ELIXIR ENERGY LIMITED - Annual Report 2012

a n d c o n t r o l l e d e n t i t i e s ABN 51 108 230 995

Annual Report

for the financial year ended 30 June 2012

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	Page
Corporate directory	3
Directors’ report	4
Auditors’ independence declaration	16
Independent audit report	17
Directors’ declaration	19
Consolidated statement of comprehensive income	20
Consolidated statement of financial position	21
Consolidated statement of changes in equity	22
Consolidated statement of cash flows	23
Notes to the consolidated financial statements	24

Corporate Directory

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Directors

Mr Alan Watson Non-Executive Chairman (appointed 5 October 2011) Mr Andrew Ross Managing Director Mr Michael Price Non-Executive Director Dr John Robertson Non-Executive Director Mr Mark O’Clery Non-Executive Director (appointed 14 August 2012) Mr Jonathan Stewart Non–Executive Chairman ( resigned 29 November 2011 ) Mr Iain Knott Executive Director, Exploration ( resigned 22 July 2011 )

Company Secretary

Bankers

National Australia Bank Limited Ground Floor, 100 St Georges Terrace Perth WA 6000

Barclays Bank plc 5 The North Colonnade Canary Wharf London E14 4BB

Auditors - Australia

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008

Mr Keith Bowker (appointed 9 July 2012) Ms Julie Foster (resigned 9 July 2012)

Auditors - UK

Registered and Principal Administration Office

Level 1, 89 St Georges Terrace Perth 6000

Western Australia Telephone: (+61) 8 9226 2111 Facsimile: (+61) 8 9226 2099

UK Operations Office

8 The Courtyard Eastern Road Bracknell Berkshire RG12 2XB United Kingdom Telephone (+44) 1344 423 170 Facsimile (+44) 1344 360 268

MacIntyre Hudson LLP New Bridge Street House 30-34 New Bridge Street London EC4V 6BJ

Stock Exchange Listing

Australian Securities Exchange Home Exchange: Perth, Western Australia Code: EXR

Website and Email

www.elixirpetroleum.com [email protected]

Share Registry

Computershare Investor Services Pty Ltd Level 2, 45 St Georges Terrace Perth WA 6000 Telephone (+61) 8 9323 2000

Directors’ Report

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The Directors present their report on the consolidated entity consisting of Elixir Petroleum Limited (“Company” or “Elixir”) and the entities it controlled during the financial year ended 30 June 2012 (“Consolidated Entity” or “Group”).

Directors

The names of the Directors of the Company in office during the financial year and at the date of this report are:

Mr Alan Watson ( appointed as Non-Executive Director on 5 October 2011) (appointed as Non-Executive Chairman on 29 November 2011) Mr Andrew Ross Mr Michael Price Dr John Robertson Mr Mark O’Clery ( appointed 14 August 2012 ) Mr Jonathan Stewart ( resigned 29 November 2011) Mr Iain Knott ( resigned 22 July 2011)

Other than as stated above, each director held office from 1 July 2011 until the date of this report.

Principal Activities

Elixir is an upstream oil and gas exploration and production parent entity whose primary purpose is to secure, find, develop, produce and sell hydrocarbons. These activities are undertaken either solely or via unincorporated joint venture arrangements. There was no significant change in the nature of these activities during the year.

Summary Financial and Operating Review

Operating Results

For the financial year ended 30 June 2012, the Consolidated Entity recorded a net loss after tax of $2,650,931 (2011: $3,363,441) after charging as expenses, amortisation costs of $91,401 (2011: $461,089), exploration and evaluation costs of $144,814 (2011: $1,164,337) and impairment of oil and gas properties of $1,594,188 (2011: $1,150,688).

Corporate and Financial

The Consolidated Entity had no financing debt during the reporting period. At 30 June 2012, the Consolidated Entity held cash totalling $3,486,500 (2011: $1,320,069).

In October 2011, the Company received commitments to place 28,300,000 new shares at $0.04 per share, to raise $1,132,000 (before costs). The placement was completed under Elixir’s 15% placement capacity predominantly to existing Elixir shareholders. The Placement did not require shareholder approval.

In March 2012 the Company received commitments to place 6,400,000 new shares at $0.0625 per share, to raise $400,000 (before costs). The placement was completed under Elixir’s 15% placement capacity to New Standard Energy Limited (ASX:NSE) (“NSE”). The Placement did not require shareholder approval. In conjunction with the placement, the Company also offered a fully underwritten non-renounceable entitlement issue to eligible shareholders to subscribe for one (1) share for every six (6) shares held at 5:00pm (AEDT) on Tuesday, 13 March 2012 at an issue price of $0.05 per new share. The total funds raised from the entitlements issue was $1,707,305 (before costs). The entitlements issue was underwritten by NSE at no cost to the Company. NSE was also offered a right to ‘top-up’ its interest in the Company to a maximum shareholding interest of 15%. NSE exercised this right by subscribing for an additional 19,416,049 ordinary shares at $0.0625 per share raising $1,213,503.

The Company was debt free in the reporting period.

Directors’ Report

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Summary Review of Operations

During the year ended 30 June 2012, the Group produced oil and gas from the High Island project located in the US Gulf of Mexico. Gross production from the projects in that period totalled 17,356 barrels of oil (2011: 30,002 barrels) and 176.7 mmscf of gas (2011: 641.6 mmscf). The net production volume attributable to the Group generated $427,901 of net sales revenue for the period (2011: $1,119,865).

The Group conducted exploration activities in respect of licences located offshore in the UK North Sea and onshore in the Saar-Lorraine Basin, located in North-eastern France. Significant progress was made in the year with respect to the Moselle Permit. Extensive technical studies and the reprocessing and reinterpretation of 2D seismic data resulted in a number of conventional oil and gas prospects and leads being defined within the permit. A farmout process was undertaken in the period with respect to the unconventional hydrocarbon potential within the permit area, however no acceptable bids have been received by the Company to date. A farmout process in respect of the conventional prospectively within the Moselle Permit is expected to be initiated in Q4 2012.

Significant changes in state of affairs

Other than those events noted above, there were no other significant changes in the state of affairs of the Group during the year that requires separate disclosure.

Directors

Mr. Alan Watson – Non- Executive Chairman (appointed Non-Executive Director on 5 October 2011) (appointed Non- Executive Chairman on 29 November 2011)

Qualifications: B.Sc (Hons.)

Board Committees: Chair of Nomination Committee and member of Remuneration and Audit Committees

Mr. Watson is a former investment banking executive with 30 years experience in global equity markets. Mr Watson has established, directed and been responsible for the conduct of securities businesses in both Europe and Asia and has advised many companies on capital structuring, initial public offerings, takeovers and mergers, investment relations strategies and regulatory obligations.

Other current directorships of Australian listed public companies: Aurora Oil & Gas Limited

Former directorships of Australian listed public companies in last three years: Nil

Interests in shares and options over shares in Group companies at the date of this report: Nil

Mr Andrew Ross – Managing Director

Qualifications: LLB, B.Com, GAICD Board Committees: Member of Nomination Committee

Mr. Ross was appointed Managing Director of the Company on 12 November 2007 following the successful completion of the merger between Elixir and Gawler Resources Limited. From 2003 to 2007, Mr. Ross was Managing Director and cofounder of the privately owned oil and gas group, Cape Energy. Prior to establishing Cape, Mr. Ross spent several years as a Director - Corporate Finance of a private merchant banking group based in London where he worked on a range of M&A transactions, public listings and fundraisings for clients in the upstream oil and gas industry as well as other industry sectors. Mr. Ross also acted as In-house Counsel for Sibir Energy Plc, working in the UK and Russia.

Mr. Ross is a qualified lawyer as well as holding a Bachelor of Commerce. Mr. Ross is a graduate of the Australian Institute of Company Directors and a member of the Society of Petroleum Engineers.

Other current directorships of Australian listed public companies: Nil.

Directors’ Report

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Former directorships of Australian listed public companies in last three years: Nil.

Interests in shares and options over shares in Group companies at the date of this report: 680,001 fully paid ordinary shares and 1,250,000 share options.

Mr Michael Price – Non-Executive Director

Qualifications: BEcon, MBA, Grad Dip Appl Finance & Invest, FAICD Board Committees: Chair of Audit and Member of Remuneration Committee

Mr Price has broad commercial experience resulting from an extensive career in the finance sector with responsibility for business and risk portfolios. Mr Price was the Chief Operating Officer for one of Australia’s largest property funds management businesses prior to its sale in 2005 and is currently the Chief Operating Officer for an Investment Bank with operations in Australia and Asia.

Mr Price holds a Bachelor of Economics and a MBA (UWA), Graduate Diploma in Applied Finance & Investment from the Financial Services Institute of Australasia and is a Fellow of the Australian Institute of Company Directors.

Other current directorships of Australian listed public companies: Nil

Former directorships of Australian listed public companies in last three years: Eureka Energy Limited

Interests in shares and options over shares in Group companies at the date of this report: 466,668 fully paid ordinary shares

Dr John Robertson – Non-Executive Director

Qualifications: BSc (Hons), PhD

Board Committees: Chair of Remuneration and Member of Audit and Nomination Committees

Dr. Robertson was appointed as a Non-Executive Director in May 2006, and held the position of Non-Executive Chairman until November 2007. He has a wealth of experience in the finance and oil and gas industries. Dr. Robertson joined the corporate banking department of Schroder’s, a London merchant bank, in 1970 before working in corporate finance at Cannon Street Investments. Subsequently, he accrued over 14 years experience in senior management positions in Canada, the US and the UK with Ultramar, a leading UK independent oil company. He returned to the UK in early 1990’s and became a director of corporate finance at Durlacher. From 1995 to June 2005 Dr. Robertson was a director of Nabarro Wells, a London-based independent corporate advisory firm where he provided capital raising and corporate advice to private and quoted companies, particularly in the oil and gas and mining sectors.

Dr. Robertson holds a Bachelor of Science (Eng.) (Hons) and a PhD in Engineering.

Other current directorships of Australian listed public companies: Nil

Former directorships of Australian listed public companies in last three years: Bonaparte Diamond Mines NL.

Interests in shares and options over shares in Group companies at the date of this report: 425,000 fully paid ordinary shares.

Mr Mark O’Clery – Non-Executive Director (appointed 14 August 2012)

Qualifications : B.Sc (Hons.)

Mr O’Clery is a Petroleum Geologist with over 24 years of experience in the international, upstream oil and gas business. During his career Mr. O’Clery has held senior technical, commercial, operational and managerial roles with a number of larger international petroleum companies, including Western Mining Corporation, British Gas Plc, Ampolex Limited, Mobil Corporation and OMV AG. Over the past 10 years, Mr O’Clery has been involved in the management of a number of public and private oil and gas, exploration and production companies, and is currently a technical advisor to Alcoa

Directors’ Report

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Australia and APA Group. Mark has broad technical and commercial experience which spans a variety of jurisdictions, including Australia, New Zealand, Indonesia, the USA, the UK and a number of East and West African Countries.

Other current directorships of Australian listed public companies: Nil

Former directorships of Australian listed public companies in last three years: Nil

Interests in shares and options over shares in Group companies at the date of this report: Nil

Company Secretaries

Mr Keith Bowker (appointed 9 July 2012)

Qualifications – BCom, CA

Mr Bowker is a qualified Chartered Accountant and is a founding Director of Somerville Corporate, a corporate advisory firm that specialises in providing financial reporting and company secretarial services.

Ms Julie Foster (resigned 9 July 2012)

Qualifications – BA(Hons), ACA (ICAEW), ACIS

Ms Foster has a degree in Accounting and Finance and is a Chartered Accountant (UK) and an associate member of Chartered Secretaries Australia.

Meetings of Directors

The following table sets out the number of meetings of the Company’s directors held during the year ended 30 June 2012, and the number of meetings attended by each director.

	Directors’ Meetings Audit Committee Remuneration Committee
	Eligible to attend Attended Eligible to attend Attended Eligible to attend Attended
Mr. Alan Watson Mr. Andrew Ross Mr. Michael Price Dr. John Robertson Mr. Mark O’Clery(1) Mr. Jonathan Stewart(2) Mr. Iain Knott (3)	4 4 - - 2 2 6 6 2 2 - - 6 6 2 2 2 2 6 6 2 2 2 2 - - - - - - 2 2 1 2 - - 1 1 - - - -

(1) Appointed a non-executive director 14 August 2012.

(2) Resigned as non-executive director 29 November 2011.

(3) Resigned as executive director 22 July 2011.

Directors’ Report

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Share options

At the date of this report the following unlisted options have been granted over unissued capital.

