credibility builds the world - asx 2010 2011 2012 2013 0.0 200.0 250.0 300.0 150.0 100.0 ......

Annual ReportFor the year ended 31 December 2015

JC INTERNATIONAL GROUP LIMITED ACN 605 248 904

CREDIBILITY BUILDS THE WORLD

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JC INTERNATIONAL GROUP LIMITED ACN 605 248 904

Annual reportFor the year ended 31 December 2015

J C I G RO U P A N N UA L R EPO RT

Nb: The pictures of buildings on the cover page and elsewhere in this

Annual Report (unless noted otherwise) depict the Olympia Complex of

the Asian Olympic Committee project undertaken by the JCI Group

in Kuwait.

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PAGE

Company Directory 2

Chairman's Letter 3

Review of Operations 5

Directors’ Report 9

Auditor’s Independence Declaration 20

Corporate Governance Statement 23

Consolidated Statement of Comprehensive Income 24

Consolidated Statement of Financial Position 25

Consolidated Statement of Changes in Equity 26

Consolidated Statement of Cash Flows 27

Directors’ Declaration 59

Independent Auditor’s Report 61

ASX Additional Information 65

Contents

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ABN

25 605 248 904

DIRECTORS

Mr John Dixon Non-Executive Chairman Mr Yonghong Tang Managing Director, General Manager Mr Youxi Sun Executive Director, Vice General Manager Mr Yangyu Zhu Executive Director, Vice General Manager Ms Bronwyn Barnes Non-Executive Director

COMPANY SECRETARY

Mr. Dennis Wilkins

REGISTERED OFFICE

Ground Floor, 20 Kings Park Road West Perth WA 6005 Telephone: +61 8 9389 2111

PRINCIPAL PLACE OF BUSINESS

Gushu Industrial Park Concentration Area Ma’anshan City, Anhui Province, 243100 People’s Republic of China Telephone: +86 555 6870 622

SOLICITORS

AUSTRALIA

Price Sierakowski Corporate Level 24, 44 St Georges Terrace Perth WA 6000

PRC

Beijing DHH Law Firm 16F/CBD International Mansion No. 16 Yong’an Dongli Chaoyang District Beijing, 100022, PRC

HONG KONG

Dentons Hong Kong 3201 Jardine House 1 Connaught Place Central, Hong Kong

SHARE REGISTER

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth WA 6000

AUDITORS

Moore Stephens Assurance Adelaide Pty Ltd Level 4, 81 Flinders Street Adelaide SA 5000

STOCK EXCHANGE LISTING

JC International Group Limited shares are listed on the Australian Securities Exchange (ASX code: JCI).

INTERNET

www.jcigroup.com.au

CORPORATE DIRECTORY


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2015 will be remembered as a year of considerable achievements for JC International Group Limited (“JCI”, “the Group” or “the Company”) with the Group experiencing year-on-year growth as it builds on enhancing its brand in the international arena.

During the year, JCI continued its strategy to become the leading Chinese company with the requisite licences to provide safe and efficient workforce solutions to Chinese State Owned Enterprises (SOEs) that are engaged in expanding overseas construction operations.

As part of this strategic objective, JCI listed successfully on the Australian Securities Exchange (ASX). We believe the ASX’s international reputation as a leading securities exchange with internationally recognised, strong and transparent governance will further enhance the Company’s ability to compete on the global construction stage.

In 2015, JCI continued to expand its reach to become a stronger international construction workforce contracting company by building on its existing relationships with Peoples Republic of China (PRC) SOEs as well as expanding its operations to n on-SOEs internationally.

The company now operates in five countries including Algeria, Bangladesh, China, Kuwait and Uzbekistan with 26 projects in operation during 2015.

The Group was also re-certified in 2015 with creditability grade of AA by China International Contractor Association (CHINCA), and was the only Chinese company focusing on Workforce Subcontracting for the overseas engineering and construction market this year out of a total of certified 30 companies.

This recognition by industrial authorities has enhanced the Group into a first-choice brand to both existing and potential clients.

The current PRC Government of President Xi Jinping has a stated policy of using China’s huge foreign capital reserves towards foreign construction

projects, primarily in Asia under the Silk Road Economic Belt Policy, and Africa. JCI Group has forged very strong ties to several of the largest Chinese construction companies, including a strategic relationship with China Railway Construction Corp, which I am sure you will agree is a positive position to be situated in.

In conclusion, I would like to thank you, our shareholders, for your continued support in the Company and I look forward to updating shareholders of the Company’s achievements over the coming year of 2016.

John Dixon Non-Executive Chairman and Director

CHAIRMAN’S LETTER

DEAR VALUED SHAREHOLDERS,

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1 Review of Operations

Nb: The picture on this page depicts the Padma Water Plant project undertaken by the JCI Group in Dhaka City, Bangladesh.

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THE COMPANY

JCI was admitted on the ASX on 23 March 2016. Prior to JCI’s listing, it operated as Ma’anshan City Jiancheng International Economic and Technical Cooperation Co., Ltd (“MCJ China”). Founded in May 2003, MCJ China is a limited liability private company incorporated in the People’s Republic of China, now a subsidiary of the Group.

BUSINESS MODEL

The Group’s main business model is “one-stop” workforce subcontracting for the construction industry and has achieved a leading market position for projects contracted by PRC SOEs. JCI operates an integrated business model which covers candidate sourcing, systematic training, screened dispatch, site deployment, engineering management, performance evaluation and talent retention. JCI provides these services for all workforce levels required for a construction project including labour, skilled worker, foreman, engineer, manager and executive.

