ASTRON LIMITED — Annual Report 2013

Aug 29, 2013

Astron Corporation Limited

ARBN 154 924 553

Preliminary Final Report Year ended 30 June 2013

Contents

• Corporate Directory

• Appendix 4E

• Consolidated Financial Statements

CORPORATE DIRECTORY

Directors

Mr Gerard King (Chairman) Mr Alexander Brown (Managing Director) Mr Robert Flew (Non-executive Director) Mr Ronald McCullough (Non-executive Director) Mdm Kang Rong (Executive Director)

Company Secretary and Registered Office

McCabe Secretarial Service Limited 29[th] Floor, Wing-On-Centre, 111 Connaught Road Central, Hong Kong

Australian Corporate Offices

Level 29, 2 Chifley Square, Sydney 2000, Australia Telephone: 61 2 9375 2361 Fax: 61 2 9375 2121

China Business Office

c/- Yingkou Astron Mineral Resources Co Ltd Level 18, Building B, Fortune Plaza 53 Beizhan Road, Shenhe District, Shenyang Liaoning Province, China 110016 Telephone: 86 24 3128 6222 Fax: 86 24 3128 6222

Bankers

Commonwealth Bank of Australia 48 Martin Place Sydney NSW 2000, Australia

Share Registrar

Computershare Investor Services Limited Level 3, 60 Carrington Street Sydney NSW 2001, Australia

Computershare Hong Kong Investor Services Limited Hopewell Centre, 46[th] floor 183 Queen’s Road East Wan Chai, Hong Kong

Auditors

Grant Thorton Australia Limited Level 19, 2 Market Street Sydney NSW 2000, Australia

Grant Thornton Jingdu Tianhua 20th Floor Sunning Plaza 10 Hysan Avenue Causeway Bay Hong Kong

Internet Address

www.astronlimited.com

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2013

PRELIMINARY FINAL INFORMATION GIVEN TO THE ASX UNDER LISTING RULE 4.3A Name of entity ASTRON CORPORATION LIMITED ARBN 154 924 553 Reporting period Previous corresponding period 30 June 2013 30 June 2012 The information contained in this report should be read in conjunction with the most recent annual financial report. CONTENTS Page Results for announcement to the market 4 Commentary on results 5 Consolidated Statement of Profit or Loss and Other Comprehensive Income 7 Consolidated Statement of Financial Position 9 Consolidated Statement of Changes in Equity 10 Consolidated Statement of Cash Flows 12 Additional information 13

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2013

RESULTS FOR ANNOUNCEMENT TO THE MARKET

OPERATIONAL HIGHLIGHTS

• Proven ore reserve issued for the Donald Project, including the finalisation of the definitive feasibility study for the Donald Project

• Sign off by an expert that the zircon washing process is feasible and capable of reducing impurities in zircon from the Donald Project and further research and development on the zircon washing process

• Further land purchases in respect of land for the Donald Project

• Investor relations program and fund raising for Donald Project commenced, including appointment of financial adviser

• Proven ore reserve issued for the Niafarang project, Senegal

• Further work undertaken in Senegal in relation to application for a mining licence for the Niafarang project

FINANCIAL HIGHLIGHTS

	Net asset value per share Down 1.1%	Net asset value per share Down 1.1%	to 160.6cps
	Revenue from continuing operations Down 38%		to $12,969,611
	Cash (outflow) from operating activities Down $6,498,134		to ($3,316,956)
	(Loss) /profit before tax from continuing operations
	attributable to members Down $5,521,648		to ($5,450,629)
	Loss after tax attributable to members Down $4,462,475		to ($5,465,643)
	Total comprehensive (loss)/profit for the year Down	$2,554,419	to ($2,287,995)

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2013

COMMENTARY ON RESULTS

Overview

Astron Corporation Limited (Astron HK) is the group’s holding company. Astron HK controls 100% of Astron Limited. Astron Limited in turn controls three wholly owned operating subsidiaries: Donald Mineral Sands Pty Limited (DMS), Yingkou Mineral Resources Company Limited (Resources) and Astron Titanium Yingkou Company Limited (Titanium). Donald holds the Donald mineral sands mining project (Donald Project). Resources and Titanium are Astron’s Chinese operating companies.

Corporate

Joshua Theunissen has been appointed as Australian company secretary for the Astron group entities.

