JC International Group Limited For personal use only · The names and details of the JC...

JC International Group Limited 2016 CONSOLIDATED ANNUAL FINANCIAL REPORT For the year ended 31 December 2016

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JC International Group Limited

Contents

Page

Directors’ Report 1

Auditor’s Independence Declaration 12

Consolidated Statement of Profit or Loss and Other Comprehensive Income 13

Consolidated Statement of Financial Position 14

Consolidated Statement of Changes in Equity 15

Consolidated Statement of Cash Flows 16

Directors’ Declaration 48

Independent Auditor’s Report 49

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JC International Group Limited 1

Directors’ Report

The Directors submit their report for the year ended 31 December 2016.

1. DIRECTORS

The names and details of the JC International Group Limited’s “the Company” directors in office during the financial year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Name Position Appointment Date

Cessation Date

Mr John Dixon Non-Executive Director/Chairman 07/09/2015 - Mr Yonghong Tang Managing director/General manager 13/04/2015 -

Mr Youxi Sun Executive Director/Vice General Manager

07/09/2015 -

Mr Yangyu Zhu Executive Director/Vice General Manager

07/09/2015 -

Ms Bronwyn Barnes Non-executive Director 07/09/2015 - Mr Min Wu Alternate Director 17/06/2016 - Mr Luo Qi Alternate Director 17/06/2016 -

2. INFORMATION ON THE DIRECTORS AND COMPANY SECRETARY

Mr John Dixon

Non-Executive Chairman

Mr John Dixon has over 30 years significant experience in the logistics sector, having previously held a number of executive director roles and senior executive positions with leading firms including TNT, Linfox Pty Ltd, Patrick Corporation and Westgate Logistics.

Mr John Dixon was previously Managing Director of Silk Logistics Group. Prior to that, he was Chief Operating Officer and an Executive Director of Skilled Group Ltd.

Mr John Dixon is currently a director of Redstar Transport Pty Ltd. Mr Dixon has not held any former public company directorships in the last 3 years.

Mr Yonghong Tang (John)

Managing director/General manager

Mr Yonghong Tang (John) is the founder of JCI Group. Mr Tang began working in the engineering industry in 1995 when he led a team of carpenters at a construction site of Anhui Conch Cement Company (CONCH), the largest cement factory in Asia, and the Saint Gobain pipe plant thereafter. Through hard work, tenacity and creativity, Mr Tang’s team has completed various influential projects. He leads a growing team across Asia and Africa, and has a deep understanding of working with PRC engineering conglomerates.

John was recognised as a “Star Entrepreneur” by the local municipality in 2013. He was also awarded Mostly Liked Executive by the local business chamber in 2014.

Mr Tang has not held any former public company directorships in the last 3 years.

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Mr Youxi Sun

Executive Director/Vice General Manager

Mr Youxi Sun serves as Vice General Manager and has oversight responsibility for project site management and cost control, as well as major contract negotiations.

Mr Sun joined JCI Group in 2008 as a Project Manager in Africa, then progressed to Vice General Manager in 2010. Before joining JCI Group, Mr Sun was Chief Surveyor and head of Contract Assessing Division of a state-owned engineering company.

Mr Sun graduated from Civil Engineering Department of Anhui Broadcasting & Television University in 1987.

Mr Sun has not held any former public company directorships in the last 3 years.

Mr Yangyu Zhu (Brian)

Executive Director/Vice General Manager

Mr Yangyu Zhu (Brian) is responsible for managing JCI’s relationships with non-PRC parties and investors.

Before joining JCI Group in 2014, Mr Zhu obtained broad experience working as an accountant for a local engineering company, foreign affairs secretary for Ma’anshan City, and also for an Indian mechanical company, an American chemical company, an Iranian automobile company and a South African biomass energy company.

Mr Zhu graduated from Xi’An University of Finance & Economics in 1995 and has also passed the Canadian Certified General Accountant exams.

Mr Zhu has not held any former public company directorships in the last 3 years.

Ms Bronwyn Barnes

Non-executive director

Ms Bronwyn Barnes has extensive experience in strategic planning and project development having worked for a number of international and Australian private and public companies. With over 16 years’ experience in the resources sector, Ms Barnes has held director, leadership and operational roles with companies ranging from BHP Billiton to emerging juniors. Ms Barnes is an experienced Board member having served in both executive and non-executive capacities in the resources, fishing, indigenous, education and community sectors.

Ms Barnes is currently the Non-Executive Chair of RNI NL, and is a member of the Advisory Council for Curtin University School of Business.

Ms Barnes has held the following public company directorships in the last 3 years:

• Windward Resource Ltd - January 2014 to October 2016

• RNI NL - 2016 to present

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Mr Min Wu

Alternate Director, appointed on 17 June 2016

Mr Wu graduated with a Masters of Public Administration from the University of Science and Technology of China in 2009. He has more than 10 years working experience in investment management and service trade regulation for city government. Mr Wu also has broad experience in management, investment and financing and project negotiation. Mr Wu has not held any former public company directors in the last 3 years.

Mr Luo Qi

Alternate Director, appointed on 17 June 2016

Mr Luo Qi has been in Australia since 2000 and graduated from Curtin University in 2006. Mr Qi has over 10 year’s professional experience in marketing, business development and strategy planning, import and export trade, Australian property development investment, and corporate advisory. He also serves as Vice Chairman of the Shandong Chamber of Commerce Western Australia, Vice President of the Australian Chinese Entrepreneurs Union and a committee member of Australian China New Business Association. Mr Qi has not held any former public company directors in the last 3 years.

Ms Marika White

Company Secretary, appointed on 07 November 2016

Ms Marika White is a Company Secretary for Boardworx Australia Pty Ltd, a private company that provides bespoke Company Secretarial services to a range of listed and non-listed companies in Australia, China, Indonesia, Israel, USA and Singapore across a variety of industries.

Marika has extensive company secretarial experience within the public, private and not-for-profit sectors, in both Australia and overseas, and is a member of the Australian Institute of Company Directors and the Governance Institute of Australia. Ms White has not held any former public company directors in the last 3 years.

Mr Dennis Wilkins

(Company Secretary, resigned on 7 November 2016)

Mr Dennis Wilkins is the founder and principal of DWCorporate Pty Ltd a leading privately held corporate advisory firm servicing the natural resources industry.

Since 1994 he has been a director of, and involved in the executive management of, several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. From 1995 to 2001 he was the Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare Earths project was acquired by the group. He was also founding director and advisor to Atlas Iron Limited at the time of Atlas’ initial public offering in 2006.

Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector.

He is currently a non-executive director of Australian listed company Key Petroleum Ltd.

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3. OPERATING AND FINANCIAL REVIEW

Nature of Operations and principal activities

The principal activities during the year of the entities within the JC International Group “the Group” were the provision of a “one-stop” subcontracted workforce for the PRC construction industry underpinned by specialised training in various skillsets.

Results of Operations

The net profit after income tax of the Group for the year was $9,202,545 (2015: $7,042,422).

Review of Operations

During the year ended 31 December 2016, the Group continued its main business activity of the provision of a “one-stop” workforce subcontracting solution underpinned by specialised training in various skillsets for construction industry.

Summarised Operating Results

The Group’s business has been growing continuously, the revenue for the 2016 financial year is $68,705,448, showing a 24% growth compared with 2015. The growth combined with strict cost management has resulted in improved financial performance during the 2016 financial year despite the slowdown of economic growth in China. The Group managed to achieve a higher level of net profit compared with last year under the overall downturn of the economy. The Group realised an after-tax profit and $9,202,545 for the 2016 financial year which represents an increase of 31% on the previous year (2015: $7,042,422). As a result of appreciation of Australian dollar, the Group showed a foreign exchange loss on translation of its foreign operation of $(1,586,352).

The net assets of the Group has increased by $12,875,733 from $23,743,721 as at 31 December 2015 to $36,619,454 as at 31 December 2016. The increase is largely resulted from the following factors:

• Successful Initial Public Offering during March 2016 has resulted in capital raising totalling $5,584,764

• Increase in trade and other receivable which is a result of increase in accumulated contracted project costs from $13,182,365 as at 31 December 2015 to $31,787,795 as at 31 December 2016. This is mainly due to expansion of the business and new major sales contracts that is still in progress.

The receipt from customers as at 31 December 2016 decreased to $45,468,496 from $63,893,049 as at 31 December 2015. The reasons are below:

• The projects that the Group undertaken is more than before after successfully listed on ASX in March 2016, and the Group's business volume grows.

• Due to the slowdown of China domestic economy, there has been a strategic shift of focus from domestic market to overseas market for all the major contractors in China which the Group served as labour outsourcing subcontractor. As a result, there is an increased proportion of oversea projects in the Group's overall subcontracting portfolio. These projects normally have longer settlement period than domestic project despite the similar subcontracting arrangement. As a result, there has been an increase in trade and other receivable and also lower cash receipt from customers as at 31 December 2016.

4. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

No significant changes in the Group’s state of affairs occurred during the financial year

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5. ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group’s operations are subject to relevant local environmental laws within the jurisdictions that it operates. The Directors have complied with these laws and are not aware of any breaches of the legislation during the financial year which are material in nature.

6. LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Likely developments in the operations of the Group and expected results of those operations in subsequent financial years have been discussed, where appropriate, in the Chairman’s Report and Review of Activities.

7. DIVIDENDS

No dividend has been paid or recommended during the financial year.

