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Half Year financial report for the period ended 31 December 2012
FIRESTONE ENERGY LIMITED
(Incorporated in Australia)
(Registration number ABN 058 436 794)
Share code on the JSE Limited: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
(SA company registration number 2008/023973/10)
("FSE" or "the Company")
ABN 71 058 436 794
Half-Year Financial Report 31 December 2012
FIRESTONE ENERGY LIMITED
CORPORATE DIRECTORY
DIRECTORS SOLICITORS TO THE COMPANY
Tim Tebeila Kelly & Co Lawyers
Non-Executive Director (Chairman) Level 21, Westpac House
91 King William Street
David Perkins ADELAIDE WA 5000
Non-Executive Director (Deputy Chairman)
Pius Kasolo SHARE REGISTRY
Non-Executive Director
Computershare Investor Services
Benjamin Mphahlele Level 2, Reserve Bank Building
Non-Executive Director 45 St Georges Terrace
PERTH WA, 6000
Kobus Terblanche Ph 08 9323 2000
Non-Executive Director Fax 08 9323 2033
Oren Zohar
Non-Executive Director AUDITORS
Jack Robert James BDO Audit (WA) Pty Ltd
Non-Executive Director 38 Station Street
SUBIACO WA 6008
COMPANY SECRETARY
STOCK EXCHANGE LISTING
Jerry Monzu
Securities of Firestone Energy Limited are dual
listed on the Australian Stock Exchange and the
REGISTERED OFFICE Johannesburg Stock Exchange.
Suite B9, 431 Roberts Road ASX & JSE CODE
SUBIACO, WA 6008
FSE
Telephone: (08) 9287 4600
Facsimile: (08) 9287 4655
1
FIRESTONE ENERGY LIMITED
Half-yearly financial statements for the period ended 31 December 2012
DIRECTORS’ REPORT
Your directors present their financial report on the group (referred to hereafter as “the Group”)
consisting of Firestone Energy Limited (“Firestone” or “the Company”) and the entities it controlled at the
end of, or during the period to the half-year ended 31 December 2012.
Directors
The names of the Directors of Firestone Energy Limited throughout the reporting period and at the date
of this report are as follows. Directors were in office for the entire period unless otherwise stated.
Timothy Tebeila
Non-Executive Chairman
David Perkins
Non-Executive Deputy Chairman
Pius Kasolo
Non-Executive Director
Benjamin Mphahlele
Non-Executive Director
Kobus Terblanche
Non-Executive Director
David Hillier (appointed 5 February 2013, resigned 1 March 2013)
Non-Executive Director
Oren Zohar (appointed 5 February 2013)
Non-Executive Director
Jack Robert James (appointed 5 February 2013)
Non-Executive Director
Results of Operations
The net loss from continuing operations for the six months to 31 December 2012 was $2,884,760 (half-
year ended 31 December 2011: $2,231,562).
Review of Operations
Operational overview for the six month period ending 31 Dec 2012
Shareholders approved a suite of transactions (“Investment Agreement”) with Ariona Company SA
(“Ariona”) which, if implemented, would significantly strengthen the Company’s financial position to
assist in the development of the Waterberg Coal Project with its joint venture partner, Sekoko
Resources (Pty) Ltd. As a result of the investment, Ariona would emerge as the Company’s major
shareholder.
During December 2012, the Company announced that it had revised the Investment Agreement entered
into with Ariona to allow for financial settlement to be concluded in two stages. As part of the settlement
terms, Ariona commenced providing funding to the Company in December and subsequently, in
January 2013, successfully completed stage one of the financial settlement agreement thereby
providing the Company with a total of A$5 million.
On 12 December 2012, Range River Gold Limited (“Range River”) a company listed on the ASX
announced that it had entered into a conditional heads of agreement to acquire 100% of the issued
share capital in Ariona. Furthermore, on 17 December 2012, Range River announced an off-market
takeover for all of the listed shares in Firestone Energy (“Firestone”) whereby shareholders in Firestone
will be offered one share in Range River for every two shares in Firestone. The Firestone board
unanimously advised shareholders not to take any action in relation to the offer until the board has had
time to consider the Range River offer.
Technical Update
The technical team have continued to work with SRK on completing the Bankable Feasibility Study
(“BFS’). Eskom have indicated that they are satisfied with the burn characteristics of the upper seams of
Smitspan which means that negotiations around the Coal Supply Agreement can start to proceed. The
Coal Supply Agreement is a key requirement to secure project finance. Geotechnical studies will
commence in early March this year, which is later than expected due to the fact that the Waterberg
project has not been able to gain access to one of the farms to carry out the work. As a result of this, the
Company currently estimates that the BFS could be at least 4 weeks later than scheduled.
