More annual reports from New Standard Energy Limited:
2020 ReportY
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
LIMITED
ACN 119 323 385
Annual Report for the Year Ended
30 June 2020
CORPORATE DIRECTORY
CONTENTS
................................................................................................................................. Page
Corporate Directory ........................................................................................................ 1
Chairman’s Letter ........................................................................................................... 2
Directors’ Report ......................................................................................................... 3
Directors’ Declaration .................................................................................................. 10
Corporate Governance Statement ............................................................................... 11
Auditor’s Independence Declaration ............................................................................ 17
Independent Auditor’s Report ...................................................................................... 18
Consolidated Statement of Profit or Loss and Other Comprehensive Income ............ 22
Consolidated Statement of Financial Position ............................................................. 23
Consolidated Statement of Changes in Equity ............................................................ 24
Consolidated Statement of Cash Flows ....................................................................... 25
Notes to the Consolidated Financial Statements ........................................................ 26
Additional Information ................................................................................................. 42
Board of Directors
Kunfang Liu
Xiaofeng Liu
Ming Li
Xiaoning Lin
Peng Zhang
| Non-Executive Chairman
| Managing Director
| Non-Executive Director
| Non-Executive Director
| Non-Executive Director
Company Secretary
Ming Li
Place of Business
Unit 1, 117 Brisbane Street
Perth WA 6000
Ph:
+61 (8) 9227 9280
Fax: +61 (8) 9227 9280
Web: www.newstandard.com.au
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Legal Advisors
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street,
Perth Western Australia 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000
ASX Code
| NSE
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 1
CHAIRMAN’S LETTER
Dear Shareholders
The past financial year was full of unprecedented challenges. The chaos and disruptions to the global economy created by COVID-
19 pandemic have never unseen before. The rising geopolitical tensions, increasing global economic uncertainty and demand
destruction in energy had negatively impact on oil and gas industry. Oil price fell dramatically during the year.
Despite these challenges, your Board remains committed to focus on identifying new opportunities, meeting its obligations and
reducing costs for New Standard Energy Limited (New Standard or Company).
The main activities for 2019/2020 were:
•
•
•
successful completion of a capital raising to fund short term working capital;
significant reduction of business overheads; and
ongoing negotiation with DMIRS and considering rehabilitation of disturbance from historical exploration activities.
The main goals for 2020/2021 are:
•
•
•
•
secure a major new project to drive the Company into the future;
successful completion of a major capital raise to drive the company forward;
resume trading on the ASX; and
commence rehabilitation of disturbance from historic exploration activities.
We believe successfully achieving these goals will result in a significantly improved valuation of the company.
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 and rebuild shareholder value.
Thank you for supporting New Standard Energy.
Yours sincerely
Kunfang Liu
Non-Executive Chairman
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 2
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
DIRECTORS’ REPORT
The Directors of New Standard Energy Ltd (“New Standard” or “the Company”) submit herewith the consolidated financial report for New Standard and its
controlled entities (“the Group”) for the financial year ended 30 June 2020.
In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:
REVIEW OF OPERATIONS
The Group continued to work with the Department of Mines, Industry Regulation and Safety (DMIRS) to consider its rehabilitation obligations that relate to
historic exploration activities.
A site visit had been postponed from November 2019 to early 2020. However, due to travel restrictions as a result of COVID-19, the rescheduled site visit
was not completed.
The Group has engaged an independent environmental consultant to liaise with DMIRS and to organize site visits to Carnarvon and Canning Basin by the
end of November 2020. In addition, the Group has conducted an assessment with additional information it received during the year to make an estimate
of its rehabilitation costs. The rehabilitation provision of $970,690 has been retrospectively adjusted in its 2019 consolidated financial statements.
Permit EP482 was expired since DMIRS had refused New Standard’s application for a renewal of Permit EP482.
The Group decided not to renew Permit EP481, which was expired in August 2020.
New Standard is seeking to secure new projects, both in the energy sector and in other sectors and accordingly has reviewed a number of new
opportunities.
CORPORATE AND FINANCE
New Standard successfully completed a placement to sophisticated investors to raise AUD400,000 in December 2019. New Standard ended the financial
year to 30 June 2020 with a cash position of $292,424. The Company has no borrowings.
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 has also continued to review other opportunities for the Company to recover and grow both in the oil and gas space and in other areas.
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 year:
DIRECTORS
Mr Kunfang Liu
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.
Mr Xiaofeng Liu
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. 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
the last 3 years
in
listed entities
in
Current and Former Directorships
the last 3 years
in
listed entities
in
Nil
Nil
Relevant interests in shares and options
Relevant interests in shares and options
Fully paid ordinary shares
Options over
fully paid ordinary shares
Nil
Nil
Fully paid ordinary shares
Options over
fully paid ordinary shares
Nil
Nil
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 3
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Mr Ming Li
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
the last 3 years
in
listed entities
in
Nil
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
the last 3 years
in
listed entities
in
Relevant interests in shares and options
Nil
5,900,387
Nil
Relevant interests in shares and options
Fully paid ordinary shares
Options over
fully paid ordinary shares
Nil
Nil
Fully paid ordinary shares
Options over
fully paid ordinary shares
Ms Xiaoning Lin
Non-Executive Director
(Appointed 25 March 2019)
Qualifications
M.Fin.
Experience
Ms Xiaoning (Linda) Lin is the Managing Director of Goldfields Oil and Gas Pty Ltd. She is also an independent management consultant who specialises in
the professional services sector, with over 15 years’ experience. After qualifying in Accounting and Finance, she worked for Asia Pacific Certified Public
Account Group and gained extensive knowledge and experience in the finance sector. She established her own business, Shenzhen Huai Ri Real Estate
Agent and Evaluation Company, which is now the 2nd largest evaluation firm in Shenzhen. Ms Lin completed her Master in Finance in Australia and
worked as a consultant, specialising in exploring for opportunities between Australia and China. She has organised a trip for the Northern Territory
government to Hainan Province, helped the local business to explore the business opportunities and also promoted government-level economic
cooperation.
