ASF GROUP LIMITED — Interim / Quarterly Report 2016

Feb 25, 2016

ASF Group Limited Appendix 4D Half-year report

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1. Company details

Name of entity: ASF Group Limited ABN: 50 008 924 570 Reporting period: For the half-year ended 31 December 2015 Previous period: For the half-year ended 31 December 2014

2. Results for announcement to the market

				$'000
Revenues from ordinary activities	up	101.2%	to	493
Loss from ordinary activities after tax attributable to the owners of ASF
Group Limited	up	56.7%	to	(10,997)
Loss for the half-year attributable to the owners of ASF Group Limited	up	56.7%	to	(10,997)

Dividends

There were no dividends paid, recommended or declared during the current financial period.

Comments

The loss for the Group after providing for income tax and non-controlling interest amounted to $10,997,000 (31 December 2014: $7,020,000).

Refer to 'Review of operations' in the Directors' Report for detailed commentary.

3. Net tangible assets

Net tangible assets per ordinary security	Reporting period Cents 0.45	Previous period Cents 3.73

4. Details of associates and joint venture entities

	Reporting	entity's	Contribution to	profit/(loss)
	percentage	holding	(where material)
	Reporting	Previous	Reporting	Previous
	period	period	period	period
Name of associate / joint venture	%	%	$'000	$'000
China Coal Resources Pty Ltd	25.00%	25.00%	-	(1)
Kaili International Resource Ltd*	-	20.00%	-	-
Rey Resources Limited	18.29%	19.60%	(595)	(966)
ActivEx Limited	19.55%	19.55%	(101)	(46)
Group's aggregate share of associates and joint venture
entities' profit/(loss) (where material)
Profit/(loss) from ordinary activities before income tax			(696)	(1,013)
Income tax on operating activities			-	-
*Entity de-registered in October 2015.

ASF Group Limited Appendix 4D Half-year report

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5. Audit qualification or review

Detai l s of audit/re v iew dispute or qualifica t ion (if any):

The f i nancial stat e ments wer e subject to a review b y the audito r s and the r e view repor t , modified w ith an emphasis of matter paragraph regarding c o ntinued op e rations and f uture fundi n g, is attach e d as part of the Interim R eport.

6. Attachments

Detai l s of attach m ents (if any):

The I n terim Repo r t of ASF Gr o up Limited f or the half- y ear ended 31 Decembe r 2015 is att a ched.

7. Signed

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Min Y ang Chai r man

Date: 26 Februar y 2016

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ASF Group Limited ABN 50 008 924 570

Interim Report - 31 December 2015

ASF Group Limited Directors' report 31 December 2015

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The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of ASF Group Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2015.

Directors

The following persons were directors of ASF Group Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Ms Min Yang - Chairman Mr Nga Fong (Alex) Lao Mr Quan (David) Fang Mr Wai Sang Ho Mr Geoff Baker Mr Xin Zhang Mr Yong Jiang Mr Chi Yuen (William) Kuan Mr. Louis Chien

Principal activities

The Group is a diversified investment entity focused principally on the identification, incubation and realisation of specific opportunities, especially in the areas of oil and gas, resource, property, infrastructure, travel and financial services. The Group’s strategy is to transform early-stage Australian investments into deliverable projects through joint venturing or other forms of co-operation with the Group’s expanding network of major Chinese investment partners.

Review of operations

The loss for the Group after providing for income tax and non-controlling interest amounted to $10,997,000 (31 December 2014: $7,020,000).

Financial results and commentary

For the six months ended 31 December 2015, revenue from continuing operations of the Group was $493,000 (31 December 2014: $245,000). Increase in revenue was contributed by the increase in property marketing services during the period. With the launching of the Hope Island project in the Gold Coast, it is expected that property marketing services will continue to provide revenue contribution to the Group.

The Group was affected during the period due to the softening of the resources industry as well as volatility of the financial markets. As a result, the Group recorded significant impairment loss in the fair value of its investments in listed entities. Consolidated loss for the period after tax attributable to members of the Group amounted to $10,997,000 (31 December 2014: $7,020,000), which was attributed by the following:

• Impairment of listed investments of $5,996,000;

• Share of losses of associates of $696,000;

• Write off of tenement assets of $1,254,000; and

• Interest expenses and other finance costs $278,000.

