ASF GROUP LIMITED — Interim / Quarterly Report 2014

Jul 30, 2014

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Rule 4.7B

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005.

Name of entity
ASF Group Limited
ABN 50 008 924 570	Quarter ended (“current quarter”)
50 008 924 570	30 June 2014

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from customers 1.2 Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes refunded/(paid) 1.7 Other Net operating cash flows	Current quarter $	Year to date (12 months) $
	482,800 (380,591) (79,770) - - (1,417,306) - 4,664 - - 103,242	958,467 (1,287,238) (184,070) - - (6,407,891) - 29,544 - - 287,027
	(1,286,961)	(6,604,161)

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

	Current quarter $	Year to date (12 months) $
1.8 Net operating cash flows (carried forward)	(1,286,961)	(6,604,161)
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.10 Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.11 Loans to other entities 1.12 Loans repaid by other entities 1.13 Other Net investing cash flows 1.14 Total operating and investing cash flows	- (59,955) - (1,726) (638,694) - 1,050,000 - - - - 850 -	(300,000) (3,312,213) - (6,450) (875,588) - 1,050,000 - - - (800,000) 352 -
	350,475	(4,243,899)
	(936,486)	(10,848,060)
Cash flows related to financing activities 1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other - security term deposit - shares buy-back Net financing cash flows	- - 1,100,000 - - - (21,346)	9,277,869 - 2,100,000 (500,000) - - (83,367)
	1,078,654	10,794,502
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Adjustments - Exchange rate adjustments - Consolidation of new subsidiary- Civil & Mining Resources 1.23 Cash at end ofquarter	142,168 1,803,428 - 557,102	(53,558) 2,001,225 (2,071) 557,102
	2,502,698	2,502,698

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.24 1.25	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.11	Current quarter $
		(153,440)
		-
1.26	Explanation necessaryfor an understandingof the transactions
	Consulting fees, directors fees and salary ($114,164), Office lease ($39,276)

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

n/a

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

n/a

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities(see Explanatory Note A) 3.2 Credit standby arrangements	Amount available $	Amount used $
	11,000,000	11,000,000 (outstanding loan - $3 million)
	-	-

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $	Previous quarter $
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other (provide details)	2,502,698	1,803,428
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.23)	2,502,698	1,803,428

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
	n/a	n/a
	n/a	n/a
	n/a	n/a
	n/a	n/a
	n/a	n/a

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2 This statement does give a true and fair view of the matters disclosed.

==> picture [128 x 49] intentionally omitted <==

Sign here: ............................................................ Date: 31 July 2014 Company Secretary

Print name: William Kuan

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to

2. See chapter 19 for defined terms.

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disclose additional information is encouraged to do so, in a note or notes attached to this report. Refer to Explanatory Note B for information concerning a proposed capital raising event.

1. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

2. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

3. • 9.2 - itemised disclosure relating to acquisitions • 9.4 - itemised disclosure relating to disposals • 12.1(a) - policy for classification of cash items • 12.3 - disclosure of restrictions on use of cash • 13.1 - comparative information

4. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

5. See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Explanatory Notes

A. Convertible Loan Facilities

The Company entered into a Loan Agreement with Star Diamond Developments Limited (“Star Diamond”) on 23 August 2012 pursuant to which Star Diamond agreed to grant a Convertible Loan Facility of $7 million which can be converted into either one or a combination of the Company’s shares or into new shares of the Company’s subsidiaries or investments held by such subsidiaries.

The Convertible Loan Facility was subsequently increased to $10 million and the expiry date extended to 30 September 2014.

On 19 December 2013, the Company repaid a principal amount of $3 million by way of $500,000 in cash and the issuance or transfer of fully paid ordinary shares with the total value of $2.5 million to Star Diamond (or its nominees) in the manner as set out below:

Company Name ASF Capital Pty Ltd ActivEX Ltd ASF Resources Ltd	Loan Conversion Amount $500,000.00 $1,000,000.00 $1,000,000.00 $2,500,000.00	% of interest Held by ASF after Conversion 59.51% 24.71% 53.69%	% of interest Held by Star Diamond (or its nominees) after Conversion 40.49% 15.24% 32.91%

On 30 December 2013, Star Diamond converted $4 million Convertible Loan into 36,363,636 fully paid ordinary shares in the Company at a price of $0.11 per share.

In January 2014, the Company further repaid a total value of $2,314,410, which represented the repayment of a principal amount of $1,000,000 together with all outstanding accrued interest of $1,314,410 into 21,040,091 fully paid ordinary shares of the Company at a price of $0.11 per share.

In March 2014, the Company drew down the remaining $1 million Convertible Loan under the $10 million Facility. In accordance with the amended agreement, the outstanding convertible loan can be repaid by the conversion of shares in the Company’s subsidiaries/associates or in cash.

In May 2014, the Company obtained a further $1 million Convertible Loan from Star Diamond, which had been drawn down on 5 May 2014.

As at the date of this Appendix 4C, the total outstanding principal amount of the Convertible Loan is $3 million which, together with all accrued interest, will be converted fully into shares of the Company subject to the approval of the shareholders at the forthcoming Extraordinary General Meeting of the Company to be held on 8 August 2014.

B. Proposed Capital Raising

The Company announced, on 2 July 2014, a fully underwritten 1 for 8 non renounceable rights issue of shares to raise approximately $10 million. Under the indicative timetable for the rights issue it is anticipated that the new shares will be issued on 7 August 2014. The proceeds of the issue will be

• See chapter 19 for defined terms.

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available to the Company for working capital purposes , which will include further investment in its present diversified portfolio of assets .

• See chapter 19 for defined terms.

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