AND CONTROLLED ENTITIES

ABN 99 124 734 961

INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED

31 DECEMBER 2014

Red Emperor Resources NL
Interim financial statements - 31 December 2014

Contents

Corporate Information........................................................................................................................................................ 1
Directors' Report ................................................................................................................................................................ 2
Auditors Independence Declaration ................................................................................................................................... 4
Consolidated Statement of Profit or Loss and Other Comprehensive Income ................................................................... 5
Consolidated Statement of Financial Position .................................................................................................................... 6
Consolidated Statement of Changes in Equity ................................................................................................................... 7
Consolidated Statement of Cash Flows .............................................................................................................................. 8
Notes to the Consolidated Financial Statements ............................................................................................................... 9
Directors' Declaration ....................................................................................................................................................... 15
Auditor's Review Report ................................................................................................................................................... 16
These interim financial statements do not include all the notes of the type normally included in the annual financia l statements. Accordingly, these financial statements are to be read in conjunction with the annual financial statements for the year ended 30 June 2014 and any public announcements made by Red Emperor Resources NL during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Red Emperor Resources NL
Interim financial statements - 31 December 2014

Corporate Information

This financial report includes the consolidated financial statements and notes of Red Emperor Resources NL and
Controlled entities (" the Group"). The Group's functional presentation currency is AUD ($).
A description of the Group's operations and of its principal activities is included in the review of operations and
activities in the Directors' report on pages 2 and 3. The Directors' report is not part of the financial report.

Directors

Mr Greg Bandy
Mr Jason Bontempo
Mr Nathan Rayner

Company Secretary

Mr Aaron Bertolatti

Registered Office

Level 1, 35 Richardson Street
West Perth WA 6005

Principal Place of Business Level 1, 35 Richardson Street West Perth WA 6005

Website

www.redemperorresources.com

Share Registry

Computershare Investor Services Pty Ltd

Auditors

BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008

Stock Exchange

Australian Securities Exchange Limited (ASX)
AIM Market of the London Stock Exchange (AIM) ASX Code: RMP
AIM Code: RMP

Page 1

Red Emperor Resources NL
Interim financial statements - 31 December 2014

Directors' Report

Your directors present their report on the consolidated entity of Red Emperor Resources NL ("Red Emperor" or "the
Company") and the entities it controlled at the end of, or during, the half year ended 31 December 2014.

Directors

The persons who were directors of Red Emperor during the half year and up to the date of this report are: Mr Greg Bandy (Managing Director)
Mr Jason Bontempo (Non-Executive Director)
Mr Nathan Rayner (Non-Executive Director) - appointed 23 October 2014
Mr Stephen Brockhurst (Non-Executive Director) - resigned 23 October 2014

Review of Operations for the Half Year ended 31 December 2014

The Consolidated Statement of Profit or loss and Other Comprehensive Income shows a consolidated net loss for the half year ended 31 December 2014 to members of $15,344,470 (2013: net loss of $307,914).

Georgian Project

During the period, Strait Oil and Gas ("Strait") stepped up on-ground activities in preparation for the scheduled drilling program, which was to see the JV commence the drilling of a well on Block VIb by the end of March 2015. The drilling of this well is to be funded by Range Resources Limited ("Range") as part of the Subscription Agreement signed between the two companies in 2011. Strait Oil & Gas advised that the drilling program had been agreed with the Georgian Oil & Gas Ministry who also confirmed that a valid drilling license is in place. All technical aspects of the well, along with the cost budget, have been approved with a drill rig and all required services on standby. Range advised Red Emperor that it is negotiating a financing deal with a third party that is designed to reduce its financial exposure to the well.

Puntland Project

During the reporting period, the Somalian Federal Government hardened its position with regards to the requirement of contracts to flow through the Federal Ministry of Energy, as evidenced by the statement of the Federal Minister at the Somalia Oil & Gas Conference in late October 2014. As a result, and subsequent to the period end, the JV significantly reduced its presence in Bosaso, Puntland and will refrain from any operational activity and associated expenditures pending a resolution of the political situation and the legitimacy of oil concession contracts. As a result the Directors are of the view that exploration and evaluation expenditure should be written down to nil.
Given the considerable efforts taken by the JV to date in Puntland (Somalia), the JV has requested a two year extension to the current exploration period from the Government of Puntland to allow time for these political challenges to be resolved.
Red Emperor continued to review new opportunities throughout the period in accordance with its outlined strategic philosophy.