1 REVIEW OF OPERATIONS

Workforce Cost Ratio Outsourced Workforce Ratio

74%Non-workforce cost of completed turnover 138.1 Billion AUD

26%workforce cost of completed turnover 48.5 billion AUD

81%workforce potential from outsourcing 39.1 Billion AUD

19%workforce potential from in-house 9.4 Billion AUD

0%

20%

40%

60%

80%

100%

2012 2013 2014

Construction

Manufacturing

Transportation

Others

Agriculture

Hotel and catering service

Science/education/culture/health

Computer service and software

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2011

Asia

Africa

Latin America

Europe

Oceania & Pacific IslandsNorth America

Others

2012 2013

2013

179.9 186.6224.8

251.3

2014

For non-construction works

Revenue Gross Profit Net Profit after Tax EBIT

For construction works

200.0

250.0

Contract value Completed turnover

150.0

100.0

50.0

2007 2008

Completed turnover Newly signed

2009 2010 2011 2012 2013

0.0

200.0

250.0

300.0

150.0

100.0

50.0

0.0

200.0

300.0

100.0

500.0

600.0

400.0

800.0

900.0

700.0

0.0

2007 2008 2009 2010 2011 2012 2013

$40

$50

$A m $A m $A m $A m

2012

14.4

27.4

33.3

48.8CY’15

10.6CY’15

6.2CY’15

8.2CY’15

24.4

2013 2014 1H’15 2012 2013 2014 1H’15 2012 2013 2014 1H’152012 2013 2014 1H’15

$30

$20

$10

$0

so

urci

ng

training dispatch deploym

ent C

andi

date

Systematic Screened Site

Skilled

E

xecu

tive

Manager EngineerOneStop

Talent Performance Engin

eering

Labour Worker

F

orem

an retention evaluation

managem

ent

Central Asia KazakhstanKyrgyzstanTajiskistan

Uzbekistan

Egypt

Australia

IranIsrael

JordanKuwaitOmanQatar

Saudi ArabiaSouth Africa

UAE

Middle East

South AsiaBangladesh

IndiaMaldives Pakistan

Sri Lanka

Finland

Founding members57Leading countryChina

FranceGermany

IcelandItaly

LuxembourgMalta

NetherlandsNorway

PortugalSpain

SwitzerlandUnited KingdomBrazil

Sweden

Europe

AsianInfrastructureInvestmentBank

Denmark Austria Headquarters

Beijing

South KoreaBrunei

CambodiaLaos

MalaysiaMyanmar

Southeast Asia

IndonesiaPhilippinesSingapore

ThailandVietnam

New Zealand

Russia

China

Mongolia

Azerbaijan

Georgia

Turkey

$8

$10

$6

$4

$2

$0

$8

$10

$6

$4

$2

$0

$8

$10

$12

$6

$4

$2

$0

1.0

4.8

8.5

5.3

0.02

2.9

5.9

3.1

0.1

3.9

7.9

4.1

TIMELINE

Key milestones in the history of the JCI Group include:

JCI China dispatched a workforce for its first overseas project in Guyana (Skelton Sugar Plant)

JCI China provided a one-stop workforce for the Olympia Complex in Kuwait, being the headquarter building for Olympic Council of Asia

JCI China established Ma’anshan City Jiancheng Occupational Training School

JCI Group was awarded contracts in Qatar, Russia and Vietnam

JCI China was awarded ISO 9001:2008 on quality management

JCI China established partnership with China National Machinery Industry Corp (SINOMACH / SINOCONST)

JCI China established partnership with China Railway Construction Corp (CRCEG)

JCI China upgraded its new training school and head office

JCI China established partnership with China State Construction Engineering Corp (CSCEC)

JCI Group lists and begins trading on the Australian Securities Exchange under ticker code JCI

2005

2007

2009

2011

2012

2013

2014

2015

2016

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INDUSTRY OVERVIEW

The workforce subcontracting market, in which JCI operates, has witnessed significant growth over the past few years.

Since 2007, foreign engineering projects completed by PRC companies have increased more than three-fold from A$53.2 billion in 2007 to A$186.5 billion in 2014. This increase is supported by the current PRC President Xi Jinping who, after taking office in March 2013, has a stated policy of strong international expansion.

In 2013, PRC entities exported A$179.7 billion worth of construction services outside of the PRC. Of that, A$101.6 billion worth of construction sales were exported by the 59 PRC companies ranked in the Top 250 International Contractor List by Engineering News-Record (ENR) 2014.

The 59 major PRC contractors were responsible for 56.5% of construction services exported by PRC entities in 2013, demonstrating a clear dominance of the overseas market.

Of the 59 PRC companies in the top 250 International Contractors, almost all of them are either controlled by SOEs, or are otherwise related to SOEs. This is to be expected, as these SOEs have a long history of implementing the PRC’s domestic and overseas economic and political strategies.

There are currently two national strategies which will have a major impact on PRC workforce subcontracting companies going forward:

1 One Belt, One Road

This is a development strategy and framework proposed by the PRC that focuses on connectivity and cooperation among countries primarily in Eurasia. It underlines China’s push to assume a greater role in global affairs and its need to export China’s production capacity in industries of domestic overproduction, such as metal manufacturing and building materials manufacturing.

2 The Asian Infrastructure Investment Bank (AIIB)

This international financial institution was formally launched in January 2016 and is focused on providing financial support to infrastructure projects in the Asian region. Currently, there are 57 Financial Members. In 2016, the AIIB expects to approve about US$1.2 billion in financing.

OPERATIONAL HIGHLIGHTS

The consolidated profit of the Group for the financial year after providing for income tax amounted to A$7,925,764 (2014: A$5,925,138), before foreign currency translation gain/loss. The subsidiary, Ma’anshan Jiancheng Occupational Training School is a not for profit entity and its constitution prohibits distributions to its Sponsor, accordingly the contribution to the Group’s results for 31 December 2015 of A$7,489,043 is available for distribution to the members of the Company. There were around 3,850 people in total trained in the School during the year.

The business performance of 2015 financial year is described as below:

The Group’s business was growing continuously in the year, showing a 66.8% growth in revenue and 9.6% growth in net profit after tax. In 2015, the Group operates 26 projects across five countries, i.e., Algeria, Bangladesh, China, Kuwait and Uzbekistan. The top 5 projects, ranked by revenues generated in 2015, are Padma Water Plant in Dhaka City of Bangladesh (RMB 68,357,755), Kingho Cement Plant in Xinjiang Autonomous Region of China (RMB 67,990,026), Changwei Public Houses in Maanshan City of China (RMB 34,669,558), 850 sets of Public Houses in Oran City of Algeria (RMB 11,069,810) and Kungrad Soda Ash Plant in Uzbekistan (RMB 10,981,437). These projects are implemented by partnership with SOEs, which are mainly SINOCONST/SINOMACH, MCC17/MCC, CRCEG/ CREC. Cooperation while CSCEC5BA/CSCEC was started in Algeria this year.

Retaining the domestic business can benefit the Group as a whole in two ways. First, domestic projects can serve as a buffer tank role that allows the Group to train, screen, select and retain the best candidates for oversea projects, thus enhance the Group’s core business competence. Second is to strengthen the partnership with key clients by supporting their strategic domestic actions, which will benefit the Group in the long-run for both domestic and overseas businesses. The Group considers cooperation with government-owned companies remains crucial in the business strategy, since the government-owned companies are expanding their businesses into mid-western China and globally.

REVIEW OF OPERATIONS


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In 2015, the Group was re-certified with creditability grade of AA by China International Contractor Association (CHINCA), and was the only Chinese company focusing on Workforce Subcontracting for the overseas engineering market out of among the certified 30 companies in 2015. The recognition by industrial authorities has enhanced the Group into a first-choice brand to both existing and potential clients. The Company’s admission to ASX further enhances its brand to the international arena.

During the 2015 financial year and to the date of this report, no dividend was declared or paid. However, the Group intends to declare a dividend in 2016.

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

To further improve the consolidated group’s profit and maximise shareholder wealth, the following developments are intended for implementation in the near future:

1 Build on existing partnerships with SOEs. The Group already has strong existing relationships with certain SOEs, and intends to reinforce these relationships. Significant gains could be made just by winning a greater share of works from SOE’s.

