Santos Limited Annual Report - Example

Name: Professor`s name: Course number: Date: Santos limited Annual Report for the 2013 Financial Year Santos limited is an Australian company dealing in petroleum and gas exploration founded on 18th March, 1954. Santos is the acronym for the South Australia Northern Territory Oil Search. It comprises of four business segments which are Western Australia and Northern Territory, Asia Pacific, Gladstone LNG (GLNG), Eastern Australia. It also deals in the production, treatment and also the marketing of fossil fuel products such as natural gas, naphtha, condensate and liquefied petroleum gas. Other key area of specialization of this company is the transportation of crude oil from oil reserves on the continent. 1.0 Management Information 1.1 Key Management personnel The top management of this company comprises of executives of high caliber. Kenneth Charles Borda is the chairman of the company while David John Wissler Knox acts both as a managing director and Chief Executive Officer in the company. Peter Roland Coate and Kenneth Alfred Dean are independent non-executive Directors of Santos limited. Roy Alexander Franklin is the Chairman of the Environment, Health, Safety and Sustainability Committee and member of the People and Remuneration Committee of the Board in the company. Gregory John Walton Martin is the Chairman of the People & Remuneration and the Finance Committees of the Board and a member of the Audit Committee of the Board. Jane Sharman Hemstitch, Hock Goh, Scott Sheffield are also independent non-executive Directors of Santos limited. Chief finance officer of Santos limited Andrew Seaton. Vice President of LNG Markets and Eastern Australia Commercial unit is Peter Cleary. Petrina Coventry is the Chief Human Resources Officer, James Baulderstone heads Eastern Australia branch as Vice President, and Trevor Brown is the Vice President Queensland branch. Rod Duke, the Vice President of Downstream Santos GLNG, Diana Hoff is the Vice President Technical and Engineering, John Anderson is the Vice President of Asia & Western Australia and Northern Territory. 1.2 Remuneration of key management personnel The salaries of the top management personnel have been tabulated into details as shown in the below table. Table 1: Remuneration overview of Santos Limited Top management. Name Base salary $ STI $ Other $ Superannuation Contributions $ SAR s $ share-based payments $ long-term benefits $ Totals $ DJW Knox 2,334,127 1,410,750 17,123 2,422,402 2,422,402 79,266 6,263,668 JH Anderson 663,607 200,500 17,123 346,074 346,074 32,220 1,259,524 JL Baulderstone 727,845 225,100 17,123 382,722 382,722 28,919 1,381,709 TJ Brown 678,178 262,700 136,411 17,123 338,234 338,234 45,390 1,478,036 PJ Cleary 612,863 173,811 16,024 358,618 358,618 8,924 1,170,240 MEJ Eames 640,263 171,281 160,094 16,024 337,495 337,495 18,063 1,343,220 AJ Seaton 720,975 231,300 17,123 363,110 363,110 23,384 1,355,892 2.0 Shareholder information 2.1 Top 20 Shareholders of Santos limited The top 20 shareholders of the company are named as follows starting with the largest shareholders as HSBC Custody Nominees (Australia) Limited, JP Morgan Nominees Australia Limited, National Nominees Limited, Citicorp Nominees Pty Limited, JP Morgan Nominees Australia Limited, BNP Paribas Noms Pty Ltd, Citicorp Nominees Pty Limited, HSBC Custody Nominees (Australia) Limited, Australian Foundation Investment Company Limited, AMP Life Limited, Warbont Nominees Pty Ltd, Ecapital Nominees Pty Limited, BNP Paribas Nominees Pty Ltd, Argo Investments Limited, CS Fourth Nominees Pty Ltd, UBS Nominees Pty Ltd, QIC Limited, RTS Nominees Pty Limited, Mr John Charles Ellice-Flint and RBC Investor Services Australia Nominees Pty Limited as number twenty on the list. The largest shareholder holds 86,681,647 shares while number twenty in the list has accumulated a total of 2,612,851 shares. The top 20 shareholders own a total of 622,405,934 shares which is equivalent to 64.15%. 2.2 Share price graph of Santos limited in 2013 The Santos limited shares traded fairly well all round the year. The least traded price per share was $11 at start of the year while highest traded price per share was approximately $15.80. The below graph shows performance of the Santos limited shares against all Ordinaries for the year 2013. Figure: Share price graph against All Ordinaries Index for 2013. 