STA.L Regulatory News (STA)

Star Phoenix Group Ltd

("Star Phoenix" or "the Company")

26 October 2020

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN. 

AUDITED ANNUAL RESULTS FOR THE 12 MONTHS ENDED 30 JUNE 2020

Star Phoenix (AIM: STA), an international company with an oilfield services business in Trinidad and an oil and gas interest in Indonesia, today releases its Annual Report for the 12 months ended 30 June 2020. A copy of the full Annual Report is available on the Company's website, www.starphoenixgroup.com.

Directors' Report

The Directors of Star Phoenix Group Ltd ("SPG" or "the Company") and the entities it controls (together, the "Group") present the financial report for the year ended 30 June 2020.

Directors

The names and details of the Company's directors in office during the financial year and until the date of this report are as follows. The directors were in office during the entire period unless otherwise stated.

Company Secretary

The following persons held the position of company secretary during the financial year:

• Ms Evgenia Bezruchko

• Mr Lubing Liu (appointed 1 April 2020)

• Ms Sara Kelly (resigned 31 March 2020)

Results of operations

The Company's net profit after taxation attributable to the members of Star Phoenix Group Ltd for the year to 30 June 2020 was US$47,941,852 (FY2019: US$49,460,755 loss). Loss for the year from continuing operations was US$23,324,385 (FY2019: US$24,373,432 loss) and profit for the year from discontinued operations was US$71,266,237 (FY2019: US$25,087,323 loss).

Dividends

No dividend was paid or declared by the Company during the year and up to the date of this report.

Corporate structure

Star Phoenix Group Ltd is a company limited by shares, which is incorporated and domiciled in Australia.

Nature of operations and principal activities

The principal activity of the Group during the financial year was oil and gas production and oilfield services in Trinidad.

Operational Review

Completion of RRTL sale and debt restructuring

During the year, the Company signed a Sale and Purchase Agreement with LandOcean Energy Services Co., Ltd ("LandOcean") for the sale of Range Resources Trinidad Limited ("RRTL") in exchange for (i) offsetting all outstanding debt and payables due from Star Phoenix and its subsidiaries to LandOcean and its subsidiaries, and (ii) a cash consideration of US$2,500,000 (the "Transaction").

The Transaction completed on 31 March 2020. Following completion, all of the Company's debt and payables (US$94,509,742 as at 31 March 2020) to LandOcean was offset and repaid, and all debt agreements with LandOcean were terminated.

LandOcean paid the Company a cash consideration of US$2,050,574 (out of total US$2,500,000 as per the agreement) as at 30 June 2020. The total outstanding receivable from LandOcean as at 30 June 2020 was US$1,843,506 which comprised the outstanding cash consideration of US$449,426, services provided by Range Resources Drilling Services Limited ("RRDSL") to RRTL, repayment of the bond for the Beach Marcelle licence and a loan to RRTL to cover working capital. The Company continues its discussions with LandOcean to expedite the payment of the outstanding amount.

Following the disposal of RRTL, which held all of the Company's oil and gas interests in Trinidad, the Company's residual business comprises the oilfield services company in Trinidad (RRDSL), as well as an interest in the oil and gas project in Indonesia.

Oilfield services (RRDSL)

During the year, the Company had to take the necessary steps to further cut the ongoing costs of RRDSL in light of the COVID-19 pandemic. As part of the cost reduction programme, the Company completed a comprehensive organization restructuring of RRDSL along with other cost cutting measures. The Company also signed an agreement with a third-party operator to dry lease some of the equipment including mud tanks and a generator to derive additional revenue.

In addition, agreements were signed to sell four smaller production rigs for a total sum of US$153,580. The Company continues to evaluate sale opportunities of the remaining eight drilling and production rigs.

£0.75 million fundraise

The Company completed a subscription in September 2019 with a new investor Sramek BioDynamics Holdings Limited ("Sramek") for ordinary shares to raise £750,000. As part of the subscription, Sramek can nominate up to two non-executive directors to the Board of the Company and shall retain this ability for so long as it holds 10% or more of the Company's shares in issue. Sramek BioDynamics have not yet elected to appoint any non-executive directors.

£0.56 million fundraise

The Company completed a subscription in January 2020 with a new investor Thesolia Ltd ("Thesolia") for ordinary shares to raise approximately £560,000 comprising subscription proceeds plus late fee payment. As part of the subscription, Thesolia can nominate up to two non-executive directors to the Board of the Company and shall retain this ability for so long as it holds 10% or more of the Company's shares in issue. Thesolia Ltd have not yet elected to appoint any non-executive directors.

Voluntary delisting from the Australian Stock Exchange ("ASX")

The Company's shares were removed from trading on ASX with effect from 25 November 2019. No change occurred to the quotation and trading of the Company's shares on the AIM market operated by the London Stock Exchange plc.

Change of company name

The Company changed its name to Star Phoenix Group Ltd with effect from 1 December 2019.

