Star Phoenix Group Ltd
and Controlled Entities
(Formerly Range Resources Limited)
Annual Report 2020
for the period ended
30 June 2020
ABN: 88 002 522 009
An electronic version of this report is available on the Company’s website
www.starphoenixgroup.com
Contents
Directors’ Report ............................................................................................................................. 3
Operational Review ........................................................................................................................ 7
Corporate Governance Statement .......................................................................................... 11
Remuneration Report (Audited) ................................................................................................. 19
Auditor’s Independence Declaration ........................................................................................ 27
Consolidated Statement of Profit or Loss and other Comprehensive Income……………. .. 28
Consolidated Statement of Financial Position .......................................................................... 29
Consolidated Statement of Changes in Equity ........................................................................ 30
Consolidated Statement of Cash Flows ..................................................................................... 31
Notes to Consolidated Financial Statements ............................................................................ 32
Directors’ Declaration .................................................................................................................. 81
Independent Audit Report to the Members .............................................................................. 82
Additional Information .................................................................................................................. 86
Corporate Directory ..................................................................................................................... 88
Star Phoenix Group Ltd
Annual report ended 30 June 2020
2
Directors’ Report
The Directors of Star Phoenix Group Ltd (“SPG” or “the Company”) and the entities it
controls (together, the “Group”) present the financial report for the year ended 30 June
2020.
Directors
The names and details of the Company’s directors in office during the financial year and
until the date of this report are as follows. The directors were in office during the entire
period unless otherwise stated.
Name
Mr Zhiwei Gu
Mr Lubing Liu
Dr Mu Luo
Dr YuFeng Meng
Ms Juan Wang
Position
Executive Chairman
Executive Director, Chief Operating Officer
Non-Executive Director
Non-Executive Director (appointed 14 April 2020)
Non-Executive Director (resigned 22 July 2019)
Mr Zhiwei Gu: Executive Chairman
Qualifications:
Interest in shares and options:
LL.B, LL.M., MSc
20,834 ordinary shares
Directorships held in other
listed entities during the past
three years
None
Mr Gu is an experienced corporate lawyer, who has worked with numerous companies
seeking listings on various international stock markets, including the Toronto Stock
Exchange and the Hong Kong Stock Exchange. He is currently a partner of Dentons, one
of the largest global law firms. Mr Gu has participated in several venture capital and
private equity investment cases by various funds such as London Asia Fund, Warburg
Pincus, Korea Development Bank, China Venture Investment Co., and China Cinda
AMC. During his time with China National Gold Group Corp., Mr Gu was in charge of
mineral resources merger and acquisition activities. Mr Gu holds an LLB from Jilin
University in China, an LLM from Northeast University in China, and Master of Applied
Finance from Macquarie University in Australia. Mr Gu is a qualified lawyer and securities
practitioner in China.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
3
Mr Lubing Liu: Executive Director, Chief Operating Officer and Joint Company Secretary
Qualifications:
BSc
Interest in shares and options:
None
Directorships held in other
listed entities during the past
three years
None
Mr Lubing Liu has 25 years of global experience in petroleum exploration, development,
production, joint venture operations and new ventures. Prior to joining the Company, Mr
Liu held various subsurface leader roles, including Chief Reservoir Engineer with Melbana
Energy Limited, Vice President of Exploration and Petroleum Technology with Sinopec
East Puffin Pty Ltd, and principal petroleum engineering leader roles with other
international exploration and production and energy service companies including
ConocoPhillips, CNOOC, Woodside, RPS and LR. Mr Liu is experienced in petroleum
engineering and has extensive IOR/EOR (waterflood inclusive) and gas cycling
experience having worked at the Xijiang24-3/30-2/24-1 oilfields, Liuhua 11-1 oilfield and
Penglai oilfield in China, the Chinguetti oilfield in Mauritania, Block 95 in Peru, Goodwyn
gas field, Thylacine & Geographe gas field and Longtom gas field in Australia. Mr Liu
holds a BSc in Petroleum Engineering from the Southwest Petroleum University, China. He
is a Member of the Society of Petroleum Engineers.
Dr Mu Luo: Non-Executive Director
Qualifications:
BSc, MSc, PhD
Interest in shares and options:
None
Directorships held in other
listed entities during the past
three years
None
Dr Luo is a senior oil and gas professional with over 35 years' experience working for leading
international E&P and oilfield services companies. He has worked on various giant
conventional and unconventional projects across all levels from research to operations.
He is currently a principal development geophysicist to Inpex Corporation, leading a multi-
billion Ichthys LNG project in Australia. Prior to that, he held principal roles with Sinopec Oil
and Gas, PGS, Japan Petroleum Exploration Company Limited, and Japan Oil, Gas and
Metals National Corporation. Dr Luo holds a PhD in Exploration Geophysics from the Curtin
University, Australia; MSc in Geophysics from the University of Queensland, Australia; and
BSc in Geophysics from the Petroleum University of China. He is a member of the Australian
Society of Exploration Geophysicists, the European Association of Geoscientists and
Engineers, and the Society of Exploration Geophysicists.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
4
Dr YuFeng Meng: Non-Executive Director (appointed 14 April 2020)
Qualifications:
BA, MBA, PhD
Interest in shares and options:
None
Directorships held in other
listed entities during the past
three years
None
Dr Meng’s career spans over 30 years across the USA, Australia, Hong Kong and China,
where she held various leadership, management and consulting roles in different sectors
including education, aircraft tyre logistics, waste management, real estate, equity
investment, banking and Free Trade Zone management and marketing. Dr Meng has
experience in the public sector, project management, and finance (particularly in the
Build-Operate-Transfer or Build-Own-Operate-Transfer project financing). More recently,
she organised numerous government trade delegations to promote bilateral business co-
operation between China and Australia. Dr Meng holds a PhD in Business Administration
from InterAmerican University and an MBA in Business Administration from Southern
California University. Dr Meng is a nominee of a shareholder, Beijing Sibo Investment
Management LP.
Ms Juan Wang: Non-Executive Director (resigned 22 July 2019)
Qualifications:
BA, MBA
20,834 ordinary shares
Interest in shares and options:
Directorships held in other
listed entities during the past
three years
None
Ms Wang was previously the President of Energy Prospecting Technology USA, Inc. and
LandOcean Energy Canada Ltd. where she was responsible for overall management
work for the subsidiary companies of LandOcean in Houston and Calgary. Previously, she
was also an investment manager and director at Anterra Energy Inc. responsible for
Chinese investor liaisons and a manager of corporate mergers and acquisitions at
LandOcean. Ms Wang has a commercial banking background having previously worked
for Deutsche Bank and Bank of East Asia.
Company Secretary
The following persons held the position of company secretary during the financial year:
• Ms Evgenia Bezruchko
• Mr Lubing Liu (appointed 1 April 2020)
• Ms Sara Kelly (resigned 31 March 2020)
Star Phoenix Group Ltd
Annual report ended 30 June 2020
5
Ms Evgenia Bezruchko: Joint Company Secretary
BSc, MSc, MBA
Qualifications:
Interest in shares and options:
14,286 ordinary shares
Directorships held in other
listed entities during the past
three years
None
Ms Evgenia Bezruchko has over 10 years experience in corporate development and
capital markets in natural resources sector. Prior to joining SPG in 2012, Evgenia worked in
corporate broking and equity sales for an independent merchant bank Brandon Hill
Capital (formerly Fox-Davies Capital Limited), covering a wide range of listed and private
oil & gas and mining companies. Evgenia holds a BSc in Pharmacology from the
University of Bristol, an MSc in Finance from the University of Westminster and an MBA from
the American InterContinental University.
Ms Sara Kelly: Joint Company Secretary
Qualifications:
B.Com, LLB
Interest in shares and options:
1 ordinary share
Directorships held in other
listed entities during the past
three years
Homestay Care Limited (from 13 November 2018)
Ragnar Metals Limited (from June 2017 to September
2019)
Ms Sara Kelly is an experienced Company Secretary and Corporate Lawyer with over 15
years’ experience. Sara has comprehensive knowledge of and experience in
administering regulatory frameworks and processes in a listed company environment
and practised as a corporate lawyer specialising in acquisitions, takeovers, capital
raisings and listing of companies on ASX and AIM. Sara has acted as the company
secretary of a number of ASX listed companies. Sara is a partner at Edwards Mac Scovell,
a boutique Western Australian legal practice based in Perth.
Results of operations
The Company’s net profit after taxation attributable to the members of Star Phoenix
Group Ltd for the year to 30 June 2020 was US$47,941,852 (FY2019: US$49,460,755 loss). Loss
for the year from continuing operations was US$23,324,385 (FY2019: US$24,373,432 loss)
and profit for the year from discontinued operations was US$71,266,237 (FY2019:
US$25,087,323 loss).
Dividends
No dividend was paid or declared by the Company during the year and up to the date
of this report.
Corporate structure
Star Phoenix Group Ltd is a company limited by shares, which is incorporated and
domiciled in Australia.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
6
Nature of operations and principal activities
The principal activity of the Group during the financial year was oil and gas production
and oilfield services in Trinidad.
Operational Review
Completion of RRTL sale and debt restructuring
During the year, the Company signed a Sale and Purchase Agreement with LandOcean
Energy Services Co., Ltd (“LandOcean”) for the sale of Range Resources Trinidad Limited
("RRTL") in exchange for (i) offsetting all outstanding debt and payables due from Star
Phoenix and its subsidiaries to LandOcean and its subsidiaries, and (ii) a cash
consideration of US$2,500,000 (the "Transaction").
The Transaction completed on 31 March 2020. Following completion, all of the Company's
debt and payables (US$94,509,742 as at 31 March 2020) to LandOcean was offset and
repaid, and all debt agreements with LandOcean were terminated.
LandOcean paid the Company a cash consideration of US$2,050,574 (out of total
US$2,500,000 as per the agreement) as at 30 June 2020. The total outstanding receivable
from LandOcean as at 30 June 2020 was US$1,843,506 which comprised the outstanding
cash consideration of US$449,426, services provided by Range Resources Drilling Services
Limited (“RRDSL”) to RRTL, repayment of the bond for the Beach Marcelle licence and a
loan to RRTL to cover working capital. The Company continues its discussions with
LandOcean to expedite the payment of the outstanding amount.
Following the disposal of RRTL, which held all of the Company's oil and gas interests in
Trinidad, the Company's residual business comprises the oilfield services company in
Trinidad (RRDSL), as well as an interest in the oil and gas project in Indonesia.
Oilfield services (RRDSL)
During the year, the Company had to take the necessary steps to further cut the ongoing
costs of RRDSL in light of the COVID-19 pandemic. As part of the cost reduction
programme, the Company completed a comprehensive organization restructuring of
RRDSL along with other cost cutting measures. The Company also signed an agreement
with a third-party operator to dry lease some of the equipment including mud tanks and a
generator to derive additional revenue.
In addition, agreements were signed to sell four smaller production rigs for a total sum of
US$153,580. The Company continues to evaluate sale opportunities of the remaining eight
drilling and production rigs.
£0.75 million fundraise
The Company completed a subscription in September 2019 with a new investor Sramek
BioDynamics Holdings Limited (“Sramek”) for ordinary shares to raise £750,000. As part of
the subscription, Sramek can nominate up to two non-executive directors to the Board of
the Company and shall retain this ability for so long as it holds 10% or more of the
Company's shares in issue. Sramek BioDynamics have not yet elected to appoint any non-
executive directors.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
7
£0.56 million fundraise
The Company completed a subscription in January 2020 with a new investor Thesolia Ltd
(“Thesolia”) for ordinary shares to raise approximately £560,000 comprising subscription
proceeds plus late fee payment. As part of the subscription, Thesolia can nominate up to
two non-executive directors to the Board of the Company and shall retain this ability for so
long as it holds 10% or more of the Company's shares in issue. Thesolia Ltd have not yet
elected to appoint any non-executive directors.
Voluntary delisting from the Australian Stock Exchange (“ASX”)
The Company’s shares were removed from trading on ASX with effect from 25 November
2019. No change occurred to the quotation and trading of the Company's shares on the
AIM market operated by the London Stock Exchange plc.
Change of company name
The Company changed its name to Star Phoenix Group Ltd with effect from 1 December
2019.
Capital consolidation
The Company's share capital was consolidated on a 100:1 basis with effect from 5
December 2019. At the date of this report, the Company’s issued capital comprises
141,367,955 ordinary fully paid shares.
Director and management changes
Ms Juan Wang tendered her resignation as Non-Executive Director of the Company,
effective 22 July 2019.
Mr Lubing Liu (the Company's Executive Director and Chief Operating Officer) was
appointed as Joint Company Secretary, replacing Ms Sara Kelly with effect from 1 April
2020.
Dr YuFeng Meng was appointed as a Non-Independent Non-Executive Director, effective
14 April 2020. Dr Meng’s appointment was made pursuant to Beijing Sibo Investment
Management LP ("Sibo") contractual right to appoint up to three Non-Executive Directors
to the Board of the Company above 10% shareholding. Resolution 1 of EGM relating to
the removal of Dr YuFeng Meng as a Director was duly passed on 25 September 2020.
Appointment of Nomad and Broker
WH Ireland Limited was appointed as the Company's Nominated Adviser ("Nomad") and
sole broker with effect from 29 June 2020.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group during the
financial year, other than as set out in this report.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
8
Significant events after the reporting
date
Extraordinary General Meeting of Shareholders
Subsequent to the year end, the Company received two separate requests from two
separate Shareholders, each of which holds at least 5% of the votes that may be cast at a
general meeting of the Company, for a general meeting to be held to consider the
following resolutions:
1. Removal of Director - Dr. YuFeng Meng;
2. Election of Director - Dr. Yang Chong Yi;
3. Election of Director - Mr. Paul Norris;
4. Election of Director - Mr. Omar C.S. Stanford IV;
5. Election of Director - Mr. Li Jun;
6. Removal of Director - Mr. Zhiwei (Kerry) Gu; and
7. Removal of Director - Mr. Lubing Liu.
The Company called, arranged and held the Meeting to consider all the resolutions
proposed pursuant to these requests and in accordance with the provisions of section
249D(5) of the Corporations Act. The Meeting was held on 25 September 2020, where only
resolution 1 relating to the removal of Dr YuFeng Meng as a Director was duly passed. All
other resolutions relating to the Board changes were lost.
Outstanding payable from LandOcean
Subsequently to the year end, the Group received two payments from LandOcean of a
total sum of US$300,000 towards the outstanding balance. The Company continues its
discussions with LandOcean to expedite the payment of the outstanding amount of
US$1,543,506.
Covid-19 impact
The impact of the Coronavirus (COVID-19) pandemic is ongoing, and it has been
financially negative for the Group up to 30 June 2020 as it has negatively affected the oil
price. It is not practicable to estimate the potential impact after the reporting date
positive or negative. The situation is continuously developing and is dependent on
measures imposed by the Government of Trinidad and Tobago and other countries, such
as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
Likely developments and expected results of operations
The Company continues its search of new attractive acquisition opportunities to provide
future growth and value for the Company and its shareholders. The Company is also
seeking to complete the sale of its rigs and equipment in Trinidad to provide additional
cashflow and strengthen the Company’s financial position.
Environmental regulations and performance
The Group’s operations are not regulated by any significant environmental regulation
under a law of the Commonwealth or of a state or territory.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
9
The Directors have considered compliance with the National Greenhouse and Energy
Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and
energy use. The directors have assessed that there are no current reporting requirements
but may be required to do so in the future.
Share options
As at 30 June 2020, the Company had no unissued ordinary shares under option. During
the year ended 30 June 2020, no ordinary shares of the Company were issued on the
exercise of options (2019: nil).
Indemnifying directors and officers
In accordance with the constitution, except where prohibited by the Corporations Act
2001, every director, principal executive officer and secretary of the Company shall be
indemnified out of the property of the Company against any liability incurred by him/her
in his/her capacity as director, principal executive officer or secretary of the Company or
any related corporation in respect of any act or omission whatsoever and howsoever
occurring or in defending any proceedings whether civil or criminal.
During the financial year, the Company has paid premiums of US$12,431 to insure the
Directors and Officers against certain liabilities arising out of the conduct of acting as an
officer of the Company. Under the terms and conditions of the insurance contract, the
nature of liabilities insured against and the premium paid cannot be disclosed.
Meetings of Directors
During the financial year, six meetings of the Board of Directors were held. Attendances
by each Director during the year were as follows:
Director
Zhiwei Gu
Lubing Liu
Mu Luo
YuFeng Meng (appointed 14 April 2020)
Juan Wang (resigned 22 July 2019)
Board Meetings
Eligible to attend
6
6
6
3
0
Attended
6
6
6
3
0
Proceedings on behalf of the company
No person has applied for leave of Court to bring proceedings on behalf of the Company
or to intervene in any proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit services
The total value of non-audit services provided by a related practice of BDO Audit (WA)
Pty Ltd in respect to the Company’s tax compliance is US$29,910 (2019: US$15,500).
The Board of Directors has considered the position and is satisfied that the provision of the
non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are satisfied that the provision of
Star Phoenix Group Ltd
Annual report ended 30 June 2020
10
non-audit services by the auditor did not compromise the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
1. all non-audit services have been reviewed by the Board to ensure they do not
impact the impartiality and objectivity of the auditor; and
2. none of the services undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants.
Corporate Governance Statement
Introduction
The Chairman and Directors support and take responsibility for high standards of
corporate governance. AIM rules require AIM companies to comply or explain against a
recognised corporate governance code. The Group has decided to adhere to the
Quoted Companies Alliance’s (QCA) Corporate Governance Code. The QCA Code is
constructed around ten broad principles, details of which, along with the approach taken
in respect of each principle by the Group, are below. The Board is aware of certain
departure from the principles of the QCA Code, which is explained below.
The Chairman’s role is to lead the Board, set its agenda, ensure it receives accurate,
timely and clear information and oversee the adoption, delivery and communication of
the Company’s Corporate Governance recommendations. Furthermore, the Chairman
ensures effective communication within the Board, and senior management and takes a
leading role in determining the composition and structure of the Board.
The Board meets frequently to consider all aspects of the Group’s activities. The Board
consists of the Chairman, Executive Director and two Non-Executive Directors. All Directors
have access to the advice and services of the Company Secretary and the Group’s
professional advisors.
The Corporate Governance Statement and Corporate Governance Plan are available on
the Company's website www.starphoenixgroup.com.
Zhiwei Gu
Chairman
26 October 2020
Star Phoenix Group Ltd
Annual report ended 30 June 2020
11
QCA code
PRINCIPLE
1. Establish a strategy
and business model
which promote long-
term value for
shareholders
2. Seek to understand
and meet shareholder
needs and
expectations
3. Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
APPLICATION
See pages 7 to 10 of the Annual Report.
The Company keeps shareholders and other interested parties informed
of performance and major developments via communications through
regulatory announcements and its website. Information about the
Company and its governance is available in the Corporate
Governance Plan which can be found on the Company’s website.
