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2023 ReportANNUAL REPORT 2019 ABN 38 115 857 988 CORPORATE DIRECTORY Directors Ian Macpherson Executive Chairman Richard Carcenac Chief Executive Officer & Executive Director Paul Graham-Clarke Non-Executive Director Athol Emerton Non-Executive Director Company Secretary Jessamyn Lyons Principal Registered Office Level 2, 33 Colin Street West Perth Western Australia 6005 Po Box 534 West Perth Western Australia 6872 Telephone: (08) 9214 7500 Facsimile: (08) 9214 7575 Email: info@rbrgroup.com.au Website: www.rbrgroup.com.au Auditor Butler Settineri (Audit) Pty Limited Unit 16, 1st Floor 100 Railway Road Subiaco Western Australia 6008 Share Registry Security Transfer Australia 770 Canning Highway Applecross Western Australia 6153 Telephone: 1300 992 916 Email: registrar@securitytransfer.com.au Stock Exchange The Company’s shares are quoted on the Australian Stock Exchange. The Home Exchange is Perth. ASX Code RBR - ordinary shares CONTENTS Chairman's Letter Letter from the CEO Directors’ Report 1 3 9 Auditor’s Independence Declaration 21 Statement of Comprehensive Income 22 Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information 23 24 25 26 49 50 55 CHAIRMAN’S LETTER Dear Shareholder Welcome to the 2019 Annual Report for your Company. The past financial year has been a pivotal period for RBR, marked by several key achievements and milestones as well as some frustration stemming from events not always proceeding at the pace we would have liked. Significant progress was made on many fronts during the year. However, the nature of this activity means that much of it took place “below the waterline” and hence there is an understandable appetite among shareholders to see us begin securing the contracts which we are now set up to fulfil. With this in mind, I can assure you that your Board and Management team are fully committed to ensuring RBR achieves its goal of becoming a key supplier of labour and training services to the LNG construction industry and is moving as quickly as the circumstances allow. The financial year culminated in Anadarko Petroleum and its project partners making a positive Final Investment Decision (FID) in June 2019, thereby committing to construction of the Area 1 LNG Project. This milestone followed a host of pre-FID early works, including the construction of a village for residents who were relocated from the Afungi project site, various roadworks, camp accommodation and an airfield. The contracts awarded to date have been predominantly, pre-FID awards. The contractors appear to have been afforded considerable flexibility in the way in which the scopes of work were delivered, including the recruitment, training and deployment of local workers. In the future, on the project construction site for post-FID contracts, the rigorous minimum standards in terms of internationally recognised skills and local recruitment requirements will be more consistently applied, in line with RBR’s services. Since the Anadarko FID, the project’s Engineering, Procurement and Construction (EPC) contractor consortium, the CCS JV, has been formally appointed, and is now beginning to award construction- related contracts. Amongst the first of these contracts is the construction of a 9,500-bed accommodation camp for construction workers. Work on this contract is expected to commence in the October 2019 quarter, around the same time as work commences on the temporary beach landing facilities. Your Board believes that this progress is firm evidence that further significant delays in project development are highly unlikely, further reinforced by the fact that first gas deliveries from the project are committed for 2024, with a construction timetable of roughly 60 months. The prevailing sense of urgency is also supported by the ongoing discussions between RBR representatives and the contractors working on these sites. Moreover, RBR is confident of securing work with these contractors. RBR is focusing its efforts on the larger, labour-intensive activities both within and outside of the project site (outside activities primarily being those related to the development of the Palma townsite). The rationale for this distinction is due to the fact that project-related contracts will be subject to very well-defined, rigorous performance conditions, lengthy payment terms, project- specific employment conditions, and so on, while potential clients undertaking work unrelated to the LNG projects will have complete flexibility within the bounds of the law. RBR’s service offerings to these two “groups” will be tailored to their specific requirements. Indeed, RBR is one of a select few organisations which is able to address a broad spectrum of clientele with bespoke services and is therefore very well-positioned. As part of RBR’s strategy, we have invested significant time and money in establishing our brand and profile in Mozambique. 1 CHAIRMAN’S LETTER (Continued) We are the preferred supplier of training services to several of the larger corporate groups within Mozambique. We have entered into a number of strategic relationships to enhance and expand our service offerings and expanded our geographic footprint beyond the capital, Maputo, with an operating base now in Palma, the regional city in closest proximity to the Project, with further representation in the coastal city of Beira via our recently announced alliance with ROTC. This is in addition to having developed a mobile training capability for deployment to any location, as required. While laying the foundations to secure these contracts, we have been prudent in our expenditure, which in turn has enabled us to limit the amount of money we have raised from investors. As part of this prudent financial management, our successful convertible note issue in January 2019 and the more recent September placement were executed above ruling market prices. While operating on a relatively small capital base, we have attracted support from high net-worth individuals and corporate parties who clearly see the enormous potential of your Company. With the Anadarko Project (Area 1) formally underway, the Exxon-led MRV (Area 4) project FID imminent and the acceleration of construction activities in and around Palma, we believe demand for RBR’s services will increase substantially over the coming 12 months. Anadarko’s recent acquisition by Occidental Petroleum, and the implications thereof on the project timeline, has been explained in the “Review of Operations and Activities” section of the Annual Report. Finally, I would like to thank our staff, alliance partners and shareholders for their support over the past year. I look forward to reporting to you as we seek to secure the contracts which we believe will generate strong returns on the investment we have made in establishing RBR as a leading supplier of labour and training services in Mozambique. Ian Macpherson 2 LETTER FROM THE CEO Dear Shareholder, As Chief Executive of your Company, I am pleased to report to you on the strong progress we have made over the past year as we seek to capitalise on the opportunities which are expected to stem from the emerging LNG industry in Mozambique. Our focus in the past financial year has been on building on the capabilities which will enable us to deliver our vision – “To be the leading provider of local and expatriate staffing solutions to the Mozambique LNG construction boom. We will recruit, train and supply skilled, fit-for-work staff to our clients every day”. Setting the Scene Mozambique is rapidly shaping up as a major LNG producer based on the discovery of vast quantities of high-quality gas in the Rovuma Basin off the northern Cabo Delgado province. Resources are already estimated to exceed 150 Tcf and further drilling under the 5th Licensing Round will commence in 2020. The country is geographically well-placed to supply, in parallel, both the fast-growing Asian markets in India and China, as well as Europe, which is facing declining indigenous production. Standard Bank considers Mozambique can become to China for LNG what Australia is for minerals and New Zealand is for food. Furthermore, Mozambique production will be price competitive with US LNG exports and is well-placed for regional bunkering/SSLNG. According to Standard Bank, the Mozambique LNG “as it stands” project timetable indicates a total project pipeline valued at US$128 billion scheduled for Final Investment Decision (FID) by 2025. This pipeline includes floating LNG (FLNG), onshore production and various domestic gas (Domgas) projects. Above: Overview of Potential developments Fuelled by LNG and Domgas Source: Standard Bank 3 LETTER FROM THE CEO (Continued) A summary of the projects is below: FLNG: o The Coral FLNG (3.4 Mtpa), secured FID in June 2017, with first gas scheduled for June 2022. Construction is already underway. Capital cost c.US$9 billion; On-shore: o Mozambique LNG (12.9 Mtpa), secured FID in June 2019 and is expected to be fully commissioned in 2024. Capex c.US$23 billion; o Area 4 Rovuma LNG (15.2 Mtpa): This will be the largest project in Africa’s history, capex c.US$30 billion; FID expected 2H 2019 and fully commissioned in 2025; o Future unitised trains (15.2 Mtpa). FID possible in 2023/4; o Prosperidade LNG (12.9 or 15.2 Mtpa). FID possible in 2023/4; Domgas Projects: o Various projects are envisioned, including gas to liquids (GTL – c.US$5.5 billion), fertiliser production, independent power projects (IPPs), small scale LNG (SSLNG), LNG bunkering, methanol to olefins (MTO). Total estimated capex of these projects exceeds US$12 billion. Above: Development Overview of the Rovuma Basin Source: Mitsui & Co. Mozambique will commission into production 28.1 Mtpa between 2023-2025 at the same site, similar to Ras Laffan in Qatar. On this basis, Mozambique will be building on-shore LNG more intensively than Qatar did. Standard Bank envisages the Afungi site will ultimately be able to host (with Mega- Trains) over 90 Mtpa of LNG production plus a Domgas Industrial Park. Mozambique has a 30-year Engineering, Procurement, Construction and Commissioning (EPCC) term and requires, through a Decree Law, that all Plans of Development (PODs) must be submitted by December 2023 – essentially, this is a use it or lose it requirement on all project Sponsors. Assuming the Sponsors submit their ambitious PODs accordingly, the big question is whether the country will have the capacity in terms of infrastructure and skills to match this market obligation. 4 LETTER FROM THE CEO (Continued) Below are a few numbers to further illustrate the enormity of the Mozambique LNG projects (source: Standard Bank): US$65 billion of FIDs expected in 2019, in a country with a GDP of US$14 billion (and 100% external debt to GDP); To date, the most expensive object ever built in the world cost US$54 billion (the Gorgon LNG project in Australia); From 2019, the Afungi LNG site in Mozambique will be the world’s most expensive real estate since time began, and will be a building site for the next decade at least; The overall US$128 billion investment is scheduled to take place in a province with a GDP of only US$0.55 billion; Mozambique’s GDP is likely to increase (roughly) at 8-10% p.a. real over the next 30 years; The LNG investments will position Mozambique as the world’s 4th or 5th biggest producer; Building the four on-shore LNG trains in parallel will need 2 million eggs per month to feed the workers, requiring nearly 60,000 chickens laying 1.2 eggs per day; The construction activities will require tens of thousands of workers on site each day at peak and create several hundred thousand employment opportunities nationally. The Mozambique Government is busy finalising a local content law which will stipulate, amongst other matters, the minimum requirements for procurement from local suppliers, as well as local employment terms (including recruitment and training). Mozambique produces very little in terms of industrial goods, with the bulk of local content expenditure likely to be labour-related (training and workers’ wages) and logistics. RBR is perfectly positioned to play a key role in training and providing this local labour. RBR’s Competitive Position Since establishing operations in Mozambique, RBR believes it has put in place all the elements required to achieve its vision “To be the leading provider of local and expatriate staffing solutions to the Mozambique LNG construction boom. We will recruit, train and supply skilled, fit-for-work staff to our clients every day”. Executing this vision requires RBR to possess the following capabilities: The ability to identify potential recruits who are willing and able to work in the targeted sectors. Recruitment efforts must also be prioritised based on proximity to the workplace, i.e. opportunities must be offered to local communities ahead of people living in other provinces or distant locations. RBR has arguably the largest consolidated database in Mozambique from which to source potential workers; A way to ensure the local employees have the skills required for the job. Mozambique’s local qualifications are not yet recognised by the developers of the LNG projects as being of a standard equivalent to “mainstream” international qualifications. However, workers will not be granted access to site without an internationally recognised qualification. RBR’s training entity Futuro Skills is able to assess the competency of individuals, in certain key skills, against the UK’s Engineering Construction Industry Training Board (ECITB) and, if deemed competent, award a recognised international qualification. Futuro Skills is well-placed to provide training in the skills which will be in high demand by the project developers; The technology to record and maintain the qualifications and competencies of workers in its database, which enables employers to inspect