Capital consolidation

The Company's share capital was consolidated on a 100:1 basis with effect from 5 December 2019. At the date of this report, the Company's issued capital comprises 141,367,955 ordinary fully paid shares.

Director and management changes

Ms Juan Wang tendered her resignation as Non-Executive Director of the Company, effective 22 July 2019.

Mr Lubing Liu (the Company's Executive Director and Chief Operating Officer) was appointed as Joint Company Secretary, replacing Ms Sara Kelly with effect from 1 April 2020.

Dr YuFeng Meng was appointed as a Non-Independent Non-Executive Director, effective 14 April 2020. Dr Meng's appointment was made pursuant to Beijing Sibo Investment Management LP ("Sibo") contractual right to appoint up to three Non-Executive Directors to the Board of the Company above 10% shareholding. Resolution 1 of EGM relating to the removal of Dr YuFeng Meng as a Director was duly passed on 25 September 2020.

Appointment of Nomad and Broker

WH Ireland Limited was appointed as the Company's Nominated Adviser ("Nomad") and sole broker with effect from 29 June 2020.

Significant changes in the state of affairs

There have been no significant changes in the state of affairs of the Group during the financial year, other than as set out in this report.

Significant events after the reporting date

Extraordinary General Meeting of Shareholders

Subsequent to the year end, the Company received two separate requests from two separate Shareholders, each of which holds at least 5% of the votes that may be cast at a general meeting of the Company, for a general meeting to be held to consider the following resolutions:

1. Removal of Director - Dr. YuFeng Meng;

2. Election of Director - Dr. Yang Chong Yi;

3. Election of Director - Mr. Paul Norris;

4. Election of Director - Mr. Omar C.S. Stanford IV;

5. Election of Director - Mr. Li Jun;

6. Removal of Director - Mr. Zhiwei (Kerry) Gu; and

7. Removal of Director - Mr. Lubing Liu.

The Company called, arranged and held the Meeting to consider all the resolutions proposed pursuant to these requests and in accordance with the provisions of section 249D(5) of the Corporations Act. The Meeting was held on 25 September 2020, where only resolution 1 relating to the removal of Dr YuFeng Meng as a Director was duly passed. All other resolutions relating to the Board changes were lost.

Outstanding payable from LandOcean

Subsequently to the year end, the Group received two payments from LandOcean of a total sum of US$300,000 towards the outstanding balance. The Company continues its discussions with LandOcean to expedite the payment of the outstanding amount of US$1,543,506. 

Covid-19 impact

The impact of the Coronavirus (COVID-19) pandemic is ongoing, and it has been financially negative for the Group up to 30 June 2020 as it has negatively affected the oil price. It is not practicable to estimate the potential impact after the reporting date positive or negative. The situation is continuously developing and is dependent on measures imposed by the Government of Trinidad and Tobago and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Likely developments and expected results of operations

The Company continues its search of new attractive acquisition opportunities to provide future growth and value for the Company and its shareholders. The Company is also seeking to complete the sale of its rigs and equipment in Trinidad to provide additional cashflow and strengthen the Company's financial position.

Environmental regulations and performance

The Group's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory.

The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and energy use. The directors have assessed that there are no current reporting requirements but may be required to do so in the future.

Share options

As at 30 June 2020, the Company had no unissued ordinary shares under option. During the year ended 30 June 2020, no ordinary shares of the Company were issued on the exercise of options (2019: nil).

Indemnifying directors and officers

In accordance with the constitution, except where prohibited by the Corporations Act 2001, every director, principal executive officer and secretary of the Company shall be indemnified out of the property of the Company against any liability incurred by him/her in his/her capacity as director, principal executive officer or secretary of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings whether civil or criminal.

During the financial year, the Company has paid premiums of US$12,431 to insure the Directors and Officers against certain liabilities arising out of the conduct of acting as an officer of the Company. Under the terms and conditions of the insurance contract, the nature of liabilities insured against and the premium paid cannot be disclosed.

Meetings of Directors

During the financial year, six meetings of the Board of Directors were held. Attendances by each Director during the year were as follows:

Proceedings on behalf of the company

No person has applied for leave of Court to bring proceedings on behalf of the Company or to intervene in any proceedings 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 Company was not a party to any such proceedings during the year.

Non-audit services

The total value of non-audit services provided by a related practice of BDO Audit (WA) Pty Ltd in respect to the Company's tax compliance is US$29,910 (2019: US$15,500).

The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

1. all non-audit services have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the auditor; and

2. none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

Corporate Governance Statement

Introduction

The Chairman and Directors support and take responsibility for high standards of corporate governance. AIM rules require AIM companies to comply or explain against a recognised corporate governance code. The Group has decided to adhere to the Quoted Companies Alliance's (QCA) Corporate Governance Code. The QCA Code is constructed around ten broad principles, details of which, along with the approach taken in respect of each principle by the Group, are below. The Board is aware of certain departure from the principles of the QCA Code, which is explained below.

