JATENERGY LIMITED ANNUAL REPORT ABN

Transcription

1 JATENERGY LIMITED ANNUAL REPORT ABN FOR YEAR ENDED 30 JUNE 2013

2 JATENERGY LIMITED CONTENTS Directors Report 3 Auditor s Independence Declaration 20 Corporate Governance 21 Financial Report 23 Directors Declaration 67 Independent Auditor s Report to the Members of Jatenergy Limited 68 Shareholder Information 71 2

3 JATENERGY LIMITED DIRECTORS REPORT Your Directors present their report on the consolidated entity (referred to hereafter as the Group ) consisting of Jatenergy Limited ( Jatenergy or the Company ) and its controlled entities during the year ended 30 June Directors The following persons were Directors of Jatenergy Limited during the whole of the financial year and up to the date of this report. Xipeng Li, Non-Executive Director (appointed 15 April 2011) Wilton Yao, Alternate Non-Executive Director for Mr Xipeng Li (appointed 15 April 2011) Anthony Crimmins, Executive Chairman (appointed 22 May 2012) Richard Pritchard, Non-Executive Director (appointed 22 May 2012) Directors have been in office since the start of the year to the date of this report unless otherwise stated. Principal activities The principal activities of Jatenergy Limited are to develop conventional and renewable energy projects, with an initial focus on exploration and production of coal from Indonesia and on producing crude oil from its Indonesian oil seeds plantation. Dividends paid or recommended No dividends were paid or declared since the start of the period. No recommendation for payment of dividends has been made (2012: $nil). Review of operations and financial results Company Structure 3

4 JATENERGY LIMITED DIRECTORS REPORT The company is divided into four sections: 1. Head office located in Sydney administration and business development. 2. Coal operations located in Jakarta with long term coal assets (CSB) and short to production coal agreements (PT Barata Energy). 3. Biomass operations (PT Jatoil Waterland) in operating in Semarang area central Java (Indonesia) and head office in Jakarta. 4. Technology projects in coal conversion technologies (Coal Plus) and seeking biomass conversion and energy material process technologies. These businesses are maintained at the head office in Sydney, Jatenergy Limited and there is a sales and marketing office in Melbourne for Jatenergy Developments Pty Ltd. The major operational activities during the year were as follows: Sydney office There have been no significant changes in personnel to the Sydney office. The company has made further savings in regards to non-essential services. On average the operating cash flows for the company for 2011/12 were $3,423,000 and for 2012/13 $1,240,000, an overall 60% reduction in costs. The company has maintained its effectiveness and operability with these reduced staffing and operating levels. The focus has been on providing support to the Jakarta and Kalimantan offices. Together with other savings, these cost reductions are expected to have a significant positive impact on the company s future cash flows. Jakarta office There have been no changes in personnel in the Jakarta office. The office has moved to less expensive premises to achieve further savings for the company. Jatenergy Developments Pty Ltd On 1 November 2012 Jatenergy Limited announced a joint venture with Shanghai businessman Mr Caigou Shang an entrepreneur with experience is business marketing and development. The company Jatenergy Developments received $1,000,000 for a share subscription being 25% of the shares in Jatenergy Developments Pty Limited. It is focused on marketing and selling Jatenergy s coal and jatropha seed/oil product. PT Barata Energy PT Barata Energy is a foreign investment company incorporated in Indonesia, licensed for mining activities, and wholly owned by Jatenergy Limited. All outstanding approvals and licences have been obtained during the course of this financial year. PT Barata Energy has contractual arrangements to undertake mining activities at Jongkang I and II mines and PT Atan Bara Sejahtera in East Kalimantan, and PT Saijaan Prima Coal, PT PPI, and the Sebuku Project in South Kalimantan. Katingan project On 8 October 2012 Jatenergy Limited entered into a Conditional Share Sale and Purchase Agreement with an Indonesian entity for the purchase of PT Coal Soil Brik. Due to external condition relating to the coal markets it was not possible to conclude the transaction. Further discussions were held with PT Prakarsa Corporindo which resulted the signing of a Conditional Share Purchase Agreement after the financial year end on 23 July Jongkang I and II projects In late 2011, PT Barata Energy entered into a joint venture with CV Wijaya Mulia for a 30/70 joint operation and 100% off-take of coal from the Jongkang I project, near Tenggarong, East Kalimantan. The JV arrangement requires Jatenergy Limited to provide working capital to earn USD 3.00/tonne plus 30% of the net margin for the coal, as well as the right to undertake marketing and sales. A production license for the Jongkang project was granted by the Kebupaten Kutaikartanegara in November 2011 and production began in early

5 JATENERGY LIMITED DIRECTORS REPORT In November 2011, PT Barata Energy entered into a joint venture with CV Karya Putra Bersama for a 30/70 joint operation and 100% off-take of coal from the Jongkang II project, near Tenggarong, East Kalimantan. The JV arrangement require Jatenergy Limited to provide working capital to earn USD 3.00/tonne plus 30% of the net margin for the coal, as well as the right to undertake marketing and sales. As an existing coal mining operation, production from Jongkang II commenced immediately. Both Jongkang I and II offer high quality thermal coal with high gross calorific values of ~6,500 kcal/kg (adb), sulphur below 1% and low ash and moisture. In March 2012, Jatenergy completed its first shipments of coal from the Jongkang projects. Total revenues from these two projects to June 2013 were $135,000, with the majority of this total coming in the March quarter. The progressive fall in the price of Indonesian coal and continued rainfall within the area has halted. Therefore some operations were suspended pending an improvement in weather and further stability of coal prices. It is expected that production proceed as prices are now more stable a new mining plan has been adopted resulting in a reduction of approximately USD10.00/tonne in operating costs. Atan Bara project The Atan Bara project is a contractual arrangement between PT Barata Energy and PT Atan Bara Sejahtera (ABS). Under this arrangement, PT Barata Energy has exclusive rights to conduct coal mining, and an exclusive right to purchase or market any coal mined from the Atan Bara project. A production licence (or IUP Produksi) for the Atan Bara project was granted by the Kebupaten Pasir Penajam Utara in February 2012, following which Jatenergy Limited completed drilling, topographical surveys and a mine plan. Following a drop in the price of Indonesian coal earlier this year, the value of the Atan Bara project has been impaired by $1,166,593 to $1,605,463 and plans to bring Atan Bara into production have been put on hold. New Project Areas for Barata Energy Gerrongang Project Area Following completion of its due diligence on the Geronggang Coal Project area, the company is looking to invest or JV its PT Saijann Prima Coal. Should this project proceed to production as expected, this would bring to three the total number of Barata Energy s actively producing Indonesian coal mines. Included in the Gerrongang Project area PT Barata Energy, has also signed two additional exclusive memoranda of understanding (MOUs) with PT Saijaan Prima Coal (SPC) and PT Platinum Prima Iron (PPI), for the establishment of additional coal and iron ore mining ventures. PT Saijaan Prima Coal A Memorandum of Understanding has been signed between PT Barata Energy and PT Saijaan Prima Coal (SPC) for the joint operation of their coal site at Geronggang in South Kalimantan. The mine is adjacent to the Arutmin operations at Senakin and is licenced by Kebupaten Kotabaru for exploitation and production. Barata have carried out a general geological survey with drilling, laboratory coal analysis, and a topographical survey from which a mine plan has been produced. Sebuku 25 March 2013 PT Barata Energy has a Memorandum of Understanding for the joint operation of two coal mining concessions on the island of Sebuku in South Kalimantan. A general geological survey has been carried out which indicated potential for coal mining activities. The owner of the concessions owns further areas of land in the vicinity which have been surveyed and drilled in the past and show potential. The MoU will therefore be amended to transfer Barata's interest to these areas. 5

6 JATENERGY LIMITED DIRECTORS REPORT PT Platinum Prima Iron 25 March 2013 PT Barata Energy has a Memorandum of Understanding with PT PPI for the joint operation of this mining concession. PT PPI has an exploration licence for iron ore. PT Barata Energy have carried out a general survey test pits have been excavated, and laboratory analysis of ore samples has been carried out. The area shows potential and PT Barata Energy is currently seeking another buyer for this project. Indonesian biofuel project As of 22 February 2013 PT Jatoil Waterland a 70% subsidiary of Jatenergy Limited, announced it had extinguished its loan to the venture. At the end of December 2012, the venture had yielded a total of over 5,600 tonnes of jatropha seed, of which about 4,840 tonnes has been used to extinguish the loan to the venture. The remaining 760 tonnes of excess seed represents a profit. With jatropha seed sales continuing, this positive balance is expected to grow over the coming years. This final profit payment was completed three years since signing of its original contract in 2009 with PT Waterland Asia Bio Ventures for the establishment of PT Jatoil Waterland. Under the agreement between Jatenergy and Waterland. Jatenergy initially paid for over 60% of the full 25 year land access fee for the 2000 ha of jatropha fields. The remaining fee was paid from profits obtained from the sale of jatropha seed. Jatenergy Head Office Projects Coal Plus Jatenergy has been activity involved in pursuing opportunities for coal plus in Indonesia and greater South East Asia. The Board of Jatenergy Limited announced on the 6 March 2013 that two new coal beneficiating plants employing the proprietary Coal Plus technology are currently nearing completion in China. The two new plants together with the three existing Coal Plus plants represent a total investment into in Coal Plus technology over four years of $160 million (about RMB 1 billion), and bring the combined input capacity to over 6.7 million tonnes per annum (Mtpa). The three existing plants, which are all located in the county of Fugu in the Shaanxi province, have input capacities of 1, 2 and 1.5 Mtpa. An additional pilot plant is also being operated in Fugu for research and process development. There are currently two Coal Plus plants under construction outside of Fugu. One is near the city of Pingdingshan in Henan province. Queensland Coal Assets In light of the recent downturn in the prospective coal tenements and a company focus on producing coal assets in Indonesia, Jatenergy and Spinifex have mutually agreed to terminate this acquisition. This provided saving of $340,000 in cash and 12.5 million Jatenergy shares, which would have been issued to acquire these tenement. There has been no value assigned to the Queensland coal assets on the balance sheet at 30 June Corporate On 6 August 2012 the Board issued a Shareholder Placement this was completed on 12 September The offer was for 4 cents per share. At the completion of the offer, 3,025,000 shares were issued raising $121,000. Subsequently the Board on 7 November 2012 completed shortfall for the Shareholder Placement Plan 2,350,000 shares were issued for $96,000. In parallel the Board on 7 November 2012 completed a further placement of 10,150,000 shares issued raising $404,000. Financial Result The consolidated loss of the Group for the year after providing for income tax amounted to $2,213,427 (2012: $4,664,932). 6