2 Set up business offices in Beijing, Algeria and Bangladesh. Most major PRC engineering SOEs are headquartered in Beijing. The Directors therefore consider that it will be beneficial for JCI to establish an office in Beijing to build on its existing relationships and also to develop new relationships with engineering SOEs and other head contractor companies. The Directors also consider that it will be beneficial for JCI Group to establish branch offices in countries where it already has substantial operations such as Algeria and Bangladesh. The Group considers that this demonstration of commitment to these locations will be a strong selling point when tendering for future contracts to work with PRC SOEs in those countries.

3 Explore opportunities to work with non-PRC clients directly.

4 Gradually introduce an Australian TAFE training system to China to enhance the competitive edge of the Chinese blue collar workforce in international markets.


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Directors’ Report2


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2 DIRECTORS’ REPORT

1 DIRECTORS

The names and details of the Company’s 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.

The Directors submit their report for the year ended 31 December 2015.

NAME POSITIONAPPOINTMENT

DATECESSATION

DATE

MR JOHN DIXON Non-Executive 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 SIMON JENKINS Non-executive director 13/04/2015 07/09/2015

MR STUART BALDWIN Non-executive director 13/04/2015 07/09/2015

2 INFORMATION ON DIRECTORS AND COMPANY SECRETARY

9

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.

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.

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2DIRECTORS’ REPORT

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.

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.

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DIRECTORS’ REPORT

MR DENNIS WILKINS COMPANY SECRETARY, APPOINTED 7 SEP 2015

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.

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 Executive Chair of Windward Resources Ltd, an independent director for Gumala Enterprises Ltd 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 present

• Gumala Enterprises Ltd - August 2015 to present

• Winja Wajarri Barna Ltd - June 2013 to July 2014

MR STUART BALDWIN (COMPANY SECRETARY, RESIGNED 7 SEP 2015)

Mr Stuart Baldwin was Company Secretary from incorporation on 13 April 2015 until his resignation on 7 September 2015.F

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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 consolidated entity were:

• “one-stop” workforce subcontracting for the PRC construction industry.

• Operation of a training school.

RESULTS OF OPERATIONS

The net profit after income tax of the consolidated entity for the year was $7,042,422 (2014: $5,925,138).


The Group continued its main business activity of the provision of a “one-stop” workforce subcontracting solution for construction industry where it has achieved a leading market position for projects contracted by PRC State Owned Enterprises (SOEs).

SUMMARISED OPERATING RESULTS

As a result of the Group’s strategy in overseas markets, the Group realised an after tax profit of $7,042,422 for the 2015 financial year (2014: $5,925,138). Revenue for the 2015 financial year reached $55,521,615, which represents 67% increase from the 2014 financial year. Most of the revenue comes from the Group’s principle activity as contracted projects income.

The Group incurred a foreign currency translation gain of the 2015 financial year of $883,343 (2014: $1,304,438) due to the strengthening of RMB. The Group’s working capital of the 2015 financial year was $12,125,986 (2014: $3,795,106), which was a symbol of much healthier working capital management by the Group.

4 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There are no significant changes in the state of affairs apart from on 6 September 2015, JC International Group Limited acquired control, via the establishment of a number of interposed companies, of Ma’anshan City Jiancheng International Economic and Technical Cooperation Co. Ltd (“MCJ China”) and its sponsored entity Ma’anshan Jiancheng Occupational Training School. Together these companies make up the JCI Group.

5 ENVIRONMENTAL REGULATION AND PERFORMANCE

The consolidated entity’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 consolidated entity, 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

There were no share options issued by the Company during the year ended 31 December 2015.

On 16 March 2016, the Company 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

Subsequent to year end 31 December 2015:

• the Company was listed on the Australian Securities Exchange (“ASX”) on 23 March 2016.

• as part of its capital raising program, the Company issued an additional 6,980,955 fully paid ordinary shares at $0.80 each amounting to $5,584,764.

Other than the above, there are no other matters or circumstances that have arisen since the end



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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, Moore Stephens Assurance Adelaide 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 Moore Stephens Assurance Adelaide Pty Ltd during or since the financial year.

12 REMUNERATION REPORT (AUDITED)

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

DETAILS OF KEY MANAGEMENT PERSONNEL

DIRECTORS

J DIXON (2) Chairman (non-executive), appointed 7 September 2015

Y TANG (1) Managing Director and General Manager, appointed 13 April 2015

Y SUN (1) Executive Director and Vice General Manager, appointed 7 September 2015

Y ZHU (1) Executive Director and Vice General Manager, appointed 7 September 2015

B BARNES (2) Non-Executive Director, appointed 7 September 2015

S JENKINS (2) Company Secretary, appointed 7 September 2015

S BALDWIN (2) Company Secretary, resigned 7 September 2015

OTHER KEY MANAGEMENT PERSONNEL

R SHEN (1) Vice General Manager - PRC

Y YU (1) Chief Financial Officer - PRC

L DU (1) Operational Manager - PRC

1 Each of these individuals held comparable positions in the JCI Group prior to the restructure detailed in section 4 above. Remuneration details are disclosed for these key management personnel for both the 2014 and 2015 financial years encompassing remuneration received from both the previous JCI Group structure, and the new structure with JCI as the parent entity.

2 Each of these individuals is included as key management personnel by virtue of their position as directors of JCI, for the periods as indicated. They held no positions in the previous JCI Group structure, and as such, they have no remuneration disclosures for the 2014 financial year.

NOTES

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DIRECTORS’ REPORT

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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:


DEC 2015 DEC 2014 DEC 2013 DEC 2012

REVENUE 55,521,615 33,281,829 27,424,137 14,407,303

NET PROFIT AFTER TAX 7,042,422 5,925,138 2,891,960 22,718

BASIC EARNINGS PER SHARE 0.14 N / A N / A N / A

DILUTED EARNINGS PER SHARE

N / A N / A N / A N / A

NET ASSETS 23,743,721 15,816,317 8,586,741 4,474,111

REMUNERATION COMMITTEE

Due to the size of JCI, 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.

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.


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DIRECTORS’ REPORT

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 company 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 2015 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 2015 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 $63,924 (RMB300,000) per annum plus statutory superannuation;

• 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.

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 $74,578 (RMB350,000) per annum plus statutory superannuation;

• 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.

