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1 Rongtai International Group Holdings Limited APPENDIX 4D HALF YEAR REPORT Rongtai International Group Holdings Limited A.C.N Period Ended 1. The reporting period is 1 July 2012 to. The previous corresponding period is 1 July 2011 to 31 December Results for announcement to the market: 2.1 Consolidated entity 31 December 2012 A$ December 2011 A$ 000 % Change Revenue from Ordinary Activities 34, ,621 (68%) Profit (loss) from ordinary activities before tax attributable to members Net profit (loss) for the period attributable to members (30,540) 4,944 (718%) (30,711) 3,462 (987%) 2.2 Dividend Distribution N/A 2.3 Record Date of Determining Dividend N/A 2.4 A brief explanation of the figures in 2.1 to 2.3 above to ensure they are understood Please refer separate announcement for commentary on the half year results. Headquarter Fuzhou Australia Floor 27, Sino Int t Plaza, Level 13, 99 Elizabeth Street 137 Wusi Road, Fuzhou, Sydney NSW 2000 Fujian, China DX 285 Sydney p p f f Shanghai Hongkong Tianjin Jiangxi Ningde

2 Rongtai International Group Holdings Limited 3. Net Tangible Asset per share (cents/share) Current Period Previous Period Net Tangible Asset per share (cents/share): Control gained or lost over entities during the period N/A 5. Details of dividends or distributions N/A 6. Details of any dividend or distribution reinvestment plans in operation N/A 7. Details of associates and joint venture entities N/A 8. For foreign entities, which set of accounting standards is used in compiling the report N/A 9. For all entities, if the accounts are subject to audit dispute or qualification, a description of the dispute or qualification. N/A Headquarter Fuzhou Australia Floor 27, Sino Int t Plaza, Level 13, 99 Elizabeth Street 137 Wusi Road, Fuzhou, Sydney NSW 2000 Fujian, China DX 285 Sydney p p f f Shanghai Hongkong Tianjin Jiangxi Ningde

3 31 December 2011 RONGTAI INTERNATIONAL GROUP HOLDINGS LIMITED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2012 Rongtai International Group Holdings Limited Registered Address LEVEL 30, CASTLEREAGH STREET, SYDNEY NSW 2000

4 DIRECTORS REPORT The Directors of Rongtai International Group Holdings Limited present their Report together with the financial statements of the consolidated entity, being Rongtai International Group Holdings Limited ( the Company ) and its controlled entities ( the Group ) for the half year ended and the Independent Review Report thereon. DIRECTORS The names of Directors who held office during or since the end of the half-year are: Mr JieLin Mr Zhenguang Huang Mr Yibiao Jiang Mr Simon ZhuangZhou Mr Xue Ping Liu Mr Roger Smeed Mr Stephen Streeter Chairman Managing Director Director Director Director Non-executive Director Non-executive Director Mr Smeed resigned on 10 August 2012 and Mr Streeter resigned on 12 December COMPANY SECRETARY Mr Vincent Zhi Qing Zhu PRINCIPAL ACTIVITIES The principal activities of the consolidated group during the period were: - Steel and commodities trading; - Logistics; and - E-commerce in the People s Republic of China. There have been some results arising from a shift of the group s focus from traditional trading of steel products to provision of online steel trading and logistic services. There have also been some positive results from diversification in shifting the trading focus from steel to international mineral commodities such as iron ore and steam coal. FINANCIAL RESULTS The consolidated gross profit of the group amounted to $1,446,181 which is a significant drop compared with the figure for the same period last year (2011: $8,403,882). The major contributing factor to this significant reduction was the exacerbation and worsening of the credit squeeze and property market shrinkage that is evident in China. Of particular concern to shareholders would be the provision of impairment of future receivables which stands at $29,974,857 and is the predominant contributor to the net loss figure of $30,710,519. It is to be noted that the impairment of future receivables was applied as a precautionary measure in response to loan advances made to related third parties that are to be repaid by June Such precaution is taken because of the worsening of market conditions and the corresponding worsening of the Group s cash flow position. The net assets of the consolidated group have reduced to $809,280 which is some $31,473,330 less than the figure for 2011 and which roughly reflects the amount provisioned for future impairment of receivables. 1

5 DIRECTORS REPORT FUTURE DEVELOPMENTS In 2012, the group is looking to further diversify its trading focus away from steel products and towards mining commodities such as iron ore, coal and rare metal minerals. In order to achieve this goal, the group is looking to move upstream and will be entering into arrangements directly with mining companies, primarily in China, for the uplift and trading of their off-takes produced. AUDITOR S INDEPENDENCE DECLARATION A copy of the auditor s independence declaration as required under s307c of the Corporations Act 2001 is included on page 3 of this financial report and forms part of this Directors report. Jie Lin Chairman Dated 28 February