7 JATENERGY LIMITED DIRECTORS REPORT The 2013 loss is attributable to the following: Employment benefits of $237,763 (2012: $291,425) Consultancy expenses of $361,905 (2012: $1,061,551) Professional costs of $170,044 (2012: $129,872) Impairment of intangible of $1,166,593 (2012: $1,594,094) Financial position The consolidated statement of financial position at 30 June 2013 reflects cash at bank of $708,722 (2012: $618,901). The net assets of the group have decreased from $5,527,746 at 30 June 2012 to $4,908,841 at 30 June Significant changes in state of affairs There have been no significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year The Company announced on 22 July 2013 that the Conditional Share Sale and Purchase agreement for the sale of PT Coal Soil Brik (CSB) to PT Prakarsa Corpirdo was signed on 17 July Jatenergy has agreed to the sale of the Coal Soil Brik to PT Prakarsa Corpindo. The purchase price of USD$ 2,000,000 will be paid by Prakarsa, with no additional management consulting fee or royalty payment, and no payable commitment in the future. Prakarsa has made an initial payment of USD$200,000 and will have six months to complete the transaction. Under the agreement, the remaining purchase price has to be paid subject to Jatenergy s fulfilment of the Conditions Precedent (CP s) within a period of three months. The principle CP s for CSB are: CSB details on regulatory and corporate matters, preparation of shareholder registrations, details of government approvals and company registration, provision of CSB company financial statements, an announcement in national Indonesian newspaper of the CSB sale, formal notification of CSB employees and evidence of CSB General Meeting of Shareholders; Internal consents of CSB Sellers; and Third Party consent as and if required from the Indonesian Government, with a Warranty that the CSB sellers have not entered into any undisclosed commitments. The purchaser must agree that all CP s must have been met. Once the CP s have been satisfied, the remaining purchase price of USD$1,800,000 will be paid by 17 December Of this payment Jatenergy will earn 80% minus costs and associated expenses. If the CP s are not fulfilled within the agreed three month period, Prakarsa has the rights to waiver the CP s outstanding or extend the period for the CP s fulfilment. Otherwise the agreement can be terminated and the initial payment refunded. 7

8 JATENERGY LIMITED DIRECTORS REPORT No matters other than the above have arisen since 30 June 2013 that have significantly affected, or may significantly affect: (i) (ii) (iii) the Company s operations in future financial years; or the results of those operations in future financial years; or the Company s state of affairs in future financial years. Likely developments and expected results of operations Additional comments on expected results of certain operations of the group are included in this annual report under the review of operations and activities on pages 3-6. Further information on likely developments in the operations of the group and the expected results of operations have not been included in this annual financial report because the directors believe it would be likely to result in unreasonable prejudice to the group. Environmental regulations The consolidated entity s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory in Australia. Loss per share Cents Cents Basic loss per share (2.4) (5.92) Diluted loss per share (2.4) (5.92) Information on directors Anthony Crimmins EXECUTIVE CHAIRMAN - (APPOINTED 22 MAY 2012) Anthony Crimmins has been actively involved in the business development of numerous start-up companies that have been funded and listed on the Australian Securities Exchange. He was fundamental in identifying projects and businesses that could be successfully listed, particularly in "breakthrough" businesses. He worked for 6 years as an environmental engineer and business development manager in Asia, and has a level fluency in Mandarin and an understanding of Asian business practices. He has also previously worked as a general manager, project manager and in commercialisation of technology-based products and services. Xipeng Li NON-EXECUTIVE DIRECTOR - INDEPENDENT (APPOINTED 15 APRIL 2011) Li Xipeng is an experienced executive and has served as a Director and Chief Executive Officer of Pinglin Expressway Limited. He has also served as Chairman of Pinglin Expressway Limited since May Prior to that, Mr Li served as Chairman of HSV, China since May 2001 and as Chairman of Henan Shengrun Real Estate Co Ltd, China, since May Mr Li graduated from Zhongnan University of Economics and Law and he earned his EMBA at Cheung Kong Graduate School of Business. Wilton Yao ALTERNATE NON-EXECUTIVE DIRECTOR FOR MR XIPENG LI INDEPENDENT (APPOINTED 15 APRIL 2011) MEMBER OF AUDIT COMMITTEE Wilton Yao has been involved in business broking industry for more than 10 years and specialises in franchise recruitment and development. He has worked with a number of franchise firms to develop franchise businesses for 8

9 JATENERGY LIMITED DIRECTORS REPORT both local and international markets. Mr Yao has also been involved in managing several retail and franchise businesses for many years and has great experience and knowledge in management and marketing. Mr Yao has strong connections with overseas investors, especially from mainland China and he has worked closely with Australian Government organisations and local companies to promote successful investment projects for Chinese investors. He also provides consulting services to a number of ASX listed companies, focusing on project exploring and seeking investment funds from overseas investors. Richard Pritchard NON-EXECUTIVE DIRECTOR - INDEPENDENT (APPOINTED 22 MAY 2012) Richard Pritchard has over 25 years experience in civil engineering and finance, and has been responsible for numerous infrastructure projects in the fields of telecommunications, transport, water, mining and energy. Mr Pritchard holds an Honours Degree in Civil Engineering from the University of Brighton (UK) and a Graduate Diploma in Public Company Management from the Institute of Company Directors. He is a Member of the Institute of Company Directors and a Member of Engineers Australia. During the past 3 years Mr Pritchard sat on the Boards of SVC Group Limited (ASX code: SVC) and Blackcrest Resources Limited (ASX code: BCR). Information on company secretary Graeme Hogan (BCom FCPA FCSA) COMPANY SECRETARY (PART-TIME) (APPOINTED 23 JULY 2012) Graeme Hogan has worked in the resources industry for over 30 years. He has worked with companies in the following commodities: iron ore, coal, industrial minerals and copper/gold. Graeme has over 20 years experience as company secretary of both listed and unlisted companies. He is currently the Company Secretary of Bligh Mining Limited (ASX Code BCH) and Chief Financial Officer of Atlantic Gold NL (ASX Code ATV). Director and audit committee meetings The number of meetings of the Company s Board of Directors held during the year ended 30 June 2013 and the numbers of meetings attended by each Director were: A meetings of directors Anthony Crimmins 5 5 Richard Pritchard 3 5 Xipeng Li 0 5 Wilton Yao 5 5 B A B Number of meetings attended Number of meetings held during the time the Director held office Risk management The Company takes a proactive approach to risk management. Management, through the Chief Executive Officer, is responsible for designing, implementing and reporting on the adequacy of the Company s risk management and internal control system. The risk management program is approved and monitored by the Board. Management reports to the Board on the Company s key risks and the extent to which it believes these risks are being managed. This is performed on a six monthly basis or more frequently as required by the Board. The Board is responsible for satisfying itself annually, or more frequently as required, that management has developed and implemented a sound system of risk management and internal control. 9

10 JATENERGY LIMITED DIRECTORS REPORT The Company has developed a series of risks which the Company believes to be inherent in the business and industry in which the Group operates. These include: operating risk; environmental risk; branding and reputation risk; legal, compliance and regulatory risk; competitor and market risk; intellectual property risk; occupational health and safety risk; and financing and adequacy of capital risk. These risk areas are provided here to assist investors to understand better the nature of the risks faced by our Group and the industry in which we operate. This is not necessarily an exhaustive list. The Board received regular reports on progress in addressing and management of the key risks associated with the Group s business. The Board has the right to appoint external professional advisers to carryout regular investigations into control mechanisms, and report their findings, including recommendations for improvement to controls, processes and procedures to the Board. A copy of the Company s risk management policy is contained in Annexure 4 of the Company s Corporate Governance Statement, a copy of which is available on the Company s website. REMUNERATION REPORT This report outlines the remuneration arrangements in place for Directors and key management personnel of the Group for FY2013. The remuneration report is set out under the following main headings: A. Principles used to determine the nature and amount of remuneration B. Details of remuneration C. Service agreements D. Share-based compensation These disclosures have been audited, as required by section 308(3c) of the Corporations Act Role of the remuneration committee The remuneration committee is a committee of the Board. It is primarily responsible for making recommendations to the Board on: non-executive director fees executive remuneration (directors and other executives), and the over-arching executive remuneration framework and incentive plan policies. Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Company. In doing this, the remuneration committee seeks advice from independent remuneration consultants. Currently the role of the Remuneration Committee is undertaken by the Board given the number of directors and the nature of the Company. The Corporate Governance Statement provides further information on the role of this committee. A. Principles used to determine the nature and amount of remuneration The performance of the Group depends on the quality of its Directors and executives. 10

11 JATENERGY LIMITED DIRECTORS REPORT To prosper, the Group must attract, motivate and retain highly skilled Directors and executives. To this end, the Group embodies the following principles in its remuneration framework: provide competitive rewards to attract high calibre executives; link executive rewards to shareholder value; ensure that a significant portion of executive remuneration is at risk, and therefore dependent on meeting pre-determined performance benchmarks; and establish appropriate performance hurdles in relation to variable executive remuneration. The Board of Directors assesses the appropriateness of the nature and amount of remuneration of Directors and senior managers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Remuneration structure In accordance with the corporate governance principles and recommendation, the structure of Non-Executive Director and senior manager remuneration is separate and distinct. Non-executive director remuneration Objective The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain Directors of the highest calibre, while incurring costs that are acceptable to shareholders. Structure Each Non-Executive Director receives a fixed fee for being a Director of the Group. The constitution and the ASX Listing Rules specify that the maximum aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting of shareholders. At the general meeting of shareholders held on 27 November 2009, this maximum amount was set at $350,000 per annum. In 2013, the Group paid Non-Executive Directors a total of $133,636 (2012: $270,927) including superannuation. The amount of aggregate remuneration sought to be approved by shareholders and the fixed fees paid to Directors are reviewed annually. The Board considers fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. Non-Executive Directors were also granted options on ordinary shares of Jatenergy Limited on the successful ASX listing of the Company (formerly Jatoil Limited) in January The details of these options are set out in Sections B and D below and note 18 to the financial statements - Key Management Personnel Disclosure. Executive remuneration Objective The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group and so as to: reward executives for group and individual performance against targets set by reference to appropriate benchmarks; align the interests of executives with those of shareholders; link reward with the strategic goals and performance of the Group; and ensure total remuneration is competitive by market standards. There are currently no full time executives of the Company and the remainder of this policy reflects the current policy, however, when the financial situation of the Company changes in the future and full time executives are appointed then this policy will be reviewed and updated to incorporate appropriate market conditions prevailing at that time. 11

12 JATENERGY LIMITED DIRECTORS REPORT Structure A policy of the Board is to establish employment or consulting contracts with the chairman, chief executive officer and other senior executives. At the time of this report there are consulting agreements, including Chris Flanagan the operations manager for Indonesia. Remuneration consists of fixed remuneration under an employment or consultancy agreement and long term equitybased incentives that are subject to satisfaction of performance conditions. The equity-based incentives are intended to retain key executives and reward performance against agreed performance objectives. Fixed remuneration The level of fixed remuneration is set so as to provide a base level of remuneration that is both appropriate to the position and competitive in the market. Fixed remuneration is reviewed annually by the Board and the process consists of a review of group-wide and individual performance, relevant comparative remuneration in the market, and internal and (where appropriate) external advice on policies and practices. Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and expense payment plans, such that the manner of payment chosen is optimal for the recipient without creating additional cost for the Group. Remuneration Policy and Performance The Company is in the early stages of its business plan following relisting on the Australian Securities Exchange (ASX) on 12 April Accordingly the Company is currently reviewing the remuneration policies applicable to the CEO, general manager and other senior personnel of the Company in relation to KPI s and extent of remuneration which is at risk. The review will assist the Company to better structure remuneration policies in accordance with current trends and practices in corporate remuneration. Relationship between remuneration policy and company performance $ $ $ Revenue 132, ,505 97,392 Net loss (2,213,427) (4,664,932) (3,166,075) Share price The Company is currently reviewing its remuneration policies as indicated above. 12