The Company has adopted a Shareholder Communications Strategy
which aims to promote and facilitate effective two-way
communication with investors. This Strategy outlines a range of ways in
which information is communicated to shareholders and is available on
the Company’s website as part of the Company’s Corporate
Governance Plan.
having the opportunity to ask questions of Directors at all
Shareholders have the ability to communicate with Directors through
various means including:
•
general meetings;
•
the presence of the Auditor at AGMs (in person or by
teleconference, as practicable and appropriate) to take shareholder
questions on any issue relevant to their capacity as Auditor; and
•
the Company making Directors and selected executives
available to answer shareholder questions submitted by telephone,
email and other means (where appropriate).
Traditionally, the key forum for two-way communication between the
Company and its shareholders is its AGM. The Board encourages
shareholder participation at the Company’s AGM and other general
meetings of shareholders, and the Chairman encourages questions and
comments from shareholders and seeks to ensure that shareholders are
given ample opportunity to participate. Shareholders who are unable
to attend the AGM or a general meeting may submit questions and
comments before the meeting to the Company and/or to the Auditor
(in the case of the AGM).
The Shareholder Communication Strategy provides that shareholders
can register with the Company to receive email notifications when a
regulatory announcement is made by the Company, including the
release of the Annual Report and half yearly reports.
Shareholder queries should be referred to the Corporate Development
Manager and/or Company Secretary in the first instance. Whilst most
contact with the Company’s investors is with the Corporate
Development Manager and Joint Company Secretary, Evgenia
Bezruchko, the other Board members receive reports of views expressed
by shareholders.
The Board takes very seriously the need to maintain good relationships
with stakeholders, including its employees and workforce, the local
communities within which it operates and the governments in whose
jurisdiction it operates. The Company continuously aims to understand
their needs, interests and expectations. The Board recognises that this is
particularly important for companies operating in the extractive
industries.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
12
As outlined under Principle 2, the Board maintains good lines of
communication with its shareholders. The Directors also meet with other
stakeholders, including employee and workforce representatives,
community leaders and government officials where appropriate.
The Company recognises that diversity drives the Company’s ability to
attract, retain, motivate and develop talent, create an engaged
workforce, and continue to grow the business. In view of this, the Board
has adopted a Diversity Policy, available on the Company’s website.
However, recognising that the Company has a small team of Directors
and employees, the Board has determined that it will not set
benchmarks for gender diversity, and will not report against its progress
to achieve any measurable objective.
The Company remains committed however, to ensuring that the best
candidates both at a Board and employee level are appointed as
opportunities arise regardless of gender, beliefs or racial background.
The Company has also developed a Code of Conduct which has been
fully endorsed by the Board and applies to all Directors and employees.
The Code of Conduct is regularly reviewed and updated as necessary
to ensure that it reflects the highest standards of behaviour and
professionalism and the practices necessary to maintain confidence in
the Company’s integrity. The purpose of the Code of Conduct is to
provide a framework for decisions and actions in relation to ethical
conduct in employment. It underpins the Company’s commitment to
integrity and fair dealing in its business affairs and to a duty of care to all
employees, clients and stakeholders. The Code of Conduct can be
found in the corporate governance section of the Company’s website.
The Company expects all employees, suppliers, contractors and
consultants to conduct their day to day business activities in a fair,
honest and ethical manner as stipulated by the Company’s Anti-
Corruption and Bribery policy. Management at all levels are responsible
for ensuring that those reporting to them, internally and externally are
made aware of and understand this policy.
The Company’s Corporate Governance Plan contains an Audit and Risk
Committee Charter that provides for the creation of an Audit and Risk
Committee. Given the Company’s current small size and lack of
complexity, the Company does not currently have an Audit and Risk
Committee. The Board considers that together with its executive team
and relevant advisers, it has sufficient resources in place for effective risk
management.
In accordance with the Company’s Board Charter, the Board carries
out the duties that would ordinarily be carried out by the Audit and Risk
Committee under the Audit and Risk Committee Charter to
independently verify and safeguard the integrity of its financial
reporting, including the processes for the appointment and removal of
the external auditor and the rotation of the audit engagement partner.
A comprehensive risk review was not undertaken during FY2020,
however the Company intends to undertake such review during
FY2021. Please refer note 31 for information on the financial risk
management.
Board
The Company has adopted a Board Charter that sets out the specific
roles and responsibilities of the Board, the Chair and management and
includes a description of those matters expressly reserved to the Board.
The Board Charter sets out the specific responsibilities of the Board,
requirements as to the Board’s composition, the roles and responsibilities
of the Chairman and Company Secretary, establishment of Board
4. Embed effective risk
management,
considering both
opportunities and
threats, throughout the
organisation
5. Maintain the board
as a well-functioning,
balanced team led by
the Chair
Star Phoenix Group Ltd
Annual report ended 30 June 2020
13
committees (once the Board is of a sufficient size and structure), Board
meetings, access to advice, details of the Board’s relationship with
management, details of the Board’s performance review and details of
the Board’s disclosure policy. A copy of the Company’s Board Charter,
which is part of the Company’s Corporate Governance Plan, is
available on the Company’s website.
All Directors have unrestricted access to Company records and
information except where the Board determines that such access
would be adverse to the Company’s interests. The Company Secretary
shall distribute supporting papers for each meeting of the Board as far in
advance as practicable, and when requested by the Board, the
Company Secretary will facilitate the flow of information of the Board,
between the Board and its Committees and between senior executives
and non-executive Directors.
All Directors may consult management and employees as required to
enable them to discharge their duties as Directors. The Board,
Committees or individual Directors may seek independent external
professional advice as considered necessary, at the expense of the
Company, subject to prior consultation with the Chairman. A copy of
any such advice received is made available to all members of the
Board.
The Chairman’s role is to lead the Board, set its agenda, ensure it
receives accurate, timely and clear information and oversee the
adoption, delivery and communication of the Company’s Corporate
Governance recommendations. Furthermore, the Chairman ensures
effective communication within the Board, and senior management
and takes a leading role in determining the composition and structure
of the Board.
The Board is satisfied that each Director commits the time necessary to
fulfil his role.
Independence
The Board is currently comprised of one independent non-executive
Director (Dr Mu Luo), one non-independent non-executive director (Dr
YuFeng Meng, and two executive Directors (Mr Zhiwei Gu and Mr
Lubing Liu). The QCA Code requires that a board should have an
appropriate balance between executive and non-executive Directors
and should have at least two independent non-executive Directors.
Accordingly, the Board does not comply with the requirements of the
QCA Code. The Board’s charter provides that where practical, the
majority of the Board is comprised of non-executive Directors and that,
where practical, at least 50% of the Board will be independent. The
Board will continue to assess the Company’s needs as it grows in size
and if appropriate, appoint additional non-executive and independent
Directors.
Mr Gu and Mr Liu are not considered to be independent. The Board has
considered and reviewed the independence and effectiveness of Dr
Luo, taking into account the guidance in the QCA Code, and is of the
view that he continues to be independent in character and judgement
and free from relationships or circumstances that could affect his
judgement. A profile of each Director is set out in this Annual Report
and on its website.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
14
Chairman
The Company does not currently have an independent non-executive
Chairman. The Executive Chairman, Mr Zhiwei Gu, assumes the role of
Chairman at the Company’s Board and shareholder meetings. The
Board will continue to assess the Company’s needs as it grows in size
and if appropriate, appoint an additional Director to act as
independent Chairman of the Company.
Audit/Risk Committee
As explained under Principle 4 above, the Company does not have an
Audit and Risk Committee. The Company’s Corporate Governance
Plan contains an Audit and Risk Committee Charter that provides for
the creation of an Audit and Risk Committee (if it is considered it will
benefit the Company), with at least three members, all of whom must
be independent Directors, and which must be chaired by an
independent Director who is not the Chair. The Company does not
have an Audit and Risk Committee as the Board considers the
Company will not currently benefit from its establishment given the
Company’s current small size and lack of complexity. In accordance
with the Company’s Board Charter, the Board carries out the duties that
would ordinarily be carried out by the Audit and Risk Committee under
the Audit and Risk Committee Charter. In addition, the Board does not
have sufficient independent Directors to satisfy the composition of the
audit and risk committee.
Remuneration/Nomination Committee
The Company does not have a Remuneration and Nomination
Committee as the Board considers the Company will not currently
benefit from its establishment given the Company’s current small size
and lack of complexity. In addition, the Board does not have sufficient
independent Directors to satisfy the composition requirements of the
Committee.
The Company’s Corporate Governance Plan contains a Remuneration
and Nomination Committee Charter that provides for the creation of a
Remuneration and Nomination Committee (if it is considered it will
benefit the Company). It is envisaged that once the Company is of a
sufficient size, it will establish the Committee which will be responsible for
arranging the performance evaluation of the Board and individual
Directors on behalf of the Board.
In the absence of a Remuneration and Nomination Committee, the full
Board is responsible for the determination of the remuneration of
Directors and senior executives and ensuring that such remuneration is
appropriate and not excessive. Where considered necessary, the Board
may engage a remuneration consultant to assist with setting and
reviewing the Company’s executive and non-executive remuneration
policies to ensure the Company attracts and retains executives and
Directors who will create value for shareholders. The Company’s
policies and practices regarding the remuneration of executive and
non-executive Directors and other senior executives are disclosed in this
Annual Report.
The Board also carries out the duties that would ordinarily be carried out
by the Remuneration and Nomination Committee, including the
following processes to address succession issues and to ensure the
Board has the appropriate balance of skills, experience, independence
and knowledge of the entity to enable it to discharge its duties and
responsibilities effectively:
Star Phoenix Group Ltd
Annual report ended 30 June 2020
15
6. Ensure that between
them the Directors
have the necessary
up-to-date
experience, skills and
capabilities
• devoting time at least annually to discuss Board succession
issues and updating the Company’s Board skills matrix; and
• all Board members being involved in the Company’s
nomination process, to the maximum extent permitted
under the Corporations Act.
The Board ensures appropriate checks (including checks in respect of
character, experience, education, criminal record and bankruptcy
history (as appropriate)) are undertaken before appointing a person, or
putting forward to security holders a candidate for election, as a
Director. When considering the appointment of a new Director, the
Board may engage the services of an external executive search firm to
identify suitable candidates for consideration and to carry out
appropriate reference and background checks.
The Board considers the present composition, size and balance in
respect of qualifications and experience of the Board to be
appropriate and effective for the control and direction of the Group’s
business at the current stage of its development. Each Director is
expected to bring to the Company their experience and skills in the
respective fields, in particular their considerable industry experience, to
add value to the performance of the Company.
The Board consider their combined skills, experience and expertise to
be as follows:
• Management and Leadership – Business Leadership, Public
Listed Company Experience, International Sustainability,
Stakeholder Management, Community Relations, Corporate
Governance, Human Resources;
Business and Finance – Finance Strategy, Competitive
Business Analysis, Corporate Financing, Financial Literacy,
Mergers and Acquisitions, Risk Management, Tax,
Remuneration; and
•
• Oil and Gas Experience – Technical Knowledge, Relevant
Industry Experience, HSE, Reserves and Resources
Assessment.
The Board Charter requires the disclosure of each Board member’s
qualifications and expertise. Full details as to each Director and senior
executive’s relevant skills and experience are available in this Annual
Report.
The Company has a process to educate new Directors about the
nature of the business, current issues, corporate strategy and the
Company’s expectations of Directors.
All Directors are made aware of their rights to access employees,
information and resources. Directors are encouraged to visit the
Group’s locations and meet with management to gain a better
understanding of the Group’s operations. Directors are given access to
continuing education opportunities to update and enhance their skills
and knowledge base.
The Board does not consider that it is dominated by one person or
group of people. The Board recognises that, as the Company evolves,
the mix of skills and experience required on the Board will change, and
Board composition will need to evolve to reflect this change.
It is recognized that the composition of the Board is not diverse,
including in terms of gender balance, although this is limited as a result
of the small size of the Board. Whilst the Company notes the QCA Code
recommendations, it recognises that the Company has a small team of
Star Phoenix Group Ltd
Annual report ended 30 June 2020
16
7. Evaluate board
performance based
on clear and relevant
objectives, seeking
continuous
improvement
Directors and employees, and as such the Board has determined that it
will not currently set benchmarks for gender diversity, and will not report
against its progress to achieve any measurable objective.
However, the Company remains committed to ensuring that the best
candidates both at a Board and employee level are appointed as
opportunities arise regardless of gender, beliefs or racial background.
The Company recognises that diversity drives the Company’s ability to
attract, retain, motivate and develop talent, create an engaged
workforce, and continue to grow the business. In view of the above, the
Board has adopted a Diversity Policy, available on the Company’s
website. As the Company and the Board grow in size appropriate
consideration will be given to the diversity and gender balance of the
Board.
The Company’s Remuneration and Nomination Committee (or, in its
absence, the Board) is responsible for evaluating the performance of
the Board, its committees and individual Directors on an annual basis. It
may do so with the aid of an independent advisor. The process for this is
set out in the Company’s Corporate Governance Plan, which is
available on the Company’s website.
As explained in relation to Principle 5, the Company does not currently
have a Nomination Committee, so it is the Board who take responsibility
for this matter. It is envisaged that once the Company is of a sufficient
size to establish a Nomination Committee, that committee will be
responsible for arranging the performance evaluation of the Board, its
committees and individual Directors on behalf of the Board.
In particular, the review will assess the performance of the Board over
the previous 12 months and examine ways of assisting the Board in
performing its duties more effectively.
The review will include:
• comparing the performance of the Board with the
requirements of the Board Charter;
• examination of the Board’s interaction with management;
• assessing the nature of information provided to the Board by
management; and
• evaluating management’s performance in assisting the
Board to meet its objectives.
A similar review will be conducted for each Committee by the Board
with the aim of assessing the performance of each Committee and
identifying areas where improvements can be made.
The Remuneration and Nomination Committee (or, in its absence, the
Board) will oversee the performance evaluation of the executive team.
This evaluation is based on specific criteria, including the business
performance of the Company and its subsidiaries, whether strategic
objectives are being achieved and the development of management
and personnel.
A formal performance evaluation of each individual Director was not
undertaken during FY2020, however the Company intends to undertake
such review during FY2021.
The Board Charter provides that the composition of the Board is to be
reviewed regularly against the Company’s board skills matrix to ensure
the appropriate mix of skills and expertise is present to facilitate
successful strategic direction. In addition, the Remuneration and
Nomination Committee (or, in its absence, the Board) shall conduct an
annual performance review of the Board that compares the
performance of the Board with the requirements of the Board Charter,
Star Phoenix Group Ltd
Annual report ended 30 June 2020
17
8. Promote a
corporate culture that
is based on ethical
values and behaviours
9. Maintain
governance structures
and processes that are
fit for purpose and
support good
decision-making by
the board
critically reviews the mix of the Board and suggests any amendments to
the Board Charter as are deemed necessary or appropriate.
The Board acknowledges the importance and the value of succession
planning in order to ensure that the Company has the benefit of an
appropriate mix of skills and experience as the Board and senior
management team evolve. The discussions around the Company’s
strategy, objectives and forward plans, as well as an assessment of the
Directors’ current mix of skills, experiences and personal qualities, all
form the succession plans for the Board.
The Company has developed a Code of Conduct which has been fully
endorsed by the Board and applies to all Directors and employees. The
Code of Conduct is regularly reviewed and updated as necessary to
ensure it reflects the highest standards of behaviour and professionalism
and the practices necessary to maintain confidence in the Company’s
integrity. The purpose of the Code of Conduct is to provide a
framework for decisions and actions in relation to ethical conduct in
employment. It underpins the Company’s commitment to integrity and
fair dealing in its business affairs and to a duty of care to all employees,
clients and stakeholders. The Code of Conduct can be found in the
corporate governance section of the Company’s website.
The Board promotes a sound corporate culture and encourages open
and respectful dialogue which results in the Group working together as
a cohesive unit. Management decisions reflect the Group’s values,
culture, policies and procedures wherever appropriate.
It is noted that the QCA Code requires that a company should maintain
governance structures and processes in line with its corporate culture
and appropriate to its size and complexity, and its capacity, appetite
and tolerance for risk. The governance structures should evolve over
time in parallel with a company’s objectives, strategy and business
model to reflect the development of the company. The Board considers
that the Company’s current governance structures and processes are
appropriate for the current size and stage of development of the
Company.
The Board currently consists of an executive Chairman, an executive
Director, a non-independent non-executive director and one
independent non-executive Director. The Company also has two joint
Company Secretaries. The qualifications and experience of each
member of the Board are stated in the Company’s latest Annual
Report. As the Company develops, consideration will be given to the
appointment of additional Directors, including additional independent
non-executive Directors, as are appropriate to the size and stage of
development of the Company.
As explained in relation to Principle 5, the Board does not currently have
any committees given its current size and the size and stage of
development of the Company. It is intended that such committees will
be established once the Board is of a sufficient size and structure, and
the Company’s operations are of a sufficient magnitude, that such
committees would be of benefit to the effective operation of the
Board.
10. Communicate how
the company is
governed and is
performing by
maintaining a
dialogue with
The Company has adopted a Board Charter that includes a description
of those matters expressly reserved to the Board.
As explained under Principle 2, the Company keeps shareholders and
other interested parties informed of performance and major
developments via communications through regulatory announcements
and its website. Information about the Company and its governance is
available in the Corporate Governance Plan which can be found on
the Company’s website.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
18
shareholders and
other relevant
stakeholders
The Company has adopted a Shareholder Communications Strategy
which aims to promote and facilitate effective two-way
communication with investors. This Strategy outlines a range of ways in
which information is communicated to shareholders and is available on
the Company’s website as part of the Company’s Corporate
Governance Plan. Shareholders have the ability to communication with
Directors through various means such as at general meetings, by
telephone, email and other appropriate means, as detailed under
Principle 2 above.
The Shareholder Communication Strategy provides that shareholders
can register with the Company to receive email notifications when an
announcement is made by the Company, including the release of the
Annual Report, half yearly reports and quarterly reports. Links are made
available to the Company’s website on which all regulatory
announcements and disclosures are promptly posted. Shareholders
queries should be referred to the Company Secretary in the first
instance.
The results of voting on resolutions put to shareholders are announced
by the Company promptly when they are available. If there has been a
significant proportion of votes cast against a resolution at a general
meeting, where relevant an explanation will be provided.
The Company’s historical annual reports and other governance-related
material, including notices of general meetings over the past five years,
are available on its website.
Remuneration Report (Audited)
Remuneration policy
The remuneration policy of Star Phoenix Group Ltd has been designed to align director
and executive objectives with shareholder and business objectives by providing a fixed
remuneration component and offering specific long-term incentives based on key
performance areas affecting the Group’s financial results. The Board of SPG believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the
best executives and directors to run and manage the Group, as well as create alignment
of goals between directors, executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board
members and senior executives of the Company is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and
other senior executives, was developed and approved by the Board.
Non-executive directors, executive directors and senior executives receive a base salary
(which is based on factors such as length of service and experience), which is calculated
on a total cost basis and includes any FBT charges related to employee benefits including
motor vehicles, as well as employer contributions to superannuation funds where
applicable.