Financial position

On 28 August 2015, the company issued unsecured convertible notes to a series of sophisticated investors for an aggregate principal amount of $7,500,000. As of the date of this report, the facility has been fully drawn down and not as yet converted.

The company further announced in September 2015 that it had obtained an irrevocable commitment from Star Diamond Developments Limited for the granting of a standby convertible note facility of up to $5,000,000, which secures additional source of funds for the company if required. As of the date of this report, the facility has not been drawn down.

For the six months ended 31 December 2015, finance costs amounted to $278,000 (31 December 2014: $384,000) which represented interest mainly on the convertible loan facilities.

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ASF Group Limited Directors' report 31 December 2015

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Net assets as at 31 December 2015 was $16,855,000, compared to $28,249,000 at 30 June 2015. The decrease in net assets was predominantly due to:

• Decrease in the net fair value of listed investments of $5,996,000;

• Increase in outstanding convertible loans (including interest) of approximately $5,897,000; and

• • Write off of tenement assets of $1,254,000.

During the period, the company bought back 392,894 shares at a cost of $126,000. The buy-back program is expected to expire in April 2016 and it is the company’s present intention to extend the program.

As of 31 December 2015, the Group maintained a cash balance of $2,434,000.

Principal Investments

ActivEX Limited (‘AIV’)

AIV is an ASX listed mineral exploration company holding a number of prospective tenements, principally targeting coppergold and gold mineralisation in Queensland. AIV also holds a potash project in Western Australia, which has an established resource and a granted mining lease.

On 3 February 2016, AIV announced that it has completed reconnaissance portable X-Ray Fluorescence (pXRF) soil geochemical surveys over its Mt Hogan tenement (EPM 18615). Attendant rock chip samples have been assayed returning exceptionally high grade gold and silver assays of up to 97.6g/t Au and 659g/t Ag at the Independence prospect north of Mt Hogan.

As of 31 December 2015, the Group maintains interest in 19.55% of the issued capital of AIV.

Rey Resources Limited (‘REY’)

REY is an ASX-listed resource exploration and development company with a large tenement holding in the Canning Basin, Western Australia in both oil & gas and coal. The principal activity of REY is exploring for and developing energy resources in Western Australia’s Canning Basin.

The Group holds approximately 18.29% of the issued share capital of REY as of 31 December 2015.

Key Petroleum Limited (‘KEY’)

KEY is an ASX listed Australian oil and gas operating company focused on exploration in conventional and unconventional projects in the North Perth and Canning Basins in Western Australia. Acreage within the Canning Basin portfolio consists of a number of exciting development and exploration opportunities.

As at 31 December 2015, the company, through its wholly owned subsidiary ASF Oil and Gas Holdings Pty Ltd, holds 19.54% of the issued capital of KEY.

Metaliko Resources Limited (‘MKO’)

MKO was incorporated in October 2010 with a focus on advanced stage gold exploration projects with identified gold mineralization and the potential for further significant discoveries. Its project portfolio is located in the Eastern Goldfields of Western Australia. The projects are located on, or adjacent to, the regional structures associated with the world class and major gold deposits of the Eastern Goldfields.

During the period, the Group further subscribed for 14.6 million entitlement shares and is now holding approximately 16.55% of the issued capital of MKO.

Kaili Resources Limited (formerly known as Omnitech Holdings Limited) (‘KLR’)

Following a successful capital raise, KLR was reinstated to official quotation on the ASX on 31 March 2015. KLR is a resources exploration company, which during the period held four coal tenements in Queensland and Western Australia.

As of 31 December 2015, the Group held an interest of 2.24% of the issued capital of KLR.

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ASF Group Limited Directors' report 31 December 2015

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Civil & Mining Resources Pty Ltd (‘CMR’)

As at 31 December 2015, the company together with its subsidiary, ASF Resources Limited, held an aggregate of 68.97% of the issued share capital of CMR.

CMR is a coal exploration company incorporated in Queensland. The major assets of which comprise 25 Exploration Permits for Coal (EPCs) in Queensland. CMR offers a significant portfolio of prospective hard coking, PCI and thermal coal projects ranging from likelihood of immediate to longer-term development timeframes.