a candidate’s training and competency assessment records at any time. To this end, RBR developed the innovative FuturoCARDTM portable training record; 5 LETTER FROM THE CEO (Continued) The licence and ability to supply skilled staff to clients, whether through a recruitment and placement service, through a labour hire arrangement, or through the Company’s comprehensive internship programme; The capacity to supply the abovementioned skilled staff in the required numbers and with the desired range of skills/experience. This will require a significant number of skilled expatriates to be employed, at least until the capabilities of the local workforce reasonably matches the expatriate workforce. Futuro People, with its labour broking licence and visa/immigration capabilities, is equipped to provide this service. However, RBR does not have an extensive database of suitable skilled expatriates of its own, so an alliance has been put in place with a leading international recruitment organisation to service this need; All the above needs to take place at multiple locations, with on-the-ground support for the workforce. RBR’s network of offices and association with leading Mozambican logistics company, LBH Mozambique, provides a strong geographic footprint from which to grow its services. STATUS MOZAMBIQUE CAPABILITY Recruitment & Labour Broking Licence Few issued, and long lead time to acquire Database of Skilled Labour Arguably the most comprehensive in Mozambique Skills Training & Assessment Already the premier provider – wide scope ECITB Accreditation First company to receive accreditation Intellectual Property Innovative FuturoCARDTM training record Adequate Facilities Hubs in north and south, mobile facilities and alliances to access further sites Visas & Immigration Have in-house capability In-country network Staff across 3 offices/locations Established relationships with key industry participants Above: RBR is systematically acquiring all the capabilities essential to success in Mozambique Above: Futuro Skills Students 6 LETTER FROM THE CEO (Continued) THE WAY FORWARD The strong progress made by RBR during the past financial year has left it well-placed to supply the major LNG projects planned for Mozambique. The Company has strengthened its team and significantly improved its facilities and technology. Please refer to the Review of Operations and Activities section in this Annual Report. RBR’s capabilities in Mozambique give the Company a significant point of difference. Other labour providers focus on recruiting “work-ready” candidates but do not have RBR’s capacity to develop their own workforce with internationally recognised qualifications. While maintaining a focus on Mozambique, the Company will continue to target other emerging markets with similarly strict local content laws and lower levels of education, primarily in Africa. The recent recovery in commodity prices should help to drive resource development activity – and therefore demand for RBR’s services – in markets of this kind. The Company also maintains its JV exploration assets which are completely funded by the JV partners, offering opportunistic upside at no cost to shareholders. The key risks to RBR remain unchanged, and are: Recruiting and retaining staff of a calibre required to deliver its vision as the business grows; Growing RBR’s capacity at the required pace and extending its network of facilities in Mozambique to meet future demand; Securing future business, including the timing and value of these contracts. The LNG Project schedules are out of RBR’s control. In closing, the LNG-driven opportunities in Mozambique are truly once-in-a-generation. Those companies which recognised the opportunity and took the bold step to invest into the country, in a considered and timely manner over the past few years, stand to share in the benefits. Progress has been slower than anticipated, testing the patience and resolve of investors. But it is all starting to happen right now, and RBR is the only ASX-listed company with exposure to what is shaping up as the world’s biggest project play. Thank you very much for your support. Richard Carcenac 7 FINANCIAL REPORT For the year ended 30 June 2019 8 DIRECTORS’ REPORT The Directors present their report on RBR Group Limited (“RBR”) and the entities it controlled at the end of and during the year ended 30 June 2019. DIRECTORS The names and details of the Directors of RBR during the financial year and until the date of this report are: Ian Macpherson – B.Comm., CA Executive Chairman Appointed 18 October 2010 Mr Macpherson is a Chartered Accountant with over forty years experience in the provision of financial and corporate advisory services. Mr Macpherson was formerly a partner at Arthur Anderson & Co managing a specialist practice providing corporate and financial advice to the mining and mineral exploration industry. In 1990, Mr Macpherson established Ord Partners (later to become Ord Nexia) and has specialised in the area of corporate advice with particular emphasis on capital structuring, equity and debt raising, corporate affairs and Stock Exchange compliance for public companies in the mining and industrial areas. He has further been involved in numerous asset acquisitions and disposal engagements. Ord Nexia merged with MGI Perth in October 2010 and Mr Macpherson continued in a consulting role with the merged group until November 2011. He has acted in the role of Director and Company Secretary for a number of entities and is currently a Non-Executive Director of Red 5 Limited (15 April 2014 to present). Former Directorships: Non-Executive (Deputy) Chairman of Avita Medical Ltd (5 March 2008 to 16 January 2016). Mr Macpherson is a Member of the Institute of Chartered Accountants in Australia, the Australian Institute of Company Directors and past member of the Executive Council of the Association of Mining Exploration Companies (WA) Inc. Richard Carcenac – B.Sc. Eng. (Civil), MBA Chief Executive Officer and Executive Director Appointed 16 June 2015 Mr Carcenac is a civil engineer with an MBA who has over 20 years experience working for international mining houses including Anglo American and BHP Billiton in a variety of roles in Australia, South Africa, Switzerland and The Netherlands. The majority of his career was spent in marketing and operations, and included board appointments at Ingwe Collieries Ltd (the South African coal subsidiary of BHP Billiton Ltd) and the Richards Bay Coal Terminal Company Ltd. Mr Carcenac’s most recent position was as General Manager of BHP Billiton Worsley Alumina’s Boddington Bauxite Mine in Western Australia. Athol Emerton – Fellow of Chartered Institute of Shipbrokers, London Non-Executive Director Appointed 19 August 2019 Mr Emerton 30 years in commerce in Southern Africa, including Mozambique and has chaired the South African Shipping Association (SAASOA) training committee for 7 years, including the scoping panel that developed the TETA shipping qualification & headed the establishment of an industry wide shipping learnership programme. He is a self-motivated leader in the maritime and transport logistics industries, with a particular interest in building business capacity and opportunities through entrepreneurial thought, and a passion for skills development and upliftment of indigenous populations. Mr Emerton’s wealth of experience and unique skills set has been gained through working with many of the large, well known, international resource and shipping companies around the world, and he is considered a specialist in developing landside, marine and transport solutions in inhospitable (due to political, economic or geographical reasons) regions or ports. Mr Emerton is the Managing Partner of the African operations of global logistics company LBH. After establishing the LBH operations in South Africa and Mozambique 35 years ago, Mr Emerton has grown the business into one of the premier logistics and ships agency enterprises in the region. 9 DIRECTORS’ REPORT (Continued) Paul Graham-Clarke – B.Sc. (Tokyo) Non-Executive Director Appointed 16 December 2015 Mr Graham-Clarke has 37 years of foreign exchange and commodity experience in the United Kingdom working for public listed companies, a UK Hedge fund and a private UK commodity company in an executive capacity. He has significant experience in company strategic turnarounds, leading large and small management teams, and the restructuring of business divisions. He was formerly Managing Director of Foreign Exchange at ICAP (part of ICAP's Global Broking business, which is now the conglomerate TPIcap) and Managing Director of London Commodity Brokers. Mr Graham-Clarke was born in South Africa and educated both there and in Japan where he received his Bachelor of Science degree. Predominantly UK-based in the latter part of his career, he maintains a significant business network and access into the UK financial markets. COMPANY SECRETARY Jessamyn Lyons – B.Comm., AGIA, ICSA Appointed 2 August 2019 Ms Lyons is a Chartered Secretary with 15 years experience working in the stockbroking and banking industries. She is an Associate of the Governance Institute of Australia and she holds a Bachelor of Commerce from the University of Western Australia with majors in Investment Finance, Corporate Finance and Marketing. Ms Lyons is also a Director of Everest Corporate and Company Secretary of Southern Hemisphere Mining Limited, Ardiden Limited, ACH Minerals Pty Ltd and Andes Resources Limited. Over the past 15 years she has held various positions with Macquarie Bank, UBS Investment Bank (London) and more recently Patersons Securities. Patrick Soh, B.Bus., CPA (Resigned as Company Secretary on 2 August 2019). PRINCIPAL ACTIVITIES The principal activities of the Consolidated Entity during the financial year focused on Mozambique. The group operates via subsidiaries PacMoz, Lda (“PacMoz”), Futuro Skills Mozambique, Lda (“Futuro Skills”) and Futuro Business Services, Lda in the provision of labour, training and professional services in Mozambique. The Australian business maintains its mineral exploration and development assets, primarily in Western Australia (refer to the review of operations and activities below), and owns a Registered Training Organisation. DIVIDENDS No dividend has been paid since the end of the previous financial year and no dividend is recommended for the current year. REVIEW OF OPERATIONS AND ACTIVITIES RBR continued to prepare for the first contracts to be issued in relation to the planned LNG projects in Mozambique. While the primary source of revenue over the reporting period was from the delivery of training and assessment services and corporate payroll services, the Company plans to capitalise on this huge future LNG opportunity by providing a comprehensive, integrated solution to the challenge of employing suitably skilled local workers. In this regard, RBR’s commercial services span the identification and recruitment of prospective workers against specific priorities and criteria, medically screening them for fitness to work, assessing their existing skills (recognition of prior learning) against accepted standards, training them both on and off the job until they are deemed fully competent, and managing their employment and placement with client companies At the same time, RBR will continue to expand our client base and secure repeat work with existing clients. As part of our preparations for the LNG construction boom in Mozambique, RBR’s key focus during this reporting period was on: Enhancing our capacity in-country. This included improving our IT systems, purchasing equipment, expanding our trainer pool, securing international accreditation (UK’s ECITB) for key training scope, filling key leadership positions and, critically, opening a training centre in Palma in August 2019, close to the LNG construction site; Furthermore, Futuro Skills developed containerised mobile training and assessment units which can be readily transported to any location within the country in order to provide basic ECITB-accredited training and assessment services; Analysing and interpreting the database of over 250,000 prospective workers so that recruitment efforts will be efficient and focussed. 