Executive and non-executive directors can be employed by the Company on a
consultancy basis on Board approval, with remuneration and terms stipulated in individual
consultancy agreements.
The Company does not currently have a Remuneration and Nomination Committee. In its
absence, the full Board is responsible for the determination of the remuneration of
Star Phoenix Group Ltd
Annual report ended 30 June 2020
19
Directors and senior executives and ensuring that such remuneration is appropriate and
not excessive. Where considered necessary, the Board may engage a remuneration
consultant to assist with setting and reviewing the Company’s executive and non-
executive remuneration policies to ensure the Company attracts and retains executives
and Directors who will create value for shareholders. As the Company grows in size, it is
planned that the Company will establish a separate remuneration committee with its own
remuneration committee charter. No remuneration consultant has been used during the
year.
The Board is also responsible for evaluating the performance of Directors and the senior
executives. It is envisaged that once the Company is of a sufficient size to establish a
Remuneration and Nomination Committee, that committee will be responsible for
arranging the performance evaluation of the Board, its committees, and individual
Directors on behalf of the Board. This evaluation will be based on specific criteria,
including the business performance of the Company and its subsidiaries, whether
strategic objectives are being achieved and the development of management and
personnel. A formal performance evaluation was not undertaken during the financial
year, however the Company intends to undertake such review during the following
financial year.
All remuneration paid to directors and executives is valued at the cost to the Company
and expensed. Shares given to directors and executives are valued as the difference
between the market price of those shares and the amount paid by the director or
executive. Unlisted options are valued using the Black-Scholes methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable
companies taking into consideration time, commitment, and level of responsibility. Fees
for non-executive directors are not linked to the performance of the Group. The directors
are not required to hold any shares in the Company under the Constitution of the
Company; however, to align directors’ interests with shareholder interests, the directors
are encouraged to hold shares in the Company.
Options may be issued to directors and executives as part of their remuneration. All
previously issued options expired during the year ended 30 June 2020 and there are
currently no options issued to directors or executives. Under the Company’s share trading
policy, all employees and directors of the Company and its related companies are
prohibited from trading in the Company’s shares or other securities if they are in possession
of inside information.
The Board believes that it has implemented suitable practices and procedures that are
appropriate for an organisation of this size and maturity.
Company performance, shareholder wealth and directors and
executive’s remuneration
No relationship exists between shareholder wealth, director and executive remuneration
and Company performance.
Key Management Personnel
Name
Position
Mr Zhiwei Gu
Executive Chairman
Appointed/Resigned
Appointed as an Executive
Chairman on 10 December 2018
Star Phoenix Group Ltd
Annual report ended 30 June 2020
20
Name
Position
Mr Lubing Liu
Executive Director, Chief
Operating Officer and Joint
Company Secretary
Dr Mu Luo
Dr YuFeng Meng
Non-Executive Director
Non-Executive Director
Ms Juan Wang
Non-Executive Director
Appointed/Resigned
Appointed as an Executive
Director on 1 March 2018 and as
a Joint Company Secretary on 1
April 2020
Appointed 11 January 2019
Appointed 14 April 2020
Appointed 30 November 2014,
resigned 22 July 2019
Details of remuneration
The remuneration for the Key Management Personnel of the Group during the year was
as follows:
Short Term Benefits
2020
Cash
salary &
fees
US$
Currency
Directors & Officers
Mr Gu (i)
Mr L Liu (ii)
Dr Luo
Ms Wang (iv)
Dr Meng (iii)
Total
385,416
207,229
52,500
1,546
-
646,691
One-off
payment
Termination
benefits
US$
US$
531,250
222,255
-
-
-
753,505
-
-
-
-
-
-
Post-
employment
benefits
Super -
annuation /
pensions
US$
Share
based
payments
Options
Total
US$
US$
-
29,054
-
-
-
29,054
-
-
-
-
-
-
916,666
458,538
52,500
1,546
-
1,429,250
(i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as Executive Chairman, US$25,000 in his role
as Executive Director and US$330,416 for additional consulting work, as well as one-off payments of US$531,250.
Consulting fees were paid to Kegrace Consulting Limited, a company owned by Mr Gu.
(ii) Fees paid to Mr L Liu comprised US$29,054 superannuation contributions, US$222,255 one-off payments and
salary of US$207,229 in his capacity as Chief Operating Officer and Trinidad General Manager.
(iii) Dr Meng was appointed 14 April 2020. Dr Meng did not receive any remuneration in the year.
(iv) Ms Wang resigned 22 July 2019.
Short Term Benefits
2019
Cash
salary &
fees
Currency
US$
Directors & Officers
Mr Gu (i)
Mr Y Liu (iii)
Ms Wang
Mr L Liu (ii)
Dr Zeng (iv)
250,000
81,459
25,000
154,164
10,417
One-off
payment
Termination
benefits
US$
US$
58,333
-
-
-
-
-
-
-
-
-
Post-
employment
benefits
Super
annuation /
pensions
US$
Share
based
payments
Options
Total
US$
US$
-
10,666
-
13,619
-
(12,386)
(31,044)
(6,440)
-
-
295,947
61,081
18,560
167,783
10,417
Star Phoenix Group Ltd
Annual report ended 30 June 2020
21
Mr Beattie (v) 177,165
Dr Luo (vi)
Total
11,828
710,033
28,823
-
87,156
-
-
-
13,103
-
37,388
(22,758)
-
(72,628)
196,333
11,828
761,949
(i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as a non-executive director, US$25,000 in his
role as Chairman and US$253,333 for additional consulting work. Mr Gu was appointed on 10 December 2018.
(ii) Fees paid to Mr L Liu comprised US$7,700 received for additional consulting work, US$6,350 benefits in kind
and salary of US$153,733 in his capacity as Chief Operating Officer.
(iii) Mr Y Liu resigned 10 December 2018
(iv) Dr Zeng resigned 27 November 2018
(v) Mr Beattie resigned 31 March 2019
(vi) Dr Luo appointed 11 January 2019
During the year, the following short-term incentives were in place for Mr Gu and Mr Liu.
Fundraising
• minimum cumulative value of US$500,000: one month’s salary paid in cash (met)
• minimum cumulative value of US$1,000,000: two months’ salary paid in cash (met)
• minimum cumulative value of US$2,000,000: three months’ salary paid in cash (not
met)
• minimum cumulative value of US$5,000,000: six months’ salary paid in cash (not
met)
Mr Gu payment (US$62,500), Mr Liu payment (US$40,930).
Tax refunds in Trinidad
• minimum cumulative value of US$300,000: one month’s salary paid in cash (met)
• minimum cumulative value of US$600,000: two months’ salary paid in cash (met)
• minimum cumulative value of US$1,000,000: three months’ salary paid in cash
(met)
• minimum cumulative value of US$1,500,000: six months’ salary paid in cash (met)
Mr Gu payment (US$187,500), Mr Liu payment (US$103,615).
Debt restructuring
•
signing of binding agreements: three months’ salary paid in cash (Mr Gu), 1.5
months’ salary paid in cash (Mr Liu) (met)
• completion of debt restructuring through debt conversion, offset or any other way:
three months’ salary paid in cash (Mr Gu), 1.5 months’ salary paid in cash (Mr Liu)
(met)
Mr Gu payment (US$187,500), Mr Liu payment (US$51,800).
Rigs sale
•
signing of binding agreements to sell all or part of rigs: three months’ salary paid in
cash (Mr Gu), 1.5 months’ salary paid in cash (Mr Liu) (met)
• completion of transaction of rigs sale: three months’ salary paid in cash (Mr Gu),
1.5 months’ salary paid in cash (Mr Liu) (not met)
Mr Gu payment (US$93,750), Mr Liu payment (US$25,910).
Star Phoenix Group Ltd
Annual report ended 30 June 2020
22
Equity instrument disclosures relating to Key Management
Personnel
Share-based payments (year ended 30 June 2020)
No options were issued to key management personnel. All existing options expired in the
financial year and there has not been an expense reversal.
Fully paid shareholdings
The numbers of shares in the Company held during the financial year or at time of
resignation by Key Management Personnel of the Company, including their personally
related parties, are set out below.
2020
Mr Gu
Ms Wang
Mr L Liu
Dr Zeng
Dr Luo
Dr Meng
Total:
Balance at
the start of
the year
2,083,333
2,083,333
-
-
-
-
4,166,666
Granted as
Compensation
Other
Changes*
Balance at
the end of
the year
-
-
-
-
-
-
-
(2,062,499) 20,834
(2,062,499) 20,834
-
-
-
-
4,124,998
-
-
-
-
41,668
Balance
held
indirectly
-
-
-
-
-
-
-
*After capital consolidation of 100:1 basis effective 5 December 2019.
Options held by Key Management Personnel
The numbers of options in the company held during the financial year or at time of
resignation by Key Management Personnel of the Company, including their personally
related parties, are set out below:
2020
Mr Gu
Ms Wang
Mr L Liu
Dr Zeng
Dr Luo
Dr Meng
Total:
Balance at
the start of
the year
30,000,000
7,500,000
-
-
-
-
37,500,000
Granted as
Compensation
Expired
-
-
-
-
-
-
-
(30,000,000)
(7,500,000)
-
-
-
-
(37,500,000)
Balance at
the end of
the year
-
-
-
-
-
-
-
Vested and
exercisable
-
-
-
-
-
-
-
Loans to Key Management Personnel
There were no loans made to directors of SPG and other Key Management Personnel of
the Group, including their personally related parties during the 2019 or 2020 financial
years.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
23
Employment contracts of Directors and other Key Management
Personnel
On appointment, Executive Directors and Other Key Management Personnel enter into
an employment contract with the Company (or another company within the Group). This
contract sets out their duties, remuneration and other terms of employment. These
contracts may be terminated by either the Company or the employee as detailed below.
All directors are eligible to receive consulting fees for services provided to the Company
over and above the services expected from a non-executive director.
Mr Zhiwei Gu as Executive Chairman
Executive Chairman contract (commenced 10 December 2018)
10 December 2018 to 29 February 2020
Contract date:
US$55,000 per annum
Base Payment:
No superannuation entitlement
Superannuation:
3 months
Notice period:
Payment in lieu of notice at Company option for termination
without cause
Termination benefits:
Consulting services:
Mr Gu provided additional executive and consulting services
over and above services rendered to the Company at a rate of
US$16,250 per month
Mr Zhiwei Gu as Executive Chairman
Executive Chairman contract
Contract start date:
Base Payment:
Superannuation:
Notice period:
Termination benefits:
Consulting services:
1 March 2020
US$55,000 per annum
No superannuation entitlement
6 months
Payment in lieu of notice at Company option for termination
without cause
Mr Gu provided additional executive and consulting services
over and above services rendered to the Company at a rate of
US$26,667 per month
Ms Juan Wang as Non-Executive Director, resigned on 22 July 2019
Non-Executive Director contract
Contract start date:
Base Payment:
Superannuation:
Termination benefits:
1 April 2018
US$25,000 per annum
No superannuation entitlement
None
Mr Lubing Liu as Chief Operating Officer, Trinidad General Manager and Executive
Director
Chief Operating Officer and Trinidad General Manger contract
Contract date:
Base Payment:
Superannuation:
Notice period:
Termination benefits:
1 March 2018 to 23 December 2019
US$140,110 per annum
10% of base
3 months
3 months’ salary
Star Phoenix Group Ltd
Annual report ended 30 June 2020
24
Mr Lubing Liu as Chief Operating Officer, Trinidad General Manager, Executive Director
and Joint Company Secretary (appointed as Joint Company Secretary on 1 April 2020)
Chief Operating Officer and Trinidad General Manger contract
Contract start date:
Base Payment:
Superannuation:
Notice period:
24 December 2019
US$236,712 per annum
US$22,488 per annum
6 months
Payment in lieu of notice at Company option for termination
without cause
Termination benefits:
Dr Mu Luo as Non-Executive Director (appointed 11 January 2019)
Non-Executive Director contract
Contract start date:
Base Payment:
Superannuation:
Termination benefits:
11January 2019 (amended on 1 August 2019)
US$25,000 per annum (US$50,000 from 1 August 2019)
No superannuation entitlement
None
Dr YuFeng Meng as Non-Executive Director (appointed 14 April 2020)
Non-Executive Director, no remuneration
Contract start date:
Base Payment:
Superannuation:
Termination benefits:
N/A
N/A
N/A
N/A
Additional information
The earnings of the consolidated entity for the five years to 30 June 2020 are summarised
below:
Revenue
EBITDA
EBIT
Profit/(loss)
after income
tax
2020
$'000
8,539
(19,703)
(20,542)
2019
$'000
12,357
(39,044)
(43,002)
2018
$'000
13,059
(6,000)
(10,951)
2017
$'000
8,435
(7,900)
(14,189)
2016
$'000
7,062
(5,658)
(11,149)
47,952
(49,461)
(17,530)
(54,363)
(43,875)
The factors that are considered to affect total shareholders return ('TSR') are summarised
below:
2020
$'000
2019*
$'000
2018*
$'000
2017*
$'000
2016*
$'000
0.02
0.0004
0.002
0.004
0.005
Share price at
financial year
end (US$)
Basic
earnings/(loss)
per share (US$)
(0.699)
*The Company’s share capital was consolidated on a 100:1 basis with effect from 5 December 2019
(0.552)
(0.231)
0.397
Star Phoenix Group Ltd
Annual report ended 30 June 2020
(0.604)
25
Voting and comments made at the company’s 2019 Annual
General Meeting
Star Phoenix Group Ltd received 99.7% of “yes” votes on its remuneration report for the
2019 financial year. The Board believes that this reflects the conservative remuneration
practices of the company.
This is the end of the audited remuneration report.
Auditor’s Independence Declaration
The auditor’s independence declaration, as required under Section 307C of the
Corporations Act 2001, for the year ended 30 June 2020 has been received and can be
found on the following page.
This report is signed in accordance with a resolution of the Board of Directors.
Zhiwei Gu: Chairman
26 October 2020
Star Phoenix Group Ltd
Annual report ended 30 June 2020
26
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY ASHLEIGH WOODLEY TO THE DIRECTORS OF STAR PHOENIX
GROUP LIMITED
As lead auditor of Star Phoenix Group Limited for the year ended 30 June 2020, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Star Phoenix Group Limited and the entities it controlled during the
period.
Ashleigh Woodley
Director
BDO Audit (WA) Pty Ltd
Perth, 26 October 2020
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent firms. Liability a by a scheme approved under Professional Standards Legislation.
Consolidated Statement of Profit or Loss and
other Comprehensive Income for the year
ended 30 June 2020
The below consolidated statement of profit or loss and other comprehensive income should be
read in conjunction with the accompanying notes.
Revenue from continuing operations
Note
3
2020 (US$)
1,320,785
Consolidated
2019 (US$)
759,974
Operating expenses
Depreciation, depletion and amortisation
Cost of sales
4a
Gross loss
Other income and expenses from continuing operations
(2,209,161)
(368,069)
(2,577,230)
(794,867)
(2,464,926)
(3,259,793)
(1,256,445)
(2,499,819)
Other income
Finance costs
General and administration expenses
Exploration expenditure and land fees
3
4b
4c
4d
1,158,624
(4,758,109)
(4,287,628)
-
2,936
(5,803,077)
(2,103,250)
(1,302,346)
Impairment of non-current assets
Loss before income tax expense from continuing
operations
Income tax credit/(expense)
5/15
(15,685,850)
(8,362,271)
(24,829,408)
(20,067,827)
6
1,505,023
(4,305,605)
Loss after income tax expense from continuing
operations
Profit/(loss) from discontinued operations, net of
tax
Profit for the year attributable to equity holders of
Star Phoenix Group Ltd
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Other comprehensive income/(loss) for year, net
of tax
Total comprehensive income/(loss) attributable
to equity holders of Star Phoenix Group Ltd
(23,324,385)
(24,373,432)
7c
71,266,237
(25,087,323)
47,941,852
(49,460,755)
24c
576,677
3,091,241
576,677
3,091,241
48,518,529
(46,369,514)
Total comprehensive income for the period attributable to owners of Star Phoenix Group Ltd arises
from:
Continuing operations
(24,284,105)
(22,747,708)
Discontinued operations
7c
71,266,237
(22,085,409)
48,518,529
(46,369,514)
Loss per share from continuing operations attributable to the ordinary equity holders of the Company:
Basic and diluted (loss) per share
(0.272)
(0.193)
9a
Earnings/(loss) per share attributable to the ordinary equity holders of the Company:
Basic and diluted earnings/(loss) per share
9a
0.397
(0.552)
Star Phoenix Group Ltd
Annual report ended 30 June 2020
28
Consolidated Statement of Financial Position
as at 30 June 2020
The below consolidated statement of financial position should be read in conjunction with the
accompanying notes.
Note
Consolidated
2020 (US$)
2019 (US$)
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
Assets of disposal group classified as held for sale
Total current assets
Non-Current Assets
Right of use asset
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings
Liabilities directly associated with assets classified as
held for sale
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Contributed equity
Reserves
Accumulated losses
Total equity/(deficit)
10
11
7a
12
15
18a
18a
19
7b
18b
19
22
23
24
3,164,752
2,248,359
-
-
7,922,861
13,335,972
880,681
157,827
959,304
34,208
83,609,947
85,641,967
183,333
100,349
-
23,009,704
283,682
13,619,654
23,009,704
108,651,671
3,688,347
-
-
1,154,300
4,842,647
296,245
-
5,991,944
6,288,189
11,130,836
782,502
17,472
1,600,000
59,071,174
61,471,149
44,997,793
44,551,690
324,742
89,874,225
151,345,373
2,488,818
(42,693,702)
388,383,974
23,389,048
(409,284,204)
2,488,818
386,726,067
27,806,287
(457,226,056)
(42,693,702)
Star Phoenix Group Ltd
Annual report ended 30 June 2020
29
Consolidated Statement of Changes in
Equity for the year ended 30 June 2020
The below consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
Contributed
equity
Accumulated
losses
Note
Foreign
currency
translation
reserve
Share-based
payment
reserve
Option
premium
reserve
Non-
controlling
interests
Total equity
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)
383,918,397
(407,765,301) 4,341,220
8,424,371
12,057,362 3,517,873
4,493,922
-
-
-
-
(24,373,432)
-
(25,087,323)
-
-
-
-
3,091,241
-
(49,460,755)
3,091,241
-
Transactions with owners in their capacity as owners:
Issue of share capital 23
2,807,670
-
-
-
-
-
-
-
(107,907)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(24,373,432)
(25,087,323)
3,091,241
(46,369,514)
2,807,670
(107,907)
(3,517,873) (3,517,873)
386,726,067
(457,226,056) 7,432,461
8,316,464
12,057,362 -
(42,693,702)
386,726,067
(457,226,056) 7,432,461
8,316,464
12,057,362 -
(42,693,702)
-
-
-
-
(23,324,385)
-
71,266,237
-
-
576,677
47,941,852
576,677
-
-
-
-
-
-
-
-
(4,993,916) -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(23,324,385)
71,266,237
576,677
48,518,529
1,657,907
(4,993,916)
-
388,383,974
(409,284,204) 3,015,222
8,316,464
12,057,362 -
2,488,818
Transactions with owners in their capacity as owners:
Issue of share capital 23
1,657,907
-
Balance at 1 July
2018
Loss from continuing
operations
Loss from
discontinued
operations
Other comprehensive
income
Total comprehensive
income/(loss) for the
year
7c
Cost of share-based
payments
Non-controlling
interests
Balance at 30 June
2019
4
-
-
Balance at 1 July
2019
Loss from continuing
operations
Profit from
discontinued
operations
Other comprehensive
income
Total comprehensive
income for the year
7c
Realisation of FCTR on
disposal of foreign
operation
Cost of share-based
payments
Balance at 30 June
2020
7c
-
-
Star Phoenix Group Ltd
Annual report ended 30 June 2020
30
Consolidated Statement of Cash Flows for
the year ended 30 June 2020
The below consolidated statement of cashflows should be read in conjunction with the
accompanying notes.