Rail studies
During February 2013, Transnet Freight Rail (“TFR”) completed their Waterberg Rail Study, and
presented their findings to the technical team. TFR have acknowledged a proposal for a stand-alone rail
line and loading facilities through the Sekoko Coal properties. This option potentially gives greater
control of the logistics, however, it may potentially sterilize some of the coal resource. Further options
are being considered.
Drilling
Drilling is continuing to be carried out on an on-going basis, with 39 boreholes having been drilled on
Smitspan to date. The average depth to first coal is 50 metres, with the average hole depth of 147
metres and the Company will advise further once the laboratory results have been completed.
Significant Events After Balance Date
Refer to Note 9 in the attached financial statements.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations
Act is set out on page 16 and forms part of this report.
This report is made in accordance with a resolution of directors.
Dated at Perth this 8th day of March 2013.
Signed in accordance with a resolution of the Directors.
Timothy Tebeila
Chairman
FIRESTONE ENERGY LIMITED
Half-yearly financial statements for the period ended 31 December 2012
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the Half-Year Ended 31 December 2012
Note December December
2012 2011
$ $
Continuing operations
Interest revenue 766 27,854
Other income 11,773 12,917
Occupancy costs (13,800) (13,800)
Legal fees (266,763) (176,456)
Administration costs (562,299) (286,670)
Travel and accommodation (46,025) (65,793)
Directors’ fees (130,000) (130,004)
Employee & consultant costs (56,216) (6,530)
Listing and share registry costs (96,746) (118,916)
Share-based payments 7 (189,850) -
Finance costs 2 (1,535,600) (1,474,164)
Loss before income tax (2,884,760) (2,231,562)
Income tax expense - -
Loss from continuing operations (2,884,760) (2,231,562)
Loss for the half-year attributable to the members of
Firestone Energy Limited (2,884,760) (2,231,562)
Other comprehensive income for the half-year
Items that may be realised through profit or loss
Foreign currency translation reserve movements (3,125,467) (10,200,250)
Total comprehensive income for the half-year
attributable to the members of Firestone Energy Limited (6,010,227) (12,431,812)
Loss per share
Loss per share on loss from continuing operations attributable to
the ordinary equity holders of the company
Basic loss per share (cents per share) (0.09) (0.08)
For JSE requirements, the Headline Earnings per Share (“HEPS”) has been calculated to be the
equivalent of the basic loss per share as displayed above.
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2012
Note December June
2012 2012
$ $
Current assets
Cash and cash equivalents 164,683 169,475
Trade and other receivables 246,845 163,330
Other assets - 112,250
Total current assets 411,528 445,055
Non-current assets
Receivables 812,524 849,475
Property, plant and equipment 4,432,275 4,662,712
Interest in joint venture 6 75,612,712 76,735,130
Total non-current assets 80,857,511 82,247,317
Total assets 81,269,039 82,692,372
Current liabilities
Trade and other payables 3,539,266 2,019,312
Borrowings 3 26,269,190 20,629,267
Total current liabilities 29,808,456 22,648,579
Non-current liabilities
Borrowings 3 2,680,287 5,330,870
Total non-current liabilities 2,680,287 5,330,870
Total liabilities 32,488,743 27,979,449
Net assets 48,780,296 54,712,923
Equity
Issued capital 76,380,048 76,380,048
Reserves (10,669,730) (7,621,863)
Accumulated losses (16,930,022) (14,045,262)
Total Equity 48,780,296 54,712,923
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Half-Year Ended 31 December 2012
Issued Accumulated Share-based Foreign Total
capital losses payment currency
reserve translation
reserve
$ $ $ $ $
Balance at 1 July 2012 76,380,048 (14,045,262) 4,193,895 (11,815,758) 54,712,923
Comprehensive income for
the half-year
Loss for the half-year - (2,884,760) - - (2,884,760)
Foreign currency translation
- - - (3,125,467) (3,125,467)
reserve
Total comprehensive income
- (2,884,760) - (3,125,467) (6,010,227)
for the half-year
Transactions with owners in
their capacity as owners:
Share-based payments - - 77,600 - 77,600
Total transactions with owners - - 77,600 - 77,600
Balance at 31 December 76,380,048 (16,930,022) 4,271,495 (14,941,225) 48,780,296
2012
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the Half-Year Ended 31 December 2012
Issued Accumulated Share-based Foreign Total
capital losses payment currency
reserve translation
reserve
$ $ $ $ $