Grant Date*	Year Ended 30 June 2012 Number Exercise Price	Year Ended 30 June 2011 Expiry Number Exercise Price
26-Jun-08 26-Jun-08 Total	- - 2,000,000 A$0.35 2,000,000	3,250,000 A$0.30 31-Mar-12 2,750,000 A$0.35 31-Mar-13 6,000,000

In accordance with applicable AASB 2, the deemed grant date disclosed above is the date of shareholder approval for the grant of these options under the Elixir Employee Share Option Plan, rather than the actual dates of Offer and Acceptance under the Plan.

No shares were issued in respect of options that were exercised during the year ended 30 June 2012 (2011: nil). The options that expired during the year ended 30 June 2012 had of value of A$437,900 at the expiry date (2011:$437,900).

Directors’ Report

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Remuneration Report (Audited)

This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this report, key management personnel of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company.

For the purposes of this report, the term ‘key management personnel’ encompasses the chief executive, senior executives and asset managers of the Parent and the Group.

Details of key management personnel

(i) Directors

Alan Watson Non-Executive Chairman (appointed as Non-Executive Director on 5 October 2011) (appointed as Non-Executive Chairman on 29 November 2011) Andrew Ross Managing Director Michael Price Non-Executive Director John Robertson Non-Executive Director Mark O’Clery Non-Executive Director (appointed 14 August 2012) Jonathan Stewart Non-Executive Chairman (resigned 29 November 2011) Iain Knott[(1)] Executive Director, Exploration (resigned 22 July 2011)

(ii) Key Management Personnel

John Anderson Senior Geoscientist

(1) Mr. Knott was retained as an employee and considered to be a key management personnel.

Remuneration committee

The remuneration committee of the board of directors of the Company is responsible for determining and reviewing remuneration arrangements for the directors and key management personnel. The remuneration committee assesses the appropriateness of the nature and amount of remuneration of key management personnel on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality, high performing directors and key management personnel team.

Remuneration philosophy

The performance of the Company, among other things, depends upon the quality of its management. To prosper, the Company must attract, motivate and retain highly skilled directors and key management personnel. To this end, the charter adopted by the remuneration committee aims to align rewards with achievement of strategic objectives. The remuneration framework applied provides for a mixture of fixed and variable pay and a blend of short and long term incentives as appropriate.

No remuneration consultants were retained during the financial year.

Remuneration structure

In accordance with best practice corporate governance, the structure of non-executive director and key management personnel remuneration is separate and distinct.

Non-executive directors

The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders in a general meeting. At the Company’s Annual General Meeting held on the 29 November 2011, the shareholders of the Company approved that the aggregate amount of director fees payable to non-executive directors of the Company be set at $500,000 per annum in total.

The Consolidated Entity’s policy is to remunerate non-executive directors at market rates (for comparable companies) for time, commitment and responsibilities. Fees for non-executive directors are not linked to the performance of the

Directors’ Report

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Consolidated Entity. However to align directors’ interests with shareholders’ interests, directors are encouraged to hold shares in the Company. Non-executive directors are eligible to participate in the Elixir Employee Share Option Plan.

Retirement benefits and allowances

No retirement benefits or allowances are paid or payable to directors of the Company (other than statutory or mandatory superannuation contributions, where applicable).

Key Management Personnel

Base pay

Key management personnel are offered a competitive level of base pay which comprises the fixed (unrisked) component of their pay and rewards. Base pay for senior key management personnel is reviewed annually to ensure market competitiveness. There is no guaranteed base pay increases included in any senior key management personnel contracts.

Short term incentives

Payment of short term incentives is at the sole and absolute discretion of the remuneration committee. The remuneration committee assess the achievement of key performance milestones as determined by the remuneration committee to determine bonus payments. These milestones require performance in relation to key strategic, non-financial measures linked to drivers of performance in future reporting periods.

Short-term bonus payments may be adjusted up or down in line with under or over achievement relative to target performance levels at the discretion of the remuneration committee. For the year ended 30 June 2012 short term bonus payments to key management personnel of the Group of $20,000 (2011: $30,000) were paid as follows:

Performance related cash bonus

*Executive directors* Andrew Ross John Anderson	Grant date Contractual performance bonus Discretionary performance bonus Total Paid Forfeited $ $ $
	May 12 - 20,000 20,000 100% - May12 - 15,352 15,352 100%

The discretionary bonus paid during the financial year ended 30 June 2012 to Messrs’ Ross & Anderson related previously agreed KPI’s, including the achievement of an independent resource certification for the Moselle Permit in France.

There have been no forfeitures of bonuses by key management personnel during the current or prior periods and no cash bonuses remained unvested at year end.

Long term Incentive - Share-based compensation

Options over shares in the Company are granted under the Elixir Employee Share Option Plan (“ESOP”) which was approved by shareholders at a general meeting on 26 June 2008. The ESOP is designed to provide long-term incentives for the Company’s directors, employees and consultants to deliver long-term shareholder returns. Under the ESOP, participants are granted options subject to vesting conditions set by the Board. The terms may be related to periods of service or achievement of certain performance standards. Participation in the ESOP is at the board’s discretion and no individual has a contractual right to participate in the ESOP or to receive any guaranteed benefits.

The terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting periods are as follows:

	Date vested and			Value per option at
Grant date*	exercisable	Expiry date	Exercise price	grant date
26-Jun-08	31-Mar-10	31-Mar-13	$0.350	$0.1202

Directors’ Report

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In accordance with applicable accounting standards, the deemed grant date above is the date upon which shareholders approved the grant of the relevant options, not the actual date of offer, acceptance or the record date.

Options granted under the ESOP carry no dividend or voting rights.

The ESOP rules at present contain no restriction on participants entering into transactions to remove the “at risk” aspect of the unvested equity instruments granted to them. The board of directors resolved that future issues of options by the Consolidated Entity under an employee share option plan will be structured to prevent the removal of the at risk component of the options without the approval of the board.

Details of options over ordinary shares in the Company provided as remuneration to each director and each of the key management personnel of the Consolidated Entity are set out below. When exercisable, each option is convertible into one ordinary share of the Company. Further information on the options is set out in notes 18 and 23 of the Financial Statements.

Group performance

At present, remuneration for key management personnel is not directly linked to common financial measures of the Consolidated Entity’s performance such as share price, earnings per share or dividends.

The table set out below shows various commonly used measures of performance for the 2008 to 2012 financial years:

Revenues and finance income (Loss) after tax Share price at start of year Share price at end of year Change Loss per share Total Shareholder Return (TSR) (i)	Year ended 30 June 2008 2009 2010 2011 2012 $ $ $ $ $
	9,288,970 5,885,942 2,795,261 1,163,371 436,734 (6,414,503) (27,349,136) (5,695,287) (3,363,441) (2,650,931) 0.27 0.26 0.05 0.05 0.05 0.26 0.05 0.05 0.05 0.05
	(0.01) (0.21) (0.00) (0.00) (0.00) (0.05) (0.15) (0.03) (0.02) (0.01)
	(0.06) (0.36) (0.03) (0.02) (0.01)

(i) Defined as the net change in share price (opening share price less the closing share price for the year), plus the loss per share for the year.

Service agreements

Remuneration and other terms of employment for Mr. Iain Knott are formalised in a contract of employment, the material terms of which are as follows:

Term of agreement – indefinite.
Base salary, inclusive of health insurance for the year ended 30 June 2012 of £150,000, to be reviewed annually by the Board.
Notice period or termination benefit in lieu of notice, other than for gross misconduct, equal to three months’ salary and superannuation.

Remuneration and other terms of employment for Mr Andrew Ross are formalised in a contract of employment, the material terms of which are as follows:

Term of agreement – indefinite
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $275,000, to be review annually by the Board.
Notice period or termination benefit in lieu of notice, other than for gross misconduct, equal to three months salary and superannuation.

Directors’ Report

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Remuneration and other terms of employment for Mr John Anderson are formalised in a contract of employment, the material terms of which are as follows:

Term of agreement – indefinite.
Base salary, inclusive of health insurance for the year ended 30 June 2012 of £120,000, and a 10% pension contribution, to be reviewed annually by the Board.
Notice period or termination benefit in lieu of notice, other than for gross misconduct, equal to three months salary and pension contribution.

Remuneration and other terms of agreement with other named executives are not formalised in service agreements.

Remuneration of key management personnel and the five highest paid executives of the Company and Consolidated Entity

2012 *Non-executive* *directors* John Robertson Michael Price Jonathan Stewart (1) Alan Watson (2) Mark O’Clery (3) Sub-total non- executive directors *Executive directors* Andrew Ross Iain Knott(4) Sub-total executive directors *Key Management* *Personnel* John Anderson Sub-total other executives Total Key Management Personnel	Short-termbenefits Post-employment benefits Share- based payment
	Cash salary and fees Cash payment Non- monetary benefits Other (5) Super- annuation(6) Retirement benefits Options Total Performance - related $ $ $ $ $ $ $ $ %
	50,000 - - - - - - 50,000 - 45,872 - - - 4,128 - - 50,000 - 33,024 - - - - - - 33,024 - 30,519 - - - 2,747 - - 33,266 - - - - - - - - - -
	159,415 - - - 6,875 - - 166,290 -
	252,294 20,000 - - 22,707 - - 295,001 7% 257,170 - - - - - - 257,170 -
	509,464 20,000 - - 22,707 - - 552,171 -
	219,384 15,352 - - 18,457 - - 253,193 6%
	219,384 15,352 - - 18,457 - - 253,193 -
	888,263 35,352 - - 48,039 - - 971,654 4%

(1) Mr. Stewart resigned as a non-executive director on 29 November 2011.

(2) Mr. Watson was appointed a non-executive director on 5 October 2011 and appointed as non-executive chairman on 29 November 2011.

(3) Mr. O’Clery was appointed a non-executive director on 14 August 2012.

(4) Mr. Knott resigned as an executive director on 22 July 2011, retained as executive employee and considered to be a key management personnel.

(5) “Other” short term benefits include current year movements in leave and termination benefits.

(6) Includes pension scheme contributions for UK based executives.

Directors’ Report

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2011 *Non-executive* *directors* John Robertson Michael Price(1) Jonathan Stewart Sub-total non- executive directors Executive directors Andrew Ross Iain Knott Sub-total executive directors Other Executives John Anderson(2) Sub-total other executives Total Key Management Personnel*	Short-termbenefits Post-employment benefits Share- based payment
	Cash salary and fees Cash payment Non- monetary benefits Other (3) Super- annuation(4) Retirement benefits Options Total Performance - related $ $ $ $ $ $ $ $ %
	50,000 - - - - - - 50,000 - 21,456 - - - 1,931 - - 23,387 - 80,000 - - - - - - 80,000 -
	151,456 - - - 1,931 - - 153,387 -
	215,995 30,000 - - 19,440 - - 265,435 11% 266,003 - - - - - - 266,003 -
	481,998 30,000 - - 19,440 - - 531,438 -
	99,885 - - - 8,864 - - 108,749 -
	99,885 - - - 8,864 - - 108,749 -
	733,339 30,000 - - 30,235 - - 793,574 -

(1) Mr. Price was appointed non-executive director on 13 January 2011.

(2) Mr. Anderson was appointed an executive on 17 January 2011.

(3) Includes pension scheme contributions for UK based executives.
(4) “Other” short term benefits include current year movements in leave and termination benefits.
Mr. Stewart held an executive position for the year ended 30 June 2010. Subsequent to year end Mr. Stewart assumed the position of non-executive chairman.

Compensation options: granted and vested during the year

No compensation options were granted during the financial reporting period ended 30 June 2012 (2011: Nil).

Options granted as part of remuneration

No share options were granted during the financial reporting period ended 30 June 2012 (2011: Nil).

Adoption of remuneration report by shareholders

The adoption of the remuneration report for the financial year ended 30 June 2011 was put to shareholders of the Company at the Annual General Meeting (AGM) held on 29 November 2011. The resolution was passed by a show of hands. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

This is the end of the audited remuneration report -

Directors’ Report

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Dividends

No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2012 (2011: Nil).

Matters subsequent to the end of the financial year

The following events occurred subsequent to the end of the year:

(a) On 9 July 2012, the Company appointed Keith Bowker as Company Secretary following the resignation of Julie Foster. On the same day, the Company also changed its principal place of business, registered office address and contact details.
(b) On the 14 August 2012, the Company appointed Mark O’Clery as an independent non-executive director.

Other than as disclosed above, no events have occurred since 30 June 2012 that would materially affect the operations of the Consolidated Entity, the results of the Consolidated Entity or the state of affairs of the Consolidated Entity not otherwise disclosed in the Consolidated Entity’s financial statements.