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Income taxes (paid)/received
Interest (paid)/received
Note
Consolidated
2020 (US$)
2019 (US$)
8,425,563
(9,485,806)
(248,673)
(3,892)
8,184,780
(9,832,657)
(1,019,231)
(8,780)
Net cash outflow from operating activities
27
(1,312,808)
(2,675,888)
Cash flows from investing activities
Payment for property, plant & equipment
Payments for exploration and evaluation
expenditure
Proceeds from disposal of property, plant and
equipment
Net cash inflow/(outflow) on disposal of subsidiary
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Receipts from share issue
Interest and other finance income
Provision of short-term loan
Payments for principal element of leases
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash
equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of
financial year
Cash and cash equivalents at end of financial year 10
Classified as held for sale
7a
-
(146,862)
(328,868)
-
40,507
1,666,481
1,560,126
1,657,907
-
(334,985)
(280,000)
1,042,922
(617,173)
121,976
-
(824,065)
1,294,181
154,115
-
-
1,448,296
1,290,240
(2,051,658)
26,691
(46,204)
1,847,821
3,945,683
3,164,752
880,681
967,140
Star Phoenix Group Ltd
Annual report ended 30 June 2020
31
Notes to Consolidated Financial Statements
Note 1: Significant accounting policies
These financial statements are general purpose financial statements that have been
prepared in accordance with Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001. Star Phoenix Group Ltd is a for-profit
entity for the purpose of preparing the financial statements.
The financial statements cover the Group consisting of Star Phoenix Group Ltd and its
controlled entities. Financial information for Star Phoenix Group Ltd as an individual entity
is disclosed in Note 30. Star Phoenix Group Ltd is a listed public company, incorporated
and domiciled in Australia.
The following is a summary of the material accounting policies adopted by the Group in
the preparation of the financial statements. The accounting policies have been
consistently applied, unless otherwise stated. The financial report was authorised for issue
by the Directors on 26 October 2020.
Basis of preparation
Historical cost convention
The financial statements have been prepared under the historical cost convention,
except for, where applicable, the revaluation of financial assets and liabilities at fair value
through profit or loss.
Compliance with IFRS
The financial statements of Star Phoenix Group Ltd also comply with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB). The financial statements were approved by the Board of Directors on 26
October 2020.
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured
using the currency of the primary economic environment in which the entity operates (the
“Functional Currency”). The consolidated financial statements are presented in United
States Dollars (USD), which is Star Phoenix Group Ltd’s functional and presentation
currency.
Going concern
This report has been prepared on the going concern basis, which contemplates the
continuity of normal business activity and the realisation of assets and settlement of
liabilities in the normal course of business.
For the year ended 30 June 2020 the Group recorded a gain of US$47,941,852 (2019: a loss
of US$49,460,755) and had net cash inflows of US$1,290,240 (2019: cash outflows of
US$2,051,658).
The ability of the Group to continue as a going concern is dependent on securing
additional funding through the issue of shares and/or debt to fund its activities.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
32
These conditions indicate a material uncertainty that may cast a significant doubt about
the Group’s ability to continue as a going concern and, therefore, it may be unable to
realise its assets and discharge its liabilities in the normal course of business.
The Company is currently seeking other opportunities to expand its operations in other
geographic locations and a successful investment in a new project can be used to raise
additional capital and subsequently generate positive cash flows. The Company is also
focusing on managing its existing cash reserves.
Management believe there are sufficient funds to meet the Group’s working capital
requirements as at the date of this report.
Should the Company not be able to continue as a going concern, it may be required to
realise its assets and discharge its liabilities other than in the ordinary course of business,
and at amounts that differ from those stated in the financial statements. The financial
report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts or liabilities that might be necessary should the Company not
continue as a going concern.
New and amended standards adopted by the Group
The Group has applied AASB 16 ‘Leases’ standard for the first time for the reporting period
commencing 1 July 2019. There has been no material impact resulting from the adoption
of AASB 16. No lease libility has ben recognised as the full amont of the lease had been
prepaid, resulting in only a right-of-use asset being recognised.
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117
'Leases' and for lessees eliminates the classifications of operating leases and finance
leases. Except for short-term leases and leases of low-value assets, right-of-use assets and
corresponding lease liabilities are recognised in the statement of financial position.
Straight-line operating lease expense recognition is replaced with a depreciation charge
for the right-of-use assets (included in operating costs) and an interest expense on the
recognised lease liabilities (included in finance costs). In the earlier periods of the lease,
the expenses associated with the lease under AASB 16 will be higher when compared to
lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) results improve as the operating expense is now replaced
by interest expense and depreciation in profit or loss. For classification within the
statement of cash flows, the interest portion is disclosed in operating activities and the
principal portion of the lease payments are separately disclosed in financing activities.
The Group has applied IFRIC 23: Uncertainty over income tax treatments for the first time
for the reporting period commencing 1 July 2019. IFRIC 23 clarifies how the recognition
and measurement requirements of AASB 12 Income taxes are applied where there is
uncertainty over income tax treatments. An uncertain tax treatment is any tax treatment
applied by the Group where there is any uncertainty whether that treatment will be
accepted by the relevant tax authority.
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all
subsidiaries of Star Phoenix Group Ltd (“Parent Entity” or “Company”) as at 30 June 2020
and the results of all subsidiaries for the year then ended. Star Phoenix Group Ltd and its
subsidiaries together are referred to as the “Group”.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
33
Subsidiaries are all those entities (including special purpose entities) over which the Group
has control. The Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its investment with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Where controlled entities have entered or left the Group during the year, their operating
results have been included/excluded from the date control was obtained or until the
date control ceased. A list of controlled entities is contained in Note 13 to the financial
statements. All controlled entities have a 30 June financial year-end.
All inter-company balances and transactions between entities in the Group, including any
unrealised profits or losses have been eliminated on consolidation. Accounting policies of
subsidiaries have been changed where necessary to ensure consistencies with those
policies applied by the Group.
Associates are all entities over which the Group has significant influence but not control or
joint control, generally accompanying a shareholding of between 20-50% of the voting
rights. Investments in associates are accounted for in the consolidated financial
statements using the equity method of accounting, after initially being recognised at cost.
(b) Income tax
The charge for current income tax expense is based on the profit for the year adjusted for
any non-assessable or disallowed items. It is calculated using tax rates that have been
enacted or are substantively enacted by the reporting date within each jurisdiction.
Deferred tax is accounted for using the liability method in respect of temporary
differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled. Deferred tax is credited in profit or loss except
where it relates to items that may be credited directly to equity, in which case the
deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax
profits will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities and assets are not recognised for temporary differences between
the carrying amount and tax bases of investments in foreign operations where the
company is able to control the timing of the reversal of the temporary differences and it is
probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets and liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates
to items recognised in other comprehensive income or directly in equity. In this case, the
tax is also recognised in other comprehensive income or directly in equity, respectively.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
34
The amount of benefits brought to account or which may be realised in the future is
based on the assumption that no adverse change will occur in income taxation legislation
and the anticipation that the Group will derive sufficient future assessable income to
enable the benefit to be realised and comply with the conditions of deductibility imposed
by the law.
(c) Property, plant and equipment
Owned assets
Plant and equipment are measured on the historical cost basis less accumulated
depreciation and impairment losses.
The cost of fixed assets constructed within the Group includes the cost of materials, direct
labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to profit or loss during the financial period in
which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets is
depreciated on a straight-line basis over their useful lives to the Group commencing from
the time the asset is held ready for use. Leasehold improvements are depreciated over
the shorter of either the unexpired period of the lease or the estimated useful lives of the
improvements.
The depreciation rates used for each class of depreciable asset are:
Class of fixed Asset
Plant & equipment
Production equipment
Motor vehicles, furniture & fixtures
Leasehold improvements
Depreciation Rate
11.25% - 33%
10 - 20%
25 - 33%
10 - 12.50%
The residual values of the assets and their useful lives are reviewed and adjusted if
appropriate at each reporting date.
The carrying amount of plant and equipment is reviewed annually by the directors to
ensure it is not in excess of the recoverable amount from these assets. The recoverable
amount is assessed on the basis of the expected net cash flows which will be received
from the employment of the assets and subsequent disposal. The expected net cash flows
have been discounted to their present values in determining recoverable amounts.
The carrying amount of the asset is written down to its recoverable amount if its carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains or losses are included in profit or loss. When revalued assets are sold,
amounts included in the revaluation reserve relating to that asset are transferred to
accumulated losses.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
35
(d) Exploration and evaluation expenditure and the recognition of assets
Acquisition costs for exploration and evaluation projects are accumulated in respect of
each identifiable area of interest. These costs are only carried forward to the extent that
they are expected to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in
the year in which the decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness
of continuing to carry forward costs in relation to that area of interest.
The recoverability of the carrying amount of the exploration and evaluation assets is
dependent on the successful development and commercial exploitation, or alternatively,
sale of the respective areas of interest.
The carrying values of expenditures carried forward are reviewed for impairment at each
reporting date when the facts, events or changes in circumstances indicate that the
carrying value may be impaired.
Accumulated expenditures are written off to profit or loss to the extent to which they are
considered to be impaired.
The group applies AASB 6 Exploration and Evaluation of Mineral Resources which is
equivalent to IFRS 6. The carrying value of exploration and evaluation expenditure is
historical cost less impairment.
Ongoing exploration costs incurred in respect of the Group’s Trinidadian and Indonesian
interests are expensed as incurred. Initial acquisition costs to obtain the right to explore
are capitalised.
(e) Producing assets
Upon the commencement of commercial production from each identifiable area of
interest, the exploration and evaluation expenditure incurred up to that point is
impairment tested and then reclassified to producing assets.
When production commences, the accumulated costs for the relevant area of interest
are amortised on a "units of production" method which is based on the ratio of actual
production to remaining proved and probable reserves (1P) as estimated by independent
petroleum engineers over the life of the area according to the rate of depletion of the
economically recoverable reserves.
Subsequent costs such as workovers, are included in the carrying amount of the asset only
when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be reliably measured. All other costs are charged to
profit or loss during the financial period in which they are incurred.
The carrying amount of producing assets is reviewed annually by the directors to ensure it
is not in excess of the recoverable amount from these assets. The recoverable amount of
an asset is the greater of its fair value less costs to sell and its value in use. In assessing
value in use, the estimated future cash flows of an asset are discounted to their present
value using a post-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. Where an asset does not generate
Star Phoenix Group Ltd
Annual report ended 30 June 2020
36
cash flows that are largely independent from other assets or groups of assets, the
recoverable amount is determined for the cash generating unit to which the asset
belongs. For producing assets, the estimated future cash flows for the value-in-use
calculation are based on estimates, the most significant of which are 2P hydrocarbon
reserves, future production profiles, commodity prices, operating costs and any future
development costs necessary to produce the reserves which the group is committed.
Under a fair value less costs to sell calculation, future cash flows are based on estimates of
2P hydrocarbon reserves.
Estimates of future commodity prices are based on the Group’s best estimate of future
market prices with reference to external market analysts’ forecasts, current spot prices
and forward curves. Future commodity prices are reviewed at least annually.
The carrying amount of an asset is written down to its recoverable amount if its carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains or losses are included in profit or loss. When revalued assets are sold,
amounts included in the revaluation reserve relating to that asset are transferred to
accumulated losses.
The Group records the present value of the estimated cost of legal and constructive
obligations to restore operating locations in the period in which the obligation arises. The
nature of restoration activities includes the removal of facilities, abandonment of wells
and restoration of affected areas. A restoration provision is recognised and updated at
different stages of the development and construction of a facility and then reviewed on
an annual basis. When the liability is initially recorded, the estimated cost is capitalised by
increasing the carrying amount of the related exploration and evaluation/development
assets.
Over time, the liability is increased for the change in the present value based on a post-
tax discount rate appropriate to the risk inherent in the liability. The unwinding of the
discount is recorded as an accretion charge within finance costs. The carrying amount
capitalised in oil and gas properties is depreciated over the useful life of the related asset.
Costs incurred that relate to an existing condition caused by past operation and do not
have a future economic benefit are expensed.
(f) Financial instruments
The Group’s financial instruments include cash and cash equivalents and trade and other
receivables.
A financial asset shall be measured at amortised cost if it is held within a business model
whose objective is to hold assets in order to collect contractual cash flows which arise on
specified dates and that are solely principal and interest.
A debt investment shall be measured at fair value through other comprehensive income if
it is held within a business model whose objective is to both hold assets in order to collect
contractual cash flows which arise on specified dates that are solely principal and interest
as well as selling the asset on the basis of its fair value.
All other financial assets are classified and measured at fair value through profit or loss
unless the entity makes an irrevocable election on initial recognition to present gains and
losses on equity instruments (that are not held-for-trading or contingent consideration
recognised in a business combination) in other comprehensive income ('OCI').
Star Phoenix Group Ltd
Annual report ended 30 June 2020
37
Despite these requirements, a financial asset may be irrevocably designated as measured
at fair value through profit or loss to reduce the effect of, or eliminate, an accounting
mismatch. For financial liabilities designated at fair value through profit or loss, the
standard requires the portion of the change in fair value that relates to the entity's own
credit risk to be presented in OCI (unless it would create an accounting mismatch).
Simpler hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity. Impairment
requirements use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment is measured using a 12-month ECL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the lifetime
ECL method is adopted. For trade receivables, a simplified approach to measuring
expected credit losses using a lifetime expected loss allowance is available.
(g) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is determined using the currency
of the primary economic environment in which that entity operates.
Transaction and balances
Foreign currency transactions are translated into the functional currency using the
exchange rates prevailing at the date of the transaction. Foreign currency monetary
items are translated at the year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are reported at the exchange rate at the
date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit
or loss
Exchange differences arising on the translation of non-monetary items are recognised
directly in equity to the extent that the gain or loss is directly recognised in equity;
otherwise the exchange difference is recognised in profit or loss.
The results and financial position of foreign operations (none of which has the currency of
a hyperinflationary economy) that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each reporting period end date presented are translated
•
at the closing rate at the date of that statement of financial position;
income and expenses for each statement of profit or loss and statement of
comprehensive income are translated at average exchange rates (unless this is
not a reasonable approximation of the cumulative effect of the rates prevailing
on the transaction dates, in which case income and expenses are translated at
the dates of the transactions), and
• all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment
in foreign entities, and of borrowings and other financial instruments designated as
hedges of such investments, are recognised in other comprehensive income. When a
foreign operation is sold or any borrowings forming part of the net investment are repaid,
Star Phoenix Group Ltd
Annual report ended 30 June 2020
38
the associated exchange differences are reclassified to profit or loss, as part of the gain or
loss on sale.
(h) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised
when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and the
amount has been reliably estimated. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole. A
provision is recognised even if the likelihood of an outflow with respect to any one item
included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the
expenditure required to settle the present obligation at the reporting date. The discount
rate used to determine the present value reflects the current market assessments of the
time value of money and the risk specific to the liability. The increase in the provision due
to the passage of time is recognised as interest expense.
(i) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to insignificant risk of
changes in value, and bank overdrafts. Bank overdrafts are shown within short-term
borrowings in current liabilities on the statement of financial position.
(j) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method, less any allowance for expected
credit losses. Trade receivables are generally due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected
credit losses, which uses a lifetime expected loss allowance. To measure the expected
credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected
credit losses.
(k) Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the
consolidated entity is expected to be entitled in exchange for transferring goods or
services to a customer. For each contract with a customer, the Group identifies the
contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable
consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of
each distinct good or service to be delivered; and recognises revenue when or as each
performance obligation is satisfied in a manner that depicts the transfer to the customer
of the goods or services promised.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
39
Revenue from a contract to provide services is recognised over time as the services are
rendered based on either a fixed price or an hourly rate.
Revenue from the sale of oil and gas and related products is recognised when the control
of the product has transferred to the buyer. In the case of oil, this usually occurs at the
time of lifting. Other revenue is recognised when control has passed.
(l) Goods and Services Tax (GST) and Value-Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of GST and VAT, except
where the amount of GST and VAT incurred is not recoverable from the taxation
authorities. In these circumstances the GST and VAT is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in
the statement of financial position are shown inclusive of GST and VAT.
Cash flows are presented in the consolidated statement of cash flows on a gross basis,
except for the GST and VAT component of investing and financing activities, which are
disclosed as operating cash flows.
(m) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to
conform to changes in presentation for the current financial year.
(n) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition
and measurement or disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and trading and available-for-sale securities) is based on quoted market
prices at the reporting date. The quoted market price used for financial assets held by
the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example
over-the-counter derivatives) is determined using valuation techniques. The Group uses a
variety of methods and makes assumptions that are based on market conditions existing
at each reporting date.
The carrying value less impairment provision of trade receivables and payables are
assumed to approximate their fair values due to their short-term nature. The fair value of
financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash follows at the current market interest rate that is available to the Group
for similar financial instruments.
(o) Investments in associates
Investments in associates are accounted for using the equity method of accounting in the
consolidated financial statements.
Under the equity method, the investment in the associate is carried in the consolidated
statement of financial position at cost plus post-acquisition changes in the Group’s share
of net assets of the associate.
After application of the equity method, the Group determines whether it is necessary to
recognise any additional impairment loss with respect to the Group’s net investment in
the associate.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
40
The Group's share of the associate post-acquisition profits or losses is recognised in the
statement of profit or loss and other comprehensive income. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment.
When the Group's share of losses in the associate equals or exceeds its interest in the
associate, including any unsecured long-term receivables and loans, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of
the associate.
The reporting dates of the associate and the Group are identical and the associate’s
accounting policies conform to those used by the Group for like transactions and events
in similar circumstances.
(p) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to
the end of financial year which are unpaid. The amounts are unsecured and are usually
paid within 30 days of recognition unless alternative terms are agreed.
(q) Dividends
Provision is made for the amount of any dividend declared, being appropriately
authorised and no longer at the discretion of the entity, on or before the end of the
financial year but not distributed at reporting date.
(r) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds.