Balance at 1 July 2011 73,135,309 (9,514,666) 4,081,645 (202,184) 67,500,104
Comprehensive income for
the half-year
Loss for the half-year - (2,231,562) - - (2,231,562)
Foreign currency translation
- - - (10,200,250) (10,200,250)
reserve
Total comprehensive income
- (2,231,562) - (10,200,250) (12,431,812)
for the half-year
Transactions with owners in
their capacity as owners:
Issue of shares, net of
1,966,962 - - - 1,966,962
transaction costs
Conversion of convertible
300,000 - - - 300,000
notes
Total transactions with owners 2,266,962 - - - 2,266,962
Balance at 31 December 75,402,271 (11,746,228) 4,081,645 (10,402,434) 57,335,254
2011
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Half-Year Ended 31 December 2012
December December
2012 2011
$ $
Cash flows from operating activities
Payments to suppliers and employees (843,286) (509,961)
Interest paid (1,032) (256,629)
Interest received 766 27,854
Net cash used in operating activities (843,552) (738,736)
Cash flows from investing activities
Project expenditure – joint ventures (1,209,406) (1,038,795)
Payments to acquire fixed assets - (1,635)
Net cash used in investing activities (1,209,406) (1,040,430)
Cash flows from financing activities
Proceeds from issue of shares - 1,966,962
Proceeds of borrowings 2,064,982 -
Transaction cost (16,500) -
Repayment of borrowings - (1,196,034)
Net cash from financing activities 2,048,482 770,928
Net decrease in cash and cash
(4,476) (1,008,238)
equivalents
Cash and cash equivalents at 1 July 169,475 1,892,188
Effect of exchange rate differences on the
(316) (314)
balance of cash held in foreign currencies
Cash and cash equivalents at 31
164,683 883,636
December
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the Period Ended 31 December 2012
1 BASIS OF PREPARATION OF HALF-YEAR FINANCIAL REPORT
These general purpose financial statements for the half-year reporting period ended 31 December
2012 have been prepared in accordance with Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Act 2001.
These half-year financial statements do not include all the notes of the type normally included in
annual financial statements. Accordingly, these financial statements are to be read in conjunction with
the annual financial statements for the year ended 30 June 2012 and any public announcements
made by Firestone Energy Limited during the half-year reporting period in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
The accounting policies adopted are consistent with those of the previous financial year and
corresponding interim reporting period unless otherwise stated.
New accounting standards and interpretations
The Group adopted the following new and amended Australian Accounting Standards and AASB
Interpretations as of 1 July 2012:
AASB 101 Presentation of Financial Statements (amendment)
There have been no other new accounting standards, or amendments to standards, that would have
any impact on the Group.
Going concern
The financial report has 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.
The Group incurred a loss after tax for the half-year ended 31 December 2012 of $2,884,760 (2011
half-year: $2,231,562) and experienced net cash outflows from operating activities of $843,552 (2011
half-year: $738,736). There is a working capital deficit at 31 December 2012 of $29,396,928.
Subsequent to the end of the half-year, the first stage of completion of the Restated Investment
Agreement between the Company, Ariona Company SA (“Ariona”), BBY Nominees Pty Ltd (“BBY”)
and Jaguar Funds Management Limited occurred on 5 February 2013. The Company issued $27.145
million of new convertible notes to Ariona in consideration for:
$5 million in cash (less reimbursed costs) through the issue of new convertible notes; and
The redemption and replacement of the $21.3 million of existing convertible notes and
accrued interest on those notes of $845,000.
The holders of the existing convertible notes were issued with 241,145,620 fully paid ordinary shares
in satisfaction of the balance of the interest which had accrued on the notes. 300 million options, with
an expiry date of 31 January 2015 and an exercise price of $0.025, were also issued to the former
holders of the existing convertible notes.
194,674,462 fully paid ordinary shares were issued to extinguish the BBY finance facility.
Under the second stage of completion, Ariona will provide a further $12.5 million for new convertible
notes, which will be applied to working capital. Second Completion was scheduled to occur by 28
February 2013, however due to internal delays, this settlement is now due to occur on 28 March 2013.