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7 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2012 Consolidated Entity 6 months to 6 months to 31-Dec Dec-11 AUD AUD Revenues 34,764, ,621,319 Cost of sales (33,318,677) (99,217,437) Gross profit 1,446,181 8,403,882 Other income 552, ,621 Operating expenses (265,814) (271,886) Administrative expenses (809,097) (1,038,977) Provision for impairment of receivables (29,974,857) - Finance costs (1,488,872) (2,625,079) Other expenses (149) - Profit before tax (30,539,867) 4,943,561 Income tax expense (170,652) (1,481,812) Profit for the period (30,710,519) 3,461,749 Other comprehensive income Exchange differences on translation of foreign operations (762,811) 2,115,813 Other comprehensive income for the period, net of tax (762,811) 2,115,813 Total comprehensive income for the period (31,473,330) 5,577,562 Profit attributable to: Members of the parent entity (30,781,951) 3,356,591 Non-controlling interests 71, ,158 Total comprehensive income attributable to: Members of the parent entity (31,532,081) 5,444,841 Non-controlling interests 58, ,721 Earnings per share From continuing operations: Basic and diluted earnings per share (cents) (13.33) 1.45 The accompanying notes form part of these financial statements. 4

8 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012 Note Consolidated 31-Dec Jun-12 AUD AUD Current assets Cash and cash equivalents 14,889,418 40,947,411 Trade and other receivables 3 13,494,958 52,088,960 Notes Receivable - - Prepayments 15,004,145 41,370,519 Inventories 1,109,064 53,883 Total current assets 44,497, ,460,773 Non-current assets Property, plant and equipment 7,748,310 8,136,218 Prepayments 4,839,622 - Total non-current assets 12,587,932 8,136,218 Total assets 57,085, ,596,991 Current liabilities Trade and other payables 5,981,386 21,275,819 Borrowings 12,552,525 9,030,600 Notes payable 37,609,796 79,780,680 Current tax liabilities 67, ,485 Total current liabilities 56,211, ,215,584 Long term borrowing 64,740 98,797 Total Non-Current liabilities 64,740 98,797 Total liabilities 56,276, ,314,381 Net assets 809,280 32,282,610 Equity Issued capital 4 14,441,524 14,441,524 Retained earnings (12,761,417) 18,020,534 Foreign exchange translation reserve (1,580,420) (817,609) Non-controlling interests 709, ,161 Total equity 809,280 32,282,610 The accompanying notes form part of these financial statements. 5

9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2012 Attributable to members of parent entity Foreign Issued capital Retained earnings currency translation reserve Noncontrolling interest Total equity AUD AUD AUD AUD AUD Balance at 1 July ,441,524 18,020,534 (817,609) 638,161 32,282,610 Total comprehensive income (loss) for the period - (30,781,951) (762,811) 71,432 (31,473,330) Increase in controlling interest of a subsidiary Shares issued during the year, net of costs Balance at 14,441,524 (12,761,417) (1,580,420) 709, ,280 Balance at 1 July ,441,524 15,937,004 (3,284,365) 390,684 27,484,847 Total comprehensive income for the period - 3,356,591 2,115, ,157 5,577,561 Increase in controlling interest of a subsidiary Shares issued during the year, net of costs Balance at 31 December ,441,524 19,293,595 (1,168,552) 495,841 33,062,408 The accompanying notes form part of these financial statements. 6

10 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER months to 31 December 2012 AUD 6 months to 31 December 2011 AUD CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 47,262, ,131,684 Payments to suppliers and employees (56,772,405) (99,690,270) Interest received 552, ,651 Finance costs (1,265,406) (2,288,241) Income tax paid (228,789) (518,291) Net cash provided(used) by operating activities (10,451,202) 15,110,533 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets - (7,610,929) Net cash used in investing activities - (7,610,929) CASH FLOWS FROM FINANCING ACTIVITIES Loan made to related parties (18,315,229) - Receipt (Repayment) of borrowings 3,667,669 (9,611,199) Net cash used in financing activities (14,647,560) (9,611,199) Net increase/(decrease) in cash held (25,098,762) (2,111,595) Effect of exchange rates on cash holdings in foreign currencies (959,231) 2,712,881 Cash and cash equivalents at beginning of period 40,947,411 33,908,379 Cash and cash equivalents at end of period 14,889,418 34,509,665 The accompanying notes form part of these financial statements. 7