Corporate

On 23 October 2014 the Company announced the appointment of Nathan Rayner to the Board of Directors following the resignation of Stephen Brockhurst.

Events subsequent to Reporting Date

On 16 February 2015 the Company announced that it had recently sold its direct equity investment in Highfield
Resources Limited (ASX: HFR) in accordance with its treasury management strategy. The shares were sold at price of
$0.80 per share, which netted the Company $798,279 after brokerage, a 66% return on its $480,000 investment.

SC55

On 2 March 2015 Red Emperor announced that it had signed a Farmin Agreement with Otto Energy Philippines Inc. (a wholly owned subsidiary of Otto Energy Ltd) to farm in to the highly prospective offshore Philippines Block, Service Contract 55 ("SC55").

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Red Emperor Resources NL
Interim financial statements - 31 December 2014

Directors' Report (continued)

SC55 is located in the southwest Palawan Basin, covers an area of 9,880km2 and was awarded to Otto Energy Investments Ltd (formerly NorAsian Energy Ltd) in 2005. It is a deep-water block in the middle of a proven regional oil and gas fairway that extends from the productive offshore Borneo region in the southwest to the offshore Philippine production assets northwest of Palawan.
SC55 contains a number of distinct exploration play types including the Hawkeye turbidite clastic prospect and the material Cinco carbonate gas/condensate prospect, as well as a number of follow-up leads. The permit provides a material opportunity and a series of possible drill targets in an exploration campaign that will be undertaken during the remaining term of the service contract.
The Company has the right to earn a 15% working interest in SC55 in consideration for paying, in cash, 15% of the Well Costs for the drilling and testing of the Hawkeye - 1 exploration well. Red Emperor's well cost exposure is capped at US$5.625m, beyond which Red Emperor has the option to reduce equity from the 15% working interest level.
To ensure that Red Emperor maintains a strong cash position throughout its 2015 work program, the Company agreed to place 66,558,555 shares at A$0.032 per share (£0.016) to raise approximately A$2.13m (£1.06m) from sophisticated investors both in Australia and the UK. 708 Capital Limited, a Sydney based full service investment advisory firm, was lead manager to the issue and were appointed as Red Emperor's Australian broker. Brandon Hill Capital (formerly Fox Davies Limited) remains the Company's UK broker. The funds raised from the placement will be u sed for purposes associated with the Company's share of upcoming drilling costs in the Philippines.

Auditor's Independence Declaration

Section 307C of the Corporations Act 2001 requires our auditors, to provide the Directors of the company with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is set out on page 4 and forms part of this Directors' report for the half-year ended 31 December 2014.
This report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306(3) of the
Corporations Act 2001.

Greg Bandy
Managing Director
Perth, Western Australia,
13 March 2015

Page 3

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 JARRAD PRUE TO THE DIRECTORS OF RED EMPEROR RESOURCES NL

As lead auditor for the review of Red Emperor Resources NL for the half-year ended 31 December 2014, 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 review; and
2. No contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Red Emperor Resources NL and the entities it controlled during the period.

Jarrad Prue

Director

BDO Audit (WA) Pty Ltd

Perth, 13 March 2015

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 member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees

Red Emperor Resources NL
Interim financial statements - 31 December 2014

Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the half-year ended 31 December 2014

Note 31 December 31 December

Continuing Operations

2014

$

2013

$

Interest income 182,854 215,743
Unrealised gain on investment 5 150,000 - Gain on derivative liability 783 19,573

Administration expenses (162,636) (165,931) Compliance and regulatory expenses (103,681) (167,908) Director fees (139,749) (130,800) Exploration expenditure written off 6 (15,203,814) - Occupancy expense (10,233) (15,559) Corporate advisory (60,000) (60,000) Unrealised FX gain/(loss) 2,006 (3,032)

Loss from continuing operations before income tax (15,344,470) (307,914)

Income tax expense - -

Loss from continuing operations after income tax (15,344,470) (307,914) Net Loss for the period (15,344,470) (307,914)

Other comprehensive income

Items that may be reclassified to profit or loss

Exchange difference on translation of foreign operations (243) 903,756

Other comprehensive income for the period net of tax (243) 903,756

Total comprehensive income for the period (15,344,713) 595,842

Basic loss per share (cents) (5.76) (0.001)