Ms Lin was a director of Ocean Sincere and Australia Trailcraft Boats, built up the Ocean Master and Australia Trailcraft Boats brand in China, setup the
production line to reduce the building cost and promote the brand internationally.
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
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 and
seeking new projects, both in the energy sector and in other sectors.
OPERATING RESULTS
The consolidated entity’s net loss attributable to members of New Standard for the year ended 30 June 2020 after applicable income tax was $361,832
(2019: a restated loss of $1,474,384).
FUTURE DEVELOPMENTS
The Company is working to secure a major new project to drive the Company into the future.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 4
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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 $361,832 for the year ended 30 June 2020 (2019: a restated loss $1,474,384). A total of $44,424 (2019: $50,404)
exploration and evaluation costs were invested in the year ended 30 June 2020 relating to New Standard’s Australian assets.
The Group had a net liability of $884,922 as at 30 June 2020 (2019: a restated net liability of $919,541). Cash and cash equivalents have increased by
$81,801 from $210,623 at 30 June 2019 to $292,424 as at 30 June 2020.
Year ended 30 June from continuing operations
Revenue and other income
Depreciation
Operating loss before tax from continuing operations
Operating loss after tax from continuing operations
Net liabilities
SHARES UNDER OPTION
2020
$
242
(6,990)
(361,832)
(361,832)
(884,922)
2019 (Restated)
$
364
–
(1,474,384)
(1,474,384)
(919,541)
There were no unissued ordinary shares in the Company under option at the date of this report.
No options were granted during the year ended 30 June 2020.
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.
EVENTS SUBSEQUENT TO YEAR END
As announced on 18 August 2020, New Standard decided not to apply for a renewal of Permit EP481. Accordingly, Permit EP481 was expired.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not had significant impact on the consolidated entity up to 30 June 2020,
it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on
measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions
and any economic stimulus that may be provided.
There were no matters or circumstances arising since the end of the reporting period that have significantly affected or may significantly affect the
operations of the Group and the results of those operations or the state of the affairs of the Group in the financial period subsequent to 30 June 2020.
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
Mr Xiaofeng Liu
Mr Ming Li
Mr Peng Zhang
Ms Xiaoning Lin
Board meetings
Held while
director
Attended
Circular
resolution
passed
1
1
1
1
1
1
1
-
1
1
4
4
4
4
4
Total
5
5
4
5
5
There were no formal Audit or Remuneration committees 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.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 5
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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 financial year no premium was paid to insure Directors against claims while acting as a Director.
No indemnity has been granted to the Auditor of the Company.
NON-AUDIT SERVICES
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 17.
REMUNERATION REPORT (AUDITED)
This remuneration report sets out the remuneration arrangements for New Standard Energy Limited (New Standard) for the year ended 30 June 2020.
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.
Shareholders approve the maximum aggregate remuneration for non-executive directors. The board determines actual payments to directors and reviews
their remuneration annually, based on 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.
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
X Liu
Non-Executives
K Liu
M Li
P Zhang
X Lin
Position
Director
Director
Director
Director
Director
REMUNERATION COMMITTEE
There was no Remuneration Committee during the year due to the size and nature of the Company.
*Appointed/resigned
during the year
Appointed as Managing Director
on 27 November 2017
Appointed 21 December 2017
Appointed 21 December 2017
Appointed 21 December 2017
Appointed 25 March 2019
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 6
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
EXECUTIVE REMUNERATION OUTCOME FOR 2020
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 2020:
30 June 2020
$
0.004
318,103
30 June 2019
(Restated)
$
0.006
287,907
30 June 2018
30 June 2017
30 June 2016
$
0.004
567,997
$
0.004
726,226
$
0.004
686,766
(361,832)
(1,474,384)
(566,981)
(892,881)
(7,680,264)
Share price
Total assets
Net profit/(loss) before tax
from continued operation
Remuneration Tables
The remuneration for each Executive Director and KMP of the Company for the years ended 30 June 2020 and 30 June 2019 were as stated below:
Short term benefits
Salary
$
Other
$
Long term
benefit
Annual
leave(i)
$
Post
employment
benefit
Super-
annuation
Share based
payments
Incentive
rights(ii)
$
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Proportion
performance
related
%
Total
$
–
–
–
–
0%
0%
0%
0%
2020
Executive Director
Mr X Liu (iii)
Total
2019
Executive Director
Mr X Liu (iii)
Total
Notes
(i)
(ii)
(iii)
Annual leave benefit include annual leave accrued, taken during the year and paid during the year.
There were no incentive rights granted in the year ended 30 June 2020 and 30 June 2019. The amount included as remuneration is not related to or indicative of the benefit (if
any) that the individual may receive.
Mr Liu resigned as Non-Executive Director and was appointed Managing Director of the Company effective 27 November 2017. Mr Liu has agreed to suspend his fees and
remain suspended to date until market condition improves.
NON-EXECUTIVE REMUNERATION
Shareholders approve the maximum aggregate remuneration for non-executive directors. Fees paid to non-executive directors are recommended by the
Remuneration Committee and the Board is responsible for ratifying any recommendations, if appropriate. As approved at the Annual General Meeting on
26 November 2010, the aggregate limit of fees payable per annum is $400,000 in total. 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.