Likely developments

Due to the nature of the Consolidated Entity’s business activities, the directors are not able to state:

likely developments in the entities’ operations; or
the expected results of these operations,

as to do so would result in unreasonable prejudice to the Consolidated Entity.

Environmental regulation

The Consolidated Entity’s operations are subject to significant environmental regulation in relation to discharge of hazardous waste and materials arising from any activities and development conducted by the Company in the countries in which it operates. The Consolidated Entity has a policy of exceeding or at least complying with its environmental performance obligations. During the financial year, the Consolidated Entity was not aware of any material breach of any particular or significant Commonwealth, State, Territory or any other particular regulation in respect to environmental management.

The directors have considered the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the directors have determined that the NGER Act will have no effect on the Company for the current or subsequent financial period. The directors will reassess this position as and when the need arises.

Loans to Directors

No loans were provided to the directors or to any of their associates.

Indemnification and insurance of Officers and Auditors

During the year, the Company paid a premium in respect of a contract insuring the directors of Elixir and the Company Secretary, Ms Julie Foster (resigned 9 July 2012) & Mr Keith Bowker (appointed 9 July 2012), against liabilities incurred as such a director or officer of the Company to the extent permitted by the Corporations Act 2001 . The contract of insurance prohibits disclosure of the nature of the insured liabilities and the amount of the premium. The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

Proceedings on behalf of the company

No person has applied for leave of the court under section 5237 of the Corporations Act 2001 to bring proceedings on behalf of the Company or to intervene in any proceeding to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Consolidated Entity was not a party to any such proceedings during the year.

Directors’ Report

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Non-audit services

No non-audit services were provided by the Consolidated Entity’s auditors during the year (or by any other person or firm on the auditors’ behalf) and accordingly the directors are satisfied that the auditor has complied with the general standard of independence for auditors imposed by the Corporations Act 2001 .

Auditor’s Independence Declaration

The Auditor’s independence declaration is included on page 16 of the financial report.

Signed in accordance with a resolution of the Directors made pursuant to s.298 (2) of the Corporations Act 2001 .

On behalf of the Directors

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Andrew Ross

Managing Director Perth, Western Australia

28 September 2012

   

  

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

   



 

 

 


 

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 

 

   

      

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 



      



      



   

        

 



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  
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 

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

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

 [] 

Directors’ Declaration

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In the Directors’ opinion:

(a) the financial statements and accompanying notes set out on pages 20 to 59, are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2012 and of its performance for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, and
(c) the financial statements and accompanying notes are presented in compliance with IFRS and interpretations adopted by the International Accounting Standards Board.
(d) the remuneration disclosures set out in the Directors’ report (as part of the audited remuneration report) for the year ended 30 June 2012 comply with section 300A of the Corporations Act 2001; and
(e) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 26 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 26.

The Directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001 .

Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001 .

On behalf of the Directors

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Andrew Ross

Managing Director Perth, Western Australia 28 September 2012

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Consolidated statement of comprehensive income for the year ended 30 June 2012

Note Revenue from oil and gas sales (4) Other income (4) Total Income Operating and production costs General and administrative costs (5) Foreign exchange gain/(loss) (6) Depreciation, depletion and amortisation expense (5) Exploration, evaluation and development costs expensed (5) Impairment expense (5) Loss before income tax Income tax expense (7) Net loss attributable to owners of the Company for the year Other comprehensive income/(loss) Foreign currency translation differences Other comprehensive income/(loss) for the year Total comprehensive income/(loss) for the year attributable to owners of Elixir Petroleum Limited (Loss) per share Basic and diluted (loss) per share (cents per share) (8)	Consolidated	Consolidated
	2012 $ 427,901 8,832 436,733 (576,757) (670,195) 2,313 (104,023) (144,814) (1,594,188) (2,650,931) - (2,650,931) 27,699 27,699 (2,623,232) (1.18)	2011 $
		1,119,865 43,506
		1,163,371 (587,887) (890,173) (250,841) (482,886) (1,164,337) (1,150,688)
		(3,363,441) -
		(3,363,441)
		(890,592)
		(890,592)
		(4,254,033)
		(1.78)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated statement of financial position

As at 30 June 2012

Note Assets Current assets Cash and cash equivalents (9) Trade and other receivables (10) Total current assets Non-current assets Receivables (11) Oil and gas properties (12) Other plant and equipment (13) Deferred exploration and evaluation expenditure (14) Total non-current assets Total assets Liabilities Current liabilities Trade and other payables (15) Provisions (16) Total current liabilities Non-current liabilities Provisions (16) Total non-current liabilities Total liabilities Net Assets Equity Contributed equity (17) Reserves (18) Accumulated losses (18) Total equity	Consolidated	Consolidated
	2012 $ 3,486,500 369,155 3,855,655 577,198 272,386 23,435 3,233,980 4,106,999 7,962,654 525,235 55,099 580,334 1,356,354 1,356,354 1,936,688 6,025,966 64,972,576 1,096,053 (60,042,663) 6,025,966	2011 $
		1,320,069 784,633
		2,104,702
		553,451 1,712,167 17,179 1,769,126
		4,051,923
		6,156,625
		402,084 307,209
		709,293
		1,126,344
		1,126,344
		1,835,637
		4,320,988
		60,644,366 1,699,254 (58,022,632)
		4,320,988

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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Consolidated statement of changes in equity for the year ended 30 June 2012

Consolidated Balance as at 1 July 2010 (Loss) for the year Exchange differences on translation of foreign operations Total comprehensive income/(loss) for the year Balance as at 30 June 2011 (Loss) for the year Exchange differences on translation of foreign operations Total comprehensive income/(loss) for the year Issue of ordinary shares Share issue costs Lapse of options Transactions with owners, in their capacity as owners Balance as at 30 June 2012	Share Capital Option Premium Reserve Share Based Payment Reserve Foreign Currency Translation Reserve Accumulated Losses Total $ $ $ $ $ $
	60,644,366 1,773,184 871,300 (54,638) (54,659,191) 8,575,021 - - - - (3,363,441) (3,363,441) - - - (890,592) - (890,592)
	- - - (890,592) (3,363,441) (4,254,033)
	60,644,366 1,773,184 871,300 (945,230) (58,022,632) 4,320,988
	- - - - (2,650,931) (2,650,931) - - - 27,699 - 27,699
	- - - 27,699 (2,650,931) (2,623,232)
	4,452,809 - - - - 4,452,809 (124,599) - - - - (124,599) - - (630,900) - 630,900 - - - - - - -
	64,972,576 1,773,184 240,400 (917,531) (60,042,663) 6,025,966

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated statement of cash flows

for the year ended 30 June 2012

	Consolidated	Consolidated
Note	2012 $	2011
		$
Cash flows from operating activities	697,808 (1,953,309)
Receipts from sales		1,362,350
Payments to suppliers and employees		(2,617,753)
Net cash(outflow) from operating activities (22)	(1,255,501)	(1,255,403)
	543,376 (1,441,921) (18,878) 8,832
Cash flows from investing activities
Payments for capitalised oil & gas properties		(607,900)
Payments for capitalised exploration, evaluation and development		(1,704,381)
Payment for property, plant & equipment		(3,745)
Interest received		58,024
Net cash (outflow) from investing activities	(908,591)	(2,258,002)
	4,452,809 (124,599)
Cash flows from financing activities
Proceeds from issues of shares		-
Payments for share issue costs		-
Net cash (outflow)/inflow from financing activities	4,328,210	-
	2,164,118 1,320,069 2,313
Increase/(decrease) in cash and cash equivalents		(3,513,405)
Cash and cash equivalents at 1 July		5,084,315
Effect ofchangeinexchangerates		(250,841)
Cash and cash equivalents at 30 June (9)	3,486,500	1,320,069

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the financial statements for the year ended 30 June 2012

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1. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated. The financial report consists of consolidated financial statements for Elixir Petroleum Limited and its subsidiaries (“Group” or “Consolidated Entity”).

Elixir Petroleum Limited is a company limited by shares, incorporated and domiciled in Australia, and whose shares are publicly traded on the Australian Securities Exchange.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001 .

Going concern

The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

Compliance with International Financial Reporting Standards

The consolidated financial statements comply with International Financial Reporting Standards (AIFRS) as adopted in Australia. Compliance with these standards ensures that the financial statements of the Group comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention

These financial statements have been prepared under the historical cost convention. Expenditure is initially recognised at cost and revalued to fair value when required to do so by the application of Australian Accounting Standards.

Critical accounting estimates and significant judgements

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.

(b) Principles of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of Elixir Petroleum Limited and its subsidiaries as at 30 June 2012 and the financial performance of the Company and its subsidiaries for the year then ended.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are eliminated unless the transaction provides evidence of the impairment of the assets transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Consolidated Entity.

Notes to the financial statements for the year ended 30 June 2012

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1. Summary of significant accounting policies (continued)

Investments in subsidiaries are accounted for at cost in the separate financial statements of the Company.

(ii) Joint ventures

Jointly controlled assets

The Group’s proportionate interests in the assets, liabilities and expenses of a joint venture activity are incorporated in the financial statements under the appropriate headings. Details of joint ventures are set out in note 23.

(c) Segment reporting

Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of operating segments, has been identified as the Board of Directors.

Management has determined, based on the reports reviewed by the Board of Directors that are used to make strategic decisions, that the Group has three reportable segments being oil and gas exploration in the United Kingdom (UK), oil and gas exploration and production in France and oil and gas exploration and production in the United States of America (USA). The Group’s management and administration office is located in Australia.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Elixir’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

Foreign currency monetary assets and liabilities at the reporting date are translated at the exchange rate existing at the reporting date.

Exchange differences are recognised in the Consolidated Statement of Comprehensive Income in the period in which they arise.

Group companies

The results and financial position of all the Group companies that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position,
income and liabilities for each statement of comprehensive income are translated at average exchange rates, and
exchange differences arising on translation of intercompany payables and/or receivables of foreign operations, in a currency that is not the same as the parent’s functional currency, are recognised in the foreign currency translation reserve, as a separate component of equity. These differences are only recognised in the Consolidated Statement of Comprehensive Income upon disposal of the foreign operations.

(e) Revenue recognition

(i) Sale of goods

Revenue from the sale of goods and disposal of other assets is recognised when the Consolidated Entity has transferred to the buyer the significant risks and rewards of ownership of the goods.

Notes to the financial statements for the year ended 30 June 2012

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1. Summary of significant accounting policies (continued)

(ii) Other revenue

Dividend revenue is recognised on a receivable basis. Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(iv) Service income

Revenue from the provision of services is recognised when the Consolidated Entity has a legally enforceable right to receive payment for services rendered.

(f) Income tax

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income / (loss) based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting or taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax assets is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax base of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(g) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that have been previously impaired are reviewed for possible reversal of the impairment at each reporting date.

(h) Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short-term, highly liquid investments with original maturities of three months or less.

Notes to the financial statements for the year ended 30 June 2012

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1. Summary of significant accounting policies (continued)

(i) Financial assets

Classification

The Group classifies its financial assets in the following categories: financial assets ‘at fair value through the Consolidated Statement of Comprehensive Income’, ‘held-to-maturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its investments at initial recognition.

(i) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. Trade receivables are generally due for settlement within 30 days.

(ii) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

(iii) Held-to-maturity investments

Bills of exchange and debentures are recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Recognition and de-recognition

Regular purchases and sales of financial assets are recognised on trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through the Consolidated Statement of Comprehensive Income. Financial assets carried at fair value through the Consolidated Statement of Comprehensive Income are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from sale of investment securities.

Subsequent measurement

Loans and receivables and held-to-maturity investments are carried at amortised cost less impairment using the effective interest method.

Available-for-sale financial assets and financial assets at fair value through the Consolidated Statement of Comprehensive Income are subsequently carried at fair value. Any changes in fair value are recognised directly in other comprehensive income. No further impairment of the available for sale asset will be recognised.

Details on how the fair value of financial instruments is determined are disclosed in note 28.

Impairment

The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the Consolidated Statement of Comprehensive Income, is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments classified as available-for-sale are not reversed through the statement of comprehensive income.

Notes to the financial statements for the year ended 30 June 2012

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1. Summary of significant accounting policies (continued)

(j) Property, plant and equipment (other than oil and gas properties)

Property, plant and equipment is stated at cost, less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write down the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The following estimated useful lives are used in the calculation of depreciation:

Fixtures and fittings 5 years Plant and equipment 5 - 15 years

(k) Non-operator interests in oil and gas properties

Exploration & evaluation expenditure

The Consolidated Entity’s accounting policy for expenditure on exploration and of evaluation is accounted for in accordance with the area of interest method.

This approach is strongly linked to the Group’s oil and gas reserves determination and reporting process and is considered to most fairly reflect the results of the Group’s exploration and evaluation activity because only assets with demonstrable value are carried on the statement of financial position.