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COMPENSATION OF KEY MANAGEMENT PERSONNEL FOR YEAR ENDED 31 DECEMBER 2015


NAME YEAR

SHORT TERM

SALARY & FEES (1)

POST EMPLOYMENT

SUPERANNUA-TION

SHARE BASED

PAYMENTSTOTAL

RELEVANT TO SHARE

BASED PAYMENTS

PERFORMANCE RELATED

$ $ $ $ % %

DIRECTORS

J DIXON 2015 - - - - - -

Y TANG 2015 74,630 - - 74,630 - -

2014 62,349 - - 62,349 - -

Y SUN 2015 47,228 - - 47,228 - -

2014 39,762 - - 39,762 - -

Y ZHU 2015 66,152 - - 66,152 - -

2014 - - - - - -

B BARNES 2015 - - - - - -

S JENKINS 2015 - - - - - -

S BALDWIN 2015 - - - - - -


R SHEN 2015 77,146 - - 77,146 - -

2014 28,926 - - 28,926 - -

Y YU 2015 77,146 - - 77,146 - -

2014 18,090 - - 18,090 - -

L DU 2015 34,451 - - 34,451 - -

2014 50,643 - - 50,643 - -

TOTAL 2015 376,753 - - 376,753 - -

2014 199,770 - - 199,770 - -

NOTES

1 Short term salary and fees includes net movements in leave provisions.


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DIRECTORS’ REPORT

NAMEBALANCE 1 JAN 15

GRANTED AS

REMUNERATION

ON EXERCISE OF

OPTIONS

NET CHANGE OTHER

BALANCE 31 DEC 15

DIRECTORS

Y TANG - - - 34,500,000 34,500,000

Y SUN - - - 9,860,000 9,860,000

Y ZHU - - - 2,500,000 2,500,000

J DIXON - - - - -

B BARNES - - - - -

S JENKINS - - - - -

S BALDWIN - - - - -


R SHEN - - - - -

Y YU - - - 9,860,000 9,860,000

L DU - - - - -

TOTAL - - - 56,720,000 56,720,000

NOTES

1 Includes options held directly, indirectly and beneficially by KMP.

SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL (1)

Shares held in JC International Group Limited (number) during the year ended 31 December 2015.

LOANS GIVEN TO KEY MANAGEMENT PERSONNEL

During the financial year 2015, there were no loans given to the key management personnel.

END OF REMUNERATION REPORT

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13 DIRECTORS’ MEETINGS

There were no directors’ meetings, or meetings of committees of the Board, held during the year. During the Company’s formation year, the business of the Company was formalised with circular resolutions of the Board. Following admission to ASX it is the Company intention for the board to meet approximately bi-monthly with meetings of the sub committees as needed.

14 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 SHARESOPTIONS OVER

ORDINARY SHARES

J DIXON 2,500 200,000

Y TANG 34,500,000 -

Y SUN 9,860,000 -

Y ZHU 2,500,000 -

B BARNES - -


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DIRECTORS’ REPORT

NON-AUDIT SERVICES

The following non audit services were provided by the entity’s auditor, Moore Stephens Assurance Adelaide Pty Ltd or associated entities which include independent firms in the Moore Stephens 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.

15 AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

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:

2015 2014

AUD AUD

INVESTIGATING ACCOUNTANT’S REPORT 29,800 -

TAXATION REPORT 5,000 -

TOTAL 34,800 -

We have received the Declaration of Auditor Independence from Moore Stephens Assurance Adelaide Pty Ltd, the Company’s Auditor. This is available for review on the page 20 and forms part of this report.

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 2016

JC International Group Limited 10

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:

2015 2014 AUD AUD

Investigating Accountant’s report 29,800 - Taxation report 5,000 - 34,800 -

We have received the Declaration of Auditor Independence from Moore Stephens Assurance Adelaide Pty Ltd, the Company’s Auditor. This is available for review on page 11 and forms part of this report.

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 2016

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Moore Stephens Assurance Adelaide Pty Ltd ABN 26 139 429 691. Liability limited by a scheme approved under Professional Standards Legislation. The Adelaide Moore Stephens firm is not a partner or agent of any other Moore Stephens firm. An independent member of Moore Stephens International Limited - members in principal cities throughout the world.

Moore Stephens Assurance Adelaide Pty Ltd

Level 4, 81 Flinders Street

Adelaide SA 5000

GPO Box 2039 Adelaide SA 5001

T +61 (0)8 8205 6200

F +61 (0)8 8205 6288

www.moorestephens.com.au

Auditor’s Independence Declaration

In accordance with the requirement of s307C of the Corporations Act 2001, I declare that, to the best of my knowledge and belief, during the year ended 31 December 2015 there have been no contraventions of:

i. the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii. any applicable code of professional conduct in relation to the audit.

MOORE STEPHENS ASSURANCE ADELAIDE PTY LTD

JIM GOUSKOS

DIRECTOR, ASSURANCE

ADELAIDE

Dated this 30th day of March 2016



Level 4, 81 Flinders Street

Adelaide SA 5000

GPO Box 2039 Adelaide SA 5001

T +61 (0)8 8205 6200

F +61 (0)8 8205 6288


Auditor’s Independence Declaration

In accordance with the requirement of s307C of the Corporations Act 2001, I declare that, to the best of my knowledge and belief, during the year ended 31 December 2015 there have been no contraventions of:

i. the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii. any applicable code of professional conduct in relation to the audit.

MOORE STEPHENS ASSURANCE ADELAIDE PTY LTD

JIM GOUSKOS

DIRECTOR, ASSURANCE

ADELAIDE

Dated this 30th day of March 2016


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Financial Statements3


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3 FINANCIAL STATEMENTS

CORPORATE GOVERNANCE STATEMENTJC International Group Limited and the Board are committed to achieving and demonstrating the highest standards of corporate governance. JC International Group Limited has established corporate governance practices that are consistent with the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.

The 2015 Corporate Governance Statement was approved by the Board on 2 October 2015 and is current as at 31 March 2016. A description of the Group’s current corporate governance practices is set out in the Group’s Corporate Governance Statement which can be viewed at www.jcigroup.com.au.

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 31 December 2015

3FINANCIAL STATEMENTS

NOTE CONSOLIDATED GROUP

2015 2014

AUD AUD

Revenue 2 55,521,615 33,281,829

Cost of Sales (42,939,588) (24,812,242)

Gross Profit 12,582,027 8,469,587

Other revenues 2 195,180 944,847

Administration Expenses 3 (3,083,097) (1,231,934)

Finance Costs 4 (277,421) (285,602)

Profit before income tax 9,416,689 7,896,898

Income tax expense 5 (2,374,267) (1,971,760)

Profit for the year 7,042,422 5,925,138

Other comprehensive income

Foreign currency translation gain/(loss) 883,343 1,304,438

Total comprehensive income for the year 7,925,765 7,229,576

Total comprehensive income attributable to:

Members of the parent entity (the Company) 7,489,044 7,126,589

Ma’anshan Jiancheng Occupational Training School

25(b) 436,721 102,987

Total comprehensive income for the year 7,925,765 7,229,576

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

CENTS CENTS

Basic earnings per share 14 n/a

Diluted earnings per share 14 n/a


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FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2015