13 JATENERGY LIMITED DIRECTORS REPORT B. Details of remuneration (audited) Details of the remuneration of the Directors and other key management personnel (as defined in AASB 124 Related Party Disclosures) of Jatenergy Limited are set out in the following tables. Key management personnel for the year ended 30 June 2013 include the Executive Chairman and Operations Manager Indonesia. Key management personnel for the year ended 30 June 2012 include the executive chairman and general manager. Short Term Benefits Post-Employment Benefits Share-Based Payments Long term benefits Name Cash salary and fees Cash bonus Nonmonetary benefits Superannuation Retirement benefits Long service leave Options Total Perform-ance related 2013 $ $ $ $ $ $ $ $ % Non-executive directors Xipeng Li Wilton Yao 1 100, ,000 - Richard Pritchard 2 33, ,336 - Total non-executive directors 133, ,636 - Executives Anthony Crimmins 134, ,000 - Chris Flanagan 175, ,415 - Total executive directors & key management 319, ,415 - Total 453, , $ $ $ $ $ $ $ $ % Non-executive directors Xipeng Li Wilton Yao 1 54, ,000 - Richard Pritchard 2 4, ,000 - Total non-executive directors 58, ,000 - Executive directors Anthony Crimmins 3 199, ,500 - Key Management Paul Hogan 144, ,975 - Total executive directors & key management 344, ,475 - Total 402, , Alternative for Xipeng Li 2. Richard Pritchard appointed effective 22 May Anthony Crimmins appointed Executive Director effective 22 May

14 JATENERGY LIMITED DIRECTORS REPORT C. Share-based compensation (audited) Description of options/rights issued and remuneration Details of the options granted as remuneration in prior years to key management personnel are shown in Note 26: Share Based Payment. No options were granted as remuneration in the financial year ended 30 June 2013, or the year ended 30 June Loans to directors and executives There were no loans to Directors or executives during or since the end of the year. Share holdings of key management personnel Balance at the start of the year Received during the year on the exercise of options Other changes during the year Balance at the end of the year Directors and key management personnel of Jatenergy Limited ordinary shares No No No No 2013 Xipeng Li** 13,411, ,411,222 Richard Pritchard 250, ,000 Anthony Crimmins 5,039, ,039,556 Wilton Yao Chris Flanagan , , Xipeng Li** 13,411, ,411,222 Richard Pritchard , ,000 Anthony Crimmins 5,039, ,039,556 Wilton Yao Paul Hogan **Shares held indirectly 14

15 JATENERGY LIMITED DIRECTORS REPORT Options held by key management personnel Balance at the start of the year Granted during the year as compensation Exercised during the year Other changes during the year Balance at the end of the year Vested and exercisable at the end of the year Name No. No. No. No. No. No Directors of Jatenergy Limited Anthony Crimmins 1,771, ,711,520 1,711,520 Xipeng Li 7,205, ,205,611 7,205,611 Wilton Yao Richard Pritchard Other key management personnel Chris Flanagan Directors of Jatenergy Limited Anthony Crimmins 1,771, ,771,520 1,771,520 Xipeng Li 500, ,705,611 7,205,611 7,205,611 Wilton Yao Richard Pritchard Alan Broome Ross Kestel 125, (125,000) - - Tom Hancock 125,000 - (41,723) 83,277 83,277 Other key management personnel Phil Hodgson 1,375, (875,000) 500,000 - Paul Hogan , ,625 - Options on issue At the date of this report, the unissued ordinary shares of Jatenergy Limited under option are as follows: Grant Date Date of Expiry Exercise Price Number under Option 19 November December 2013 $ , April March 2014 $0.25 5,500,000 4 October March 2014 $ ,686, December March 2014 $0.25 5,711,730 32,273,547 Option holders do not have any rights to participate in any issues of shares or other interests in the Company or any other entity. 15

16 JATENERGY LIMITED DIRECTORS REPORT There have been no unissued shares or interests under option of any controlled entity within the Group during or since reporting date. For details of options issued to Directors and executives as remuneration, refer to the Remuneration Report. During the year ended 30 June 2013, no ordinary shares of Jatenergy Limited were issued on the exercise of options granted. No further shares have been issued since year end. No amounts are unpaid on any of the shares. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. Insurance of officers and auditors END OF REMUNERATION REPORT During the financial year, the Group paid premiums to insure the Directors and officers of the Group. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity of officers of the Group and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for them or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. No insurance or indemnification has been given to the auditors. Indemnification of officers and auditors The Group has entered into Deeds of Indemnity, Insurance and Access with each of the Directors and the Company secretary. Each deed provides officers with the following: a right to access certain Board papers of the Group during the period of their tenure and for a period of seven years after that tenure ends; subject to the Corporations Act an indemnity in respect of liability to persons other than the Group and its related bodies corporate that they may incur while acting in their capacity as an officer of the Group or a related body corporate, except where that liability involves a lack of good faith and for defending certain legal proceedings; and the requirement that the Group maintain appropriate Directors and officers insurance for the officer. No liability has arisen under these indemnities as at the date of this report. The Group has not, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the Corporations Act Non-audit services The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor s expertise and experience with the Group and/or the Company are important. Details of the amounts paid or payable to the auditor (currently Grant Thornton) for audit and non-audit services provided during the year are set out below. 16

17 JATENERGY LIMITED DIRECTORS REPORT The Board has considered the position and in accordance with the advice received from the audit committee is satisfied that the provision of the non-audit service is compatible with the general standard of independence for auditors imposed by the Corporations Act The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor. None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of ethics for Professional Accountants. During the year the following fees were paid or payable for services provided by the auditor of the group, its related practices and non-related audit firms: 2 Consolidated Consolidated $ $ (a) Assurance services Audit services - Grant Thornton Australian firm Audit of financial reports and other audit work under the Corporations Act ,019 64,675 Total remuneration for audit services 37,019 64,675 (b) Taxation services Grant Thornton Australian firm Tax compliance services, including review of company income tax returns - 6,000 Total remuneration for taxation services - 6,000 (c) Advisory services Grant Thornton Australian firm Initial public offering, other public raisings - 7,500 Total remuneration for advisory services - 7,500 Total remuneration for non-audit services - 13,500 17

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19 Grant Thornton Audit Pty Ltd ACN Level 19, 2 Market Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230 Auditor s Independence Declaration To the Directors of Jatenergy Limited T F E info.nsw@au.gt.com W In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Jatenergy Limited for the year ended 30 June 2013, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants N J Bradley Partner - Audit & Assurance Sydney, 28 August 2013 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 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. 19

20 JATENERGY LIMITED CORPORATE GOVERNANCE The principal features of the Company s Corporate Governance policies and practices are summarized below. The Company has adopted a comprehensive system of control and accountability as the basis for the administration of corporate governance. The Board is responsible to Shareholders for the overall management of the Company s business and affairs. The Directors overriding objective is to increase Shareholder value within an appropriate framework which protects the rights and interests of Shareholders and ensures the Company is properly managed. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. To the extent they are applicable, the Company has adopted the Corporate Governance Principles (2nd edition) ( Principles ) as published by ASX Corporate Governance Council (ASXCGC). The Company s corporate governance principles and policies are structured with reference to the ASXCGC s Corporate Governance Principles (2nd edition), which are as follows: Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4 Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8 Lay solid foundations for management and oversight; Structure the Board to add value; Promote ethical and responsible decision making; Safeguard integrity in financial reporting; Make timely and balanced disclosures; Respect the rights of shareholders; Recognise and manage risk; Remunerate fairly and responsibly; In accordance with recommendations of the ASX, information published on the Company s web site includes charters of Board and its subcommittees, codes of conduct and other policies and procedures relating to the Board and its responsibilities. A copy of the Company s Corporate Governance Statement can be found on the Company s website under the Corporate Governance Section. The Board will consider on an ongoing basis its Corporate Governance procedures and whether they are sufficient as the Company s activities develop in size, nature and scope. Jatenergy Limited s corporate governance practices were in place for the year ending 30 th June 2012 and other than outlined below the corporate governance practices of Jatenergy Limited were compliant with the Council s recommendations during the year. In May 2012, there was a restructure of the Company with 2 independent directors and the CEO resigning and two new directors appointed. The company has no full-time staff in recognition of the current economic climate and the current strategy. This situation may change in the future. As a result all management of the Company is under the direction of Mr Crimmins and all Board subcommittees functions have been performed by the Board. Board Structure The directors in office at the date of this statement and their respective terms in office are as follows: Name Position Term in Office Mr Li Wilton Yao (alternate for Mr Li) Non-Executive Director Alternate Non-Executive Director for Mr Li 2.5 Years 2.5 Years Anthony Crimmins Executive Chairman 1.5 Years Richard Pritchard Independent Non-Executive Director 1.5 Years Mr Li has an indirect shareholding through Sheng Run Holdings Group (Australia) Pty Ltd which is the Company s largest shareholder with an ownership interest of 14.61% at 30 June Mr Crimmins is currently undertaking the role of the CEO in the absence of a full time CEO and is therefore not considered independent. Each of the other abovementioned directors denominated as independent are considered independent by virtue of the fact that each individual is not a member of management, is not a substantial shareholder of the Company and is free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the independent exercise of their judgment. 20

21 JATENERGY LIMITED CORPORATE GOVERNANCE When assessing the independence of directors, the ASX recommendations refer to materiality thresholds throughout the independence criteria, specifically in reference to evaluating what may constitute a material relationship. The Board has adopted the following quantitative thresholds to be used as a guide when considering amounts in context of determining the materiality of certain relationships: (i) (ii) an amount which is equal to or greater than 10% of the appropriate base amount may be presumed to be material unless there is evidence or convincing argument to the contrary; an amount which is equal to or less than 5% of the appropriate base amount may be presumed not to be material, unless there is evidence, or convincing argument to the contrary. The Board consist of one independent director and three directors who are not independent, including the Chairman. While this is not in accord with the ASXCGC principles, the directors believe it is currently appropriate given the current manner of the operations of the Company. As part of discharging its obligations as directors of the Company, the Directors will, from time to time need to seek independent professional advice at the expense of the Company. Accordingly, the Board has agreed that where issues or matters arise in relation to the running of the Company, that in the opinion of the directors require independent professional advice to assist in the decision making surrounding the resolution of these issues, the Board may engage such professional advice providing it is on standard commercial terms for advice of its nature. Please refer to pages 8-9 of the 2013 Annual Financial Report for the relevant skills and experience of each of the directors. Board Sub Committees The Board has decided to not have sub Committees given the size and financial situation of the Company and all functions of the former Board sub committees are performed by the Board effective from May 2012 Board restructure. The Board can confirm that it has received written assurance from the Executive Chairman who is acting as the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) that to the best of his knowledge and belief, the declaration provided by him in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively and in relation to financial reporting risks. The Board notes that due to its nature, internal control assurance from the CEO and CFO can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures. Code of Conduct and Diversity The Company has established a Code of Conduct and an Employee/Executive Share Trading Policy which is contained in Annexure 2 and 3 respectively of the Company s Corporate Governance Statement, a copy of which is available on the Company s website. Jatenergy has not established a Diversity Policy due to the current situation in which it operates, however, the Directors will review this situation regularly and when a full time CEO is appointed it is likely that a Diversity Policy will be developed in line with ASXCGC principles. Timely Disclosure The Company s Corporate Governance Statement contains the Company s policy to ensure compliance with ASX Listing Rules continuous disclosure obligations and the Company s policy to ensure timely and effective shareholder communication, including the encouragement for shareholders to participate at the Company s Annual General Meeting. A copy of the Company s Corporate Governance Statement is available on the Company s website. 21

