Investor Presentaiton

68 Armour Energy and controlled entities armourenergy.com.au Financial report continued Notes to the consolidated financial statements continued NOTE 7. REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue Revenue from contracts with customers DISAGGREGATION OF REVENUE Consolidated 30 June 2020 $ 30 June 2019 $ Revenue recognition with respect to the Group's specific business activities are as follows: Sale of goods The Group satisfies its performance obligation at the point in time when control of oil and gas products has transferred to the customer. Specifically: for oil and LPG sales this is when the products are collected by truck at the production site; and for gas sales this is at the point of the custody transfer meter at Run 2 of the Roma to Brisbane Pipeline (RBP). Revenue on sale of goods is variable depending on physical production amounts and is due by the customer within 30 days from the end of the invoiced month. 21,103,928 27,819,335 The Group generated revenue from the sale of petroleum products, which are derived from the same production process, have materially similar performance obligations and are for goods that have been transferred at a point in time. Therefore, no ✓ disaggregation of revenue by product line or recognition method has been presented. personal use only Revenue from contracts with customers: Oil and Condensate Consolidated 30 June 30 June 2020 $ 2019 $ 15,386,230 19,807,216 2,068,339 2,643,491 3,649,359 5,368,628 21,103,928 27,819,335 ACCOUNTING POLICY FOR REVENUE The Group recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the Group 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. Interest Interest revenue is recognised as interest accrues using the effective interest rate method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. 69 69

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