Star Phoenix Group Ltd

("Star Phoenix" or "the Company")

31 March 2023

HALF-YEAR REPORT

Star Phoenix (AIM: STA), an international company with an oilfield services business in Trinidad and an oil and gas interest in Indonesia, today releases its half-year report (unaudited) for the 6 months ending 31 December 2022.

This announcement has been approved by Chairman Lubing Liu on behalf of the Company.

ABN: 88 002 522 009

An electronic version of this report is available on the Company's website www.starphoenixgroup.com

Contents

About this Report

Directors' Report

Operational and Corporate Review

Auditor's Independence Declaration

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

Director's Declaration

Independent Auditor's Review Report to the Members of Star Phoenix Group Ltd.

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About this Report

This half-year report (unaudited) is a summary of Star Phoenix Group Ltd ("Star Phoenix") operations, activities and financial position for the half-year ended 31 December 2022. It complies with Australian reporting requirements. Star Phoenix (ABN 88 002 522 009) is a company limited by shares and is incorporated and domiciled in Australia.

Unless otherwise stated in this report, all references to Star Phoenix, the Group, the Company, we, us and our, refer to its controlled entities as a whole. References to the half-year or period are to the half-year ended 31 December 2022. All dollar figures are expressed in United States currency unless otherwise stated.

Directors' Report

The Directors of Star Phoenix and the entities it controls (together, the "Group") present the financial report for the half-year ended 31 December 2022.

Directors

The persons who were Directors at any time during or since the end of the half-year are:

The Directors were in office for the entire period unless otherwise stated.

Principal activities

During the half-year, the Company's main focus was on securing new attractive acquisition and investment opportunities to provide future growth and value for the Company and its shareholders. In addition, the Company's efforts were aimed at resolving matters in relation to its legacy assets and transactions.

Dividends

No dividends have been declared, provided for or paid in respect of the half-year ended 31 December 2022 (half-year ended 31 December 2021: Nil).

Financial position

The loss for the financial half-year ended 31 December 2022 amounted to US$53,190 (loss for half-year ended 31 December 2021: US$124,732).

At 31 December 2022, the Group had net assets of -US$6,494,111 (30 June 2022: net assets of -US$5,962,442) and cash of US$535,703 (30 June 2022: US$758,346).

Operational and Corporate Review

New acquisition opportunities

The Company's key focus remains on securing new attractive acquisition opportunities to provide future growth and value for the Company and its shareholders. During the previous 12 months, the Company had reviewed a few new projects and investment opportunities.

Currently, discussions are ongoing with several parties in relation to new projects in the energy sector. The directors are confident that these discussions will eventuate in securing a new project for the Company on attractive terms.

Oilfield services business

During the half-year, the Company took necessary steps to further cut the ongoing costs of its oilfield services business in Trinidad ("Range Resources Drilling Services Limited" or "RRDSL").

Termination of Conditional fee agreement

The Company reached a conditional fee agreement (the "CFA") with Dentons UK and Middle East LLP ("Dentons") in the 2021 financial year based on a no-win no-fee business model to recover the outstanding sums due from LandOcean through arbitration proceedings in the London Court of International Arbitration ("LCIA").

The Company further announced on 22 August and 18 October 2022 that LCIA issued a consent award in relation to two of the four Stage 1 Claims in which LandOcean is required to make payment of US$301,265 to Star Phoenix, and a partial payment of US$130,000 has been received in a trust account set up by Dentons. Regrettably, on 2 December 2022, the Company received a notice letter written by Dentons to terminate the CFA with immediate effect, citing mainly a broken-down relationship of trust between the two parties.

The Company does not agree with the assertions in relation to the termination of CFA. The Company will endeavour to minimize the cost impact by sourcing a new legal representative based on a cost effective basis. The Company takes the matter very seriously and will review possible remedies  for any damage on company reputation and /or financial loss from inaction of CFA.

Result of special general meeting

On 19 December 2022, the Board announced that the Company would not be in a position to appoint its new intended auditor because the resolutions (Removal of Auditor and Appointment of Auditor) were not passed in the General Meeting held on 19 December 2022.

As a result of the new auditor not being appointed, the Company was not able to publish its audited results for the year ended 30 June 2022 by 31 December 2022 as required under Aim rule 19 of the Aim rules for Companies.  Consequently the shares of the Company was suspended from trading 7.30am on 3 January 2023.

The Company planed another vote of shareholders in early 2023 to have the necessary resolutions passed.