The Chairman's role is to lead the Board, set its agenda, ensure it receives accurate, timely and clear information and oversee the adoption, delivery and communication of the Company's Corporate Governance recommendations. Furthermore, the Chairman ensures effective communication within the Board, and senior management and takes a leading role in determining the composition and structure of the Board.

The Board meets frequently to consider all aspects of the Group's activities. The Board consists of the Chairman, Executive Director and two Non-Executive Directors. All Directors have access to the advice and services of the Company Secretary and the Group's professional advisors.

The Corporate Governance Statement and Corporate Governance Plan are available on the Company's website www.starphoenixgroup.com.

Zhiwei Gu

Chairman

26 October 2020

QCA code

Remuneration Report (Audited)

Remuneration policy

The remuneration policy of Star Phoenix Group Ltd has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Group's financial results. The Board of SPG believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group, as well as create alignment of goals between directors, executives and shareholders.

The Board's policy for determining the nature and amount of remuneration for Board members and senior executives of the Company is as follows:

The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the Board.

Non-executive directors, executive directors and senior executives receive a base salary (which is based on factors such as length of service and experience), which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles, as well as employer contributions to superannuation funds where applicable.

Executive and non-executive directors can be employed by the Company on a consultancy basis on Board approval, with remuneration and terms stipulated in individual consultancy agreements.

The Company does not currently have a Remuneration and Nomination Committee. In its absence, the full Board is responsible for the determination of the remuneration of Directors and senior executives and ensuring that such remuneration is appropriate and not excessive. Where considered necessary, the Board may engage a remuneration consultant to assist with setting and reviewing the Company's executive and non-executive remuneration policies to ensure the Company attracts and retains executives and Directors who will create value for shareholders. As the Company grows in size, it is planned that the Company will establish a separate remuneration committee with its own remuneration committee charter. No remuneration consultant has been used during the year.

The Board is also responsible for evaluating the performance of Directors and the senior executives. It is envisaged that once the Company is of a sufficient size to establish a Remuneration and Nomination Committee, that committee will be responsible for arranging the performance evaluation of the Board, its committees, and individual Directors on behalf of the Board. This evaluation will be based on specific criteria, including the business performance of the Company and its subsidiaries, whether strategic objectives are being achieved and the development of management and personnel. A formal performance evaluation was not undertaken during the financial year, however the Company intends to undertake such review during the following financial year.

All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Shares given to directors and executives are valued as the difference between the market price of those shares and the amount paid by the director or executive. Unlisted options are valued using the Black-Scholes methodology.

The Board policy is to remunerate non-executive directors at market rates for comparable companies taking into consideration time, commitment, and level of responsibility. Fees for non-executive directors are not linked to the performance of the Group. The directors are not required to hold any shares in the Company under the Constitution of the Company; however, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the Company.

Options may be issued to directors and executives as part of their remuneration. All previously issued options expired during the year ended 30 June 2020 and there are currently no options issued to directors or executives. Under the Company's share trading policy, all employees and directors of the Company and its related companies are prohibited from trading in the Company's shares or other securities if they are in possession of inside information.

The Board believes that it has implemented suitable practices and procedures that are appropriate for an organisation of this size and maturity.

Company performance, shareholder wealth and directors and executive's remuneration

No relationship exists between shareholder wealth, director and executive remuneration and Company performance.

Key Management Personnel

Details of remuneration

The remuneration for the Key Management Personnel of the Group during the year was as follows:

(i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as Executive Chairman, US$25,000 in his role as Executive Director and US$330,416 for additional consulting work, as well as one-off payments of US$531,250. Consulting fees were paid to Kegrace Consulting Limited, a company owned by Mr Gu.

(ii) Fees paid to Mr L Liu comprised US$29,054 superannuation contributions, US$222,255 one-off payments and salary of US$207,229 in his capacity as Chief Operating Officer and Trinidad General Manager.

(iii) Dr Meng was appointed 14 April 2020. Dr Meng did not receive any remuneration in the year.

(iv) Ms Wang resigned 22 July 2019.

(i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as a non-executive director, US$25,000 in his role as Chairman and US$253,333 for additional consulting work. Mr Gu was appointed on 10 December 2018.

(ii) Fees paid to Mr L Liu comprised US$7,700 received for additional consulting work, US$6,350 benefits in kind and salary of US$153,733 in his capacity as Chief Operating Officer.

(iii) Mr Y Liu resigned 10 December 2018

(iv) Dr Zeng resigned 27 November 2018

(v) Mr Beattie resigned 31 March 2019

(vi) Dr Luo appointed 11 January 2019

During the year, the following short-term incentives were in place for Mr Gu and Mr Liu.

Fundraising

· minimum cumulative value of US$500,000: one month's salary paid in cash (met)

· minimum cumulative value of US$1,000,000: two months' salary paid in cash (met)

· minimum cumulative value of US$2,000,000: three months' salary paid in cash (not met)

· minimum cumulative value of US$5,000,000: six months' salary paid in cash (not met)

Mr Gu payment (US$62,500), Mr Liu payment (US$40,930).