8. SHARE OPTIONS

On 16 March 2016, the Group issued 200,000 Loyalty Options to the Non-executive Chairman, John Dixon. The Loyalty Options were issued for nil cash consideration, and will vest upon Mr Dixon remaining a Director of the Company until 7 September 2017 (representing 2 years of continuous service), or, if before 7 September 2017, Mr Dixon resigns at the request of the Company’s major shareholder or is removed by resolution (unless such removal is for cause). Once the 200,000 Loyalty Options vest, they may be exercised for nil consideration at any time before 31 December 2017, and 200,000 shares will be issued to Mr Dixon.

There are no other unissued ordinary shares of JC International Group Limited under option at the date of this report.

9. SIGNIFICANT EVENTS AFTER THE BALANCE DATE

There are no matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect either the Group’s operations in future financial years, the results of those operations in future financial years or the Group’s state of affairs in future financial years.

10. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During or since the financial year, the Company has not paid any premiums insuring any director or officer of JC International Group Limited. The Company has agreements in place to indemnify each director against any and all liabilities incurred by the Director as an officer of JC International Group Limited to the extent as permitted by section 199A of the Corporations Act 2001.

11. INDEMNIFICATION OF AUDITORS

To the extent permitted by law, the Company has agreed to indemnify its auditors, Pitcher Partners SA Pty Ltd, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Pitcher Partners SA Pty Ltd during or since the financial year.

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12. REMUNERATION REPORT (AUDITED)

The compensation arrangements in place for key management personnel of the Company are set out below:

Details of key management personnel

Directors J Dixon Chairman (non-executive), appointed 7 September 2015

Y Tang Managing Director and General Manager, appointed 13 April 2015

Y Sun Executive Director and Vice General Manager, appointed 7 September 2015

Y Zhu Executive Director and Vice General Manager, appointed 7 September 2015

B Barnes Non-Executive Director, appointed 7 September 2015

L Qi Alternate Director, appointed 17 June 2016

M Wu Alternate Director, appointed 17 June 2016 Other key management personnel

R Shen Vice General Manager -PRC

Y Yu Chief Financial Officer -PRC

L Du Operational Manager - PRC

Compensation Philosophy

The performance of the Company depends upon the quality of its directors and executives. To prosper, the Company must attract, motivate and retain highly skilled directors and executives.

The Company embodies the following principle in its compensation framework:

• Provide competitive rewards to attract high-calibre executives.

Group Performance

The Group’s financial performance for the last four years has been as follows:

December 2016

December 2015

December 2014

December 2013

Revenue 68,705,448 55,521,615 33,281,829 27,424,137 Net profit after tax 9,202,545 7,042,422 5,925,138 2,891,960 Basic earnings per share 0.16 0.14 N/A N/A Diluted earnings per share 0.16 N/A N/A N/A Net assets 36,619,454 23,743,721 15,816,317 8,586,741

Remuneration Committee

Due to the size of the Group, remuneration is considered by the full Board. The Board reviews remuneration packages and policies applicable to the directors and senior executives. Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executives.

Compensation Structure

In accordance with best practice corporate governance, the structure of non-executive director and senior manager remuneration is separate and distinct.

Objective of Non-Executive Director Compensation

The Board seeks to set aggregate compensation at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

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Structure of Non-Executive Director Compensation

The Constitution provides that each Director is entitled to such remuneration from the Company as the Directors decide, but the total amount provided to all non-executive directors must not exceed in aggregate the amount fixed by the Directors prior to the first annual general meeting. The aggregate remuneration for all non-executive directors has been set at an amount of $140,000 per annum by the Directors. The remuneration of the Directors must not be increased except pursuant to a resolution passed at a general meeting of the Company where notice of the proposed increase has been given to shareholders in the notice convening the meeting.

The amount of aggregate compensation sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

Objective of Senior Management and Executive Director Compensation

The Company aims to reward executives with a level and mix of compensation commensurate with their position and responsibilities within the company and so as to:

• reward executives for the Group and individual performance against targets set by reference to appropriate benchmarks;

• align the interests of executives with those of shareholders; and

• ensure total compensation is competitive by market standards.

Structure of Senior Management and Executive Director Compensation

In determining the level and make-up of executive compensation, the Board may engage external consultants to provide independent advice. No external advice was obtained during the 2016 year.

It is the Board’s policy that an employment contract is entered into with key executives.

Compensation consists of a fixed compensation element and the issue of options from time to time. 200,000 Loyalty Options were issued to John Dixon as outlined in Section 8 Share Options.

Fixed Compensation

Fixed compensation is reviewed annually by the Board. The process consists of a review of company and individual performance, relevant comparative compensation in the market and internally and, where appropriate, external advice on policies and practices. No external advice was obtained during the 2016 year.

Structure

Senior managers are given the opportunity to receive their fixed (primary) compensation in a variety of forms including cash and fringe benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company.

Employment Contracts

The Managing Director and General Manager, Mr Yonghong Tang, is employed under contract that commenced on 13 August 2015. The term of the engagement is five years unless otherwise terminated in accordance with the contract. The significant terms of the contract are:

• Mr Tang receives remuneration of $60,670 (RMB300,000) per annum, there is no statutory superannuation paid as Mr Tang is not an resident of Australia.

• Either party may terminate the agreement without cause by providing the other party no less than 6 months’ notice in writing; and

• The Company may terminate the agreement by summary notice to the Managing Director and General Manager with cause in circumstances considered standard for agreements of this nature.

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The Chief Financial Officer, Mr Yonghui Yu, is employed under contract that commenced on 13 August 2015 and will continue until terminated in accordance with the contract. The significant terms of the contract are:

• Mr Yu receives remuneration of $70,781 (RMB350,000) per annum, there is no statutory superannuation as Mr Yu is not a resident of Australia.

• Either party may terminate the agreement without cause by providing the other party no less than 6 months’ notice in writing; and

• The Company may terminate the agreement by summary notice to the Chief Financial Officer with cause in circumstances considered standard for agreements of this nature.

Loyalty Options

As Non-Executive Chairman, Mr John Dixon was issued 200,000 Loyalty Options on 16 March 2016. The Loyalty Options were issued for nil cash consideration, and will vest upon Mr Dixon remaining a Director of the Company until 7 September 2017 (representing 2 years of continuous service), or, if before 7 September 2017, Mr Dixon resigns at the request of the Company’s major shareholder or is removed by resolution (unless such removal is for cause). Once the 200,000 Loyalty Options vest, they may be exercised for nil consideration at any time before 31 December 2017, and 200,000 shares will be issued to Mr Dixon.

Compensation of Key Management Personnel for Year Ended 31 December 2016

Name

Year

Short term Salary and

Fees(1) $

Post-Employment

Super- annuation

$

Share based

payments $

Total $

% relevant to share based

payments

% performance

related

Directors

J Dixon 2016 60,883 5,784 - 66,667 - -

2015 - - - - - -

Y Tang

2016 70,952 - - 70,952 - -

2015 74,630 - - 74,630 - -

Y Sun

2016 44,759 - - 44,759 - -

2015 47,228 - - 47,228 - -

Y Zhu

2016 62,668 - - 62,668 - -

2015 66,152 - - 66,152 - -

B Barnes 2016 50,000 - - 50,000 - -

2015 - - - - - -

L QI 2016 91,324 8,676 - 100,000

- -

2015 - - - - - -

M Wu 2016 48,535 - - 48,535 - -

2015 - - - - - -

Other key management personnel

R Shen 2016 73,072 - - 73,072 - -

2015 77,146 - - 77,146 - -

Y Yu 2016 73,072 - - 73,072 - -

2015 77,146 - - 77,146 - -

L Du 2016 32,625 - - 32,625 - -

2015 34,451 - - 34,451 - -

Total

2016 607,890 14,460 - 622,350 - -

2015 376,753 - - 376,753 - - (1) Short term salary and fees includes net movements in leave provisions. During the financial year, payments for

Non-Executive Director services from Mrs Bronwyn Barnes is made to Integra Management Consultants Pty Ltd (director-related entity of Mrs Bronwyn Barnes). The current trade payable balance as at 31 December 2016 was $0. All transactions were made on normal commercial terms and conditions and at market rates.

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Shareholdings of Key Management Personnel(1)

Shares held in JC International Group Limited (number) during the year ended 31 December 2016. Name Balance

1 Jan 16 Granted

as remunera

tion

On exercise

of options

Net change other

Balance 31 Dec 16

Directors

J Dixon - - - 5,000 5,000

Y Tang 34,500,000 - - - 34,500,000

Y Sun 5,916,000 - - - 5,916,000

Y Zhu 2,500,000 - - - 2,500,000

B Barnes - - - - -

L Qi - - - 94,242 94,242

M Wu - - - - -

Other key management personnel

R Shen - - - - -

Y Yu 3,944,000 - - - 3,944,000

L Du - - - - -

Total 46,860,000 - - 99,242 46,959,242 (1) Includes options held directly, indirectly and beneficially by KMP.

Loans Given to Key Management Personnel

During the financial year 2016, there were no loans given to the key management personnel.

END OF REMUNERATION REPORT

13. PROCEEDINGS ON BEHALF OF COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.

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14. DIRECTORS’ MEETINGS

The number of Directors Meetings (including meetings of Committees of Directors) held

during the year, and the number of meetings attended by each Director is as follows:

Directors’ Name Board Meetings Audit and Risk Committee*

Nomination and Remuneration Committee*

A B A B A B

J Dixon 3 3 - - - -

Y Tang 3 3 - - - -

Y Sun 1 1 - - - -

Y Zhu 1 1 - - - -

B Barnes 3 3 - - - -

L Qi 2 2 - - - -

M Wu 2 2 - - - -

• Column A is the number of meetings the Director was entitled to attend

• Column B is the number of meetings the Director attended.