(s) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity
holders of the Company, excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings
per share to take into account the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares.
(t) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the
chief operating decision maker. The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been
identified as the Executive Chairman.
(u) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be impaired. Other assets are tested
Star Phoenix Group Ltd
Annual report ended 30 June 2020
41
for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which they
are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or groups of assets (cash-generating units). Non-financial assets other
than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
(v) Intangible assets (goodwill)
Goodwill is measured at cost less any impairment write-downs. Goodwill on acquisitions
of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for
impairment annually or more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that
are expected to benefit from the business combination in which the goodwill arose,
identified according to operating segments (note 26).
(w) Share-based payments
The fair value of options granted is recognised as an expense with a corresponding
increase in equity. The total amount to be expensed is determined by reference to the
fair value of the options granted, which includes any market performance conditions and
the impact of any non-vesting conditions but excludes the impact of any service and
non-market performance vesting conditions.
(x) Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits are recognised in
current liabilities in respect of employees’ services up to the reporting date and are
measured at the amounts expected to be paid when the liabilities are settled.
Long service benefit
The liability for long service benefit is recognised in current and non-current liabilities,
depending on the unconditional right to defer settlement of the liability for at least 12
months after the reporting date. The liability is measured as the present value of
expected future payments to be made in respect of services provided by employees up
to the reporting date using the projected unit credit method. Consideration is given to
expected future wage and salary levels, experience of employee departures and periods
of service.
(y) Leases
The Group has applied the definition of a lease and related guidance set out in AASB 16
to all lease contracts in place or entered into or modified on or after 1 July 2019. The
Directors have determined that the new definition in AASB 16 will not change significantly
the scope of contracts that meet the definition of a lease for the Group.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
42
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the
date the underlying asset is available for use). Right-of-use assets are measured at cost,
less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of
lease liabilities recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. Unless the Group is
reasonably certain to obtain ownership of the leased asset at the end of the lease term,
the recognised right-of-use assets are depreciated on a straight-line basis over the shorter
of its estimated useful life and the lease term. Right-of-use assets are subject to
impairment.
Lease liabilities
At the commencement date of a lease, the Group recognises lease liabilities measured
at the present value of lease payments to be made over the lease term.
(z) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration
received, net of transaction costs. They are subsequently measured at amortised cost
using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12
months after the reporting date, the loans or borrowings are classified as non-current.
(aa) Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes that can
be converted to ordinary shares at the option of the holder, when the number of shares to
be issued is fixed.
The liability component of a compound financial instrument is recognised initially at the
fair value of a similar liability that does not have an equity conversion option. The equity
component is recognised initially at the difference between the fair value of the
compound financial instrument as a whole and the fair value of the liability component.
Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial
instrument is measured at amortised cost using the effective interest method. The equity
component of a compound financial instrument is not re-measured subsequent to initial
recognition.
Interest related to the financial liability is recognised in profit or loss. On conversion the
financial liability is reclassified to equity and no gain or loss is recognised.
Convertible notes that can be converted to share capital at the option of the holder and
where the number of shares is variable, contain an embedded derivative liability. The
embedded derivative liability is calculated (at fair value) first and the residual value is
assigned to the debt host contract. The embedded derivative is subsequently measured
at fair value and movements are reflected in profit or loss.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
43
Certain convertible notes issued by the Group which include embedded derivatives
(option to convert to variable number of shares in the Group) are recognised as financial
liabilities at fair value through profit or loss. On initial recognition, the fair value of the
convertible note will equate to the proceeds received and subsequently the liability is
measured at fair value at each reporting period until settlement. The fair value
movements are recognised in profit or loss as finance costs.
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other
finance costs are expensed in the period in which they are incurred.
(bb) Inventories
Inventories include consumable supplies and maintenance spares and are valued at the
lower of cost and net realisable value. Cost is determined on a weighted average basis
and includes direct costs and an appropriate portion of fixed and variable production
overheads where applicable. Inventories determined to be obsolete or damaged are
written down to net realisable value, being the estimated selling price less selling costs.
The directors evaluate estimates and judgements incorporated into the financial
statements based on historical knowledge and best available current information.
Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group. Areas
involving a higher degree of judgement or complexity, or areas where estimations and
assumptions are significant to the financial statements are disclosed here.
(cc) Non-current assets classified as held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. They are
measured at the lower of their carrying amount and fair value less costs to sell. For non-
current assets to be classified as held for sale, they must be available for immediate sale in
their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-
current assets to fair value less costs to sell. A gain is recognised for any subsequent
increases in fair value less costs to sell of a non-current asset, but not in excess of any
cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for
sale. Interest and other expenses attributable to the liabilities of assets held for sale
continue to be recognised.
Non-current assets classified as held for sale are presented separately on the face of the
consolidated statement of financial position, in current assets. The liabilities of disposal
groups classified as held for sale are presented separately on the face of the statement of
financial position, in current liabilities.
Discontinued operations
A discontinued operation is a component of the Group’s business, the operations and
cash flows of which can be clearly distinguished from the rest of the Group and which:
•
•
•
represents a separate major line of business or geographical area of operations;
is part of a single co-ordinated plan to dispose of a separate major line of business
or geographical are of operations; and
is a subsidiary acquired exclusively with a view to resale.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
44
Classification as a discontinued operation occurs at the earlier of disposal or when the
operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative
consolidated statement of profit or loss and other comprehensive income is re-presented
as if the operation had been discontinued from the start of the comparative year.
Note 2: Critical accounting estimates and judgements
Non-current assets classified as held for sale and discontinued operations
2019: Range Resources Trinidad Limited
Towards the end of the financial year ended 30 June 2019, the Group undertook a review
of the oil and gas business culminating in the decision to sell Range Resources Trinidad
Limited to LandOcean. The Board of Directors have judged that as a result of this review,
the assets and associated liabilities of Range Resources Trinidad Limited should be
classified as held for sale as at 30 June 2019 and all operations of Range Resources
Trinidad Limited to be classified as discontinued. In reaching this judgement, the Board of
Directors have considered that the requirements of AASB 5: Non-current assets held for
sale and discontinued operations have been met. As at 31 March 2020 and with
completion of this transaction, the assets and liabilities of Range Resources Trinidad
Limited were disposed of and sold to LandOcean. The net assets of the disposed entity
were US$65,915,896.
2020: Rigs and related inventory
The Group has been marketing the rigs and equipment in the financial year, therefore all
rigs and related equipment were classified as held for sale assets as it is highly probable
that these assets will be sold within 12 months.
Impairment of rigs and related inventory
As a result of impairment indicators identified management were required to undertake
an impairment assessment as per AASB 136. The most significant indicators of impairment
being the inactivity of the rigs and the decline in oil price. The recoverable amount of
these assets was estimated based on an indicative conditional offer received for one of
the rigs which was 70% below the carrying value.
As a result, a 70% impairment across all rigs was deemed appropriate resulting in total
impairment being recognised for the year of US$15,453,686.
The Company sold four production rigs for a total sum of approximately US$153,580. The
rigs had a carrying value of approximately US$116,245. The Company continues the sale
process of the remaining three production and five drilling rigs.
Accounting for the disposal of RRTL
On 31 March 2020, the sale of RRTL was completed resulting in SPG transferring its entire
shareholding in RRTL to LandOCean and at the same time losing control and therefore
deconsolidating the entity at this point. From the date that control has been lost (31
March 2020), 100% of assets and liabilities were de-recognised from the consolidated
financial position of SPG resulting in the net assets of RRTL of US$65,915,896 being
deconsolidated and set off against the proceeds of the disposal.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
45
SPG disposed of its investment in RRTL and recognised a gain on disposal of US$36,087,762
million (pre-tax) being the difference of total consideration (US$97,009,742 which is the
debt written off of US$94,509,742 plus a cash consideration of US$2,500,000) and net assets
of RRTL (US$65,915,896) and the realisation of the foreign currency translation reserve of
US$4,993,916 as at 31 March 2020.
Refer to Note 7 for details.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-
19) pandemic has had, or may have, on the Group based on known information. This
consideration extends to the nature of services offered, customers, supply chain, staffing
and geographic regions in which the Group operates. The impact of the Coronavirus
(COVID-19) pandemic is ongoing, and it has been financially negative for the Group up
to 30 June 2020 as it has negatively affected the oil price. It is not practicable to estimate
the potential impact after the reporting date positive or negative. The situation is rapidly
developing and is dependent on measures imposed by the Government of Trinidad and
Tobago and other countries, such as maintaining social distancing requirements,
quarantine, travel restrictions and any economic stimulus that may be provided.
Deferred tax liability
The carrying value of the deferred tax liability is US$1,154,300 at 30 June 2020. In the event
that the manner by which the carrying value of these assets is recovered differs from that
which is assumed for the purpose of this estimation, the associated tax charges may be
significantly less than this amount.
Accounting for Strait Oil & Gas Limited
SPG owns 65% of the issued share capital of Strait Oil & Gas Limited (“SOG”). This is
achieved by interest through a 45% shareholding held by SPG itself plus a 20%
shareholding through its full ownership of Georgian Oil Pty Ltd. Despite owning a majority
of the issued share capital, management do not view this as control and the principal
rationale for that view is as follows:
1. SPG has no appointed directors of SOG so exercises no effective control over the
company. The sole director of SOG is a different corporate entity;
2. All shareholders must agree to any termination of the management agreement
which governs the role of the appointed director;
3. The Articles of Association of SOG are silent on the ability of shareholders to
appoint directors. To appoint a director, management believe that the articles
would need to be amended. To amend the articles requires a special resolution
which needs 75% votes (SPG only controls 65%) and management do not believe
they would get support from the other shareholders to do this;
In practice all decision making and corporate activities require consent of all the
shareholders resulting in SPG having no demonstrable control over SOG.
The Directors therefore conclude that SOG is not a controlled entity. All previous costs
incurred by SPG in relation to SOG have been impaired and the Company will continue
to expense any ongoing expenses which are incurred.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
46
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and
judgement. It is based on the lifetime expected credit loss, grouped based on days
overdue, and makes assumptions to allocate an overall expected credit loss rate for
each group. These assumptions include recent sales experience and historical collection
rates, the impact of the Coronavirus (COVID-19) pandemic and forward-looking
information that is available. The allowance for expected credit losses, as disclosed in
note 11, is calculated based on the information available at the time of preparation. The
actual credit losses in future years may be higher than the Nil recorded.
IFRIC 23 Uncertain tax position and tax-related contingency
The group has estimated that following the disposal of Range Resources Trinidad Limited
and the settlement of liabilities in multiple jurisdictions which formed part of the
consideration for the disposal, may give rise to the possible payment of withholding tax.
The group considers it possible that a withholding tax liability of US$742,713 may be
payable in Australia and withholding tax liability of US$2,364,933 payable in Trinidad. As at
30 June 2020, both amounts have been provided for in full, resulting in an increase in
expenses and withholding tax payable of US$3,107,646.
The group is intending to apply for private rulings in both Australia and Trinidad to confirm
its interpretation. If both rulings are favourable, this would decrease the group’s current
withholding tax payable and expense by US$3,107,646 respectively. The group expects to
get a response, and therefore certainty about the tax position, before the next interim
reporting date.
Note 3: Revenue
From continuing operations
Revenue from services to third parties
recognised over time
Note
Consolidated
2020 (US$)
2019 (US$)
1,320,785
759,974
Total revenue from continuing operations
1,320,785
759,974
Other income
Interest income
Other income
Total other income
Other income from discontinued operations
Other income
Total other income from discontinued
operations
-
1,158,624
1,158,624
-
-
2,936
-
2,936
7,108
7,108
Revenue from third party services and sale of oil is solely generated in the Republic of
Trinidad and Tobago.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
47
As per the signed agreement with LandOcean, until SPG receives the final tranche
payment, it is entitled to receive a fee equating to the value of VAT refunds which related
to the period up to 31 March 2020 as well as proceeds from sale of oil by RRTL to Heritage
Petroleum Company Limited. These amounts are reflected in Other Income.
Note 4: Expenses
a: Cost of sales – continuing operations
Costs of operations
Depreciation and amortisation
Total cost of sales from continuing
operations
b: Finance costs – continuing operations
Fair value movement of derivative liability
Fair value movement of option liability
Foreign exchange loss
Interest expense (i)
Interest on convertible note (i)
Total finance costs from continuing
operations
Note
Consolidated
2020 (US$)
2019 (US$)
2,209,161
368,069
794,867
2,464,926
2,577,230
3,259,793
-
-
111,065
3,406,210
1,240,834
(383,894)
(33,345)
118,502
3,316,336
2,785,478
4,758,109
5,803,077
(i) Interest expense and interest on convertible note relate to LandOcean balances which have
been subsequently offset. Refer to Note 7.
1,429,250
c: General and administration expenses – continuing operations
Directors’ and officers’ fees and benefits
Share based payments – employee,
director and consultant options
Legal fees
Business developent, financial and other
consulting fees
Listing fees
Other
Total general and administration expenses
from continuing operations
246,028
704,377
571,828
-
1,336,145
4,287,628
d: Exploration expenditure – continuing operations
Indonesia (i)
Trinidad (ii)
Total exploration expenditure from
continuing operations
-
-
-
837,874
(107,907)
526,216
195,302
227,484
424,281
2,103,250
617,173
685,173
1,302,346
(i) Amounts expensed in the prior year in Indonesia relate to exploration activities in the Perlak field
for which the company policy is to expense.
(ii) Amounts expensed in the prior year in Trinidad relate to land fees in relation to St Mary’s for which
the company policy is to expense.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
48
Note 5: Impairment of non-current assets held for sale
As a result of impairment indicators identified management were required to undertake
an impairment assessment as per AASB 136. The most significant indicators of impairment
were the inactivity of the rigs and the decline in oil price.
As a result, the total impairment being recognised for the year of US$15,685,850 bringing
the net book value of the rigs, other property, plant and equipment and related inventory
to US$7,992,861. Refer to Note 7(a).
Note 6: Income tax expense
a: Income tax expense/(benefit)
Current tax
Deferred tax
Adjustments for current tax of prior periods
Note
Consolidated
2020 (US$)
2019 (US$)
-
13,183,838
565,336
-
(26,602,649)
3,661,806
13,749,174
(22,940,843)
Income tax expense/(benefit) is attributable to:
Loss from continuing operations
Profit/(loss) from discontinued operations
Aggregate income tax expense/(credit)
b: The prime facie tax on profit from ordinary activities before income tax is reconciled
to the income tax as follows:
Loss from continuing operations before
income tax
Profit/(Loss) from discontinuing operations
before income tax
4,305,605
(27,246,448)
(1,505,023)
15,254,197
(22,940,843)
(52,333,771)
(20,067,827)
(24,829,408)
13,749,174
86,520,434
Prime facie tax payable/(benefit) on
profit/(loss) from ordinary activities before
income tax at 30% (2019: 30%) Group
Add tax effect of:
Other taxes
Expenses not deductible for tax
Tax losses not brought to account
Income not assessable for tax
Benefit of tax tax losses not previously
recognised
Expenses deductible for tax purposes
Deferred tax assets not brought to
account
Differences in tax rates
Unrecognised deferred tax asset
Capital losses
Revenue losses
61,691,026
(72,401,598)
18,507,308
(21,720,479)
18,507,308
(21,720,479)
(593,104)
8,576,613
245,597
(39,984,744)
-
-
2,863,914
6,615,840
10,305,814
(3,781,594)
(2,822,802)
-
879,384
1,534,226
(1,380,228)
(13,749,174)
(15,935,762)
(22,940,843)
498,254
11,485,508
498,254
10,905,153
Star Phoenix Group Ltd
Annual report ended 30 June 2020
49
Other
Offset of deferred tax liabilites
Net Deferred Tax Assets not brought to
account
c: Recognised deferred tax assets
Temporary differences
Recognised deferred tax liabilities
Accelerated depreciation
DTL arising on business combination
Net deferred tax liabilities
Note
Consolidated
2020 (US$)
5,242,215
-
2019 (US$)
4,381,634
(8,292,796)
17,225,977
7,492,245
111,947
111,947
15,439,010
15,439,010
(1,154,300)
-
(1,154,300)
(39,184,861)
(905,471)
(40,090,332)
Deferred tax assets not brought to account, the benefits of which will only be realised if
the conditions for deductibility set out in Note 1(b) occur.
(b) Significant estimates – uncertain tax position and tax-related contingency
The group has estimated that following the disposal of Range Resources Trinidad Limited
and the settlement of liabilities in multiple jurisdictions which formed part of the
consideration for the disposal, may give rise to the possible payment of withholding tax.
The group considers it possible that a withholding tax liability of US$742,713 may be
payable in Australia and withholding tax liability of US$2,364,933 payable in Trinidad. As at
30 June 2020, both amounts have been provided for in full, resulting in an increase in
current tax expense and current tax payable of US$3,107,646.
The group is intending to apply for private rulings in both Australia and Trinidad to confirm
its interpretation. If both rulings are favourable, this would decrease the group’s current
tax payable and current tax expense by US$3,107,646 respectively. The group expects to
get a response, and therefore certainty about the tax position, before the next interim
reporting date.
Note 7: Discontinued operations
On 2 September 2019, the Company and LandOcean signed a binding conditional Sale
and Purchase Agreement for the sale of Range Resources Trinidad Limited to LandOcean
in exchange for offsetting all outstanding debt and payables (including the convertible
note) due from SPG and its subsidiaries to LandOcean and its subsidiaries, and a cash
consideration of US$2,500,000. The subsidiary was sold on 31 March 2020 and total debt
and payables which were offset, as at 31 March 2020, are detailed below and do not
form part of the assets held for sale and associated liabilities.
Agreement Regarding Amounts
Outstanding between the Purchaser and
RRDSL dated 30 November 2017
Agreement Regarding Amounts
Outstanding between EPT and RRDSL
dated 30 November 2017
Debtor
Creditor
Amount (US$)
RRDSL
LandOcean
Energy
Services*
1,878,458
RRDSL
EPT*
1,324,141
Star Phoenix Group Ltd
Annual report ended 30 June 2020
50
Agreement Regarding Amounts
Outstanding between GPN and RRDSL
dated 30 November 2017
Agreement Regarding Amounts
Outstanding between LOPCL and RRDSL
dated 30 November 2017
Agreement Regarding Amounts
Outstanding between CWUPET and RRDSL
dated 30 November 2017
RRDSL
GPN*
493,928
RRDSL
LOPCL*
22,461,848
RRDSL
CWUPET*
620,709
Purchase Order No. 9 in respect of the IMSC
dated 31 January 2018
SPG
Hong Kong Fu
Tong
International
Petroleum
Technology
Ltd*
553,012
Letter Agreement to the IMSC and
Purchase Orders entered into by the
Purchaser, RRDSL, CWUPET, and PST Service
Corp. (together as the Contractor) and the
Seller, Range Resources GY Shallow Limited
and the Company dated 6 April 2017
Sale and Purchase Agreement between
SOCA and LOPCL dated 27 April 2017
SPG
LandOcean
Energy
Services*
45,074,942
SOCA
LOPCL*
502,704
Convertible note deed between the Seller
and the Purchaser date 31 December 2019
SPG
Grand total
*Subsidiaries of LandOcean
LandOcean
Energy
Services*
21,600,000
94,509,742
Note 7a: Assets of disposal group classified as held for sale
Note
Consolidated
2020 (US$)
2019 (US$)
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Rigs and related inventory
Deferred tax asset
Property, plant and equipment
Producing assets
Exploration assets
Total non-current assets
Total held for sale assets
-
-
-
-
7,211,928
-
710,933
-
-
7,992,861
7,992,861
967,140
4,320,067
2,064,575
7,351,782
-
15,439,010
1,159,235
58,986,034
673,886
76,258,165
83,609,947
Star Phoenix Group Ltd
Annual report ended 30 June 2020
51
Disposal of rigs and related inventory held by RRDSL
The Company has been actively marketing the rigs and equipment. As a result, the
Company sold four production rigs for a total sum of US$153,580. The Company continues
the sale process of the remaining three production and five drilling rigs.