Once a decision has been made to develop an oil or gas prospect, accumulated exploration and evaluation costs for that prospect are transferred from Deferred Exploration, Evaluation to Development Projects. Once production commences capitalised costs associated with the producing well are transferred to Oil and Gas Properties and are amortised or depreciated over the useful life of the asset.

This method allows the costs of discovery, evaluation and development of a prospect to be aggregated on the statement of financial position and matched against the benefits derived from production once this commences.

Costs

Exploration licence acquisition costs relating to greenfields oil and gas exploration provinces are expensed as incurred while the costs incurred in relation to established or recognised oil and gas exploration provinces are initially capitalised and then amortised over the shorter term of the licence or the expected life of the project.

All other exploration and evaluation costs, including general permit activity, geological and geophysical costs and new venture activity costs are charged as expenses as incurred except where:

the expenditure relates to an area of interest that, at reporting date, no assessment of the existence of economically recoverable reserves has been made; or
where there exists an economically recoverable reserve and it is expected that the capitalised expenditure will be recouped through successful exploitation of the area of interest, or alternatively, by its sale.

Areas of interest are recognised at the field level. Subsequent to the recognition of an area of interest, all further costs relating to the area of interest are initially capitalised. Each area of interest is reviewed at least bi-annually to determine whether economic quantities of reserves exist or whether further exploration and evaluation work is required to support the continued carry forward of capitalised costs.

The costs of drilling exploration wells are initially capitalised pending the results of the well. Costs are expensed where the well does not result in the successful discovery of economically recoverable hydrocarbons. To the extent it is considered that the relevant expenditure will not be recovered, it is immediately expensed.

Notes to the financial statements for the year ended 30 June 2012

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1. Summary of significant accounting policies (continued)

Transfer to development projects

Upon a decision being made to commercially develop an area of interest, accumulated expenditure for the area of interest is transferred to Oil and Gas Properties and amortised or depreciated over the useful life of the project.

Producing projects

Exploration, evaluation and development costs are initially capitalised as deferred exploration, evaluation and development expenditure and upon commencement of commercial operations are transferred to Oil and Gas Properties. Operating costs of projects in commercial production are expensed as incurred.

Prepaid drilling and completion costs

Where the Group has a non-operator interest in an oil or gas property, it may periodically be required to make a cash contribution for its share of the operator’s drilling and / or completion costs, in advance of these operations taking place.

Where these contributions relate to a prepayment for exploratory or early stage drilling activity, prior to a decision on the commerciality of a well having been made, the costs are capitalised as prepaid drilling costs within Deferred Exploration, Evaluation and Development Expenditure.

Where these contributions relate to a prepayment for well completion, these costs are capitalised as prepaid completion costs within Deferred Exploration, Evaluation and Development Expenditure.

As the operator notifies the Company as to how funds have been expended, the costs are reclassified from prepaid costs to the appropriate expenditure category.

Once a decision has been made to proceed with completion of a well, all costs are transferred from Exploration and Evaluation to Oil and Gas Properties, including any prepaid amounts.

Amortisation of producing projects

Upon commencement of production, the Consolidated Entity amortises the accumulated costs for the relevant area of interest over the life of the area according to the rate of depletion of the economically recoverable quantities of reserves. Estimates of recoverable reserve quantities include judgemental assumptions regarding commodity prices, exchange rates, discount rates, and production and transportation costs for future cash flows. It also requires interpretation of complex and difficult geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reservoirs, and their anticipated recoveries. The economic, geological and technical factors used to estimate reserves may change from period to period. Amortisation charged for the year to 30 June 2012 was $91,401 (2011: $461,089).

Future restoration costs

The Consolidated Entity’s aim is to avoid or minimise environmental impacts resulting from its operations.

Work scope and cost estimates for restoration are reviewed annually and updated at least every three years.

Provision is made in the statement of financial position for restoration of operating locations. The estimated costs are capitalised as part of the cost of the related project where recognition occurs upon acquisition of an interest in the operating locations. The costs are then recognised as an expense on a units of production basis during the production phase of the project.

The costs are based on the latest estimated future costs, determined on a discounted basis, which are re-assessed regularly and exclude any allowance for potential changes in technology or material changes in legislative requirements.

The Group accounts for changes in cost estimates on a prospective basis.

(l) Trade and other payables Trade payables and other accounts payable are recognised when the Consolidated Entity becomes obliged to make future payments resulting from the purchase of goods and services. They are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method.

Notes to the financial statements for the year ended 30 June 2012

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1. Summary of significant accounting policies (continued)

(m) Employee benefits

Provision is made for benefits accruing to employees in respect of employee entitlements when it is probable that settlement will be required and these benefits can be measured reliably.

Provisions made in respect of employee entitlements expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Consolidated Entity in respect of services provided by employees up to the reporting date.

(n) 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 obligation can be reliably estimated.

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 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 cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.

An onerous contract is considered to exist where the Consolidated Entity has a contract under which the unavoidable cost of meeting the contractual obligations exceed the economic benefits estimated to be received. Present obligations arising under onerous contracts are recognised as a provision to the extent that the present obligation exceeds the economic benefits estimated to be received.

Provision for restoration and rehabilitation

Provision is made in the statement of financial position for restoration of operating locations. The estimated restoration and rehabilitation costs are initially recognised as part of the capitalised cost of the relevant project which gave rise to the future obligation. During the production phase of the project the capitalised restoration costs is amortised using the units of production method. Any actual costs incurred by the Consolidated Entity are allocated against the provision.

The provision for restoration and rehabilitation are based on the latest estimated future costs, determined on a discounted basis, which are re-assessed regularly and exclude any allowance for potential changes in technology or material changes in legislative requirements.

(o) 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 the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

If the Company reacquires its own equity instruments, e.g. as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognise directly in equity.

(p) Borrowing costs

Borrowing costs are expensed in the period in which they are incurred, except to the extent which they are directly attributable to the acquisition, construction or production of an asset and it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably.

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Notes to the financial statements for the year ended 30 June 2012

1. Summary of significant accounting policies (continued)

(q) Good and services tax (GST) and Value Added Tax (VAT)

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) or value added tax (VAT), except:

where the amount of GST or VAT 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
for receivables and payables which are recognised inclusive of GST or VAT.

The net amount of GST or VAT 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 or VAT 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.

(r) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit / (loss) 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 on issue during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(s) Share-based payments

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Consolidated Entity’s estimate of shares that will eventually vest.

(t) New accounting standards and interpretations In the current period, the Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. Adoption of these standards has had no impact on the Company’s Financial Statements:

Reference	Title	Nature of Change	Application date of standard	Impact on Elixir’s financial statements
AASB 9 (issued December 2009 and amended December 2010)	Financial Instruments	Amends the requirements for classification and measurement of financial assets. The available- for-sale and held-to-maturity categories of financial assets in AASB 139 have been eliminated. AASB 9 requires that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income.	Periods beginning on or after 1 January 2015	Adoption of AASB 9 is only mandatory for the year ending 30 June 2016. Elixir has not yet made an assessment of the impact of these amendments.

Notes to the financial statements

for the year ended 30 June 2012

1. Summary of significant accounting policies (continued)

Reference	Title	Nature of Change	Application date of standard	Impact on Elixir’s financial statements
AASB 10 (issued August 2011)	Consolidated Financial Statements	Introduces a single ‘control model’ for all entities, including special purpose entities (SPEs), whereby all of the following conditions must be present: Power over investee (whether or not power used in practice) Exposure, or rights, to variable returns from investee Ability to use power over investee to affect the entity’s returns from investee. Introduces the concept of ‘defacto’ control for entities with less than 50% ownership interest in an entity, but which have a large shareholding compared to other shareholders. This could result in more instances of control and more entities being consolidated.	Annual reporting periods commencing on or after 1 January 2013	When this standard is first adopted for the year ended 30 June 2014, there will be no impact on transactions and balances recognised in the financial statements because the Entity does not have any special purpose entities. Elixir does not have ‘defacto’ control of any entities with less than 50% ownership interest in an entity.
AASB 12 (issued August 2011)	Disclosure of Interests in Other Entities	Combines existing disclosures from AASB 127 Consolidated and Separate Financial Statements, AASB 128_Investments in_ Associates_and AASB 131_Interests in Joint Ventures. Introduces new disclosure requirements for interests in associates and joint arrangements, as well as new requirements for unconsolidated structured entities.	Annual reporting periods commencing on or after 1 January 2013	As this is a disclosure standard only, there will be no impact on amounts recognised in the financial statements. However, additional disclosures will be required for interests in associates and joint arrangements, as well as for unconsolidated structured entities.
AASB 13 (issued September 2011)	Fair Value Measurement	AASB 13 establishes a single framework for measuring fair value of financial and non- financial items recognised at fair value in the statement of financial position or disclosed in the notes in the financial statements. Additional disclosures required for items measured at fair value in the statement of financial position, as well as items merely disclosed at fair value in the notes to the financial statements. Extensive additional disclosure requirements for items measured at fair value that are ‘level 3’ valuations in the fair value hierarchy that are not financial instruments	Annual reporting periods commencing on or after 1 January 2013	When this standard is adopted for the first time for the year ended 30 June 2014, additional disclosures will be required about fair values.
AASB 119 (reissued September 2011)	Employee Benefits	Employee benefits expected to be settled (as opposed to due to settled under current standard) wholly within 12 months after the end of the reporting period are short-term benefits, and therefore not discounted when calculating leave liabilities. Annual leave not expected to be used wholly within 12 months of end of reporting period will in future be discounted when calculating leave liability.	Annual periods commencing on or after 1 January 2013	When this standard is first adopted for 30 June 2014 year end, annual leave liabilities will be recalculated on 1 July 2012 as long-term benefits because they are not expected to be settled wholly within 12 months after the end of the reporting period. This will result in a reduction of the annual leave liabilities recognised on 1 July 2012, and a corresponding increase in retained earnings at that date.

Notes to the financial statements

for the year ended 30 June 2012

1. Summary of significant accounting policies (continued)

Reference	Title	Nature of Change	Application date of standard	Impact on Elixir’s financial statements
AASB 2010-8 (issued December 2010)	Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets (AASB 112)	For investment property measured using the fair value model, deferred tax assets and liabilities will be calculated on the basis of a rebuttable presumption that the carrying amount of the investment property will be recovered through sale.	Periods commencing on or after 1 January 2012	The Elixir does not have any investment property measured using the fair value model. There will therefore be no impact on the financial statements when these amendments are first adopted.
AASB 2011-4 (issued July 2011)	Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement s	Amendments to remove individual key management personnel (KMP) disclosure requirements from AASB 124 to eliminate duplicated information required under the Corporation Act 2001.	Annual periods commencing on or after 1 July 2013	When this standard is first adopted for the year ended 30 June 2014 the Entity will show reduced disclosures under Key Management Personnel note to the financial statements.
AASB 2011-9 (issued September 2011)	Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehens ive Income	Amendments to align the presentation of items of other comprehensive income (OCI) with US GAAP. Various name changes of statements in AASB 101 as follows:  1 statement of comprehensive income – to be referred to as ‘statement of profit or loss and other comprehensive income’  2 statements – to be referred to as ‘statement of profit or loss’ and ‘statement of comprehensive income’.  OCI items must be grouped together into two sections: those that could subsequently be reclassified into profit or loss and those that cannot.	Annual periods commencing on or after 1 July 2012	When this standard is first adopted for the year ended 30 June 2013, there will be no impact on amounts recognised for transactions and balances for 30 June 2013 (and comparatives).

Standards and Interpretations in issue not yet adopted

At the date of authorisation of the financial report, a number of Standards and Interpretations including those Standards and Interpretations issued by the IASB/IFRIC, where an Australian equivalent has not been made by the AASB, were in issue but not yet effective for which the Consolidated Entity has considered it unlikely for there to be a material impact on the financial statements.