22 JATENERGY LIMITED CORPORATE GOVERNANCE Board and Senior Executive Performance Evaluation ASXCGC recommendation 2.5 requires the disclosure of the process for performance evaluation of the Board, its committees and individual directors, and key executives. Currently the Company does not have a CEO and has no full time staff. All consultants and contractors to the company had their contracts reviewed including agreed hours to be worked since 8 May OTHER INFORMATION The Company s corporate governance practices and policies are publicly available at the Company s registered office. 22

23 JATENERGY LIMITED CORPORATE GOVERNANCE Corporate Governance Policy Principle 1 Lay solid foundation for management and oversight Comment Adopted 1.1 Formalise and disclose the functions reserved to the Board and those delegated to management. 1.2 Disclose the process for evaluating the performance of senior executives. The Company s Corporate Governance Polices includes a Board Charter, which discloses the specific responsibilities of the Board. However the functions of management of the Company are currently undertaken by the Board. The Board will monitor the performance of senior management including measuring actual performance against planned performance. 1.3 Provide the information indicated in 'Guide to reporting on Principle 1. The Company will provide details of any departures from best practice recommendation Principle 1 in its Annual Report. Principle 2 Structure the Board to add value Adopted except for Recommendations 2.1,2.2, 2.3 and A majority of the Board should be independent. The Company is not in compliance with this recommendation as two of the Directors including the Chairman are defined as not being independent. 2.2 The chairperson should be an independent director. Given the Company does not have any CEO, the current Chairman is undertaking the role of CEO until a full time CEO is appointed and therefore, the Company is not in compliance with this. 2.3 The roles of chairperson and chief executive officer should not be exercised by the same individual. The Company is not in compliance with this recommendation as all functions of management are undertaken by the Board due to the size of the Company. 2.4 The Board should establish a nomination committee. No formal nomination committee or procedures have been adopted as yet given the size of the Company and the Board. The Board, as a whole, will serve as a nomination committee. Where necessary, the nomination committee seeks advice of external advisers in connection with the suitability of applicants for Board membership. 2.5 Disclose the process for evaluating the performance of the Board, its committees and the individual directors. 2.6 Provide the information indicated in 'Guide to reporting on Principle 2. The Board will conduct an annual performance review of itself that compares the performance of the Board with the requirements of the Board Charter, critically reviews the mix of the Board and suggests and amendments to the Board Charter as are deemed necessary or appropriate. The Company will provide details of each director, such as their skills, experience and expertise relevant to their position, together with an explanation of any departures from best practice recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 in its annual reports. 23

24 JATENERGY LIMITED CORPORATE GOVERNANCE Corporate Governance Policy Comment Principle 3 Actively promote ethical and responsible decision-making Adopted except for recommendations 3.2 and Establish a code of conduct and disclose the code or a summary of the code as to: the practices necessary to maintain confidence in the Company's integrity the practices necessary to take into account their legal obligations and reasonable expectations of their stakeholders the responsibility and accountability of individuals for reporting or investigating reports of unethical practices. 3.2 Establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity for the Board to assess annually both the objectives and progress in achieving them. 3.3 Disclose in each Annual Report the measurable objectives for achieving gender diversity set by the Board in accordance with the diversity policy and progress towards achieving them. 3.4 Disclose in the annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board. The Company s Corporate Governance Policies include a Directors and Executive officers Code of Conduct Policy, which provides a framework for decisions and actions in relation to ethical conduct in employment. Currently all those functions are performed by the Board. Given the size of the Company & the fact it does not have any full time employees at this current time, the directors do not believe it appropriate to establish a policy but this will be reviewed on a regular basis by the Directors. As the Company does not have a diversity policy presently, there are no measurable objectives for achieving gender diversity. There are no women on the Board of the Company. As the Company has no employees, there are no women employed in the organisation or in senior executive positions. 3.5 Provide the information indicated in 'Guide to Reporting on Principle 3'. The Company will provide details of any departures from best practice recommendation Principle 3 in its Annual Report. Principle 4 Safeguard integrity in financial reporting Adopted except for Recommendation The Board should establish an audit committee. The Board considers that it is not of sufficient size at this stage to require a separate audit committee. Until the audit committee has been established, its functions, roles and responsibilities will be undertaken by the Board. 4.2 Structure the audit committee so that it consists of: Only non-executive directors A majority of independent directors An independent chairperson who is not the chairperson of the Board At least three members. The composition, roles and responsibilities of the audit committee when it is established will be set out in the Corporate Governance Plan. 4.3 The audit committee should have a formal operating The Audit and Risk Committee will adopt a formal 24

25 JATENERGY LIMITED CORPORATE GOVERNANCE Corporate Governance Policy charter. 4.4 Provide the information indicated in the 'Guide to reporting on Principle 4'. Comment Charter when established. The Company will provide details of any departures from best practice recommendation Principle 4 in its Annual Report. Principle 5 Promote timely and balanced disclosure Adopted 5.1 Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance. 5.2 Provide the information indicated in the 'Guide to reporting on Principle 5'. The Company has a Continuous Disclosure program in place which is designed to ensure compliance with the ASX Listing Rules requirements on disclosure and to ensure accountability at a board level for compliance and factual presentation of the Company s financial position. The Company will provide details of any departures from best practice recommendation Principle 5 in its Annual Report. Principle 6 Respect the rights of shareholders Adopted 6.1 Design and disclose a communications policy to promote effective communication with shareholders and encourage effective participation at general meetings and disclose the policy or a summary of the policy 6.2 Provide the information indicated in the 'Guide to reporting on Principle 6'. The Company s Corporate Governance Policies includes a Shareholder Communications Policy which aims to ensure that the shareholders are informed of all material developments affecting the Company s state of affairs. The Company will provide details of any departures from best practice recommendation Principle 6 in its Annual Report. Principle 7 Recognise and manage risk Adopted 7.1 The Board or appropriate Board committee should establish policies on risk oversight and management. 7.2 The Board should require management to design and implement the risk management and internal control system to manage the Company s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company s management of its material business The Company s Corporate Governance Policies includes a Risk Management Policy which aims to ensure that all material business risks are identified and mitigated. The Board determines and identifies the Company s risk profile and is responsible for overseeing and approving risk management strategies and policies, internal compliance and internal controls. The Board has designed and implemented continuous risk management and internal control systems. Reports as requested are provided at relevant times. 25

26 JATENERGY LIMITED CORPORATE GOVERNANCE Corporate Governance Policy risks. 7.3 The Board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound risk management and internal control and that the system is operating effectively in all material respects in relation to the financial reporting risks. 7.4 Provide the information indicated in the 'Guide to reporting on Principle 7'. Comment The Board seeks, at the appropriate time, the relevant assurances from the individuals appointed to perform the roles of Chief Executive Officer and the Chief Financial Officer. Currently the assurances are provided by the Chairman who performs the functions of the Chief Executive Officer in the absence of an appointed Chief Executive Officer and an external consultant who prepares the financial statements for the Company. The Company will provide details of any departures from best practice recommendation Principle 7 in its Annual Report. Principle 8 Remunerate fairly and responsibly Adopted except for Recommendations 8.1and The Board should establish a remuneration committee The Company s remuneration committee comprises the Board acting without the affected director participating in the decision making process 8.2 The Remuneration Committee should be structured so that it Consists of a majority of independent directors; Is chaired by an independent chair; Has at least 3 members. 8.3 Clearly distinguish the structure of non-executive directors' remuneration from that of executives As noted in 8.1 the Company s remuneration committee comprises the Board acting without the affected director participating in the decision making process. The Board consist of 3 directors. It is intended that when the company establishes a Remuneration Committee it will comply with these recommendations. The Board will distinguish the structure of non executive director s remuneration from that of executive directors and senior executives. Relevantly, the Company s Constitution provides that the remuneration of non-executive Directors will be not be more than the aggregate fixed sum determined by a general meeting. The Board is responsible for determining the remuneration of the Managing Director and senior executives (without the participation of the affected director). 26

27 JATENERGY LIMITED FINANCIAL REPORT CONTENTS Financial Report 28 Statement of Profit or Loss and Other Comprehensive Income 29 Statement of Financial Position 30 Statement of Changes in Equity 31 Statement of Cash Flows 32 Notes to the Financial Statements 33 Directors Declaration 65 Independent Auditor s Report to the Members of Jatenergy Limited 68 Shareholder Information 71 27

28 JATENERGY LIMITED FINANCIAL REPORT This financial report covers the consolidated entity consisting of Jatenergy Limited and its subsidiaries. Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompany a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The financial report is presented in Australian currency. Jatenergy Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 6, Suite 8 55 Miller Street Pyrmont NSW 2009 The financial report was authorised for issue by the Directors on 28 August The Company has the power to amend and reissue the financial report. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: 28

29 JATENERGY LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2013 Consolidated Entity Note $ $ Revenue 5 132, ,505 Consultancy expenses (361,905) (1,061,551) Share-based compensation - (9,157) Insurance expense (52,016) (44,337) Depreciation and amortisation expense 6 (11,689) (9,158) Professional fees (170,044) (129,872) Director s fees (267,636) (270,927) Employee benefits expense (237,763) (291,425) Travel expenses (90,312) (140,513) Occupancy expenses (145,105) (112,522) Finance costs 6 (13,770) - Foreign exchange gains 283,788 35,609 Oil Seed costs - (208,670) Other expenses (93,374) (181,102) Coal production costs (19,190) (1,111,718) Impairment of assets 6 (1,166,593) (1,594,094) Loss before income tax (2,213,417) (4,664,932) Income tax expense Loss for the year (2,213,417) (4,664,932) Other Comprehensive Income Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operating (176,488) (13,197) Total comprehensive loss for the year (2,389,905) (4,678,129) Loss attributable to: - Members of parent entity (2,170,661) (4,628,457) - Non-controlling interest (42,756) (36,475) Total comprehensive loss attributable to: (2,213,417) (4,664,932) - Members of parent entity (2,347,149) (4,641,654) - Non-controlling interest (42,756) (36,475) (2,389,905) (4,678,129) Loss per share for loss attributable to the ordinary equity holders of the company: Cents Cents Basic loss per share (2.4) (5.92) Diluted loss per share (2.4) (5.92) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 29

30 JATENERGY LIMITED STATEMENT OF FINANCIAL POSITION As at 30 June 2013 Consolidated Entity Note $ $ Assets Current assets Cash and cash equivalents 8 708, ,901 Trade and other receivables 9 952, ,981 Assets held for sale 10 1,478,235 Total current assets 3,139,740 1,082,882 Non-current assets Property, plant and equipment , ,916 Investments Intangibles 13 1,605,643 4,250,471 Total non-current assets 1,893,548 4,567,387 Total assets 5,033,288 5,650,269 Liabilities Current liabilities Trade and other payables , ,807 Short term provisions Total current liabilities 124, ,523 Total liabilities 124, ,523 Net assets 4,908,841 5,527,746 Equity Contributed equity 16 26,426,160 25,655,160 Non-controlling interest 962,953 5,709 Reserves 17(a) 425, ,376 Accumulated losses 17(b) (22,906,160) (20,735,499) Total equity 4,908,841 5,527,746 The above statement of financial position should be read in conjunction with the accompanying notes. 30