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:
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.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 7
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NON-EXECUTIVE REMUNERATION (CONTINUED)
Non-executive remuneration for the year ended 30 June 2020 and comparative 2019 remuneration:
2020
Mr K Liu
Mr M Li
Mr P Zhang
Ms X Li
Total
2019
Mr K Liu
Mr M Li
Mr P Zhang
Ms X Li
Total
Salary and fees
Superannuation
Options
Total
$
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
EQUITY INSTRUMENTS
OPTIONS AND INCENTIVE RIGHTS
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. There were no grant of options affecting remuneration in the current or future reporting periods.
INCENTIVE RIGHTS
During the year ended 30 June 2020, no Performance Rights were granted to executives as part of their remuneration packages.
There were no balance held by the executive as at 30 June 2020.
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.
Name
Balance at start of year
Granted
Others
TOTAL
During the Year
Balance at end of year
Mr K Liu
Ordinary shares
Mr X Liu
Ordinary shares
Mr M Li
Ordinary shares
Mr P Zhang
Ordinary shares
Ms X Lin
Ordinary shares
–
–
5,900,387
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,900,387
–
–
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There were no other transactions with Key Management Personnel during the year.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 8
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 2020 are provided below.
Name
Mr X Liu
Mr K Liu
Mr M Li
Mr P Zhang
Ms X Lin
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
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.
Kunfang Liu
Non-executive Chairman
30 October 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 9
DIRECTOR’S DECLARATION
In the directors’ opinion:
(a)
the consolidated 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 2020 and of its performance for the financial year
ended on that date; and
(b)
(c)
(d)
there are reasonable grounds to believe that the consolidated entity 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.
This declaration is made in accordance with a resolution of the directors.
Kunfang Liu
Non-executive Chairman
30 October 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 10
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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 year.
This statement describes how New Standard has addressed the Council’s guidelines and eight corporate governance principles and where the Company’s
corporate governance practices depart from a recommendation, the Company discloses the reason for adoption of its own practices on an “if not, why not”
basis.
Given the size and stage of development of the Company and the cost of strict compliance with all the recommendations, the Board has adopted a range
of modified procedures and practices which it considers appropriate to enable it to meet the principles of good corporate governance. At the end of this
statement is a checklist setting out the recommendations with which the Company does or does not comply. The information in this statement is current
as at 30 October 2020.
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;
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 11
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.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 12
Principle 1: Lay solid foundations for management and oversight (cont’d)
Diversity
Retirement and rotation of directors
The Board values diversity in all aspects of its business and is
committed to creating a working environment that recognises and
utilizes the contribution of its employees. The purpose of this is to
provide diversity and equality relating to all employment matters. The
Company’s policy is to recruit and manage on the basis of ability and
qualification for the position and performance, irrespective of gender,
age, marital status, sexuality, nationality, race/cultural background,
religious or political opinions, family responsibilities or disability. The
company opposes all forms of unlawful and unfair discrimination.
The Board acknowledges only one female sits 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
fill. However, every
candidate suitably qualified for a position has an equal opportunity of
regardless of gender, age, ethnicity or cultural
appointment
background.
to
Apart from the Managing Director, the Company currently only has one
part-time male employee. 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 2020 did not occur.
Managing Director and senior executives
is undertaken annually
Performance evaluation of the Managing Director, senior executives
through a performance
and employees
appraisal process which involves reviewing and assessment of
performance against agreed corporate and individual key performance
indicators and deliverables.
formal review of
the Managing Director’s performance and
A
effectiveness in respect of the financial year ended 30 June 2020 did
not occur.
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 elected and two directors were re-elected in the
Company’s 2019 Annual General Meeting. It is intended for two
directors to be re-elected at the Company’s 2020 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
The Company is responsible for maintaining the Directors’ and officers’
liability insurance for the Directors and senior executives at the
Company’s expense. The directors’ and officers’ liability insurance
lapsed in prior years and the Company is committed to ensure the
insurance policy is organised as soon as practical.
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.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 13
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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 three (3) are considered
independent, Mr Kunfang Liu, Mr Peng Zhang and Ms Xiaoning Lin. Mr
Ming Li holds ordinary securities in the Company and does not meet
the criteria for an independent director. Mr Xiaofeng Liu serves in an
executive roles from 27 November 2017 and therefore does not meet
the criteria for an independent director. The length of Mr Xiaofeng Liu’s
service is 2.5 years.
The detailed skills matrix of the Board for a company of New
Standard’s size and complexity is not considered necessary.
Except for Ms Lin, all Non-executive directors were appointed on 21
December 2017. The length of services of Mr Liu, Mr Li and Mr Zhang
is 2.5 years. Ms Lin was appointed a Non-executive director on 25
March 2019. The length of her service is 1.5 years.
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.
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
the
directorship of
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.
the Company. Directors are provided with
the significant
Given
the Company has recently
undergone the Board composition is under review to better align with
the new direction of the Company.
transformation
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;
• 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
Annual report for the year ended 30 June 2020 | 14
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.
New Standard does not have an audit committee. The whole Board of
directors has 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. The Board before it approves the financial
statements, receive the Managing Director (acting as CEO & CFO)
a declaration that, in his opinion, the financial records of the entity
have been properly maintained and that the financial statements
comply with the appropriate accounting standards and give a true
and fair view of the financial position and performance of the entity
and that the opinion has been formed on the basis of a sound
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.
system of risk management and internal control which is operating
effectively.
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.
for
The Company has established procedures
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.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 15
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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
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.
internal
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. 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.
remuneration,
Details of
the Company’s policy on
including
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
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.
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
from
managed effectively. The Board has
management as to the effectiveness of the Company’s management of
its material business risks for the Reporting Period.
received a
report
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
• 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.
