ASF GROUP LIMITED — Annual Report 2012

Aug 30, 2012

APPENDIX 4E

PRELIMINARY FINAL REPORT

FINANCIAL YEAR ENDED 30 JUNE 2012

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

Appendix 4E Preliminary Final Report

APPENDIX 4E

Preliminary Final Report

.

ASF Group Limited (the “Company”) A.B.N 50 008 924 570 Financial Year ended 30 June 2012

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 Profit from ordinary activities after tax attributable to members Net profit for the year attributable to members	Up Up Up	9% 1,393% 1,393%	To To To	1,653,349 21,263,423 21,263,423
Dividends (distributions)	Amount per security		Franked amount per security
Final dividend	No final dividend proposed
Previous corresponding period	Nil		Nil

Entity over which control has been gained during the period

Name	Date of gain of control	Contribution to net profits/(losses), where material	Contribution to net profits/(losses), where material
		2012 $	2011 $
Kaili International Resource Ltd	12/08/2011	(6,774)	-

Entities over which control has been lost during the period

Name	Date of loss of control	Contribution to net profits/(losses), where material	Contribution to net profits/(losses), where material
		2012 $	2011 $
Kaili International Resource Ltd	24/10/2011	(6,774)	-
ASF Resources Limited	23/12/2011	(106,248)	(718,118)

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Appendix 4E Preliminary Final Report

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
	2012 %	2011 %	2012 $	2011 $	2012 $	2011 $
China Coal Resources Pty Ltd	45%	45%	(55,381)	(30,297)	(55,381)	(30,297)
Kaili International Resource Ltd	20%	-	(42,649)	-	(42,649)	-
ASF Resources Limited	48.95%	89%	(75,226)	-	(75,226)	-

Pursuant to the agreement with Longluck Investment (Australia) Pty Ltd (the holding company being Beijing Guoli Energy Investment Co,. Ltd), the Company shall within 12 months from 23 December 2011 demerge ASF Resources Limited (“ASFR”) by way of distribution of not less than 80% of its interest in ASFR to shareholders of the Company (“Demerger”). The interest to be distributed to shareholders under the Demerger is classified as an investment held for distribution and the remaining interest of approximately 9.25% after the Demerger was accounted for as an investment in associate by using equity accounting method.

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Appendix 4E Preliminary Final Report

Commentary on the results :

Financial results

Revenue from continuing operations of the Company and its controlled entities (together the “Group”) for the financial year ended 30 June 2012 increased by 9% to $1,653,349 (2011: $1,517,834).

Consolidated profit after tax attributable to members of the Company increased considerably amounting to $21,263,432, compared with a loss of $1,643,961 for the previous year.

The significant increase in profits was contributed by the following items:

• Gain of revaluation of investments in ASFR of approximately $17.7 million; and

• Gain of approximately $7 million recognised on the sale on 80% interest in Kaili.

While the profits were generated predominantly from one-off transactions, these transactions were consistent with the Company’s strategy. This business strategy includes the transformation of earlystage Australian resource opportunities into deliverable projects through joint venturing with the Company’s expanding network of major Chinese mining, trading and strategic investor partners. The Directors believe that similar opportunities will continue to emerge in future.

On 16 February 2012, the Company announced a share buy-back proposal pursuant to which the Company is able to purchase on the ASX market up to 10% of its issued shares within 12 months from 2 March 2012. Up to 30 June 2012, the Company has spent approximately $1.5 million on the share buyback.

The Group continues to maintain a strong financial position with approximately $7.1 million of cash as at 30 June 2012. As at the balance sheet date, the Group does not have any outstanding loans or debts.

Investments

Consistent with its strategy, the Company invested in other potential resources company including ActivEX Limited (“AIV”) in May 2012. As a consequence the Company became a substantial shareholder of AIV holding approximately 13.04% of its then issued capital.

The Company also announced in June 2012 the subscription of shares in Rey Resources Limited (“Rey”) and became a substantial shareholder holding 6.01% of its then issued capital. Subject to its shareholders approval and upon completion of the second tranche of the subscription, the Company will hold an interest of approximately 22.7% of the enlarged issued capital of Rey.

Minerals and Resources

During the financial year the Company’s primary focus was on adding value to the Group’s mineral tenements, particularly those in the Canning Basin of Western Australia, which are held by the Group’s 48.95% owned associate, ASFR.