Reference	Title	Nature of Change	Application date of standard	Impact on Elixir’s financial statements
AASB 127 (issued August 2011)	Separate Financial Statements	Requirements for consolidation removed and inserted into AASB 10 Consolidated Financial Statements. Disclosures removed and inserted into AASB 12 Disclosure of Interests in Other Entities.	Annual periods commencing on or after 1 January 2013	1 July 2013
AASB 128 (issued August 2011)	Investments in Associates and Joint Ventures	Disclosures removed and inserted into AASB 12 Disclosure of Interests in Other Entities.	Annual periods commencing on or after 1 January 2013	1 July 2013

Notes to the financial statements

for the year ended 30 June 2012

1. Summary of significant accounting policies (continued)

Reference	Title	Nature of Change	Application date of standard	Impact on Elixir’s financial statements
AASB 2010-7 (issued December 2010)	Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127]	Mainly editorial changes.	Periods commencing on or after 1 January 2013	1 July 2013
AASB 2012-2	Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities [AASB 7 & AASB 132]	Amendments clarify the requirements for offsetting financial instruments and introduce new disclosure requirements.	Annual periods commencing on or after 1 January 2013	1 July 2013
AASB 2012-3 (issued June 2012	Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities [AASB 132]	Amendments clarify the requirements for offsetting financial instruments and introduce new disclosure requirements.	Annual periods commencing on or after 1 January 2013	1 July 2013

2. Critical accounting estimates & judgments

In preparing this financial report the Consolidated Entity has been required to make certain estimates and assumptions concerning future occurrences. There is an inherent risk that the resulting accounting estimates will not equate exactly with actual events and results.

(a) Significant accounting judgements

In the process of applying the Consolidated Entity’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Exploration, evaluation and development expenditure

The Group's accounting policy for exploration, evaluation and development is set out at note 1(k). Application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves exist. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under our policy, management conclude that it is unlikely that capitalised expenditure will be recovered by future exploitation or sale, the relevant capitalised amount will be written off to the income statement. As at 30 June 2012 the carrying amount of deferred exploration and evaluation expenditure is $3,233,980 (2011: $1,769,126).

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Notes to the financial statements for the year ended 30 June 2012

2. Critical accounting estimates & judgments (continued)

Oil & Gas Properties

The Group's accounting policy for oil & gas properties is set out at note 1(k). Application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves exist. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under our policy, management conclude that it is unlikely that capitalised expenditure will be recovered by future exploitation or sale, the relevant capitalised amount will be written off to the income statement. As at 30 June 2012 the carrying amount of oil & gas properties is $272,386 (2011: $2,265,618).

Deferred tax assets

The Consolidated Entity has carried forward tax losses which have not been recognised as deferred tax assets as it is not considered sufficiently probable that these losses will be recouped by means of future profits taxable in the appropriate jurisdictions.

Taxation of oil and gas activities in the US allows a number of alternative treatments which are not available under Australian taxation legislation. In particular, companies may elect to:

(i) claim an immediate deduction for Intangible Drilling Costs ("IDC"); and
(ii) must use either the cost or percentage depletion method, whichever yields the largest tax deduction, when calculating applicable tax deductions in relation to the entities economic interest in its oil and gas properties.

The election to expense IDC applies to all expenditures incident to and necessary for the drilling of wells and the preparation of wells for the production of oil or gas. Once the election to expense IDC is made, the election is binding upon the taxpayer for the first taxable year for which it is effective and for all subsequent taxable years.

At reporting date a determination had not been made as to whether the cost or percentage depletion method would apply for the current years US income tax calculation. The directors have not recognised a deferred tax asset or liability in respect of this potential difference in the tax base of these properties as they do not believe it is capable of being reliably estimated at reporting date.

(b) Critical accounting estimates

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Amortisation

Upon commencement of production, the Group amortises the accumulated costs for the relevant area of interest over the life of the area according to the rate of depletion of the economically recoverable quantities of reserves. Estimates of recoverable reserve quantities include judgemental assumptions regarding commodity prices, exchange rates, discount rates, and production and transportation costs for future cash flows. It also requires interpretation of the quality of reservoirs, and their anticipated recoveries. The economic, geological and technical factors used to estimate reserves may change from period to period. Amortisation charged for the year ended 30 June 2012 was $104,023 (2011: $461,089).

Share-based payment transactions

The Consolidated Entity measures the cost of equity-settled transactions with employees and consultants by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Binomial model, using the assumptions detailed in note 20.

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Notes to the financial statements for the year ended 30 June 2012

2. Critical accounting estimates & judgments (continued)

Rehabilitation obligations

The Consolidated Entity estimates its share of the future removal and remediation costs of oil and gas platforms, production facilities, wells and pipelines at the time of acquisition or installation of the assets. In most instances, removal of assets occurs many years into the future. This requires judgemental assumptions regarding removal date, future environmental legislation, the extent of remediation activities required, the engineering methodology for estimating cost, future removal technologies in determining the removal cost, and asset specific discount rates to determine the present value of these cash flows. For more detail regarding the policy in respect of provision for rehabilitation refer to note 1(n). As at 30 June 2012 rehabilitation obligations have a carrying value of $1,356,354 (2011: $1,126,344).

Impairment of assets

In the absence of readily available market prices, the recoverable amounts of assets are determined using estimates of the present value of future cashflows using asset-specific discount rates. For oil & gas properties, these estimates are based on assumptions concerning reserves, future production profiles and costs. Impairment for the year ended 30 June 2012 was $1,594,188 (2011: $1,150,688). When the carrying amount exceeds the present value of the future cash flows then the asset is impaired to its fair value. As at 30 June 2012, the carrying value of oil & gas properties is $272,386 (2011: $2,265,618).

3. Segment Information

Management has determined, based on the reports reviewed by the Board of Directors that are used to make strategic decisions, that the Group has three reportable segments being oil and gas exploration in the United Kingdom (UK), oil and gas exploration in France and oil and gas exploration and production in the United States of America (USA). The Group’s management and administration office is located in Australia.

The Board of Directors review internal management reports on a monthly basis that are consistent with the information provided in the statement of comprehensive income, statement of financial position and statement of cash flows. As a result, no reconciliation is required, because the information as presented is used by the Board to make strategic decisions.

Reportable segment revenue

Revenue, including interest income, is disclosed below based on the reportable segment:

Revenue from oil and gas exploration - UK Revenue from oil and gas exploration - France Revenue from oil and gas exploration and production – USA Revenue from other corporate activities	2012 $	2011 $
	- - 427,901 8,832 436,733	- - 1,119,865 43,506
		1,163,371

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Notes to the financial statements for the year ended 30 June 2012

3. Segment Information (continued)

Reportable segment assets

Assets are disclosed below based on the reportable segment:

Asset from oil and gas exploration – UK Asset from oil and gas exploration – France Asset from oil and gas exploration and production – USA Assets from other corporate activities: Cash and cash equivalents Other corporate assets Reportable segment liabilities Liabilities are disclosed below based on the reportable segment: Liabilities from oil and gas exploration – UK Liabilities from oil and gas exploration – France Liabilities from oil and gas exploration and production – USA Liabilities from other corporate activities: Other corporate liabilities Reportable segment loss Loss is disclosed below based on the reportable segment: Loss from oil and gas exploration – UK Loss from oil and gas exploration – France Loss from oil and gas exploration and production – USA Loss from other corporate activities	2012 $	2011 $
	390,878 2,877,587 1,080,892 3,486,500 126,796 7,962,654 2012 $	291,455 1,511,517 2,903,218 1,320,069 130,366
		6,156,625
		2011 $
	12,908 6,147 1,475,802 441,831 1,936,688 2012 $	39,701 52,560 1,264,329 479,047
		1,835,637
		2011 $
	(5,380) (75,526) (1,511,556) (1,058,469) (2,650,931)	(773,317) (1,003,888) (435,632) (1,150,604)
		(3,363,441)

4. Revenue from continuing operations

Revenue from continuing operations
Revenue from oil & gas sales Interest received	Consolidated
	2012 $ 427,901 8,832 436,733	2011 $
		1,119,865 43,506
		1,163,371

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Notes to the financial statements for the year ended 30 June 2012

5. Expenses

Loss before income tax is arrived at after deducting the following expenses:

Administration and office costs Corporate compliance Corporate management costs Amortisation of oil & gas properties Depreciation of plant and equipment Exploration expenditure expensed Impairment of deferred exploration and evaluation expenditure Impairment of oil & gas properties	Consolidated	Consolidated
	2012 $ 402,898 72,742 194,555 670,195 91,401 12,622 104,023 144,814 5,723 1,588,465 1,594,188	2011 $
		439,044 50,804 400,325
		890,173 461,089 21,797
		482,886 1,164,337
		506,520 644,168
		1,150,688

6. Other expenses

Other expenses
Foreign exchange gain/(loss)	Consolidated
	2012 $ 2,313 2,313	2011 $
		(250,841)
		(250,841)

7. Income tax

Income tax recognised in comprehensive income statement:

Current tax expenses in respect of the current year Deferred tax expenses relating to the origination and reversal of temporary differences Total tax expense	Consolidated	Consolidated
	2012 $ - - -	2011 $
		- -
		-

The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in the financial statements as follows:

Notes to the financial statements

for the year ended 30 June 2012

7. Income tax (continued)

Consolidated 2012 2011 $ $ Prima facie tax benefit on loss at 30% (2011: 30%) (795,279) (1,009,032) Add tax effect of: Foreign/overseas tax losses not recognised (44,246) 316,566 Revenue losses not recognised 232,784 187,768 Effect of foreign tax differential (477,335) 24,191 Share based payments - - Other non-allowable items 1,048,798 453,227 Less tax effect of: Other allowable items 35,278 27,280 Income tax (benefit) / expense - - The following deferred tax balances have not been recognised Deferred tax assets Tax losses 7,219,098 6,563,757 Capital raising costs 35,279 31,273 Provisions and accruals 626,374 90,679 Total deferred tax assets 7,880,751 6,685,709 Deferred tax liability Oil and gas properties (871,490) (1,288,322) Total deferred tax liability (871,490) (1,288,322) Net deferred tax asset not recognised 7,009,261 5,397,387 The tax benefits of the above deferred tax assets will only be obtained if: (a) the Group derives future assessable income of a nature and amount sufficient to enable the benefits to be utilised; (b) the Group continues to comply with the conditions for deductibility imposed by law; and (c) no changes in income tax legislation adversely affect the company utilising the benefits. Loss per share Consolidated 2012 2011 $ $ Loss used in calculation of basic / diluted loss per share Loss attributable to the ordinary equity holders of the Consolidated Entity (2,650,931) (3,363,441) Weighted average number of ordinary shares used as the denominator in calculating basic / diluted loss per share 224,029,801 188,988,472	Consolidated	Consolidated
		2011 $
		(1,009,032) 316,566 187,768 24,191 - 453,227 27,280
		-
		6,563,757 31,273 90,679
		6,685,709 (1,288,322)
		(1,288,322) 5,397,387
	2012 $ (2,650,931) 224,029,801	2011 $
		(3,363,441)
		188,988,472

The tax benefits of the above deferred tax assets will only be obtained if:

(a) the Group derives future assessable income of a nature and amount sufficient to enable the benefits to be utilised;

(b) the Group continues to comply with the conditions for deductibility imposed by law; and

8. Loss per share

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Notes to the financial statements for the year ended 30 June 2012

8. Loss per share (continued)

Basic / diluted loss per share Loss attributable to the ordinary equity holders of the Consolidated Entity	Cents (1.18)	Cents
		(1.78)

The options on issue (note 19) represent potential ordinary shares but are not dilutive as they would decrease the loss per share. Accordingly they have been excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share.

9. Cash and cash equivalents

Cash and cash equivalents
Cash at bank and in hand Deposits at call	Consolidated
	2012 $ 3,437,304 49,196 3,486,500	2011 $
		1,273,073 46,996
		1,320,069

Information about the Consolidated Entity’s exposure to foreign exchange risk and interest rate risk in relation to cash and cash equivalents is provided in note 28.

10. Trade and other receivables

Trade and other receivables
Trade receivables Other receivables and prepayments	Consolidated
	2012 $ 56,560 312,595 369,155	2011 $
		262,924 521,709
		784,633

Trade and other receivables are non-interest bearing and are normally settled on 30 days terms.

(a) Fair value

Due to the short-term nature of these receivables, their carrying value approximates fair value.

(b) Credit risk – refer to note 28

(c) Impaired trade receivables

No Consolidated Entity trade receivables were past due or impaired as at 30 June 2012 (2011: nil) and there is no indication that amounts recognised as trade and other receivables will not be recovered in the normal course of business.

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Notes to the financial statements for the year ended 30 June 2012

11. Receivables

Non-current receivables	Consolidated	Consolidated
	2012 $ 577,198 577,198	2011* $
		553,451
		553,451

Restated to reclassify oil & gas properties to non-current receivables for comparative purposes.

Receivables relate directly to an abandonment bond placed in relation to restoration of the Pompano oil and gas property.

(a) Credit risk – refer to note 28 for further information.

