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Investor Presentaiton

Armour Energy and controlled entities armourenergy.com.au Financial report continued Notes to the consolidated financial statements continued NOTE 26. FINANCIAL RISK MANAGEMENT CONTINUED PRICE RISK CONTINUED Commodity price risk The Group is exposed to the risk of fluctuations in prevailing market commodity prices on the gas and associated liquid products it produces. The Group is not of a size to have influence on gas or other petroleum product prices and is therefore a price-taker in general terms. The Group manages this risk by continuously monitoring actual and forecast commodity prices and analysing the impact these changes will have on profitability and cashflow. Interest rate risk CLinter Interest rate risk arises principally from cash and cash equivalents. The Company's corporate bond has a fixed coupon rate, and thus no variable interest rate exposures. The objective of interest rate risk management is to manage and control interest rate risk exposures within acceptable parameters while optimising the return. Sthu For further details on interest rate risk refer to the tables below. As at the reporting date, the Group had no variable rate borrowings outstanding. CREDIT RISK Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references, and setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not hold any collateral. Sais Credit risk is reviewed regularly by the Board. It arises from exposure to receivables as well as through deposits with financial institutions. Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet financial obligations as they fall due. The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient liquidity to meets its liabilities when they fall due, under both normal and stressed conditions. Liquidity risk is reviewed regularly by the Board. For further details on liquidity risk refer to the tables below. FINANCING ARRANGEMENTS The Group had no access to undrawn borrowing facilities at the end of the reporting period (2019: nil). REMAINING CONTRACTUAL MATURITIES The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Consolidated - 30 June 2020 Non-derivatives Non-interest bearing Trade payables Deferred consideration Weighted 1 year or less Between 1 and 2 average interest years Between 2 and 5 years Over 5 years rate % Remaining contractual maturities S 6,605,726 1,000,000 S S 6,605,726 1,000,000 Interest-bearing - fixed rate Tribeca facility 9.00% Corporate bonds Capital lease 8.75% 16.30% 6.30% 608,328 10,363,203 33,487 156,397 18,767,141 6,802,534 25,208,906 7,410,862 27,970,078 63,542,187 33,487 33,247 32,044,687 27,970,078 189,644 78,781,907 The Group's cash at bank is spread across multiple Australian financial institutions to mitigate credit risk, such as Macquarie Bank (local currency short term rating A-2), ANZ (local currency short term rating A-1+) and Westpac (local currency short term rating A-1+). Financial assurances are held with both Westpac and Macquarie Bank. Lease liability Total non-derivatives Consolidated - 30 June % 2019 S S $ $ $ 94 Refer to note 14 for credit risk exposure of trade and other receivables. LIQUIDITY RISK Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Non-derivatives Non-interest bearing Trade payables Deferred consideration 4,025,736 1,000,000 4,025,736 1,000,000 Interest-bearing - fixed rate Tribeca facility Corporate bonds Capital lease 9.00% 8.75% 8.25% Total non-derivatives 608,328 4,812,500 38,381 10,484,945 7,412,528 21,607,265 28,786 29,048,579 8,020,856 47,637,735 74,057,500 67,167 47,637,735 87,171,259 95
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