* due to the size of Board and current nature and scale of the Company, the function of Audit and Risk Committee and Remuneration and Nomination Committee is conducted collectively by the board.

15. DIRECTORS’ INTERESTS

The relevant interest of each director in the shares and options issued by the Company in accordance with the Corporations Act 2001, at the date of signing this report is as follows:

Name Ordinary shares Options over ordinary shares

J Dixon 5,000 200,000

Y Tang 34,500,000 -

Y Sun 5,916,000 -

Y Zhu 2,500,000 -

B Barnes - -

L Qi 94,242 -

M Wu - -

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16. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

Non-audit services

Pitcher Partners SA Pty Ltd did not provide any non-audit services during the financial year ended 31 December 2016.

The following non-audit services disclosed below were provided by the entity's previous auditor, Moore Stephens Assurance Adelaide Pty Ltd or associated entities which include independent firms in the Australia network.

The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. 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.

Moore Stephens Adelaide Pty Ltd and Moore Stephens Perth Corporate Services Pty Ltd received or are due to receive the following amounts for the provision of non-audit services in financial year 2016:

2016 2015 AUD AUD

Investigating Accountant’s report - 29,800 Taxation report - 5,000

- 34,800

There are not any non- auditing services provided during the year by the Group’s Auditor

We have received the Declaration of Auditor Independence from Pitcher Partners SA Pty Ltd, the Company’s Auditor. This is available for review on page 12 and forms part of this report.

17. ROUNDING OF AMOUNTS TO NEAREST DOLLAR

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the Directors’ report and in the financial report have been rounded to the nearest dollar.

SIGNED in accordance with a Resolution of the Directors on behalf of the Board

__________________________ Yonghong Tang Managing Director and General Manager Dated this 31st day of March 2017

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Auditor’s Independence Declaration

To the Directors of JC International Group Limited

In relation to the independent auditor’s review for the financial year ended 31 December 2016,

to the best of my knowledge and belief there have been:

i) no contraventions of the auditor independence requirements of the Corporations Act

2001; and

ii) no contraventions of APES 110 Code of Ethics for Professional Accountants.

This declaration is in respect of JC International Group Limited and the entities it controlled

during the period.

Jim Gouskos

Principal

Pitcher Partners SA Pty Ltd

Dated 31 March 2017

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These financial statements should be read in conjunction with the accompanying notes.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 December 2016 Consolidated Group Note 2016 2015 AUD AUD Revenue 2 68,705,448 55,521,615 Cost of sales (54,588,694) (42,939,588)

Gross profit 14,116,754 12,582,027 Other revenues 2 1,827,334 195,180 Administration expenses 3 (2,996,817) (3,083,097) Finance costs 4 (465,923) (277,421)

Profit before income tax 12,481,348 9,416,689 Income tax expense 5 (3,278,803) (2,374,267)

Profit for the year 9,202,545 7,042,422

Other comprehensive income Items that will be reclassified subsequently to profit or loss on disposal of related subsidiary

Foreign currency translation gain/(loss) (1,586,352) 883,342

Total comprehensive income for the year 7,616,193 7,925,764

Total comprehensive income attributable to: Members of the parent entity (the Company) 7,053,733 7,489,043 Ma’anshan Jiancheng Occupational Training School

25(b) 562,460 436,721

Total comprehensive income for the year 7,616,193 7,925,764

cents cents Earnings per share for profit attributable to the owners of JC International Group Limited

Basic earnings per share 16 14 Diluted earnings per share 16 14

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Consolidated Statement of Financial Position

As at 31 December 2016 Consolidated Group Note 2016 2015 AUD AUD Current assets Cash and cash equivalents 7 1,487,866 1,413,059 Trade and other receivables 8 52,616,713 31,737,689 Inventory 9 10,457 15,136 Other current assets 10 12,500 135,715

Total current assets 54,127,536 33,301,599

Non-current assets Trade and other receivables 8 6,057,324 4,022,277 Property, plant and equipment 11 6,367,765 6,789,725 Intangible assets - Land use rights 12 380,543 413,251 Deferred tax assets 13 366,422 392,482

Total non-current assets 13,172,054 11,617,735

Total assets 67,299,590 44,919,334

Current liabilities Trade and other payables 14 20,098,059 16,136,174 Short-term borrowings 15 7,457,344 2,642,000 Current tax liabilities 16 3,124,733 2,397,439

Total current liabilities 30,680,136 21,175,613

Total liabilities 30,680,136 21,175,613

Net assets 36,619,454 23,743,721

Equity

Issued capital 17 9,991,585 4,732,045 Reserves 18 5,459,351 5,522,033 Retained earnings 21,168,518 13,489,643

Total equity 36,619,454 23,743,721 For

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Consolidated Statement of Changes in Equity

For the year ended 31 December 2016

Note Share

Capital Retained Earnings

Foreign Currency

Translation Reserve

Statutory Reserve

Training School Profits

Reserve

Consolidated Total

AUD AUD AUD AUD AUD AUD

Balance at 1 January 2015

4,730,405 7,591,396 2,413,968 862,141 218,407 15,816,317

Shares issued during the year

1,640 - - - - 1,640

Total consolidated comprehensive income for the year

- 7,042,422 - - - 7,042,422

Transferred to Statutory Reserve

18 - (707,454) - 707,454 - -

Transferred to Training School Profits Reserve

18 - (436,721) - - 436,721 -

Other comprehensive income

18 - - 883,342 - - 883,342

Balance at 31 December 2015

4,732,045 13,489,643 3,297,310 1,569,595 655,128 23,743,721

Shares issued during the year

17 5,584,765 - - - - 5,584,765

Transaction costs 17 (325,225) - - - - (325,225) Total consolidated comprehensive income for the year

- 9,202,545 - - - 9,202,545

Transferred to Statutory Reserve

18 - (961,210) - 961,210 - -

Transferred to Training School Profits Reserve

18 - (562,460) - - 562,460 -

Other comprehensive income

18 - - (1,586,352) - - (1,586,352)


9,991,585 21,168,518 1,710,958 2,530,805 1,217,588 36,619,454

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Consolidated Statement of Cash Flows

For the year ended 31 December 2016

Consolidated Group Note 2016 2015 AUD AUD Cash flows from operating activities Receipts from customers 45,468,496 63,893,049 Payments to suppliers, employees and others (51,969,895) (59,542,214) Interest received 19,116 6,455 Finance costs (465,923) (277,421) Income tax paid (2,471,642) (2,212,988)

Net cash provided by (used in) operating activities (9,419,848) 1,866,881

Cash flows from investing activities Purchase of property, plant and equipment (528,979) (277,618) Proceeds from sale of property plant and equipment 30,335 -

Net cash provided by (used in) investing activities (498,644) (277,618)

Cash flows from financing activities Proceeds (Repayment) from (of) borrowings 4,971,563 (528,400) Cash receipts (Advanced) from (to) related parties 23(d) - (1,114,437) Additional share capital injection 5,259,541 -

Net cash provided by (used in) financing activities 10,231,104 (1,642,837)

Net change in cash and cash equivalents held 312,612 (53,574) Effect of exchange rates on cash holdings in foreign currencies

(237,805) 3,754

Cash and cash equivalents at beginning of financial year 1,413,059 1,462,879

Cash and cash equivalents at end of financial year 7 1,487,866 1,413,059

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JC International Group Limited Notes to Financial Statements For the year ended 31 December 2016

17

1 Statement of significant accounting policies

These general purpose financial statements have been prepared in accordance with the

Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian

Accounting Standards Board and International Financial Reporting Standards as issued by the

International Accounting Standards Board.

JC International Group Limited was incorporated on 13 April 2015.

The consolidated financial statements for JC International Group “the Group” were authorised

for issue by the director on 31 March 2017.

Basis of preparation

The consolidated financial statements have been prepared on an accrual basis and are based on

historical costs modified by the revaluation of selected non-current assets and financial

instruments for which the fair value basis of accounting has been applied. All amounts are

presented in Australian Dollar (AUD) which is the Group’s presentational currency, unless

otherwise noted.

Material accounting policies adopted in the preparation of these financial statements are

presented below and have been consistently applied unless stated otherwise.

The financial statements have been prepared on a going concern basis.

a. Principle of consolidation

The consolidated financial statements incorporate all of the assets, liabilities and results of the

parent (JC International Group Limited) and all of the subsidiaries (including any structured

entities). Subsidiaries are entities the parent controls. The parent controls an entity when it is

exposed to, or has rights to, variable returns from its involvement with the entity and has the

ability to affect those returns through its power over the entity.

A list of the subsidiaries is provided in Note 25.

The assets, liabilities and results of all subsidiaries are fully consolidated into the financial

statements of the Group from the date on which control is obtained by the Group. The

consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany

transactions, balances and unrealised gains or losses on transactions between group entities are

fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and

adjustments made where necessary to ensure uniformity of the accounting policies adopted by

the Group.

Business Combination

Business combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a

combination involving businesses under common control. Business combinations other than

those involving businesses under common control are accounted for from the date that control

is attained, whereby the identifiable assets acquired and liabilities (including contingent liabilities)

assumed are recognised at their acquisition-date fair values (except in a limited number of

circumstances as identified in AASB 3: Business Combinations).