Tax refunds in Trinidad

· minimum cumulative value of US$300,000: one month's salary paid in cash (met)

· minimum cumulative value of US$600,000: two months' salary paid in cash (met)

· minimum cumulative value of US$1,000,000: three months' salary paid in cash (met)

· minimum cumulative value of US$1,500,000: six months' salary paid in cash (met)

Mr Gu payment (US$187,500), Mr Liu payment (US$103,615).

Debt restructuring

· signing of binding agreements: three months' salary paid in cash (Mr Gu), 1.5 months' salary paid in cash (Mr Liu) (met)

· completion of debt restructuring through debt conversion, offset or any other way: three months' salary paid in cash (Mr Gu), 1.5 months' salary paid in cash (Mr Liu) (met)

Mr Gu payment (US$187,500), Mr Liu payment (US$51,800).

Rigs sale

· signing of binding agreements to sell all or part of rigs: three months' salary paid in cash (Mr Gu), 1.5 months' salary paid in cash (Mr Liu) (met)

· completion of transaction of rigs sale: three months' salary paid in cash (Mr Gu), 1.5 months' salary paid in cash (Mr Liu) (not met)

Mr Gu payment (US$93,750), Mr Liu payment (US$25,910).

Equity instrument disclosures relating to Key Management Personnel

Share-based payments (year ended 30 June 2020)

No options were issued to key management personnel. All existing options expired in the financial year and there has not been an expense reversal.

Fully paid shareholdings

The numbers of shares in the Company held during the financial year or at time of resignation by Key Management Personnel of the Company, including their personally related parties, are set out below.

*After capital consolidation of 100:1 basis effective 5 December 2019.

Options held by Key Management Personnel

The numbers of options in the company held during the financial year or at time of resignation by Key Management Personnel of the Company, including their personally related parties, are set out below:

Loans to Key Management Personnel

There were no loans made to directors of SPG and other Key Management Personnel of the Group, including their personally related parties during the 2019 or 2020 financial years.

Employment contracts of Directors and other Key Management Personnel

On appointment, Executive Directors and Other Key Management Personnel enter into an employment contract with the Company (or another company within the Group). This contract sets out their duties, remuneration and other terms of employment. These contracts may be terminated by either the Company or the employee as detailed below.

All directors are eligible to receive consulting fees for services provided to the Company over and above the services expected from a non-executive director.

Additional information

The earnings of the consolidated entity for the five years to 30 June 2020 are summarised below:

The factors that are considered to affect total shareholders return ('TSR') are summarised below:

\* The Company's share capital was consolidated on a 100:1 basis with effect from 5 December 2019

Voting and comments made at the company's 2019 Annual General Meeting

Star Phoenix Group Ltd received 99.7% of "yes" votes on its remuneration report for the 2019 financial year. The Board believes that this reflects the conservative remuneration practices of the company.

This is the end of the audited remuneration report.

Auditor's Independence Declaration

The auditor's independence declaration, as required under Section 307C of the Corporations Act 2001, for the year ended 30 June 2020 has been received and can be found on the following page.

This report is signed in accordance with a resolution of the Board of Directors.

Zhiwei Gu: Chairman

26 October 2020

Consolidated Statement of Profit or Loss and other Comprehensive Income for the year ended 30 June 2020

The below 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 30 June 2020

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

Consolidated Statement of Changes in Equity for the year ended 30 June 2020

The below 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 2020

The below consolidated statement of cashflows should be read in conjunction with the accompanying notes.

Notes to Consolidated Financial Statements

Note 1: Significant accounting policies

These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Star Phoenix Group Ltd is a for-profit entity for the purpose of preparing the financial statements.

The financial statements cover the Group consisting of Star Phoenix Group Ltd and its controlled entities. Financial information for Star Phoenix Group Ltd as an individual entity is disclosed in Note 30. Star Phoenix Group Ltd is a listed public company, incorporated and domiciled in Australia.

The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated. The financial report was authorised for issue by the Directors on 26 October 2020.

Basis of preparation

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss.

Compliance with IFRS

The financial statements of Star Phoenix Group Ltd also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements were approved by the Board of Directors on 26 October 2020.

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "Functional Currency"). The consolidated financial statements are presented in United States Dollars (USD), which is Star Phoenix Group Ltd's functional and presentation currency.

Going concern

This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

For the year ended 30 June 2020 the Group recorded a gain of US$47,941,852 (2019: a loss of US$49,460,755) and had net cash inflows of US$1,290,240 (2019: cash outflows of US$2,051,658).

The ability of the Group to continue as a going concern is dependent on securing additional funding through the issue of shares and/or debt to fund its activities.

These conditions indicate a material uncertainty that may cast a significant doubt about the Group's ability to continue as a going concern and, therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Company is currently seeking other opportunities to expand its operations in other geographic locations and a successful investment in a new project can be used to raise additional capital and subsequently generate positive cash flows. The Company is also focusing on managing its existing cash reserves.