Financials

Statement of profit or loss and other comprehensive income

• Total revenue comprising sales, interest received and other income decreased from the prior year by 38% to $12,969,611. This is mainly due to the substantial reduction in interest rate and lower trading volume.

• Gross margins from the trading business decreased from 35% to (4.8)% due to poorer trading conditions.

• Administration expenditure increased by $829,608. This increase can be explained mainly due to Senegal expenditure of $446,739 being written off, and the increase of remuneration of key management personnel for the year.

• Costs associated with Gambia litigation comprise legal fees and associated advisors’ costs and costs pertaining to expert witnesses.

Statement of financial position

• The decrease in stock and creditors is attributed to lower purchases.

• Available for sale financial assets comprise shares in South American Iron & Steel, Altona Mining, Zambezi Resources and Greenpower Energy. The combined market value of these investments has decreased by $1,000,578 from 30 June 2012. This decrease has been debited to the financial assets available-for-sale reserve in the statement of financial position and impairment of available-for-sale financial assets expense account in the profit and loss.

• The increase in property, plant and equipment arises from land purchases at the Donald Project, construction of facilities and construction of the zircon sponge plant at Yingkou, China.

• The increase in intangible assets arises from development expenditure capitalised in respect of the Donald and Niafarang Projects and the purchase of high security water rights for the Donald Project.

• Land use rights comprise 50 year land use leases. These leases are capitalised and amortised over the 50 year period.

• The marginal decrease in the net asset value from 162.4cps at 30 June 2012 to 160.6 cps at 30 June 2013 results from appreciation of the Chinese Reminbi against the Australian Dollar and the related conversion of the Chinese assets to Australian Dollars as at 30 June 2013 but this is offset by the comprehensive losses for the year to 30 June 2013.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2013

Operations review

Donald

The development of the Donald project continued during the period under review. Progress was made in the following areas:

Regulatory

• The next stage in obtaining the right to mine is the completion of a work plan. A draft work plan has been submitted to the Department of Primary Industries. A Cultural Heritage Management Plan is required prior to obtaining an approved work plan. Stage 1 site surveys were undertaken and completed during the reporting period. A development plan for stage 2 has been completed and work continues.

Geology and mining

• Additional drilling and sampling was undertaken during the period on the Donald and Jackson mineral sands deposits.

• Further mine planning continued with the aim being to optimise the proposed mine path.

• Work was undertaken to complete the definitive feasibility study, which was announced after the 30 June 2013 year end.

Plant designs, processes and costs

• Engineering design for all plants was undertaken, along with revision of operational and capital costs.

Land

• DMS purchased a further 3 parcels of land with a total area of 1,280 acres for $1,692,435. These parcels adjoin the mining licence.

China operations

• Work at Yingkou continued with the construction of additional infrastructure, construction of the zircon sponge plant and the purchase of equipment for the laboratory.

• Astron received confirmation from technical consultants Mineral Engineering Technical Services Pty Ltd that its proposed zircon washing process is feasible and capable of reducing the impurities in the Donald zircon sand enabling the production of a premium zircon product.

Senegal

• Work continued on the components required to apply for the mining licence. The most significant of which are:

• the environmental impact assessment;

• sustainable development plan; and

• the mining license feasibility study report.

• Astron completed its updated reserve estimate for the Niafarang project in September 2012.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Year Ended 30 June 2013

		Year Ended	Year Ended
		30 June	30 June
		2013	2012
		$	$
Sales revenue Cost of sales Gross (loss)/profit Interest income Other income Distribution expenses Marketing expenses Occupancy expenses Administrative expenses Write down of stock Impairment of available-for-sale financial assets Impairment of capital works in progress Costs associated with Gambian litigation Finance costs Other expenses (Loss)/profit before income tax expense Income tax expense (Loss) from continuing operations		7,917,87813,591,574 (8,295,654)(8,794,386)
		(377,776)4,797,188 4,756,3197,261,191 295,414140,238 (266,241)(159,869) (42,761) (74,256) (203,934)(180,945) (8,333,938) (7,504,330) (537,920)(331,504) (299,112)(169,803) - (88,745) (328,491)(3,323,866) (96,669) (30,964) (15,520)(263,316)
		(5,450,629)71,019 (15,014)(1,074,187)
		(5,465,643)(1,003,168)
Net (loss) for the year		(5,465,643)(1,003,168)
Other comprehensive profit/ (loss) (Decrease)/ increase in fair value of available-for-sale financial assets Foreign currency translation differences Decrease in share basedpayment reserve		(701,466)(849,680) 4,004,3641,994,022 (125,250) 125,250
Other comprehensive income/ (loss) for the year, net of tax		3,177,6481,269,592
Total comprehensive profit/ (loss) for the year		(2,287,995) 266,424
(Loss)/ profit for the year attributable to: Owners of Astron Corporation Limited Total comprehensive (loss)/profit for the year attributable to: Owners of Astron Corporation Limited		(5,465,643)(1,003,168) (2,287,995) 266,424