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When measuring the consideration transferred in the business combination, any asset or liability

resulting from a contingent consideration arrangement is also included. Subsequent to initial

recognition, contingent consideration classified as equity is not remeasured and its subsequent

settlement is accounted for within equity. Contingent consideration classified as an asset or

liability is remeasured each reporting period to fair value, recognising any change to fair value in

profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to the business combination are expensed to the

statement of comprehensive income. The acquisition of a business may result in the recognition

of goodwill or a gain from a bargain purchase.

b. Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense/ (income).

Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense/ (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

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c. Property, Plant and Equipment

Property, Plant and equipment are measured at cost less depreciation and impairment losses.

The cost of fixed assets constructed within the Group includes the cost of materials, direct

labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,

as appropriate, only when it is probable that future economic benefits associated with the item

will flow to the Group and the cost of the item can be measured reliably. All other repairs and

maintenance are charged to the statement of comprehensive income during the financial period

in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including building and capitalised leased assets, but

excluding freehold land, is depreciated on a straight line basis over their useful lives to the

Group commencing from the time the asset is held ready for use. Leased assets are depreciated

over the shorter of either the unexpired period of the lease or the estimated useful lives of the

assets.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate Office equipment 20% Buildings 5%

Plant and equipment 10% Motor vehicles 10%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each

reporting period 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.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount.

These gains or losses are included in the statement of comprehensive income.

d. Intangible assets – Land use right Land use right has a finite useful life and is carried at cost less accumulated amortisation and any impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of land use rights over its estimated useful lives, which is 50 years.

e. Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of

manufactured products includes direct materials, direct labour and an appropriate portion of

fixed overheads. Costs are assigned on the basis of weighted average costs.

f. Contracted project costs Contracted project costs comprise cost, plus profit recognised to date less any provision for anticipated future losses. Cost includes both variable and fixed costs relating to specific

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contracted projects, and those costs that are attributable to the project activity in general and that can be allocated on a reasonable basis. Project profits are recognised on the stage of completion basis and measured using the proportion of costs incurred to date compared to expected actual costs. Where losses are anticipated they are provided for in full Contracted project revenue has been recognised on the basis of the terms of the contract adjusted for any variations or claims allowable under the contract

g. Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the

contractual provisions of the instrument and are initially measured at fair value plus

transactions costs where the instrument is not classified as at fair value through profit or loss. .

Financial instruments are classified and subsequently measured as set out below.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. When the effect of discounting is material, loans and

receivables are carried at amortised cost using the effective interest rate method.

Financial liabilities

When the effect of discounting is material, non-derivative financial liabilities (excluding

financial guarantees) are carried at amortised cost using the effective interest rate method.

Impairment of financial assets

At each reporting date, the Group assesses whether there is objective evidence that a financial

instrument has been impaired.

In the case of financial assets carried at amortised cost, loss events may include: indications that

the debtors or a group of debtors are experiencing significant financial difficulty, default or

delinquency in interest or principal payments; indications that they will enter bankruptcy or

other financial reorganisation; and changes in arrears or economic conditions that correlate with

defaults.

For financial assets carried at amortised cost (including loans and receivables), a separate

allowance account is used to reduce the carrying amount of financial assets impaired by credit

losses. After having taken all possible measures of recovery, if management establishes that the

carrying amount cannot be recovered by any means, at that point the written-off amounts are

charged to the allowance account or the carrying amount of impaired financial assets is reduced

directly if no impairment amount was previously recognised in the allowance account.

In a subsequent period, the amount of the impairment loss decreases and the decrease can be

related objectively to an event occurring after the impairment was recognised, the previously

recognised impairment loss is reversed through profit or loss to the extent the carrying amount

of the investment at the date the impairment is reversed does not exceed what the amortised

cost would have been had the impairment not been recognised.

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Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the

consolidated statement of financial position if there is a currently enforceable legal right to

offset the recognised amounts and there is an intention to settle on a net basis, to realise the

assets and settle the liabilities simultaneously.

h. Impairment of Non-Financial Assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible

assets to determine whether there is any indication that those assets have been impaired. If such

an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair

value less costs to sell and value in use, is compared to the asset’s carrying value. In assessing

value in use, the estimated future cash flows are discounted to their present value using a pre-

tax discount rate that reflects current market assessments of the time value of money and the

risks specific to the asset for which the estimates of future cash flows have not been adjusted.

Any excess of the asset’s carrying value over its recoverable amount is expensed to the

statement of comprehensive income.

i. Employee Benefits

Salary and wages are paid on a monthly basis and recognised as an expense when incurred and

no leave entitlements accrue at the end of the reporting period.

j. Cash and Cash Equivalents

Cash comprises cash on hand, demand deposits and security deposits. Cash equivalents are

short-term, highly liquid investments that are readily convertible to known amounts of cash and

which are subject to an insignificant risk of changes in value.

k. Revenue

Revenue is measured at the fair value of the consideration received or receivable after taking

into account any trade discounts and volume rebates allowed. Any consideration deferred is

treated as comprising a finance component and is discounted at a rate of interest that is

generally accepted in the market for similar arrangements. The difference between the amount

initially recognised and the amount ultimately received is interest revenue.

Revenue relating to contracted project is detailed at Note 1(f).

Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the transaction at the end of the reporting period, where the outcome of the contract can be estimated reliably. The stage of completion is determined with reference to the services performed to date as a percentage of total anticipated services to be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure is recoverable.

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the

effective interest rate applicable, which is the rate that exactly discounts estimated future cash

receipts through the expected life of the financial asset to that asset’s net carrying amount.

All revenue is stated net of the amount of business tax.

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l. Trade and Other Receivables

Trade and other receivables include amounts due from customers for goods sold and services

performed in the ordinary course of business. Trade receivables are normally collected within

90 to 120 days of recognition of the asset. Receivables expected to be collected within 12

months of the end of the reporting period are classified as current assets. All other receivables

are classified as non-current assets, less any provision for impairment.

m. Trade and Other Payables

Trade and other payables represent the liabilities for goods and services received by the entity

that remain unpaid at the end of the reporting period. The balance is recognised as a current

liability with the amounts normally paid within 90 days of recognition of the liability.

n. Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of assets

that necessarily take a substantial period of time to prepare for their intended use or sale, are

added to the cost of those assets, until such time as the assets are substantially ready for their

intended use of sale. All other borrowing costs are recognised in the statement of

comprehensive income in the period in which they are incurred.

o. Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform

to changes in presentation for the current financial year.

p. Critical accounting estimates and judgments

The director evaluates estimates and judgments incorporated into the financial statements based

on historical knowledge and best available current information. Estimates assume a reasonable

expectation of future events and are based on current trends and economic data, obtained both

externally and within the Group. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised if the revision

affects only that period or in the period of the revision and future periods if the revision affects

both current and future periods.

Key estimates — Impairment of non-financial assets

The Group assesses impairment at each reporting date by evaluating conditions and events

specific to the Group that may be indicative of impairment triggers. Recoverable amounts of

relevant assets are reassessed using value-in-use calculations which incorporate various key

assumptions.

Significant judgments — Provision for impairment of receivables/inventory

The Group assesses the provision for impairment of receivables at each reporting date by

evaluating the ageing likely recoverability of the outstanding balances.

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q. Accounting standards not yet effective

There are new accounting standards and IFRIC interpretations that have been published that

are not mandatory for current reporting periods. The Group has not applied the following new

and revised IFRSs that have been issued but are not yet effective which may have a material

impact on the financial statements in future:

AASB 9 Financial Instruments – Annual reporting periods beginning on or after 1

January 2018

Classification and measurement

AASB 9 amendments the classification and measurement of financial assets:

• Financial assets will either be measured at amortised cost, fair value through other

comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL).

• Financial assets are measured at amortised cost or FVTOCI if certain restrictive

conditions are met. All other financial assets are measured at FVTPL.

• All investments in equity instruments will be measured at fair value. For those

investments in equity instruments that are not held for trading, there is an irrevocable

election to present gains and losses in OCI. Dividends will be recognised in profit or

loss.

The following requirements have generally been carried forward unchanged from AASB 139 Financial Instruments: Recognition and Measurement into AASB 9:

• Classification and measurement of financial liabilities, and

• Derecognition requirements for financial assets and liabilities.

However, AASB 9 requires that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income.

Impairment

The new impairment model in AASB 9 is now based on an ‘expected loss’ model rather than an ‘incurred loss’ model.

A complex three stage model applies to debt instruments at amortised cost or at fair value through other comprehensive income for recognising impairment losses.

A simplified impairment model applies to trade receivables and lease receivables with maturities that are less than 12 months.

For trade receivables and lease receivables with maturity longer than 12 months, entities have a choice of applying the complex three stage model or the simplified model.

The entity has both long term and short term trade receivables. When this standard is adopted,

the entity’s loss allowance on receivables will increase.

The change is applied retrospectively, however comparatives need not be retrospectively

restated. Instead, the cumulative effect of applying the change for the first time is

recognised as an adjustment to the opening balance of retained earnings on 1 January 2018.

The Group is not expecting any material financial impact in the period of initial application

of AASB9.

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AASB 15 Revenue from Contracts with Customers – Annual reporting periods

beginning on or after 1 January 2018

An entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This means that revenue will be recognised when control of goods or services is transferred, rather than on transfer of risks and rewards as is currently the case under AASB 18 Revenue. Due to the recent release of this standard, the entity has not yet made a detailed assessment of the impact of this standard.