31 JATENERGY LIMITED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2013 Balance at 1 July 2011 Contributed Equity Non- Controlling Interest Reserves Accumulated Losses Total $ $ $ $ $ 25,655,160 (2,401) 342,335 (16,107,042) 9,888,052 Profit for the year - (36,475) - (4,628,457) (4,664,932) Foreign Currency Translation - - (13,199) - (13,199) Total comprehensive income - (36,475) (13,199) (4,628,457) (4,678,131) Employee share based scheme - - 9,157-9,157 Issue of Options - 44, , ,668 Issue of capital Transaction with owners - 44, , ,825 Balance at 30 June ,655,160 5, ,376 (20,735,499) 5,527,746 Balance at 1 July ,655,160 5, ,376 (20,735,499) 5,527,746 Loss for the year - (42,756) - (2,170,661) (2,213,417) Foreign Currency translation - - (176,488) - (176,488) Total comprehensive income - (42,756) (176,488) (2,170,661) (2,389,905) Issue of Capital 771,000 1,000, ,771,000 Transaction with owners 771,000 1,000, ,771,000 Balance at 30 June ,426, , ,888 (22,906,160) 4,908,841 The above statement of changes in equity should be read in conjunction with the accompanying notes. 31

32 JATENERGY LIMITED STATEMENT OF CASH FLOWS For the year ended 30 June 2013 Consolidated Entity Note $ $ Cash flows from operating activities Receipts from customers 82, ,105 Payments to suppliers and employees (1,340,132) (3,791,226) Interest received 22,480 69,896 Interest paid (1,016) - Net cash outflow from operating activities 25 (1,236,229) (3,438,225) Cash flows from investing activities Payments for property, plant and equipment - (44,256) Deposits (433,520) - Net cash outflow from investing activities (433,520) (44,256) Cash flows from financing activities Proceeds from issues of shares, options and other equity securities net of transactions costs 756, ,083 Proceeds from issue of shares from non-controlling interest 1,000,000 - Net cash inflow from financing activities 1,756, ,083 Net increase (decrease) in cash and cash equivalents 86,252 (3,218,398) Cash and cash equivalents at the beginning of the financial year 618,901 3,801,689 Effect of exchange on cash holdings in foreign currencies 3,619 35,610 Cash and cash equivalents at end of year 8(a) 708, ,901 The above statement of cash flows should be read in conjunction with the accompanying notes. 32

33 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 1 Summary of significant accounting policies Nature of operations Jatenergy and subsidiaries (the Group) principal activities include to develop conventional and renewable energy projects, with an initial focus on exploration and production of coal from Indonesia and on producing crude oil from its Indonesian Oil Seeds plantation. General information and statement of compliance The consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Jatenergy Ltd is a for-profit entity for the purpose of preparing the financial statements. Jatenergy Ltd is the Group's ultimate parent company. Jatenergy Ltd is a public company incorporated and domiciled in Australia. The address of its registered office and its principal place of business is Floor 6, Suite 8, 55 Miller Street, Pyrmont, New South Wales 2009, Australia. The consolidated financial statements for the year ended 30 June 2013 (including comparatives) were approved and authorised for issue by the Board of Directors on 27 August (a) Principles of consolidation Subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Jatenergy Limited at the end of the reporting period. A controlled entity is any entity over which Jatenergy Limited has the power to govern the financial and operating policies so as to obtain benefits from the entity s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 22 to the financial statements. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the group. (b) Going concern basis of accounting The financial statements have been prepared on a going concern basis. The Group has incurred an operating loss for the year if $2,213,417 (2012: $4,664,932) and negative cash flows from operating activities of $1,236,229(2012: $3,438,225). The Directors are managing the Company s cash flows carefully to meet its operational commitments. The Directors intend to fund the company activities from future sales of non-core assets and further capital raisings. Therefore the Directors consider that the going concern basis is appropriate. (c) 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 Board of Directors. 33

34 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED (d) Revenue and other income Interest income is recognised on a time proportion basis using the effective interest method. Sale of Goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed from the buyer to the seller. (e) Income tax The income tax expense or revenue for the period is the tax payable on the current period s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probably that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. (f) Leases 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) Business combinations The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group s share of the fair value of the identifiable net assets of the 34

35 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED subsidiary acquired, the difference is recognised directly in the statement of comprehensive income, but only after a reassessment of the identification and measurement of the net assets acquired. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. (h) Impairment of non financial assets At each the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset s fair value less costs to sell and value in use, to the asset s carrying value. Any excess of the asset s carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. (i) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. (j) Financial instruments Recognition and initial measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the Company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs. Classification and subsequent measurement Finance instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as: (i) (ii) (iii) (iv) the amount at which the financial asset or financial liability is measured at initial recognition; less principal repayments; plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and less any reduction for impairment. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction 35

36 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 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 in profit or loss. The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments. (i) 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 subsequently measured at amortised cost. Loans and receivables are included in current assets, as they are expected to mature within 12 months after the end of the reporting period. (ii) Financial liabilities: Impairment Non-derivative financial liabilities are subsequently measured at amortised cost. At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the statement of comprehensive income. De-recognition Financial assets are de-recognised 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 are de-recognised where the related obligations are discharged, cancelled or expired. 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. (k) Property, plant and equipment Property, plant and equipment are stated at historical cost less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probably 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 comprehensive income during the financial period in which they are incurred. Depreciation on assets in calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives. The depreciation rates used for each class of depreciable assets are: Furniture, fittings and office equipment 20-33% Leasehold improvements 33% The asset s residual values and useful lives are reviewed and adjusted if appropriate, at each reporting date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount (note 1(h)). 36

37 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income. (l) Assets Held for Sale Non current assets are reclassified as held for sale when it is highly probable that a sale will take place, within 12 months of the financial year end date. (m) (i) Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Australian dollars, which is Jatenergy Limited s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income, except when they are attributable to part of the next investment in foreign operation. Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in statement of comprehensive income as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale financial assets are included in the fair value reserve in equity. (iii) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and all resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders equity. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised in the statement of comprehensive income, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate. (n) Intangibles Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated 37

38 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over their useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cashgenerating unit level consistent with the methodology outlined for goodwill above. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis. (o) Employee benefits Benefits (i) Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Share-based payments Share-based compensation benefits are provided to Directors and executives. Information relating to these benefits is set out in note 27. The fair value of options granted is recognised as a benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the Directors and executives become unconditionally entitled to the options. The fair value at grant date is determined using a Black-Sholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The benefit expense recognised each period takes into account the most recent estimate. 38

39 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital and the proceeds received, net of any directly attributable transaction costs, and are credited to share capital. (p) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration. (q) (i) Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (r) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow. (s) Investments in associates Associate companies are companies in which the Group has significant influence through holding, directly or indirectly, 20% or more of the voting power of the Company. Investments in associates are accounted for in the financial statements by applying the equity method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the Group s share of net assets of the associate company. In addition the Group s share of the profit or loss of the associate company is included in the Group s profit or loss. Details of the Group s investments in associates are shown at Note

40 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED (t) New accounting standards and Australian accounting interpretations New and Amended Standards adopted by the Group AASB Amendments to Australian Accounting Standards Presentation of items of Other Comprehensive Income (Applies to annual reporting periods commencing 1 July 2013) AASB requires entities to group items presented in other comprehensive income (OCI) on the basis of whether they have the potential to be reclassified to profit or loss in subsequent periods, 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 Groups accounting policies or the amounts reported during the financial year. New Accounting Standards for Application in Future Periods The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of the new and amended pronouncements. The Group s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below: AASB 9: Financial Instruments (December 2010) and AASB : Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) These Standards are applicable retrospectively and include revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The key changes made to accounting requirements include: simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value; simplifying the requirements for embedded derivatives; removing the tainting rules associated with held-to-maturity assets; removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; requiring financial assets to be reclassified where there is a change in an entity s business model as they are initially classified based on: (a) the objective of the entity s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss. These standards were mandatorily applicable for annual reporting periods commencing on or after 1 January However, AASB : Amendments to Australian Accounting Standards Mandatory Effective Date of AASB 9 and Transition Disclosures (issued September 2012) defers the mandatory application date of AASB 9 from 1 January 2013 to 1 January In light of this change to the mandatory effective date, the Group is expected to adopt AASB 9 and AASB for the annual reporting period ending 31 December Although the directors anticipate that the adoption of AASB 9 and AASB may have a significant impact on the Group s financial instruments, it is impracticable at this stage to provide a reasonable estimate of such impact. 40

41 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED AASB 10: Consolidated Financial Statements, AASB 11: Joint Arrangements, AASB 12: Disclosure of Interests in Other Entities, AASB 127: Separate Financial Statements (August 2011) and AASB 128: Investment in Associates and Joint Ventures (August 2011)(as amended by AASB : Amendments to Australian Accounting Standards Transition Guidance and Other Amendments), and AASB : Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards (applicable for annual reporting periods commencing on or after 1 January 2013). AASB 10 replaces parts of AASB 127: Consolidated and Separate Financial Statements (March 2008, as amended) and interpretation 112: Consolidation Special Purpose Entities. AASB 10 provides a revised definition of control and additional application guidance so that a single control model will apply to all investees. This standard is not expected to significantly impact the Group s financial statements. AASB 11 replaces AASB 131: Interests in Joint Ventures (July 2004, as amended). AASB 11 requires joint arrangements to be classified as either joint operations (where parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities) or joint ventures (where the parties that have joint control of the arrangement have rights to the net assets of the arrangement). AASB 12 contains the disclosure requirements applicable to entities that hold an interest in a subsidiary, joint venture, joint operation or associate. AASB 12 also introduces the concept of a structured entity replacing the special purpose entity concept currently used in interpretation 112, and requires specific disclosures in respect of any investments in unconsolidated structured entities. This standard will affect disclosures only and is not expected to significantly impact the Group s financial statements. To facilitate the application of AASB s 10,11 and 12, revised versions of AASB 127 and AASB 128 have also been issued. The revisions made to AASB 127 and AASB 128 are not expected to significantly impact the Group s financial statements. AASB 13 Fair Value Measurement and AASB : Amendments to Australian Accounting Standards arising from AASB 13 (applicable for annual reporting periods commencing on or after 1 January 2013). AASB 13 defines fair value, sets out in a single Standard a framework for measuring fair value, and requires disclosures about fair value measurement. AASB 13 requires: Inputs to all fair value measurements to be categorised in accordance with a fair value hierarchy; and Enhanced disclosures regarding all assets and liabilities (including, but not limited to, financial assets and financial liabilities) to be measured at fair value. These standards are expected to result in more detailed fair value disclosures, but are not expected to significantly impact the amounts recognised in the Group s financial statements. AASB : Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (applicable for annual reporting periods beginning on or after 1 July 2013). This standard makes amendments to AASB 124: related party disclosures to remove the individual key management personnel disclosure requirements (including paras Aus29.1 to Aus19.9.3). These amendments serve a number of purposes, including furthering trans-tasman convergence, removing differences from IFRS s, and avoiding any potential confusion with the equivalent Corporations Act 2001 disclosure requirements. This standard is not expected to significantly impact the Group s financial report as a whole because: Some of the disclosures removed from AASB 124 will continue to be required under s 300A of the Corporations Act, which is applicable to the Group; and AASB does not affect the related party disclosure requirements in AASB 124 applicable to all reporting entities, and some of these requirements require similar disclosures to those removed by AASB