2015 2014

AUD AUD

Current assets

Cash and cash equivalents 7 1,413,059 1,462,879

Trade and other receivables 8 31,737,689 29,492,532

Inventory 9 15,136 9,084

Other current assets 10 135,715 -

Total current assets 33,301,599 30,964,495

Non-current assets


Property, plant and equipment 11 6,789,725 6,679,658

Intangible assets - Land use rights 12 413,251 397,763

Deferred tax assets 13 392,482 258,550

Total non-current assets 11,617,735 12,021,211

Total assets 44,919,334 42,985,706

Current liabilities

Trade and other payables 14 16,136,174 22,205,384

Short-term borrowings 15 2,642,000 2,988,000

Current tax liabilities 16 2,397,439 1,976,005

Total current liabilities 21,175,613 27,169,389

Net assets 23,743,721 15,816,317

Equity

Issued capital 17 4,732,045 4,730,405

Reserves 18 5,522,033 3,494,516

Retained earnings 13,489,643 7,591,396

Total equity 23,743,721 15,816,317

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2015

3FINANCIAL STATEMENTS

NOTESHARE

CAPITALRETAINED

EARNINGS

FOREIGN CURRENCY

TRANSLATION RESERVE

STATUTORY RESERVE

TRAINING SCHOOL PROFITS RESERVE

CONSOLIDATED TOTAL

AUD AUD AUD AUD AUD AUD

Balance at 1 January 2014 4,730,405 2,351,460 1,109,529 279,926 115,420 8,586,740

Total consolidated comprehensive income for the year

- 5,925,138 - - - 5,925,138

Transferred to Statutory Reserve

(582,215) - 582,215 - -

Transferred to Training School Profits Reserve

(102,987) - - 102,987 -

Other comprehensive income - 1,304,439 - - 1,304,439

Balance at 31 December 2014 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


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FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2015


2015 2014

AUD AUD

Cash flows from operating activities

Receipts from customers 63,893,049 29,305,089

Payments to suppliers, employees and others (59,542,214) (24,464,349)

Interest received 6,455 15,886

Finance costs (277,421) (285,602)

Income tax paid (2,212,988) (1,000,503)

Net cash provided by (used in) operating activities 1,866,881 3,570,521

Cash flows from investing activities

Purchase of property, plant and equipment (277,618) (4,935,418)

Proceeds from sale of property plant and equipment

- 227,922

Proceed from sale of Land use right - 71,880

Net cash provided by (used in) investing activities (277,618) (4,635,616)

Cash flows from financing activities

Proceeds (Repayment) from (of) borrowings (528,400) (597,600)

Cash receipts (Advanced) from (to) related parties 23(d) (1,114,437) 1,036,259

Net cash provided by (used in) financing activities (1,642,837) 438,659

Net change in cash and cash equivalents held (53,574) (626,436)

Effect of exchange rates on cash holdings in foreign currencies

3,754 656,122

Cash and cash equivalents at beginning of financial year

1,462,879 1,433,193

Cash and cash equivalents at end of financial year

7 1,413,059 1,462,879

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NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015

3NOTES TO THE FINANCIAL STATEMENTS

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 were authorised for issue by the directors on 31 March 2016.

BASIS OF PREPARATION

The consolidated financial statements have been prepared on an accruals 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.

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).

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.

1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

JC INTERNATIONAL GROUP LIMITED


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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.

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.

NOTES TO THE FINANCIAL STATEMENTS

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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 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.

The carrying amount of financial assets including uncollectable trade receivables is reduced by the impairment loss through the use of an allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

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.

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.



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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.

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. 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.


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SIGNIFICANT JUDGMENTS — PROVISION FOR IMPAIRMENT OF RECEIVABLES/INVENTORY

The Group assesses the provision for impairment of receivables and cash at each reporting date by evaluating the ageing likely recoverability of the outstanding balances.

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

CL ASSIFICATION 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.

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



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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

R 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, Ma’anshan City 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 BAL ANCES

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.


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2 REVENUE


CONSOLIDATED GROUP

2015 2014

AUD AUD

Operating activities

Contracted projects income 54,658,929 32,827,642

Labour brokerage income 14,541 100,414

Training school income 848,145 327,410

Other operating income - 26,363

Total Revenue 55,521,615 33,281,829

Non-operating activities

Interest received 6,455 15,886

Government subsidies 188,483 122,808

Gain on disposal of fixed assets - 529,809

Tax refund - 266,367

Other non-operating income 242 9,977

Other income 195,180 944,847

3 ADMINISTRATION EXPENSES

CONSOLIDATED GROUP

2015 2014

AUD AUD

Administration expenses

Salary expenses 863,058 586,849

Depreciation 457,781 280,853

Travel expense 83,426 9,283

Impairment provision for trade receivables 505,912 -

IPO expense 747,803 -

Other administration expenses 425,117 354,949

Total administration expenses 3,083,097 1,231,934


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4 FINANCE COSTS

CONSOLIDATED GROUP

2015 2014

AUD AUD

Finance costs

Interest expense on borrowings 268,913 259,108

Guarantee fees 10,685 26,115

Other finance expenses (2,177) 379

Total finance costs 277,421 285,602

5 INCOME TAX EXPENSE

CONSOLIDATED GROUP

2015 2014

AUD AUD

The components of tax expense comprise:

Current tax 2,493,724 1,935,298

Deferred tax (119,457) 36,462

Total Income Tax Expense 2,374,267 1,971,760

Reconciliation of tax expense

Profit before income tax 9,416,690 7,896,899

Prima facie tax payable on profit before income tax at 30% (2014:25%)

2,825,007 1,971,760

Add:

Tax effect of:

-Foreign losses not recognised 721 -

-Losses in the parent entity not recognised 44,881 -

Less:

Tax effect of:

-Difference in taxation rates in foreign subsidiaries (470,835) -

-Other non-taxable income (25,507) -

Income tax attributable to the entity 2,374,267 1,971,760

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

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6 AUDITORS’ REMUNERATION


CONSOLIDATED GROUP

2015 2014

AUD AUD

Remuneration of the auditor for:

- Auditing or reviewing the financial statements 100,000 35,000

Total Auditors’ Remuneration 100,000 35,000

Non- audit services

- Taxation report 5,000 -

- Investigating Accountant’s report 29,800 -

Total Non- audit services 34,800 -

The auditor is Moore Stephens Assurance Adelaide Pty Ltd.

Non-Audit services were performed by independent Moore Stephens member firms within the network as follows:

• Taxation report: Moore Stephens Adelaide Pty Ltd

• Investigating Accountant’s report: Moore Stephens Perth Corporate Service Pty Ltd

7 CASH AND CASH EQUIVALENTS CONSOLIDATED GROUP

2015 2014

AUD AUD

Cash on hand 417,480 272,677

Cash at bank 361,499 692,202

Security deposits 634,080 498,000

Total cash and cash equivalent 1,413,059 1,462,879


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8 TRADE AND OTHER RECEIVABLES CONSOLIDATED GROUP

NOTES 2015 2014

AUD AUD

Current

Trade receivables 18,335,474 18,410,934

Note receivables 8(a) 126,816 -

Other receivables 93,034 5,869,408

Related party receivable 23(c) - 53,784

Contracted project costs 8(b) 13,182,365 5,158,406

Total current trade and other receivables 31,737,689 29,492,532

Non - Current

Trade receivables 1(l) 1,678,966 1,335,157

Other receivables 1(l) 3,901,110 4,346,674

Provision for impairment (1,557,799) (996,591)

Total non-current trade and other receivables 4,022,277 4,685,240

A Note receivables 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

2015 2014

AUD AUD

Contracted project costs incurred 120,912,682 74,918,748

Recognised profits 30,789,122 17,120,058

151,701,804 92,038,806

Progress billings (138,507,311) (86,842,790)

Provision for expected loss on contracted project (12,128) (37,610)

Total Contracted Project Costs 13,182,365 5,158,406

As at 31 December 2015, trade receivable included retentions of AUD 5,861,190 (2014: AUD 4,523,280) related to contracted projects in progress.

