ASF GROUP LIMITED — Annual Report 2011

Aug 30, 2011

APPENDIX 4E

PRELIMINARY FINAL REPORT

FINANCIAL YEAR ENDED 30 JUNE 2011

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ASF Group Limited A.B.N. 50 008 924 570

Appendix 4E Preliminary Final Report

APPENDIX 4E

Preliminary Final Report

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ASF Group Limited
A.B.N 50 008 924 570	Financial Year ended 30 June 2011

RESULTS FOR ANNOUNCEMENT TO THE MARKET

RESULTS FOR ANNOUNCEMENT TO THE MARKET	RESULTS FOR ANNOUNCEMENT TO THE MARKET	RESULTS FOR ANNOUNCEMENT TO THE MARKET	RESULTS FOR ANNOUNCEMENT TO THE MARKET	RESULTS FOR ANNOUNCEMENT TO THE MARKET
$A
Revenues from ordinary activities Loss from ordinary activities after tax attributable to members Net loss for the year attributable to members	Up Down Down	1,126.68% 40.36% 40.36%	To To To	4,189,684 (1,643,961) (1,643,961)
Dividends (distributions)	Amount per security		Franked amount per security
Final dividend	No final dividend proposed
Previous corresponding period	Nil		Nil

Controlled entity acquired during the period

Controlled entity acquired during the period
Name of entity	ASF Balmoral Pty Ltd
Date control gained	22 September 2010
Percentage of interest	75%

Associates and Joint Venture entities

Name	Ownership interest	Ownership interest	Aggregate share of profits/(losses), where material	Aggregate share of profits/(losses), where material	Contribution to net profits/(losses), where material	Contribution to net profits/(losses), where material
	2011 %	2010 %	2011 $	2010 $	2011 $	2010 $
Macau Multinational Youth Travel Agency Limited	40	40	-	80,714	-	80,714
China Coal Resources Pty Ltd	45	-	-	(30,297)	-	(30,297)

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Appendix 4E Preliminary Final Report

Commentary on the results :

ASF Group Limited (the “Company”) operates as an investment holding company. It facilitates cross border investment activity between Australia and China, co-investing with strategic Chinese ‘partners’.

Revenue from these continuing activities of the Company and its controlled entities (together the “Group”) for the financial year ended 30 June 2011 increased by 1,126.68% to $4,189,684 (2010: $341,548).

The significant increase in revenue was assisted in particular by contributions from the following items:

• A shipment of coal to China;

• Gain of $1.1 million recognized on the incorporation of an associate - China Coal Resources Pty Ltd; and

• Retention of a $1.5 million non-refundable deposit paid by Yongbin International Holdings Limited (“Yongbin”) arising as a result of the termination of a subscription agreement due to non-payment of the balance of subscription monies for new shares in ASF Resources Limited (“ASF Resources”).

On a consolidated Group basis, the net loss attributable to members of the Group after income tax for the financial year was $1,643,961 (2010: loss of $2,756,515) representing a decrease of 40.36% compared with the previous year.

While on a consolidated group basis the Group reported a loss, significant gain was reported on a parent entity basis in a transaction during the year which is referred to below. Under Australian Accounting Standards, this realised gain do not contribute to consolidated profits and is reported as part of Group reserves in the consolidated statements. However, ASF Group Limited, on a parent entity basis, recorded an Operating Profit of $3,053,187 for the year.

Subsequent to the termination of the subscription agreement with Yongbin referred to above, a share sales agreement was entered into with Yongbin and a gain on disposal of approximately $1.7 million was realised on a parent entity basis, in relation to the sale by the Company of an 11% interest in ASF Resources to Yongbin.

Prior to the year end, the Company also entered into a share sales agreement with Mr Jianzhong Yang for the sale of a 40% interest in ASF Properties Pty Ltd for $1 million as consideration. Under the terms of the agreement the Company was granted a call option giving it the right at its election to buy back the shares within a period commencing 24 months after the date of completion of the agreement and ending 36 months thereafter. Under Australian Accounting Standards, the call option is accounted for as a non-current liability of the Company and the gain arising from the sale of the shares will not be recognised and reported as a profit in the Company’s financial statements until such time as the call option expires.