11 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 1: BASIS OF PREPARATION The condensed interim consolidated financial statements (the interim financial statements) of the Group are for the six months ended and are presented in Australian dollars ($), which is the functional currency of the parent company. These general purpose interim financial statements have been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with AIFRS, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2012 and any public announcements made by the Group during the half-year in accordance with continuous disclosure requirements arising under the Australian Stock Exchange Listing Rules and the Corporations Act The interim financial statements have been approved and authorized for issue by the board of directors on 28 February NOTE 2: SIGNIFICANT ACCOUNTING POLICIES a. Principles of Consolidation A controlled entity is any entity that Rongtai International Group Holdings Limited has the power to control the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered. A list of controlled entities is contained in Note 7 to the financial statements. All controlled entities have a June financial year end. As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Non-controlling interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the Equity section of the consolidated Statement of Financial Position and in the consolidated Statement of Profit or Loss and Other Comprehensive Income. The interest of minority shareholders in the acquiree is initially measured at the minority s proportion of the net fair value of the assets liabilities and contingent liabilities recognised. 8

12 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) b. New and revised Australian Accounting Standards The Group has adopted all new and revised Australian Accounting Standards and Interpretations that became effective for the first time and are relevant to the Group, including: AASB Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income which requires entities to group items presented in Other Comprehensive Income (OCI) on the basis of whether they are potentially re-classifiable to profit or loss subsequently, and changes the title of statement of comprehensive income to statement of profit or loss and other comprehensive income. The adoption of the new and revised Australian Accounting Standards and Interpretations has had no significant impact on the Group s accounting policies or the amounts reported during the current halfyear period. The adoption of AASB has resulted in changes to the Group s presentation of its half-year financial statements. c. Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income). Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Current tax Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. d. Inventories Inventories are measured at the lower of cost and net realisable value. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. 9

13 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) e. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. The cost of fixed assets constructed within the group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit or Loss and Other Comprehensive Income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including building and capitalised leased assets, but excluding freehold land, is depreciated on a straight line basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Leasehold Improvements 5-10% Computer equipment 15-20% Office Equipment 15-20% Motor Vehicles 15-20% Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of Profit or Loss and Other Comprehensive Income. 10

14 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) f. Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Group, are classified as finance leases. Finance leases are capitalised by recognizing an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. g. Financial Instruments Initial recognition and measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instrument classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. Effective interest rate method The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss. 11

15 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) Income is recognised on an effective interest rate basis for debt instruments other than those financial assets at fair value through profit or loss. Classification and subsequent measurement Financial assets at fair value through profit or loss Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Group s intention to hold these investments to maturity. They are subsequently measured at amortised cost. Held-to-maturity investments are included in non-current assets where they are expected to mature within 12 months after the end of the reporting period. All other investments are classified as current assets. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with changes in such fair value (ie gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. 12

16 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) Available-for-sale financial assets are included in non-current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as current assets. Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm s length transactions, reference to similar instruments and option pricing models. Impairment of financial assets At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the Statement of Profit or Loss and Other Comprehensive Income. The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use of an allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities 13

17 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed is recognised in profit or loss. h. Foreign Currency Transactions and balances Functional and Presentation Currency The functional currency of each of the Group s entities is measured using the currency of the primary economic environment in which that entity operates. The interim financial statements are presented in Australian dollars which is the parent entity s functional and presentation currency. Transactions and Balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the yearend exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the Statement of Profit or Loss and Other Comprehensive Income, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the Statement of Profit or Loss and Other Comprehensive Income. Group Companies The financial results and position of foreign operations whose functional currency is different from the Group s presentation currency are translated as follows: - assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; - income and expenses are translated at average exchange rates for the period; and - retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations are transferred directly to the Group s foreign currency translation reserve in the statement of financial position. These differences are recognised in the Statement of Profit or Loss and Other Comprehensive Income in the period in which the operation is disposed. 14

18 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) i. Employee Benefits Provision is made for the entity s liability for employee benefits arising from services rendered by employees to balance date. j. Provisions Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of amounts required to settle the obligation at balance date. k. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with original maturities of 12 months or less, and bank overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the statement of financial position. l. Revenue Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Revenue recognition relating to the provision of logistic and storage services is determined with reference to the amount of services provided to customers on a monthly basis. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset s net carrying amount. All revenue is stated net of the amount of VAT and GST. m. Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use of sale. All other borrowing costs are recognised in the Statement of Profit or Loss and Other Comprehensive Income in the period in which they are incurred. 15

