impairment of exploration and development expenditure
Loss on investment in available-for-sale asset
Fair value gain/(loss) on available-for-sale financial assets through
profit or loss
Gain/(loss) on foreign exchange
(Increase)/decrease in assets:
Current receivables
Increase/(decrease) in liabilities:
Current payables
Net cash used in operating activities
2018
$
2017
$
(961,307)
(909,235)
–
112,034
79,177
–
–
394,326
85,307
35,602
433,699
(42,500)
80,865
16,354
(655)
5,963
(7,575)
(384,000)
(42,979)
(336,924)
(c)
Reconciliation of net loss after tax to net cash flow from operating activities
There were no non-cash investing and financing activities during the year ended 30 June 2018 and 30 June 2017.
21.
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. 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
19(a)
Float interest rate
Total carrying amount
2018
$
383,515
383,515
2017
$
460,157
460,157
2018
$
383,515
383,515
2017
$
460,157
460,157
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 46
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
21.
Financial risk management (cont’d)
(b)
Liquidity risk
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities as at
30 June 2018. 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
$
2018
Trade payables
2017
Trade payables
(c)
Currency risk
214,844
214,844
256,177
256,177
–
–
–
–
–
–
–
–
214,844
214,844
256,177
256,177
214,844
214,844
256,177
256,177
During the year the Group dissolved all subsidiaries located in the United States. There were minimal affects by the movement in the USD/AUD
upon translation of the US operations into AUD exchange rates on the Group’s statement of financial position due to the minimal expenditure
movement.
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 was not involved in joint venture with third parties and has no expenditure commitments or liabilities outstanding as
at 30 June 2018.
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. The Group has dissolved all its US entities. 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 13 as follows:
Level 1: the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: a valuation technique is used using other than quoted prices within Level 1 that are observable for the financial instrument
either directly (i.e. as prices) or indirectly (i.e. derived from prices); or
Level 3: a valuation technique is used using inputs that are not based on observable market data (unobservable inputs).
2018
Available for sale investments (i)
Total
2017
Available for sale investments (i)
Total
Level 1
$
161,728
161,728
131,936
131,936
Level 2
$
Level 3
$
–
–
–
–
–
–
–
–
Total
$
161,728
161,728
131,936
131,936
(i)
The fair value of the available-for-sale financial assets is derived from quoted market prices in an active market.
47 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
21.
Financial risk management (cont’d)
(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.
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)
(f)
Capital risk management
2018
$
383,515
–
383,515
2017
$
332,179
127,978
460,157
For the purposes of the Group’s capital management, capital includes issued capital and all other equity reserves attributable to the equity
holders of the parent, which at 30 June 2018 was $6,788,307 (30 June 2017: $3,883,759). The Group’s objective when managing capital is to
safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders.
At 30 June 2018 the Group does not hold any external debt funding (30 June 2017: Nil) and is not subject to any externally imposed covenants
in respect of capital management.
22.
Subsidiaries
Name of entity
Parent entity
Country of
incorporation
Nature of activities
Ownership interest
2018
2017
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 Inc (i)
USA
Exploration, development of hydrocarbons
100
–
100
100
(i)
The company was dissolved during the year.
23.
Share based payments
Expenses arising from share-based payment transactions
Options issued to directors
Incentive rights issued to directors
Options issued to employees
Incentive rights issued to employees
2018
$
–
–
–
–
–
2017
$
–
85,307
–
–
85,307
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 48
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
23.
Share based payments (cont’d)
Unlisted options
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
Expiry date
Exercise
price
$
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.
2018
6 Aug 14
6 Aug 14
5 Aug 17
5 Aug 17
0.167
0.187
Weighted average exercise price
2017
13 Feb 14
12 Dec 16
27 May 14
26 May 17
27 May 14
26 May 17
6 Aug 14
6 Aug 14
5 Aug 17
5 Aug 17
0.581
0.224
0.248
0.167
0.187
Weighted average exercise price
500,000
500,000
1,000,000
0.18
100,000
75,000
75,000
500,000
500,000
1,350,000
0.24
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(500,000)
(500,000)
(1,000,000)
0.18
(100,000)
(75,000)
(75,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
500,000
500,000
500,000
(350,000)
1,000,000
1,000,000
0.42
0.18
0.18
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.