42 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED AASB 119: Employee Benefits (September 2011) and AASB : Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) (applicable for annual reporting periods commencing on or after 1 January 2013). These standards introduce a number of changes to the presentation and disclosure of defined benefit plans, including Removal of the corridor approach from AASB 119, thereby requiring entities to recognise all changes in a net defined benefit liability/(asset) into service cost, net interest expense and remeasurement and recognition of: (i) (ii) Service cost and net interest expense in profit and or loss; and remeasurements in other comprehensive income. AASB 119 (September 2011) also includes changes to the criteria for determining when termination benefits should be recognised as an obligation. AASB 119 is not expected to materially affect the financial statements of the Group.. AASB Amendments to Australian Accounting Standards Disclosures- Offsetting Financial Assets and Liabilities (applicable for annual reporting periods commencing on or after 1 January 2013). AASB principally amends AASB 7: Financial Instruments: Disclosures to require entities to include information that will enable users of their financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity s recognised financial assets and recognised financial liabilities, on the entity s financial position. This standard is not expected to significantly impact the Group s financial statements. AASB Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities (applicable for annual reporting periods commencing on or after 1 January 2014) This standard adds application guidance top AASB 132: Financial Instruments: Presentation to address potential inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of currently has a legally enforceable right of set-off and that some gross settlement systems may be considered equivalent to net settlement. This standard is not expected to significantly impact the Group s financial statements. AASB : Amendments to Australian Accounting Standards arising from Annual Improvements Cycle(applicable for annual reporting periods commencing on or after 1 January 2013). This standard amends a number of Australian Accounting Standards as a consequence of the issuance of Annual Improvements to IFRSs Cycle by the International Accounting Standards Board, including: -AASB 1: First-time Adoption of Australian Accounting Standards to clarify the requirements in respect of the application of AASB 1 when an entity discontinues then resumes applying Australian Accounting Standards; AASB101: Presentation of Financial Statements and AASB 134: Interim Financial Reporting to clarify the requirements for presenting comparative information; AASB 116: Property, Plant and Equipment to clarify the accounting treatment of spare parts, standby equipment and servicing equipment; AASB 132 and Interpretation2: Members Shares in Co-operative Entities and Similar Instruments to clarify the accounting treatment of any tax effect of a distribution to holders of equity instruments; and AASB 134 to facilitate consistency between the measures of total assets and liabilities an entity reports for it s segments in its interim and annual financial statements. This standard is not expected to significantly impact the Group s financial statements. 42

43 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED AASB Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine clarifies that costs of removing mine waste materials (overburden) to gain access to mineral ore deposits during the production phase of a mine must be capitalised as inventories under AASB112 Inventories if the benefits from stripping activity is realised in the form of inventory produced. Otherwise, if stripping activity provides improved access to the ore, stripping costs must be capitalised as a non-current, stripping activity asset if certain recognition criteria are met (as an addition to, or enhancement of, an existing asset). The interpretation is applicable for annual periods on or after 1 January The interpretation will have no impact on the Group as it has no mining activities. 2 Financial risk management The Board of Directors has overall responsibility for the establishment and oversight of the Group s risk management framework. The Group s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limited and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group s activities. The Group s activities expose it to a limited number of financial risks as described below. The Group s overall risk management program seeks to minimise potential adverse effects on the financial performance of the Group. To date, the Group has not had the need to utilise derivative financial instruments such as foreign exchange contracts or interest rate swaps to manage any risk exposure identified. The Group holds the following financial instruments. Consolidated Entity Note $ $ Financial assets Cash and cash equivalents 8 708, ,901 Trade and other receivables 9 952, ,981 Total 1,661,505 1,082,882 Financial liabilities Trade and other payable , ,807 Total 124, ,807 Specific financial risk exposures and management The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. (a) Interest rate risk The Group s main interest exposure arises from cash at bank and bank term deposits as at the reporting date, the Group had the following cash profile. Consolidated Entity $ $ Cash at bank and in hand 193, ,901 Term deposit 515,657 - Total 708, ,901 43

44 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED The Group s main interest rate risk arises from cash and cash equivalents. The bank term deposit has an interest rate which is fixed for the term of the investment and the bank accounts have a floating interest rate. (b) Foreign exchange risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity s functional currency. The risk is measured using cash flow forecasting. The Groups exposure to foreign currency risk relates to investments in overseas entities which are denominated in foreign currency with future investments dependent on achievement of milestones agreed. The Group maintains a foreign currency (United States dollars) bank account in Australia to control currency risk. The balance of this account at 30 June 2013 was USD$65,603 (2012: USD$83,481). The Group operates internationally but are only exposed to minimal foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions denominated in a currency that is not the entity s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The Group maintains sufficient funds in this account to cover its foreign currency denominated investments for the immediate future. (c) Credit risk Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, deposits and banks as well credit exposure including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of A are accepted. In respect of the group, credit risk relates to loans with subsidiary and associated companies. In order to achieve stated corporate objectives, the parent entity provides financial support to subsidiary and associated companies, but only to the level which the Board considers necessary to achieve these objectives and meets agreed conditions. Any loans to subsidiary and associated companies considered to be unrecoverable have been provided for. (d) Liquidity risk The Group maintains sufficient liquidity by holding cash in readily accessible accounts. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group has no access to borrowing facilities at the reporting date. The Group s financial assets $1,661,505 and financial liabilities $124,447 have a maturity within 12 months of 30 June (e) Fair value The carrying amount of financial assets and liabilities recorded in the financial statements represents their respective net fair values unless otherwise noted, determined in accordance with the accounting policies disclosed in the Statement of Accounting Policies. (f) Sensitivity analysis The following table illustrates a sensitivity to the Group s exposure to changes in interest rates and exchange rates. The table indicates the impact on how profit and equity values reported at reporting date would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. This sensitivity assumes that the movement in a particular variable is independent of other variables. 44

45 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED Consolidated Entity Profit Equity $ $ Year ended 30 June /-1% in interest rates +/-7,088 +/-7,088 +/-10% in $A/$US +/-6,560 +/-6,560 Year ended 30 June /-1% in interest rates +/-6,189 +/-6, % in $A/$US 8,683 8,683-10% in $A/$US (7,090) (7,090) 3 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. (a) Critical accounting estimates and assumptions The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Estimated impairment of investment in associate The Company review s impairment of its investments in associates in accordance with the accounting policy stated in note 1(h). Refer to note 11(d) for details of assumptions used. (ii) Value allocation of intangibles The Group determines whether intangibles with indefinite useful lives are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units, using a value in use discounted cash flow methodology, to which the goodwill and intangibles with indefinite useful lives are allocated. See Note 12 for further details. (iii) Share based payments The Company determines values for share options issued. Disclosure of these valuations can be found in Note Segment information The Company has identified its operating segment based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Company is managed primarily on the basis of product category. The Company s operating segments are therefore determined on the same basis. 45

46 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following: the products sold provided by the segment; the planting process; the type or class of customer for the products; the distribution method; and external regulatory requirements. The primary business segments and the primary geographic segments within which the Company operates are biofuel and coal mining in the Asia Pacific regions respectively. For primary reporting purposes, the entity operates predominantly in two geographical areas, being Australia and Indonesia. The acquisition of Blackrock Resources Pty Ltd in April 2011 included mining tenements and contracts located in Indonesia. (i) Segment performance Coal $ Oilseeds $ 2013 REVENUE External Sales 89,781-89,781 Total Segment Revenue 89,781-89,781 Reconciliation of Reconciliation of segment revenue to group revenue Interest Revenue 22,480 Other revenue 19,931 Total Group Revenue 132,192 Segment net loss from continuing operations before tax (1,427,034) (24,438) (1,451,472) Amounts not included in segment result but reviewed by the Board - Corporate Expenses (737,702) - Depreciation and amortisation (4,144) Net (loss) from continuing operations (2,213,417) Coal $ Oilseeds $ 2012 REVENUE External Sales 300,246 92, ,690 Total Segment Revenue 300,246 92, ,690 Reconciliation of Reconciliation of segment revenue to group revenue Interest Revenue 69,896 Other revenue 1,919 Total Group Revenue 464,505 Segment net loss from continuing operations before tax (2,837,789) (142,984) (2,980,773) Amounts not included in segment result but reviewed by the Board - Corporate Expenses (1,675,001) - Depreciation and amortisation (9,158) Net (loss) from continuing operations (4,664,932) Total $ Total $ 46

47 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED (ii) Segment assets Coal $ Oilseeds $ 2013 Segment Assets Segment assets increases for the period - Capital expenditure Acquisitions Reconciliation of segment assets to group assets 3,887, ,268 4,191,724 Corporate assets 861,673 Total Group Assets 5,033,288 Coal $ Oilseeds $ 2012 Segment Assets Segment assets increases for the period - Capital expenditure 44,256-44,256 - Acquisitions ,256-44,256 Reconciliation of segment assets to group assets 4,755, ,903 5,110,071 Corporate assets 540,198 Total Group Assets 5,650,269 Total $ Total $ (iii) Segment liabilities Coal $ Oilseeds $ 2013 Segment Liabilities Reconciliation of segment liabilities to group liabilities Corporate liabilities ,447 Total Group Liabilities 124,447 Coal $ Oilseeds $ 2012 Segment Liabilities Reconciliation of segment liabilities to group liabilities 7,274 1,987 9,261 Corporate liabilities 113,262 Total Group Liabilities 122,523 Total $ Total $ (iv) Revenue by geographic location Revenue, including revenue from discontinued operations, attributable to external customers is disclosed below, based on the location of the external customer Australia 42,411 72,236 Indonesia 89, ,269 Total Revenue 132, , $ 2012 $ (v) Assets by geographical location 2013 $ 2012 $ Australia 1,161, ,198 Indonesia 3,747,168 5,129,071 Total Assets 4,908,841 5,650,269 47

48 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 5 Revenue Consolidated Entity $ $ Revenue Interest 22,480 69,896 Coal sales 89, ,246 Sale of jatropha oil - 92,444 Consulting Fee 19,931 - Miscellaneous income - 1,919 Total 132, ,505 6 Expenses Consolidated Entity $ $ Loss before income tax includes the following specific expenses: Depreciation of plant and equipment 11,689 9,158 Finance costs 13,770 - Foreign exchange gains 283,788 35,609 Impairment - intangible assets 1,166,593 1,594,094 Rental expense relating to operating lease: 45,033-48