Further in June 2011, the Company entered into an Investment and Cooperation Agreement with Kaili Holdings Limited (“Kaili”) pursuant to which Kaili will acquire an effective 80% interest in two tenements (E04/1433 and E04/1436) in Ellendale, Western Australia for $6 million. A deposit of $1 million was received from Kaili on signing of the agreement and the balance of $5 million was received subsequent to the year-end. At 30 June 2011, the deposit is recorded within trade and other payables.

ASF Balmoral Pty Ltd was acquired as a subsidiary in September 2010 and operates as an ASIC licensed, fund management and advisory business. ASF Balmoral has entered into distribution agreements with Marco Polo Pure Asset Management Limited (a Hong Kong based fund manager focusing primarily in China ‘A’ shares through the QFII program) and Evolved Alpha LLC (a US based multistrategy fund manager) to represent them in the Australian institutional investor market. Ongoing marketing of the funds management products is being undertaken and it is anticipated that ASF Balmoral will make a positive contribution to the Group’s results in the near future.

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Appendix 4E Preliminary Final Report

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2011

Note	30 June 2011 $ 30 June 2010 $
Revenue from continuing operations 2 Other income Cost of sales Marketing expenses Consultants expenses Occupancy expenses Professional fees Administration expenses Employment expenses Corporate expenses Depreciation expense 3 Legal expenses Finance costs 3 Share-based payments 3 Provision for impairment of debtors Impairment of investment in associated entity Loss on loss of significant influence over associate 3 Other expenses (Loss)/profit on liquidation of subsidiaries 5 Share of net (loss)/profit of associate Loss before income tax Income tax expense Loss for the year Loss attributable to: Members of the parent entity Non-controlling interest Other Comprehensive Income/(Expense) Recognition of foreign currency translation reserves of associate in profit or loss Exchange differences on translation of foreign operations Share of other comprehensive loss of associate Total Comprehensive Loss for the year Total Comprehensive Loss for the year is attributable to: Members of the parent entity Non-controlling interest Earnings per share for loss attribute to the ordinary equity holders of the Company: Basic (cents per share) 16 Diluted (cents per share) 16	4,189,684 341,548 3,778 - (1,996,811) (81,480) (188,607) (437,744) (946,721) (879,896) (408,532) (522,162) (235,749) (197,217) (331,047) (259,351) (676,567) (288,389) (79,571) (128,785) (28,845) (24,058) (55,913) (19,814) (9,798) (61,729) (48,500) (95,000) - (550) - (193,021) (405,534) - (492,530) (33,238) (5,812) 43,657 (30,297) 80,714
	(1,747,372) (2,756,515) - -
	(1,747,372) (2,756,515)
	(1,643,961) (2,756,515) (103,411) -
	(1,747,372) (2,756,515)
	405,534 - 60,006 16,203 - (59,177)
	(1,281,832) (2,799,489)
	(1,178,421) (2,799,489) (103,411) -
	(1,281,832) (2,799,489)
	(0.53) (1.02) (0.53) (1.02)

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

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Appendix 4E Preliminary Final Report

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2011

Note	30 June 2011 $ 30 June 2010 $
ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Total current assets Non-current assets Other receivables Plant and equipment 7 Investments accounted for using the equity method 8 Available-for-sale financial asset 9 Mining tenements and exploration 10 Intangible assets 4 Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Deferred revenue Provisions Total current liabilities Non-current liabilities Borrowings Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves 11 Accumulated losses 11 Capital and reserves attributable to the owners of ASF Group Limited Non-controlling interest 12 Total equity	5,888,769 4,324,705 447,193 72,846 - 1,009,978 67,914 1,250
	6,403,876 5,408,779
	228,668 247,473 115,703 62,187 1,278,794 634,168 634,168 - 2,848,516 2,411,461 141,792 -
	5,247,641 3,355,289
	11,651,517 8,764,068
	1,883,046 655,569 64,989 - 35,660 13,365
	1,983,695 668,934
	1,000,000 -
	1,000,000 -
	2,983,695 668,934
	8,667,822 8,095,134
	54,258,787 54,258,787 4,152,370 1,631,889 (49,439,503) (47,795,542)
	8,971,654 8,095,134 (303,832) -
	8,667,822 8,095,134

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

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Appendix 4E Preliminary Final Report