In November 2015, CMR announced that Mineral Development Licence (MDL) had been granted on its Dawson West Project (EPC2427), which covers an area of 6173 hectares within the Bowen Basin Queensland for a term of 5 years. CMR will commence intensive activities to determine the commercial viability of the significant Dawson West coal resource and aims to have the bulk sample pit operational by 2016-17.

CMR is currently reviewing its tenements with a view of relinquishing some of the non-core tenements.

Minerals and resources

China Coal Resources Pty Limited (‘CCR’)

CCR manages two joint ventures with the Group in Queensland and Tasmania.

In Western Australia, CCR relinquished the Dongara Project (E70/4403) located in the north Perth Basin 250km north of Perth. Following an internal company review it was determined the known coal seams were located at uneconomic depths and as such no further exploration expenditure was warranted.

In Tasmania, CCR manage one base metal project located in the north of the state (Wilmont). The project is currently being reviewed in light of historically encouraging field work with a view to further field work in 2016. Wilmont (E55/2207) is due for renewal in June 2016 and CCR are currently reviewing possible exploration plans for the project

In Queensland CCR manages 1 tenement at Somersford Creek (EPC2859). During the reporting period Nelgai Creek (EPC 2820) and Two Mile Creek (EPC 2821) projects were relinquished. CCR determined the historical coal intersections in Nelgai Creek and Two Mile Creek were at uneconomic depths and as such no further exploration expenditure was warranted. Evaluation at Sommersford Creek is ongoing with a view to possible drill testing in 2016.

ASF Coal Pty Limited ('ASF Coal')

ASF Coal has 6 licences in SE Queensland. EPC 1508(Leyburn) was reduced in size from 107 blocks to 33 blocks and renewed until 16 May 2016. Further exploration is planned for the current licence, which will involve a full compilation of all historical drilling and possible drill testing of the western margin of the tenement where the Walloon Coal Measures are at depths of less than 50 metre.

The other ASF Coal tenements include EPC1861 (Mt Hope), EPC2094 (Glenrowan), EPC2110 (Cooyar Creek), EPC2208 (Taroom 2) and EPC1982 (McAllister) which was granted on the 23/04/2015 with the other tenements granted in 2013. ASF Coal is currently reviewing all tenements with a view to drill testing the highest priority targets in 2016.

Basin Coal Pty Limited ('Basin Coal')

Basin Coal had 1 licence (EL5270) which was located in the South Gippsland Region east of Melbourne. The licence expired on the 9 June 2015 and following an office and field appraisal, it was decided not to renew the licence. The location of the project in prime dairy cattle country combined with known coal seams generally less than 1 metre in thickness means the development of any coal project is very likely to be uneconomic.

ASF Metals Pty Limited ('ASF Metals')

ASF Metals relinquished its single tenement (EL14/2007) in Tasmania following extensive on ground surficial geochemical/geophysical work which failed to produce significant exploration results. ASF Metals is currently reviewing other base metal opportunities in Tasmania.

Austin Resources Pty Ltd (‘Austin Resources’)

Austin Resource holds a single licence near the northern Tasmanian town of Derby (EL23/2011) which is prospective for tin and gold in palaeoalluvial channels which have been mined historically. The licence expires on 12 September 2016 and Austin Resources currently have a gravity survey approved by the Tasmanian Government to explore for the location and depths of the tin/gold bearing palaeo alluvial channels.

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ASF Group Limited Directors' report 31 December 2015

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ASF Copper Pty Ltd (‘ASF Copper’)

ASF Copper hold a single licence located on the West Coast of Tasmania near the small fishing village of Temma (EL44/2011) where limited historical drilling has intersected iron and copper mineralisation at relatively shallow depths. The licence is granted until 2 April 2017 and ASF Copper have a surficial geochemical/geophysical survey approved to further evaluate and extend the known copper/iron mineralisation.

Property marketing and services

ASF Properties Pty Ltd ('ASFP')

ASFP, a wholly-owned subsidiary of the company, continues to provide international property and marketing services to investors in Australia and China. It represents an important strategic platform for China-based investors to access the Australian real estate market.