Management believe there are sufficient funds to meet the Group's working capital requirements as at the date of this report.

Should the Company not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Company not continue as a going concern.

New and amended standards adopted by the Group

The Group has applied AASB 16 'Leases' standard for the first time for the reporting period commencing 1 July 2019. There has been no material impact resulting from the adoption of AASB 16. No lease libility has ben recognised as the full amont of the lease had been prepaid, resulting in only a right-of-use asset being recognised.

The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities.

The Group has applied IFRIC 23: Uncertainty over income tax treatments for the first time for the reporting period commencing 1 July 2019. IFRIC 23 clarifies how the recognition and measurement requirements of AASB 12 Income taxes are applied where there is uncertainty over income tax treatments. An uncertain tax treatment is any tax treatment applied by the Group where there is any uncertainty whether that treatment will be accepted by the relevant tax authority.

(a) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Star Phoenix Group Ltd ("Parent Entity" or "Company") as at 30 June 2020 and the results of all subsidiaries for the year then ended. Star Phoenix Group Ltd and its subsidiaries together are referred to as the "Group".

Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

Where controlled entities have entered or left the Group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased. A list of controlled entities is contained in Note 13 to the financial statements. All controlled entities have a 30 June financial year-end.

All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Group.

Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20-50% of the voting rights. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost.

(b) Income tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date within each jurisdiction.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is credited in profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations 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 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 is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(c) Property, plant and equipment

Owned assets

Plant and equipment are measured on the historical cost basis less accumulated depreciation and impairment losses.

The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable asset are:

The residual values of the assets and their useful lives are reviewed and adjusted if appropriate at each reporting date.

The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the employment of the assets and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The carrying amount of the asset is written down to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses.

(d) Exploration and evaluation expenditure and the recognition of assets

Acquisition costs for exploration and evaluation projects are accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

The carrying values of expenditures carried forward are reviewed for impairment at each reporting date when the facts, events or changes in circumstances indicate that the carrying value may be impaired.

Accumulated expenditures are written off to profit or loss to the extent to which they are considered to be impaired.

The group applies AASB 6 Exploration and Evaluation of Mineral Resources which is equivalent to IFRS 6. The carrying value of exploration and evaluation expenditure is historical cost less impairment.

Ongoing exploration costs incurred in respect of the Group's Trinidadian and Indonesian interests are expensed as incurred. Initial acquisition costs to obtain the right to explore are capitalised.

(e) Producing assets

Upon the commencement of commercial production from each identifiable area of interest, the exploration and evaluation expenditure incurred up to that point is impairment tested and then reclassified to producing assets.

When production commences, the accumulated costs for the relevant area of interest are amortised on a "units of production" method which is based on the ratio of actual production to remaining proved and probable reserves (1P) as estimated by independent petroleum engineers over the life of the area according to the rate of depletion of the economically recoverable reserves.

Subsequent costs such as workovers, are included in the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. All other costs are charged to profit or loss during the financial period in which they are incurred.

The carrying amount of producing assets is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows of an asset are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash flows that are largely independent from other assets or groups of assets, the recoverable amount is determined for the cash generating unit to which the asset belongs. For producing assets, the estimated future cash flows for the value-in-use calculation are based on estimates, the most significant of which are 2P hydrocarbon reserves, future production profiles, commodity prices, operating costs and any future development costs necessary to produce the reserves which the group is committed. Under a fair value less costs to sell calculation, future cash flows are based on estimates of 2P hydrocarbon reserves.

Estimates of future commodity prices are based on the Group's best estimate of future market prices with reference to external market analysts' forecasts, current spot prices and forward curves. Future commodity prices are reviewed at least annually.

The carrying amount of an asset is written down to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses.

The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation arises. The nature of restoration activities includes the removal of facilities, abandonment of wells and restoration of affected areas. A restoration provision is recognised and updated at different stages of the development and construction of a facility and then reviewed on an annual basis. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related exploration and evaluation/development assets.

Over time, the liability is increased for the change in the present value based on a post-tax discount rate appropriate to the risk inherent in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs. The carrying amount capitalised in oil and gas properties is depreciated over the useful life of the related asset.

Costs incurred that relate to an existing condition caused by past operation and do not have a future economic benefit are expensed.

(f) Financial instruments

The Group's financial instruments include cash and cash equivalents and trade and other receivables.

A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest.

A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value.

All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI').

Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch).

Simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. Impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For trade receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.

(g) Foreign currency transactions and balances

Functional and presentation currency

The functional currency of each entity within the Group is determined using the currency of the primary economic environment in which that entity operates.

Transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction.

Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or loss

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in profit or loss.

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· assets and liabilities for each reporting period end date presented are translated at the closing rate at the date of that statement of financial position;

· income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

· all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

(h) Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects the current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(i) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

(j) Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

(k) Revenue from contracts with customers

Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate.