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8 TRADE AND OTHER RECEIVABLES


CONTINUED

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 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

Consolidated Group 2014

Trade receivables 19,746,091 - 996,591 143,068 195,498 - 18,410,934

Other receivables 10,269,866 - - - 104,360 597,044 9,568,462

Contracted project costs

5,158,406 - - - - - 5,158,405

Total 35,174,363 - 996,591 143,068 299,858 597,044 33,137,801


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8 TRADE AND OTHER RECEIVABLES

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:

CONTINUED

CONSOLIDATED GROUP

NOTES 2015 2014

AUD AUD

Balance at 1 January 996,591 996,591

Impairment incurred for the year 3 505,912 -

Write-off incurred for the year - -

Foreign currency translation difference 55,296 -

Balance at 31 December 1,557,799 996,591

9 INVENTORY

CONSOLIDATED GROUP

NOTES 2015 2014

AUD AUD

Current

Raw material 15,136 9,084

Total Inventory 15,136 9,084

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.

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10 OTHER CURRENT ASSETS

CONSOLIDATED GROUP

NOTES 2015 2014

AUD AUD

Current

Prepayment 135,715 -

Total other current assets 135,715 -

Other assets represent prepayment for IPO expenses to be offset against share capital raised in the subsequent financial year.

11 PROPERTY, PLANT AND EQUIPMENT

CONSOLIDATED GROUP

2015 2014

AUD AUD

Office Equipment

At cost 599,336 453,255

Accumulated depreciation (225,422) (131,822)

Total Office Equipment 373,914 321,433

Buildings

At cost 6,421,876 6,052,412


Total Buildings 5,964,317 5,908,667

Plant and Equipment

At cost 225,606 210,654


Total Plant and Equipment 175,705 184,066

Motor Vehicles

At cost 551,766 477,117


Total Motor Vehicles 275,789 265,492

Total property, plant and equipment 6,789,725 6,679,658


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11 PROPERTY, PLANT AND EQUIPMENT CONTINUED

OFFICE EQUIPMENT

BUILDINGSPLANT AND EQUIPMENT

CONSTRUCTION IN PROGRESS

MOTOR VEHICLES

CONSOLIDATED


Balance at 1 January 2014

18,561 3,901,383 41,109 1,238,967 286,639 5,486,659

Addition 313,219 - 143,776 4,273,183 - 4,730,178

Disposal - (4,244,180) (13,545) - - (4,257,725)

Transfer from CIP to Buildings

- 5,487,277 - (5,487,277) - -

Depreciation expense (39,988) 290,798 (3,635) - (40,182) 206,993

Foreign currency translation difference

29,641 473,389 16,361 (24,873) 19,035 513,553

Balance at 31 December 2014

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

Balance at 31 December 2015

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

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:

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12 INTANGIBLE ASSET

CONSOLIDATED GROUP

NOTES 2015 2014

AUD AUD

Land use right 439,629 414,336

Accumulated amortisation (26,378) (16,573)

Total Land use right 413,251 397,763

A Reconciliation of carrying amount

Balance at 1 January 2015 397,763

Disposal – land use right disposed -

Amortisation (net of disposal amortisation write back)

(8,890)

Foreign currency translation difference 24,378

Balance at 31 December 2015 413,251

13 DEFERRED TAX ASSETS

CONSOLIDATED GROUP

2015 2014

AUD AUD

The balance comprises temporary differences attributable to

Doubtful debts 389,450 249,148

Expected losses for contracted project 3,032 9,402

Total deferred tax assets 392,482 258,550


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14 TRADE AND OTHER PAYABLES

CONSOLIDATED GROUP

NOTE 2015 2014

AUD AUD

Current

Trade payables 391,305 282,322

Note payables - 996,000

Salary payable 12,430,621 17,427,216

Related party loan 23(d) 27,551 1,069,412

Business tax payable 1,673,614 850,987

Other tax payables 303,311 182,269

Other payables 1,309,771 1,397,178

Total Current Trade and Other Payables 16,136,174 22,205,384

15 SHORT-TERM BORROWINGS

CONSOLIDATED GROUP

2015 2014

AUD AUD

Current

Bank loan secured:

- Huishan Bank (HSB) 1,585,200 1,494,000

- Ma’anshan Rural Commercial Bank (RCB) 1,056,800 498,000

- Shanghai Pudong Development Bank (SPD) - 996,000

Total Short-term Borrowings 2,642,000 2,988,000

In 2015, the bank borrowings from SPD were repaid. The borrowings from RCB were renewed and another AUD 558,800 (RMB 2,500,000) have been borrowed. Interest is charged at 7.8% by HSB and 5.6% by RCB.

The bank borrowings from HSB are secured by personal guarantees of the Director, Mr Yonghong Tang, his wife, Mrs Wang Jinxiang and the Group’s land and building with a carrying amount of AUD 6,377,568 (2014: AUD 6,306,430).

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16 CURRENT TAX LIABILITIES

CONSOLIDATED GROUP

2015 2014

AUD AUD

Income tax payable 2,397,439 1,976,005

Total current tax liabilities 2,397,439 1,976,005

17 ISSUED CAPITAL

CONSOLIDATED GROUP

2015 2014

AUD AUD

At the beginning of reporting period 4,730,405 4,730,405

Shares issued during the year 1,640 -

Total Issued Capital 4,732,045 4,730,405

The company has authorised share capital amounting to 50,000,000 ordinary shares.

A Ordinary shares

CONSOLIDATED GROUP

2015 2014

AUD AUD

At the beginning of the reporting period

Shares issued during the year:

- 13 April 2015 1 -

- 13 July 2015 49,999,999 -

Total Issued Capital 50,000,000 -

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.


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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.

18 RESERVES

CONSOLIDATED GROUP

2015 2014

AUD AUD

Statutory reserve 1,569,595 862,141

Training school profits reserve 655,128 218,407

Foreign currency translation reserve 3,297,310 2,413,968

Total Reserves 5,522,033 3,494,516

STATUTORY RESERVE

Pursuant to the current People’s Republic of China Company Law, the Group is required to transfer 5% to 10% of its profit after taxation to a statutory reserve until the surplus reserve balance reaches minimal 50% of the registered capital. 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.

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FOREIGN CURRENCY TRANSL ATION 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 2015.

B Operating Commitments

The Group does not have any operating commitments as at 31 December 2015.

20 CONTINGENT ASSETS AND CONTINGENT LIABILITIES The Group has no contingent liabilities or contingent assets.

21 EVENTS AFTER THE BALANCE SHEET DATE Subsequent to year end 31 December 2015:

• the Company was listed on the Australian Securities Exchange (“ASX”) on 23 March 2016.