There are no termination or retirement benefits for non-executive
directors (other than for superannuation).
includes a
The Company’s Remuneration Committee Charter
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
Annual report for the year ended 30 June 2020 | 16
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF NEW STANDARD ENERGY
LIMITED
As lead auditor of New Standard Energy Limited for the year ended 30 June 2020, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of New Standard Energy Limited and the entity it controlled during the
period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 30 October 2020
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of New Standard Energy Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of New Standard Energy Limited (the Company) and its subsidiary
(the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form
part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
30 June 2019 Qualified opinion – restatement
Key audit matter
How the matter was addressed in our audit
The financial report of the Group for the year ended
Our procedures included, but were not limited to the
30 June 2019 expressed a qualified audit opinion
following:
dated 27 September 2019 on that financial report.
The qualified audit opinion related to the Group not
recognising a liability in respect of the rehabilitation
obligations, but disclosing it as a contingent liability.
We were unable to obtain sufficient appropriate
audit evidence to determine the amount of
adjustment required to the liability balance as at
30 June 2019.
As disclosed in Note 1 of the financial report, during
the year the Group conducted an assessment with
additional information to make an estimate of its
rehabilitation costs which has been retrospectively
recognised as a rehabilitation provision at 30 June
2019.
We considered this a key audit matter due to the
determination of the provision requires
·
discussing with management the process and steps
taken to identify and quantify the prior period
restatement;
·
·
·
·
·
agreeing provision balances to supporting
reconciliations and cost models;
assessing the mathematical accuracy of the
provision for rehabilitation calculations;
assessing the independence, competency and
objectivity of the Group’s external expert involved
with future rehabilitation expenditure estimates;
evaluating the adequacy of the experts work;
assessing the adequacy of the related disclosures in
Note 1 and Note 16 in the financial report at
30 June 2020.
management’s judgement in relation to estimating
As a result of the above, this matter has now been
the costs of performing the work required, including
resolved and our audit opinion for 30 June 2020 is not
volume and unit rates and environmental legislative
modified in respect of this matter.
requirements.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2020, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 6 to 9 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the Remuneration Report of New Standard Energy Limited, for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 30 October 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
for the financial year ended 30 June 2020
Revenue and other income
Depreciation expenses
Administrative expenses
Impairment of exploration and evaluation expenditure
Provision for rehabilitation
Fair value loss on other financial assets
Loss before income tax expense
Income tax expense
Loss after income tax for the year
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
Note
2
3
3
16
4
2020
$
242
(6,990)
(261,056)
(44,424)
-
(49,604)
(361,832)
–
(361,832)
2019 (Restated)*
$
364
–
(350,446)
(50,404)
(970,690)
(103,208)
(1,474,384)
–
(1,474,384)
–
–
(361,832)
(1,474,384)
(361,832)
(1,474,384)
Cents Per Share
Cents Per Share
14
(0.04)
(0.19)
Basic loss per share attributable to the ordinary equity holders of the Company
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
*： Comparative figures are restated as a result of the recognition of a rehabilitation provision for the previous year. Refer to Note 1 for details.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 22
Note
21(a)
6
7
7
8
9
10
16
17
17
11
12
13
2020
$
292,424
1,909
2,514
296,847
6,402
–
14,854
21,256
318,103
217,260
970,690
10,497
1,198,447
4,578
4,578
2019 (Restated)*
$
210,623
18,764
16,500
245,887
42,020
–
–
42,020
287,907
236,758
970,690
–
1,207,448
–
–
1,203,025
1,207,448
(884,922)
(919,541)
69,762,264
29,792
(70,676,978)
(884,922)
69,365,813
29,792
(70,315,146)
(919,541)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2020
Financial assets at fair value through profit and loss
Financial assets at fair value through profit and loss
Exploration and evaluation expenditure
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Right-of-use assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Rehabilitation provision
Lease liabilities
Total Current Liabilities
Non-Current Liabilities
Lease liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
*: Comparative figures are restated as a result of the recognition of a rehabilitation provision for the previous year. Refer to Note 1 for details.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2020
Equity as at 1 July 2019 as originally presented
Correction – recognition of a rehabilitation obligation*
Restated total equity as at 1 July 2019
Loss for the year
Total comprehensive expense
Transactions with owners in their capacity as owners;
Issue of shares,
net of transaction costs
Equity as at 30 June 2020
Equity as at 1 July 2018
Loss for the year
Total comprehensive expense
Issue of shares,
net of transaction costs
Equity as at 30 June 2019
Transactions with owners in their capacity as owners;
Note
Issued Capital
Accumulated
Losses
$
$
69,365,813
(69,344,456)
–
(970,690)
69,365,813
(70,315,146)
–
–
(361,832)
(361,832)
11
396,451
–
Reserves
$
29,792
–
29,792
–
–
–
69,762,264
(70,676,978)
29,792
69,164,123
(68,840,762)
29,792
–
–
(503,694)
(503,694)
11
201,690
–
–
–
–
69,365,813
(69,344,456)
29,792
Total
$
51,149
(970,690)
(919,541)
(361,832)
(361,832)
396,451
(884,922)
353,153
(503,694)
(503,694)
201,690
51,149
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
*: The correction represented recognition of a rehabilitation provision for the previous year. Refer to Note 1 for details.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 24
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2020
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Finance cost
Net cash used in operating activities
Cash flows from investing activities
Payment for exploration, evaluation and development
Net cash used in investing activities
Cash flows from financing activities
Payments for right-of-use assets
Proceeds from issue of shares
Payments for share issue costs
Net cash flows provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Cash and cash equivalents at the end of the financial year
Note
2020
$
2019
$
(263,195)
(324,465)
242
(504)
364
–
21(b)
(263,457)
(324,101)
(44,424)
(44,424)
(6,769)
400,020
(3,569)
389,682
81,801
210,623
292,424
(50,481)
(50,481)
–
204,134
(2,444)
201,690
(172,892)
383,515
210,623
21(a)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 25
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of accounting policies
CORPORATE INFORMATION
New Standard Energy Limited (New Standard or Company) 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 Unit 1, 117
Brisbane Street, Perth WA6000.