1 BASIS OF PREPARATION OF HALF-YEAR FINANCIAL REPORT (continued)
Going concern (continued)
As at the date of this report, the Group has approximately $1.0 million in cash at bank, and has $2.2
million available to draw down in the BBY standby credit facility which is available to the Group until
June 2014. The Board is aware that it has payments for liabilities where the terms of payment have
been negotiated to ensure that they are not payable until such time as the second stage of completion
under the Ariona transaction has completed. These include trade creditors and the Sekoko loan
facility. These will need to be repaid following the successful completion of the facility agreement.
Further to this, the Company will also be required to raise additional funds through debt or equity
should the decision be made to progress the Waterberg project to development.
The Board notes that these conditions indicate the existence of a material uncertainty in relation to
going concern, and should the capital not be raised to repay these liabilities and progress the
development of the project, the Group may be unable to realised its assets and discharge its liabilities
in the ordinary course of business at the values stated in these financial statements.
Half-year Half-year
ended ended
December December
2012 2011
$ $
2. EXPENSES – FINANCE COSTS
Interest expense 1,278,091 1,145,634
Amortisation of transaction costs 257,509 328,530
Total finance costs 1,535,600 1,474,164
3. BORROWINGS
December June
2012 2012
$ $
Current
Unsecured loans carried at amortised cost
Loan – Sekoko 1 5,374,208 4,690,858
Loan – BBY 2 1,457,006 260,000
Loan – Ariona 3 867,976 -
Loans carried at amortised cost
Convertible note (carrying value) 4 18,570,000 15,678,409
26,269,190 20,629,267
Non-current
Loans carried at amortised cost
Convertible note (face value) 4 25,000,000 25,000,000
Conversions since inception (3,700,000) (3,700,000)
Transaction costs (convertible notes) (49,713) (290,721)
Amount reported as current (18,570,000) (15,678,409)
2,680,287 5,330,870
1. Interest is charged at the South African prime rate (9%).
2. These funds were advanced under a short-term funding agreement with BBY Nominees Pty Ltd and will be
repaid in shares, which will be issued at the lower of the 5 day volume weighted average price leading up
to but not including the date of drawdown, or 90% of the closing bid price on the day prior to the drawdown
date of the Company’s ordinary shares quoted on the ASX. No value for this embedded derivative has
been brought to account at 31 December 2012 as it is not material as at that date. Shares will not be
issued pursuant to this facility if the issue would cause a note holder to hold more than 19.99% of the
Company’s shares. The Company is able to terminate the Agreement at no cost after six months, or at any
other time upon payment of a cancellation fee of $100,000. The Company must also meet various
performance conditions. The loan does not attract interest. Subsequent to 31 December 2012, the loan
was converted into shares. Refer to Note 9 for further details.
3. Working capital facility provided by Ariona Company SA on an interest-free basis. Subsequent to 31
December 2012, upon the first stage of completion of the Investment Agreement between the Company
and Ariona, the facility was rolled into new convertible notes. Refer to Note 9 for further details.
4. The total draw down facility is $25 million with a maturity date of 3 years from the date of issuing each
note. The notes can be converted at any time before the maturity date and bear interest at a fixed rate of
10% per annum. The effective interest rate on the liability will also be 10%. For convertible notes issued
prior to 13 July 2010 the conversion price is $0.04. All notes issued subsequent to that date ($8.2 million
notes, of which $3.7 million have been converted at 31 December 2012) have a conversion price set to the
higher of $0.02 or the 7.5% discount to the 5 day volume weighted average price. The notes commenced
maturing in October 2012, but in accordance with the Investment Agreement, it was agreed that they
would be rolled into new convertible notes. This occurred on 31 January 2013. Refer to Note 9 for further
details.
4. DIVIDENDS
No dividend has been paid during or is recommended for the financial period ended 31 December
2012.
5. COMMITMENTS AND CONTINGENCIES
There have been no significant changes to commitments or contingencies since 30 June 2012.
6. INTEREST IN JOINT VENTURE
The Company is a participant with Sekoko Coal (Pty) Ltd in a coal project in the Waterberg locality in
South Africa comprising the Olieboomfontein and Vetleegte properties. The Joint Venture is
unincorporated.
During the year ended 30 June 2011, an amendment was made to the existing Joint Venture
Agreement (T1), to allow Checkered Flag Investments 2 (Pty) Ltd, a wholly owned subsidiary, to earn
up to an interest of 60% in the T1 Joint Venture, in which it had a full participation at 30 June 2011.
In addition to T1, Lexshell 126 General Trading (Pty) Ltd (“Lexshell”), a wholly owned subsidiary,
entered into two further Joint Venture agreements, T2 and T3. In September 2009 and February
2011, Firestone Energy Limited issued 868,176,563 (T2) and 200,000,000 (T3) shares, in
consideration for Lexshell entering into the T2 and T3 transactions. These transactions were included
in the financial statements at amounts of $43,408,828 and $5,400,000 respectively.