19 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONT) n. VAT/GST Revenues, expenses and assets are recognised net of the amount of VAT, except where the amount of VAT incurred is not recoverable from the Taxation Office. In these circumstances, the VAT is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of VAT. Cash flows are presented in the cash flow statement on a gross basis, except for the VAT component of investing and financing activities, which are disclosed as operating cash flows. o. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Where the Group has retrospectively applied an accounting policy, made a retrospective restatement of items in the financial statements or reclassified items in its financial statements, an additional statement of financial position as at the beginning of the earliest comparative period will be disclosed. p. Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the director. In identifying its operating segments, management generally follows the Group's service lines, which represent the main products and services provided by the Group. Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches. All inter-segment transfers are carried out at arm's length prices. The measurement policies the Group uses for segment reporting under AASB 8 are the same as those used in its financial statements. 16

20 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 3: TRADE AND OTHER RECEIVABLES 31 Dec June 2012 AUD AUD Trade Receivables 7,271,136 22,644,550 Other Receivables 36,218,335 29,444,410 43,489,471 52,088,960 Provision for Impairment of Other Receivables (29,994,513) - Total Net Trade and Other Receivables 13,494,958 52,088,960 The group has fully provided for two of major related party receivables totalling $29,994,513. The provision was raised due to concerns with the recoverability of these loans because these two related parties have cash flow difficulties. NOTE 4: ISSUED CAPITAL AUD Number Balance at 30 June ,441, ,887,960 Shares issued during the half year - - Less: capital raising costs Balance at 14,441, ,887,960 NOTE 5: DIVIDENDS No dividends provided for or paid during the half year (2011: nil). 17

21 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 6: OPERATING SEGMENTS The directors have determined the operating segments based on the reports reviewed by the chief decision makers. The Group operates predominately in one geographical segment, being the People's Republic of China. The chief decision makers assessed the business based on the following segments: - Steel product trading; - E-Commerce; -Logistic service - Corporate During the six month period to, there have been no changes from prior periods in the measurement methods used to determine operating segments and reported segment profit or loss. Segment information The segment information provided to the chief decision makers is as follows: Steel product trading E-Commerce Logistic Services Corporate Total AUD AUD AUD AUD AUD 6 months to Segment revenues 33,401, , ,381 29,220 34,764,858 Segment profit (30,501,365) 511,955 (460,158) (260,951) (30,710,519) 6 months to 31 December 2011 Segment revenues 104,638, ,012 2,045, ,621,319 Segment profit 3,682, ,984 72,563 (799,821) 3,461,749 Total segment assets 55,047,743 1,107, , ,770 57,085, June ,922,000 3,414,575 2,112, , ,596,991 Total segment liabilities 51,306,827 1,085, ,357 3,124,287 56,276, June ,322,803 1,373,782 1,481,671 3,136, ,314,381 18

22 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 7: CONTROLLED ENTITIES Country of Incorporation Principal Activities Percentage Owned (%)* 31 Dec Jun 2012 Subsidiary of Rongtai International Group Holdings Limited: Everprosper (Asia) International Limited Hong Kong Investment Holding Company 100% 100% Subsidiary of Everprosper (Asia) International Limited: Fujian Zhongda Logistics Co., Limited China Trading of Steel products 100% 100% Subsidiary of Fujian Zhongda Logistics Co., Limited: Fujian RongtaiMinxin Logistics Co., Limited China Trading of Steel Products&Provisio n of Logistic Services 99.90% 99.90% Subsidiary of Fujian RongtaiMinxin Logistics Co., Limited: Fuzhou China United Steel Commerce Co., Limited China Provision of steel trading services via E-commerce Platform 80% 80% * Percentage of voting power in proportion to ownership. 19

23 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended NOTE 8: CONTINGENT LIABILITIES The group is not aware of any contingent liabilities that should be disclosed in accordance with AASB 137. NOTE 9: EVENTS SUBSEQUENT TO REPORTING DATE No material events have occurred subsequent to balance date and up to the date of this report. NOTE 10: Going Concern As at, net cash used in operating activities amount to $10,451,202. The consolidated group has made a net loss totalling $1,498,473 before recognition of provision for doubtful debt for related party receivables totalling $29,974,857. After the recognition of provision for doubtful debt, the net loss amount to $31,473,330. The consolidated group is in a negative working capital position of $11,713,912. The consolidated entity s ability to continue as a going concern is contingent upon the recoverability of other receivables and capital injection from third party. If related party receivable is not recovered and/or capital are not injected, the going concern basis may not be appropriate, with the result that the Group may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business and in amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report. 20

24 DIRECTOR S DECLARATION The directors of the company declare that: The financial statements and notes, as set out on pages 4 to 20: a. comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001; and b. give a true and fair view of the consolidated entity s financial position as at 31 December 2012 and of its performance for the half-year ended on that date. In the directors opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Jie Lin Chairman Dated 28 February

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