49 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 7 Income tax expense Consolidated Entity $ $ (a) Income tax expense Current tax - - Deferred tax (b) Numerical reconciliation of income tax expense to prima facie tax payable Loss before income tax expense (2,213,417) (4,664,932) Tax (benefits) at the Australian tax rate of 30% (664,025) (1,399,480) Tax effect of amounts which are not deductible in calculating taxable income: Other non-allowable items - - Share-based payments - 2,747 Impairment 349, ,228 Adjusted income tax (314,048) (918,505) Tax losses not brought to account 314, ,505 Income tax expense - - (c) Tax losses Unused tax losses for the current year for which no deferred tax asset has been recognised 314, ,505 Unused tax losses carried forward from prior years for which no deferred tax asset has been recognised 2,106,564 1,188,059 Potential tax benefit at 30% 2,420,612 2,106,564 (d) Tax consolidation legislation Jatenergy Limited has not formed a tax consolidated group. 8 Current assets - cash and cash equivalents Consolidated Entity $ $ Cash at bank and in hand 193, ,901 Term deposit 515,657 - Total 708, ,901 49

50 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 8 Current assets cash and cash equivalents (continued) (a) Reconciliation to cash at the end of the year The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flow as follows: Consolidated Entity $ $ Balances as above 708, ,901 Balances per statement of cash flow 708, ,901 (b) Cash The cash in the investment account earns a floating interest rate of 3% (2012: 1.5%). (c) Interest rate risk The Group s exposure to interest rate risk relates primarily to the cash balances in the investment account detailed above. The Group s and the parent entity s exposure to interest rate risk is discussed in note 2. 9 Current assets - trade and other receivables Consolidated Entity $ $ Other receivables 27, ,239 Deposits 725,064 Advances 199,867 Prepayments - 17,742 Total 952, ,981 (a) Effective interest rates and credit risk There is no interest rate risk for the balance of trade and other receivables. All amounts past due are considered impaired and provided against. All other receivables are within credit terms and not considered impaired. 50

51 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 10 Current assets assets available for sale Consolidated Entity $ $ Tenements 1,478,235 - Total 1,478,235 - On 17 July 2013 JAT Energy entered into a contract to sell assets that had previously been classified as intangible assets tenements. At 30 June 2013 these assets have been reclassified as assets held for sale as it is highly probable that the asset will be sold, within 12 months of the year end. 11 Non-current assets Furniture & fixtures Cost 65,905 82,240 Accumulated Depreciation (43,743) (31,067) 22,162 51,173 Plantations Cost 265, ,743 Accumulated depreciation , ,743 Total property, plant & equipment 287, ,916 Movements in Carrying Amounts Furniture and Fittings Plantations Total Balance at 1 July , , ,916 Additions Disposals (17,322) - (17,322) Depreciation (11,689) - (11,689) Balance at 30 June , , , Non-current assets - investments Consolidated Entity Note $ $ Investment in associates (a) - - (a) Investments in associates Investments in associates are accounted for in the consolidated financial statement using the equity method of accounting and are carried at cost by the parent entity. 51

52 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 12 Non-current assets investments (continued) (b) Movements in carrying amounts Consolidated Entity Carrying amount at the beginning of the financial year - - New investments during the year - - Dividends received/receivable - - Share of associate loss after income tax - - Impairment of investment - - Carrying amount at the end of the financial year - - (c) Summarised financial information of associates 2013 Ownership Interest % Groups Share of: Assets Liabilities Revenues Profit/(Loss) $ $ $ $ Green Energy Joint Stock Company Green Energy Joint Stock Company The above associates are incorporated in Vietnam. Principal activities are producing processing and marketing jatropha based projects. (d) Impairment of investment in associate The Company announced on 24 September 2010 that it would suspend further funding into its Vietnam operations, Green Energy Vietnam (GEV). The farmer contract model was proving too costly and slow to establish compared to the Indonesian plantation model. While Jatenergy will retain its 45.96% stake in GEV, if GEV is unable to raise further capital in the short to medium term, Jatenergy s investment may be severely impaired or ultimately prove to be unrecoverable. While Jatenergy will endeavour to recover its investment in GEV, given the parameters of the asset impairment assessment process, a decision was taken to write down the investment in GEV to zero. This has resulted in an impairment charge of $nil (2012: $321,113) in the accounts of the Company. The investment in Green Energy was based on a business plan to produce jatropha and a positive cash flow by An impairment test insert was prepared on the financial projections prepared by Green Energy and has been based on best-estimate assumptions of the company s management. These calculations are cash flows based on a financial projection which cover a five-year period plus a terminal value. The revenue projection included crop yields and pricing for seedcake, CJO and carbon. Pricing assumptions are based on near equivalent products recently sold in target markets. All future cash flows have been discounted to present values at a rate of 20%. The Directors have assessed that the recoverable amount of the Company s investment in Green Energy under the impairment basis is nil as at 30 June

53 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 13 Intangibles Goodwill Tenements Contracts Total $ $ $ $ 30 June 2013 Cost - 1,478,235 4,366,330 5,844,565 Transferred to assets held for sale - (1,478,235) - (1,478,235) Accumulated Impairment Losses - - (2,760,687) (2,740,578) Net carrying amount - - 1,605,643 1,605, June 2012 Cost - 1,478,235 4,366,330 5,844,565 Accumulated Impairment Losses - - (1,594,094) (1,594,094) Net carrying amount - 1,478,235 2,772,236 4,250,471 Fair Value Balance at 1 July ,478,235 2,772,236 4,250,471 Transferred to assets held for sale - (1,478,235) - (1,478,235) Impairment - - (1,166,593) (1,166,593) Balance at 30 June ,605,643 1,605,643 Carrying amounts At 1 July ,478,235 2,772,236 4,250,471 At 30 June ,605,643 1,605,643 The premium of $5,844,565 paid over the fair value of assets acquired has been allocated to two interests Blackrock held at the time of acquisition; being a mining services contract and interest in mining tenement in Indonesia. The Fair value of the mining services contract has been calculated based on net future cash flows generated from the contract. A total of $4,366,330 was allocated to this contract. At 30 June 2012, a re-assessment of the net future cashflows was made and at 30 June 2013 a further reassessment was made. The key assumptions used in the valuation include a discount rate of 21%. Revenues are based on forecasted coal production of 435,000 tonnes with an effective margin of $8USD per tonne. The $US to $Australian exchange rate was The contract life is 2.5 years and in accordance with the Group's accounting amortisation will be occur on a systematic basis over the life of the contract once coal production commences. Based on these key assumptions, an impairment expense of $1.2m (2012:$1.6m) was recognised. A further analysis was made at 30 June 2013 the key assumptions allocated to the mining tenement PT Coal Soil Brik is not considered to be impaired by management. On 17 July 2013 JAT Energy entered into a contract to sell assets that had previously been classified as intangible assets tenements. At 30 June 2013 these assets have been reclassified as assets held for sale as it is highly probable that the asset will be sold. 53

54 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 14 Current liabilities - trade and other payables Consolidated $ $ Trade payables 124, ,807 Total 124, , Current liabilities - provisions Consolidated $ $ Employee benefits - annual leave Total Employee benefits - annual leave Consolidated Group Opening balance 1 July Additional provisions 3,083 Amounts used Balance as at 30 June (716) 2, Provisions of Annual Leave A provision has been recognised for employee benefits relating to annual leave for the year ended 30 June The provision was released as the Group no longer has employees. The measurement and recognition criteria relating to employee benefits have been included in Note 1 to this report. 54

55 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 16 Contributed equity Consolidated Entity Notes $ $ (a) Share capital Ordinary Shares - 98,565,568 (2012: 79,290,568) Fully paid shares (c) 26,426,160 25,655,160 Total Share Capital 26,426,160 25,655,160 (b) Other equity securities Options Restricted - - Unrestricted 31,898,547 31,898,547 Directors Unlisted 375, ,000 Executives Unlisted - 125,000 Total options 32,273,547 32,398,547 (c) Movements in ordinary share capital Number Number At the beginning of the reporting period 79,290,568 79,290,568 Share issues during the year: 12 September ,025,000-5 October ,500, October ,000-7 November ,150,000-6 December ,875,000 - Closing balance 98,565,568 79,290,568 (d) Ordinary shares The Company does not have a limited amount of authorised capital. 55

56 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 16 Contributed Equity (Continued) Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held and do not have a par value. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (e) Movements in options Listed Unlisted Total Opening balance at 1 July ,898, ,000 32,398,547 Options issued during the period - - Expired (125,000) (125,000) Closing at 30 June ,898, ,000 32,273,547 (f) Options Information relating to Jatenergy Director and executive options, including details of options issued and outstanding, is set out in note 18. (g) Capital risk management The Group s and parent entity s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. There were no changes in the Group s approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 56

57 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 17 Reserves and accumulated losses Consolidated Entity $ $ (a) Reserves Share-based payments reserve 351, ,492 Options reserve 264, ,083 Foreign currency translation reserve (189,687) (13,199) 425, ,376 (b) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July 20,735,499 16,107,042 Net loss for the year 2,170,661 4,628,457 Balance 30 June 22,906,160 20,735,499 (c) (i) Nature and purpose of reserves Share-based payments reserve The share-based payments reserve is used to recognise the fair value of options granted but not exercised. (ii) Options reserve The options reserve is used to recognise the amounts received form the issue of listed options. (iii) Foreign Currency translation reserve The foreign currency translation reserves comprises of foreign currency translation differences arising on translation of financial statements of the Groups foreign entities. 18 Key management personnel disclosures (a) Directors The following persons were Directors of Jatenergy Limited during the financial year. Chairman - executive Anthony Crimmins (appointed 22 May 2012) Non-executive directors Xipeng Li, Non-Executive Director (appointed 15 April 2011) Wilton Yao, Alternate Non-Executive Director for Mr Xipeng Li (appointed 15 April 2011) Richard Pritchard, Non-Executive Director (appointed 22 May 2012) 57

58 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 18 Key Management Personnel Disclosures (continued) (b) Key management personnel compensation The Company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed remuneration disclosures to the Director s report. The relevant information can be found in sections A-D of the remuneration report on pages 13 to 19. (c) Equity instrument disclosures relating to key management personnel (i) Options provided as remuneration and shares issued on exercise of such options Details of options provided as remuneration, together with terms and conditions of the options, can be found in note 26. (ii) Options holding The numbers of options over ordinary shares in the Company held during the financial year by each Director of Jatenergy Limited and other key management personnel of the Group, including their personally related parties, are set out below. Balance at the start of the year Granted during the year as compensation Exercised during the year Other changes during the year Balance at the end of the year Vested and exercisable at the end of the year Name No. No. No. No. No. No Directors of Jatenergy Limited Anthony Crimmins 1,771, ,711,520 1,711,520 Xipeng Li 7,205, ,205,611 7,205,611 Wilton Yao Richard Pritchard Other key management personnel Chris Flanagan Directors of Jatenergy Limited Anthony Crimmins 1,771, ,771,520 1,771,520 Xipeng Li 500, ,705, ,205,611 7,205,611 Wilton Yao Richard Pritchard Alan Broome Ross Kestel 125, (125,000) Tom Hancock 125,000 - (41,723) 1 83,277 83,277 Other key management personnel Phil Hodgson 1,375, (875,000) 500,000 - Paul Hogan , , ,000 expired 30 November 2011 and 83,277 options were purchased for $833 on 4 October 2011, net movement disclosed in other changes during the year 2. 6,706,611 options were purchased for $67,056 on 16 September ,625 options were purchased for $1,000 on 21 December