The recoverable amount of these assets was estimated based on an indicative
conditional offer received for one of the rigs which was 70% below the carrying value.
As a result, a 70% impairment across all rigs was deemed appropriate resulting in total
impairment being recognised for the year of US$15,685,850.
Note 7b: Liabilities directly associated with assets classified as
held for sale
Current and non-current liabilities
Trade and other payables
Deferred tax liabilities
Accrued expenditure
Total current and non-current liabilities
Total held for sale liabilities
Note
Consolidated
2020 (US$)
2019 (US$)
-
1,154,300
-
1,154,300
1,154,300
18,694,044
40,090,332
286,798
59,071,174
59,071,174
Note 7c: Discontinued operations
The financial performance and cash flows of RRTL is shown below.
Note
Consolidated
2020 (US$)
2019 (US$)
Financial Performance and cash flow information
Revenue from sale of oil
Other income
Royalties
Staff costs
Repairs and maintenance
Utilities
Other operating expenses
Oil and gas properties depreciation,
depletion and amortisation
Administrative expenses
Impairment reversal/(expense)
Finance income/(expense)
Loss on disposal of assets
Land fees
Withholding tax charge
Gain on disposal of subsidiary (RRTL)
Taxation (charge)/benefit
Total gain/(loss) after tax
7,217,906
-
(2,629,896)
(302,941)
(140,537)
(314,962)
(656,528)
-
(580,794)
51,320,529
360,115
(206,927)
(525,647)
(3,107,646)
36,087,762
(15,254,197)
71,266,237
11,597,161
7,108
(4,400,775)
(720,722)
(883,148)
(413,712)
(2,944,684)
(1,493,021)
(1,106,200)
(51,320,529)
(655,249)
-
-
-
-
27,246,448
(25,087,323)
Star Phoenix Group Ltd
Annual report ended 30 June 2020
52
Net cash inflow from operating activities
Net cash inflow/(outflow) from investing
activities
Net cash inflow from financing activities
Net cash increase/(decrease) in cash
generated by the subsidiary
Note
Consolidated
2020 (US$)
2,219,789
1,666,481
-
3,886,270
2019 (US$)
146,962
(206,893)
115,086
55,155
As at 31 March 2020, the carrying value of the consideration was US$97,009,742 as shown
in the note below. The carrying amounts of assets and liabilities of RRTL disposed of as at
31 March 2020 were:
Cash and cash equivalents
Trade and other receivables
Other current assets
Property, plant and equipment
Producing assets
Total assets
Trade and other payables
Provision forr rehabilitiation
Deferred tax liability
Other payables long-term
Total liabilities
Consideration received
Cash received
Amount receivable
Carrying value of liabilities settled
Total disposal consideration
Carrying amount of net assets sold
Gain on sale after income tax and before
reclassification of foreign currency
translation reserve
Reclasification of foreign currency
translation reserve
Gain on sale after income tax
Note
2020 (US$)
354,211
3,033,132
1,796,864
1,093,351
107,523,521
113,801,079
9,895,375
856,152
33,719,298
3,414,358
47,885,183
Note
2020 (US$)
2,050,574
449,426
94,509,742
97,009,742
(65,915,896)
31,093,846
4,993,916
36,087,762
Star Phoenix Group Ltd
Annual report ended 30 June 2020
53
Note 8: Auditor’s remuneration
Note
Consolidated
2020 (US$)
2019 (US$)
Remuneration of the auditor of the Parent Entity for:
Auditing or reviewing the financial report
by BDO Audit (WA) Pty Ltd
Non-audit services provided by a related
entity of BDO Audit (WA) Pty Ltd in respect
to Parent Entity’s tax compliance
Total remuneration for the Parent Entity
Remuneration of the auditors of the subsidiaries
Auditing or reviewing the financial report
by MHA Macintyre Hudson
Auditing or reviewing the financial report
by BDO UK
Auditing or reviewing the financial report
by BDO Barbados
Auditing or reviewing the financial report
by BDO Trinidad
Total remuneration for the subsidiaries
Note 9: Earnings/(loss) per share
74,000
68,000
29,910
15,500
103,910
83,500
9,072
-
-
7,500
32,985
49,557
4,670
7,500
34,150
46,320
Note
Consolidated
2020 (US$)
2019 (US$)
0.397
0.590
(0.193)
a: Basic gain/(loss) per share
Gain/(loss) per share from continuing
operations attributable to the ordinary
equity holders of the company
Gain/(loss) per share attributable to the
ordinary equity holders of the company
Gain/(loss) per share from discontinued
operations attributable to the ordinary
equity holders of the company
b: Reconciliation of gain/(loss) used in calculating earnings per share
Basic/ Diluted gain/(loss) per share
Gain/(loss) from continuing operations
attributable to the ordinary equity holders
of the company
Gain/(loss) attributable to the ordinary
equity holders of the company
Gain/(loss) from discontinued operations
attributable to the ordinary equity holders
of the company
c: Weighted average number of shares used as the denominator
Weighted average number of ordinary
shares used as the denominator in
calculating basic EPS
(23,324,385)
120,700,101
47,941,852
71,266,237
(0.272)
(0.552)
(0.280)
(24,373,432)
(49,460,755)
(25,087,323)
89,668,489
Star Phoenix Group Ltd
Annual report ended 30 June 2020
54
The Company's share capital was consolidated on a 100:1 basis with effect from 5
December 2019. As a result, the Company’s share capital decreased by 11,662,791,778
shares. At the date of this report, the Company’s issued capital comprises 141,367,955
ordinary fully paid shares (2019: 10,243,998,615). As a result, the prior year comparative
Earnings Per Share figures have been restated as though the share capital consolidation
had always been in effect.
Note 10: Cash and cash equivalents
Cash at bank and on hand
Note
Consolidated
2020 (US$)
3,164,752
2019 (US$)
880,681
There are no restrictions on cash balances held as at 30 June 2020.
Risk exposure
Information about the Group’s exposure to credit risk, foreign exchange risk and price risk
is provided in Note 31.
Note 11: Trade and other receivables
Current
Trade receivables (i)
Taxes receivable
Other receivables (ii)
Prepayments
Other taxes receivable
Other assets (iii)
Total trade and other receivables
Note
Consolidated
2020 (US$)
2019 (US$)
1,124,429
70,049
784,572
20,864
111,945
136,500
2,248,359
157,827
-
-
-
-
-
157,827
(i) Trade receivables are generally due for settlement within 30 days. They are presented as current
assets unless collection is not expected for more than 12 months after the reporting date.
(ii) Other receivables include the final tranche of cash consideration receivable from LandOcean
(US$0.4 million) and US$0.3 million for loans provided to Range Resources Trinidad Limited between 1
April 2020 and 30 June 2020.
(iii) Relates to the Beach Marcelle performance bond which was left in place after 31 March 2020.
The consolidated entity has increased its monitoring of debt recovery as there is an
increased probability of customers delaying payment, due to the Coronavirus (COVID-19)
pandemic. Management have no reasons to believe that an allowance for credit losses is
appropriate as at 30 June 2020.
Fair value approximates the carrying value of trade and other receivables at 30 June 2020
and 30 June 2019.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
55
Risk exposure
Information about the Group’s exposure to credit risk, foreign exchange risk and price risk
is provided in Note 31.
Allowance for expected credit losses
The consolidated entity has not recognised a loss in profit or loss in respect of the
expected credit losses for the year ended 30 June 2020 as described above.
Note 12: Right-of-use asset
Non-current
Right-of-use asset
Total right-of-use asset
Note
Consolidated
2020 (US$)
2019 (US$)
183,333
183,333
-
-
The amount relates to the office lease in Beijing, People’s Republic of China, expiring on
31 August 2021. Amortisation of US$96,667 was recognised in the Income Statement with
regards to the asset. Commencement date of the lease was 26 August 2019, for a 24-
month term. The total lease payments of US$280,000 were paid on commencement of the
lease.
The Group is only party to one lease, and this has been fully prepaid, and so the Group
does not have any remaining lease liabilities reflected in the statement of financial
position.
Note 13: Controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of the
following subsidiaries in accordance with accounting policy described in Note 1(a).
Controlled Entities Consolidated
Country of
Incorporation
Percentage Owned (%)
30 June 2020 30 June 2019
Subsidiaries of Star Phoenix Group Ltd:
Range Resources (Barbados) Limited
SOCA Petroleum Limited
Barbados
Barbados
Range Resources Drilling Services Limited
Trinidad
West Indies Exploration Company Limited Trinidad
Range Resources Trinidad Limited
(disposed of)
Range Resources West Coast Limited
Trinidad
Trinidad
Range Resources (Barbados) GY Limited
Barbados
Range Resources GY Shallow Limited
Range Resources GY Deep Limited
Trinidad
Trinidad
100
100
100
100
-
100
100
100
100
Star Phoenix Group UK Limited
United Kingdom 100
Range Resources HK Limited
PT Hengtai Weiye Oil and Gas
PT Jasmine Oil and Gas Services
Hong Kong
Indonesia
Indonesia
100
60
60
100
100
100
100
100
100
100
100
100
100
100
60
60
Star Phoenix Group Ltd
Annual report ended 30 June 2020
56
PT Lubuk Kawai Raya (i)
PT Aceh Timur Kawai Energi (i)
Indonesia
Indonesia
46.8
42.1
46.8
42.1
Georgian Oil Pty Ltd
Shanghai AusQuality International Trading
Co. Ltd
(i) Indirect control of these entities was obtained with the acquisition of 60% of the share capital in PT Hengtai
Weiye Oil and Gas.
Australia
China
100
65
65
-
Note 14: Intangible Assets
Cost
Impairment write down
Net book amount
Impairment tests
Note
Consolidated
2020 (US$)
2019 (US$)
-
-
-
3,241,472
(3,241,472)
-
In the prior financial year, the Group recorded an impairment with respect to the total
value goodwill of US$3,241,472. Goodwill had been allocated for impairment testing
purposes to one cash-generating unit (CGU), identified according to operating segments,
being Trinidad – oil and gas production. The goodwill represented the costs savings
achieved within the group as a result of the RRDSL acquisition.
Note 15: Property, Plant & Equipment
(1,213,335)
24,091,391
Consolidated
Production
equipment
and access
roads
(US$)
Year ended 30 June 2019
Opening net book
amount
Foreign currency
movement
Additions
Disposals
Depreciation
charge
Classified as held
for sale
Closing net book
amount
At 30 June 2019
Cost
Accumulated
depreciation
Net book amount 22,297,641
162,814
(60,954)
22,297,641
24,016,629
(263,537)
(418,738)
(1,718,988)
Gathering
station and
field office
(US$)
Leasehold
improvement
(US$)
Motor vehicle,
furniture,
fixtures &
fittings
(US$)
Total
(US$)
76,001
181,490
1,140,732
25,489,614
349,820
(16,215)
(2,956)
(882,686)
-
-
-
-
-
-
-
(40,019)
162,814
(100,973)
(236,293)
(499,830)
(425,821)
(165,275)
(149,401)
(1,159,235)
-
-
-
-
-
-
-
-
712,063
23,009,704
949,452
24,966,081
(237,389)
(1,956,377)
712,063
23,009,704
Star Phoenix Group Ltd
Annual report ended 30 June 2020
57
32,178
22,297,641
Consolidated
Production
equipment
and access
roads
(US$)
Year ended 30 June 2020
Opening net book
amount
Foreign currency
movement
Additions
Disposals
Impairment
Depreciation
charge
Classified as held
for sale
Closing net book
amount
At 30 June 2020
Cost
-
(344,590)
(15,453,686)
(6,177,809)
(353,734)
-
Accumulated
depreciation
Net book amount -
Gathering
station and
field office
(US$)
Leasehold
improvement
(US$)
Motor vehicle,
furniture,
fixtures &
fittings
(US$)
Total
(US$)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
712,063
23,009,704
(1,130)
31,048
114,685
-
-
114,685
(344,590)
(15,453,686)
(14,335)
(368,069)
(710,934)
(6,888,743)
100,349
100,349
323,402
2,396,124
223,053
(2,295,775)
100,349
100,349
Note 16: Exploration assets
Opening balance (ii)
Acquisition (i)
Impairment (ii)
Foreign exchange
Classified as held for sale (note 7a)
Disposed of – RRTL sale
Closing net book amount
Note
2020 (US$)
-
-
-
-
-
Consolidated
2019 (US$)
6,744,977
-
(6,077,873)
6,782
(673,886)
-
The Company made a decision in the prior financial year to write off the value of its
investment in Indonesia due to poor resuts, resulting in an impairment of US$6,077,873.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
58
Note 17: Producing assets
Cost
Accumulated amortisation
Net book value
Opening net book amount
Foreign currency movement
Additions
Impairment charge
Amortisation charge
Classified as held for sale (note 7a)
Closing net book amount
Note
Consolidated
2020 (US$)
2019 (US$)
-
-
-
-
-
-
-
-
-
-
46,006,207
(46,006,207)
-
109,091,650
1,053,641
1,407,974
(51,320,529)
(1,246,702)
(58,986,034)
-
Note 18: Trade and other payables
Note
Consolidated
2020 (US$)
2019 (US$)
a: Current
Trade payables
Sundry payables and accrued expenses (i)
Other payables (ii)
Total
b: Non-Current
Interest bearing trade payables
Other payables – interest bearing
Other payables – non-interest bearing (i)
Total
222,789
313,784
3,151,774
3,688,347
-
-
296,245
3,984,592
648,693
151,281
799,974
44,395,944
482,886
118,963
44,997,793
(i) Amount mainly relates to accrued expenditure from operations in Trinidad.
(ii)Amount relates to withholding taxes payable as a result of debt eliminations.
Risk exposure
Trade payables are non-interest bearing (2019: US$44,395,944 interest bearing). Interest
bearing trade payables were amounts due to LandOcean and formed part of the SPA
signed in September 2019. Contractually, they were not payable until April 2020 and
interest was charged at 6%. Other interest-bearing payables related to the consideration
due to LandOcean Petroleum Corp which also forms part of the SPA, as disclosed in note
7 all debt with LandOcean was settled on completion of the SPA on 31 March 2020.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
59
Note 19: Borrowings
Current borrowings
Interest on convertible note
Total current borrowings
Non-current borrowings
Borrowings at amortised cost
Convertible note
Total non-current borrowings
a: Borrowings
Principal
Interest due on outstanding balance
Closing net book amount
Note
19c
19a
19c
Note
Consolidated
2020 (US$)
2019 (US$)
-
-
-
-
-
1,600,000
1,600,000
25,791,724
18,759,966
44,551,690
Consolidated
2020 (US$)
2019 (US$)
-
-
-
15,640,024
10,151,700
25,791,724
Refer to Note 7 for amounts settled as part of the SPA with LandOcean.
No options were exercised during the year (2019: Nil).
No fair value movement recognised in the Statement of Profit or Loss (2019: US$33,345
gain).
c: Convertible note
Convertible note liability element
Convertible note derivative element
Interest due on outstanding balance –
non-current
Interest due on outstanding balance-
current
Closing net book amount
Note
Consolidated
2020 (US$)
2019 (US$)
-
-
-
-
-
16,507,750
113
652,103
1,600,000
18,759,966
Star Phoenix Group Ltd
Annual report ended 30 June 2020
60
The terms of the convertible note were as follows:
Issuer
Noteholder
Amount
Tenor
Repayment
Interest
Security
Star Phoenix Group Ltd
LandOcean Energy Services Co. Limited
US$20,000,000
Three years, maturity date 28 November 2019 (i)
Bullet at maturity date
8% per annum, payable annually in arrears (ii)
None
Conversion price
0.88p per share
Lender Conversion Right
At any time, in a minimum amount of US$10,000,000
The proceeds from this convertible note were utilised solely to replace a portion of the
outstanding payable balance due to LandOcean under the terms of the Integrated
Master Services Agreement ("IMSA").
(i) As per SPA dated 2 September 2019, maturity date was the earlier of 30 June 2020 and
the date on which completion occurred. Under SPA, LandOcean undertook not to issue a
conversion notice. Given the transaction completed on 31 March 2020, this date was
deemed to be the maturity date and the liability was settled.
(ii) On 5 March 2019, the Group issued 1,739,076,923 new ordinary fully paid shares at
A$0.0013 in lieu of annual interest payment of US$1,600,000 due in November 2018.
All borrowings formed part of the consideration for the sale of RRTL, as per note 7.
Note 20: Provision for rehabilitation
The Group recorded the present value of the estimated cost of legal and constructive
obligations to restore operating locations in the period in which the obligation arises. The
nature of restoration activities includes removal of facilities, abandonment of wells and
restoration of affected areas.
Provision for rehabilitation
Note
Consolidated
2020 (US$)
2019 (US$)
-
811,737
Movement in the provision for rehabilitation during the financial year are set out below:
Carrying amount at the start of the year
Additional provision recognised
Included in held for sale (note 7b)
-
-
-
-
811,737
24,618
(836,355)
-
Carrying amount at the end of the year
Up to 31 March 2020, the group recognised a provision of US$856,152, which was
subsequently derecognised following disposal of RRTL (as disclosed in note 7c).