ASFR’s Canning Basin Project comprises 7 exploration licences covering a total area of 1,496km2. The target commodity of the Canning Basin tenements is sub bituminous thermal coal within the Permian Lightjack Formation.

In January 2012, ASFR completed a $16M capital injection by Longluck Investment (Australia) Pty Ltd (the holding company is Beijing Guoli Energy Investment Co., Ltd). The injection of new capital, will facilitate a proposed expansion of ASFR’s exploration and related activities.

In the first quarter of 2012, Geos Mining began detailed desktop studies of the Canning Basin tenements and is assisting ASFR with various facets of the exploration program, including exploration planning and heritage inspections and clearances. The drilling program currently being undertaken was planned during the financial year completed and includes exploration of the down dip extension in ASFR’s tenements which are adjacent to tenements held by Rey containing Duchess Paradise coal project resources.

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Appendix 4E Preliminary Final Report

As announced on 15 June 2012, the Company has entered into two subscription agreements (the “Subscription Agreements”) with Rey pursuant to which the Company will subscribe for up to 115 million new ordinary shares in the capital of Rey at $0.12 per share by two tranches (the “Rey Subscription”). The Company has completed the subscription of 25 million shares under the first tranche and is currently interested in 6.01% in the issued capital of Rey. Upon completion of the second tranche of Rey Subscription, ASF will hold an interest of approximately 22.7% of the enlarged issued capital of Rey. ASF will seek to assist Rey to facilitate the development of its Duchess-Paradise project as a thermal coal mine, exporting coal through the port of Derby.

ASF Kaili Resources Pty Limited (“ASF Kaili”) has also employed the services of Geos Mining in order to assist with various facets of the exploration program, including exploration planning and heritage inspections and clearances. A drilling program is planned for later in this financial year pending heritage clearance approval from the local Aboriginal communities.

In Tasmania, the Group has interests in five granted tenements, two of which lie within the Cambrian Mount Read Volcanics which host several world class polymetallic mines. In April 2010 the Company entered into a cooperative agreement with China Coal Geology Engineering Corporation (“CCGEC”) and then in early 2011, the joint venture of China Coal Resources (“CCR”) was formed. The Group announced in July 2012 that CCGEC increased its stakes in CCR by subscribing 800,000 new ordinary shares representing 20% of the enlarged issued capital of CCR for $600,000 and, as a consequence, CCGEC is now holding 75% interest in CCR.

CCR has conducted field work in the Wilmot and Lake Pieman areas including geological reconnaissance, soil sampling and drainage geochemical surveys. CCR has also recently received approvals for two tenement applications in the Queensland Bowen Basin and is currently in the phase of exploration planning.

Property Marketing and Services

ASF Properties Pty Ltd continues to provide property and marketing services. The company will mainly focusing on building and extending our network in the Greater China Area.

Through existing and new networks we have achieved successful sales of Australian property projects within China such as: Breakfast Point, Inmark and Hyde Park Residence.

To fully utilize the increasing Chinese investment into Australia, ASF Properties will not only take advantage of wealthy individual property investment opportunities, but also extend our property services to Chinese developers. ASF Properties sources projects and can now provide market analysis along with development feasibility studies to Chinese investors. Providing such access into the Australian market alongside the existing property marketing services will help to further grow the business.

Fund Management and Advisory Services

ASF Balmoral Pty Limited, the Group's 75% owned entity, holds an Australian Financial Services Licence and operates as the financial services arm of the Group. Its main services comprise the marketing of Fund Management products to the Australian wholesale investor markets and also the provision of corporate advisory services.

ASF Balmoral represents Hong Kong based Fund Manager, Marco Polo Pure Asset Management, a specialist award winning China A share manager in the Australian market. In the year ended, ASF Balmoral was appointed by Cadence Capital, a long biased Australian equities manager and also by LaTrobe Financial, to assist with the raising of institutional monies. Cadence has an outstanding 8 year track record of performance. LaTrobe Financial manages $1.6 billion of Australian residential and commercial mortgage investments with a 60 year track record as a specialist residential mortgage lender dedicated to successfully managing both retail and wholesale mandates. Uncertain global investor market conditions have prevailed throughout the year ended which has slowed investment decision making.