• as part its capital raising program, the Company issued an additional 6,980,955 fully paid ordinary shares at $0.80 each amounting to $5,584,764

Other than above, there are no other 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.


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22 CASH FLOW INFORMATION

CONSOLIDATED GROUP

2015 2014

AUD AUD

Reconciliation of cash flow from operations with profit after income tax

Profit after income tax 391,305 282,322

Non-cash flows in profit - 996,000

Depreciation 12,430,621 17,427,216

Amortisation 27,551 1,069,412

Net gain/loss on disposal of property, plant and equipment 1,673,614 850,987

Net gain/loss on disposal of Land use right 303,311 182,269

Changes in assets and liabilities, net of the effects of purchase ad disposal of subsidiaries 1,309,771 1,397,178

(Increase)/decrease in trade receivables 1,310,983 (1,737,022)

(Increase)/decrease in other receivables 7,030,703 (2,728,494)

(Increase)/decrease in notes receivable (126,816) 99,600

(Increase)/decrease in prepayments (135,715) 182,648

(Increase)/decrease in inventories (5,497) (3,979)

(Increase)/decrease in contracted project costs (7,709,069) (2,870,701)

(Increase)/decrease in DTA (118,149) 40,217

Increase/(decrease) in trade payables 201,500 121,272

Increase/(decrease) in income taxes payable 300,811 931,041

Increase/(decrease) in other tax liabilities 880,594 532,935

Increase/(decrease) in other payable (165,401) (1,027,507)

Increase/(decrease) in notes payable (1,056,800) 996,000

Increase/(decrease) in salary payable (6,060,425) 3,335,952

Cash flows from operations 1,866,881 3,570,520

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23 RELATED PARTY TRANSACTIONS

A The Group’s main related parties are as follows:

(i) Key management personnel:

NAME POSITION

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 Dennis Wilkins Company secretary(appointed 12/08/2015)

Mr Simon Jenkins Non-executive director (Appointed on 13/04/2015, resigned on 07/09/2015)

Mr Stuart Baldwin Non-executive director (Appointed on 13/04/2015, resigned on 07/09/2015)

Mr Yonghui Yu Chief financial officer – PRC

Ms Ru Shen Vice general manager - PRC

Mr Lei Du Operational General manager - PRC


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23 RELATED PARTY TRANSACTIONS CONTINUED

(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:

NAME POSITION

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

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

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

Windward Resources Ltd A company in which Ms Bronwyn Barnes is holding an executive chair's role

Gumala Enterprises Ltd A company in which Ms Bronwyn Barnes is holding an independent director's role

China Ningbo Cixi Import & Export Corporation Ltd

A company in which Mr Yangyu Zhu is holding the sole director’s role.

DWCorporate Pty Ltd A company in which Mr Dennis Wilkins is the principal

Key Petroleum Limited A company in which Mr Dennis Wilkins is holding a non-executive director's role

TSX listed Mawson West Limited

A company in which Mr Dennis Wilkins is holding a non-executive director's role

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B Transaction with related parties:

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The following transactions occurred with related parties:

CONSOLIDATED GROUP

2015 2014

AUD AUD

(i) Other related entities:

Contracted project sales with Ma'anshan Zhongji Chengjian Construction Engineering Co., Ltd.

- 11,188,730

Purchase of capital assets:

Stage 2 property plant and equipment purchased from Ma'anshan Zhongji Chengjian Construction Engineering Co., Ltd.

- 4,258,103

C Amounts receivable from related parties:

CONSOLIDATED GROUP

2015 2014

AUD AUD

Other receivables

(i) Loans to other related entities:

Beginning of the year* - -

Loan advanced - 139,062

Loan repayment received - (90,300)

Foreign currency translation difference - 5,022

End of the year - 53,784

*Ma’anshan Zhongji Chengjian Construction Engineering Co., Ltd ceased to be a related party when the director Mr Yonghong Tang disposed of his shareholdings on 27/01/2014.


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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.


D Amounts payable to related parties:

CONSOLIDATED GROUP

2015 2014

AUD AUD

Other payables

(i) Loans from key management personnel:

Beginning of the year 1,064,786 (117,830)

Loan advanced 480,567 2,385,341

Loan repayment received (1,595,004) (1,300,320)

Foreign currency translation difference 77,202 102,221

End of the year 27,551 1,069,412

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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.

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

CONSOLIDATED GROUP

NOTES 2015 2014

AUD AUD

Financial Assets

Cash and cash equivalents 7 1,413,059 1,462,879


Related party loans 23(c) - 53,784

Total financial assets 37,173,025 35,640,651

Financial Liabilities

Trade and other payables (excluding other tax payable)

14 16,108,623 21,135,972

Short term borrowings 15 2,642,000 2,988,000

Related party loans 23(d) 27,551 1,069,412

Total financial liabilities 18,778,174 25,193,384

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.


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CONTINUED

24 FINANCIAL RISK MANAGEMENT

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.

The table below reflects a maturity analysis for financial liabilities.

0 - 12 MONTHS CONSOLIDATED GROUP

OVER 1 YEAR CONSOLIDATED

GROUP

TOTAL CONSOLIDATED GROUP

2015 2014 2015 2014 2015 2014


Financial liabilities due for payment

Trade and other payables 14,159,248 21,172,128 - - 14,159,248 21,172,128

Borrowings 2,642,000 2,988,000 - - 2,642,000 2,988,000

Total expected outflows 16,801,248 24,160,128 - - 16,801,248 24,160,128

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. Accordingly, the Group has an immaterial exposure to credit risk.

B Credit risk analysis

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24 FINANCIAL RISK MANAGEMENT CONTINUED

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.

E Offsetting agreements

As at 31 December 2015, Jiancheng International Economic and Technical Cooperation Co., Ltd (the wholly owned main operating subsidiary) has a payable balance of AUD 1,690,880 to non-related party Ma’anshan Zhongji Chengjian Construction Engineering Co., Ltd and the Company’s sponsored entity Ma’anshan Jiancheng Occupational Training School has a receivable balance of AUD 1,690,880 from Ma’anshan Zhongji Chengjian Construction Engineering Co., Ltd.