10 DIRECTORS’ REPORT (Continued) The Key Event during the Reporting Period The standout news event in the reporting period was the 19 June 2019 announcement by Anadarko Petroleum and its joint venture partners that they had made a Final Investment Decision (FID) in favour of their US$20 billion Mozambique LNG Project (“Moz LNG”), which is the largest single LNG project approved in Africa. This consortium has also appointed its Engineering, Procurement and Construction (EPC) Contractor, the CCS JV, the key participants in which are Saipem (with a 75% share) and McDermott (with a 25% share). This was the second LNG project in Mozambique to receive a positive FID (Eni’s floating LNG being the first) and a larger onshore LNG project led by Eni and Exxon Mobil is understood to be proceeding towards its FID in the coming months. These two onshore LNG projects have a combined estimated capital cost of US$50 billion. LNG projects of this scale typically take about five years to construct and are expected to have a peak construction workforce of up to 50,000. There is both a legal requirement and corporate commitment by the investors in both projects to maximise employment opportunities for Mozambicans, requiring significant investment in training. Furthermore, on 8 August 2019, Anadarko Petroleum Corporation (“Anadarko”) confirmed the successful completion of the acquisition of Anadarko by Occidental Petroleum Corporation (“Occidental”), with Anadarko’s Mozambican entity AMA1 continuing to exist as a wholly owned subsidiary of Occidental. A few days prior, on 3 August 2019, Occidental entered into a definitive Purchase and Sale Agreement with Total S.A. (“Total”), pursuant to which Total will acquire all of Anadarko’s Algeria, Ghana, Mozambique and South Africa assets, including all of Anadarko’s shareholding in AMA1. The transaction is expected to close promptly following receipt of all requisite approvals. Occidental and Total are committed to AMA1’s operations in Mozambique and are confident that the Transaction will have no adverse impact on AMA1’s business in Mozambique, including in relation to both the direction and schedule of the project. The Significance of this FID for Near-term Activities The main construction-related activities which will commence within the coming six months include: major earthworks (clearing, grubbing, infill and stabilisation) camp accommodation with at least 10,000 beds and associated facilities a reverse osmosis plant to provide a safe source of water a temporary beach landing for the receival of material, plant and equipment temporary facilities such as fencing, site offices, warehouses, laydown areas, waste facilities, fuel depot and temporary power concrete batch plant with aggregate receival and storage. RBR is in regular contact with the companies bidding for, or already holding, these contracts, many of which are awaiting Notice to Proceed. Actions Taken by RBR With the FID in place, RBR took significant steps during the June 2019 quarter to ensure we are fully prepared to bid for the supply of our services under these large contracts, as soon as they are awarded to the various contractors. As part of our preparations under our strategy to assess, train and provide workers to the LNG projects, RBR has opened a training centre in the Mozambican city of Palma, which is located close to the LNG construction sites. The facility is run by RBR’s training subsidiary, Futuro Skills Mozambique, Lda (FSM). Palma was chosen as the Company’s northern hub because of its close proximity to the LNG construction sites, whereas the province’s capital city, Pemba, is situated more than 400km from the site by road. The Catalisa Youth Training Program, which is an initiative of the Anadarko-led Mozambique LNG Project (Moz LNG), recently trained 100 young Palma residents in various basic life skills which will better prepare them for the job market. This program aims to train about 1000 candidates during the construction of Moz LNG, representing only a small proportion of the Mozambicans expected to secure employment on the LNG projects and related industries. FSM and Catalisa are working together to create an integrated personal development pathway for the Catalisa graduates. FSM is enrolling Catalisa graduates in our Mozambique Construction Green Card training program which will, upon successful completion, earn them an internationally-recognised level one qualification that meets the health and safety needs of multiple industries, including oil and gas, mining and construction. The holders of the Mozambique Construction Green Card will then become eligible to enrol into Futuro Skills’ internationally-recognised ECITB technical training programs as well as a suite of other FSM vocational training programs that will significantly raise their employment potential in semi-skilled and skilled roles. 11 DIRECTORS’ REPORT (Continued) The first cohort of Catalisa graduates completed their training on 12 August 2019 and each week another group of students will be trained as they become available from the Catalisa program. RBR has already received expressions of interest from contractors operating in the area which are seeking to hire the graduates as they become available, and placement interviews are underway. Other Contracts FSM secured Mozambique’s first accreditation from the UK’s Engineering Construction Industry Training Board (ECITB) to assess, train and issue ECITB qualifications in health and safety, as well as five key technical disciplines: rigging, scaffolding, non-critical welding, pipe-fitting, and steel erecting. These ECITB qualifications, or their international equivalent, will be required for any worker to gain access to the LNG project site. In recognition of securing ECITB accreditation in the December quarter of 2018 and FSM’s participation in the December 2018 launch event for the Anadarko Area 1 LNG project and Government of Mozambique Skills Fair initiative, FSM was awarded a contract by the CCS JV to “Perform a series of Skills Roadshows around Mozambique for the Mozambique LNG Project”. During the June 2019 quarter the scope of the Skills Fair project was significantly expanded by Anadarko, which indicated the expected numbers of Mozambican participants had grown from about 700 to over 2,500 and put out to tender. While the current Skills Fair contract with the CCS JV remains valid, Anadarko may elect to award the entire expanded scope to a single Party under a contract which supersedes the CCS JV contract. The tender result and contract are yet to be confirmed but RBR remains confident. In January 2019, South32’s Mozal aluminium business appointed FSM as its sole provider of a range of training and assessment services to all its contractors, as required for entry to site. The contract continues to operate on a month-by- month basis, with variable revenues up to about $20k per month (driven by contractor volumes), potentially growing if other programs are added to the scope of works. FSM delivered two months of skills development in the June quarter, on behalf of Sasol to the stakeholder communities around its Inhassoro petroleum operations, delivering over $100k of revenues. FSM secured further training work from the NGO Swisscontact, which is funding the training of employees of small construction businesses in the Maputo region. Corporate and Financial Position As at 30 June 2019 the Consolidated Entity had cash reserves of $412,821 (2018: $341,920). The net loss for the year was $1,513,571 (2018: $1,423,434) including a non-cash impairment charge of $nil (2018: $150,000). Risk Management The Board is responsible for the oversight of the Consolidated Entity’s risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management with the Chief Executive Officer having ultimate responsibility to the Board for the risk management and control framework. Areas of significant business risk to the Consolidated Entity are presented to the Board by the Chief Executive Officer each year. Arrangements put in place by the Board to monitor risk management include monthly reporting to the Board in respect of operations and the financial position of the Consolidated Entity. EARNINGS/LOSS PER SHARE Basic loss per share Diluted loss per share SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS 2019 Cents (0.21) (0.21) 2018 Cents (0.24) (0.24) In the opinion of the Directors there were no other significant changes in the state of affairs of the Consolidated Entity that occurred during the financial year under review. 12 DIRECTORS’ REPORT (Continued) OPTIONS OVER UNISSUED CAPITAL Unlisted Options and Performance Rights During the financial year the following options were issued. 4,500,000 options with an exercise price of $0.018 and expiring 31 July 2019 were issued to Directors as a free issue as part of a placement approved by shareholders on the 6 November 2018 and completed on the 6 December 2018. 3,500,000 options with an exercise price of $0.018 and expiring 31 July 2019 were issued as part of a share based payment to a supplier on the 6 December 2018. 2,500,000 Performance Rights were issued to Ken Foote on the 22 January 2019 under Employee Securities Incentive Plan and subject to internal management performance criteria. Since 30 June 2019 and up until the date of this report there have been no further options issued to Directors or Staff. For a reconciliation of the number of options on issue refer to note 15(c). No person entitled to exercise any option has or had, by virtue of the option, a right to participate in any share issue of any other body corporate. CORPORATE STRUCTURE RBR Group Limited (ACN 115 857 988) is a Company limited by shares that was incorporated on 19 August 2005 and is domiciled in Australia. EVENTS SUBSEQUENT TO THE REPORTING DATE There has not arisen since the end of the financial year any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Consolidated Entity to affect substantially the operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in subsequent financial years except for the following: 29,321,429 unlisted options with an exercise price $0.018 expired on 31 July 2019. On 2 August 2019, the Company announced a change of Company Secretary appointing Ms Jessamyn Lyons. On 14 August 2019, the Company announced that it had started training workers for jobs on the Mozambique LNG projects. On 19 August 2019, the Company announced the appointment of global logistics specialist Mr Athol Emerton as Non- Executive Director. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS RBR is developing and growing the business units described in the “Review of Operations and Activities” (page 10) and developing the client base and revenues. EXPLORATION / ENVIRONMENTAL REGULATION AND PERFORMANCE Exploration interests are maintained and fully funded via Newmont Joint Venture as detailed in Note 28. The Consolidated Entity holds various exploration licences to regulate its exploration activities in Australia. These licences include conditions and regulations with respect to the rehabilitation of areas disturbed during the course of its exploration activities. So far as the Directors are aware there has been no known breach of the Consolidated Entity’s licence conditions and all exploration activities comply with relevant environmental regulations. 13 DIRECTORS’ REPORT (Continued) INFORMATION ON DIRECTORS As at the date of this report the Directors’ interests in shares and unlisted options of the Consolidated Entity are as follows: Directors Ian Macpherson Executive Chairman Appointed 18 October 2010 Richard Carcenac Chief Executive Officer and Executive Director Appointed 16 June 2015 Paul Graham-Clarke Non-Executive Director Appointed 16 December 2015 Athol Emerton Non-Executive Director Appointed 19 August 2019 DIRECTORS’ MEETINGS Ordinary Shares Performance Rights Unlisted Options 51,000,000 - 33,441,210 15,000,000 19,435,564 91,948,871 - - - - - - The number of meetings of the Consolidated Entity’s Directors held in the period each Director held office during the financial year and the numbers of meetings attended by each Director were: Director Board of Directors’ Meetings I Macpherson R Carcenac P Graham-Clarke Meetings Attended 3 3 3 Meetings held while a director 3 3 3 14 DIRECTORS’ REPORT (Continued) REMUNERATION REPORT the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendation 8.1 of Recommendations (2nd edition) states that the Board should establish a Remuneration Committee. The Board has formed the view that given the number of Directors on the Board, this function could be performed just as effectively with full Board participation. Accordingly, it was resolved that there would be no separate Board sub-committee for remuneration purposes. This report details the amount and nature of remuneration of each Director of the Consolidated Entity and executive officers of the Consolidated Entity during the year. Overview of Remuneration Policy The Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the executive team. The broad remuneration policy is to ensure that remuneration properly reflects the relevant person’s duties and responsibilities, and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality. The Board believes that the best way to achieve this objective is to provide the Managing Director (or equivalent) and the Executive Team with a remuneration package consisting of a fixed and variable component that together reflects the person’s responsibilities, duties and personal performance. An equity based remuneration arrangement for the Board and the Executive Team is in place. The remuneration policy is to provide a fixed remuneration component and a specific equity related component, with performance conditions. The Board believes that this remuneration policy is appropriate given the stage of development of the Consolidated Entity and the activities which it undertakes and is appropriate in aligning Director and executive objectives with shareholder and business objectives. The remuneration policy in regard to setting the terms and conditions for the Chief Executive Officer has been developed by the Board taking into account market conditions and comparable salary levels for companies of a similar size and operating in similar sectors. Directors receive a superannuation guarantee contribution required by the government, which is currently 9.5% per annum and do not receive any other retirement benefits. Some individuals, however, can choose to sacrifice part or all of their salary to increase payments towards superannuation. All remuneration paid to Directors is valued at cost to the Consolidated Entity and expensed. Options are valued using either the Black-Scholes methodology or the Binomial model. In accordance with current accounting policy the value of these options is expensed over the relevant vesting period. Non-Executive Directors The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting. The annual aggregate amount of remuneration paid to Non-Executive Directors was approved by shareholders on 7 November 2006 and is not to exceed $200,000 per annum. Actual remuneration paid to the Consolidated Entity’s Non-Executive Directors is disclosed below notwithstanding the approved maximum of $200,000 and the policy of fair remuneration, Non-Executive Directors have accepted significantly reduced remuneration fees in light of the restricted working capital position of the company as it builds its business units. Remuneration fees for Non- Executive Directors are not linked to the performance of the Consolidated Entity. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Consolidated Entity. Senior Executives and Management The Consolidated Entity aims to reward executives with a level of remuneration commensurate with their position and responsibilities within the Consolidated Entity so as to: Reward executives of the Consolidated Entity and individual performance against targets set by reference to appropriate benchmarks; Reward executives in line with the strategic goals and performance of the Consolidated Entity; and Ensure that total remuneration is competitive by market standards. Structure Remuneration consists of the following key elements: Fixed remuneration; and Issuance of performance rights. 15 DIRECTORS’ REPORT (Continued) Fixed Remuneration Fixed remuneration consists of base remuneration (which is calculated on a total cost basis including any employee benefits e.g. motor vehicles) as well as employer contributions to superannuation funds. The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Remuneration packages for the staff who report directly to the Managing Director (or equivalent) are based on the recommendation of the Managing Director (or equivalent), subject to the approval of the Board in the annual budget setting process. Service Agreement Mr Richard Carcenac was appointed Chief Executive Officer and an Executive Director on 16 June 2015. A summary of his employment contract is as follows: • • • Term of agreement – Ongoing, subject to termination and notice periods; Base Salary, $250,000 including superannuation; The following performance rights were issued on 27 November 2015; • 7,500,000 Class 2 performance rights subject to meeting specific performance criteria achieved within 24 months; • 7,500,000 Class 3 performance rights subject to meeting specific performance criteria achieved within 24 months; and • Termination of employment by either party requires 3 month’s written notice. Contracted key management personnel are engaged on standard commercial terms. Details of the nature and amount of each element of the remuneration of each Director and Executive Officer of RBR Group Limited paid/accrued during the year are as follows: 2018/2019 Directors I Macpherson – Executive Chairman R Carcenac – Chief Executive Officer P Graham-Clarke – Non-Executive Executives Ken Foote – General Manager, Training (i) P Soh – Company Secretary, CFO (ii) Short-term Benefits Post Employment Equity Compensation Base Salary/Fees $ Motor Vehicle/Bonus $ Superannuation Contributions $ Performance Rights (v) $ Total $ 76,606 228,311 20,000 117,000 47,500 - - - - 3,478 21,690 - - 28,217 - 80,084 278,218 20,000 - 9,278 - 126,278 47,500 2017/2018 Directors I Macpherson – Executive Chairman R Carcenac – Chief Executive Officer I Buchhorn – Non-Executive (iii) D Fyfe – Non-Executive Director (iv) P Graham-Clarke – Non-Executive Executives Ken Foote – General Manager, Training (i) P Soh – Company Secretary, CFO (ii) Notes: (i) Mr Foote was identified as a KMP for the year ending 30 June 2019. (ii) Mr Soh resigned as Company Secretary on 2 August 2019 and continues as CFO. (iii) Mr Buchhorn resigned as Non-Executive Director on 19 April 2018 (iv) Mr Fyfe was appointed Non-Executive Director on 18 December 2017 and resigned on 13 June 2018 (v) Amounts represent value of performance rights expensed for the period. 76,606 228,311 18,750 5,000 20,000 3,478 21,690 - 475 - 91,000 57,235 - - - - - - - - 87,375 - - - - 80,084 337,376 18,750 5,475 20,000 91,000 57,235 Other than the Directors and Executive Officers disclosed above there were no other Executive Officers who received emoluments during the financial year ended 30 June 2019. 16 DIRECTORS’ REPORT (Continued) Loans During the 2019 financial year, the transactions with Directors, included an entity related to Ian Macpherson, which loaned the Company $55,000 on normal commercial terms (unsecured, interest rate of 5%). The loans have been repaid from the proceeds of shares issued. There were no other loan transactions with Directors or Executives in the current year. Movement in Shares The aggregate numbers of shares of the Company held directly, indirectly or beneficially by Directors and Executive Officers of the Consolidated Entity or their personally-related entity are as follows: Opening Purchases Disposals 30 June Purchases Closing - - - - - - 9,699,999 3,000,000 - 3,000,000 - - 49,000,000 33,441,210 - 19,435,564 - - 39,300,001 30,441,210 - 16,435,564 - - 2,000,000 - 91,948,871 - - - 2018/2019 Mr I Macpherson (i) & (ii) Mr R Carcenac (ii) Mr Athol Emerton (iii) Mr P Graham-Clarke (ii) Mr K Foote Mr P Soh 2017/2018 Mr I Macpherson Mr R Carcenac Mr I Buchhorn (iv) Mr D Fyfe Mr P Graham-Clarke Mr P Soh Notes: (i) Purchase includes during FY2019 include on-market purchases of 6,699,999 and purchases post 30 June 2019 are on-market. (ii) Purchase includes 3,000,000 shares from placement in December 2018. (iii) Post 30 June purchase represents holding on appointment as Director on the 19 August 2019. (iv) Deemed disposal when left the Board or Company. - - - (18,574,724) - - - 5,747,600 - - 39,300,001 30,441,210 - - 16,435,564 - 33,800,000 17,691,210 18,574,724 - 10,687,964 - 5,500,001 12,750,000 51,000,000 33,441,210 91,948,871 19,435,564 - - - - - - - - Movement in Options The aggregate numbers of options of the Company held directly, indirectly or beneficially by Directors and Executive Officers of the Consolidated Entity or their personally-related entity are as follows: Opening Placement options (i) 30 June Expired 31 July 2019 Closing 2018/2019 Mr I Macpherson Mr R Carcenac Mr Athol Emerton Mr P Graham-Clarke Mr K Foote Mr P Soh Notes: (i) Options were a free issue on a 1 option for every 2 shares basis as apart of a placement participated by Directors and approved by shareholders at a general meeting on the 6 November 2018. Options had an exercise price of $0.018 expiring on the 31 July 2019. 1,500,000 1,500,000 - 1,500,000 - - 1,500,000 1,500,000 - 1,500,000 - - 1,500,000 1,500,000 - 1,500,000 - - - - - - - - - - - - - - There were no amounts payable on the issue of the options, and there are no performance conditions attached. All options previously issued are now fully vested and are exercisable at any time. When exercisable, each option is convertible into one ordinary share of RBR Group Limited. 17 DIRECTORS’ REPORT (Continued) Movement in Convertible Notes The aggregate numbers of Convertible Notes of the Company held directly, indirectly or beneficially by Directors and Executive Officers of the Consolidated Entity or their personally-related entity are as follows: Opening Issues (i) On appointment Closing 2018/2019 Mr I Macpherson Mr R Carcenac Mr Athol Emerton (ii) Mr P Graham-Clarke Mr K Foote Mr P Soh Notes: (i) (ii) Mr Emerton’s holding on appointment as Director on the 19 August 2019. - - - - - - 80,000 22,500 - - - - - - 80,000 - - - 80,000 22,500 80,000 - - - Issue of Convertible Notes to Directors was by shareholders at a general meeting on the 6 November 2018. Performance Rights The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are as follows: Granted Number Date of Grant Terms & Conditions for each Grant Date of Vesting Option Value ($) Exercise Price ($) Expiry Date 7,500,000 27 Nov 2017 Refer (i) below 7,500,000 29 Nov 2018 Refer (ii) below Performance Rights R Carcenac Class 2 (i) R Carcenac Class 3 (ii) Staff Performance Rights Ken Foote Class 1 (iii) Ken Foote Class 2 (iii) Notes: (i) Rights subject to performance criteria prior to 26 November 2018; the Company’s market capitalisation averaging over a period of 30 consecutive trading days a daily average of not less than $8,000,000; and consolidated gross income of the Company and its revenue exceeding $2,000,000; and Mr Carcenac completing 24 months of continuous employment with the Company. 1,250,000 22 Jan 2019 Refer (iii) below 1,250,000 22 Jan 2019 Refer (iii) below N/A 31 Dec 2018 N/A 31 Dec 2019 N/A 26 Nov 2019 N/A 29 Nov 2020 0.00720 0.00048 0.00350 0.00689 (ii) Rights subject to performance criteria prior to 29 November 2020; the Company’s market capitalisation averaging over a period of 30 consecutive trading days a daily average of not less than $10,000,000; and Mr Carcenac completing 12 months of continuous employment with the Company following date of issue. (iii) Staff Performance Rights subject to internal management KPI criteria prior to expiry date. As at the date of this report no Performance Rights had vested. Movement in Performance Rights The aggregate numbers of Performance Rights of the Company held directly, indirectly or beneficially by Directors and Executive Officers of the Consolidated Entity or their personally-related entity are as follows: 2018/2019 Mr I Macpherson Mr R Carcenac Mr Athol Emerton (ii) Mr P Graham-Clarke Mr K Foote Mr P Soh Opening Granted Closing - 7,500,000 - - - - - 7,500,000 - - 2,500,000 - - 15,000,000 - - 2,500,000 - 18 DIRECTORS’ REPORT (Continued) INDEMNIFYING OFFICERS AND AUDITOR During the year the Company paid an insurance premium to insure certain officers of the Consolidated Entity. The officers of the Consolidated Entity covered by the insurance policy include the Directors named in this report. The Directors and Officers Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the officers in their capacity as officers of the Consolidated Entity. The insurance policy does not contain details of the premium paid in respect of individual officers of the Consolidated Entity. Disclosure of the nature of the liability cover and the amount of the premium is subject to a confidentiality clause under the insurance policy. The Consolidated Entity has not provided any insurance for an auditor of the Consolidated Entity. AUDITORS’ INDEPENDENCE DECLARATION Section 370C of the Corporations Act 2001 requires the Consolidated Entity’s auditors Butler Settineri (Audit) Pty Ltd, to provide the Directors of the Consolidated Entity with an Independence Declaration in relation to the audit of the financial report. This Independence Declaration is attached and forms part of this Directors’ Report. NON-AUDIT SERVICES A company related to Butler Settineri (Audit) Pty Limited provided non-audit services on taxation during the period. The Directors are satisfied that the provision of 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, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001. Taxation Services PROCEEDINGS ON BEHALF OF THE CONSOLIDATED ENTITY 2019 $ 2018 $ 2,550 2,920 No person has applied for leave of Court to bring proceedings on behalf of the Consolidated Entity or intervene in any proceedings to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of the Consolidated Entity for all or any part of those proceedings. The Consolidated Entity was not party to any such proceedings during the year. 19 DIRECTORS’ DECLARATION CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the Consolidated Entity support and have adhered to the principles of corporate governance. The Consolidated Entity’s corporate governance practices have been disclosed in Appendix 4G in accordance with ASX listing rule 4.7.3 at the same time as the annual report is lodged with the ASX. Further information about the Company’s corporate governance practices is set out on the Company’s web site at www.rbrgroup.com.au. In accordance with the recommendations of the ASX, information published on the web site includes codes of conduct and other policies and procedures relating to the Board and its responsibilities. DATED at Perth this 30th day of August 2019 Signed in accordance with a resolution of the Directors Ian Macpherson Executive Chairman Competent Persons Statement The information in this report that relates to Exploration is based on information compiled by Andrew Ford who is a Member of the Australasian Institute of Mining and Metallurgy. Andrew Ford is a consultant to RBR Group Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the exploration activity that is being undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Andrew Ford has consented to the inclusion in this report of the matters based on his information in the form and context that it appears. 20 AUDITOR’S INDEPENDENCE DECLARATION 21 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2019 Notes 2 3 3 3 3 5 Revenue Cost of sales Gross profit Employee expenses Directors’ fees Insurance expenses Consultants fees Corporate expenses Depreciation Property expenses Share-based payments expense Exploration costs refund Exploration written off Goodwill impairment Interest expense Capital raising costs Other expenses Loss before income tax Income tax Net loss for the year Other comprehensive income that may be recycled to profit or loss Foreign currency translation adjustments Total other comprehensive loss Total comprehensive loss Loss is attributable to: Equity holders of RBR Group Ltd Non-controlling interests Total comprehensive loss is attributable to: Equity holders of RBR Group Ltd Non-controlling interests 2019 $ 531,588 (71,347) 460,241 (662,759) (60,092) (20,102) (267,161) (68,345) (17,523) (175,244) (46,993) - (21,659) - (87,312) (16,537) (530,313) (1,513,799) 228 (1,513,571) (5,130) (5,130) (1,518,701) (1,498,298) (15,273) (1,513,571) (1,503,122) (15,579) (1,518,701) Earnings per share Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share) 21 21 (0.21) cents (0.21) cents 2018 $ 485,180 (155,703) 329,477 (544,329) (79,317) (7,617) (196,191) (100,624) (19,024) (141,195) (62,765) 3,493 - (150,000) - - (454,795) (1,422,887) (577) (1,423,464) (13,829) (13,829) (1,437,293) (1,413,820) (9,644) (1,423,464) (1,427,796) (9,497) (1,437,293) (0.24) cents (0.24) cents The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Consolidated Entity accompanying notes. 