Since 2015, ASFP has undertaken a development management role on a waterfront development project named ‘The Peninsula, Hope Island’ and situated at Hope Island, Gold Coast. The Peninsula Hope Island, which includes 45 House lots, 27 Town houses and 115 Apartments across three buildings, is Gold Coast’s very last waterfront development released at the exclusive Hope Island Resort. The project is master planned by AECOM, a premier, fully integrated professional and technical services firm positioned to design, build, finance and operate infrastructure assets around the world for public and private-sector clients. ASFP is also working extensively on the project with a number of domestic professional companies relating to project management, architecture, landscaping and building etc. During the period, a marketing campaign has been launched and approximately 75% of the properties under Stage I, which comprises the housing lots, have been sold. Stage II of the project includes town houses and apartments and will be released shortly. It is expected that the project will continue to provide revenue contribution to ASFP in the year ahead.

Fund management and advisory services

ASF Capital Pty Ltd

ASF Capital is to facilitate the Group’s core strategy of participating in the two way capital flows between Australia and China. ASF Capital assists in providing services to selected Chinese businesses on matters such as public listing, investment and funds management in Australia.

As of May 2013, ASF Capital has been operating with an Australian Financial Services Licence (‘AFSL’) to assist Chinese groups in expanding their activities in Australia within the Funds Management Sector. ASF Capital has capability to form any number of tailor-made funds to capture a diverse array of investment opportunities (including certain infrastructure and real estate) for Chinese enterprises to participate in the Australian market.

ASF Capital formed a Venture Fund in which it will seek to make investment into Australian and overseas early stage innovative technologies and platforms.

ASF Capital also can market selective international and domestic funds to the Australian investor markets.

Gold Coast Integrated Resort, Queensland

ASF Consortium Pty Ltd, a wholly owned subsidiary of the Group, continues to be the sole proponent to Queensland Government for the proposed multi-billion dollar Gold Coast Integrated Resort (‘GCIR’).

On 4th August 2015, Minister Anthony Lynham announced agreement between the State Government and ASF Consortium to commence the process for the development of the GCIR on a five hectare site between SeaWorld and Versace.

ASF Consortium Pty Ltd is currently engaged with the Department of State Development on the corporate structure and feasibility of the project, the site masterplan and infrastructure solutions via a series of interactive workshops.

Continued operations and future funding

The attached financial statements detail the performance and financial position of the Group for the half-year ended 31 December 2015. It also contains an independent auditor’s review report which includes an emphasis of matter. For further information, refer to note 2 to the financial statements, together with the independent auditor's review report.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Group during the financial half-year.

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ASF Group Limited Directors' report 31 December 2015

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Matters subsequent to the end of the financial half-year As at 26 Februar y 2016, the d ate of signi n g the finan c ial stateme n ts, the share price of R e y Resourc e s Limited h a s fallen to $0.015 which e quates to a fair value of investment of $1,950,0 0 0. The car r ying value o f this invest m ent in ass o ciate at the reporting date and reflect e d in the fina n cial statem e nts is $5,2 0 0,000.

No other matter o r circumsta n ce has arisen since 31 December 2 015 that h a s significan t ly affected, or may sig n ificantly affect the Group's operations, the results o f those ope r ations, or th e Group's st a te of affair s in future fin a ncial years .

Rounding of amounts The c ompany is of a kind r eferred to in Class Or d er 98/100, issued by the Austral i an Securiti e s and Inv e stments Com m ission, rela t ing to 'roun d ing-off'. Am o unts in this report have been round e d off in acc o rdance wit h that Class O rder to the n e arest thous a nd dollars, o r in certain cases, the nearest dolla r .

Auditor's independence declaration A co p y of the au d itor's indep e ndence de c laration as r equired under section 307C of the C orporation s Act 2001 i s set out on th e following p a ge.

This r eport is made in accor d ance with a resolution of directors, pursuant t o section 3 0 6(3)(a) of t h e Corporations Act 2001.