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Year Ended 30 June 2013

	Year Ended	Year Ended
	30 June	30 June
	2013	2012
1. (LOSS) PER SHARE For (loss) from continuing operations
Basic (loss) per share (cents per share) Diluted (loss) per share (cents per share)	(4.46) (0.8) (4.46) (0.8)
For (loss)/ profit for the year
Basic (loss)/ earnings per share (cents per share) Diluted (loss)/ earnings per share (cents per share)	(4.46) (0.8) (4.46) (0.8)
2. COMPARISON OF HALF-YEAR RESULTS Consolidated (loss)/profit after tax attributable to owners reported for the first half year Consolidated (loss) after tax attributable to owners reported for the second half year Total consolidated (loss after tax for the year	(1,874,333) 238,980 (3,591,310) (1,242,148)
	(5,465,643) (1,003,168)

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Financial Position

As at 30 June 2013

	As at	As at
30 June 2013 $		30 June 2012
		$
ASSETS Current assets Cash and cash equivalents 45,790,618 Term deposits greater than 90-days 62,333,117 Trade and other receivables 5,007,469 Inventories 2,184,447 Available-for-sale financial assets 983,198 Current tax assets 282,505		58,787,135 62,370,546 4,178,092 5,090,733 1,983,776 -
Total current assets 116,581,354		132,410,282
Non-current assets Property, plant and equipment 21,091,882 Intangible assets 56,247,132 Land use rights 10,012,664		16,705,390 48,559,413 8,712,067
Total non-current assets 87,351,678		73,976,870
TOTAL ASSETS 203,933,032		206,387,152
LIABILITIES Current liabilities Borrowings 301,909 Trade and other payables 1,882,980 Current tax liabilities - Provisions 18,546		- 2,188,375 221,023 18,546
Total current liabilities 2,203,435		2,427,944
Non-current liabilities Deferred tax liabilities 5,036,583 Long-termprovisions 40,000		4,978,199 40,000
Total non-current liabilities 5,076,583		5,018,199
TOTAL LIABILITIES 7,280,018		7,446,143
NET ASSETS 196,653,014		198,941,009
EQUITY Contributed equity 30,061,919 Reserves 6,128,499 Retained earnings 160,462,596		30,061,919 2,950,851 165,928,239
TOTAL EQUITY 196,653,014		198,941,009

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2013

				Financial	Foreign
			Share-based	Assets	Currency
	Contributed	Retained	Payment	Available For	Translation
	Equity	Earnings	Reserve	Sale Reserve	Reserve	Total Equity
Year Ended 30 June 2013	$	$	$	$	$	$
Equity as at 1 July 2012	30,061,919	165,928,239	125,250	964,651	1,860,950	198,941,009
Loss for the year	-	(5,465,643)	-	-	-	(5,465,643)
Other comprehensive
(loss)/ income
Decrease in fair value of
available-for-sale financial
assets	-	-	-	(701,466)	-	(701,466)
Exchange differences on
translation of foreign
operations	-	-	-	-	4,004,364	4,004,364
Unvestedforfeitedrights			(125,250)	-	-	(125,250)
Total comprehensive
profit for theyear	-	(5,465,643)	(125,250)	(701,466)	4,004,364	(2,287,995)
Transactions with owners
in their capacity as
owners
Shares repurchased during
the year	-	-	-	-	-	-
Total of transactions with
owners in their capacity
as owners	-	-	-	-	-	-
Equity as at 30 June 2013	30,061,919	160,462,596	-	263,185	5,865,314	196,653,014