12. Oil and gas properties

A reconciliation of movements in oil & gas properties during the year is as follows:

Tangible Costs $ Producing Projects At Cost At 1 July 2010 2,821,076 Additions - Net movement in prepaid - Foreign exchange movement (540,546) At 30 June 2011 2,280,530 Additions - Foreign exchange movement 97,853 At 30 June 2012 2,378,383 Associated future restoration costs capitalised At 1 July 2010 - Additions - Foreign exchange movement - At 30 June 2011 - Additions - Foreign exchange movement - At 30 June 2012 -	Intangible Costs $ 34,588,473 52,064 - (6,971,864) 27,668,673 - 1,546,352 29,215,025 1,393,818 - (267,474) 1,126,344 181,681 48,329 1,356,354	Prepaid Drilling & Completion Costs $ 10,460 - (10,460) - - - - - - - - - - - -	Total $ 37,420,009 52,064 (10,460) (7,512,410) 29,949,203 - 1,644,205 31,593,408 1,393,818 - (267,474)
			1,126,344 181,681 48,329
			1,356,354

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Notes to the financial statements for the year ended 30 June 2012

12. Oil and gas properties (continued)

Accumulated amortisation At 1 July 2010 Amortisation for the year Transfer from impairment provision Foreign exchange movement At 30 June 2011 Amortisation for the year Foreign exchange movement At 30 June 2012 Impairment Provision At 1 July 2010 Transfer to accumulated amortisation Foreign exchange movement At 30 June 2011 Impairment Foreign exchange movement At 30 June 2012 Net carrying value At 1 July 2011 At 30 June 2012	(656,536) - - 120,536 (536,000) - (22,998) (558,998) (1,131,011) (28,419) 216,713 (942,717) (680,021) (68,039) (1,690,777) 801,813 128,608	(20,277,682) (428,834) - 4,151,776 (16,554,740) (91,401) (711,730) (17,357,871) (13,687,198) (348,995) 2,706,270 (11,329,923) (908,444) (831,363) (13,069,730) 910,354 143,778	- - - - - - - - - - - - - - - - -	(20,934,218) (428,834) - 4,272,312
				(17,090,740) (91,401) (734,728)
				(17,916,869)
				(14,818,209) (377,414) 2,922,983
				(12,272,640) (1,588,465) (899,402)
				(14,760,507)
				1,712,167
				272,386

13. Plant and equipment

Plant and equipment
Plant and equipment at cost Accumulated depreciation Total plant and equipment A reconciliation of movements in property, plant and equipment is as follows: Carrying amount at the beginning of the year Additions Depreciation expense Foreign exchange movement Carrying amount at the end of year	Consolidated
	2012 $ 90,265 (66,830) 23,435 17,179 18,445 (12,622) 433 23,435	2011 $
		70,664 (53,485)
		17,179
		39,418 3,745 (21,797) (4,187)
		17,179

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Notes to the financial statements for the year ended 30 June 2012

14. Deferred exploration & evaluation expenditure

Deferred exploration & evaluation expenditure
Balance at 1 July Amount capitalised during the year Impairment Foreign exchange movements Balance at 30 June	Consolidated
	2012 $ 1,769,126 1,441,064 (5,728) 29,518 3,233,980	2011 $
		778,276 1,704,381 (644,168) (69,363)
		1,769,126

The ultimate recoupment of exploration expenditure carried forward is dependent on successful development and exploitation, or alternatively sale, of the respective area of interest.

15. Trade and other payables

Trade and other payables
Trade payables Other payables	Consolidated
	2012 $ 477,885 47,350 525,235	2011 $
		367,850 34,234
		402,084

Trade payables and other payables are non interest-bearing and are normally settled on 30 day terms.

Information about the Consolidated Entity’s exposure to foreign exchange risk in relation to trade and other payables is provided in note 28.

16. Provisions

Provisions
Current Provision for annual leave Provision for termination benefits Non-current – Restoration Costs Provision for restoration costs	Consolidated
	2012 $ 55,099 - 55,099 1,356,354	2011 $
		19,361 287,848
		307,209
		1,126,344

The Consolidated Entity’s policy with regard to providing for its share of future restoration costs for jointly controlled assets is documented in note 1(n). Movements in this provision during the current and prior year are as follows:

Non-current Opening balance Additions Foreign exchange movement Closing balance	1,126,344 181,681 48,329 1,356,354	1,393,318 - (266,974)
		1,126,344

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Notes to the financial statements for the year ended 30 June 2012

17. Contributed equity

Fully paid ordinary shares	2012 No. 277,250,637	2011 No. 188,988,472	2012 $ 64,972,576	2011 $
				60,644,366

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting or by proxy, is entitled to one vote. Upon a poll every holder is entitled to one vote per share held.

Movements in share capital during the current and prior financial year are as follows:

Balance at 1 July 2010 Balance 30 June 2011 Shares placement issued at 4 cents per share on 11 October 2011 Shares placement issued at 6.25 cents per share on 19 March 2012 Shares issued at 5 cents on 30 March 2012 Shares issued as at 6.25 cents on 11 April 2012 Share issue costs Balance at 30 June 2012	Number of shares 188,988,472 188,988,472 28,300,000 6,400,000 34,146,116 19,416,049 - 277,250,637	$
		60,644,366
		60,644,366
		1,132,000 400,000 1,707,306 1,213,503 (124,599)
		64,972,576

The Consolidated Entity’s objectives when managing capital are to safeguard its ability to continue as a going concern so that it can provide returns for shareholders and benefits for other stakeholders, and maintain a capital structure appropriate to the size, stage and nature of its activities whilst reducing the cost of capital where possible.

In order to maintain or adjust the capital structure, the Company may issue new shares, adjust future dividend payments, return capital to shareholders or sell assets.

The Company and its subsidiaries are not subject to any externally imposed capital requirements.

18. Reserves and accumulated losses

Reserves and accumulated losses
Option premium reserve Opening balance Closing balance Foreign currency translation reserve Opening balance Currency translation differences arising during the year Closing balance	Consolidated
	2012 $ 1,773,184 1,773,184 (945,230) 27,699 (917,531)	2011 $
		1,773,184
		1,773,184
		(54,638) (890,592)
		(945,230)

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Notes to the financial statements for the year ended 30 June 2012

18. Reserves and accumulated losses (continued)

Share-based payment reserve Opening balance Lapse of options Closing balance Total reserves Accumulated losses Opening balance Net loss for the year Lapse of options Closing balance	Consolidated	Consolidated
	2012 $ 871,300 (630,900) 240,400 1,096,053 (58,022,632) (2,650,931) 630,900 (60,042,663)	2011 $
		871,300 -
		871,300
		1,699,254
		(54,659,191) (3,363,441) -
		(58,022,632)

The option premium reserve is used to record any premium received upon grant of options.

The share-based payment reserve is used to record the deferred expense in relation to share based payments. During the year 4,000,000 (3,250,000 ESOP Trance 2 & 750,000 ESOP Tranche 3 options) employee options issued as part of share based payments expired or were forfeited resulting in a de-recognition of $630,900.

The foreign currency translation reserve is used to record exchange differences arising on consolidation of subsidiaries with different functional currencies from the Company.

With respect to the payment of dividends (if any) by the Company in subsequent financial years, no franking credits are currently available, or are likely to become available in the next 12 months. No dividends were paid or declared during the current financial year.

19. Options

As at reporting date, the Company and Consolidated Entity have the following classes of options on issue:

Type ESOP Tranche 2 (EXRAI) ESOP Tranche 3 (EXRAI)	2012 Number - 2,000,000 2,000,000	2011 Number 3,250,000 2,750,000 6,000,000	Exercise Price $ 0.300 0.350	Expiry
				31-Mar-12 31-Mar-13

These options are unlisted and carry no dividend or voting rights. Upon exercise, each option is convertible into one ordinary share to rank pari passu in all respects with the Company’s existing fully paid ordinary shares.

During the year ended 30 June 2012 4,000,000 options expired without being exercised (2011: 1,750,000 options).

Movements in the number of options on issue during the year are as follows:

Notes to the financial statements for the year ended 30 June 2012

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19. Options (continued)

Opening balance Expired during the year ESOP Tranche 1 (EXRAI) ESOP Tranche 2 (EXRAI) Forfeited during the year ESOP Tranche 3 (EXRAI) Closing balance	Number 2012 6,000,000 - (3,250,000) (750,000) 2,000,000	Number 2011
		7,750,000 (1,750,000) - -
		6,000,000

20. Share-based payments

During the year ended 30 June 2012 3,250,000 ESOP Tranche 2 and 750,000 ESOP Tranche 3 options expired without being exercised (2011: 1,750,000 ESOP Tranche 1 options). No other options were granted or forfeited during the current financial year (2011: Nil).

Employee Share Option Plan

The granting of up to 15,000,000 options under the Elixir Employee Share Option Plan (“Plan”) was approved by shareholders at a general meeting held on 26 June 2008. Under the terms of the Plan the Board may offer options to eligible persons (as determined by the Board) at such times and on such terms as the Board considers appropriate.

The fair value of options granted was calculated using the binomial option pricing model. An expense is recognised on a pro rata basis over the period from grant date to vesting date.

21. Parent entity information

The following details information related to the parent entity, Elixir Petroleum Limited, at 30 June 2012. The information presented here has been prepared using accounting policies consistent with those presented in Note 1.

Current assets Non-current assets Total assets Current liabilities Total liabilities Contributed equity Share-based payment reserve Option premium reserve Accumulated losses Total equity	Company	Company
	2012 $ 2,875,521 3,602,363 6,477,884 304,989 304,989 64,972,576 240,400 1,773,184 (60,960,193) 6,025,966	2011 $
		940,705 3,683,582
		4,624,287
		364,894
		364,894
		60,644,366 871,300 1,773,184 (59,029,457)
		4,259,393

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Notes to the financial statements for the year ended 30 June 2012

21. Parent entity information (continued)

Parent entity information (continued)
Loss for the year Other comprehensive income for the year Total comprehensive loss for the year	Company
	2012 $ (2,561,636) - (2,561,636)	2011 $
		(4,315,630) -
		(4,315,630)

At reporting date amounts receivable from controlled entities at cost totalled $15,374,940 (2011: $13,695,211). The amounts receivable were fully impaired at 30 June 2012 and 30 June 2011. The transactions were made interest free with no fixed terms for repayment.

At reporting date the parent entity has no commitments or contingencies. Information about a deed of cross guarantee to which the parent entity and Elixir Petroleum (Australia) Pty Ltd are parties is provided in note 26.

(a) Wholly-owned Group

Details of interests in wholly-owned controlled entities are set out at part (b) of this note. Details of dealings with controlled entities are as follows:

Inter-company Account

Elixir Petroleum Limited provides working capital to its controlled entities. Transactions between Elixir Petroleum Limited and other controlled entities in the Consolidated Entity during the year ended 30 June 2012 consisted of:

(i) Working capital advanced by Elixir Petroleum Limited.

(ii) Provision of services by Elixir Petroleum Limited.

(iii) Expenses paid by Elixir Petroleum Limited on behalf of its controlled entities.

The above transactions were made interest free with no fixed terms for the repayment of amounts advanced by Elixir Petroleum Limited.

Details of transactions with controlled entities during the year are as follows:

Sale of goods and services Management fees & recharges to subsidiaries Loans to subsidiaries Balance at 1 July Additions Loans written off Balance at 30 June	Consolidated	Consolidated
	2012 $ 20,810 13,695,211 1,679,729 - 15,374,940	2011 $
		266,003
		13,975,789 - (280,578)
		13,695,211

Notes to the financial statements for the year ended 30 June 2012

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21. Parent entity information (continued)

(b) Investments in controlled entities

(b) Investments in controlled entities
Name of Entity Country of incorporation Class of shares	Equity holding
Elixir Petroleum (Australia) Pty Ltd Australia Ordinary Elixir Petroleum (Europe) Ltd United Kingdom Ordinary Elixir Petroleum (Technical Services) Ltd United Kingdom Ordinary Elixir Petroleum (France) Ltd United Kingdom Ordinary Elixir Petroleum (Moselle) Ltd United Kingdom Ordinary Elixir Petroleum (Meuse) Ltd United Kingdom Ordinary Elixir Petroleum (Thionville) Ltd United Kingdom Ordinary Cottesloe Oil & Gas LLC USA Ordinary Cottesloe Oil & Gas Inc USA Ordinary	2012 2011 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

(b) Investments in controlled entities

Name of Entity
Country of
incorporation
Class of
shares

Equity holding

Elixir Petroleum (Australia) Pty Ltd
Australia
Ordinary
Elixir Petroleum (Europe) Ltd
United Kingdom
Ordinary
Elixir Petroleum (Technical Services) Ltd
United Kingdom
Ordinary
Elixir Petroleum (France) Ltd
United Kingdom
Ordinary
Elixir Petroleum (Moselle) Ltd
United Kingdom
Ordinary
Elixir Petroleum (Meuse) Ltd
United Kingdom
Ordinary
Elixir Petroleum (Thionville) Ltd
United Kingdom
Ordinary
Cottesloe Oil & Gas LLC
USA
Ordinary
Cottesloe Oil & Gas Inc
USA
Ordinary

2012
2011
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

(c) Ultimate Parent Company

Elixir Petroleum Limited, an ASX listed public company incorporated and domiciled in Australia, is the ultimate parent of the Group.