Revenue from the sale of oil and gas and related products is recognised when the control of the product has transferred to the buyer. In the case of oil, this usually occurs at the time of lifting. Other revenue is recognised when control has passed.

(l) Goods and Services Tax (GST) and Value-Added Tax (VAT)

Revenues, expenses and assets are recognised net of the amount of GST and VAT, except where the amount of GST and VAT incurred is not recoverable from the taxation authorities. In these circumstances the GST and VAT is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST and VAT.

Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST and VAT component of investing and financing activities, which are disclosed as operating cash flows.

(m) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(n) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash follows at the current market interest rate that is available to the Group for similar financial instruments.

(o) Investments in associates

Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements.

Under the equity method, the investment in the associate is carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group's share of net assets of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group's net investment in the associate.

The Group's share of the associate post-acquisition profits or losses is recognised in the statement of profit or loss and other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in the associate equals or exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The reporting dates of the associate and the Group are identical and the associate's accounting policies conform to those used by the Group for like transactions and events in similar circumstances.

(p) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition unless alternative terms are agreed.

(q) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at reporting date.

(r) 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.

(s) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit or 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 outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

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.

(t) Segment reporting

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

(u) 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 they 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 suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(v) Intangible assets (goodwill)

Goodwill is measured at cost less any impairment write-downs. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments (note 26).

(w) Share-based payments

The fair value of options granted is recognised as an expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.

(x) Employee benefits

Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service benefit

The liability for long service benefit is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

(y) Leases

The Group has applied the definition of a lease and related guidance set out in AASB 16 to all lease contracts in place or entered into or modified on or after 1 July 2019. The Directors have determined that the new definition in AASB 16 will not change significantly the scope of contracts that meet the definition of a lease for the Group.

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

Lease liabilities

At the commencement date of a lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term.

(z) Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.

(aa) Compound financial instruments

Compound financial instruments issued by the Group comprise convertible notes that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition.

Interest related to the financial liability is recognised in profit or loss. On conversion the financial liability is reclassified to equity and no gain or loss is recognised.

Convertible notes that can be converted to share capital at the option of the holder and where the number of shares is variable, contain an embedded derivative liability. The embedded derivative liability is calculated (at fair value) first and the residual value is assigned to the debt host contract. The embedded derivative is subsequently measured at fair value and movements are reflected in profit or loss.

Certain convertible notes issued by the Group which include embedded derivatives (option to convert to variable number of shares in the Group) are recognised as financial liabilities at fair value through profit or loss. On initial recognition, the fair value of the convertible note will equate to the proceeds received and subsequently the liability is measured at fair value at each reporting period until settlement. The fair value movements are recognised in profit or loss as finance costs.

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

(bb) Inventories

Inventories include consumable supplies and maintenance spares and are valued at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes direct costs and an appropriate portion of fixed and variable production overheads where applicable. Inventories determined to be obsolete or damaged are written down to net realisable value, being the estimated selling price less selling costs.

The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Areas involving a higher degree of judgement or complexity, or areas where estimations and assumptions are significant to the financial statements are disclosed here.

(cc) Non-current assets classified as held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell. For non-current assets to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write down of the non-current assets to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of a non-current asset, but not in excess of any cumulative impairment loss previously recognised.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised.

Non-current assets classified as held for sale are presented separately on the face of the consolidated statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities.

Discontinued operations

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

· represents a separate major line of business or geographical area of operations;

· is part of a single co-ordinated plan to dispose of a separate major line of business or geographical are of operations; and

· is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative consolidated statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year.

Note 2: Critical accounting estimates and judgements 

Non-current assets classified as held for sale and discontinued operations

2019: Range Resources Trinidad Limited

Towards the end of the financial year ended 30 June 2019, the Group undertook a review of the oil and gas business culminating in the decision to sell Range Resources Trinidad Limited to LandOcean. The Board of Directors have judged that as a result of this review, the assets and associated liabilities of Range Resources Trinidad Limited should be classified as held for sale as at 30 June 2019 and all operations of Range Resources Trinidad Limited to be classified as discontinued. In reaching this judgement, the Board of Directors have considered that the requirements of AASB 5: Non-current assets held for sale and discontinued operations have been met. As at 31 March 2020 and with completion of this transaction, the assets and liabilities of Range Resources Trinidad Limited were disposed of and sold to LandOcean. The net assets of the disposed entity were US$65,915,896.

2020: Rigs and related inventory

The Group has been marketing the rigs and equipment in the financial year, therefore all rigs and related equipment were classified as held for sale assets as it is highly probable that these assets will be sold within 12 months.

Impairment of rigs and related inventory

As a result of impairment indicators identified management were required to undertake an impairment assessment as per AASB 136. The most significant indicators of impairment being the inactivity of the rigs and the decline in oil price. The recoverable amount of these assets was estimated based on an indicative conditional offer received for one of the rigs which was 70% below the carrying value.