STATEMENT OF COMPLIANCE
The financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and Interpretations and complies with other requirements of the law.
The financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the Directors on 30 October 2020.
BASIS OF PREPARATION
The consolidated financial statements have been prepared on the basis of historical cost convention, as modified by the fair value of financial
assets in subsequent period. 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 2020.
ACCOUNTING CORRECTION AND RESTATEMENT OF COMPARATIVE FIGURES
The Group received directions from the Department of Mines, Industry Regulation and Safety (“DMIRS”) to rehabilitate its respective exploration
permit areas by November 2019 and August 2020. The Group did not recognise a liability in respect of these obligations as the likely outflow of
economic benefits was unclear but disclosed the matter as contingent liabilities in its published annual accounts for the year ended 30 June
2019.
The matter was resolved during FY2020 as the Group has engaged external expert to assist to conduct an assessment with additional
information to make an estimate of its rehabilitation costs. As a result, the rehabilitation provision of $970,690 has been retrospectively adjusted.
An expense of $970,690 for the rehabilitation costs was charged to the profit or loss accounts for the year ended 30 June 2019 and a
corresponding liability was recognised as at 30 June 2019.
The relevant comparative figures for the year ended 30 June 2020 have been restated.
GOING CONCERN
During the year the consolidated entity incurred a net loss after income tax for the year ended 30 June 2020 of $361,832 (2019: a restated loss
$1,474,384), incurred net cash outflows from operating and investing activities of $307,881 (2019: outflow $374,582), and had net working capital
of $69,090 at 30 June 2020. As disclosed in note 16, the Company is required to rehabilitate certain tenements it previously held. DMIRS
requested site visits to be conducted to determine the current state of rehabilitation and then update the draft Rehabilitation Plan. Once the
Rehabilitation Plan is approved, the Company is required to progress rehabilitation as soon as possible. The Company is currently organising the
site visits.
The financial statements have been approved by the Directors on a going concern basis. In determining the appropriateness of the basis of
preparation, the Directors have considered the impact of the COVID19 pandemic on the position of the Group at 30 June 2020 and its operations
in future periods. The ability of the consolidated entity to continue as a going concern is dependent on the financial support received from the
major shareholder and directors and/or its ability to secure additional funding through capital raisings as and when required to continue to meet
its working capital requirements, including the rehabilitation obligation, and the successful realisation of new investment opportunities 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:
•
In response to preserve the Company’s cash flow, all directors have agreed to suspend the directors’ remuneration 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
directors;
• The Company has received the financial support through a loan facility from its major shareholder if required; and the directors are
comfortable with its capacity to provide the support;
• The Company has recently completed a capital raising to sophisticated investors in December 2019 and has the proven ability to raise
capital as and when required;
• The Company is reviewing a number of opportunities in both energy and other sectors; 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 to fund its rehabilitation obligation, new acquisitions, 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.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of accounting policies (cont’d)
PRINCIPALS OF CONSOLIDATION
(a)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group
is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group.
They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and
other comprehensive income, statement of changes in equity and statement of financial position respectively.
(b) 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.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 27
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of accounting policies (cont’d)
(f)
Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss
for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current
tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax base of those items.
Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are
not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a
result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and
joint ventures except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
(g)
Exploration and evaluation expenditure
Exploration for and evaluation of hydrocarbon resources is the search for hydrocarbon resources after the entity has obtained legal
rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the
hydrocarbon resources. Accordingly, exploration and evaluation expenditures are those expenditures incurred by the Company in
connection with the exploration for and evaluation of hydrocarbon resources before the technical feasibility and commercial viability of
extracting a hydrocarbon resource is demonstrable.
Accounting for exploration and evaluation expenditures is assessed separately for each ‘area of interest’. An ‘area of interest’ is an
individual geological area which is considered to constitute a favourable environmental for the presence of a hydrocarbon resource or
has been proved to contain such a resource.
Expenditure incurred on activities that precede exploration of hydrocarbon resources, including all expenditure incurred prior to securing
legal rights to explore an area, is expensed as incurred. For each area of interest the expenditure is recognised as an exploration and
evaluation asset where the following conditions are satisfied:
(a)
(b)
The rights to tenure of the area of interest are current; and
At least one of the following conditions is also met:
i.
The expenditure is expected to be recouped through the successful development and commercial exploitation of an area
of interest, or alternatively by its sale; and
ii Exploration and evaluation activities in the area of interest have not, at reporting date, reached a stage which permits a
reasonable assessment of the existence or otherwise of ‘economically recoverable reserves’ and active and significant
operations in, or in relation to, the area of interest are continuing. Economically recoverable reserves are the estimated
quantity of product in an area of interest that can be expected to be profitably extracted, processed and sold under current
and foreseeable conditions.
Exploration and evaluation assets include:
•
•
Acquisition of rights to explore;
Topographical, geological, geochemical and
geophysical studies;
(h) Right-of-use assets
•
•
Exploratory drilling, logging and coring; and
Activities in relation to evaluating the technical feasibility and
commercial viability of extracting the hydrocarbon resource.
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the
asset, whichever is the shorter. Where the entity expects to obtain ownership of the leased asset at the end of the lease term, the
depreciation is over its estimated useful life.
Right-of-use assets are subject to impairment or adjusted for any re-measurement of lease liabilities.
The entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12
months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 28
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of accounting policies (cont’d)
(i)
Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their
carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits,
financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are
specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current
asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held
for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be
recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately
from the other assets in the 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.
(j)
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial
instrument. Financial instruments (except for trade receivables) are measured initially at fair value adjusted by transactions costs,
except for those carried “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss. Where
available, quoted prices in an active market are used to determine the fair value. In other circumstances, valuation techniques are
adopted. Subsequent measurement of financial assets and financial liabilities are described below.
Trade receivables are initially measured at the transaction price if the receivables do not contain a significant financing component in
accordance with AASB 15.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial
asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged,
cancelled or expires.
Classification and subsequent measurement
Financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in
accordance with AASB 15, the financial assets are initially measured at fair value adjusted for transaction costs or amortised cost
(where applicable).
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments, are
classified into the following categories upon initial recognition:
•
•
•
amortised cost;
fair value through other comprehensive income (FVOCI); and
fair value through profit or loss (FVPL).
Classifications are determined by both:
•
•
the contractual cash flow characteristics of the financial assets; and
the entities business model for managing the financial asset.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL):
•
•
they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the
effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of
financial instruments.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 29
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of accounting policies (cont’d)
(j) Financial instruments (cont’d)
Financial assets at fair value through other comprehensive income (Equity instruments)
The Group measures debt instruments at fair value through OCI if both of the following conditions are met:
-
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding; and
the financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling
the financial asset.
-
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are
recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The
remaining fair value changes are recognised in OCI.
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value
through OCI when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading.
Financial assets at fair value through profit or loss (FVPL)
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial
recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are
classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated
a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial
liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, gains and losses arising on changes in fair value that are recognised in profit or loss.
Impairment
From 1 July 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase
in credit risk. For trade receivables, the group Group applies the simplified approach permitted by AASB, which requires expected
lifetime losses to be recognised from initial recognition of the receivables.
(k)
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.
(l)
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the
lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the entity's incremental borrowing rate. Lease payments are comprised of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term;
certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
(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.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 30
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of accounting policies (cont’d)
(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.
(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.
The Group is required to rehabilitate exploration sites to a condition acceptable to the relevant authorities. The expected cost of any
approved rehabilitation programme, discounted to its net present value, is provided when the related environmental disturbance occurs.
Expected rehabilitation costs are based on the discounted value of the estimated future cost of detailed plans prepared. Where there is
a change in the expected rehabilitation costs, the value of the provision is adjusted and the effect is recognised in profit or loss. The
estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other
circumstances.
(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.
(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 Group has adopted all of the new and revised Standards and Interpretations that are relevant to its operations and effective for the
current year. The adoption of AASB16 did not have significant impact on the Group’s financial positions and did not require
retrospective adjustments as the Group did not have operating leases with terms over 12 months as at 1 July 2019. Since 1 July 2019,
under the new AASB 16, the company recognised $21,844 right-of-use-asset and $21,844 lease payable for its office lease (refer to
Note 17). The right-of-use asset was depreciated over the lease period and the lease payable was reduced when the company made
payment for its rent.
The other standards did not have any impact on the entity's accounting policies and did not require retrospective adjustments.
Standards and interpretations issued not yet effective
At the date of authorisation of the Financial Statements, any new, revised or amending Accounting Standards or Interpretations that are
not yet mandatory have not been early adopted. The potential effect of the revised Standards on the Company’s financial statements
has not yet been determined.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
Rehabilitation Provision
The ultimate rehabilitation costs are uncertain, and cost estimates can vary in response to many factors, including estimates of the extent and costs of
rehabilitation activities, technological changes, regulatory changes, inflation and other factors. These uncertainties may result in future actual expenditure
differing from the amounts currently provided. Therefore, significant estimates and assumptions are made in determining the provision for rehabilitation. As
a result, there could be significant adjustments to the provisions established which would affect future financial result. The provision at reporting date
represents management’s best estimate of the present value of the future rehabilitation costs required.
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. The carrying amounts of
exploration and evaluation expenditure were fully impaired for all projects at 30 June 2020.
Contingencies
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.
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.
Impairment assessment of all exploration expenditure are performed 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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated entity
based on known information. This consideration extends to the nature of the business operation, supply chain, staffing and geographic regions in which
the consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the
financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the
reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 32
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2020
$
2019 (Restated)
$
2.
Revenue and other income
Other income:
Interest income
Total Revenue and other income
3.
Expenses
Depreciation expenses
Provision for rehabilitation
Administrative expenses
Employee benefit expenses
Professional fees
Occupancy expenses
Other administrative expenses
Total administrative expenses
Income tax expenses
The components of tax expense comprise:
Current tax
Deferred tax
4.
(a)
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% (2019: 30%)
Tax effect of amount which are not deductible/(taxable) in calculating taxable income:
Other permanent difference
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
The following deferred tax assets and (liabilities) have not been brought to account:
242
242
6,990
–
28,816
153,649
8,899
69,692
261,056
–
–
–
–
–
–
(361,832)
(108,550)
–
(108,550)
108,550
–
364
364
–
970,690
25,963
197,554
30,979
95,950
350,446
–
–
–
–
–
–
(1,474,384)
(442,315)
–
(442,315)
442,315
–
Tax losses – revenue
Net other temporary differences
At tax rate of 30% (2019: 30%)
21,179,790
1,701,861
22,881,651
6,864,495
20,258,894
2,218,398
22,477,292
6,743,188
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.
Auditors’ remuneration
Auditor of the group
BDO Audit (WA) Pty Ltd
6.
Trade and other 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.
Financial assets at fair value through profit or loss
Listed securities
Current
Sundance Energy Inc.