Star Phoenix Group Ltd
Annual report ended 30 June 2020
61
Note 21: Deferred taxes
Other
(US$)
Accrued
interest
(US$)
Total
(US$)
Deferred tax asset
Movements: Year ended 30 June 2020
Opening balance
Charged/(credited) - to profit or loss
Closing net book amount (i)
15,439,010
(15,382,769)
56,241
(i) Deferred tax asset is included in the asset held for sale (note 7a)
-
55,706
55,706
15,439,010
(15,327,063)
111,947
Fair value
uplift on
business
combination
(US$)
Accelerated
depreciation
(US$)
Total
(US$)
Deferred tax liability
Movements: Year ended 30 June 2019
Opening balance
Foreign currency movement
Charged/(credited) - to profit or loss
28,429,185
-
1,617,020
Closing net book amount
30,046,205
36,332,757
(645,359)
(25,643,271)
10,044,127
64,761,942
(645,359)
(24,026,251)
40,090,332
Movements: Year ended 30 June 2020
Opening balance
Foreign currency movement
Transferred on disposal of subsidiary
Charged/(credited) - to profit or loss
Closing net book amount (i)
30,046,205
-
(29,582,812)
(463,393)
-
10,044,127
58,610
(4,136,714)
(4,811,723)
1,154,300
40,090,332
58,610
(33,719,526)
(5,275,116)
1,154,300
(i) Deferred tax liability is included in liabilities directly associated with assets held for sale
(note 7b)
Note 22: Provisions
Employee service benefits
Provision (i)
Total
Note
Consolidated
2020 (US$)
195,896
5,796,048
5,991,944
2019 (US$)
324,742
-
324,742
(i)Provision relates to an estimate of the potential land taxes that may be payable by the Company
on expired exploration licences in Trinidad.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
62
Note 23: Contributed equity
141,367,955 (2019: 10,243,998,615) fully
paid ordinary shares
Share issue costs
Total contributed equity
Note
Consolidated
2020 (US$)
2019 (US$)
409,428,374
407,770,469
(21,044,400)
388,383,974
(21,044,402)
386,726,067
a: Fully paid ordinary shares
At the beginning of
reporting period
Shares issued during year
Consolidation
Shares issued during year
Total contributed equity
2020 No.
2020 (US$)
2019 No.
2019 (US$)
Consolidated
10,243,998,615
407,770,469 7,595,830,782
404,910,284
1,536,599,792
(11,662,791,778)
23,561,326
141,367,955
2,648,167,833
-
999,176
-
658,729
409,428,374 10,243,998,615 407,770,469
2,860,185
-
The Company's share capital was consolidated on a 100:1 basis with effect from 5
December 2019. At the date of this report, the Company’s issued capital comprises
141,367,955 ordinary fully paid shares.
Ordinary shares entitle the holder to participate in dividends and the proceeds on
winding up of the Company in proportion to the number of and amounts paid on the
shares held.
On a show of hands every holder of ordinary shares present at a meeting of the
Company, in person or by proxy, is entitled to one vote and upon a poll each share is
entitled to one vote.
On 9 September 2019, the Group announced a subscription for new ordinary shares to
raise £750,000. Pursuant to the Subscription, the Group issued 1,536,599,792 new ordinary
shares at a price of 0.049 pence per new ordinary share.
On 20 January 2020, the Group announced a subscription for new ordinary shares to raise
£560,000. Pursuant to the Subscription, the Group issued 23,561,326 new ordinary shares at
a price of 2.21 pence per new ordinary share.
b: Options
At the beginning of reporting period
Options expired
Options exercised during year
Total options
Consolidated
2020 No.
2019 No.
404,643,137
(404,643,137)
-
-
781,844,977
(377,201,840)
-
404,643,137
Star Phoenix Group Ltd
Annual report ended 30 June 2020
63
The holders of these options did not have any rights under the options to participate in
any share issues of the company.
During the year ended 30 June 2020, no ordinary shares of Star Phoenix Group Ltd were
issued on the exercise of options (2019: nil).
Note 24: Reserves
a: Share-based payment reserve
Balance 1 July 2019
Share based payment expenses (Note 29)
Balance 30 June 2020
Note
Consolidated
2020 (US$)
2019 (US$)
8,316,464
-
8,316,464
8,424,371
(107,907)
8,316,464
The share-based payment reserve records items recognised as expenses on the fair
valuation of shares and options issued as remuneration to employees, directors and
consultants.
b: Option premium reserve
Balance 1 July 2019
Fair value movement of exercised options that
were originally classified as a derivative liability
Balance 30 June 2020
Note
Consolidated
2020 (US$)
2019 (US$)
12,057,362
12,057,362
-
-
12,057,362
12,057,362
The option premium reserve is used to recognise the grant date fair value of options issued
previously under financing arrangements.
c: Foreign currency translation reserve
Balance 1 July 2019
Currency translation differences arising during
the year
Currency translation differences arising due to
disposal of subsidiary
Balance 30 June 2020
Note
Consolidated
2020 (US$)
2019 (US$)
7,432,461
4,341,220
576,677
3,091,241
(4,993,916)
-
3,015,222
7,432,461
The foreign currency translation reserve is used to record exchange differences arising
from the translation of foreign subsidiaries.
Total reserves at 30 June 2020
23,389,048
27,806,287
Star Phoenix Group Ltd
Annual report ended 30 June 2020
64
Note 25: Contingent liabilities and contingent assets
During FY2016, the Company received an invoice from Geeta Maharaj, a Trinidad based
attorney seeking payment for legal services in the amount of approximately US$1.9 million.
The invoice purports to relate to legal work undertaken during mid-2014 including the
preparation of intercompany loan agreements. SPG strongly refutes the amount of this
purported invoice and considers it to be vastly excessive and therefore not payable. A
claim has been filed by Ms Maharaj seeking the sum of TT$12,019,573 (approximately
US$1.9 million) plus interest and costs. The Company filed a notice of application to strike
out this claim on 14 July 2017. An initial hearing on this application was held on 29
September 2017 at which the parties were ordered to file and exchange written
submissions by 20 October 2017 with replies, if any, to be filed by 30 October 2017. Both
parties filed and exchanged written submissions and responses by the requested dates
and a further hearing was scheduled for 1 December 2017. This hearing was rescheduled
by the court and the Company is awaiting notification of a rescheduled date.
Separately, SPG has received further correspondence from Ms Maharaj on a related
matter claiming damages of TT$6,000,000 (approximately US$890,000) on the basis of a
conspiracy designed to damage Ms Maharaj's reputation. Again, SPG firmly refutes the
allegation and in conjunction with its legal counsel in Trinidad has responded to this
demand. A claim has been filed by Ms Maharaj seeking damages of TT$6,000,000
(approximately US$890,000) plus interest and costs. The Company, in conjunction with its
legal counsel, has filed a defence in respect of this claim and a preliminary hearing was
scheduled for 1 December 2017. This hearing was rescheduled by the court and the
Company is awaiting notification of a rescheduled date.
While the Company, having taken legal advice, considers the probability of Ms Maharaj
succeeding in either of her claims to be remote, there can be no guarantee that there
will be a favourable outcome for the Company. There have been no other updates with
regards to this case since 30 June 2018.
The Directors are not aware of any other contingent liabilities or contingent assets as at 30
June 2020.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
65
Note 26: Segment reporting
30 June 2020
Segment revenue
Total segment revenue
Intersegment revenue
Revenue from external
customers
Other income
Segment result
Trinidad – Oil
& Gas
Production
(US$)
Discontinued
7,217,906
-
Trinidad –
Oilfield
Services
(US$)
3,279,275
(1,958,490)
7,217,906
1,320,785
-
1,158,624
Depreciation
360,115
Interest income/(expense)
(5,358,232)
Other segment expenses
51,320,529
Impairment reversal
(3,107,646)
Withholding tax
Gain on disposal
36,087,762
Profit/(loss) before income tax 86,520,434
Income tax
Profit/(Loss) after income tax
Segment assets
(15,254,197)
71,266,237
Segment assets
Total assets
Segment liabilities
Segment liabilities
Total liabilities
-
-
-
-
(353,734)
(1,903,279)
(18,413,616)
-
-
-
(18,191,220)
1,505,023
(16,686,197)
10,859,099
10,859,099
10,210,766
10,210,766
Indonesia
(US$)
Unallocated
(US$)
Total
(US$)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14,336)
(2,854,830)
(3,769,022)
-
-
-
(6,638,188)
-
(6,638,188)
10,497,181
(1,958,490)
8,538,691
1,158,624
(368,070)
(4,397,994)
(27,540,870)
51,320,529
(3,107,646)
33,271,798
61,982,708
(13,749,174)
47,941,852
2,760,555
2,760,555
13,619,654
13,619,654
920,070
920,070
11,130,836
11,130,836
30 June 2019
Trinidad – Oil
& Gas
Production
(US$)
Trinidad –
Oilfield
Services
(US$)
Indonesia
(US$)
Unallocated
(US$)
Total
(US$)
Segment revenue Discontinued
Total segment revenue
Intersegment revenue
Revenue from external
customers
Other income
Segment result
Depreciation
Interest income/(expense)
Other segment expenses
Loss before income tax
Income tax
Loss after income tax
Segment assets
Segment assets
Total assets
Segment liabilities
Segment liabilities
Total liabilities
11,597,161
-
4,218,523
(3,458,549)
11,597,161
759,974
7,108
-
-
-
-
-
-
-
-
15,815,684
(3,458,549)
12,357,135
2,936
10,045
(1,493,021)
(655,249)
(61,789,770)
(52,333,771)
27,246,448
(25,087,323)
(2,464,926)
(1,532,938)
1,177,183
(2,060,707)
(168,633)
(2,229,340)
-
-
(6,695,045)
(6,695,045)
-
(6,695,045)
-
(4,270,140)
(7,044,871)
(11,312,075)
(4,136,972)
(15,449,047)
(3,957,947)
(6,458,327)
(74,352,503)
(72,401,598)
(22,940,843)
(49,460,755)
83,609,947
83,609,947
24,244,249
24,244,249
59,071,174
59,071,174
23,974,481
23,974,481
-
-
-
-
797,474
797,474
108,651,670
108,651,670
68,299,717
68,299,717
151,345,372
151,345,372
Star Phoenix Group Ltd
Annual report ended 30 June 2020
66
(i) Unallocated assets
Segment assets
Cash
Other
Total segment assets
a: Other segment information
Segment other revenue – all other segments
Other income
Total unallocated segment revenue
Segment result – all other segments
Directors’ and officers’ fees and benefits
Share based payments – employee and
consultant shares
Finance costs
Other general and administration expenses
Total unallocated segment expenses
Accounting policies
30 June 2020
(US$)
30 June 2019
(US$)
2,473,884
286,671
2,760,555
797,474
-
797,474
Note
Consolidated
2020 (US$)
2019 (US$)
-
-
2,936
2,936
Note
Consolidated
2020 (US$)
2019 (US$)
1,429,250
924,584
-
(107,907)
2,854,830
2,354,108
6,638,188
4,648,884
1,919,773
7,385,334
AASB 8 requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the chief operating decision
maker in order to allocate resources to the segment and to assess its performance. The
chief operating decision maker is the Executive Chairman and through this role the Board
of Directors.
Information regarding these segments is presented above. The accounting policies of the
reportable segments are the same as those of the Group. Segment information is
prepared in conformity with the accounting policies of the entity as disclosed in Note 1.
Segment revenues and expenses are those directly attributable to the segments and
include any joint revenue and expenses where a reasonable basis of allocation exists.
Segment assets include all assets used by a segment and consist principally of cash,
receivables, plant and equipment, exploration expenditure capitalised and development
assets net of accumulated depreciation and amortisation. While most such assets can be
directly attributed to individual segments, the carrying amount of certain assets used
jointly by two or more segments is allocated to the segments on a reasonable basis.
Revenue from discontinued operations was derived from one customer. These related to
the sale of oil and were recognised at a point in time as and when control of the product
passed to the customer.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
67
Note 27: Cash flow information
Note
Consolidated
2020 (US$)
2019 (US$)
Reconciliation of cash flow from operations with loss after income tax
Gain/(loss) after income tax
Non-cash flows in profit
Depreciation, depletion and amortisation
Share based payment- consultants and
employees
Impairment of non-current assets
Impairment reversal
464,736
-
47,941,852
(49,760,755)
3,957,947
(107,907)
6,077,873
-
-
118,502
-
(51,320,529)
(30,385,017)
26,691
16,250,238
51,320,529
-
-
(383,894)
(5,338,495)
(1,271,752)
6,969,323
15,254,197
-
4,404,590
(15,030,944)
-
(4,569,660)
(128,846)
(229,445)
-
(811,737)
2,020,692
-
-
-
2,112,084
(430,323)
-
(1,312,808)
(1,438,646)
(2,975,888)
Gain on disposal of subsidiary
Foreign exchange (gain)/loss
Impairments recognised on held for sale
assets
Fair value movement of derivative
Decrease in other current assets
(Increase)/decrease in trade and other
receivables
Decrease in deferred tax asset
Increase/(decrease) in trade and other
payables
Increase/(decrease) in income tax payable
Decrease in deferred tax liabilities
Decrease in provisions
Items reclassified as investing activities on
gain on disposal of subsidiary
(Decrease)/increase in borrowings
(Decrease)/Increase in non-current operating
payables
Held for sale
Net cash outflow (from)/to operations
Financial liability reconciliation
Balance at 1 July 2018
Net cash from financing
activities
Interest accrued
Fair value/other changes
Balance at 30 June 2019
Net cash from financing
activities
Interest accrued
Fair value/other changes
Balance at 30 June 2020
Borrowings
(US$)
24,481,224
Convertible note
(US$)
Total
(US$)
19,558,382
44,039,606
-
-
1,310,500
-
25,791,724
1,681,975
(1,983,894)
19,256,463
-
-
987,360
(26,779,084)
-
2,343,527
(21,600,000)
-
-
2,992,475
(1,983,894)
45,048,187
-
3,330,897
(48,379,084)
-
Star Phoenix Group Ltd
Annual report ended 30 June 2020
68
On 31 March 2020, the transaction with LandOcean was completed. As a result, the
above liabilities were settled as part of the consideration for the sale of RRTL. Refer to note
7.
Non-cash investing and financing activities
Interest accrued
Fair value adjustments (convertible note)
Settlement of debt as part of consideration
for sale of RRTL
Total
2020
(US$)
3,330,897
-
(48,379,084)
2019
(US$)
2,992,475
(1,983,894)
-
(45,048,187)
1,008,581
Note 28: Share based payments
Employee option plan
Year ended 30 June 2020
No options were issued to key management personnel. All options expired during the year
as vesting conditions were not met.
Year ended 30 June 2019
No options were issued to key management personnel. The expense reversal is due to the
change in the probability of meeting the vesting conditions as explained below.
Probability of meeting the 1,500 barrels of oil per day for a continuous 15-day period in
Trinidad vesting condition is 0%.
Probability of meeting the 2,500 barrels of oil per day for a continuous 15-day period in
Trinidad vesting condition is 0%.
Probability of meeting the 4,000 barrels of oil per day for a continuous 15-day period in
Trinidad vesting condition is 0%.
Expenses recognised in the profit or loss
During the year, no share-based payments were recognised in profit or loss to a reversal
(2019: reversal of US$107,907).
Star Phoenix Group Ltd
Annual report ended 30 June 2020
69
As at 1 July
Granted during year:
Other
Expired
Forfeited
As at 30 June
2019 No.
404,643,137
-
(404,643,137)
-
-
Vested and exercisable at
30 June
Weighted average
remaining contractual life
options outstanding at end
of period
-
-
Average
exercise
price (US$)
-
2019 No.
761,844,977
Average
exercise
price (US$)
0.023
-
-
-
-
-
-
-
(357,201,840) 0.017
-
404,643,137
-
0.018
9,375,000
0.01
85 days
Note 29: Related party transactions
(a) Parent entity
The ultimate Parent Entity and ultimate Australian Parent Entity within the Group is Star
Phoenix Group Ltd.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 13.
(c) Transactions with Key Management Personnel
The following transactions occurred during the year with Key Management Personnel or
their related parties:
Consulting fees paid or payable to Kegrace Consulting Limited,
a company owned by Mr Gu
Consulting fees paid or payable to Ten Faye Limited, a
company owned by Mr L Liu
There were no balances outstanding at the year-end (2019: Nil).
2020
(US$)
2019
(US$)
330,416
253,333
42,255
7,700
Note
Consolidated
2020 (US$)
2019 (US$)
d: Key Management Personnel compensation
Short–term benefits
One-off payments
Post-employment benefits
Share based payments
Total
646,691
753,505
29,054
-
1,429,250
797,189
-
37,388
(72,628)
761,949
Star Phoenix Group Ltd
Annual report ended 30 June 2020
70
Note 30: Parent entity information
The following details information related to the Parent Entity Star Phoenix Group Ltd at 30
June 2020. The information presented here has been prepared in accordance using
consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Accumulated losses
Reserves
Total equity
Note
Consolidated
2020 (US$)
2019 (US$)
2,473,884
5,668,315
8,142,199
2,330,478
3,322,903
5,653,381
3,597,474
22,008,541
25,606,015
307,884
67,991,834
68,299,718
388,383,974
(409,139,032)
23,243,876
2,488,818
387,730,534
(452,663,645)
22,239,408
(42,693,703)
Loss for the year from continuing operations
Profit for the year for discontinued operations
Total comprehensive loss for the year
(5,858,309)
70,230,658
64,372,349
(34,810,725)
-
(34,810,725)
No contingent liabilities were recognised as disclosed in Note 25.
There are no capital commitments of the parent entity.
Note 31: Financial risk management
The Group has exposure to the following risks from their use of financial instruments:
• Credit risk
•
• Market risk
Liquidity risk
This note presents information about the Group’s exposure to each of the above risks, their
objectives, policies and processes for measuring and managing risk, and the
management of capital. Further quantitative disclosures are included throughout these
financial statements. The Board of Directors has overall responsibility for the establishment
and oversight of the risk management framework.
Risk management policies are established to identify and analyse the risks faced by the
Group, to set appropriate risk limits and controls, and to monitor risks and adherence to
limits. Risk management policies and systems are reviewed to reflect changes in market
conditions and the Group’s activities. The Group, through training and management
standards and procedures, aims to develop a disciplined and constructive control
environment in which all consultants and agents understand their roles and obligations.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
71
Credit risk
Credit risk is the risk of financial loss to the Group if counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Group’s
receivables and cash held at financial institutions.
Credit risk is managed on a group basis. Individual risk limits are set based on internal or
external ratings in accordance with limits set by the board. Although there is only one
customer and hence significant concentration to one customer, the credit risk is
considered low.
The credit quality of financial assets that are neither past due or impaired can be assessed
by reference to external credit ratings (if available) or to historical information about
counterparty default rates.
The Group has a credit risk exposure with LandOcean, which as at 30 June 2020 owed the
consolidated entity $1.8 million. Albeit the balance was outside the SPA/terms of trade, no
impairment was made as at 30 June 2020 as Management believe it is recoverable.
LandOcean have made two payments post year-end totalling US$0.3 million and the
Group continues its discussions with LandOcean to expedite the payment of the
outstanding amount. There are no guarantees against this receivable.
Note
Consolidated
2020 (US$)
2019 (US$)
Cash at bank, restricted deposits and short-term bank deposits (S&P ratings)
AAA -
AA-
A+
BBB+
BBB-
Not rated
Total
1,489,291
984,593
-
690,868
-
-
3,164,752
10
398,530
398,944
-
83,207
-
-
880,681
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit
exposure. The Group’s maximum exposure to credit risk at the reporting date was:
Trade and other receivables – current (i)
Cash and cash equivalents
Total
(i) Counterparties without an external credit rating.
Loans and receivables
Note
11
10
Consolidated
2020 (US$)
2019 (US$)
2,248,359
3,164,752
5,413,111
157,827
880,681
1,038,508
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of
each debtor. No collateral was held in relation to these receivables.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
72
Impairment losses
No impairment loss was recognised in relation to other receivables.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as
they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation.