22. Reconciliation of loss after income tax to net cash outflow from operating activities

Operating loss from continuing operations after tax Non-cash items Impairment write down of oil and gas properties Depreciation, depletion & amortisation Exploration & evaluation costs written down Net exchange rate differences Non-operating cashflows Interest income Movement in assets and liabilities Increase / (decrease) in current liabilities (Increase) / decrease in current assets Increase / (decrease) in provisions Net cash (outflow) / inflow from operating activities	Consolidated	Consolidated
	2012 $ (2,650,931) 1,588,465 104,023 5,723 25,386 (8,832) 94,495 (161,720) (252,110) (1,255,501)	2011 $
		(3,363,441) 644,168 482,886 506,520 (28,771) (43,506) (86,370) 900,887 (267,776)
		(1,255,403)

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Notes to the financial statements for the year ended 30 June 2012

23. Jointly controlled assets

At the reporting date, the Consolidated Entity has working interests in joint operating agreements for the following projects:

Project Blocks Activity Location	Working Interest
High Island Project 268A Oil & Gas field, production project USA Pompano Project 446-L SE/4 Oil & Gas field, production project USA Red Fish Prospect(1) 479-L N/2 & NE/4 Oil & Gas, exploration project USA MulleProspect(2) 211/22b,211/27d Oil& Gas, appraisalproject UK	2012 2011
	30% 30% 25% 25% - 25% - 40%

(1) Red Fish Prospect – Working interest was relinquished July 2011.

(2) Mulle Prospect - Working interest was relinquished September 2011.

Details of capital commitments in respect of these jointly controlled assets are disclosed in note 30.

The table below sets out other projects that the Consolidated Entity has a 100% working interest in.

Project	Blocks	Activity	Location	Working	Interest
Tiger Prospect	211/12b	Oil & Gas, exploration project	UK	100%	100%
Moselle Permit	Moselle	Oil & Gas, exploration project	France	100%	100%
North Sea(1)	12/18, 12/19a	Oil & Gas, exploration project	UK	100%	-
DumasProject	30/25a	Oil& Gas, explorationproject	UK	100%	-

(1) North Sea – The acquisition of this license was completed in January 2012.

24. Key management personnel disclosures

(a) The directors of Elixir Petroleum Limited during the year were:

Mr. Jonathan Stewart Non-Executive Chairman (resigned 29 November 2011) Mr. Alan Watson Non-Executive Chairman (appointed 5 November 2011) Mr. Andrew Ross Managing Director Mr. Iain Knott[(1)] Executive Director (resigned 22 July 2011) Dr. John Robertson Non-Executive Director Mr. Michael Price Non-Executive Director

(1) Mr. Knott was retained as an employee and considered to be a key management personnel.

(b) Other key management personnel and executives

Mr. John Anderson Senior Geoscientist

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Notes to the financial statements for the year ended 30 June 2012

24. Key management personnel disclosures (continued)

(c) Key management personnel compensation

Short term employee benefits Post-employment benefits Share-based payments	Consolidated	Consolidated
	2012 $ 923,615 48,039 - 971,654	2011 $
		763,339 30,235 -
		793,574

(d) Equity instrument disclosures relating to Key Management Personnel Option holdings

The number of options over ordinary shares in the Company held during the financial year by each director of Elixir Petroleum Limited and other key management personnel of the Consolidated Entity, including their personally related parties, are set out below.

	Balance at		Exercised		Balance
	start of the	Granted as	during the	Net other	at end of	Vested and
	year	compensation	year	change	year	exercisable	Unvested
2012
Directors of Elixir	Petroleum Limited
Jonathan Stewart(1)	1,750,000	-	-	(1,750,000)	-	-	-
Alan Watson(2)	-	-	-	-	-	-	-
Andrew Ross	2,500,000	-	-	(1,250,000)	1,250,000	1,250,000	-
Iain Knott(3)	1,750,000	-	-	(1,000,000)	750,000	750,000	-
John Robertson	-	-	-	-	-	-	-
Michael Price	-	-	-	-	-	-	-
Other key management personnel		and executives
John Anderson	-	-	-	-	-	-	-

	Balance at		Exercised		Balance
	start of the	Granted as	during the	Net other	at end of	Vested and
	year	compensation	year	change	year	exercisable	Unvested
2011
Directors of Elixir	Petroleum Limited
Jonathan Stewart	2,500,000	-	-	(750,000)	1,750,000	1,750,000	-
Andrew Ross	2,500,000	-	-	-	2,500,000	2,500,000	-
Iain Knott	2,500,000	-	-	(750,000)	1,750,000	1,750,000	-
John Robertson	250,000	-	-	(250,000)	-	-	-
Michael Price	-	-	-	-	-	-	-
Other key management personnel		and executives
John Anderson	-	-	-	-	-	-	-

(1) Mr. Stewart resigned as non-executive director on 22 July 2011.
(2) Mr. Watson was appointed as non-executive director on 5 October 2011.
(3) Mr. Knott resigned as executive director on 22 July 2011.

Notes to the financial statements for the year ended 30 June 2012

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24. Key management personnel disclosures (continued)

Details of options provided as remuneration and shares issued on exercise of such options, together with the terms and conditions of the options, can be found in the section of the Directors’ Report titled “Remuneration Report”.

Share holdings

The numbers of shares in the Company held during the financial year by each director of Elixir Petroleum Limited and other Key Management Personnel of the Consolidated Entity, including their personally related parties, are set out below. No shares were granted as compensation during the current reporting period.

				Balance at the
				end of the
	Balance start			year/held on
	of the year	Acquired	Net other change	resignation
2012
Directors of Elixir Petroleum Limited
Jonathan Stewart(1)	1,281,250	-	-	1,281,250
Alan Watson(2)	-	-	-	-
Andrew Ross	390,000	65,001	-	455,001
Iain Knott	-	-	-	-
John Robertson	425,000	-	-	425,000
Michael Price	400,000	66,668	-	466,668
Other key management personnel and	executives
John Anderson	-	-	-	-

2011
Directors of Elixir Petroleum Limited
Jonathan Stewart(1)	281,250	1,000,000	-	1,281,250
Andrew Ross	35,000	355,000	-	390,000
Iain Knott	-	-	-	-
John Robertson	425,000	-	-	425,000
Michael Price(3)	-	-	400,000	400,000
Other key management personnel and	executives
John Anderson(4)	-	-	-	-

(1) The holding above excludes the 24,000,000 shares held by Aurora Oil & Gas Ltd (ASX:AUT). Mr. Stewart is Chairman of Aurora Oil & Gas Ltd which is not a related party under the Corporations Act.

(2) Mr. Watson was appointed as non-executive director on 5 October 2011.

(3) Mr. Price was appointed as a non-executive director on 13 January 2011.

(4) Mr. Anderson was appointed an executive on 17 January 2011.

Please refer to Remuneration Report on page 9 for additional information.

Notes to the financial statements for the year ended 30 June 2012

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25. Related party transactions

Transactions with controlled entities are disclosed in note 21(a). Compensation and equity transactions with Key Management Personnel are disclosed in note 24 and in the section of the Directors’ Report titled “Remuneration Report”.

Details of other transactions with related parties during the current and prior financial year are set out below:

Note Payments for services (i)(ii)	Consolidated	Consolidated
	2012 $ 78,191	2011 $
		100,136

(i) During the year an amount of $18,191 (2011: $100,136) was expensed on commercial terms for office accommodation (rental and outgoings), car parking and office equipment to Epicure Administration Pty Ltd, a company of which Mr. Jonathan Stewart, Chairman, is also a director and beneficial shareholder. The outstanding balance payable at year end was nil (2011: $18,281).
(ii) During the year an amount of $60,000 (2011: nil) was expensed on commercial terms for office accommodation (rental and outgoings), car parking and office equipment to Aurora Oil & Gas Limited, a company of which Mr. Jonathan Stewart, Chairman, and Mr. Alan Watson are directors. The outstanding balance payable at year end was $60,000 (2011: nil).

26. Deed of cross guarantee

Elixir Petroleum Limited and Elixir Petroleum (Australia) Pty Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the other. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission.

Consolidated statement of comprehensive income and a summary of movements in consolidated retained earnings

The above companies represent a “Closed Group” for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are controlled by Elixir Petroleum Limited, they also represent the “Extended Closed Group”.

Set out below is a consolidated statement of comprehensive income and a summary of movements in consolidated retained earnings for the year ended 30 June 2012 of the Closed Group consisting of Elixir Petroleum Limited and Elixir Petroleum (Australia) Pty Ltd.

(a) Statement of comprehensive income for the year ended 30 June 2012

Finance income Other income General and administrative costs Share based payment expenses Other costs Exploration & evaluation costs written off Loss before income tax Income tax expense Net loss attributable to members of Closed Group	Closed Group	Closed Group
	2012 $ 8,832 743,336 (700,522) - (1,774,041) (61,640) (1,784,035) - (1,784,035)	2011 $
		43,506 266,003 (1,094,256) - (2,434,706) (30,650)
		(3,250,103) -
		(3,250,103)

Notes to the financial statements for the year ended 30 June 2012

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26. Deed of cross guarantee (continued)

Deed of cross guarantee (continued)
Movement in accumulated losses for the year end 30 June Closed Group accumulated losses at 1 July Net loss of Closed Group for the year to 30 June Closed Group accumulated losses as at 30 June (b) Statement of financial position as at 30 June 2012 Assets Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Receivables Investment in subsidiaries Other plant and equipment Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Provisions Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Total parent entity interest in equity	Closed Group
	2012 2011 $ $ (33,669,988) (30,419,885) (1,784,035) (3,250,103) (35,454,022) (33,669,988) Closed Group	2011 $
		(30,419,885) (3,250,103)
		(33,669,988)
	2012 $ 2,859,724 25,913 2,885,637 6,167,517 22,774,797 19,292 28,961,606 31,847,243 306,613 8,492 315,105 31,532,138 64,972,575 2,013,585 (35,454,022) 31,532,138	2011 $
		922,234 -
		922,234
		6,266,926 22,774,797 1,328
		29,043,051
		29,965,285
		50,171 296,253
		346,424
		29,618,861
		60,644,365 2,644,484 (33,669,988)
		29,618,861

Notes to the financial statements for the year ended 30 June 2012

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27. Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditors of the Consolidated Entity, its related practices and non-related audit firms:

(a) BDO Audit (WA) Pty Ltd for: (i) Audit and assurance services Audit and review of financial statements Total remuneration of BDO Audit (WA) Pty Ltd (b) MacIntyre Hudson LLP for: (i) Audit and assurance services Audit of UK subsidiary accounts Total remuneration for audit services	Consolidated	Consolidated
	2012 $ 53,449 53,449 38,578 92,027	2011 $
		48,000
		48,000
		34,894
		82,894

28. Financial risk management

The Consolidated Entity’s board of directors (“Board”) performs the duties of a risk management committee in identifying and evaluating sources of financial and other risks. The Board seeks to balance the potential adverse effects of financial risks on the Consolidated Entity’s financial performance and position with the “upside” potential made possible by exposure to these risks. The Board manages the risks facing the Consolidated Entity by regularly monitoring the various risks affecting the business and regularly reviewing the entities operating activities, financial performance and position both prospectively and retrospectively.

These risks include financial risks such as market risks (including currency risk, fair value interest rate risk and commodity price risk), credit risk & liquidity risk. These disclosures are not, nor are they intended to be an exhaustive list of risks to which the Consolidated Entity is exposed.

(a) Market risk

(i) Commodity price risk

As a result of its operations, the Consolidated Entity is exposed to commodity price risk arising due to fluctuations in the prices of natural gas and crude oil. The demand for, and prices of, natural gas and crude oil are dependent on a variety of factors, including:

Supply and demand;
The level of consumer product demand;
Weather conditions;
The price and availability of alternative fuels;
Actions taken by governments and international cartels; and
Global economic and political developments.

During the year the Board decided that it would not be beneficial for the Consolidated Entity to purchase forward contracts or other derivative financial instruments to hedge its commodity price risk. Factors which the Board considered in arriving at this position included the expense of purchasing such instruments, the low spot price of gas and the inherent difficulties associated with forecasting future production levels. The Board regularly monitors oil and gas prices and market factors that affect these prices. In future periods the Board may decide to enter into hedges to manage the Consolidated Entity’s exposure to commodity price risk if it is beneficial to do so.