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2011

Note Contributed equity Reserves Accumulated losses Total Non- controlling interest Total equity $ $ $ $ $ $	Note Contributed equity Reserves Accumulated losses Total Non- controlling interest Total equity $ $ $ $ $ $
Balance at 1 July 2009 (Loss) for the year Other comprehensive income Total comprehensive loss for the year Transaction with owners in their capacity as owners: Contributions of equity, net of transaction costs Share based payments Balance at 30 June 2010 Balance at 1 July 2010 (Loss) for the year Other comprehensive income Total comprehensive loss for the year Transaction with owners in their capacity as owners: Share-based payments 11 Transactions with non-controlling interests Non-controlling interest on acquisition of subsidiary Balance at 30 June 2011	46,163,827 1,579,863 (45,039,027) 2,704,663 2,704,663
	- - (2,756,515) (2,756,515) - (2,756,515) - (42,974) - (42,974) - (42,974)
	- (42,974) (2,756,515) (2,799,489) - (2,799,489)
	8,094,960 - - 8,094,960 - 8,094,960 - 95,000 - 95,000 - 95,000
	8,094,960 95,000 - 8,189,960 - 8,189,960
	54,258,787 1,631,889 (47,795,542) 8,095,134 - 8,095,134
	54,258,787 1,631,889 (47,795,542) 8,095,134 - 8,095,134
	- - (1,643,961) (1,643,961) (103,411) (1,747,372) - 465,540 - 465,540 - 465,540
	- 465,540 (1,643,961) (1,178,421) (103,411) (1,281,832)
	- 48,500 - 48,500 - 48,500 - 2,006,441 - 2,006,441 - 2,006,441 - - - - (200,421) (200,421)
	- 2,054,941 - 2,054,941 (200,421) 1,854,520
	54,258,787 4,152,370 (49,439,503) 8,971,654 (303,832) 8,667,822

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

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Appendix 4E Preliminary Final Report

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2011

Note	30 June 2011 $ 30 June 2010 $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of goods and services tax) Other income received Payments to suppliers and employees (inclusive of goods and services tax) Interest received Interest paid Income tax paid Net cash (outflow) from operating activities 13 CASH FLOWS FROM INVESTING ACTIVITIES Payments for exploration expenditure Purchase of plant and equipment Investment in associates Payments for acquisition of subsidiary, net of cash acquired Payments on liquidation of subsidiaries Net cash inflow (outflow) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issue Proceeds received in advance for issue of shares of a subsidiary Transactions with non-controlling interests Borrowings Proceeds from forfeiture of non-refundable deposit Net cash (outflow) inflow from financing activities Other non-cash items Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the year	1,266,789 387,265 - 73 (4,083,739) (3,592,671) 66,957 80,703 - (52,284) (4,933) -
	(2,754,926) (3,176,914)
	(641,776) (1,624,429) (78,583) (11,807) (82) - (159,850) - (5,812) -
	(886,103) (1,636,236)
	- 8,094,959 1,000,000 - 1,800,000 - 1,000,000 1,500,000 -
	5,300,000 8,094,959
	- -
	1,658,971 3,281,809 4,324,705 1,026,693 (94,907) 16,203
	5,888,769 4,324,705

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

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Appendix 4E Preliminary Final Report

NOTES TO THE FINANCIAL STATEMENTS

1 STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of ASF Group Limited and its subsidiaries.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRS

The consolidated financial statements of the ASF Group Limited group and the separate financial statements of ASF Group Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.

Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

2 REVENUE

REVENUE
	2011 $ 2010 $
(a) Revenue from continuing operations - Resources trading - Commission revenue - Marketing service - Corporate advisory service (b) Other revenue - Forfeiture of deposit (i) - Gain on incorporation of an associate (ii) - Interest received - Other revenue	1,007,835 - 481,749 116,400 - 143,772 28,250 -
	1,517,834 260,172
	1,500,000 - 1,103,934 - 66,957 80,703 959 673
	2,671,850 81,376
	4,189,684 341,548

(i) This represents a non-refundable deposit paid by Yongbin International Holdings Limited (“Yongbin”) on its proposed subscription of 20% interest in ASF Resources Limited. Yongbin did not pay the balance of the subscription money by 21 April 2011 and the deposit was forfeited in accordance with the agreement.

(ii) This represents gain on incorporation of an associate, China Coal Resources Pty Ltd, which holds two tenements in Tasmania – EL15/2007 and EL55/2007. ASF Group holds a 45% equity interest in China Coal Resources Pty Ltd.