As a result, a 70% impairment across all rigs was deemed appropriate resulting in total impairment being recognised for the year of US$15,453,686.

The Company sold four production rigs for a total sum of approximately US$153,580. The rigs had a carrying value of approximately US$116,245. The Company continues the sale process of the remaining three production and five drilling rigs.

Accounting for the disposal of RRTL

On 31 March 2020, the sale of RRTL was completed resulting in SPG transferring its entire shareholding in RRTL to LandOCean and at the same time losing control and therefore deconsolidating the entity at this point. From the date that control has been lost (31 March 2020), 100% of assets and liabilities were de-recognised from the consolidated financial position of SPG resulting in the net assets of RRTL of US$65,915,896 being deconsolidated and set off against the proceeds of the disposal.

SPG disposed of its investment in RRTL and recognised a gain on disposal of US$36,087,762 million (pre-tax) being the difference of total consideration (US$97,009,742 which is the debt written off of US$94,509,742 plus a cash consideration of US$2,500,000) and net assets of RRTL (US$65,915,896) and the realisation of the foreign currency translation reserve of US$4,993,916 as at 31 March 2020.

Refer to Note 7 for details.

Coronavirus (COVID-19) pandemic

Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of services offered, customers, supply chain, staffing and geographic regions in which the Group operates. The impact of the Coronavirus (COVID-19) pandemic is ongoing, and it has been financially negative for the Group up to 30 June 2020 as it has negatively affected the oil price. It is not practicable to estimate the potential impact after the reporting date positive or negative. The situation is rapidly developing and is dependent on measures imposed by the Government of Trinidad and Tobago and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Deferred tax liability

The carrying value of the deferred tax liability is US$1,154,300 at 30 June 2020. In the event that the manner by which the carrying value of these assets is recovered differs from that which is assumed for the purpose of this estimation, the associated tax charges may be significantly less than this amount.

Accounting for Strait Oil & Gas Limited

SPG owns 65% of the issued share capital of Strait Oil & Gas Limited ("SOG"). This is achieved by interest through a 45% shareholding held by SPG itself plus a 20% shareholding through its full ownership of Georgian Oil Pty Ltd. Despite owning a majority of the issued share capital, management do not view this as control and the principal rationale for that view is as follows:

1. SPG has no appointed directors of SOG so exercises no effective control over the company. The sole director of SOG is a different corporate entity;

2. All shareholders must agree to any termination of the management agreement which governs the role of the appointed director;

3. The Articles of Association of SOG are silent on the ability of shareholders to appoint directors. To appoint a director, management believe that the articles would need to be amended. To amend the articles requires a special resolution which needs 75% votes (SPG only controls 65%) and management do not believe they would get support from the other shareholders to do this;

In practice all decision making and corporate activities require consent of all the shareholders resulting in SPG having no demonstrable control over SOG.

The Directors therefore conclude that SOG is not a controlled entity. All previous costs incurred by SPG in relation to SOG have been impaired and the Company will continue to expense any ongoing expenses which are incurred.

Allowance for expected credit losses

The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates, the impact of the Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected credit losses, as disclosed in note 11, is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher than the Nil recorded.

IFRIC 23 Uncertain tax position and tax-related contingency

The group has estimated that following the disposal of Range Resources Trinidad Limited and the settlement of liabilities in multiple jurisdictions which formed part of the consideration for the disposal, may give rise to the possible payment of withholding tax. The group considers it possible that a withholding tax liability of US$742,713 may be payable in Australia and withholding tax liability of US$2,364,933 payable in Trinidad. As at 30 June 2020, both amounts have been provided for in full, resulting in an increase in expenses and withholding tax payable of US$3,107,646.

The group is intending to apply for private rulings in both Australia and Trinidad to confirm its interpretation. If both rulings are favourable, this would decrease the group's current withholding tax payable and expense by US$3,107,646 respectively. The group expects to get a response, and therefore certainty about the tax position, before the next interim reporting date.

Note 3: Revenue

Revenue from third party services and sale of oil is solely generated in the Republic of Trinidad and Tobago.

As per the signed agreement with LandOcean, until SPG receives the final tranche payment, it is entitled to receive a fee equating to the value of VAT refunds which related to the period up to 31 March 2020 as well as proceeds from sale of oil by RRTL to Heritage Petroleum Company Limited. These amounts are reflected in Other Income.

Note 4: Expenses

(i) Amounts expensed in the prior year in Indonesia relate to exploration activities in the Perlak field for which the company policy is to expense.

(ii) Amounts expensed in the prior year in Trinidad relate to land fees in relation to St Mary's for which the company policy is to expense.

Note 5: Impairment of non-current assets held for sale

As a result of impairment indicators identified management were required to undertake an impairment assessment as per AASB 136. The most significant indicators of impairment were the inactivity of the rigs and the decline in oil price.