The issue of shares was consideration for entering into a second Joint Venture Agreement (T2) with
Sekoko Coal (Pty) Ltd for a coal project in the Waterberg locality in South Africa, comprising the
Smitspan, Hooikraal, Massenberg and Minnasvlakte properties. An addendum was later made to
include additional properties Duikerfontein and Swanepoelpan (T3). At 30 June 2011 Firestone
Energy Limited had completed its performance and was entitled to 60% in the project.
Half-year ended Year ended
Dec 2012 June 2012
$ $
Opening balance 76,735,130 85,197,758
Additional project costs 1,957,355 2,833,305
Foreign exchange movements (3,079,773) (11,295,933)
Closing balance 75,612,712 76,735,130
7. SHARE-BASED PAYMENTS
40,000,000 unlisted 2 year options with an exercise price of 2.5 cents were issued to the Company’s
CEO, Mr David Knox, on 19 September 2012. The fair value of the options was estimated using a
binomial model and the following assumptions:
Dividend yield (%) Nil
Expected volatility (%) 100%
Risk-free interest rate (%) 3.00%
Expected life (years) 1.5
Exercise price (cents) 2.5
Share price at grant date (cents) 0.9
At 30 June 2012, $112,250 deferred share-based payment expense relating to 25,000,000 options to
be issued under a Share Subscription Agreement with BBY Nominees Pty Ltd was reported as a
current asset. This amount was expensed during the half-year.
8. SEGMENT INFORMATION
Management has determined that the consolidated group has one reportable segment, being coal
exploration in South Africa. As the Company is focused on mineral exploration, the Board monitors the
consolidated group based on actual versus budgeted exploration expenditure incurred by area of
interest.
This internal reporting framework is the most relevant to assist the Board with making decisions
regarding the consolidated group and its ongoing exploration activities, while also taking into
consideration the results of exploration work that has been performed to date.
Segment information provided to the Board: December December
2012 2011
$ $
Segment revenue from external sources - -
Reportable segment loss (544,497) (168,160)
A reconciliation of reportable segment loss to operating loss before income tax is provided as follows:
Total loss for reportable segment (544,497) (168,160)
Unallocated:
Interest revenue 612 27,386
Other income 369 2,376
Occupancy costs (13,800) (13,800)
Legal fees (266,763) (176,456)
Administration costs (216,949) (133,685)
Directors’ fees (130,000) (130,004)
Employee and consultant costs (78,164) (67,388)
Listing and share registry costs (96,746) (118,916)
Travel & accommodation (16,703) (54,779)
Share-based payments (189,850) -
Finance costs (1,332,269) (1,398,136)
Loss before income tax from continuing operations (2,884,760) (2,231,562)
December
June 2012
2012
$
$
Reportable segment assets 79,985,891 81,307,190
9. SIGNIFICANT EVENTS OCCURRING AFTER BALANCE DATE
The first stage of completion of the Restated Investment Agreement between the Company, Ariona
Company SA (“Ariona”), BBY Nominees Pty Ltd (“BBY”) and Jaguar Funds Management Limited
occurred on 5 February 2013.
The Company issued $27.145 million of new convertible notes to Ariona in consideration for:
$5 million in cash (less reimbursed costs) through the issue of new convertible notes; and
The redemption and replacement of the $21.3 million of existing convertible notes and
accrued interest on those notes of $845,000.
The new convertible notes have a face value of $1.00 per note, a term of 4 years and bear interest at
8%, payable six monthly. For the first 24 months, interest is payable in cash or capitalised, at the
election of the Company. After the first 24 months, interest is payable in cash, or if the Company and
the majority noteholder agree, can be capitalised. The notes are secured over the assets of the
Company and its wholly owned subsidiaries that hold the interest in the Waterberg Coal Joint Venture
Project. Conversion can occur at the election of the noteholder at any time prior to maturity date at
$0.025 per share. The Company has no obligation to convert the notes if it would result in the
noteholder exceeding the takeover threshold of 20%.
The holders of the existing convertible notes were issued with 241,145,620 fully paid ordinary shares
in satisfaction of the balance of the interest which had accrued on the notes. 300 million options, with
an expiry date of 31 January 2015 and an exercise price of $0.025, were also issued to the former
holders of the existing convertible notes.