The Group entered into a tripartite offsetting agreement on 31 December 2015 which gives the Group a legally enforceable right to offset its AUD 1,690,880 payable to Ma’anshan Zhongji Chengjian

Construction Engineering Co., Ltd and Ma’anshan Jiancheng Occupational Training School’s receivable for the same amount from Ma’anshan Zhongji Chengjian Construction Engineering Co., Ltd as at year end 31 December 2015 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 2015, in accordance with AASB 132, the Group has offset in its consolidated financial statements its AUD 1,690,880 liability to Ma’anshan Zhongji Chengjian Construction Engineering Co., Ltd against Ma’anshan Jiancheng Occupational Training School’s receivable for the same amount from Ma’anshan Zhongji Chengjian Construction 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 SUBSIDIARYPRINCIPAL PL ACE OF

BUSINESSOWNERSHIP INTEREST

2015 2014

% %

Jiancheng International Holdings Limited Hong Kong 100 -

Ma'anshan City Jiancheng Human Resources Service Limited

Anhui, China 100 -

Ma'anshan City Jiancheng International Economic and Technical Cooperation Co. Ltd

Anhui, China 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

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25 INTERESTS IN SUBSIDIARIES CONTINUED

B Significant Restrictions

Ma’anshan Jiancheng Occupational Training School is a not for profit entity and its constitution prohibits realisation and distributions of its assets to its Sponsor, the parent company. The carrying amount of the assets included within the consolidated financial statements to which these restrictions apply is as follows:

2015 2014

AUD AUD

Current assets

Cash and cash equivalents 152,853 27,023

Trade and other receivables 57,534 582,311

Total current assets 210,387 609,334

Non-current assets

Property, plant and equipment 173,611 139,971

Total non-current assets 173,611 139,971

Total assets 383,998 749,305

The subsidiary’s contribution to the Group’s results for 31 December 2015 (AUD 436,721) 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

STATEMENT OF FINANCIAL POSITION 2015 2014

AUD AUD

Assets

Current assets 93,502 -

Non-current assets 50,000 -

Total Assets 143,502 -

Liabilities

Current liabilities 559,949 -

Non-current liabilities - -

Total Liabilities 559,949 -

Net Assets (416,446) -

Equity

Issued capital 50,001 -

Retained earnings (466,447) -

Total equity (416,446) -

Statement of Comprehensive income

Total profit/(loss) (466,447) -

Total comprehensive income (466,447) -

The parent entity has no contingent liabilities or contingent assets as at 31 December 2015.

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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

2015 2014

AUD AUD

Short-term employee benefits 376,753 199,770

Total KMP compensation 376,753 199,770

28 COMPANY DETAILS

The registered office of the Company is:

JC International Group Limited 20 Kings Park Road West Perth, WA 6005, Australia


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The director of the Group declares that:

1 The financial statements and notes, as set out on pages 24 to 58 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 2015 and of the performance for the year ended on that date of the Company and consolidated group.

2 In the director’s 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 Director.

Mr Yonghong Tang

Dated 31 March 2016

JC International Group Limited

44

Director’s Declaration

The director of the Group declares that:

1. The financial statements and notes, as set out on pages 12 to 43 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 2015 and of the performance for the year ended on that date of the Company and consolidated group.

2. In the director’s 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 Director.

________________ Mr Yonghong Tang Dated 31 March 2016

DIRECTORS’ DECLARATION


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Independent Auditor’s Report

4


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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JC INTERNATIONAL GROUP LIMITED Report on the Financial Report We have audited the accompanying financial report of JC International Group Limited (“the Company”) and its controlled entities which comprises the consolidated statement of financial position as at 31 December 2015, 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, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards (IFRS). Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report 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 entity’s internal control.

An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of JC International Group Limited, would be in the same terms if provided to the directors as at the time of this auditor’s report.


Level 4, 81 Flinders Street Adelaide SA 5000

GPO Box 2039 Adelaide SA 5001 T +61 (0)8 8205 6200 F +61 (0)8 8205 6288


4INDEPENDENT AUDITOR’S REPORT

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Auditor’s Opinion In our opinion:

a. the financial report of JC International Group Limited is in accordance with the Corporations Act 2001, including i. giving a true and fair view of the Company’s and consolidated entity’s financial

position as at 31 December 2015 and of its performance for the year ended on that date; and

ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the remuneration report included in pages 5 to 9 of the directors’ report for the year ended 31 December 2015. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with s 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.

Auditor’s Opinion

In our opinion the remuneration report of JC International Group Limited for the year ended 31 December 2015 complies with s 300A of the Corporations Act 2001. MOORE STEPHENS ASSURANCE ADELAIDE PTY LTD

JIM GOUSKOS DIRECTOR, ASSURANCE ADELAIDE Dated this 31st day of March 2016

4INDEPENDENT AUDITOR’S REPORT


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ASX Additional Information

5


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ASX ADDITIONAL INFORMATION

Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 6 April 2016.

A Distribution of equity securities

Analysis of numbers of equity security holders by size of holding:

ORDINARY SHARES

NUMBER OF HOLDERS NUMBER OF SHARES

1 - 1,000 19 13,956

1,001 - 5,000 327 923,443

5,001 - 10,000 33 258,335

10,001 - 100,000 37 910,221

100,001 and over 16 54,875,000

432 56,980,955

The number of shareholders holding less than a marketable parcel of shares are:

4 987

5

B Twenty largest shareholders

The names of the twenty largest holders of quoted ordinary shares are:

ORDINARY SHARES

NUMBER OF SHARES PERCENTAGE OF ORDINARY SHARES

1 Yonghong Tang 34,500,000 60.55

2 Sequoia Capital Asia Holdings Ltd 9,860,000 17.30

3 Jingxiang Wang 2,300,000 4.04

4 Yangyu Zhu 1,500,000 2.63

5 Guopin Investment (Aust) Pty Ltd 1,250,000 2.19

6 Hebo Investments (Aust) Pty Ltd 1,250,000 2.19

7 China Ningbo Cixi Imp & Exp Corp 1,000,000 1.75

8 Dao Capital Group Ltd 840,000 1.47

9 Daobin Zhang 395,000 0.69

10 Renxi Du 390,000 0.68

11 Yan Du 380,000 0.67

12 Shizhuang Guo 370,000 0.65

13 Bangyou Wu 350,000 0.61

14 Fan Wu 200,000 0.35

15 Jing Ren 150,000 0.26

16 Lin Zang 140,000 0.25

17 Daqi Cui 85,000 0.15

18 Cuiwei Song 63,125 0.11

19 Shuo Yang 60,250 0.11

20 Lin Li 60,000 0.11

55,143,375 96.78

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5ASX ADDITIONAL INFORMATION

C Escrowed securities

CLASS NUMBER OF SECURITIES ESCROW EXPIRY

Ordinary fully paid shares 50,000,000 22 September 2017

D Substantial shareholders

The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

NUMBER OF SHARES

Yonghong Tang 34,500,000

Youxi Sun and Sequoia Capital Asia Holdings Ltd 9,860,000

E Voting rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

F Unquoted Securities

HOLDERS OF 20% OR MORE OF THE CLASS

CLASSNUMBER OF SECURITIES

NUMBER OF HOLDERS

HOLDER NAMENUMBER OF SECURITIES

Options, nil exercise price, expiry 31 December 2017

200,000 1 John Dixon 200,000

G Use of funds

The Company was admitted to the Official List of the ASX subsequent to the end of the reporting period. The Company will use the cash and cash equivalents held at the time of admission in a way consistent with its business objectives.


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CREDIBILITY BUILDS THE WORLD

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credibility builds the world - asx 2010 2011 2012 2013 0.0 200.0 250.0 300.0 150.0 100.0 ......

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