Events subsequent to reporting date

Result of general meeting

On 31 January 2023, the company announced that the Company appointed its new intended auditor as the resolution of appointment of auditor was passed in General Meeting held on 31 January 2023. The company published its audited results for the year ended 30 June 2022 on 21 February 2023

As a result of the publication of the Company's Annual Results, the trading in the Company's shares was restored from 7.30am on 22 February 2023.

Resignation of non-executive director

On 2 March 2023, the Company announces that Mr. Zhiwei Gu has resigned as a non-executive director of the Company with immediate effect.

Lubing Liu

Chairman

Dated this 31 day of March 2023

Consolidated Statement of Profit or Loss and Other Comprehensive Income

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

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

Consolidated Statement of Changes in Equity

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to Consolidated Financial Statements

Note 1: Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 31 December 2022 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2022 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

New and amended accounting standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

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 period ended 31 December 2022 the Group recorded a loss of US$53,190 (loss for half- year ended 31 December 2021: US$124,732).

As at the reporting date (31 March 2023), the company had a cash balance of approximately US$450,000.  Management believes there are sufficient funds to meet the Group's working capital requirements for the next 5 months. The ability of the Group to continue as a going concern beyond that timeframe is dependent on securing additional funding through the issue of shares and/or debt to fund its activities. The Company is currently seeking other opportunities to further expand its operations in other geographic locations.

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 may be used to raise additional capital and subsequently generate positive cash flows. The Company is also focusing on managing its existing cash reserves.
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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.

The Directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

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 amounts or classification of recorded assets or liabilities that might be necessary if the Group does not continue as a going concern.

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 area of operations; and

·      is a subsidiary acquired exclusively with a view to re-sale.

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: Significant estimates and judgements

Impairment of rigs and related inventory

The Directors did not deem necessary to undertake an impairment assessment during the reporting period as per AASB 136. The basis of the recoverable value remains the same and the Company continues the sale process of the remaining three production and five drilling rigs.

Deferred tax liability

The carrying value of the deferred tax liability is US$691,974 at 31 December 2022. 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.

Recoverability of deferred tax assets

Deferred tax assets are recognised only if it is probable that future taxable amounts will be

available to utilise those temporary differences and losses. Management considers that it

is probable that future taxable profits will be available to utilise those temporary differences. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future profits.

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$1,341,649 may be payable in Australia and withholding tax liability of US$3,087,883 payable in Trinidad. As at 31 December 2022, both amounts have been provided for in full.

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 reporting date.

Contingent liabilities

The Directors are of the opinion that no provision is required to be raised in respect to any

of the matters disclosed in note 5 as the likely outcome of any outflow is considered to

be remote.

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

2022 and 2021: 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.

Note 3: Revenue

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

Note 4: Expenses

Note 5: Contingent liabilities
There are no contingent liabilities as at 31 December 2022.

Note 6: Discontinued operations

The discontinued operations relate to Range Resources Drilling Services Ltd

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

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

Note 8: Trade and other receivables

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

Fair value approximates the carrying value of trade and other receivables at 31 December 2022.

Note 9: Property, plant & equipment

Note 10: Trade and other payables

(i)            Amount relates to withholding taxes payable as a result of debt eliminations.

Note 11: Provisions

(i) Provision relates to an estimate of the potential land taxes that may be payable by the Company on expired exploration licences in Trinidad.

Note 12: Contributed equity

Note 13: Segmental reporting

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 and exploration and development expenditure. While most 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. Segment liabilities consist principally of payables, employee benefits, accrued expenses, provisions and borrowings.

(i) Unallocated assets

Intersegment transfers

Segment revenues, expenses and results do not include any transfers between segments. Other unallocated assets relate to assets of Star Phoenix and Star Phoenix Group UK Ltd.

Note 14: Events after the reporting date

Result of general meeting

On 31 January 2023, the company announced that the Company appointed its new intended auditor as the resolution of appointment of auditor was passed in General Meeting held on 31 January 2023. The company published its audited results for the year ended 30 June 2022 on 21 February 2023

As a result of the publication of the Company's Annual Results, the trading in the Company's shares was restored from 7.30am on 22 February 2023.

Resignation of non-executive director

On 2 March 2023, the Company announces that Mr. Zhiwei Gu has resigned as a non-executive director of the Company with immediate effect.

Director's 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:

a)   comply with Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

b)   give a true and fair view of the consolidated entity's financial position as at 31 December 2022 and of its performance for the half-year ended on that date.

In the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:

Lubing Liu

Chairman

31 March 2023

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