Sundance Energy Australia Ltd
Carrying amount at the end of year
Non-current
Sundance Energy Inc.
Sundance Energy Australia Ltd
Carrying amount at the end of year
2020
$
34,000
34,000
1,909
1,909
2,514
–
2,514
6,402
–
6,402
2019
$
31,000
31,000
18,764
18,764
–
16,500
16,500
–
42,020
42,020
During the year Sundance Energy Australia Ltd announced scheme of arrangement in relation to re-
domiciliation from Australia to the United States. After the implementation of the scheme, the Group
converted its 212,800 ordinary shares to 2,128 units of Sundance Energy Inc (NASDAQ: SNDE). 600 units
among them were freely tradable as at 30 June 2020.
8.
Exploration and evaluation expenditure
Balance at beginning of the year
Expenditure incurred
Expenditure impaired (i)
–
44,424
(44,424)
–
50,404
(50,404)
Balance at end of the year
–
During the year the Company recognised a full non-cash impairment charge of $44,424 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 and
expiry of licences.
–
The Consolidated Entity had interests in the following wholly-owned oil and gas exploration and development assets as at 30 June 2020. The permit has expired on 18 August
2020.
Operator: New Standard Onshore Pty Ltd Principal activity: Exploration, of hydrocarbons
Country: Australia
Area
Carnarvon Basin
Asset
EP481
Percentage
Interest
100%
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 34
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9.
Right-of-use assets
Right-of-use assets
Accumulated depreciation
Closing net book amount
2020
1 July 2019
Additions
Depreciation expense
Balance at 30 June 2020
10.
Trade and other payables
Current
Trade payables
Sundry payables and accrued expenses
2020
$
21,844
(6,990)
14,854
Right-of-use
assets
$
–
21,844
(6,990)
14,854
8,781
208,479
217,260
2019
$
–
–
–
Total
$
–
–
–
–
11,299
225,459
236,758
The average credit period on purchases is 30 days. No interest is charged on the
trade payables. The consolidated entity has financial risk management policies in
place to ensure that all payables are paid within the credit time frame. Refer to note 22
for the Group’s risk management objectives and policies.
11.
Issued capital
888,748,864 fully paid ordinary shares (2019: 822,082,197)
69,762,264
69,365,813
(a)
Fully paid ordinary shares
2019
Balance at 1 July 2018
On 9 May 2019, issue of shares to sophisticated investors
Less: Transaction costs arising from issue of shares
Balance at 30 June 2019
2020
On 9 December 2019, issue of shares to sophisticated investors
Less: Transaction costs arising from issue of shares
Balance at 30 June 2020
No.
$
788,059,805
34,022,392
–
69,164,123
204,134
(2,444)
822,082,197
69,365,813
66,666,667
–
400,020
(3,569)
888,748,864
69,762,264
(b)
Terms and conditions of Issue Capital
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At the
shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show
of hands.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 35
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12.
Reserves
Financial asset reserve
Movements in financial asset
Balance at the beginning of the year
Fair value of financial assets
Balance at the end of the year
Nature and purpose of reserve
The financial asset revaluation reserve represents the unrealised gain or loss on the
market value of financial asset valued through profit or loss.
13.
Accumulated losses
Balance at the beginning of the year as originally presented
Correction – recognition of a rehabilitation obligation
Restated accumulated losses at the beginning of the year
Net loss attributable to members of the Company
Balance at the end of the year
14.
Loss per share
Basic earnings/(loss) per share
The loss and weighted average number of ordinary shares used in the calculation of
basic and diluted loss per share are as follows:
Loss for the year
2020
$
29,792
29,792
29,792
–
29,792
2019
$
29,792
29,792
29,792
–
29,792
(69,344,456)
(970,690)
(70,315,146)
(361,832)
(70,676,978)
(68,840,762)
-
(68,840,762)
(1,474,384)
(70,315,146)
Cents per share
Cents per share
(Restated)
(0.04)
(0.19)
$
$
(361,832)
(1,474,384)
No.
No.
Weighted average number of ordinary shares used in the calculation of basic EPS
859,342,197
792,906,831
15.
Dividends
There have been no dividends paid or proposed in the 2020 or 2019 financial years.
16.
Rehabilitation provision
Beginning of the year
Arising during the year
End of the year
2020
$
2019 (Restated)
$
970,690
–
970,690
–
970,690
970,690
The rehabilitation provision represents the present value of rehabilitation costs as a result of its previous exploration activities. These provisions have been
created based on an assessment performed by an independent consultant. Assumptions based on the current economic environment have been made,
which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account
any material changes to the assumptions. However, actual rehabilitation costs related to five directions on permits EP450, EP451, EP456 and EP481, will
ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time.
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 36
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17.
Lease liabilities
Lease Payable
Current
Non-current
18.
Commitments for expenditure
Leases
Not longer than 1 year
Exploration Permits and Oil and Gas Leases – Commitments for Expenditure
Not longer than 1 year
Exploration Permit 482 was expired during the year and Exploration Permit 481 was
expired in August 2020. As such, there were no exploration commitments as at 30 June
2020.
2020
$
10,497
4,578
15,075
–
–
–
–
2019
$
–
–
–
8,226
8,226
9,361,485
9,361,485
19.
Segment reporting
For management purposes, the Group has identified only one (1) reportable segment as exploration activities undertaken in Australia since it
ended all operations in the United States in 2018.