AASB 16 Leases – Annual reporting periods beginning on or after 1 January 2019

AASB 16 eliminates the operating and finance lease classifications for lessees currently accounted for under AASB 117 Leases. It instead requires an entity to bring most leases onto its balance sheet in a similar way to how existing finance leases are treated under AASB 117. An entity will be required to recognise a lease liability and a right of use asset in its balance sheet for most leases. There are some optional exemptions for leases with a period of 12 months or less and for low value leases. Lessor accounting remains largely unchanged from AASB 117. To the extent that the entity, as lessee, has significant operating leases outstanding at the date of initial application, 1 January 2019, right-of-use assets will be recognised for the amount of the unamortised portion of the useful life, and lease liabilities will be recognised at the present value of the outstanding lease payments. Thereafter, earnings before interest, depreciation, amortisation and tax (EBITDA) will increase because operating lease expenses currently included in EBITDA will be recognised instead as amortisation of the right-of-use asset, and interest expense on the lease liability. However, there will be an overall reduction in net profit before tax in the early years of a lease because the amortisation and interest charges will exceed the current straight-line expense incurred under AASB 117 Leases. This trend will reverse in the later years.

There will be no change to the accounting treatment for short-term leases less than 12 months

and leases of low value items, which will continue to be expensed on a straight-line basis.

The Group is not expecting to enter into any material operating lease arrangement for the

period beginning or after 1 January 2019 and the Group is not expecting any material financial

impact resulted from potential operating lease arrangements in the period of initial application

of AASB16.

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r. Operating Segment

Operating segments are presented using the 'management approach', where the information

presented is on the same basis as the internal reports provided to the Chief Operating Decision

Makers ('CODM'). The CODM is responsible for the allocation of resources to operating

segments and assessing their performance.

s. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the

primary economic environment in which that entity operates. The functional currency of the

main operating entities, Anhui Jiancheng International Economic and Technical Cooperation

Co., Ltd and Ma'anshan Jiancheng Occupational Training School is Chinese Renminbi. The

consolidated financial statements are presented in Australian dollars which is the Parent Entity’s

functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates

prevailing at the date of the transaction. Foreign currency monetary items are translated at the

year-end exchange rate. Non-monetary items measured at historical cost continue to be carried

at the exchange rate at the date of the transaction. Non-monetary items measured at fair value

are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or

loss, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly

in equity to the extent that the gain or loss is directly recognised in equity; otherwise the

exchange difference is recognised in profit or loss.

Group entities Financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

• Assets and liabilities are translated at year end exchange rates;

• Income and expenses are translated at average rates for the period; and

• Retained earnings are translated at historical average rates.

• Share capital is translated at historical spot rates

Exchange differences arising on the translation of foreign operations are recognised directly to the Group’s foreign currency translation reserve in the Consolidated Statement of Financial Position.

t. Rounding of Amounts to Nearest Dollar

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument

2016/191, the amounts in the directors’ report and in the financial report have been rounded to

the nearest dollar.

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2 Revenue Consolidated Group 2016 2015 AUD AUD Operating activities Contracted projects income 67,820,057 54,658,929 Labour brokerage income 64,653 14,541 Training school income 820,738 848,145

Total Revenue 68,705,448 55,521,615

Non-operating activities Interest received 19,116 6,455 Government subsidies 1,808,218 188,483 Other non-operating income - 242

Other Income 1,827,334 195,180

3 Administration Expenses

Consolidated Group 2016 2015 AUD AUD Administration expenses Salary expenses 1,112,818 863,058 Depreciation 444,624 457,781 Travel expense 63,431 83,426 Impairment provision for trade receivables - 505,912 IPO expense 366,856 747,804 Secretarial service expense 149,847 - Other administration expenses 859,241 425,116

Total administration expenses 2,996,817 3,083,097

4 Finance Costs Consolidated Group 2016 2015 AUD AUD Finance costs Interest expense on borrowings 407,688 268,913 Guarantee fees 63,225 10,685 Other finance expenses (4,990) (2,177)

Total finance costs 465,923 277,421

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5 Income Tax Expense

Consolidated Group 2016 2015 AUD AUD The components of tax expense comprise: Current tax 3,252,743 2,493,724 Deferred tax 26,060 (119,457)

Total Income Tax Expense 3,278,803 2,374,267

Reconciliation of tax expense Profit before income tax 12,481,348 9,416,690 Prima facie tax payable on profit before income tax at 30% (2014:25%)

3,744,404 2,825,007

Add: Tax effect of: -Foreign losses not recognised 4 721 -Losses in the parent entity not recognised 272,007 44,881 Less: Tax effect of: -Foreign profit not recognised (6,479) - -Difference in taxation rates in foreign subsidiaries (624,067) (470,835) -Other non-taxable income (107,066) (25,507)

Income tax attributable to the entity 3,278,803 2,374,267

The applicable weighted average effective tax rate are as follows: 26% 25%

6 Auditors’ Remuneration

Consolidated Group 2016 2015 AUD AUD Remuneration of the auditor for:

- Reviewing the financial statements 35,000 35,000 - Auditing the financial statements 75,000 65,000

Total Auditors’ Remuneration 110,000 100,000

Non- audit services

- Taxation report - 5,000 - Investigating Accountant's report - 29,800

Total Non- Audit Services - 34,800

7 Cash and Cash Equivalents Consolidated Group 2016 2015 AUD AUD Cash on hand 296,862 417,480 Cash at bank 1,191,004 361,499 Security deposits - 634,080

Total cash and cash equivalent 1,487,866 1,413,059

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8 Trade and Other Receivables

Note Consolidated Group 2016 2015 AUD AUD Current Trade receivables 20,690,146 18,335,474 Note receivables 8(a) - 126,816 Other receivables 138,772 93,034 Contracted project costs 8(b) 31,787,795 13,182,365

Total current trade and other receivables 52,616,713 31,737,689

Non - Current Trade receivables 1(l) 1,832,930 1,678,966 Other receivables 1(l) 5,690,082 3,901,110 Provision for impairment (1,465,688) (1,557,799)

Total noncurrent trade and other receivables 6,057,324 4,022,277

a Note receivable are bank endorsed note that the Group received from its customers. Notes

receivables may be redeemed for cash or used as payment for the Group’s suppliers. b Contracted project costs

Consolidated Group

Consolidated Group

2016 2015 AUD AUD Contracted project costs incurred 167,955,105 120,912,682 Recognised profits 41,862,661 30,789,122

209,817,766 151,701,804 Progress billings (178,029,971) (138,507,311) Provision for expected loss on contracted project - (12,128)

Total Contracted Project Costs 31,787,795 13,182,365

As at 31 December 2016, trade receivable included retentions of AUD 6,088,014 (2015: AUD

5,861,190) related to contracted projects and other receivable included performance bond of

AUD 5,683,490 (2015: AUD 3,774,686) related to contracted projects.

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8 Trade and Other Receivables cont

The Group has no significant concentration of credit risk with respect to any single

counterparty or group of counterparties. The main sources of credit risk to the Group are

considered to relate to the classes of assets described as “trade and other receivables”.

The following table details the Group’s trade and other receivables exposed to credit risk with

ageing analysis.

Past Due and

Impaired Past Due but Not Impaired

Not Past Due

Gross

Amount <1 year >1 year 1~2 years 2~3 years >3 years <1 year

AUD AUD AUD AUD AUD AUD AUD

Consolidated Group

2016

Trade receivables 21,057,389 - 327,350 1,199,200 306,380 - 19,224,459

Other receivables 5,828,854 - 118,949 3,380,663 - - 2,329,242

Contracted project costs

31,787,795 - - - - - 31,787,795

Total 58,674,038 - 446,299 4,579,863 306,380 - 53,341,496

Consolidated Group

2015

Trade receivables 20,014,440 - 1,431,375 470,132 247,591 - 17,865,342

Other receivables 3,994,144 - 126,424 2,091,976 - 63,408 1,712,336

Note receivable 126,816 - - - - - 126,816

Contracted project costs

13,182,365 - - - - - 13,182,365

Total 37,317,765 - 1,557,799 2,562,108 247,591 63,408 32,886,859

The aging analysis at balance date for trade receivables is on the basis of the date of interim

settlement statements rather than when the receivables are expected to be collected which

relates to current and non-current classifications.

Receivables that are past due are assessed for impairment by ascertaining solvency of the

debtors and are provided for where there are specific circumstances indicating that the debt

may not be fully repaid to the Group.

The movement in the provision for impairment of trade receivables is as follows:

Consolidated Group Note 2016 2015 AUD AUD Balance at 1 January 1,557,799 996,591 Impairment incurred for the year 3 - 505,912 Write-off incurred for the year - - Foreign currency translation difference (92,111) 55,296

Balance at 31 December 1,465,688 1,557,799

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9 Inventory Consolidated Group 2016 2015 AUD AUD Current Raw material 10,457 15,136

Total Inventory 10,457 15,136

Inventory includes raw material on hand. Inventory has been determined to be valued at the

lower of cost and net realisable value at balance date.

10 Other Current Assets

Consolidated Group 2016 2015 AUD AUD Current Prepayment 12,500 135,715

Total other current assets 12,500 135,715

Prepayment in 2016 represents prepaid office Security Bond for the Australian office.