On b e half of the directors

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_ _ _ _ _ _ ______ Min Y ang Chai r man

26 F e bruary 201 6 Sydn e y

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Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration To The Directors of ASF Group Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of ASF Group Limited for the half-year ended 31 December 2015, I declare that, to the best of my knowledge and belief, there have been:

• a No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b No contraventions of any applicable code of professional conduct in relation to the review.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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L M Worsley Partner - Audit & Assurance

Sydney, 26 February 2016

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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ASF Group Limited Contents 31 December 2015

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Contents

Statement of profit or loss and other comprehensive income	8
Statement of financial position	9
Statement of changes in equity	10
Statement of cash flows	11
Notes to the financial statements	12
Directors' declaration	18
Independent auditor's review report to the members of ASF Group Limited	19

General information

The financial statements cover ASF Group Limited as a Group consisting of ASF Group Limited (the company) and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is ASF Group Limited's functional and presentation currency.

ASF Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Suite 2, 3B Macquarie Street Sydney NSW 2000 A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 26 February 2016. The directors have the power to amend and reissue the financial statements.

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ASF Group Limited Statement of profit or loss and other comprehensive income For the half-year ended 31 December 2015

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Note Revenue 4 Other income Expenses Commission and fee expenses Consultancy expenses Marketing expenses Employee benefits expense Depreciation and amortisation expense Impairment of investments in associates 5 Impairment of assets 5 Net fair value movements on other financial assets 5 Legal and professional fees Corporate and administration expenses Occupancy Share of loss of associates 5 Finance costs 5 Loss before income tax expense Income tax expense Loss after income tax expense for the half-year Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Loss for the half-year is attributable to: Non-controlling interest Owners of ASF Group Limited Total comprehensive income for the half-year is attributable to: Non-controlling interest Owners of ASF Group Limited Basic earnings per share 15 Diluted earnings per share 15	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 493 245 111 - (104) (8) (756) (2,686) (108) (84) (1,013) (1,471) (102) (17) (5,596) - (1,271) (123) (345) (452) (295) (304) (574) (701) (605) (328) (696) (1,013) (278) (384)	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 493 245 111 - (104) (8) (756) (2,686) (108) (84) (1,013) (1,471) (102) (17) (5,596) - (1,271) (123) (345) (452) (295) (304) (574) (701) (605) (328) (696) (1,013) (278) (384)
	(11,139) -	(7,326) -
	(11,139) (133)	(7,326) 130
	(133)	130
	(11,272)	(7,196)
	(142) (10,997)	(306) (7,020)
	(11,139)	(7,326)
	(142) (11,130)	(306) (6,890)
	(11,272)	(7,196)
	Cents (1.82) (1.82)	Cents (1.36) (1.36)

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

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ASF Group Limited Statement of financial position As at 31 December 2015

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Note Assets Current assets Cash and cash equivalents Trade and other receivables Other 6 Total current assets Non-current assets Other receivables Investments accounted for using the equity method 7 Other financial assets - at fair value through profit or loss 8 Property, plant and equipment Intangibles 9 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings 10 Employee benefits Total current liabilities Total liabilities Net assets Equity Issued capital 11 Reserves Accumulated losses Equity attributable to the owners of ASF Group Limited Non-controlling interest Total equity	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 2,434 4,229 292 101 2,195 537	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 2,434 4,229 292 101 2,195 537
	4,921	4,867
	463 6,625 3,000 598 14,133	339 12,917 2,907 356 13,684
	24,819	30,203
	29,740	35,070
	1,078 11,716 91	942 5,819 60
	12,885	6,821
	12,885	6,821
	16,855	28,249
	101,757 (973) (82,968)	101,883 (840) (71,971)
	17,816 (961)	29,072 (823)
	16,855	28,249

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

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ASF Group Limited Statement of changes in equity For the half-year ended 31 December 2015

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Consolidated Balance at 1 July 2014 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share buy-back Change in non-controlling interests Balance at 31 December 2014 Consolidated Balance at 1 July 2015 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Share buy-back Change in non-controlling interests Balance at 31 December 2015	Issued capital $'000 73,029 - -	Reserves $'000 2,686 - 130	Accumulated losses $'000 (57,745) (7,020) -	Non- controlling interest $'000 329 (306) -	Total equity $'000 18,299 (7,326) 130
	- 21,574 (44) -	130 - - (24)	(7,020) - - -	(306) - - 356	(7,196) 21,574 (44) 332
	94,559	2,792	(64,765)	379	32,965
	Issued capital $'000 101,883 - -	Reserves $'000 (840) - (133)	Accumulated losses $'000 (71,971) (10,997) -	Non- controlling interest $'000 (823) (142) -	Total equity $'000 28,249 (11,139) (133)
	- (126) -	(133) - -	(10,997) - -	(142) - 4	(11,272) (126) 4
	101,757	(973)	(82,968)	(961)	16,855