As a result, the total impairment being recognised for the year of US$15,685,850 bringing the net book value of the rigs, other property, plant and equipment and related inventory to US$7,992,861. Refer to Note 7(a).

Note 6: Income tax expense

Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(b) occur.

(b) Significant estimates - uncertain tax position and tax-related contingency

The group has estimated that following the disposal of Range Resources Trinidad Limited and the settlement of liabilities in multiple jurisdictions which formed part of the consideration for the disposal, may give rise to the possible payment of withholding tax. The group considers it possible that a withholding tax liability of US$742,713 may be payable in Australia and withholding tax liability of US$2,364,933 payable in Trinidad. As at 30 June 2020, both amounts have been provided for in full, resulting in an increase in current tax expense and current tax payable of US$3,107,646.

The group is intending to apply for private rulings in both Australia and Trinidad to confirm its interpretation. If both rulings are favourable, this would decrease the group's current tax payable and current tax expense by US$3,107,646 respectively. The group expects to get a response, and therefore certainty about the tax position, before the next interim reporting date.

Note 7: Discontinued operations

On 2 September 2019, the Company and LandOcean signed a binding conditional Sale and Purchase Agreement for the sale of Range Resources Trinidad Limited to LandOcean in exchange for offsetting all outstanding debt and payables (including the convertible note) due from SPG and its subsidiaries to LandOcean and its subsidiaries, and a cash consideration of US$2,500,000. The subsidiary was sold on 31 March 2020 and total debt and payables which were offset, as at 31 March 2020, are detailed below and do not form part of the assets held for sale and associated liabilities.

*Subsidiaries of LandOcean

Note 7a: Assets of disposal group classified as held for sale

Disposal of rigs and related inventory held by RRDSL

The Company has been actively marketing the rigs and equipment. As a result, the Company sold four production rigs for a total sum of US$153,580. The Company continues the sale process of the remaining three production and five drilling rigs.

The recoverable amount of these assets was estimated based on an indicative conditional offer received for one of the rigs which was 70% below the carrying value.

As a result, a 70% impairment across all rigs was deemed appropriate resulting in total impairment being recognised for the year of US$15,685,850.

Note 7b: Liabilities directly associated with assets classified as held for sale

Note 7c: Discontinued operations

The financial performance and cash flows of RRTL is shown below.

As at 31 March 2020, the carrying value of the consideration was US$97,009,742 as shown in the note below. The carrying amounts of assets and liabilities of RRTL disposed of as at 31 March 2020 were:

Note 8: Auditor's remuneration

Note 9: Earnings/(loss) per share

The Company's share capital was consolidated on a 100:1 basis with effect from 5 December 2019. As a result, the Company's share capital decreased by 11,662,791,778 shares. At the date of this report, the Company's issued capital comprises 141,367,955 ordinary fully paid shares (2019: 10,243,998,615). As a result, the prior year comparative Earnings Per Share figures have been restated as though the share capital consolidation had always been in effect.

Note 10: Cash and cash equivalents

There are no restrictions on cash balances held as at 30 June 2020.

Risk exposure

Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 31.

Note 11: Trade and other receivables

(i) Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

(ii) Other receivables include the final tranche of cash consideration receivable from LandOcean (US$0.4 million) and US$0.3 million for loans provided to Range Resources Trinidad Limited between 1 April 2020 and 30 June 2020.

(iii) Relates to the Beach Marcelle performance bond which was left in place after 31 March 2020.

The consolidated entity has increased its monitoring of debt recovery as there is an increased probability of customers delaying payment, due to the Coronavirus (COVID-19) pandemic. Management have no reasons to believe that an allowance for credit losses is appropriate as at 30 June 2020.

Fair value approximates the carrying value of trade and other receivables at 30 June 2020 and 30 June 2019.

Risk exposure

Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 31.

Allowance for expected credit losses

The consolidated entity has not recognised a loss in profit or loss in respect of the expected credit losses for the year ended 30 June 2020 as described above.

Note 12: Right-of-use asset

The amount relates to the office lease in Beijing, People's Republic of China, expiring on 31 August 2021. Amortisation of US$96,667 was recognised in the Income Statement with regards to the asset. Commencement date of the lease was 26 August 2019, for a 24-month term. The total lease payments of US$280,000 were paid on commencement of the lease.

The Group is only party to one lease, and this has been fully prepaid, and so the Group does not have any remaining lease liabilities reflected in the statement of financial position.

Note 13: Controlled entities

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with accounting policy described in Note 1(a).

(i) Indirect control of these entities was obtained with the acquisition of 60% of the share capital in PT Hengtai Weiye Oil and Gas.

Note 14: Intangible Assets

Impairment tests

In the prior financial year, the Group recorded an impairment with respect to the total value goodwill of US$3,241,472. Goodwill had been allocated for impairment testing purposes to one cash-generating unit (CGU), identified according to operating segments, being Trinidad - oil and gas production. The goodwill represented the costs savings achieved within the group as a result of the RRDSL acquisition.

Note 15: Property, Plant & Equipment