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The corporate advisory services are provided both within ASF Group and to external clients. ASF Balmoral advises and assists companies with the raising of capital and to implement IPOs, acquisitions and other transactions. Increased activity is anticipated in the year commencing 1 July 2012.

Resources Trading

Building on the success of its first trial shipment of coal in 2011, ASF Energy continues to explore methods of export for iron and steel residue product. Given the uncertainties in the current commodities market, ASF Energy continues to assess the prospects of further shipments of coal and other mineral resources with a view to the resources trading business making a positive contribution to the Group’s results.

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Appendix 4E Preliminary Final Report

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2012

For the year ended 30 June 2012
Note	30 June 2012 $ 30 June 2011 $
Revenue from continuing operations 2 Other income 3 Cost of sales Marketing expenses Consultants expenses Occupancy expenses Professional fees Administration expenses Employment expenses Corporate expenses Depreciation and amortisation expense 4 Legal expenses Finance income/(costs) 4 Share-based payments 4 Impairment of goodwill 4 Impairment of available for sale financial assets 4 Loss on loss of significant influence over associate 4 Other expenses (Loss) on liquidation of subsidiaries Share of net (loss) of associate Gain on loss of control over subsidiaries Profit/(loss) before income tax Income tax expense Profit/(loss) for the year Profit/(Loss) is attributable to: Members of the parent entity Non-controlling interest Other Comprehensive Income/(Expense) Recognition of foreign currency translation reserves on loss of associate Exchange differences on translation of foreign currency Other Comprehensive (Expense)/Income for the year Total Comprehensive Profit/(Loss) for the year Total Comprehensive profit/(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	1,653,349 1,517,834 342,530 2,675,628 (564,855) (1,996,811) (228,100) (188,607) (1,288,146) (946,721) (354,105) (408,532) (166,347) (235,749) (422,477) (331,047) (934,712) (676,567) (90,951) (79,571) (38,489) (28,845) (94,154) (55,913) 21,347 (9,798) - (48,500) (141,792) - (657,491) - - (405,534) (9,669) (492,530) - (5,812) (173,076) (30,297) 24,754,062 -
	21,606,924 (1,747,372) (418,154) -
	21,188,770 (1,747,372)
	21,263,423 (1,643,961) (74,653) (103,411)
	21,188,770 (1,747,372)
	- 405,534 (64,846) 60,006
	(64,846) 465,540
	21,123,924 (1,281,832)
	21,198,577 (1,178,421) (74,653) (103,411)
	21,123,924 (1,281,832)
	6.88 (0.53) 6.88 (0.53)

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 2012

As at 30 June 2012
Note	30 June 2012 $ 30 June 2011 $
ASSETS Current assets Cash and cash equivalents Trade and other receivables Other current assets Total current assets Non-current assets Other receivables Plant and equipment 6 Investments in associates 7 Available-for-sale financial asset 8 Held-for-distribution investment 9 Mining tenements and exploration 10 Intangible assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Deferred revenue Provisions Total current liabilities Non-current liabilities Deferred tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses 11 Capital and reserves attributable to members of the parent entity Non-controlling interest 12 Total equity	7,103,469 5,888,769 755,678 447,193 87,464 67,914
	7,946,611 6,403,876
	159,616 228,668 128,028 115,703 5,974,127 1,278,794 2,296,505 634,168 14,015,555 - 657,272 2,848,516 - 141,792
	23,231,103 5,247,641
	31,177,714 11,651,517
	1,745,715 1,883,046 - 64,989 13,480 35,660
	1,759,195 1,983,695
	418,154 - - 1,000,000
	418,154 1,000,000
	2,177,349 2,983,695
	29,000,365 8,667,822
	54,583,282 54,258,787 2,714,580 4,152,370 (28,176,080) (49,439,503)
	29,121,782 8,971,654 (121,417) (303,832)
	29,000,365 8,667,822