3.0 Accounting information 3.1 Accounting policies The Group applied certain accounting standards and amendments that required the restatement of previously reported balances. These include AASB 10 Consolidated Financial Statements that focuses on a new definition of control that focuses on the need to have both power and rights or exposure to variable returns. A review determined that AASB 10 does not have an impact that is significant on the composition of investments that are currently consolidated into group`s results. Second is the AASB 11 Joint Arrangements removes the option to account for jointly controlled entities using proportionate consolidation. Therefore jointly controlled entities that meet the definition of joint venture under AASB 11 must be accounted for using the equity method of accounting. AASB 12 Disclosures of Interests in Other Entities. It sets out requirements for disclosures relating to an entity’s interests in arrangements in joint form, subsidiaries, associates of company and structured entities. Application of this by the Santos group does not affect any of the amounts that are recognized in the financial statements but does impact only on the type of information disclosed in relation to the group’s investments. Third is the AASB 119 that stands for Employee Benefits and amendments and has brought changes in the accounting for defined benefit plans and also the group`s annual obligation leave . These changes do not have an impact on Santos group financial performance or may be the position of the group in current period. AASB 101 Presentation of Financial Statements requires that all items presented in other comprehensive income that would be reclassified in terms of profit or loss at a future point, be presented separately from items that will never be reclassified at any future time. This led to restating of financial statements. 3.2 Property Plant & Equipment Disclosures Property, plant and equipment are items that held for use in production and supply of goods or even services , for renting to others or even administrative purposes within the company. They are usually expected to be used for more than one time. In the category of Property Plant & Equipment (PPE) Disclosures, the company used the revaluation method to find the current value of the property plant and equipment of the Santos limited company in the year 2013. The assets were estimated to be worth at least 11 million US dollars for the financial year 2013. 3.3 Tax Disclosures Tax Disclosures of the company include two categories which are the income tax paid to government and the taxation expense. Income tax expense was $296 million while the royalty-related taxation expense amounted to $57 million dollars. By adding up the income tax expense and the royalty-related taxation expense, Taxation expense was found to amount to 353 million US dollars whereas the income tax paid was amounting to 214 million US dollars for financial year 2013. 3.4 Lease Disclosures Lease disclosures comprises of two types which are the finance lease and the operating lease payments. Finance lease is defined as when the terms of the lease transfer considerably of all risks and rewards related to the ownership of the leased asset to the lessee. Operating lease payments usually recognized as an expense on a straight line basis over the stated agreed lease term. Operating lease commitments that Santos group had for the 2013 amounted to a total of $ 593 million. This total is a summation of the following constituents. Non-cancellable operating lease rentals that are payable in a period not later than one year amounted to $ 124 million, those payable in a period not later than five years but later than one year summed up to $ 318 million. Finally operating lease rentals payable in a period greater than five years amounted to a moderate value of $ 150 million. Adding up $124 million, $318 million, $ 150 million, you attain a value of $ 593 million. 3.5 Superannuation Disclosures Superannuation Disclosures includes the defined benefit obligation and the fair value of the plan assets. The company has a defined benefit plan. The Superannuation expense of the company stands at a discount rate of 2.9% per annum while the expected average salary increase rate over the life of the plan is 5% per annum. Defined benefit obligation Discount rate is 4.2% per annum while the expected average salary increase rate over the life of the plan is at 4% per annum. 4.0 Audit information 4.1 Audit firm The Ernst & Young audit firm audited the financial report of the Santos limited company in the financial year 2013. 4.2 Auditor`s opinion The auditor`s opinion informs us that the financial report of Santos Limited is in accordance with The Corporations Act 2001 and the financial report also totally complies with International Financial Reporting Standards. 4.3 Amount of money paid The amount of money that the Ernst & Young auditors were paid was 2.205 million US dollars in total. In Audit and review services category, Ernst & Young in Australia earned $1,435,000; while overseas branch called Ernst & Young firm networks earned a total of $205,000. In the category of other services, Ernst & Young (Australia) for other assurance, taxation and other services earned a total of $ 585,000. Overseas network firms of Ernst & Young (Australia) for taxation services earned a sum of $20,000. References. Twelve Creative 2014, Santos limited annual report 2013, Adelaide, South Australia, Viewed on 17 may 2014, Read More