Corporate
Exploration
Total
30 Jun 2020
30 Jun 2019
30 Jun 2020
30 Jun 2019
30 Jun 2020
30 Jun 2019
Administration
and
employment expenses
Depreciation
Impairment expenses
Fair value adjustment
Reportable loss
Other income
Net loss before tax as
originally presented
Correction –
recognition of a
rehabilitation provision
(261,056)
(350,446)
(6,990)
–
(49,604)
(317,650)
242
–
–
(103,208)
(453,654)
364
(261,056)
(350,446)
–
–
–
–
(44,424)
(50,404)
–
–
(6,990)
(44,424)
(49,604)
(44,424)
(50,404)
(362,074)
–
–
242
–
(50,404)
(103,208)
(504,058)
364
(317,408)
(453,290)
(44,424)
(50,404)
(361,832)
(503,694)
–
–
–
(970,690)
–
(970,690)
Net loss before tax
(317,408)
(453,290)
(44,424)
(1,021,094)
(361,832)
(1,474,384)
Segment assets
Exploration assets
Other financial assets
at
through
profit or loss
fair value
Other assets
Total assets
Segment liabilities
–
–
8,916
58,520
309,187
318,103
229,387
287,907
Other liabilities
232,335
236,758
–
–
–
–
–
–
–
–
–
–
Rehabilitation provision
Total liabilities
Net assets/(liabilities)
–
232,335
85,768
–
236,758
51,149
970,690
970,690
970,690
970,690
970,690
970,690
–
–
8,916
58,520
309,187
318,103
232,335
970,690
229,387
287,907
236,758
970,690
1,203,025
1,207,448
(884,922)
(919,541)
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20.
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.
21.
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
(b)
Reconciliation of net loss after tax to net cash flow from operating activities
Loss after income tax
Non-cash expenditure:
Depreciation expense
Impairment of exploration and development expenditure
Provision for rehabilitation
Fair value gain/(loss) on other sale financial assets through
profit or loss
(Increase)/decrease in assets:
Current receivables
Increase/(decrease) in liabilities:
Current payables
Net cash used in operating activities
2020
$
2019
$
–
–
–
–
–
–
–
–
292,424
210,623
2020
$
2019 (Restated)
$
(361,832)
(1,474,384)
6,990
44,424
–
49,604
–
50,404
970,690
103,208
16,855
3,990
(19,498)
(263,457)
21,991
(324,101)
(c)
Reconciliation of net loss after tax to net cash flow from operating activities
There were no material non-cash investing and financing activities during the year ended 30 June 2020 and 30 June 2019.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 38
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22.
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
(b)
Liquidity risk
Float interest rate
Total carrying amount
Note
19(a)
2020
$
292,424
2019
$
210,623
2020
$
292,424
2019
$
210,623
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities as at
30 June 2020. 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
$
2020
Trade and other payables
Lease liabilities
2019
217,260
10,497
Trade and other payables
236,758
(c)
Currency risk
–
4,578
–
–
–
–
217,260
15,075
217,260
15,075
236,758
236,758
The Group had no foreign expenditure commitments or liabilities outstanding as at 30 June 2020. As operational activity has since decreased
significantly overseas, foreign exchange exposure was negligible, no foreign exchange hedge contracts were in place at year end.
(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).
2020
Financial assets fair value through
profit or loss
2019
Financial assets fair value through
profit or loss
Level 1
$
Level 2
$
Level 3
$
8,916
58,520
–
–
–
–
Total
$
8,916
58,520
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 39
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22.
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-)
(f)
Capital risk management
2020
$
292,424
2019
$
210,623
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 2020 was $69,762,264 (2019: $69,365,813). 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 2020 the Group did
not hold any external debt funding (2019: Nil) and is not subject to any externally imposed covenants in respect of capital management.
23.
Subsidiaries
Name of entity
Country of
incorporation
Nature of activities
New Standard Onshore Pty Ltd
Australia
Exploration of hydrocarbons
Ownership interest
2020
100%
2019
100%
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.
There were no other material contingent liabilities or contingent assets for the Group as at 30 June 2020 or as at the date of the report other
than the above.
25.
Parent entity information
The following details information related to the parent entity, New Standard Energy Limited, as at 30 June 2020. The information presented
here has been prepared using consistent accounting policies as presented in note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Accumulated losses
Reserves
Total equity
Loss for the year
Total comprehensive loss for the year
2020
$
291,494
14,854
306,348
227,757
4,578
232,335
78,922,106
(78,877,885)
29,792
74,013
(361,832)
(361,832)
2019
$
276,152
–
276,152
236,758
–
236,758
78,525,655
(78,516,053)
29,792
39,394
(662,097)
(662,097)
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26.
Events occurring after the reporting date
As announced on 17 August 2020, the Company decided not to renew the Permit EP481. Accordingly, EP481 has expired.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has had not significant impact on the consolidated entity up to 30
June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing
and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements,
quarantine, travel restrictions and any economic stimulus that may be provided.
There were no matters or circumstances arising since the end of the reporting period that have significantly affected or may significantly affect the
operations of the Group and the results of those operations or the state of the affairs of the Group in the financial period subsequent to 30 June
2020.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
NEW STANDARD ENERGY LTD
Annual report for the year ended 30 June 2020 | 41
1.
2.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
4.
5.
3.
ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 23 October 2020.
Distribution of shareholders
(a)
Analysis of number of shareholder by size of holding.
Category of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Holders
196
346
262
736
306
1,846
Number of shares
49,466
1,113,952
% of capital
0.01
0.13
2,186,604
28,574,609
856,824,233
888,748,864
0.25
3.22
96.39
100.00
(b)
There are 1,570 shareholders with less than a marketable parcel of ordinary shares (minimum $500 parcel at $0.004 per unit).
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
China International Economic Huizhou Energy Investment (Beijing) Co Ltd
Mr Xiangqian Zhang
Jara Resources Pty Ltd
Citicorp Nominees Pty Limited
Chembank Pty Limited
Continue reading text version or see original annual report in PDF format above