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

10

ASF Group Limited Statement of cash flows For the half-year ended 31 December 2015

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Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest and other finance costs paid Net cash used in operating activities Cash flows from investing activities Payments for investments at fair value through profit and loss account Payments for investment in associates Payments for property, plant and equipment Payments for intangibles Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Proceeds from issue of shares Payments for share buy-backs Repayment of loan payable Loans to related and other parties Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial half-year	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 247 1,185 (3,404) (3,834) 15 37 - (206)	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 247 1,185 (3,404) (3,834) 15 37 - (206)
	(3,142)	(2,818)
	(438) - (367) (1,703) 21	(666) (2,300) (9) (6,523) -
	(2,487)	(9,498)
	5,625 - (126) - (1,650)	- 16,150 (44) (1,921) -
	3,849	14,185
	(1,780) 4,229 (15)	1,869 2,309 95
	2,434	4,273

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

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ASF Group Limited Notes to the financial statements 31 December 2015

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Note 1. Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 31 December 2015 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2015 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

New, revised or amending Accounting Standards and Interpretations adopted

The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group during the financial half-year ended 31 December 2015 and are not expected to have any significant impact for the full financial year ending 30 June 2016.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Comparatives

Comparatives in the statement of profit or loss and other comprehensive income and the notes to the financial statements have been realigned to current period presentation. There has been no effect on loss for the period.

Note 2. Continued operations and future funding

The financial report has been prepared on the going concern basis which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Group incurred losses after income tax and non-controlling interest of $10,997,000 (31 December 2014: $7,020,000);net cash outflows from operating activities of $3,142,000 (31 December 2014: $2,818,000) and net cash outflows from investing activities of $2,487,000 (31 December 2014: $9,498,000) for the half-year ended 31 December 2015. Net assets of the Group as at 31 December 2015 were $16,855,000, compared to $28,249,000 at 30 June 2015.

The continuing viability of the Group to meet its commitments and to develop its projects or dispose of them for a profit is dependent upon the Group’s ability to continue to raise capital. The directors have considered the following in their assessment of future funding of the Group:

● The Group manages cash diligently to meet immediate business needs. The Group has a proven track record in raising capital via share placements, rights issues and convertible notes over the past 10 years, most recently during August and September 2015; and

● Budgets for the 12 months from the date of issuance of these financial statements project that the Group will be able to pay its debts as and when due, however in the event that expected revenues and capital raisings do not fully materialize, the Group would reduce its overhead costs as appropriate.

The directors are of the opinion that the Group will continue to obtain additional capital when business requires and accordingly have prepared the financial statements on a going concern basis.

Should the Group not be able to obtain additional capital as and when required, there is material uncertainty whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in these financial statements.

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ASF Group Limited Notes to the financial statements 31 December 2015

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Note 2. Continued operations and future funding (continued)

At this time, the Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial statements at 31 December 2015. Accordingly, no adjustments have been made to the financial statements relating to the recoverability and classification of the asset carrying amounts or the amounts and classifications of liabilities that might be necessary.

Note 3. Operating segments

Identification of reportable operating segments

The Group's operating segment is based on the internal reports that are reviewed and used by the Board of Directors (being the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

The Group operates in only one segment, being an investment and trading house. The segment result is as shown in the statement of profit or loss and other comprehensive income. Refer to statement of financial position for assets and liabilities.