22 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2019 ASSETS CURRENT ASSETS Cash and cash equivalents Trade receivables Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment and motor vehicles Intangibles Capitalised mineral exploration expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Provisions Convertible Note Liability TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses Equity attributable to equity holders in the Company Non-controlling interests TOTAL EQUITY Notes 22(a) 6 7 8 10 11 12 13 14 15(a) 16 2019 $ 412,821 167,741 40,774 621,336 45,979 149,898 17,843 213,720 835,056 229,335 35,300 1,304,513 1,569,148 1,569,148 (734,092) 19,478,110 716,650 (20,906,828) (712,068) (22,024) (734,092) 2018 $ 341,920 205,464 15,932 563,316 34,257 149,898 39,147 223,302 786,618 207,434 40,082 - 247,516 247,516 539,102 19,279,596 674,481 (19,408,530) 545,547 (6,445) 539,102 The above Consolidated Statement of Financial Position should be read in conjunction with the Consolidated Entity’s accompanying notes. 23 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2019 l a t o T - n o N g n i l l o r t n o c t s e r e t n i f o s r e n w O t n e r a p e h t l d e t a u m u c c A n o i t a l s n a r T s e s s o l e v r e s e R n g i e r o F y c n e r r u C e r a h S n o i t p O e v r e s e R d e t u b i r t n o C y t i u q E s e t o N 3 9 4 , 0 7 8 0 1 6 9 2 , 3 8 8 , 0 4 8 , ) 9 7 6 8 5 0 , 8 1 ( ) 7 9 0 , 7 4 ( 3 7 1 , 2 1 8 6 8 4 , 4 3 1 , 8 1 7 1 0 2 E N U J 0 3 T A E C N A L A B 2 0 1 , 9 3 5 ) 5 4 4 , 6 ( 7 4 5 , 5 4 5 , ) 0 3 5 8 0 4 , 9 1 ( ) 2 3 4 , 5 9 ( 3 1 9 , 9 6 7 6 9 5 , 9 7 2 , 9 1 8 1 0 2 E N U J 0 3 T A E C N A L A B ) 4 6 4 , 3 2 4 , 1 ( ) 4 4 6 , 9 ( ) 0 2 8 , 3 1 4 , 1 ( ) 0 2 8 , 3 1 4 , 1 ( - ) 9 2 8 , 3 1 ( 7 4 1 ) 6 7 9 , 3 1 ( - ) 6 7 9 , 3 1 ( ) 3 9 2 , 7 3 4 , 1 ( ) 7 9 4 , 9 ( ) 6 9 7 , 7 2 4 , 1 ( ) 0 2 8 , 3 1 4 , 1 ( ) 6 7 9 , 3 1 ( - - - 5 6 7 2 6 , - - - - - - - 5 6 7 , 2 6 7 3 1 3 4 0 , , 1 2 5 0 , 3 5 8 0 , 0 4 0 1 , - - - - - - - - - - - ) 0 1 6 9 2 ( , 0 1 6 , 9 2 9 6 9 , 3 6 ) 9 5 3 , 4 3 ( - - - - - - - e m o c n i i e v s n e h e r p m o c r e h O t r a e y e h t r o f s s o L e m o c n i i e v s n e h e r p m o c l t a o T 5 8 0 , 0 4 0 , 1 ) b ( 5 1 r a e y e h t g n i r u d d e u s s i s e r a h S n o i t a n b m o c i s s e n s u b i n o g n i t a n m i i l e t s e r e t n i g n i l l o r t n o c - n o N : s r e n w o s a y t i c a p a c r i e h t n i s r e n w o h t i w s n o i t c a s n a r T ) 0 0 0 , 0 7 ( 0 0 0 , 0 7 y t i u q e o t s e r a h s d e u s s n u i r e f s n a r T 5 6 7 , 2 6 - ) 5 7 3 , 7 8 ( 5 7 3 , 7 8 0 5 3 , 2 5 ) 0 5 3 , 2 5 ( d e u s s i s t h g i r e c n a m r o f r e P d e t s e v s t h g i r e c n a m r o f r e P s t h g i r e c n a m r o f r e p r e k o r B 24 ) 1 7 5 , 3 1 5 , 1 ( ) 3 7 2 5 1 ( , ) 8 9 2 , 8 9 4 , 1 ( ) 8 9 2 , 8 9 4 , 1 ( - - 4 1 5 , 8 9 1 3 9 9 6 4 , - - - - 4 1 5 , 8 9 1 3 9 9 , 6 4 - - - ) 0 3 1 , 5 ( ) 6 0 3 ( ) 4 2 8 , 4 ( - ) 1 0 7 , 8 1 5 , 1 ( ) 9 7 5 5 1 ( , ) 2 2 1 , 3 0 5 , 1 ( ) 8 9 2 , 8 9 4 , 1 ( - - - ) 4 2 8 , 4 ( ) 4 2 8 , 4 ( - - - - - 3 9 9 , 6 4 - - - e m o c n i i e v s n e h e r p m o c r e h O t r a e y e h t r o f s s o L e m o c n i i e v s n e h e r p m o c l t a o T 4 1 5 , 8 9 1 ) b ( 5 1 r a e y e h t g n i r u d d e u s s i s e r a h S : s r e n w o s a y t i c a p a c r i e h t n i s r e n w o h t i w s n o i t c a s n a r T - - y t i u q e o t s e r a h s d e u s s n u i r e f s n a r T s n o i t p o d n a s t h g i r e c n a m r o f r e P r a e y e h t g n i r u d ) 2 9 0 , 4 3 7 ( ) 4 2 0 2 2 ( , ) 8 6 0 , 2 1 7 ( , ) 8 2 8 6 0 9 , 0 2 ( ) 6 5 2 , 0 0 1 ( 6 0 9 , 6 1 8 0 1 1 , 8 7 4 , 9 1 9 1 0 2 E N U J 0 3 T A E C N A L A B i t . s e o n g n y n a p m o c c a s ’ y t i t n E d e t a d i l o s n o C e h t h t i w n o i t c n u n o c n j i d a e r l e b d u o h s y t i u q e n i s e g n a h c f o t n e m e t a t s d e t a d i l o s n o C e v o b a e h T CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2019 Notes 2019 $ 2018 $ Cash flows from operating activities Receipts from customers Interest received Convertible note interest paid Payments to suppliers and employees (inclusive of goods and services tax) Net cash used in operating activities 22(b) 540,320 1,846 (73,519) 601,409 1,542 - (1,862,774) (1,394,127) (1,628,335) (1,025,384) Cash flows from investing activities Payments for exploration and evaluation Receipt on sale of tenement Payments for investments in subsidiaries Payments for plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from loan Repayment of loan Proceeds from the issue of shares (net of fees) Proceeds from convertible notes Capital raising costs Net cash provided by financing activities Net decrease in cash held Cash at the beginning of the financial year Exchange rate movements Cash at the end of the financial year 22(a) (354) - - (29,121) (29,475) 96,715 (89,239) 198,514 1,304,513 (16,537) 1,493,966 70,364 341,920 537 412,821 2,655 - (4,578) (10,209) (12,132) - - 1,040,085 - - 1,040,085 2,569 339,084 267 341,920 The above Consolidated Statement of Cash Flows should be read in conjunction with the Consolidated Entity’s accompanying notes. 25 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2019 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in preparing the financial report of the Company, RBR Group Limited and its controlled entities (“RBR” or “Consolidated Entity”), are stated to assist in a general understanding of the financial report. These policies have been consistently applied to all the years presented, unless otherwise indicated. RBR Group Limited is a Company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the official list of the Australian Securities Exchange. The financial statements are presented in Australian dollars which is the Consolidated Entity’s functional currency. (a) Basis of Preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards (including Australian Interpretations) adopted by the Australian Accounting Standards Board and the Corporations Act 2001. RBR Group Limited is a for-profit entity for the purpose of preparing the financial statements. The financial report has been prepared on the basis of historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. The financial report was authorised for issue by the Directors. Going Concern The Consolidated Entity incurred a loss for the year of $1,513,571 (2018: $1,423,464) including a non-cash impairment charge of $nil (2018: $150,000). At 30 June 2019 the Consolidated Entity had cash assets of $412,821 (2018: $341,920) and working capital of $356,701 (2018: $315,800). During the financial year the Company raised $1,503,027 before costs from issue of shares and convertible notes. Although the above is indicative of a material uncertainty, the Company maintains the ongoing support of its major shareholders and capital markets advisers in ensuring continuing access to equity funds. The Company completed a capital raise in December 2018 and January 2019 that included the issue of 1,304,513 convertible notes. In March 2019 7,528,573 options at $0.018 were exercised and converted to ordinary shares. The Company is confident that it will be able to access additional funds through the equity markets during the year to allow for operating activities to continue, if required. Based on this information, the Directors consider it appropriate that the financial statements be prepared on a going concern basis. (b) Use of Estimates and Judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. None of the balances reported have been derived from estimates. (c) Basis of Consolidation Controlled Entity The consolidated financial statements comprise the financial statements of RBR Group Limited and its subsidiaries as at 30 June each year. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. The subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity and ceases to be consolidated from the date on which control is transferred out of the consolidated entity. The acquisition of the subsidiaries has been accounted for using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition. 26 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 Accordingly, the consolidated financial statements include the results of the subsidiaries for the period from their acquisition. Joint Ventures Joint ventures are those entities over whose activities the consolidated entity has joint control, established by contractual agreement. In the consolidated entity’s financial statements, investments in joint ventures are carried at cost. Details of these interests are shown in Note 28. (d) Income Tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred asset or liability is recognised in relation to those temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Current and future tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. (e) Foreign Currency Translation The financial statements are presented in Australian dollars, which is RBR Group Limited’s functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. (f) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. Revenue from rendering of services Rendering of services revenue from training, payroll and business service fees is recognised by reference to the stage of completion of the contracts. Stage of completion is measured by reference to delivery of service. 27 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. (g) Cash and Cash Equivalents Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, which are readily convertible to cash on hand and which are used in the cash management function on a day-to-day basis. (h) Employee Entitlements Liabilities for wages and salaries, annual leave and other current employee entitlements expected to be settled within 12 months of the reporting date are recognised in other payables 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. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. Contributions to employee superannuation plans are charged as an expense as the contributions are paid or become payable. (i) Plant and Equipment and Motor Vehicles Each class of plant and equipment and motor vehicles is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment and motor vehicles Plant and equipment and motor vehicles are stated at cost less accumulated depreciation and any impairment in value. The carrying values of plant and equipment and motor vehicles are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists where the carrying values exceed the estimated recoverable amount, the assets or cash generating units are written down to their recoverable amount. Depreciation Depreciable non-current assets are depreciated over their expected economic life using either the straight line or the diminishing value method. Profits and losses on disposal of non-current assets are taken into account in determining the operating loss for the year. The depreciation rate used for each class of assets is as follows: Plant & equipment 20 - 33% (j) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (“ATO”). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated with the amount of GST included. GST incurred is claimed from the ATO when a valid tax invoice is provided. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. 28 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 (k) Payables These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (l) Contributed Equity Issued capital is recognised as the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (m) Exploration and Evaluation Expenditure Mineral exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest and is subject to impairment testing. These costs are carried forward only if they relate to an area of interest for which rights of tenure are current, can be successfully developed or have not reached a stage which permits assessment of recoverability. 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. (n) Earnings per Share Basic earnings per share (“EPS”) are calculated based upon the net profit/(loss) attributable to equity holders of the parent divided by the weighted average number of shares. Diluted EPS are calculated as the net profit/(loss) attributable to equity holders of the parent divided by the weighted average number of shares and dilutive potential shares. (o) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis over the term of the lease. (p) 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. The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of financial position, net of transaction costs. On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss. (q) Share-based payment transactions The Company provides benefits to employees (including Directors and Consultants) of the Consolidated Entity in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (“Equity–settled transactions”). There is currently one plan in place to provide these benefits being an Employee Share Option Plan (“ESOP”) which provides benefits to Directors, Consultants and Senior Executives. The cost of these equity-settled transactions is measured by reference to fair value at the date at which they are granted. The fair value is determined by an external valuer using the either the Black-Scholes or Binomial model. 