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Appendix 4E Preliminary Final Report

3 EXPENSES

	2011 $ 2010 $
Loss before income tax includes the following specific expenses: Commission expenses Finance costs Rental expenses on operating leases - minimum lease payments Impairment losses - Investment in associate Bad debts Depreciation expense Share-based payments expensed Loss on loss of significant influence over associate Net foreign exchange losses included in other expenses for the year	321,612 81,480 9,798 61,729 178,451 175,660 - 193,021 - 550 28,845 24,058 48,500 95,000 405,534 - 154,913 -

4 BUSINESS COMBINATION

(a) Summary of acquisition

On 22 September 2010, the Company acquired 75% of the issued shares in ASF Balmoral Pty Ltd (formerly known as Balmoral Capital Pty Limited) which is an established Australian investment banking firm operating under an Australian Financial Securities licence. The acquisition will enable the Group to further diversify its business activities and to broaden its income streams.

Purchase consideration Cash paid The assets and liabilities recognised as a result of the acquisition are as follows:	$ 159,851
	Fair value $
Cash and cash equivalents Trade and other receivables Prepayments Trade and other payables Current tax liabilities Net identifiable assets acquired Less: non-controlling interest Add: goodwill	1 45,709 825 (17,523) (4,933)
	24,079 (6,020) 141,792
	159,851

The goodwill is attributable to ASF Balmoral’s strong position and presence in the financial services industry. It will not be deductible for tax purposes.

(i) Acquisition-related costs Acquisition-related cost of $900 representing stamp duty paid for the transfer of shares is included in legal expenses in profit or loss.

(ii) Acquired receivables The fair value of trade and other receivables is $45,709 and includes trade receivables with a fair value of $25,000. The gross contractual amount of trade receivables due is $60,500 of which $35,500 is expected to be uncollectible.

(iii) Non-controlling interest

The Group has chosen to recognise the non-controlling interest at its proportionate share of the acquiree's net identifiable assets.

(iv) Revenue and profit contribution

The acquired business contributed net loss of $258,820 to the Group for the period from 22 September 2010 to 30 June 2011. If the acquisition had occurred on 1 July 2010, consolidated revenue and consolidated loss for the year ended 30 June 2011 would have been $4,279,312 and $1,690,931 respectively.

(b) Purchase consideration – cash outflow

The purchase consideration is entirely paid in cash.

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Appendix 4E Preliminary Final Report

5 DISPOSAL OF SUBSIDIARIES

ASF Properties (Guangzhou) Co Ltd, which was an indirect wholly-owned subsidiary of the Company, was liquidated on 17 November 2009.

ASF (Beijing) Investment Consulting Co Ltd, which was a wholly-owned subsidiary of the Company, was liquidated on 19 April 2011.

The profit/loss contributed by the subsidiaries were as follow:

	2011 $ 2010 $
(Loss)/profit on liquidation of subsidiaries	(5,812) 43,657
	(5,812) 43,657

6 SEGMENT INFORMATION

(a) Description of segments

Management has determined the operating segments based on the reports received by the Board that are used to make strategic decisions. The Board considers the business from both a business and geographic perspective.

(b) Segment information – operating segments

The segment information provided to the Board for the year ended 30 June 2011 is as follows:

30 June 2011	Property marketing and services Mineral and resources Resources trading Travel services Corporate services Fund management and advisory services Eliminations Total
Segment revenue Sales Other income Other revenue Total segment revenue Loss on liquidation of subsidiaries Share of loss from associate Segment result Segment assets Segment liabilities 30 June 2010	$ $ $ $ $ $ $ $ 481,749 - 1,007,835 - 1,618,250 296,066 (1,886,066) 1,517,834 - - 3,778 - - 3,778 55 3,542 2,476 - 4,361,148 1,737 (1,697,108) 2,671,850
	481,804 3,542 1,010,311 - 5,983,176 297,803 (3,583,174) 4,193,462
	- - - - - (5,812) - (5,812) - (30,297) - - - - - (30,297)
	10,549 (762,203) (2,064,899) - 3,530,682 (473,175) (1,988,326) (1,747,372)
	458,643 3,623,067 740,114 - 14,217,117 214,755 (7,602,179) 11,651,517
	1,245,514 5,649,001 3,719,642 - 11,941,851 925,499 (20,497,812) 2,983,695
Segment revenue Sales Other revenue Total segment revenue Profit on liquidation of subsidiaries Share of profit from associate Segment result Segment assets Segment liabilities	248,808 - - - 1,411,364 - (1,400,000) 260,172 - 787 - - 76,342 4,247 - 81,376
	248,808 787 - - 1,487,706 4,247 (1,400,000) 341,548
	43,657 - - - - - - 43,657 - - - 80,714 - - - 80,714
	(169,310) (1,209,183) (914,630) - (8,562,474) (61,835) 8,160,917 (2,756,515)
	141,503 2,804,538 1,592,610 - 7,303,060 404,977 (3,482,620) 8,764,068
	1,938,913 5,276,324 2,507,239 - 8,735,662 744,528 (18,533,732) 668,934