59 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 18 Key Management Personnel Disclosures (continued) (iii) Share holdings of key management personnel The numbers of shares in the Company held during the financial year by each Director of Jatenergy Limited, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation Directors and Key Management Personnel of Jatenergy Limited ordinary shares Balance at the start of the year Received during the year on the exercise of options Other changes during the year Balance at the end of the year No. No. No. No. Anthony Crimmins 5,039, ,039,556 Xipeng Li** 13,411, ,411,222 Wilton Yao Richard Pritchard Chris Flanagan , , Directors and Key Management Personnel of Jatenergy Limited ordinary shares Anthony Crimmins 5,039, ,039,556 Xipeng Li** 13,411, ,411,222 Wilton Yao Richard Pritchard , ,000 Alan Broome Phil Hodgson 97, , ,674 Ross Kestel Tom Hancock 166, ,553 ** Xipeng Li owns 13,411,222 shares indirectly 59

60 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 18 Key Management Personnel Disclosures (continued) (d) Other transactions with key management personnel There were no other transactions with key management personnel during the financial year ended 30 June The chief executive officer and general manager are employed under a consulting and employment services contract, respectively. 19 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and a non-related audit firm. Consolidated Entity $ $ (a) Assurance services Audit services Grant Thornton Australian firm Audit of financial reports and other audit work under the Corporations Act ,019 64,675 Total remuneration for audit services 37,019 64,675 Other assurance services - - Total remuneration for assurance services 37,019 64,675 (b) Taxation services Grant Thornton Australian firm Tax compliance services, including review of company income tax returns - 6,000 Total remuneration for taxation services - 6,000 (c) Advisory services Grant Thornton Australian firm Initial public offering, other public raisings - 7,500 Total remuneration for advisory services - 7,500 Total remuneration for non-audit services - 13,500 Grant Thornton was appointed as the Group s auditors at the Annual General Meeting on 26 October It is the Group s policy to employ Grant Thornton on assignments additional to their statutory audit duties where Grant Thornton s expertise and experience with the Group are important, and where the engagement does not compromise their independence. It is the Group s policy to seek competitive tenders for all major consulting projects. 60

61 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 20 Contingencies (a) Contingent liabilities The Group had no significant contingent liabilities at 30 June 2012 or at 30 June (b) Contingent assets The Group had no significant contingent assets at 30 June 2012 or at 30 June Commitments (a) Operating lease commitments - group as lessee Consolidated Entity $ $ Commitments for minimum lease payments in relation to operating leases contracted for the reporting date but not recognised as liabilities, payable: Within one year - 19,081 Later than one year but not later than five years - - Later than five years ,081 Representing: Non-cancellable operating leases , Related party transactions (a) Parent entities Jatenergy Limited is the ultimate parent entity within the Group. (b) Subsidiaries Interests in the subsidiary are set out in note 22. (c) Key management personnel Disclosures relating to key management personnel are set out in the Director s report. 61

62 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 22 Related party transactions (continued) (d) Amounts receivable or payable to related parties There were no amounts receivable or payable to related parties for the year ended 30 June 2013 or the year ended 30 June (e) Transactions with related parties The following transactions occurred with related parties: Consolidated Entity $ $ A company controlled by George Sims, a former director, provided consultancy services during the period - 42,000 A company controlled by Tony Crimmins, a director, received payment for expenses incurred during the period 7,834 - A company controlled by Chris Flanagan, a key management personnel, received payment for expenses incurred during the period 23,736 - A company controlled by Wilton Yao, a director, received payment for expenses incurred during the period 11, Controlled Entities (a) Controlled Entities Consolidated Subsidiaries of Jatenergy Limited Country of incorporation Percentage Owned (%)* % % Jatenergy Holdings Pte Ltd(~) Singapore Jatenergy Indonesia Pte Ltd(^) Singapore Jatenergy Developments Pty Limited(#) Australia 75 - PT Jatoil Waterland(^) Indonesia Blackrock Resources Pty Ltd Australia Blackrock Energy Pte Ltd( x ) Singapore PT Barata Energy Indonesia PT Coal Soil Brik Indonesia * Percentage of voting power is in proportion to ownership ^ These entities are subsidiaries of Jatenergy Holdings Pte Ltd. x This entity is a subsidiary of Blackrock Resources Pty Ltd ~This entity was dissolved on 2 January 2013 #This entity was incorporated 24 September

63 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 24 Events occurring after the reporting date The Company announced on 22 July 2013 that the Conditional Share Sale and Purchase agreement for the sale of PT Coal Soil Brik (CSB) to PT Prakarsa Corpindo was signed on 17 July Jatenergy has agreed to the sale of the Coal Soil Brik to PT Prakarsa Corpindo. The purchase price of USD$ 2,000,000 will be paid by Prakarsa, with no additional management consulting fee or royalty payment, and no payable commitment in the future. Prakarsa has made an initial payment of USD$200,000 and will have six months to complete the transaction. Under the agreement, the remaining purchase price has to be paid subject to Jatenergy s fulfilment of the Conditions Precedent (CP s) within a period of three months. The principle CP s for CSB are: CSB details on regulatory and corporate matters, preparation of shareholder registrations, details of government approvals and company registration, provision of CSB company financial statements, an announcement in national Indonesian newspaper of the CSB sale formal notification of CSB employees and evidence of CSB General Meeting of Shareholders; Internal consents of CSB Sellers; and Third Party consent as and if required from the Indonesian Government, with a Warranty that the CSB sellers have not entered into any undisclosed commitments. The purchaser must agree that all CP s must have been met. Once the CP s have been satisfied, the remaining purchase price of USD$1,800,000 will be paid by 17 December Of this payment Jatenergy will earn 80% minus costs and associated expenses. If the CP s are not fulfilled within the agreed three month period, Prakarsa has the rights to waiver the CP s outstanding or extend the period for the CP s fulfilment. Otherwise the agreement can be terminated and the initial payment refunded. No matters other than the above have arisen since 30 June 2013 that has significantly affected, or may significantly affect: (i) (ii) (iii) the Company s operations in future financial years; or the results of those operations in future financial years; or the Company s state of affairs in future financial years. 25 Reconciliation of loss after income tax to net cash outflow from operating activities Consolidated Entity $ $ Loss for the year (2,213,417) (4,664,932) Depreciation and amortisation 11,730 9,158 Foreign exchange (gain)/loss (283,790) (35,609) Non-cash expense - share-based payments - 9,157 Other non-cash items: Impairment 1,166,593 1,594,094 Change in operating assets and liabilities: (Increase)/decrease in trade and other receivables 89,995 (147,113) Decrease/(increase) in trade and other payables (6,624) (203,065) Increase/ (decrease in provisions (716) 85 Net cash (outflow) from operating activities (1,236,229) (3,438,225) 63

64 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 26 Loss per share Consolidated Entity cents cents (a) Basic and diluted loss per share Basic loss attributable to the ordinary equity holders of the Company (2.4) (5.92) Diluted loss attributable to the ordinary equity holders of the Company (2.4) (5.92) (b) Loss used in calculating basic and diluted loss per share (2,107,661) (4,664,932) (c) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share. Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share. 92,159,472 78,833,301 92,159,472 78,833,301 (d) (i) Information concerning the classification of securities Options Options granted to executives and Directors are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. In the year ended 30 June 2012 and 30 June 2013, these options were in fact anti-dilutive, and consequently diluted EPS is the same as basis EPS. The options have not been included in the determination of basic earnings per share. Details relating to the options are set out in note

65 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED 27 Share-based payments (a) Director and executive options The following share based payments existed at 30 June 2013: Director options issued to Phil Hodgson at a fair value of $15,000 approved at a General meeting of shareholders on 17 November These options were granted for no consideration with an exercise price of $0.20 exercisable any time prior to 31 December Each option entitles the holder to one share in the Company. Options granted carry no dividend or voting rights. Total share based payment expense incurred during the year was $nil (2012: $9,157) No Of Options Consolidated Entity Weighted Average Exercise Price $ No Of Options Weighted Average Exercise Price $ Outstanding at the Beginning of the year 500, ,625, Granted Forfeited - - (875,000) 0.20 Expired (125,000) (250,000) 0.22 Outstanding at year end 375, , Exercisable at year end 375, ,

66 NOTES TO THE FINANCIAL STATEMENTS JATENERGY LIMITED Jatenergy Limited - Parent Company Information Parent Entity Assets Consolidated Entity $ $ Current assets 279,938 2,754,627 Non-current assets 8,551,476 5,575,046 Total assets 8,831,414 8,329,673 Liabilities Current liabilities ,262 Total liabilities 328, ,262 Equity Issues capital 26,426,160 25,919,145 Retained earnings (18,539,144) (18,053,926) Total equity 7,887,016 7,865,219 Reserves Share-based payments reserve 615, ,492 Total reserves 615, ,492 Financial performance Loss for the year (847,363) (2,080,689) Other comprehensive income - - Total comprehensive income (847,363) (2,080,689) Guarantees in relation to the debts of subsidiaries Guarantee provided under the deed of cross guarantee Nil Nil Contingent liabilities Non-cancellable operating lease - premises - - Contractual commitments Contractual capital commitments for the acquisition of property, plant or equipment. Nil Nil 66

67 JATENERGY LIMITED DIRECTORS DECLARATION The Directors of the Company declare that: (a) the financial statements and notes set out on pages 29 to 66 are in accordance with the Corporations Act 2001, and: (i) (ii) comply with Accounting Standards; give a true and fair view of the financial position as at 30 June 2013 and of the performance for the year ended on that date of the consolidated entity. (iii) comply with International Financial Reporting Standards as disclosed in note 1. (b) the executive chairman has declared that: (i) (ii) (iii) the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements and notes for the financial year comply with the Accounting Standards; and the financial statements and notes for the financial year give a true and fair view; (c) 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 Directors. Anthony Crimmins Chairman Sydney 28 August

68 Grant Thornton Audit Pty Ltd ACN Level 19, 2 Market Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230 T F E info.nsw@au.gt.com W Independent Auditor s Report To the Members of Jatenergy Limited Report on the financial report We have audited the accompanying financial report of Jatenergy Limited (the Company ), which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors declaration of the consolidated entity comprising the Company and the entities it controlled at the year s end or from time to time during the financial year. Directors responsibility for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act The Directors responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards. Auditor s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s 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 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. 68

69 judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act Auditor s opinion In our opinion: a the financial report of Jatenergy Limited is in accordance with the Corporations Act 2001, including: i giving a true and fair view of the consolidated entity s financial position as at 30 June 2013 and of its performance for the year ended on that date; and ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements. Emphasis of Matter on Going Concern Without qualifying our opinion, we draw attention to Note 1 in the financial report which indicates that the consolidated entity incurred a net loss of $2,213,417 and operating cash outflows of $1,236,229 during the year ended 30 June Furthermore, the consolidated entity is reliant on future sale of its assets, and additional equity fundings. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report. 69

70 Report on the remuneration report We have audited the remuneration report included in pages 10 to 16 of the directors report for the year ended 30 June The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. Auditor s opinion on the remuneration report In our opinion, the remuneration report of Jatenergy Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act GRANT THORNTON AUDIT PTY LTD Chartered Accountants N J Bradley Partner - Audit & Assurance Sydney, 28 August