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2013

				Financial	Foreign
			Share-based	Assets	Currency
	Contributed	Retained	Payment	Available For	Translation
	Equity	Earnings	Reserve	Sale Reserve	Reserve	Total Equity
Year Ended 30 June 2012	$	$	$	$	$	$
Equity as at 1 July 2011	33,157,582	166,931,407	-	1,814,331	(133,072)	201,770,248
Loss for the year	-	(1,003,168)	-	-	-	(1,003,168)
Other comprehensive
(loss)/ income
Decrease in fair value of
available-for-sale financial
assets	-	-	-	(849,680)	-	(849,680)
Exchange differences on
translation of foreign
operations	-	-	-	-	1,994,022	1,994,022
Increase in share based
paymentsreserve			125,250	-	-	125,250
Total comprehensive
profit for theyear	-	(1,003,168)	125,250	(849,680)	1,994,022	266,424
Transactions with owners
in their capacity as
owners
Shares repurchased during
the year	(3,095,663)	-	-	-	-	(3,095,663)
Total of transactions with
owners in their capacity
as owners	(3,095,663)	-	-	-	-	(3,095,663)
Equity as at 30 June 2012	30,061,919	165,928,239	125,250	964,651	1,860,950	198,941,009

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Cash Flows

For the Year Ended 30 June 2013

	Year Ended	Year Ended
	30 June	30 June
	2013	2012
	$	$
Cash flows from operating activities: Receipts from customers 6,374,033 15,331,526 Payments to suppliers and employees (14,684,366) (18,883,318) Interest received 5,299,763 7,294,588 Interest paid (96,669)(30,964) Income taxes paid (460,158) (670,892) Other income 250,441 140,238
Net cash(outflow)/inflow from operating activities (3,316,956) 3,181,178
Cash flows from investing activities: Investments in short term deposits 37,429 (2,036,709) Refund for cancellation of acquisition of mining licence - 500,000 Acquisition of available for sale investment - (523,216) Acquisition of property, plant and equipment (2,264,384) (1,181,712) Construction in works in progress (1,234,738) (2,923,938) Purchase of computer software (115,125) (200,885) Deferred exploration, evaluation expenditure and development costs (7,431,047) (3,450,724) Acquisitionof water rights - (17,958,613)
Net cash outflow from investing activities (11,007,865) (27,775,797)
Cash flows from financing activities: Payment for share buy back - (3,095,662) Borrowings 301,909 - Expenditure on re-domiciliation (170,824) (1,086,032)
Net cash inflow/(outflow) from financing activities 131,085 (4,181,694)
Net decrease in cash held (14,193,736) (28,776,313)
Cash and cash equivalents at beginning of the year 58,787,135 87,110,656 Netforeignexchange differences 1,197,219 452,792
Cash and cash equivalents at end of theyear 45,790,618 58,787,135

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Additional Information

For the Year Ended 30 June 2013

1. DETAILS OF CONTROLLED ENTITIES

• The Group did not gain or lose control of any entities during the financial year ended 30 June 2013.

2. DETAILS OF ASSOCIATES AND JOINT VENTURE ENTITIES

The Group has no associates or joint venture entities.

3. DIVIDENDS

No dividends were paid or proposed for the years ended 30 June 2012 and 30 June 2013. There is no Dividend Reinvestment Plan in operation .

4. ACCOUNTING STANDARDS

• Australian Accounting Standards and International Financial Reporting Standards have been used in preparing the information contained in this Appendix 4E.

5. SIGNIFICANT ACCOUNTING POLICIES

• Accounting policies, estimation methods and measurement bases used in this Appendix 4E are the same as those used in the last annual report and the last half-year report.

6. CONTINGENCIES

Astron has received a claim from its former CEO regarding the termination of his employment, which it is defending. Astron is currently engaged in confidential and without prejudice discussions around the settlement of a termination package with the former CEO. At this stage, the directors do not expect a resolution of this matter to have any significant impact on the Company’s stated financial position.

7. OTHER INFORMATION REGARDING THE PRELIMINARY REPORT

• The information contained in this Appendix 4E is based on accounts which are in the process of being audited.

8. COMPARATIVE INFORMATION The comparative financial information has been presented on a consistent basis with the prior year’s audited financial Statements.

9. OTHER SIGNIFICANT INFORMATION

• There is no other significant information requiring disclosure in the preliminary report.

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