194,674,462 fully paid ordinary shares were issued to extinguish the BBY finance facility.
Under the second stage of completion, Ariona will provide a further $12.5 million for new convertible
notes, which will be applied to working capital. Second Completion is scheduled to occur by 28
February 2013.
In accordance with the Restated Investment Agreement, Ariona nominated and the Company
appointed three persons to the board of the Company, namely Mr David Hillier, Mr Oren Zohar and Mr
Jack Robert James.
With the exception of the above, there have been no matters or circumstances that have arisen since
31 December 2012 that have significantly affected, or may significantly affect:
(i) The consolidated entity’s operations in future financial years, or
(ii) The results of those operations in future financial years, or
(iii) The consolidated entity’s state of affairs in future financial years.
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1. The consolidated financial statements and notes are in accordance with the Corporations Act
2001 and:
a. comply with Accounting Standard AASB 134: Interim Financial Reporting,
Corporations Regulations 2001 and any other mandatory professional reporting
requirements; and
b. give a true and fair view of the consolidated entity’s financial position as at 31
December 2012 and of its performance for the half-year then ended on that date.
2. in the Directors’ opinion there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Dated at Perth this 8th day of March 2013.
Timothy Tebeila
Chairman
Tel: +8 6382 4600 38 Station Street
Fax: +8 6382 4601 Subiaco, WA 6008
www.bdo.com.au PO Box 700 West Perth WA 6872
Australia
8 March 2013
Firestone Energy Limited
The Board of Directors
Suite B9, 431 Roberts Road
Subiaco WA 6008
Dear Sirs,
DECLARATION OF INDEPENDENCE BY WAYNE BASFORD TO THE DIRECTORS OF
FIRESTONE ENERGY LIMITED
As lead auditor for the review of Firestone Energy Limited for the half-year ended 31 December
2012, I declare that, to the best of my knowledge and belief, the only contraventions of:
• the auditor independence requirements of the Corporations Act 2001 in relation to the review;
and
• any applicable code of professional conduct in relation to the review.
This declaration is in respect of Firestone Energy Limited and the entities it controlled during the
period.
Wayne Basford
Director
BDO Audit (WA) Pty Ltd
Perth, Western Australia
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent
entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company
limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO
network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation (other than for the acts or omissions of financial services licensees) in
each State or Territory other than Tasmania.
Tel: +8 6382 4600 38 Station Street
Fax: +8 6382 4601 Subiaco, WA 6008
www.bdo.com.au PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REVIEW REPORT
TO THE MEMBERS OF FIRESTONE ENERGY LIMITED
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Firestone Energy Limited, which
comprises the consolidated statement of financial position as at 31 December 2012, and the
consolidated statement of profit or loss and other comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the half-year ended on that date,
notes comprising a statement of accounting policies and other explanatory information, and the
directors’ declaration of the consolidated entity comprising the disclosing entity and the entities it
controlled at the half-year’s end or from time to time during the half-year.
Directors’ Responsibility for the Half-Year Financial Report
The directors of the disclosing entity are responsible for the preparation of the half-year financial
report that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the half-year financial report that is free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review.
We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, we have become aware of any matter that
makes us believe that the half-year financial report is not in accordance with the Corporations Act
2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31
December 2012 and its performance for the half-year ended on that date; and complying with
Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
As the auditor of Firestone Energy Limited, ASRE 2410 requires that we comply with the ethical
requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the Corporations
Act 2001, which has been given to the directors of Firestone Energy Limited, would be in the same
terms if given to the directors as at the time of this auditor’s review report.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent
entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company
limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO
network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation (other than for the acts or omissions of financial services licensees) in
each State or Territory other than Tasmania.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us
believe that the half-year financial report of Firestone Energy Limited is not in accordance with the
Corporations Act 2001 including:
(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December
2012 and of its performance for the half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations
Regulations 2001.
Emphasis of Matter
Without modifying our conclusion, we draw attention to Note 1 in the half year financial statements
which indicates that the group incurred a loss for the half year of $2,884,760 and a net cash outflow
from operating activities of $843,552. These matters, along with the other matters set forth in
Note 1 indicate the existence of a material uncertainty which may cast significant doubt on the
company’s ability to continue as a going concern and therefore, the group may be unable to realise
its assets and discharge its liabilities in the normal cause of business at the values stated in the
financial report.
BDO Audit (WA) Pty Ltd
Wayne Basford
Director
Perth, Western Australia
Dated this 8th day of March 2013
Johannesburg
8 March 2013
Sponsor
River Group
18
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