29 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 In valuing equity-settled transactions, other than conditions linked to the price of the shares of RBR Group Limited (“market conditions”), management reviews the likelihood of achieving performance criteria. The cost of equity settled securities is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“vesting date”). Where the Consolidated Entity acquires some form of interest in an exploration tenement or an exploration area of interest and the consideration comprises share-based payment transactions, the fair value of the equity instruments granted is measured at grant date. The cost of equity securities is recognised within capitalised mineral exploration and evaluation expenditure, together with a corresponding increase in equity. (r) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (s) Financial risk management The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework, to identify and analyse the risks faced by the Consolidated Entity. These risks include credit risk, liquidity risk and market risk from the use of financial instruments. The Consolidated Entity has only limited use of financial instruments through its cash holdings being invested in short term interest bearing securities. The primary goal of this strategy is to maximise returns while minimising risk through the use of accredited Banks with a minimum credit rating of A1 from Standard & Poors. The Consolidated Entity has no debt, and working capital is maintained at its highest level possible and regularly reviewed by the full board. (t) Changes in accounting policies and disclosures In the current year, the Consolidated Entity has adopted all new and revised Standards and Interpretations that have been issued and are effective for the accounting periods beginning on or after 1 January 2018. The adoption of the new and revised Standards and Interpretations has not resulted in any changes to the Group’s accounting policies. (u) Standards issued but not yet effective Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Consolidated Entity for the annual reporting period ended 30 June 2019. The Consolidated Entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Consolidated Entity, are set out below. AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019). When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. The main changes introduced by the new Standard include: - recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets); - depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; - variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date; - by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all components as a lease; and - additional disclosure requirements. The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The Directors anticipate that the adoption of AASB 16 will impact the Group's financial statements and estimate that the impact to be similar to the operating lease commitments of $80,282, detailed in note 19. 30 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 2. OTHER INCOME Revenue Revenue from training services (i) Revenue from payroll services (ii) Revenue from business services (iii) Interest 2019 $ 2018 $ 314,539 111,847 103,356 1,846 166,287 111,619 207,274 1,569 531,588 485,180 Notes: (i) RBR delivers training services to clients and recognises revenue based on completion of training by students. Pricing is based on each training program and student enrolment for the program. A program is considered delivered following a final report on training sent to the client. (ii) Payroll and HR services are based on a percentage of the total payroll and billed following completion of the payroll service. (iii) RBR delivers a range of business services to clients and recognises revenue on successful delivery of those services. There is a schedule of fixed prices for services. 3. EXPENSES Contributions to employees superannuation plans Depreciation - plant and equipment Exploration Written off Share based payment expense Provision for employee entitlements Other Expenses Travel and accommodation IT and communications Legal and public relations Other 4. AUDITORS’ REMUNERATION Butler Settineri (Audit) Pty Limited (Including component auditors Perfect Partners - Mozambique) Audit and review of the financial statements Taxation Services – company related to Butler Settineri (Audit) Pty Ltd 2019 $ 2018 $ 33,296 17,523 21,659 46,993 (4,093) 63,899 39,912 96,843 329,659 530,313 38,851 19,024 (3,493) 62,765 (7,976) 105,464 26,614 81,250 241,467 454,795 2019 $ 2018 $ 31,578 2,550 34,128 37,881 2,920 40,801 31 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 5. INCOME TAX (a) Income tax expense No income tax is payable by the Consolidated Entity as it has incurred losses for income tax purposes for the year, therefore current tax, deferred tax and tax expense is $Nil (2018: $Nil). 2019 $ Numerical reconciliation of income tax expense to prima facie tax payable (b) 2018 $ Loss from continuing operations before income tax expense (1,513,800) (1,422,887) Prima facie tax benefit at the Australian tax rate of 30% (2017: 30%) (454,140) (426,866) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Non-deductible expenses Overseas projects income and expenses Other allowable expenditure Deferred tax asset not brought to account Income tax expense (b) Tax losses 20,596 81,507 (1,193) 62,753 72,152 (290) 353,458 292,470 228 219 Unused tax losses for which no deferred tax asset has been recognised 17,756,759 16,582,746 Potential tax benefit at 30% 5,329,727 4,974,823 (c) Unrecognised deferred tax assets Unrecognised deferred tax assets Provisions Carry forward tax losses 15,621 17,295 5,329,727 4,974,823 5,345,348 4,992,118 No deferred tax asset has been recognised for the above balance as at 30 June 2019 as it is not considered probable that future taxable profits will be available against which it can be utilised. Unrecognised deferred tax liabilities Capitalised mineral exploration and evaluation expenditure 5,353 11,744 (d) Franking credits balance The Consolidated Entity has no franking credits as at 30 June 2019 available for use in future years (2018: $Nil). 6. TRADE RECEIVABLES Current Trade receivables Other receivables 2019 $ 152,190 15,551 167,741 2018 $ 199,654 5,810 205,464 Trade receivables represent outstanding amounts owed by customers in Mozambique. Other receivables include GST and other value added tax receipts. 32 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 7. OTHER ASSETS Current Prepayments 8. PLANT AND EQUIPMENT AND MOTOR VEHICLES Plant and office equipment At cost Accumulated depreciation 2019 $ 2018 $ 40,774 15,932 2019 $ 2018 $ 190,126 162,808 (144,147) (128,551) 45,979 34,257 Reconciliation Reconciliation of the carrying amounts for each class of plant and equipment and motor vehicles are set out below: Plant and office equipment Carrying amount at beginning of the year Additions Depreciation Foreign currency differences Carrying amount at the end of the year 2019 $ 2018 $ 34,257 29,121 41,484 10,209 (17,523) (19,024) 124 45,979 1,588 34,257 33 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 9. INVESTMENTS Particulars in relation to the Controlled Entity RBR Group Limited is the parent entity. Name of Controlled Entity Country of incorporation Class of Shares Equity Holding Freelance Support Pty Ltd (i) Australia Ordinary PacMoz, Lda Mozambique Ordinary Futuro Skills Mozambique, Lda (ii) Mozambique Ordinary Futuro Business Services, Lda (iii) Mozambique Ordinary Rubicon Resources & Mining, Lda (iv) Mozambique Ordinary Morson Mozambique, Lda (iv) Mozambique Ordinary 2019 100% 100% 100% 100% 59.4% 59.4% Futuro Skills Guinee SARL (v) Notes: (i) RBR purchased 100% of the issued capital of Freelance Support Pty Ltd on 11 January 2016. (ii) RBR Incorporated Futuro Skills Mozambique, Lda on 9 July 2015. (iii) RBR Incorporated Futuro Business Services, Lda on 24 May 2017. (iv) Parent entity owner PacMoz, Lda. These entities are dormant. (v) RBR Incorporated Futuro Skills Guinee SARL on 21 February 2018. Ordinary Guinea 60% 2018 100% 100% 100% 100% 59.4% 59.4% 60% 10. INTANGIBLES Cost brought forward Goodwill impairment of PacMoz Lda 2019 $ 149,898 2018 $ 299,898 - (150,000) 149,898 149,898 The carrying value of the goodwill for PacMoz was subject to impairment testing in accordance with the accounting standards. A valuation was undertaken using a discounted cashflow model based on current cashflows plus expected revenues and a discount rate of 12% and the Board agreed to maintain the current carrying value. The carrying value of the intangible is expected to be indefinite and will be evaluated on a six-month basis in the future. The Directors reviewed the carrying value of Freelance Support Pty Ltd and formed a view that the carrying value is recoverable. 34 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 11. CAPITALISED MINERAL EXPLORATION EXPENDITURE In the exploration phase Non-Current Balance at the beginning of the year Expenditure incurred during the year (at cost) Refund of exploration costs Exploration expenditure written off Balance at the end of the year 2019 $ 2018 $ 39,147 355 - (21,659) 17,843 38,309 (2,655) 3,493 - 39,147 The recoupment of costs carried forward is dependent on the successful development and/or commercial exploitation or alternatively sale of the respective areas of interest. The Company assessed the value of its exploration assets and impaired tenements that had expired. 12. TRADE AND OTHER PAYABLES Current (Unsecured) Trade creditors Other creditors and accruals Loan 2019 $ 134,866 2018 $ 122,018 94,469 85,416 - - 229,335 207,434 Included within trade and other creditors and accruals is an amount of $nil (2018: nil) relating to exploration expenditure. 13. PROVISIONS Current Africa Tax Provisions Employee entitlements 2019 $ (1,460) 36,760 35,300 2018 $ 3,259 36,823 40,082 PacMoz tax provisions relate to deferred taxes in Mozambique and employee entitlements are a calculation of leave owing to employees. 35 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 14. CONVERTIBLE NOTES On 22 January 2019, the Company completed the issue of 1,304,513 Convertible Notes at a face value of $1 as part of its preparations to capitalise on the US$50 billion LNG construction boom about to get underway in Mozambique. The key terms of the Convertible Notes are as follows. Type of Instrument: Convertible notes which are convertible into Ordinary Fully Paid Shares and attaching Options; the Notes will not be quoted on any securities exchange or financial market. Face Value: Each Note shall have a face value of $1.00 (Face Value); the aggregate Face Value of all Notes is $1,304,513. Maturity Date: The Notes will mature on the date that is 24 months after the Issue Date. Interest: The Notes shall bear interest at the rate of 12% per annum, accrued monthly and calculated monthly; interest on the Notes shall be paid quarterly in cash by the Company to the Noteholder. Conversion at election of Noteholder: The Noteholder may at any time after the date that is 6 months after the Issue Date and prior to the Maturity Date and the Company issuing a Redemption, elect to convert all the Notes into Shares by providing the Company with notice of the conversion in a form acceptable to the Company acting reasonably. On receipt of a Conversion Notice, the Company must issue Shares to the Noteholder based on a price per Share equal to the lower of $0.015 and the issue price of any equity capital raising completed by the Company within the two months prior to receipt of the Conversion Notice, but in any event not less than $0.01; issue Options to the Noteholder for nil or nominal consideration on the basis that the Noteholder is entitled to 1 Option of every 5 Shares issued to the Noteholder on conversion of the Notes and immediately pay to the Noteholder any outstanding Interest that is due and payable. Repayment at election of Company: The Company may, at any time prior to the Maturity Date and the Noteholder providing a Conversion Notice elect to redeem all the Notes by providing written notice to the Noteholders. Within 2 business days of issuing a Redemption Notice, the Company must pay to each Noteholder the Face Value of the Notes in cash; issue Options to each Noteholder for nil or nominal consideration and pay each Noteholder in cash an amount equal to 12 months Interest on the Principal Amount less any amount of Interest already paid by the Company to the relevant Noteholder as at the date of the Redemption Notice. If the Company issues a Redemption Notice, it must redeem all of the Notes. The number of Options issued will be the same number of Options that would have been issued to the Noteholder had the Noteholder given a Conversion Notice to the Company dated the same date as the Redemption Notice Repayment at Maturity Date: If at the Maturity Date the Notes have not been converted by the Noteholder or repaid by the Company, the Company must redeem all the Notes by paying to the Noteholder (within 2 business days of the Maturity Date) the Face Value of the Notes in cash plus any outstanding Interest that is due and payable. Option Exercise Price and Expiry Date: Each Option will be unquoted and have an exercise price equal to the volume weighted average price per Share of Shares traded on ASX during the 20 trading day period ending on the date that an Exercise Notice is given in respect of the Option and will expire at 5.00pm (WST) on the date that is two (2) years after their issue (Expiry Date). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date. Each Option entitles the holder to subscribe for one fully paid ordinary share in the capital of the Company upon exercise of the Option. 