2018
There were no share options granted during the 2018 financial year.
2017
There were no share options granted during the 2017 financial year.
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.
49 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
23.
Share based payments (cont’d)
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. There were no Performance Rights and Retention Rights granted during the
2018 financial year. During the 2015 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.
The table below outlines movements in Incentive Rights during the 2018 and 2017 financial year and the balance held as at 30 June 2018
and 30 June 2017.
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
2018
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
4,900,000
2,960,000
890,000
8,750,000
2017
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
300,000
Performance Rights
14 Feb 14
14 Sep 16
0.076
1,400,000
Retention Rights
14 Feb 14
14 Sep 16
0.105
225,000
Retention Rights
14 Feb 14
14 Sep 16
0.101
500,000
Performance Rights
16 Dec 14
14 Sep 17
0.029
4,900,000
Performance Rights
16 Dec 14
14 Sep 17
0.015
2,960,000
Retention Rights
16 Dec 14
14 Sep 17
0.038
890,000
13,975,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,900,000)
(2,960,000)
(890,000)
(8,750,000)
(1,800,000)
(1,000,000)
(300,000)
(1,400,000)
(225,000)
(500,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
4,900,000
2,960,000
890,000
(5,225,000)
8,750,000
24.
Contingencies
On 10 August 2015 the Group completed 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 Energy Australia Ltd
(Sundance). In accordance with the Share and Asset Sale Agreement Sundance made a claim in relation to Due Diligence Defects (DD
Defects) associated with the Eagleford asset. There is a potential liability associated with the DD Defects which will be covered partially or
wholly by escrowed SEA shares which formed part of consideration of the sale as disclosed in note 7. Whilst the maximum exposure to the
Group is approximately $500k, the likely outflow of economic benefits is currently not probable and as such a provision has not been
recognised in relation to the claim.
The Company continues to assess the Company’s rehabilitation obligations and associated costs with respect to its historic drilling activities on
EP 450, EP 451, EP 456 and EP 481. The likely amount of outflow of economic benefits is currently not clear and as such a provision has not
been recognised in relation to the rehabilitation obligations. The Company has submitted a rehabilitation proposal to DMIRS for approval.
Subsequently the Company has received directions from DMIRS to rehabilitate the well at EP 481 by 15 August 2020 and at EP 450, EP 451
and EP 456 by 30 November 2019. The Company is in the process of obtaining reliable estimates for the rehabilitation work to be completed.
There were no other material contingent liabilities or contingent assets for the Group as at 30 June 2018 or as at the date of the report other
than the above.
NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT | 50
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
25.
Parent entity information
The following details information related to the parent entity, New Standard Energy Limited, as at 30 June 2018. 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 for the year
Total comprehensive loss for the year
2018
$
558,783
156,038
714,821
215,020
–
215,020
78,323,965
(77,853,956)
29,792
499,801
(1,319,151)
723,182
(595,969)
2017
$
477,468
112,034
589,502
256,353
–
256,353
77,897,674
(77,852,952)
288,427
333,149
(1,029,719)
434,754
(594,965)
26.
Events occurring after the reporting date
(a) The Company has received directions from DMIRS to rehabilitate historic exploration activities carried out on permit EP 481 by 15 August
2020 and on permits EP 450, EP 451 and EP 456 by 30 November 2019 respectively.
(b)
In September 2018 DMIRS confirmed the extension of term for EP 481 to 15 August 2020.
There has been no other matter or circumstances that has arisen since the end of the year that requires disclosure other than the above.
51 | NEW STANDARD ENERGY LTD 2018 ANNUAL REPORT
For personal use only
ASX ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 20 September 2018.
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
196
357
278
800
334
1,965
49,521
1,148,260
2,332,617
31,346,109
753,183,298
788,059,805
0.01
0.15
0.30
3.98
95.56
100.00
(b)
There are 1,670 shareholders with less than a marketable parcel of ordinary shares (minimum $500 parcel at $0.004 per unit).
2.
Twenty one largest shareholders
The names of the twenty one 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
21
China International Economic Huizhou Energy Investment (Beijing) Co Ltd
Jara Resources Pty Ltd
Chembank Pty Limited
Continue reading text version or see original annual report in PDF format above