Note 4. Revenue

Sales revenue Commission revenue Fund management and advisory service Corporate services Other revenue Interest Other revenue Revenue	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 262 13 - 105 192 89	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 262 13 - 105 192 89
	454	207
	39 -	37 1
	39	38
	493	245

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ASF Group Limited Notes to the financial statements 31 December 2015

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Note 5. Expenses

Loss before income tax includes the following specific expenses: Impairment Impairment of investment in associates Mining exploration and evaluation expenditures Impairment of receivables Total impairment Share of loss of associates China Coal Resources Pty Ltd Rey Resources Limited ActiveEx Limited Total share of loss of associates Net fair value movement on other financial assets Key Petroleum Ltd (ASX: KEY) Metaliko Resources Ltd (ASX: MKO) Kaili Resources Limited (ASX: KLR) Total Net fair value movement on other financial assets Finance costs Interest and finance charges paid/payable Share-based payments expense Share-based payments expense Note 6. Current assets - other Loan receivable from Rey Resources Limited Prepayments Other current assets	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 5,596 - 1,254 119 17 4	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 5,596 - 1,254 119 17 4
	6,867	123
	- 595 101	1 966 46
	696	1,013
	283 117 (55)	452 - -
	345	452
	278	384
	-	2,276
	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 1,674 - 520 536 1 1
	2,195	537

Note 6. Current assets - other

Loan Receivable

On 29 October 2015, the Group entered into a loan facility agreement with its associate, Rey Resources Limited (ASX: REY). Pursuant to the agreement the Group will provide up to $2,000,000 to fund REY's exploration activities and general working capital. Interest will accrue at 9% per annum. The loan is repayable in cash or ordinary shares of REY at the Group's election and the repayment date has been extended to 30 June 2016.

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ASF Group Limited Notes to the financial statements 31 December 2015

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Note 7. Non-current assets - investments accounted for using the equity method

China Coal Resources Pty Ltd Rey Resources Limited (ASX: REY) ActivEx Limited (ASX: AIV)	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 184 184 5,200 11,391 1,241 1,342	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 184 184 5,200 11,391 1,241 1,342
	6,625	12,917

Note 8. Non-current assets - other financial assets - at fair value through profit or loss

Investment in Kaili Resources Limited (ASX: KLR, formerly known as Omnitech Holdings Limited) Investment in Key Petroleum Ltd (ASX: KEY) Investment in Metaliko Resources Ltd (ASX: MKO)	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 385 330 423 706 2,192 1,871	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 385 330 423 706 2,192 1,871
	3,000	2,907

Note 9. Non-current assets - intangibles

Mining exploration and evaluation expenditures - at cost Capitalised project costs - at cost Less: Impairment Note 10. Current liabilities - borrowings Convertible notes payable Loan payable	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 4,804 5,699	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 4,804 5,699
	10,568 (1,239)	9,224 (1,239)
	9,329	7,985
	14,133	13,684
	Consolidated 31 Dec 2015 30 Jun 2015 $'000 $'000 11,696 5,799 20 20
	11,716	5,819

Note 10. Current liabilities - borrowings

Terms of convertible notes payable are provided below:

In April 2015, the company issued a $6,000,000 unsecured convertible note ('Note') to Oceanic Alliance Investments Limited ('OAIL') which will bear interest at 5% per annum. As at 31 December 2015, the Note has been fully drawn down. The Note may be converted into ordinary shares of the company during the period commencing 2 April 2015 and ending 30 days immediately prior to the maturity date of 2 April 2017 (‘Maturity’) at a conversion price of $0.28 per share. Upon Maturity, any unconverted balance of the Note, including accrued interest, will be redeemed by the company for cash.

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ASF Group Limited Notes to the financial statements 31 December 2015

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Note 10. Current liabilities - borrowings (continued)

On 28 August 2015, the company issued unsecured convertible notes to a series of sophisticated investors for an aggregate amount of $7,500,000 with maturity date of 31 December 2016. As at 31 December 2015, $5,625,000 has been drawn down. The notes carry interest at the rate of 8% per annum (as amended by the Deeds of Amendment and Restatement dated 25 December 2015). The company may, subject to shareholders approval, convert all the notes into ordinary shares of the company at a conversion price being 80% of VWAP immediately prior to conversion. In addition, the company may select to convert the notes prior to the maturity date into ordinary shares of other wholly owned subsidiaries of the company at values agreed between the parties.