36 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 15. CONTRIBUTED EQUITY (a) Ordinary Shares 2019 $ 2018 $ 716,264,651 (2018: 699,736,078) fully paid ordinary shares 19,478,110 19,279,596 (b) Share Movements during the Year Beginning of the financial year 699,736,078 19,279,596 510,913,294 18,134,486 2019 2018 Number of Shares $ Number of Shares $ New share issues during the year Director placement (i) Conversion of options (ii) Placements during the year (iii) Broker options (iv) Unissued shares (v) Shares issued to staff (vi) Less costs of share issues 9,000,000 63,000 7,528,573 135,514 - - - - - - - - - - - - - 167,322,784 1,092,014 - (52,350) 14,000,000 7,500,000 70,000 87,375 - (51,929) 716,264,651 19,478,110 699,736,078 19,279,596 Notes: (i) As approved at the general meeting on 6 November 2018, shares were issued to directors as part of a placement. (ii) Exercise of $0.018 options. (iii) In September 2017, 53,622,784 shares valued at $268,114 before costs, were issued as the 2nd tranche of a placement approved by shareholders on 8 August 2017. In December 2017 and January 2018 a placement of 70,000,000 shares was made raising $490,000 before costs. In June 2018 a placement for 57,700,000 shares was made to raise $403,900 before costs. (iv) As part of the December placement 15,000,000 broker options with an exercise price of $0.025 expiring on 30 June 2020, were issued as part of the capital raising cost. (v) Included in the September 2017 placement were 14,000,000 unissued shares for a value of $70,000. (vi) Vesting of 7,500,000 tranche 1 performance rights was made to Mr Carcenac on 16 March 2018. (c) Unlisted Options The following table details movement of options during the year. Beginning of the financial year 1 Jul 2018 Number of Options 43,850,002 Exercise Price $0.018 Expiring 31 July 2019 28,850,002 Exercise Price $0.025 Expiring 30 June 2020 15,000,000 Director placement (i) 6 Dec 2018 4,500,000 4,500,000 Vendor options as part of a share- based payment (ii) Converted to shares (iii) Converted to shares (iii) 6 Dec 2018 3,500,000 3,500,000 7 Mar 2019 (2,457,144) (2,457,144) 27 Jul 2019 (5,071,429) (5,071,429) - - - - Notes: (i) As approved at the general meeting on the 6 November 2018, options were issued to directors as part of a placement. (ii) Options issued as part of a share based payment to a supplier (iii) Exercise of $0.018 options. 30 Jun 2019 44,321,429 29,321,429 15,000,000 As at the date of this report the only remaining options were the 15,000,000 broker options with an exercise price of $0.025 expiring on 30 June 2020. There were no other options issued to staff under the RBR Share Option Plan (refer Note 17). 37 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 2019 Unquoted placement options (1 option for 2 shares) Issue date Expiry date Number of options Exercise Price Weighted average value cents 6 Dec 2018 31 Jul 2019 4,500,000 $0.018 N/A Unquoted vendor options 6 Dec 2018 31 Jul 2019 3,500,000 $0.018 0.312 2018 Unquoted Placement Options (3 options for 4 shares) Unquoted Placement Options (3 options for 4 shares) 15 Dec 2017 30 Jun 2018 45,000,000 $0.018 22 Jan 2018 30 Jun 2018 7,500,000 $0.018 Unquoted broker options 15 Dec 2017 30 Jun 2020 15,000,000 Unquoted placement options (1 option for 2 shares) 25 Jun 2018 31 Jul 2019 28,850,002 $0.025 $0.018 N/A N/A 0.349 N/A The assessed fair values of the 15,000,000 Broker and 3,500,000 Vendor Options were determined on a Black- Scholes model, taking into account the exercise price, term of option, the share price at grant date and expected price volatility of the underlying share, expected yield and the risk-free interest rate for the term of the option. The inputs to the model used were: Grant Date 7 December 2017 6 December 2018 Expiry Date 30 June 2020 31 July 2019 Exercise Price (Cents) 2.50 1.80 Volatility Percentage (%) 130 130 Risk-free rate (%) 1.93 1.93 Value (Cents) for one Option 0.349 0.312 (d) Performance Shares An independent valuation was completed on performance rights granted during the year. Market based vesting conditions were valued using a hybrid share option pricing model that simulates the share price of the Company as at the test date using a Monte-Carlo model. For non-market based vesting conditions no discount was made to the underlying valuation model. Grant date Expiry date Number of performance rights Weighted average value cents 2019 R Carcenac Class 3 29 Nov 2018 29 Nov 2020 7,500,000 0.689 Rights subject to performance criteria prior to 29 November 2020; the Company’s market capitalisation averaging over a period of 30 consecutive trading days a daily average of not less than $10,000,000; and Mr Carcenac completing 12 months of continuous employment with the Company following date of issue. At the Annual General Meeting held on 28 November 2018, shareholders approved the issue of Performance Rights of Mr Carcenac. Staff Performance Rights Class 1 22 Jan 2019 31 Dec 2018 1,250,000 Staff Performance Rights Class 2 22 Jan 2019 31 Dec 2019 1,250,000 0.720 0.048 Staff Performance Rights subject to internal management KPI criteria prior to expiry date. In determining the value of the Performance Rights, Management assigned a likelihood of achieving performance criteria and applied the value of shares on grant date of $0.012. 38 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 Grant date Expiry date Number of performance rights Weighted average value cents 2016 R Carcenac Class 2 27 Nov 2015 27 Nov 2019 7,500,000 0.350 Rights subject to performance criteria prior to 26 November 2019; the Company’s market capitalisation averaging over a period of 30 consecutive trading days a daily average of not less than $8,000,000; and consolidated gross income of the Company and its revenue exceeding $2,000,000; and Mr Carcenac completing 24 months of continuous employment with the Company. At the Annual General Meeting held on 28 November 2017, shareholders approved the variation to the Performance Rights of Mr Carcenac, amending the expiry date of each tranche by one year. Mr Carcenac’s Class 2 Performance Rights expiry date changed from 27 November 2018 to 27 November 2019. An independent valuation was completed following changes to the expiry dates. (e) Terms and Conditions of Contributed Equity Ordinary Shares The Company is a public company limited by shares. The Company was incorporated in Perth, Western Australia. The Company’s shares are limited whereby the liability of its members is limited to the amount (if any) unpaid on the shares respectively held by them. Ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares held. Ordinary shares which have no par value, entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. (f) Capital Risk Management Due to the nature of the Consolidated Entity’s activities, the Consolidated Entity does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Consolidated Entity’s capital risk management is the current working capital position against the requirements to meet the costs of development of the group’s business units and corporate overheads. The Consolidated Entity’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Consolidated Entity is as follows: Cash and cash equivalents Trade and other receivables Other assets Trade and other payables Provisions Working capital position 2019 $ 412,821 167,741 40,774 2018 $ 341,920 205,464 15,932 (229,335) (207,434) (35,300) 356,701 (40,082) 315,800 39 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 16. RESERVES Reserves Share Option Reserve Foreign Currency Translation Reserve Total Reserves As represented by: Share Option Reserve Balance at the beginning of the year Unissued (issued) shares Performance rights expensed in current year Performance rights vested Broker options issued Balance at the end of the year 2019 $ 2018 $ 816,906 (100,256) 716,650 769,913 (95,432) 674,481 2019 $ 2018 $ 769,913 - 46,993 - - 816,906 812,173 (70,000) 62,765 (87,375) 52,350 769,913 The share option reserve comprises any equity settled share based payment transactions. Foreign Currency Translation Reserve Balance at the beginning of the year Loss on translation of foreign subsidiaries Balance at the end of the year 2019 $ 2018 $ (95,432) (4,824) (100,256) (47,097) (48,335) (95,432) The foreign currency translation reserve is used to record currency differences arising from the translation of financial statements of foreign operations. 40 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 17. OPTION PLAN The establishment of the RBR Group Limited Employee Securities Incentive Plan (“the Plan”) was approved by special resolution at a General Meeting of Shareholders of the Consolidated Entity held on 28 November 2017. All eligible Directors, Executive Officers, Employees and Consultants of RBR Group Limited who have been continuously employed by the Consolidated Entity are eligible to participate in the Plan. The Plan allows the Consolidated Entity to issue free securities to eligible persons. Listing Rule 7.2, exception 9(b) provides an exception to Listing Rule 7.1 such that issues of Equity Securities under an employee incentive scheme are exempt for a period of 3 years from the date on which shareholders approve the issue of Equity Securities under the scheme as an exception to Listing Rule 7.1. 18. RELATED PARTIES Full remuneration details for Directors and Executives are included in the Directors report where the information has been audited as indicated. 19. EXPENDITURE COMMITMENTS (a) Exploration The Consolidated Entity has certain obligations to perform minimum exploration work on mineral leases held. These obligations may vary over time, depending on the Consolidated Entity’s exploration programs and priorities. As at balance date, total exploration expenditure commitments on tenements held by the Consolidated Entity have not been provided for in the financial statements and those which cover the following twelve-month period amount to $84,000 (2018: $70,000). These obligations are also subject to variations by farm-out arrangements or sale of the relevant tenements. (b) Operating Lease Commitments The Consolidated Entity has entered into commercial leases for office premises in Mozambique and Australia. The Mozambique lease has a three-year term commencing March 2016. The Australian lease has a term until December 2019. Within one year After one year but not more than five years 2019 $ 80,282 - 2018 $ 77,751 27,039 80,282 104,790 (c) Capital Commitments The Consolidated Entity had no capital commitments at 30 June 2019 (2018: $Nil). 41 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 20. SEGMENT INFORMATION The Consolidated Entity has operated the business in two distinct regions, Asia-Pacific and Africa since the purchase of PacMoz in March 2015. The operating segments are recognised according to geographical location, with each segment representing a strategic business unit. As the chief operating decision makers, the Directors and Executive Management team monitor the operating results of business units separately, for the purposes of making decisions about resource allocation and performance assessment. Year ended 30/6/2019 Revenue Asia-Pacific $ 1,804 Africa $ 485,866 Total $ 487,670 Operating Profit (Loss) before tax (1,242,108) (271,691) (1,513,799) Income Tax Net Profit (Loss) after tax Segment Assets Segment Liabilities Year ended 30/6/2018 Revenue - 228 228 (1,242,108) (271,463) (1,513,571) 531,358 1,483,320 303,698 835,056 85,828 1,569,148 Asia-Pacific $ 121,804 Africa $ 363,376 Total $ 485,180 Operating Profit (Loss) before tax (1,032,479) (390,407) (1,422,887) Income Tax Net Profit (Loss) after tax Segment Assets Segment Liabilities 21. EARNINGS/ (LOSS) PER SHARE (359) (218) (577) (1,032,838) (390,626) (1,423,464) 452,090 121,994 334,528 125,522 786,618 247,516 The following reflects the loss and share data used in the calculations of basic and diluted earnings/(loss) per share: Earnings/(loss) used in calculating basic and diluted earnings/ (loss) per share (1,498,298) (1,413,820) 2019 $ 2018 $ Weighted average number of ordinary shares used in calculating basic earnings/(loss) per share: Effect of dilutive securities-share options 706,909,660 593,960,476 - - Adjusted weighted average number of ordinary shares used in calculating diluted earnings/(loss) per share 706,909,660 593,960,476 Basic and diluted loss per share (cents per share) (0.21) (0.24) Non-dilutive securities As at balance date, 44,321,429 unlisted options (30 June 2018: 43,850,002) which represent potential ordinary shares were not dilutive as they would decrease the loss per share. 42 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 22. NOTES TO THE STATEMENT OF CASH FLOWS (a) Cash and Cash Equivalents Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows: Cash on hand Cash at bank Deposits at call 2019 $ 2018 $ 432 395,785 16,605 412,821 264 325,051 16,605 341,920 (b) Reconciliation of the loss from ordinary activities after income tax to the net cash flows used in operating activities Loss from ordinary activities after income tax Non-cash items: Depreciation Exploration written-off Share-based payments expense Goodwill impairment Exchange movement Change in operating assets and liabilities: Decrease (Increase) in prepayments Decrease (Increase) in receivables Increase (Decrease) in trade creditors and accruals Increase in employee provisions 2019 $ 2018 $ (1,513,571) (1,423,464) 17,523 21,659 46,993 - (4,824) (24,842) 37,722 21,901 (4,782) 19,024 (3,493) 62,765 150,000 (8,599) 5,783 111,261 66,114 (4,775) Net cash outflows used in operating activities (1,394,127) (1,025,384) (c) Stand-By Credit Facilities As at 30 June 2019 the Consolidated Entity has a business credit card facility available totaling $20,000 of which $10,400 (2018: $82) was utilised. 