Notes to the financial statements for the year ended 30 June 2012

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28. Financial risk management (continued)

(ii) Foreign exchange risk

The Consolidated Entity’s management is based in Australia, its shares are listed on the Australian Securities Exchange and the Consolidated Entity reports its financial performance and position in Australian dollars ($A). The Consolidated Entity maintains a UK office and, as its activities include operations in the USA and France, it also has United States dollar ($US) and Euro denominated cash flows. As a result of these factors, the Consolidated Entity is exposed to foreign exchange risk arising from fluctuations in the $A / $US, $A / £GBP and $A / Euro exchange rates.

During the year the Board decided that it would not be beneficial for the Consolidated Entity to purchase forward contracts or other derivative financial instruments to hedge its foreign exchange risk. Factors which the board considered in arriving at this position included, the expense of purchasing such instruments, the inherent difficulties associated with forecasting the timing and quantum of $US cash inflows and $US, £GBP and Euro outflows, the natural hedge provided by $US denominated production and the Consolidated Entity’s foreign exchange holdings. The Board regularly monitors the Consolidated Entity’s foreign exchange requirements and its foreign exchange risk. The Board may in future periods enter into transactions to hedge its foreign exchange risk if it is beneficial to do so.

The Consolidated Entity’s exposure to foreign currency risk at the reporting date was as follows:

	2012			2011
US$ 406,915 227,937 586,500 (121,374) 1,099,978	£ 141,125 83,970 - (71,218) 153,877	Euro 6,147 - - - 6,147	US$ 1,104,227 675,674 586,500 (146,226) 2,220,175	£ 124,327 97,278 - (141,635) 79,970	Euro
					7,637 - - -
					7,637

Group sensitivity

Based on the financial instruments held at the reporting date, with all other variables assumed to be held constant, the table below sets out the notional effect on the consolidated loss after tax for the year and equity at the reporting date under varying hypothetical fluctuations in prevailing exchange rates:

under varying hypothetical fluctuations in prevailing exchange rates:
Hypothetical 20%(1) strengthening of AU$ relative to US$ and £ Increase / (decrease) in loss after tax Increase / (decrease) in equity Hypothetical 20%(1) weakening of AU$ relative to US$ and £ Increase / (decrease) in loss after tax Increase / (decrease) in equity	Consolidated
	2012 $ 399,184 (399,184) (265,321) 265,321	2011 $
		369,324 (369,324) (553,985) 553,985

(1) Management has determined that the above hypothetical outcomes are the most appropriate estimation of foreign exchange movements given the current market and economic conditions (2011: 20%).

(iii) Interest rate risk

As at, and during the year ended on the reporting date, the Consolidated Entity had no significant interest-bearing assets or liabilities other than liquid funds on deposit. As such, the Consolidated Entity’s income and operating cash flows (other than interest income from funds on deposit) are substantially independent of changes in market interest rates. The Consolidated Entity’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and liabilities is set out below.

Notes to the financial statements for the year ended 30 June 2012

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28. Financial risk management (continued)

Financial Assets Cash assets Floating rate*	Consolidated	Consolidated
	2012 $ 3,486,500	2011 $ 1,320,069

Weighted average effective interest rate 0.144% (2011: 0.27%).

Group sensitivity

Based on the financial instruments held at reporting date, with all other variables assumed to be held constant, the table below sets out the notional effect on consolidated loss after tax for the year and equity at reporting date under varying hypothetical changes in prevailing interest rates:

Hypothetical 90(1) basis point increase Increase / (decrease) in loss after tax Increase / (decrease) in equity Hypothetical 90(1) basis point decrease Increase / (decrease) in loss after tax Increase / (decrease) in equity	Consolidated	Consolidated
	2012 $ (31,379) 31,379 31,379 (31,379)	2011 $
		(11,881) 11,881 11,881 (11,881)

(1) A hypothetical change of 90 basis points was used to calculate the Group’s sensitivity to future interest rate movements as this figure approximates the movement in bond yields published by the Reserve Bank of Australia for bonds with a 12 month maturity (2011: 0.90%).

(b) Credit risk

The Consolidated Entity seeks to trade only with recognised, trustworthy third parties and it is the Consolidated Entity’s policy to perform credit verification procedures in relation to any customers wishing to trade on credit terms with the Consolidated Entity.

Notwithstanding the above, the Consolidated Entity is exposed to a level of credit risk arising from the fact that a large proportion of its receivables and non-current oil & gas assets relate to its interests in projects operated by private companies.

The Board are of the opinion that the credit risk arising as a result of this concentration of the Consolidated Entity’s assets is more than offset by the potential benefits to be gained through continuing to build on the Consolidated Entity’s relationship with the operators of its existing projects.

The maximum exposure to credit risk at the reporting date is the carrying amount of the assets as summarised below, none of which are impaired. The Group has a number of recourse options available in the event of counterparty default, including but not limited to de facto security over jointly held assets.

Notes to the financial statements for the year ended 30 June 2012

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28. Financial risk management (continued)

Financial risk management (continued)
Trade and other receivables Non-current receivables	Consolidated
	2012 $ 369,155 577,198	2011 $
		784,633 587,887

Credit risk also arises from cash and cash equivalents and deposits with financial institutions. For banks and financial institutions, only independently rated parties with minimum rating of ‘A’ are accepted.

Cash at bank and short-term bank deposits AA Rated A Rated	Consolidated	Consolidated
	2012 $ 2,859,262 627,238 3,486,500	2011 $
		1,115,078 204,991
		1,320,069

(c) Liquidity risk

Prudent liquidity management involves the maintenance of sufficient cash, marketable securities, committed credit facilities and access to capital markets. It is the policy of the Board to ensure that the Consolidated Entity is able to meet its financial obligations and maintain the flexibility to pursue attractive investment opportunities through keeping committed credit lines available where possible, and ensuring that the Consolidated Group has sufficient working capital and preserving the 15% share issue limit available to the Company under the ASX Listing Rules.

Maturities of financial liabilities

As at reporting date the Consolidated Entity had total financial liabilities of $525,235 (2011: $402,084), comprised of non interest-bearing trade creditors and accruals with a maturity of less than 6 months.

(d) Net fair value

The carrying amount of financial assets and liabilities recorded in the financial statements approximate their fair value as at 30 June 2012.

29. Events occurring after the reporting period

The following events occurred subsequent to the end of the year:

(a) On 9[th] July 2012, the Company appointed Keith Bowker as Company Secretary following the resignation of Julie Foster. On the same day, the Company also changed its principal place of business, registered office address and contact details.
(b) On the 14[th] August 2012, the Company appointed Mark O’Clery as an independent non-executive Director.

Notes to the financial statements for the year ended 30 June 2012

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30. Commitments and contingencies

The Consolidated Entity has no contingent assets or liabilities at reporting date and has no firm contractual commitments for expenditure not reflected in the financial statements other than:

commitments for expenditure not reflected in the financial statements other than:
Capital commitments Within one year More than one year but less than five years Total Non-cancellable operating lease commitments Within one year More than one year but less than five years Total Total commitments	Consolidated
	2012 $ - - - 135,635 174,989 310,624 310,624	2011 $
		94,365 -
		94,365
		57,013 52,483
		109,496
		203,861

During the year, Elixir Petroleum Limited has taken out an operating lease for offices in Australia, commencing 1 July 2012. At reporting date the remaining lease term was 3 years (2011: nil).

Elixir Petroleum (Technical Services) Ltd holds an operating lease for offices in the United Kingdom, the rental lease is held by Elixir Petroleum (Technical Services) Ltd. At the reporting date the remaining lease term was 1 year (2011: 2 years).

Notes to the financial statements for the year ended 30 June 2012

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Additional securities exchange information as at 19 September 2012

Distribution of Shareholders

Range	Total holders	Units	% of Issued Capital
1 - 1,000	29	6,129	0.00
1,001 - 5,000	50	157,909	0.06
5,001 - 10,000	55	474,126	0.17
10,001 - 100,000	586	24,551,781	8.86
100,001 - 9,999,999,999	281	252,060,692	90.91
Rounding			0.00
Total	1,001	277,250,637	100.00
The number of shareholdings	held in less than	marketable parcels is 147.

20 Largest Shareholders — Ordinary Shares as at 31 August 2012.

		Number of	% Held of
	Name	Ordinary Fully Paid Shares	Issued Ordinary
		Held	Capital
1	NEW STANDARD ENERGY LIMITED	38,079,066	13.73
2	AURORA OIL AND GAS LIMITED	28,000,000	10.10
3	JP MORGAN NOMINEES AUSTRALIA LIMITED	14,940,288	5.39
4	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	14,817,762	5.34
5	CITICORP NOMINEES PTY LIMITED	10,477,618	3.78
6	J P MORGAN NOMINEES AUSTRALIA LIMITED	7,120,076	2.57
7	ARGONAUT EQUITY PARTNERS PTY LIMITED	6,000,000	2.16
8	AURORA OIL AND GAS LIMITED	5,833,334	2.10
9	MR HENRY JOHN DEBURGH	5,000,001	1.80
10	HENRY JOHN DEBURGH	5,000,001	1.80
11	MR HENRY JOHN DEBURGH	5,000,001	1.80
12	NATIONAL NOMINEES LIMITED	4,842,340	1.75
13	CLELAND PROJECTS PTY LTD	4,172,500	1.50
14	BEACON EXPLORATION PTY LTD	3,000,000	1.08
15	SDMO AUSTRALIA PTY LTD	2,333,917	0.84
16	HAZARDOUS INVESTMENTS PTY LTD	2,013,755	0.73
17	MR P GRENVILLE SCHOCH	2,000,000	0.72
18	WALLOON SECURITIES PTY LTD	2,000,000	0.72
19	REEF INVESTMENTS PTY LTD	1,750,000	0.63
20	SANDHURST TRUSTEES LTD	1,650,000	0.60
Total	top 20 holders of ordinary fully paid shares	164,030,659	59.16
Remaining Holders Balance		113,219,978	40.84
TOTAL SHARES		277,250,637	100.00

Notes to the financial statements for the year ended 30 June 2012

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Company Secretary

Mr Keith Bowker

Registered Office

Level 1, 89 St Georges Terrace PERTH WA 6000 Tel: (61 8) 9226 2111 Fax: (61 8) 9226 2099

Principal administration office

Level 1, 89 St Georges Terrace PERTH WA 6000 Tel: (61 8) 9226 2111 Fax: (61 8) 9226 2099

Share Registry

Computershare Investor Services Pty Ltd Level 2, 45 St Georges Terrace Perth WA 6000 Telephone (+61) 8 9323 2000

AI assistant

ELIXIR ENERGY LIMITED — Annual Report 2012

64893_rns_2012-09-30_fbe69da4-ac62-446b-81d9-3b728abbd43b.pdf

Annual Report

Directors

Company Secretary

Bankers

Auditors - Australia

Auditors - UK

Registered and Principal Administration Office

UK Operations Office

Stock Exchange Listing

Website and Email

Share Registry

Directors

Principal Activities

Summary Financial and Operating Review

Operating Results

Corporate and Financial

Summary Review of Operations

Significant changes in state of affairs

Directors

Mr. Alan Watson – Non- Executive Chairman (appointed Non-Executive Director on 5 October 2011) (appointed Non- Executive Chairman on 29 November 2011)

Qualifications: B.Sc (Hons.)

Mr Andrew Ross – Managing Director

Directors’ Report

Mr Michael Price – Non-Executive Director

Dr John Robertson – Non-Executive Director

Mr Mark O’Clery – Non-Executive Director (appointed 14 August 2012)

Directors’ Report

Company Secretaries

Mr Keith Bowker (appointed 9 July 2012)

Ms Julie Foster (resigned 9 July 2012)

Meetings of Directors

Share options

Remuneration Report (Audited)

Details of key management personnel

(i) Directors

(ii) Key Management Personnel

Remuneration committee

Remuneration philosophy

Remuneration structure

Non-executive directors

Retirement benefits and allowances

Key Management Personnel

Base pay

Short term incentives

Performance related cash bonus

Long term Incentive - Share-based compensation

Group performance

Service agreements

Directors’ Report

Remuneration of key management personnel and the five highest paid executives of the Company and Consolidated Entity

Directors’ Report

Compensation options: granted and vested during the year

Options granted as part of remuneration

Adoption of remuneration report by shareholders

Dividends

Matters subsequent to the end of the financial year

Likely developments

Environmental regulation

Loans to Directors

Indemnification and insurance of Officers and Auditors

Proceedings on behalf of the company

Non-audit services

Auditor’s Independence Declaration

Andrew Ross

 

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Directors’ Declaration

In the Directors’ opinion:

ELIXIR ENERGY LIMITED Annual Report 2012