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Appendix 4E Preliminary Final Report

(c) Segment information – geographical segments

	Segment revenues from sales to external customers Segment assets 2011 $ 2010 $ 2011 $ 2010 $
Australia China Eliminations TOTAL	4,193,007 341,548 19,167,573 11,841,811 455 - 86,123 404,877 - - (7,602,179) (3,482,620)
	4,193,462 341,548 11,651,517 8,764,068

(d) Other segment information

Revenue for property marketing and services represents commission income received from the sale of properties owned by customers in Australia.

Revenue for corporate services mainly represents corporate fees charged to other subsidiaries. The corporate fees were based on the estimation of time spent and works undertaken by the management of the Group.

The revenue from external parties reported to the Board is measured in a manner consistent with that in the income statement. Revenues from external customers are derived from the sale of coalfine, from the provision of corporate advisory services and from the marketing of properties.

7 NON-CURRENT ASSETS – PLANT AND EQUIPMENT

	Plant & Equipment	Leasehold Improvements Motor Vehicles TOTAL
	$	$ $ $
At 1 July 2009
Cost Accumulated depreciation Net book amount Year ended 30 June 2010 Opening net book amount Additions Disposals Depreciation charge Closing net book amount	212,166 (175,082)	124,231 29,991 366,388 (93,892) (12,292) (281,266)
	37,084	30,339 17,699 85,122
	37,084 11,807 (10,684) (9,141)	30,339 17,699 85,122 - - 11,807 - - (10,684) (11,377) (3,540) (24,058)
	29,066	18,962 14,159 62,187
At 30 June 2010
Cost Accumulated depreciation Net book amount Year ended 30 June 2011 Opening net book amount Additions Disposals Depreciation charge Exchange difference Closing net book amount	60,554 (31,488)	124,231 29,991 214,776 (105,269) (15,832) (152,589)
	29,066	18,962 14,159 62,187
	29,066 28,853 - (16,158) 120	18,962 14,159 62,187 10,401 54,545 93,799 - (11,677) (11,677) (8,860) (3,827) (28,845) 119 - 239
	41,881	20,622 53,200 115,703
At 30 June 2011
Cost Accumulated depreciation Net book amount	89,407 (47,526)	134,632 54,545 278,584 (114,010) (1,345) (162,881)
	41,881	20,622 53,200 115,703

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Appendix 4E Preliminary Final Report

8 NON NON-CURRENT ASSETS – INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Macau Multinational Travel Agency Limited (“MYTA”) in which the Company has a 40% interest was equity accounted from 1 July 2008. With effect from 1 July 2010, MYTA was reclassified as available-for-sale financial asset (note 9).

In May 2011, China Coal Geology Engineering Corporation subscribed for 55% equity interest in China Coal Resources Pty Ltd (“CCR”) for $1,600,000. CCR holds two mineral exploration licences in Tasmania, EL15/2007 and EL55/2007, and is currently 45% owned by the Company.

	2011 $ 2010 $
Shares in associate	1,278,794 634,168

(a) Summarised financial information of associates

The Group’s share of the results of its principal associate and its aggregated assets and liabilities are as follows:

2011 China Coal Resources Pty Ltd 2010 Macau Multinational Youth Travel Agency Ltd*	Group’s share of
	Ownership Interest % Assets $ Liabilities $ Revenues $ Profit/ (loss) $
	45 783,271 1,247 - (30,297)
	40 4,315,094 3,335,092 6,739,954 80,714

* Private company incorporated in Macau. It was reclassified as an available-for-sale financial asset from 1 July 2010.

9 NON-CURRENT ASSETS – AVAILABLE-FOR-SALE FINANCIAL ASSET

On the basis that the Company has lost significant influence over Macau Multinational Travel Agency Limited, the directors consider it appropriate to classify MYTA as an available-for-sale financial asset with effect from 1 July 2010.