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11 Property, Plant and Equipment

Consolidated Group 2016 2015 AUD AUD Office Equipment At cost 585,971 599,336 Accumulated depreciation (302,709) (225,422)

Total Office Equipment 283,262 373,914

Buildings At cost 6,042,157 6,421,876 Accumulated depreciation (717,506) (457,559)

Total Buildings 5,324,651 5,964,317

Plant and Equipment At cost 683,312 225,606 Accumulated depreciation (103,046) (49,901)

Total Plant and Equipment 580,266 175,705

Motor Vehicles At cost 473,244 551,766 Accumulated depreciation (293,658) (275,977)

Total Motor Vehicles 179,586 275,789

Total property, plant and equipment 6,367,765 6,789,725

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11 Property, Plant and Equipment cont

a Movements in Carrying Amounts

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year:

Office

Equipment Buildings

Plant and Equipment

Motor Vehicles

Consolidated Total

AUD AUD AUD AUD AUD

Balance at 1 January 2015

321,433 5,908,667 184,066 265,492 6,679,658

Addition 119,723 - 2,116 46,028 167,867 Depreciation expense (86,500) (308,416) (21,931) (52,003) (468,850) Foreign currency translation difference

19,258 364,066 11,454 16,272 411,050


373,914 5,964,317 175,705 275,789 6,789,725

Addition 22,447 - 694,891 136,004 853,342 Disposal - - - (74,179) (74,179) Depreciation expense (92,151) (291,866) (57,046) (34,575) (475,638) Foreign currency translation difference

(20,948) (347,800) (233,284) (123,453) (725,485)


283,262 5,324,651 580,266 179,586 6,367,765

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12 Intangible Asset Consolidated Group 2016 2015 AUD AUD Land use right 413,634 439,629 Accumulated amortisation (33,091) (26,378)

Total Land use right 380,543 413,251

(a) Reconciliation of carrying amount

Balance at 1 January 2016 413,251 Disposal – land use right disposed - Amortisation (net of disposal amortisation write back) (8,413) Foreign currency translation difference (24,295)

Balance at 31 December 2016 380,543

13 Deferred Tax Assets

Consolidated Group 2016 2015 AUD AUD The balance comprises temporary differences attributable to Doubtful debts 366,422 389,450 Expected losses for contracted project - 3,032

Total deferred tax assets 366,422 392,482

14 Trade and Other Payables Note Consolidated Group 2016 2015 AUD AUD Current Trade payables 367,482 391,305 Salary payable 17,676,806 12,430,621 Related party loan 23(d) 25,922 27,551 Business tax payable - 1,673,614 VAT Payable/(Receivable) (21,076) - Other tax payables 52,532 303,312 Other payables 1,996,393 1,309,771

Total Current Trade and Other Payables 20,098,059 16,136,174

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15 Short-term Borrowings

Consolidated Group 2016 2015 AUD AUD Current Bank loan secured: - Huishan Bank (HSB) 1,491,469 1,585,200 - Ma’anshan Rural Commercial Bank (RCB) - 1,056,800 - Shanghai Pudong Development Bank (SPD) 994,312 - - Dangtu Xinhua Village and Township Bank (DXVTB) 1,988,625 - - Agricultural Bank of China (ABC) 2,982,938 -

Total Short-term Borrowings 7,457,344 2,642,000

The bank borrowings from HSB are secured by personal guarantees of the Director, Mr

Yonghong Tang, his wife, Mrs Jinxiang Wang and the Group’s land and building with a

carrying amount of AUD 5,705,194 (2015: AUD 6,377,568).

The bank borrowing from RCB has been repaid during the year of 2016. The bank borrowings

from SPD are secured by personal guarantees of the Director, Mr Yonghong Tang and his wife,

Mrs Jinxiang Wang.

The bank borrowings from DXVTB are secured by guarantee of Ma'anshan Pubang Financing

Guarantee Co., Ltd. with the annual guarantee fee of 1% of the guaranteed amount. The

guarantee contract with Ma'anshan Pubang Financing Guarantee Co., Ltd. is secured by the

personal counter guarantees of the Director Mr Yonghong Tang and his wife Mrs Jinxiang

Wang.

The bank borrowings from ABC are secured by guarantees of Ma'anshan Pubang Financing

Guarantee Co., Ltd. and Dangtu Dangfa Financing Guarantee Co., Ltd. with the annual

guarantee fee of 1% of the guaranteed amount respectively. The guarantee contract with

Ma'anshan Pubang Financing Guarantee Co., Ltd. is secured by the personal counter guarantees

of the Director Mr Yonghong Tang and his wife Mrs Jinxiang Wang.

16 Current Tax Liabilities

Consolidated Group 2016 2015 AUD AUD Income tax payable 3,124,733 2,397,439

Total current tax liabilities 3,124,733 2,397,439

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17 Issued Capital Consolidated Group 2016 2015 AUD AUD At the beginning of reporting period 4,732,045 4,730,405 Shares issued during the year 5,584,765 1,640 Transaction costs (325,225)

Total Issued Capital 9,991,585 4,732,045

a. Ordinary shares

Consolidated Group 2016 2015 No. No. At the beginning of the reporting period 50,000,000 - Shares issued during the year:

- 13 April 2015 - 1 - 13 July 2015 - 49,999,999 - 23 March 2016 6,980,955 -

At the end of the reporting period 56,980,955 50,000,000

On 23 March 2016, the Group issued 6,980,955 fully paid ordinary shares at $0.80 each during the initial public offering. Ordinary shares participate in dividends and the proceeds on winding-up of the parent entity in proportion to the number of shares held. At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

b. Capital Management

Management controls the capital of the Company in order to maintain a capital base so as to

maintain investor, creditor and market confidence and to sustain future development of the

business, and ensure that the company can fund its operations and continue as a going concern.

The Group’s debt and capital includes ordinary share capital and financial liabilities, supported

by financial assets.

Management effectively manages the Group’s capital by assessing the Group’s financial risks

and adjusting its capital structure in response to changes in these risks and in the market. These

responses include the management of debt levels, and share issues.

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18 Reserves Consolidated Group

2016 2015

AUD AUD

Statutory reserve 2,530,805 1,569,595 Training school profits reserve 1,217,588 655,128 Foreign currency translation reserve 1,710,958 3,297,310

Total Reserves 5,459,351 5,522,033

Statutory Reserve

Pursuant to the current People’s Republic of China Company Law, the Group is required to

transfer 5% to 10% of the profit after taxation made by its wholly owned subsidiary Anhui

Jiancheng International Economic and Technical Cooperation Co., Ltd to a statutory reserve

until the surplus reserve balance reaches minimal 50% of the registered capital of the subsidiary.

For the purposes of calculating the transfer to this reserve, the profit after taxation shall be the

amount determined under the People’s Republic of China accounting standards. The transfer

to this reserve must be made before the distribution of dividends to the shareholders.

Training School Profits Reserves

Contributions to the results of the Group by the Ma’anshan Jiancheng Occupational Training

School during the financial year are set aside to a reserve called Training School Profits Reserve

because Ma’anshan Jiancheng Occupational Training School is a not for profit entity and its

constitution prohibits distribution of profits to its Sponsor, the parent company.

Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of a

foreign controlled subsidiary.

19 Commitments (a) Capital Commitments

The Group does not have any capital commitments as at 31 December 2016.

(b) Operating Commitments

Non-cancellable operating leases contracted for but not recognised in the financial statements

are as follows:

2016 2015 AUD AUD Payable — minimum lease payments

not later than 12 months 16,667 -

Total operating commitments 16,667 -

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20 Contingent Assets and Contingent Liabilities

The Group has no contingent liabilities or contingent assets

21 Events After the Balance Sheet Date

There are no matters or circumstances that have arisen since the end of the year that have

significantly affected or may significantly affect either the Group’s operations in future financial

years, the results of those operations in future financial years or the Group’s state of affairs in

future financial years.

22 Cash Flow Information Consolidated Group

2016 2015

AUD AUD

Reconciliation of cash flow from operations with profit after income tax

Profit after income tax 9,202,545 7,042,422 Non-cash flows in profit Depreciation 496,492 468,850 Amortisation 8,413 8,890 Net gain/loss on disposal of property, plant and equipment 22,990 -

Changes in assets and liabilities, net of the effects of purchase ad disposal of subsidiaries

(Increase)/decrease in trade receivables (3,573,121) 1,310,983 (Increase)/decrease in other receivables (2,206,366) 7,030,703 (Increase)/decrease in notes receivable 119,318 (126,816) (Increase)/decrease in prepayments 117,360 (135,715) (Increase)/decrease in inventories 3,784 (5,497) (Increase)/decrease in contracted project costs (19,384,890) (7,709,069) (Increase)/decrease in DTA 2,853 (118,149) Increase/(decrease) in trade payables (13,898) 201,500 Increase/(decrease) in income taxes payable 869,052 300,811 Increase/(decrease) in other tax liabilities (1,828,576) 880,594 Increase/(decrease) in other payable 737,080 (165,401) Increase/(decrease) in notes payable - (1,056,800) Increase/(decrease) in salary payable 6,007,116 (6,060,425)

Cash flows from operations (9,419,848) 1,866,881

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23 Related Party Transactions

a) The Group’s main related parties are as follows:

(i) Key management personnel:

Mr Yonghong Tang Managing director / general manager (Appointed 13/04/2015)

Mr Youxi Sun Executive director / vice general manager (Appointed 7/09/2015)

Mr Yangyu Zhu Executive director / vice general manager (Appointed 7/09/2015)

Mr John Dixon Non-executive chairman / director (Appointed 7/09/2015)

Ms Bronwyn Barnes Non-executive director (Appointed 7/09/2015)