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 2012

For the year ended 30 June 2012	For the year ended 30 June 2012
Note Contribute d equity Reserves Accumulate d losses Total Non- controlling interest Total equity $ $ $ $ $ $
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 Balance at 1 July 2011 Profit for the year Exchange differences on translation of foreign currency Total comprehensive profit for the year Transaction with owners in their capacity as owners: Contributions of equity, net of transaction costs Share buy-back Asset revaluation reserve Non-controlling interest Balance at 30 June 2012	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
	54,258,787 4,152,370 (49,439,503) 8,971,654 (303,832) 8,667,822
	- - 21,263,423 21,263,423 (74,653) 21,188,770 - (64,846) - (64,846) - (64,846)
	- (64,846) 21,263,423 21,198,577 (74,653) 21,123,924
	1,880,000 - - 1,880,000 - 1,880,000 (1,555,505) - - (1,555,505) - (1,555,505) - (1,372,944) - (1,372,944) - (1,372,944) - - - - 257,068 257,068
	324,495 (1,372,944) - (1,048,449) 257,068 (791,381)
	54,583,282 2,714,580(28,176,080) 29,121,782 (121,417) 29,000,365

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 2012

For the year ended 30 June 2012
Note	30 June 2012 $ 30 June 2011 $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Income tax (paid)/received(net) Net cash (outflow) from operating activities 13 CASH FLOWS FROM INVESTING ACTIVITIES Payments for exploration expenditure Payment for PP&E Investment in associates Investment in available-for-sale financial asset Investment in subsidiaries Proceeds for disposal of subsidiary Loan to related parties Repayment of loans by related parties Net cash inflow (outflow) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Repayment of borrowings Proceeds from share issue Payment for share buyback Proceeds received in advance for issue of shares of a subsidiary Transactions with non-controlling interests Proceeds from forfeiture of non-refundable deposit Net cash (outflow) inflow from financing activities Other non-cash items Net increase/(decrease) in cash held 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	1,646,727 1,266,789 (5,039,822) (4,083,739) 341,562 66,957 - - - (4,933)
	(3,051,533) (2,754,926)
	(578,347) (641,776) (55,079) (78,583) - (82) (3,669,449) - 234 (159,850) 4,628,188 (5,812) (311,069) - 4,982,892
	4,997,370 (886,103)
	- 1,000,000 (1,000,000) - 1,870,723 - (1,546,227) - - 1,000,000 - 1,800,000 - 1,500,000
	(675,504) 5,300,000
	- -
	1,270,333 1,658,971 5,888,769 4,324,705 (55,633) (94,907)
	7,103,469 5,888,769

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
	2012 $ 2011 $
Revenue from continuing operations - Resources trading - Commission revenue - Corporate services - Fund management and advisory service	- 1,007,835 836,734 481,749 811,615 28,250 5,000 -
	1,653,349 1,517,834

3 OTHER INCOME

OTHER INCOME
	2012 $ 2011 $
Forfeiture of deposit(i) Gain on incorporation of an associate(ii) Interest received Others	- 1,500,000 - 1,103,934 341,563 66,957 967 4,737
	342,530 2,675,628

(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

4 EXPENSES

EXPENSES
	2012	2011
	$	$
Loss before income tax includes the following specific expenses:
Commission expenses	564,855	321,612
Finance (income)/costs	(21,347)	9,798
Rental expenses on operating leases
- minimum lease payments	315,721	178,451
Impairment of goodwill	141,792	-
Impairment of available for sale financial assets	657,491	-
Depreciation expense	38,489	28,845
Share-based payments expensed	-	48,500
Loss on loss of significant influence over associate	-	405,534
Net foreign exchange (gain)/losses included in other expenses for
the year	(29,603)	154,913

5 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 2012 is as follows:

30 June 2012	Property marketing and services Mineral and resources Resources trading Corporate services Fund management and advisory services Eliminations Total
Segment revenue Sales Other income Total segment revenue Gain on loss of control over subsidiaries Share of loss from associate Segment result Segment assets Segment liabilities 30 June 2011	$ $ $ $ $ $ $ 836,734 - - 1,403,992 5,000 (592,377) 1,653,349 41 1,177 69 364,978 1,890 (25,625) 342,530
	836,775 1,177 69 1,768,970 6,890 (618,002) 1,995,879
	- 21,785,950 - - - 2,968,112 24,754,062 - (173,076) - - - - (173,076)
	92,018 (106,791) (8,306) 23,614,757 (284,313) (2,118,595) 21,188,770
	203,572 6,435,861 851,298 39,724,633 49,095 (16,086,745) 31,177,714
	1,045,811 9,693,578 3,839,131 13,973,551 604,820 (26,979,542) 2,177,349
Segment revenue Sales Other income Total segment revenue Loss on liquidation of subsidiaries Share of loss from associate Segment result Segment assets Segment liabilities	481,749 - 1,007,835 1,618,250 296,066 (1,886,066) 1,517,834 55 3,542 2,476 4,364,926 1,737 (1,697,108) 2,675,628
	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

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Appendix 4E Preliminary Final Report

(c) Segment information – geographical segments

Segment information – geographical segments
	Segment revenues from sales to external customers Segment assets 2012 $ 2011 $ 2012 $ 2011 $
	1,124,070 4,193,007 41,853,365 19,167,573 1,121,657 455 5,411,094 86,123 (592,378) - (16,086,745) (7,602,179)
	1,653,349 4,193,462 31,177,714 11,651,517

(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.