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

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Red Emperor Resources NL

Interim financial statements - 31 December 2014

Consolidated Statement of Financial Position

as at 31 December 2014

ASSETS

Current Assets

Note

31 December

2014

$

30 June

2014

$

Cash and cash equivalents 9,525,726 10,321,349

Trade and other receivables 4 36,297 54,991

Total Current Assets 9,562,023 10,376,340

Non-Current Assets

Financial assets at fair value through profit and loss 5 630,400 298,101
Exploration and evaluation expenditure 6 - 15,000,000

Investment accounted for using the equity method 7 6,987,315 6,928,175

Total Non-current Assets 7,617,715 22,226,276

TOTAL ASSETS 17,179,738 32,602,616

LIABILITIES Current Liabilities

Trade and other payables 63,340 140,722

Derivative financial liability - 783

Total Current Liabilities 63,340 141,505

TOTAL LIABILITIES 63,340 141,505

NET ASSETS 17,116,398 32,461,111

EQUITY

Issued capital 8 49,646,733 49,646,733

Accumulated losses (36,333,073) (20,988,603) Reserves 9 3,802,738 3,802,981

TOTAL EQUITY 17,116,398 32,461,111

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

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Red Emperor Resources NL

Interim financial statements - 31 December 2014

Consolidated Statement of Changes in Equity

for the half-year ended 31 December 2014

Issued

Accumulated

Foreign exchange translation

Share based payments

capital losses reserve reserve Total

$ $ $ $

Balance at 1 July 2013 49,646,733 (10,756,800) 2,386,817 3,831,386 45,108,136

Loss for the period - (307,914) - - (307,914) Comprehensive income for the period - - 903,756 - 903,756

Total comprehensive income for the period - (307,914) 903,756 - 595,842

Transactions with their owners in their capacity as owners:

Balance at 31 December 2013 49,646,733 (11,064,714) 3,290,573 3,831,386 45,703,978

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

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Red Emperor Resources NL
Interim financial statements - 31 December 2014

Consolidated Statement of Cash Flows

for the half-year ended 31 December 2014

Note

31 December

2014

$

31 December

2013

$

Cash Flows from Operating Activities

Payments to suppliers and employees (521,111) (543,921) Finance and interest costs (961) (385) Interest received 182,854 215,743

Net cash used in operating activities (339,218) (328,563)

Cash Flows from Investing Activities

Payments for exploration and evaluation (214,966) (558,549) Payments for purchase of equities (182,299) - Payments for investment in associate (59,140) - Net cash used in investing activities (456,405) (558,549)

Net decrease in cash held (795,623) (887,112)

Cash and cash equivalents at the beginning of the half-year 10,321,349 11,984,410

Cash and cash equivalents at end of half-year 9,525,726 11,097,298

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

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Red Emperor Resources NL
Interim financial statements - 31 December 2014

Notes to the Consolidated Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

This general purpose financial report for the interim half year reporting period ended 31 December 2014 has been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standards including AASB 134: Interim Financial Reporting.
This interim financial report is intended to provide users with an update on the latest annual financial statements of Red Emperor Resources NL. As such, it does not contain information that represents relatively insignificant changes occurring during the half-year. It is therefore recommended that this financial report be read in conjunction with the annual financial report of the Group for the year ended 30 June 2014, together with any public announcements made during the half-year.
In the half year ended 31 December 2014, the Group has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2014. It has been determined by the Group that, there is no impact, material or otherwise, of the new and revised standards and interpretations on its business and therefore no change is necessary to accounting policies.
No retrospective change in accounting policy or material reclassification has occurred requiring the inclusion of a third
Statement of Financial Position as at the beginning of the comparative financial period, as required under AASB 101.
The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the half-year ended 31 December 2014. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.

Reporting Basis and Conventions

The half-year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Dividends

No dividends were paid or declared during the period (2013: Nil).

2. SEGMENT INFORMATION

The Group operates in one industry, oil and gas exploration however due to the differing geographical areas and functional currencies the financial information has been broken down into Exploration and Treasury. During the half year the consolidated entity operated in two business segments, exploration & evaluation and treasury (other).

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter-segment transactions

Inter-segment loans payable and receivable are initially recognised at the consideration received net of transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of thei r nature and physical location. Unless indicated otherwise in the segment assets note, investments in financial assets have not been allocated to operating segments.

Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

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