	2011
	$
Available-for-sale financial asset	634,168

10 NON-CURRENT ASSETS – MINING TENEMENTS AND EXPLORATION

10 NON-CURRENT ASSETS – MINING TENEMENTS	AND EXPLORATION
	2011 $ 2010 $
Exploration and development costs Accumulated amortisation and impairment	2,848,516 2,411,461 - -
	2,848,516 2,411,461

11 RESERVES AND ACCUMULATED LOSSES

(a) Reserves

	2011 $ 2010 $
Share based payments Foreign currency translation Transactions with non-controlling interests	2,235,261 2,186,761 (89,332) (554,872) 2,006,441 -
	4,152,370 1,631,889

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Appendix 4E Preliminary Final Report

**Movements: **		2011 $ 2010 $ 2,186,761 2,091,761 48,500 95,000 2,235,261 2,186,761 (554,872) (511,898) 405,534 - 60,006 16,203 - (59,177) (89,332) (554,872) - - 2,006,441 - 2,006,441 - 2011 $ 2010 $ (47,795,542) (45,039,027) (1,643,961) (2,756,515) (49,439,503) (47,795,542) 2011 $ 2010 $ 110,011 - (413,843) - (303,832) - CASH INFLOW FROM OPERATING 2011 $ 2010 $
Share-based payments Balance 1 July Shares issued to consultant for service rendered Balance 30 June Foreign currency translation Balance 1 July Recognition of foreign currency translation reserves of associate Exchange differences on translation of foreign currency Share of other comprehensive expense of associate Balance 30 June Transactions with non-controlling interests Balance 1 July Sale of shares in subsidiary to non-controlling interests Balance 30 June (b) Accumulated losses
Balance 1 July Net loss for the year Balance 30 June 12 NON-CONTROLLING INTERESTS
Interest in: Share capital Retained earnings 13 RECONCILIATION OF LOSS AFTER INCOME TAX TO NET ACTIVITIES
Loss for the year Provision for impairment of investment in associate Bad debts Share-based payment expense Gain on disposal of plant and equipment Proceeds from forfeiture of non-refundable deposit Depreciation and amortisation Loss on loss of significant influence over associate Gain on incorporation of an associate Share of loss/(profit) of associate Loss on liquidation of subsidiaries Change in operating assets and liabilities Decrease/(Increase) in inventories (Increase) in receivables Increase in payables Net exchange differences Net cash (outflow) from operating activities		(1,643,961) (2,756,515) - 193,021 - 550 48,500 95,000 (3,778) - (1,500,000) - 28,845 24,058 405,534 - (1,103,934) (43,657) 30,297 (80,714) 5,812 - 1,009,978 (1,009,978) (376,026) (130,544) 188,895 531,865 154,912 -
		(2,754,926) (3,176,914)

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Appendix 4E Preliminary Final Report

14 NTA BACKING

14 NTA BACKING
	2011	2010
	$	$
Net tangible asset backing per ordinary security (per share)	0.028	0.030

15 EVENTS OCCURRING AFTER THE REPORT PERIOD

In June 2011, the Company entered into an Investment and Cooperation Agreement with Kaili Holdings Limited (“Kaili”) pursuant to which Kaili will acquire an 80% interest in two tenements (E04/1433 and E04/1436) in Ellendale, Western Australia for $6 million. A deposit of $1 million was received from Kaili on signing of the agreement and the balance of $5 million was received subsequent to the year-end.

There are no other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

16 EARNINGS PER SHARE

16 EARNINGS PER SHARE
	2011 Cents 2010 Cents
Basic loss per share Diluted loss per share	(0.53) (1.02)
	(0.53) (1.02)

Reconciliations of earnings used in calculating earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows:-

Earnings (i) Weighted average number of ordinary shares	2011 $ 2010 $
	(1,643,961) (2,756,515)
	308,696,375 270,832,265

(i) Earnings used in the calculation of basic and diluted earnings per share are net loss after tax attributable to the ordinary equity holders of the Company as per the income statement.

(ii) At balance sheet date there were no potential shares and therefore no dilutive shares.

17 DIVIDEND

The Company intends to implement a dividend policy of distributing after tax profits as dividends when the Company achieves profitability.

18 AUDIT OF ACCOUNTS

This report is based on accounts that are in the process of being audited.

==> picture [62 x 33] intentionally omitted <==

Min Yang Chairman 30 August 2011

Appendix 4E Page 13