Note 11. Equity - issued capital

31 Dec 2015 Shares Ordinary shares - fully paid 603,861,843 Movements in ordinary share capital Details Date Balance 1 July 2015 Share buy-back 1 July 2015 to 31 December 2015 Balance 31 December 2015	31 Dec 2015 Shares 603,861,843	Consolidated 30 Jun 2015 31 Dec 2015 Shares $'000 604,254,737 101,757	Consolidated 30 Jun 2015 31 Dec 2015 Shares $'000 604,254,737 101,757	30 Jun 2015 $'000 101,883
		Shares 604,254,737 (392,894) 603,861,843	$'000 101,883 (126) 101,757

Share buy-back

During the period, the company bought back 392,894 shares at a cost of $126,000. The buy-back program is expected to expire on 12 April 2016 and it is the company’s present intention to extend the program for another year.

Note 12. Equity - dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.

Note 13. Fair value measurement

The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Unobservable inputs for the asset or liability

Consolidated - 31 Dec 2015 Assets Investments at fair value through profit or loss Total assets Consolidated - 30 Jun 2015 Assets Investments at fair value through profit or loss Total assets	Level 1 $'000 3,000	Level 2 $'000 -	Level 3 $'000 -	Total $'000 3,000
	3,000	-	-	3,000
	Level 1 $'000 2,907	Level 2 $'000 -	Level 3 $'000 -	Total $'000 2,907
	2,907	-	-	2,907

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ASF Group Limited Notes to the financial statements 31 December 2015

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Note 13. Fair value measurement (continued)

There were no transfers between levels during the financial half-year.

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.

Note 14. Events after the reporting period

As at 26 February 2016, the date of signing the financial statements, the share price of Rey Resources Limited has fallen to $0.015 which equates to a fair value of investment of $1,950,000. The carrying value of this investment in associate at the reporting date and reflected in the financial statements is $5,200,000.

No other matter or circumstance has arisen since 31 December 2015 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Note 15. Earnings per share

Loss after income tax Non-controlling interest Loss after income tax attributable to the owners of ASF Group Limited Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of ordinary shares used in calculating diluted earnings per share Basic earnings per share Diluted earnings per share	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 (11,139) (7,326) 142 306	Consolidated 31 Dec 2015 31 Dec 2014 $'000 $'000 (11,139) (7,326) 142 306
	(10,997)	(7,020)
	Number 604,012,434	Number 516,682,291
	604,012,434	516,682,291
	Cents (1.82) (1.82)	Cents (1.36) (1.36)

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ASF Group Limited Directors' declaration 31 December 2015

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In the directors' o p inion:

• t h e attached f inancial sta t ements an d notes com p ly with the Corporation s Act 2001, Australian A ccounting S tandard A A SB 134 'In t erim Financial Reportin g ', the Corporations Reg u lations 200 1 and other m andatory professional r eporting r e quirements;

• t h e attached financial st a tements a n d notes gi v e a true a n d fair view of the Gro u p's financi a l position a s at 31 December 20 1 5 and of its performanc e for the fin a ncial half-y e ar ended on that date; a n d

• t h ere are rea s onable gro u nds to believe that the c ompany wil l be able to p ay its debt s as and wh e n they bec o me due a n d payable.

Signed in accord a nce with a r e solution of d irectors ma d e pursuant to section 3 0 3(5)(a) of t h e Corporati o ns Act 200 1 .

On b e half of the directors

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_ _ _ _ _ _ ______ Min Y ang Chai r man

26 F e bruary 201 6 Sydn e y

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Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Review Report To the Members of ASF Group Limited

We have reviewed the accompanying half-year financial report of ASF Group Limited (“Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2015, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement or description of accounting policies, other explanatory information and the directors’ declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

The directors of ASF Group Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such controls as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the ASF Group Limited consolidated entity’s financial position as at 31 December 2015 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of ASF Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of ASF Group Limited is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and of its performance for the half-year ended on that date; and

• b complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Material uncertainty regarding continuation as a going concern

Without qualification to the conclusion expressed above, we draw attention to Note 2 of the financial statements that describes conditions which may cast significant doubt about the consolidated entity’s ability to continue as a going concern.

The ability of the consolidated entity to continue as a going concern is dependent on it achieving sufficient profitability and operating cash flows to enable it to maintain working capital and the raising of additional share capital or borrowings in the future to support the working capital needs of the consolidated entity, when and if required.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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L M Worsley Partner - Audit & Assurance

Sydney, 26 February 2016

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