Mr Yonghui Yu Chief financial officer – PRC

Ms Ru Shen Vice general manager - PRC

Mr Lei Du Operational general manager - PRC

Mr Min Wu Alternate director (Appointed on 17/06/2016)

Mr Luo Qi Alternate director (Appointed on 17/06/2016)

(ii) Other related entities:

Other related entities include entities over which the director has joint control, entities in which the director hold a director’s position and individual shareholder: Mr Yonghong Tang Shareholder

Sequoia Capital Asia Holdings Limited

Shareholder

Mrs Jinxiang Wang Spouse of Managing Director

Mr Yonghui Yu and Mr Youxi Sun

Shareholders of Sequoia Capital Asia Holdings Limited

Alford Capital Pty Ltd A company in which Mr John Dixon is a shareholder and holding a director's role and a secretary’s role

DIXJAC Pty Ltd A company in which Mr John Dixon is a shareholder and holding a director's role and secretary's role

Intermodal Staffing Pty Ltd A company in which Mr John Dixon is holding a director's role

JACDIX Pty Ltd A company in which Mr John Dixon is a shareholder and holding a director's role and a secretary role

JC International Group Ltd A company in which Mr John Dixon is holding a director's role

Jermah Pty Ltd A company in which Mr John Dixon is holding a director's role

Redstar Transport Pty Ltd A company in which Mr John Dixon is holding a director's role

Redstar Transport Services Pty Ltd

A company in which Mr John Dixon is holding a director's role

Redstar Transport Operations Pty Ltd


Redstar Transport Trucks Pty Ltd


Redstar Transport Linehaul Pty Ltd


Sarino Park Pty Ltd A company in which Mr John Dixon is a shareholder and holding a director's role

Villacare Pty Ltd A company in which Mr John Dixon is holding a director's role

Integra Management Consultants Pty Ltd

A company in which Ms Bronwyn Barnes is a shareholder and holding a director's role and secretary's role

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23 Related Party Transactions cont

Cresta Resources Pty Ltd A company in which Ms Bronwyn Barnes is a shareholder

Auris Exploration Pty Ltd A company in which Ms Bronwyn Barnes is holding a director's role

JC International Group Limited A company in which Ms Bronwyn Barnes is holding a director's role

Martu People Limited A company in which Ms Bronwyn Barnes is holding a director's role and a secretary role.

Peak Hill Metals Pty Ltd A company in which Ms Bronwyn Barnes is holding a director's role

RNI NL A company in which Ms Bronwyn Barnes is holding a director's role

Laclos Pty Ltd A company in which Ms Bronwyn Barnes is holding a director's role and a secretary's role.

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23 Related Party Transactions cont

b) Transaction with related parties:

There were no transactions with related parties during the financial year

c) Amounts receivable from related parties:

There were no related party receivable balances as at the end of the financial year

d) Amounts payable to related parties:

Consolidated Group

2016 2015

AUD AUD

Other payables

(i) Loans from key management personnel:

Beginning of the year 27,551 1,064,786

Loan advanced - 480,567

Loan repayment received - (1,595,004)

Foreign currency translation difference (1,629) 77,202

End of the year 25,922 27,551

Related party balances comprise related party loans and no specific terms and conditions have

been attached to the above transactions. No interest is charged to or from related parties.

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24 Financial Risk Management

The Group’s financial instruments consist of cash, trade and other receivables, trade and other

payables, related party loans and bank loans. All financial instruments are accounted for by the

entity at amortised cost.

The total for each category of financial instruments are as follows:

Consolidated Group 2016 2015 AUD AUD Financial Assets Cash and cash equivalents 7 1,487,866 1,413,059 Trade and other receivables 8 58,674,037 35,759,966

Total financial assets 60,161,903 37,173,025

Financial Liabilities Trade and other payables (excluding other tax payable) 14 20,040,681 14,131,697 Short term borrowings 15 7,457,344 2,642,000 Related party loans 23(d) 25,922 27,551

Total financial liabilities 27,523,947 16,801,248

The main financial risks to which the Group is exposed are liquidity risk, credit risk and market

risk.

There have been no substantive changes in the types of risks the Group is exposed to or how

these risks arise from the previous period.

a. Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial

obligations as they fall due. The Group manages this risk through the following mechanisms:

• monitoring undrawn credit facilities;

• obtaining funding from a variety of sources;

• maintaining a reputable credit profile and

• comparing the maturity profile of financial liabilities with the realisation profile of

financial assets.

• ensuring trade receivable is collected within the normal trading terms which is 90 to

120 days.

The table below reflects a maturity analysis for financial liabilities

0 - 12 Months Over 1 Year Total Consolidated Group Consolidated Group Consolidated Group

Financial liabilities due for payment

2016 2015 2016 2015 2016 2015

AUD AUD AUD AUD AUD AUD

Trade and other payables 20,066,603 14,159,248 - - 20,066,603 14,159,248

Borrowings 7,457,344 2,642,000 - - 7,457,344 2,642,000

Total expected outflows 27,523,947 16,801,248 - - 27,523,947 16,801,248

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24 Financial Risk Management cont

b. Credit risk analysis

Credit risk refers to the risk that the counterparty will default on its contractual obligations

resulting in a financial loss to the Group.

Credit risk arises from cash and cash equivalents, and deposits with banks and financial

institutions, as well as credit exposure to customers, including outstanding receivables and

committed transactions.

The Group’s exposure to credit risk is limited to the carrying amount of financial assets

recognised at the balance sheet date.

The credit risk for liquid funds and other short-term financial assets is considered negligible,

since the counterparties are reputable banks with high quality external credit ratings. In

addition, the Group has adopted a policy of only extending credit to customers with proven

credit histories as a means of mitigating the risk of financial loss from default. For significant

transactions, customers are required to make sufficient prepayments in order to reduce the

credit risk to an acceptable level. Further information about the credit risk of receivables are

detailed in Note 8 Trade and other receivables.

c. Market risk

Exposure to interest rate risk arises on financial assets and liabilities recognised at reporting

date whereby a future change in interest rates will affect future cash flows or the fair value of

fixed rate financial instruments.

The Group’s level of borrowings is nominal and any borrowings are normally for terms of 12

months or less. The Group’s holds no marketable securities and all cash balances are primarily

used for working capital and not invested in interest or dividend-bearing assets. Accordingly,

the Group has an immaterial exposure to market risk.

d. Fair value estimation

The carrying amounts of financial assets and financial liabilities are reasonable approximations

of their fair values.

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24 Financial Risk Management cont

e. Offsetting agreements

As at 31 December 2016, Anhui Jiancheng International Economic and Technical Cooperation

Co., Ltd (the wholly owned main operating subsidiary) has a payable balance of AUD 1,590,900

to non-related party Ma'anshan Zhongji Chengjian Contruction Engineering Co., Ltd and the

Company’s sponsored entity Ma'anshan Jiancheng Occupational Training School has a

receivable balance of AUD 1,590,900 from Ma'anshan Zhongji Chengjian Contruction

Engineering Co., Ltd.

The Group entered into a tripartite offsetting agreement on 31 December 2016 which gives the

Group a legally enforceable right to offset its AUD 1,590,900 payable to Ma'anshan Zhongji

Chengjian Contruction Engineering Co., Ltd and Ma'anshan Jiancheng Occupational Training

School’s receivable for the same amount from Ma'anshan Zhongji Chengjian Contruction

Engineering Co., Ltd as at year end 31 December 2016 and the Group intended to settle the

liability and receivable in the future on a ‘net basis’.

On this basis, for the year ended 31 December 2016, in accordance with AASB 132, the Group

has offset in its consolidated financial statements its AUD 1,590,900 liability to Ma'anshan

Zhongji Chengjian Contruction Engineering Co., Ltd against Ma'anshan Jiancheng

Occupational Training School’s receivable for the same amount from Ma'anshan Zhongji

Chengjian Contruction Engineering Co., Ltd, thereby recognising a net amount of AUD 0 in

respect of the two balances.

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25 Interests in subsidiaries

(a) Information about Principal Subsidiaries

The subsidiaries listed below have share capital consisting solely of ordinary shares or share

capital injection, which are held directly by the group unless otherwise stated. Each subsidiary’s

principal place of business is also its country of incorporation or registration.

Name of Subsidiary

Principal Place of Business

Ownership Interest Held by the Group

2016 2015

% % Jiancheng International Holdings Limited Hong Kong 100 100 Ma'anshan City Jiancheng Human Resources Service Limited

Anhui, China 100 100

Anhui Jiancheng International Economic and Technical Cooperation Co.,Ltd***

Anhui, China 100* 100*

Ma'anshan Jiancheng Occupational Training School

Anhui, China N/A** N/A**

Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as the Group’s financial statements. * Refer Corporate Information section of the Director’s report for information on ownership interest **Refer 25(b) for information on ownership interest *** Ma'anshan City Jiancheng International Economic and Technical Cooperation Co., Ltd has changed its registered name to Anhui Jiancheng International Economic and Technical Cooperation Co., Ltd

(b) Significant Restrictions

Ma’anshan Jiancheng Occupational Training School (MJOTS) is a not for profit entity and its constitution prohibits realisation and distributions of its assets to its Sponsor, Anhui Jiancheng International Economic and Technical Cooperation Co., Ltd. The carrying amount of the assets included within the consolidated financial statements to which these restrictions apply is as follows:

2016 2015 AUD AUD Current assets Cash and cash equivalents 41,988 152,853 Trade and other receivables 35,857 57,534

Total current assets 77,845 210,387

Non-current assets Property, plant and equipment 135,558 173,611

Total non-current assets 135,558 173,611

Total assets 213,403 383,998

The MJOTS’s contribution to the Group’s results for 31 December 2016 (AUD 562,460) is not available for distribution to the members of the Company. There are no significant restrictions over the Group’s ability to settle liabilities of the Group.