6 NON-CURRENT ASSETS – PLANT AND EQUIPMENT

	Plant & Equipment Leasehold Improvements Motor Vehicles TOTAL
	$ $ $ $
At 1 July 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	60,554 124,231 29,991 214,776 (31,488) (105,269) (15,832) (152,589)
	29,066 18,962 14,159 62,187
	29,066 18,962 14,159 62,187 28,853 10,401 54,545 93,799 - - (11,677) (11,677) (16,158) (8,860) (3,827) (28,845) 120 119 - 239
	41,881 20,622 53,200 115,703
At 30 June 2011
Cost Accumulated depreciation Net book amount Year ended 30 June 2012 Opening net book amount Deconsolidation of subsidiary Additions Disposals Depreciation charge Exchange difference Closing net book amount	89,407 134,632 54,545 278,584 (47,526) (114,010) (1,345) (162,881)
	41,881 20,622 53,200 115,703
	41,881 20,622 53,200 115,703 (5,053) - - (5,053) 55,079 - - 55,079 - - - - (20,448) (7,567) (10,640) (38,655) 547 407 - 954
	72,006 13,462 42,560 128,028
At 30 June 2012
Cost Accumulated depreciation Net book amount	135,354 135,116 54,545 325,015 (63,348) (121,654) (11,985) (196,987)
	72,006 13,462 42,560 128,028

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Appendix 4E Preliminary Final Report

7 NON-CURRENT ASSETS – INVESTMENT IN ASSOCIATES

	2012 $ 2011 $
China Coal Resources Pty Ltd ASF Resources Ltd Kaili International Resource Ltd	1,223,413 1,278,794 3,213,663 - 1,537,051 -
	5,974,127 1,278,794

Upon completion of the subscription by Longluck Investment (Australia) Pty Ltd (the holding company being Beijing Guoli Energy Investment Co., Ltd) (“Guoli”) of 45% interest in ASFR, the Company’s interest in ASFR was accordingly diluted to 48.95%. In accordance with the applicable Australian Accounting Standards, the interest held by the Company has been revaluated to its fair value of which $14,015,555 was classified as an investment held for distribution (Note 9) and the remaining interest in the fair value of $3,213,663 was accounted for as an investment in associate by using equity accounting method.

In June 2011, the Company entered into an Investment and Cooperation Agreement with Kaili Holdings Limited for the sale of 80% interest in two exploration licenses in Ellendale, Western Australia for $6 million. Upon completion of the said agreement, 80% interest in the issued share capital of Kaili International Resource Ltd (“KIR”), the intermediate holding company of the subject tenements, were transferred to Kaili Holdings Limited. The remaining 20% interest in KIR was revaluated and accounted for as an investment in associate by using equity accounting method.

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

	2012 $ 2011 $
Investment in MYTA Investment in ActivEX Limited Investment in Rey Resources Limited	- 634,168 421,505 - 1,875,000 -
	2,296,505 634,168

The Company has no participation or influence on the decision making process of Macau Multinational Travel Agency Limited (“MYTA”). The management is of the view that MYTA will not be able to provide any profit contribution to the Company and it is unlikely that the fair value of the investment can be recovered. The management is therefore considered that it is appropriate to make a full impairment on the investment.

During the year, the Company subscribed for 24,794,398 shares in ActivEX Limited at 2.7 cents per share and 25 million shares in Rey Resources Limited at $0.12 per share. The investments were revaluated to the fair value as at the balance sheet date.