The Group uses activity-based costing to cost its activities, which assists in monitoring cash
flow requirements and optimising its cash return on investments. Typically, the Group
ensures that it has sufficient cash on demand to meet expected operational expenses for
a period of 12 months; this excludes the potential impact of extreme circumstances that
cannot reasonably be predicted, such as natural disasters.
Group 2020
Carrying
amount (US$)
Contractual
cash flows (US$)
Within one
year (US$)
1-2 years
(US$)
2-5 years
(US$)
Financial liabilities at amortised cost
Trade and other
payables
Borrowings
Total
-
3,984,592
3,984,592
3,984,592
-
3,984,592
3,688,347
296,245
-
3,688,347
-
296,245
-
-
-
Group 2019
Carrying
amount (US$)
Contractual
cash flows (US$)
Within one
year (US$)
1-2 years
(US$)
2-5 years
(US$)
Financial liabilities at amortised cost
Trade and other
payables
Borrowings
Total
46,151,690
92,274,199
45,797,767
45,797,767
44,551,690
90,674,199
12,901,659
32,896,108
44,551,690
1,600,000
14,501,659 77,272,540
-
-
-
Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices
will affect the Group’s income or the value of its holdings of financial assets. The objective
of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
73
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to the US dollar, AU dollar, TT Dollar,
British pound and Chinese Renminbi. Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities denominated in a currency that is not
the entity’s functional currency. The risk is measured using sensitivity analysis and cash
flow forecasting.
The Group’s treasury risk management policy is to closely monitor exchange rate
fluctuations. To date, the Group has not sought to hedge its exposure to fluctuations in
exchange rates, however this policy will be reviewed on an ongoing basis.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
Cash
Amount payable to other
entities
Total
2020 AUD
2019 AUD
2020 GBP
2019 GBP
143,230
249,624
1,030,708
38,965
(63,702)
(66,216)
(19,970)
(48,631)
79,528
183,408
(1,010,738)
(9,666)
Consolidated
Consolidated
2020 TTD
3,765,720
2019 TTD
561,647
984,593
2020 RMB
2019 RMB
(597,861)
(2,007,383)
-
3,167,859
(1,445,736)
984,593
-
-
-
Cash
Amount payable to other
entities
Total
Sensitivity
Based upon the amounts above, had the US dollar strengthened by 10%, with all other
variables held constant, there would not have been a material impact on the profit and
equity of the Group. A 10% weakening of the US dollar against the above currencies
would have had an equal, but opposite effect, on the basis that all other variables remain
constant.
Interest rate risk
There is no material interest rate risk exposure in the Group as there are no material
floating rate borrowings or repayments to be made.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
74
Profile
At the reporting date, the interest rate profile of the Group’s financial instruments which exposes the group to cash flow interest rate risks are:
Weighted
Average
Effective Interest
Rate
2020
2019
Floating Interest
Rate
Fixed Interest Maturing Non-interest bearing
Total
2020
(US$)
2019
(US$)
2020
(US$)
2019
(US$)
2020
(US$)
2019
(US$)
2020
(US$)
2019
(US$)
Financial assets:
Cash and cash equivalents 0.1%
1.8%
3,164,752
880,681
Trade and other
receivables
Total financial assets
-
-
-
-
3,164,752
880,681
Financial Liabilities:
Trade and other payables
Borrowings
Total financial liabilities
10%
6%
-
10%
6%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,164,752
880,681
2,248,359
157,827
2,248,359
157,827
2,248,359
157,827
5,413,111
1,038,508
44,878,830 3,984,592
46,151,690
91,030,520 3,984,592
-
918,937
-
918,937
9,790,640
-
9,790,640
45,797,767
46,151,690
91,949,457
Star Phoenix Group Ltd
Annual report ended 30 June 2020
75
Sensitivity analysis for variable rate instruments
The sensitivity on interest rates for 2020 and 2019 assumes a change of 100 basis points in
the interest rates at the reporting date and would have increased / (decreased) profit or
loss by the amounts shown. Both analyses for each year assume that all other variables, in
particular foreign currency rates, remain constant. The group is not subject to any material
variable rate interest instruments at 30 June 2020 and so no sensitivity analysis has been
prepared.
Fair values versus carrying amounts
The fair value of financial assets and liabilities, together with the carrying amounts shown
in the statement of financial position, are as follows:
Group
Trade and other
receivables
Cash and cash
equivalents
Trade and other
payables
Borrowings
Total
30 June 2020
(US$)
Carrying amount
Fair value
30 June 2019
(US$)
Carrying
amount
Fair
value
2,248,359
2,248,359
157,827
157,827
3,164,752
3,164,752
880,681
880,681
(3,984,592)
(3,984,592)
(45,797,767)
(45,797,767)
-
-
(46,151,690)
(46,151,690)
1,428,519
1,428,519
(91,949,457)
(91,949,457)
The basis for determining fair value is disclosed in Note 1(n).
Non-recurring fair value measurements
Property, plant and equipment consisting of rigs and associated inventory classified as
held for sale during the reporting period was measured at the lower of its carrying amount
and fair value less costs to sell at the time of the reclassification. The fair value of the rigs
was estimated based on an indicative offer received for one of the rigs which was 70%
below carrying value as disclosed in note 7a.
Other price risks
The Group is not exposed to any other price risks.
Capital management
The entity’s objectives when managing capital is to safeguard its ability to continue as a
going concern, so that it can continue to provide returns for shareholders and to maintain
an optimal capital structure to reduce the cost of capital.
The capital structure of the group consists of cash and cash equivalents and equity
attributable to equity holders of the Company, comprising issued capital, reserves and
accumulated losses as disclosed in Notes 23 and 24 respectively. None of the entities
within the group are subject to externally imposed capital requirements.
Gearing ratio
The Board reviews the capital structure on an annual basis. As a part of this review the
Board considers the cost of capital and the risks associated with each class of capital.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
76
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Borrowings
Net debt
Equity
Net debt to equity ratio
Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables – current
Total
Financial liabilities
Trade and other payables - non-current
Trade and other payables – current
Borrowings
Total
Note
10
18
19
Consolidated
2020 (US$)
2019 (US$)
3,164,752
880,681
(3,984,592)
(46,122,509)
-
(3,984,592)
(46,151,690)
(92,274,199)
2,488,818
(39,516,245)
125.9%
N/A
Note
Consolidated
2020 (US$)
2019 (US$)
10
11
18
19
3,164,752
2,248,359
5,413,111
880,681
157,827
1,038,508
296,245
44,997,793
3,688,347
799,974
-
3,984,592
46,151,690
91,949,457
The carrying amount reflected above represents the Group’s maximum exposure to credit
risk for such loans and receivables.
(a) Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
(b) Inputs other than quoted prices included within level 1 that are observable for the
asset or liability, either directly or indirectly (level 2), and
(c) Inputs for the asset or liability that are not based on observable market data
(unobservable inputs (level 3).
The following table presents the Group’s financial assets and financial liabilities measured
and recognised at fair value at 30 June 2020 and 30 June 2019 on a recurring basis.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
77
At 30 June 2020
Assets
Financial asset measured at Fair
Value through profit and loss
Equity securities
Total assets
Liabilities
Option liability at fair value through
profit or loss
Derivative liability at fair value
through profit or loss
Total liabilities
At 30 June 2019
Assets
Financial asset measured at Fair
Value through profit and loss
Equity securities
Total assets
Liabilities
Option liability at fair value through
profit or loss
Derivative liability at fair value
through profit or loss
Total liabilities
Level 1
US$
Level 2
US$
Level 3
US$
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Level 1
US$
-
Level 2
US$
-
Level 3
US$
-
-
-
-
-
-
-
-
-
-
113
113
-
-
-
-
-
-
-
-
-
-
-
-
Total
-
-
-
-
113
113
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy
levels as at the end of the end of the reporting period. There were no transfers between
the levels of the fair value hierarchy during the year ended 30 June 2020.
(b) Fair values of other financial instruments
The Group has financial instruments which are measured at amortised cost in the
consolidated statement of financial position.
Due to their short-term nature, the carrying amounts of the current receivables, current
payables, current borrowings, and current other financial liabilities is assumed to
approximate their fair value.
(c) Fair values of non-current receivables, payables and borrowings
For non-current receivables, payables and borrowings, the fair values are not materially
different to their carrying amounts since the interest on these balances is close to current
market rates.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
78
Note 32: Events after the reporting date
Amounts received from LandOcean
The Group received two payments from LandOcean totalling US$0.3 million and continues
its discussions with them to expedite the payment of the outstanding amount of US$1.5
million.
Extraordinary General Meeting
The Company called, arranged and held the Meeting to consider all the resolutions
proposed pursuant to these requests and in accordance with the provisions of section
249D(5) of the Corporations Act. The Meeting was held of 25 September 2020, where only
resolution 1 relating to the removal of Dr YuFeng Meng as a Director was duly passed. All
other resolutions relating to the Board changes were lost.
Impact of COVID-19
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been
financially negative for the consolidated entity up to 30 June 2020, it is not practicable to
estimate the potential impact after the reporting date. The situation is rapidly developing
and is dependent on measures imposed by the Government of Trinidad and Tobago and
other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
Note 33: New accounting Standards and Interpretations
Australian accounting Standards and Interpretations released but not yet
effective: 30 June 2020 year end
Certain new Accounting Standards and Interpretations have been published that are not
mandatory for 30 June 2020 reporting periods and have not been early adopted by the
Group. The Group’s assessment of the impact of these new Standards and Interpretations
is set out below. In all cases the Group intends to apply these standards from the
application date as indicated in the tables below.
Reference:
Conceptual
Framework
Standard application date:
Group application date:
Title:
Conceptual Framework for Financial
Reporting
1 January 2020
1 July 2020
Key Requirements
The Conceptual Framework contains new definition and recognition criteria as well as
new guidance on measurement that affects several Accounting Standards. Where the
consolidated entity has relied on the existing framework in determining its accounting
policies for transactions, events or conditions that are not otherwise dealt with under the
Australian Accounting Standards, the consolidated entity may need to review such
policies under the revised framework.
Impact
At this time, the application of the Conceptual Framework is not expected to have a
material impact on the consolidated entity's financial statements. Management will be
continuously assessing this.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
79
There are no other standards that are not yet effective and that would be expected to
have a material impact on Star Phoenix Group Ltd in the current or future period and on
foreseeable future transactions.
Note 34: Company details
The registered office of the company is:
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000
Telephone: +61 8 6205 3012
The principal place of business is:
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000
Telephone: +61 8 6205 3012
Star Phoenix Group Ltd
Annual report ended 30 June 2020
80
Directors’ Declaration
The directors of the company declare that:
•
The financial statements, comprising the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of financial position,
consolidated statement of cash flows, consolidated statement of changes in
equity, accompanying notes, are in accordance with the Corporations Act 2001
and:
• comply with Accounting Standards and the Corporations Regulations 2001
and other mandatory professional reporting requirements; and
• give a true and fair view of the Group’s financial position as at 30 June
2020 and of its performance for the year ended on that date.
•
The company has included in the notes to the financial statements an explicit and
unreserved statement of compliance with International Financial Reporting
Standards.
In the directors’ opinion, there are reasonable grounds to believe that the
•
• company will be able to pay its debts as and when they become due and
•
payable.
The directors have been given the declarations by the chief executive officer and
chief financial officer required by section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is
signed for and on behalf of the directors by:
Zhiwei Gu
Chairman
26 October 2020
Star Phoenix Group Ltd
Annual report ended 30 June 2020
81
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Star Phoenix Group Limited
Report on the Audit of the Financial Report
Qualified opinion
We have audited the financial report of Star Phoenix Group Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion, except for the effects of the matter described in the Basis for qualified opinion section
of our report, the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for qualified opinion
As disclosed in note 7a of the financial statements, the Group’s current assets as at 30 June 2020
include an amount of $7,922,861 classified as assets held for sale. During the year ended 30 June 2020,
there has been a deterioration in the operating and economic performance of the Group, which
created an impairment indicator of the assets included in this amount. The Directors have undertaken
an impairment assessment as at 30 June 2020 and have estimated the recoverable amount of these
assets based on an indicative offer received for one of the rigs. This resulted in an impairment expense
of $15,453,686 being recognised in the current year.
The valuation methodology used to arrive at the recoverable amount was not in accordance with the
requirements of Australian Accounting Standards, and we were unable to perform alternative
procedures to determine whether any adjustments to the carrying value of the property, plant and
equipment, rigs and related inventory included in assets held for sale as at 30 June 2020 is necessary.
Our audit opinion for the year ended 30 June 2019 was also modified with respect to this matter.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent firms. Liability a by a scheme approved under Professional Standards Legislation.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our qualified opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s
ability to continue as a going concern and therefore the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not further modified in respect
of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Basis for qualified
opinion and the Material uncertainty related to going concern sections, we have determined the
matters described below to be the key audit matters to be communicated in our report.
Discontinued operation of Range Resources Trinidad Limited
Key audit matter
How the matter was addressed in our audit
During the prior financial year, a decision was made to
Our audit procedures included, but were not limited
divest the Group’s oil and gas production business,
to the following:
Range Resources Trinidad Limited (“RRTL”).
On 31 March 2020, the Group finalised the sale of RRTL
for consideration of $97.5M by way of forgiveness of all
debt owed by the Group to the purchaser, LandOcean
Energy Services Co., Ltd and a cash consideration of
$2.5M. The carrying value of the net assets of RRTL at
the date of disposal were $65.9M. A gain of $31.6M was
recognised on this transaction.
·
·
Assessing the key terms of the sale and
purchase agreement with LandOcean;
Assessed the calculation of the profit
recognised on the sale by agreeing the
purchase price and the value of the assets
and liabilities de-recognised as a result of
the sale.
·
Considering the application of AASB 5 to the
This was a key audit matter as it was a significant
accounting of the assets and associated
transaction for the year and had a considerable impact
liabilities as an asset held for sale and the
of the profit and loss statement and the statement of
appropriateness of the classification of
financial position.
discontinued operations;
·
Reviewing the completeness of the de-
recognition of assets and liabilities held for
sale as at 30 June 2020; and
·
Assessing the adequacy of the related
disclosures in Notes 2 and 7 to the financial
report.
Other information
The directors are responsible for the other information. The other information obtained at the date of
this auditor’s report is information included in the directors report, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 26 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Star Phoenix Group Limited, for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Ashleigh Woodley
Director
Perth, 26 October 2020
Additional Information
Top 20 shareholders
The 20 largest shareholders of the Company as at 31 August 2020 are listed below:
Rank Shareholder
Number of shares
Percentage
held (%)
1.
2.
3.
4
5.
6.
7.
8.
9.
10.
11.
BEIJING SIBO INVESTMENT MANAGEMENT LP
24,476,210
THESOLIA LTD
23,561,326
LANDOCEAN ENERGY SERVICES CO LTD
17,390,770
SRAMEK BIODYNAMICS HOLDINGS LIMITED
15,365,998
ABRAHAM LIMITED
7,123,776
INTERACTIVE INVESTOR SERVICES NOMINEES
LIMITED
6,431,052
BARCLAYS DIRECT INVESTING NOMINEES
LIMITED
INTERACTIVE INVESTOR SERVICES NOMINEES
LIMITED
HSDL NOMINEES LIMITED
5,404,831
3,878,346
3,071,546
HARGREAVES LANSDOWN (NOMINEES) LIMITED
<15942>
2,717,044
HSBC CLIENT HOLDINGS NOMINEE (UK) LIMITED
<731504>
12.
HSDL NOMINEES LIMITED
1,918,678
1,798,373
13.
14.
HARGREAVES LANSDOWN (NOMINEES) LIMITED
1,714,611
HARGREAVES LANSDOWN (NOMINEES) LIMITED
1,450,352
15.
PERSHING NOMINEES LIMITED
1,279,969
16.
SHARE NOMINEES LTD
950,616
17. WEALTH NOMINEES LIMITED
890,022
18.
AURORA NOMINEES LIMITED <2288700>
852,393
19. WEALTH NOMINEES LIMITED
817,136
20.
VIDACOS NOMINEES LIMITED
677,740
17.31
16.67
12.30
10.87
5.04
4.55
3.82
2.74
2.17
1.92
1.36
1.27
1.21
1.03
0.91
0.67
0.63
0.60
0.58
0.48
Total
121,770,789
86.14
Star Phoenix Group Ltd
Annual report ended 30 June 2020
86
Substantial shareholders
An extract of the Company’s register of substantial shareholders (being those
shareholders who held 5% or more of the issued capital on 31 August 2020) is below:
Rank Shareholder
Number of shares
Percentage
held (%)
1.
2.
3.
4
5.
BEIJING SIBO INVESTMENT MANAGEMENT LP
24,476,210
THESOLIA LTD
23,561,326
LANDOCEAN ENERGY SERVICES CO LTD
17,390,770
SRAMEK BIODYNAMICS HOLDINGS LIMITED
15,365,998
ABRAHAM LIMITED
7,123,776
17.31
16.67
12.30
10.87
5.04
Distribution of equity securities
The number of shareholders by size of holding is set out below:
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of holders
1,989
519
132
174
21
2,835
Number of shares
575,507
1,266,055
1,040,064
4,315,080
134,171,249
141,367,955
Tenement schedule
The tenement schedule for the Group as at 30 June 2020 is tabulated below:
Tenement Reference
Perlak1
Location
Indonesia
Percentage held (%)
23
Operator
PT Aceh Timur
Kawai Energi
Notes:
1. The Company’s indirect interest in the Perlak field is held through its 60%
shareholding in Hengtai, which holds a 78% interest in Lukar which in turn holds a
49% interest in PT Aceh Timur Kawai Energi.
Star Phoenix Group Ltd
Annual report ended 30 June 2020
87
Corporate Directory
s
r
Mr Zhiwei Gu
o
c
e
Mr Lubing Liu
Dr Mu Luo
t
r
i
D
Executive Chairman
Executive Director, COO, Joint Company Secretary
Non-Executive Director
Dr YuFeng Meng
Non-Executive Director
Company Secretary Ms Evgenia Bezruchko and Mr Lubing Liu
Registered office &
principal place of
business
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace
Perth WA 6000, Australia
Telephone: +61 8 6205 3012
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace, Perth WA 6000
Telephone: +61 3 9415 4000
Computershare Investor Services plc
PO Box 82, The Pavilions, Bridgwater Road, Bristol, UK BS99 6ZZ
Telephone: +44 370 702 0000
BDO Audit (WA) Pty Ltd, 38 Station Street;
Subiaco WA 6008, Australia
Star Phoenix Group Ltd shares are listed on Alternative
Investment Market of the London Stock Exchange (AIM code:
STA)
Australia
www.starphoenixgroup.com
Share Registry
(Australia)
Share Registry
(United Kingdom)
Auditor
Stock Exchange
Listing
Country of
Incorporation
Website
Star Phoenix Group Ltd
Annual report ended 30 June 2020
88