43 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 23. FINANCIAL INSTRUMENTS The Consolidated Entity's activities expose it to a variety of financial risks and market risks. The Consolidated Entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Consolidated Entity. (a) Interest Rate Risk The Consolidated Entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market, interest rates and the effective weighted average interest rates on those financial assets, is as follows: Note Weighted Average Effective Interest % Funds Available at a Floating Interest Rate $ Fixed Interest Rate $ Assets/ (Liabilities) Non-Interest Bearing $ Total $ 2019 Financial assets Cash and cash equivalents 22(a) 0.3% 395,785 16,605 432 412,821 2018 Financial assets Cash and cash equivalents 22(a) 0.6% 325,051 16,605 264 341,920 (b) Foreign currency exchange risk The Consolidated Entity undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The carrying amount of the Consolidated Entity’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows: Assets – Mozambique Metical Liabilities – Mozambique Metical Assets – Guinean Franc Liabilities – Guinean Franc Foreign currency sensitivity analysis 2019 $ 198,862 2018 $ 229,065 81,238 157,432 4,836 4,591 6,296 - The Consolidated Entity is exposed to Mozambique Metical (MZN) and Guinea Franc (GNF) currency fluctuations. The following table details the Consolidated Entity’s sensitivity to a 10% increase and decrease in the Australian Dollar (AUD) against the relevant currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes cash balances held in MZN/GNF and trade creditors and other payables held in MZN/GNF. A positive number indicates an increase in profit and other equity where the AUD weakens against the relevant currency. For a strengthening Australian Dollar against the relevant currency there would be an equal and opposite impact on the profit and other equity and the balances would be negative. AUD strengthens against MZN AUD weakens against MZN 44 2019 $ Profit /(Loss) 2018 $ Profit /(Loss) (11,762) 11,762 (7,984) 7,984 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 AUD strengthens against GNF AUD weakens against GNF (c) Credit Risk 2019 $ 2018 $ (250) 250 (630) 630 The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and in the notes to the financial statements. The Consolidated Entity does not have any material credit risk exposure to any single debtor or group of debtors, under financial instruments entered into by it. As at the end of the year the Consolidated Entity had trade receivables of $152,190 (2018: $199,654) as detailed in Note 6. Included in the trade receivables of $152,190 at 30 June 2019, $140,092 were due in less than 6 months, $5,269 were due between 6-12 months and $6,829 were due between 1-5 years. The Company has assessed the exposure to credit losses as low and has not made any provision for credit losses and will continue to review long outstanding receivables. (d) Liquidity Risk The liquidity position of the Consolidated Entity is managed to ensure sufficient liquid funds are available to meet financial obligations as they fall due. The contractual maturities of the financial liabilities referred to in Note 12 at the reporting date are less than 12 months. (e) Net Fair Values For assets and other liabilities, the net fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form. The Consolidated Entity has no financial assets where the carrying amount exceeds net fair values at balance date. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to the financial statements. 24. EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS Employee Entitlements The aggregate employee entitlement liability is disclosed in Note 13. Directors, Officers, Employees and Other Permitted Persons Option Plan Details of the Consolidated Entity’s Directors, Officers, Employees and Other Permitted Persons Option Plan are disclosed in Note 17. Superannuation Commitments The Consolidated Entity contributes to individual employee accumulation superannuation plans at the statutory rate of the employees’ wages and salaries, in accordance with statutory requirements, to provide benefits to employees on retirement, death or disability. Accordingly, no actuarial assessments of the plans are required. Funds are available for the purposes of the plans to satisfy all benefits that would have been vested under the plans in the event of: termination of the plans; voluntary termination by all employees of their employment; and compulsory termination by the employer of the employment of each employee. During the year employer contributions (including salary sacrifice amounts) to superannuation plans totaled $33,296 (2018: $38,851). 45 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 25. CONTINGENT LIABILITIES There were no material contingent liabilities not provided for in the financial statements of the Consolidated Entity as at 30 June 2019 other than: Native Title and Aboriginal Heritage Native title claims have been made with respect to areas which include tenements in which the Consolidated Entity has an interest. The Consolidated Entity is unable to determine the prospects for success or otherwise of the claims and, in any event, whether or not and to what extent the claims may significantly affect the Consolidated Entity or its projects. Agreement is being or has been reached with various native title claimants in relation to Aboriginal Heritage issues regarding certain areas in which the Consolidated Entity has an interest. PacMoz Minority Acquisition During the previous year, the Company acquired the 40% minority stake in PacMoz from the PacMoz Director and General Manager Ms Hanlie Lloyd. The purchase consideration for the acquisition included a contingent liability for the issue of 5,000,000 shares subject to Ms Lloyd successfully completing the re-organisation of the entity including agreed specific conditions over the subsequent twelve month period. As at the date of this report no shares had been issued to Ms Lloyd. 26. EVENTS SUBSEQUENT TO THE REPORTING DATE There has not arisen since the end of the financial year any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Consolidated Entity to affect substantially the operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in subsequent financial years except for the following: 29,321,429 unlisted options with an exercise price $0.018 expired on 31 July 2019. On 2 August 2019, the Company announced a change of Company Secretary appointing Ms Jessamyn Lyons. On 14 August 2019, the Company announced that it had started training workers for jobs on the Mozambique LNG projects. On 19 August 2019, the Company announced the appointment of global logistics specialist Mr Athol Emerton as Non-Executive Director. 46 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 27. PARENT COMPANY (a) Financial Position As at 30 June 2019 Assets Total current assets Total non-current assets Total Assets Liabilities Total current liabilities Total Liabilities Net Assets Equity Contributed equity Reserves Accumulated losses Total Equity Loss for the year Other comprehensive income 2019 $ 2018 $ 1,251,881 493,688 1,745,569 1,473,320 1,473,320 272,249 756,275 503,350 1,259,625 111,994 111,994 1,147,631 19,478,467 19,279,952 816,906 769,913 (20,023,124) (18,902,234) 272,249 1,147,631 (1,120,890) (926,966) - - Total comprehensive loss for the year (1,120,890) (926,966) (b) Guarantees entered into RBR Group Limited has not entered into a deed of cross guarantee with its wholly-owned subsidiary. (c) Contingent liabilities RBR Group Limited had no contingent liabilities at 30 June 2019 (2018: Nil). (d) Capital commitments RBR Group Limited’s capital commitments are disclosed in Note 19. 47 NOTES TO THE FINANCIAL STATEMENTS (Continued) For the year ended 30 June 2019 28. INTERESTS IN JOINT VENTURES RBR has the following Joint Venture Interest: Peters Dam Joint Venture (Silver Lake Resources Limited (“Silver Lake”) 69%, RBR diluting) The Peters Dam Joint Venture comprises approximately 6km2 of RBR tenements in the southern Yindarlgooda project. Silver Lake has earned an initial 51% by spending $1.5 million. Silver Lake manages the joint venture and is currently sole funding it with RBR being diluted. RBR can elect to contribute to the exploration program at six monthly intervals (one-off right) to maintain its interest. Yindarlgooda Farm-in Agreement (Newmont Exploration Pty Ltd (“Newmont”) 0%, RBR 100%) The Yindarlgooda Project covers a 28km strike length of gold prospective stratigraphy between the Mt Monger- Bulong (15km north) and Gindalbie (4km south) gold mining centres, and is just 600m from the Penny’s Find Gold Project currently in development. The project also contains several historic gold workings. To date Newmont has conducted a detailed geophysical interpretation, soil sampling and aircore drilling over the project. The Term Sheet sets out the basic terms of the FJV Agreement as follows: • Newmont has contributed expenditure of $75,000 and has elected to earn a 51% interest upon additional Expenditure of $925,000 by 31 October 2019, the second anniversary of the FJV Agreement (“Phase 1 Earn- in”). • On and from the date Newmont has completed the Phase 1 Earn-In (“JV Commencement Date”), Newmont and RBR will be associated in a joint venture for the exploration and evaluation and, if warranted, development and exploitation of the Joint Venture Assets and all minerals within the Joint Venture Assets to which the Joint Venture Assets extend. • Newmont can then elect to commit to spending an additional $1.0 million over a further two years to earn 75% equity in the project (Phase 2 Earn-in). • Once Newmont has met the Phase 2 Earn In - RBR has the election to contribute to the Tenement expenditure at its respective interest, or dilute using an industry standard dilution formula. 48 DIRECTORS’ DECLARATION In the opinion of the Directors of RBR Group Limited (“the Consolidated Entity”): (a) the financial statements and notes, set out on pages 22 to 48, are in accordance with the Corporations Act 2001, including: (i) (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and giving a true and fair view of the financial position of the Consolidated Entity as at 30 June 2019 and of its performance, as represented by the results of its operations, for the financial year ended on that date. (b) there are reasonable grounds to believe that RBR Group Limited will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Managing Director and the Company Secretary for the financial year ended 30 June 2019. This declaration is made in accordance with a resolution of the Directors. Signed at Perth this 30th day of August 2019. Ian Macpherson Executive Chairman 49 INDEPENDENT AUDITOR’S REPORT 50 INDEPENDENT AUDITOR’S REPORT (Continued) 51 INDEPENDENT AUDITOR’S REPORT (Continued) 52 INDEPENDENT AUDITOR’S REPORT (Continued) 53 INDEPENDENT AUDITOR’S REPORT (Continued) 54 ASX ADDITIONAL INFORMATION Pursuant to the Listing Requirements of the Australian Stock Exchange Limited, the shareholder information set out below was applicable as at 10 September 2019. A. Voting Rights In accordance with the Company’s Constitution, voting rights in respect of ordinary shares are on a show of hands whereby each member present in person or by proxy shall have one vote and upon a poll each share shall have one vote. B. Distribution of Equity Securities Analysis of numbers of shareholders by size of holding: Distribution 1 – 1000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over Totals The number of equity security holders holding less than a marketable parcel (based on a 1.4 cents price) of securities are: C. Twenty Largest Shareholders The names of the twenty largest holders of quoted shares are listed below: Shareholder Name Athol Emerton Gurravembi Investments Pty Ltd Fats Pty Ltd (Macib Super Fund A/C) Fats Pty Ltd (Macib Family A/C) Perth Capital Pty Ltd Linvana Thomson BT Portfolio Services Ltd (Warrell Holdings Super Fund A/C) Richard A E Carcenac (Carcenac Family A/C) Paul Graham-Clarke Richard A E Carcenac (Carcenac Super Fund A/C) Ragged Holdings Pty Ltd (Jon Young Family Fund) Ashley Robert Brown Harold Cripps Holdings Pty Ltd Nicholas Barr Gattenside Pty Ltd Paul Horsfall Citicorp Nominees Pty Ltd Frank Violi HSBC Custody Nominees (Australia) Ltd Tom Hume Pty Ltd Number of Holders Number of Shares 110 64 44 326 362 906 344 22,753 147,457 329,203 16,033,021 699,732,217 716,264,651 3,382,992 Issued Ordinary Shares Number of Holders 88,473,872 28,000,000 27,787,315 20,683,334 20,000,000 18,847,314 18,436,192 15,810,000 13,553,156 13,350,000 13,000,000 12,000,000 11,500,000 11,183,370 10,610,416 9,625,184 9,574,803 8,000,000 7,489,037 7,366,311 365,290,304 Percentage of Ordinary Shares 12.35% 3.91% 3.88% 2.89% 2.79% 2.63% 2.57% 2.21% 1.89% 1.86% 1.81% 1.68% 1.61% 1.56% 1.48% 1.34% 1.34% 1.12% 1.05% 1.03% 51.00% 55 ASX ADDITIONAL INFORMATION (Continued) D. Substantial Shareholders An extract of the Company’s Register of Substantial Shareholders (who holds 5% or more of the issued capital) is set out below: Shareholder Name A Emerton & Associates I Macpherson & Associates E. Unquoted Options Shareholder Name Performance Rights R Carcenac Class 2 1 R Carcenac Class 3 2 Staff Performance Rights Class 1 3 Staff Performance Rights Class 2 4 Options Options exercisable at $0.025 each on or before 30 June 2020 Issued Ordinary Shares Number of Holders 85,842,268 38,800,001 Percentage of Ordinary Shares 13.5% 6.9% Number of Holders Number of Securities 1 1 1 1 5 7,500,000 7,500,000 1,250,000 1,250,000 15,000,000 Notes: (1) Rights subject to performance criteria prior to 27 November 2019; the Company’s market capitalisation averaging over a period of 30 consecutive trading days a daily average of not less than $8,000,000; consolidated gross income of the Company and its revenue exceeding $2,000,000; and Mr Carcenac completing 24 months of continuous employment with the Company. (2) Rights subject to performance criteria prior to 29 November 2020; the Company’s market capitalisation averaging over a period of 30 consecutive trading days a daily average of not less than $10,000,000; and Mr Carcenac completing 12 months of continuous employment with the Company following date of issue. (3) Staff Performance Rights subject to internal management KPI criteria prior to expiry date. In determining the value of the Performance Rights, Management assigned a likelihood of achieving performance criteria and applied the value of shares on grant date of $0.012. 56 THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY Level 2, 33 Colin Street, West Perth, Western Australia, 6005 Po Box 534, West Perth, Western Australia, 6872 Telephone: +61 8 9214 7500 Facsimile: +61 8 9214 7575 www.rbrgroup.com.au
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