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26 Parent Entity Information

JC International Group Limited “the Company” is a limited liability company, incorporated and

domiciled in Australia on 13 April 2015

2016 2015

Statement of financial position AUD AUD

Assets

Current assets 4,440,561 93,502

Non-current assets 50,000 50,000

Total Assets 4,490,561 143,502

Liabilities

Current liabilities 641,429 559,948

Non-current liabilities - -

Total Liabilities 641,429 559,948

Net Assets 3,849,132 (416,446)

Equity

Issued capital 5,309,542 50,001

Retained earnings (1,460,410) (466,447)

Total equity 3,849,132 (416,446)

Statement of Comprehensive income

Total profit/(loss) (993,962) (466,447)

Total comprehensive income (993,962) (466,447)

The Company has no contingent liabilities or contingent assets as at 31 December 2016.

27 Key Management Personnel Compensation

The totals of remuneration paid to KMP of the Company and the Group during the year are as

follows

Consolidated Group

2016 2015

AUD AUD

Short-term employee benefits 607,890 376,753 Post-Employment Superannuation 14,460 -

Total KMP compensation 622,350 376,753 For

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28 Operating Segment

The Board of Directors (who are identified as the Chief Operating Decision Makers (CODM))

assess performance and determine the allocation of resources based on the internal reports

which are organised in one operating segment for the subcontracting of workforce with State

Owned Enterprise and private companies based in China. As a result, there is only one

operating segment and the statement of profit or loss and other comprehensive income and the

statement of financial position is reflective of this operating segment.

Major customers

During the year ended 31 December 2016 approximately 70% (2015: 74%) of the Group’s

external revenue was derived from subcontracting workforce to one customer.

29 Share based payment

a. On 16 March 2016, 200,000 Loyalty Options were granted to the Non-executive Chairman, John Dixon for nil cash consideration. The options may be exercised at any time after the Vesting Date and prior to the Expiry Date. Share issued on exercise of these options will rank equally in all respects with then existing fully paid ordinary shares in the Company. The Options can only be transferred with the prior written consent of the Company.

b. Options granted to key management personnel are as follows:

Grant Date Number 16/03/2016 200,000

The Options will vest upon Mr Dixon remaining a Director of the Company until 7 September 2017 (representing 2 years of continuous service), or, if before 7 September 2017, Mr Dixon resigns at the request of the Company’s major shareholder or is removed by resolution (unless such removal is for cause). Once the 200,000 Loyalty Options vest, they may be exercised for nil consideration at any time before 31 December 2017, and 200,000 shares will be issued to Mr Dixon.

c. A summary of the movements of all Group options issues is as follows:

Number

Weighted Average Exercise

Price Options outstanding as at 31 December 2015

- -

Granted 200,000 - Forfeited - - Exercised - - Expired - -

Options outstanding as at 31 December 2016

200,000 -

d. No share granted to key management personnel as share-based payments during the

year ending 31 December 2016.

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30 Earnings Per Share 2016 2015

AUD AUD

Profit after income tax attributable to the owners of JC International Group Limited

9,202,545 7,042,422

2016 2015

Number Number

Weighted average number of ordinary shares used in calculating basic earnings per share

56,980,955 50,000,000

Weighted average number of dilutive option outstanding* 200,000 -

Weighted average number of ordinary shares used in calculating dilutive EPS

57,180,955

*On 16 March 2016, the Group issued 200,000 Loyalty Options to the Non-executive

Chairman, John Dixon. The Loyalty Options were issued for nil cash consideration, and will

vest upon Mr Dixon remaining a Director of the Company until 7 September 2017

(representing 2 years of continuous service), or, if before 7 September 2017, Mr Dixon resigns

at the request of the Company’s major shareholder or is removed by resolution (unless such

removal is for cause). Once the 200,000 Loyalty Options vest, they may be exercised for nil

consideration at any time before 31 December 2017, and 200,000 shares will be issued to Mr

Dixon. There are no other unissued ordinary shares of the Group under option at the date of

this report.

31 Company Details The registered office and principal place of business of the Company is: JC International Group Limited Level 9 115 Pitt Street Sydney, NSW 2000

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JC International Group Limited

48

Directors’ Declaration

The directors of the Group declare that:

1. The financial statements and notes, as set out on pages 13 to 47 are in accordance with

the Corporations Act 2001 and:

a. comply with Australian Accounting Standards, which, as stated in accounting

policy Note 1 to the financial statements, constitutes compliance with

International Financial Reporting Standards (IFRS); and

b. give a true and fair view of the financial position as at 31 December 2016 and

of the performance for the year ended on that date of the Company and the

Group.

2. In the directors’ opinion there are reasonable grounds to believe that the Group will be

able to pay its debts as and when they become due and payable.

3. The directors have been given the declarations required by s 295A of the Corporations

Act 2001 from the Chief Executive Officer and Chief Financial Officer.

This declaration is made in accordance with a resolution of the Board of Directors.

________________ Mr Yonghong Tang

Dated 31 March 2017

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JC International Group Limited 25 605 248 904 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JC INTERNATIONAL GROUP LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of JC International Group Limited “the Company” and its controlled entities “the Group”, which comprises the consolidated statement of financial position as at 31 December 2016, the consolidated statement of profit or loss and other comprehensive Income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its financial performance for the year then ended; and

(b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants “the Code” that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Group, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How our audit addressed the key audit matter

Revenue recognition for contracted projects

Refer to Note 2: Revenue

The Group’s operating revenue is primarily derived from providing subcontracted workforce services to People’s Republic of China, “PRC” State Owned Enterprises “SOEs” and large private construction companies hereon in referred to as “Organisations”. These Organisations undertake large scale infrastructure and building projects contracting directly with various foreign government departments and agencies worldwide. The Group generally enters into contractual arrangements with these Organisations primarily for the provision of subcontracted workforce services including management thereof. The Group derives its revenue from the provision of these services based on various stages of the project that are assessed either monthly or on a quarterly basis by both parties in accordance with the contractual arrangements. Revenue recognition in relation to these services is complex because it is based on management assessment of:

• the stage of completion of the contracted projects;

• total budgeted contract revenue and costs;

• the Organisations’ approval of contract variations and claims; and

• project commencement and completion dates. This is a key audit matter because of its significance to profit, and the judgement required in recognising revenue from the provision of contracted labour services.

Our procedures included, amongst others:

For revenue from providing subcontracted workforce for contracted projects, we: ▪ obtained and documented our

understanding of the revenue accounting systems and internal controls in place

▪ performed walkthrough of the systems to assess the effectiveness of the controls and whether we could place any reliance on the controls implemented

▪ reviewed contractual arrangements, terms and conditions and commencement and estimated completion dates of the project

▪ assessed management’s estimates of total

contract revenue and contract costs and recalculated the stage of completion based on actual costs incurred to date

▪ reviewed revenue transactions that

deviated from budgeted expectations and compared that to contract variations and claims

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Key audit matter How our audit addressed the key audit matter

Recoverability of Trade and other receivables

Refer to Note 8: Trade and other receivables

The Group’s customers are the PRC State Owned Enterprises “SOEs” and large private construction companies hereon in referred to as “Organisations”. These Organisations undertake large scale infrastructure and building projects contracting directly with various foreign government departments and agencies worldwide. Some of these foreign government department and agencies have considerable lead time when it comes to settling their accounts and obligations with these Organisations. This practice directly impacts on the Group’s ageing and settlement of its trade and other receivables from these organisations. Per note 8 in the financial report, trade receivables are $21,057,389 with $1,832,930 aged over more than one year and other receivables are $5,828,854 with $3,499,612 aged over more than one year. The contractual arrangements between the Group and these organisations also includes performance bonds and retention monies which also impact on the ageing because there is a stipulated timeframe after completion the contract before these monies can be recovered from the Organisations Included in trade receivables is retention monies of $6,088,014. and other receivables includes performance bonds of $5,683,490 This area is a key audit matter due to the inherent subjectivity that is involved in the Group making judgments in relation to credit risk exposures to determine the recoverability of trade receivables.

Our procedures included, amongst others:

▪ Reviewed and tested ageing of trade and

other receivables including performance bonds and retention monies.

▪ Sought direct confirmations for individually material receivables to confirm their existence and acknowledgment of the debt

▪ Assessed the recoverability of a sample of

large outstanding trade and other receivable by comparing management’s views of recoverability of amounts outstanding to historical patterns of receipts, in conjunction with reviewing cash received subsequent to year end for its effect in reducing amounts outstanding at year end;

▪ Challenged management’s view of credit

risk and noting the historical patterns for long outstanding trade receivables. Reviewing other evidence including customer correspondence, and discussions with management personnel to challenge knowledge of future conditions that may impact expected customer receipts; and

▪ Assessed the adequacy of the Group’s

disclosures in respect of credit risk

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 31 December 2016, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

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In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Group 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 2001 and for 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. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up

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to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 9 of the directors’ report for the year ended 31 December 2016. In our opinion, the Remuneration Report of JC International Group Limited for the year ended 31 December 2016, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Group are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Pitcher Partners

Jim Gouskos Principal 31 March 2017

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