9 NON-CURRENT ASSETS – INVESTMENT HELD FOR DISTRIBUTION

9 NON-CURRENT ASSETS – INVESTMENT	HELD FOR DISTRIBUTION
	2012	2011
	$	$
Investment held for distribution	14,015,555	-

Pursuant to the agreement with Guoli, the Company shall within 12 months after completion demerge ASFR by way of distribution of not less than 80% of its interest in ASFR to shareholders of the Company (“Demerger”). The interest to be distributed to shareholders under the proposed Demerger was classified as an investment held for distribution.

10 NON-CURRENT ASSETS – MINING TENEMENTS AND EXPLORATION

10 NON-CURRENT ASSETS – MINING TENEMENTS	AND EXPLORATION
	2012 $ 2011 $
Exploration and development costs	657,272 2,848,516

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Appendix 4E Preliminary Final Report

11 RESERVES AND ACCUMULATED LOSSES

(a) Reserves

(a) Reserves
		2012 $ 2011 $
Share based payments Foreign currency translation Transactions with non-controlling interests Revaluation reserve Movements:		2,235,261 2,235,261 (154,178) (89,332) 2,006,441 2,006,441 (1,372,944) -
		2,714,580 4,152,370
		2012 $ 2011 $
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 Balance 30 June Transactions with non-controlling interests Balance 1 July Sale of shares in subsidiary to non-controlling interests Balance 30 June Revaluation reserve Balance 1 July Provision for impairment in ActivEX Limited Provision for impairment in Rey Resources Limited Balance 30 June (b) Accumulated losses		2,235,261 2,186,761 - 48,500
		2,235,261 2,235,261
		(89,332) (554,872) - 405,534 (64,846) 60,006
		(154,178) (89,332)
		2,006,441 - - 2,006,441
		2,006,441 2,006,441
		- - (247,944) - (1,125,000) -
		(1,372,944) -
		2012 $ 2011 $
Balance 1 July Net profit/(loss) for the year Balance 30 June 12 NON-CONTROLLING INTERESTS		(49,439,503) (47,795,542) 21,263,423 (1,643,961)
		(28,176,080) (49,439,503)
		2012 $ 2011 $
Interest in: Share capital Retained earnings		- 110,011 (121,417) (413,843)
		(121,417) (303,832)

Appendix 4E Page 14

Appendix 4E Preliminary Final Report

13 RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES

ACTIVITIES
	2012 $ 2011 $
Profit/(Loss) for the year Gain on loss of control over subsidiaries Impairment of goodwill Impairment of available for sale financial assets 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 of associate Loss on liquidation of subsidiaries Income tax expenses Change in operating assets and liabilities Decrease/(Increase) in inventories Decrease/(Increase) in receivables (Decrease)/Increase in payables Net exchange differences Net cash (outflow) from operating activities 14 NTA BACKING	21,263,423 (1,643,961) (24,754,062) - 141,792 - 657,491 - - 48,500 - (3,778) - (1,500,000) 38,489 28,845 - 405,534 - (1,103,934) 173,076 30,297 - 5,812 418,154 - - 1,009,978 52,085 (376,026) (1,214,490) 188,895 172,509 154,912
	(3,051,533) (2,754,926)
	2012 $ 2011 $
Net tangible asset backing per ordinary security (per share)	0.094 0.028

15 EVENTS OCCURRING AFTER THE REPORT PERIOD

In July 2012, China Coal Geology Engineering Corporation (“CCGEC”) increased its stake in China Coal Resources Pty Ltd (“CCR”) by subscribing 800,000 new ordinary shares representing 20% of the enlarged issued capital of CCR for $600,000 and, as a consequence, CCGEC is now holding 75% interest in CCR.

On 23 August 2012, the Company entered into a $7 million loan facility agreement with Star Diamond Developments Limited repayable 90 days after the date of loan drawdown. Alternatively, the loan facility can be fully repaid by conversion of the loan into either one or a combination of the Company’s shares or into new shares of the Company’s subsidiary or investments held by such subsidiaries.

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
	2012 Cents 2011 Cents
Basic earning/(loss) per share Diluted earning/(loss) per share	6.88 (0.53)
	6.88 (0.53)

Appendix 4E Page 15

Appendix 4E Preliminary Final Report

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:-

as follows:-
Earnings (i) Weighted average number of ordinary shares	2012 $ 2011 $
	21,263,423 (1,643,961)
	308,848,130 308,696,375

(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 sustained profitability.

18 AUDIT OF ACCOUNTS

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

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Min Yang Chairman 31 August 2012

Appendix 4E Page 16