A N N U A L R E P O R T 2 0 1 9
Jatenergy Limited
Year ended 30 June 2019
Annual Report
CORPORATE DIRECTORY
Directors:
Mr. Wilton Yao
Executive Director
Mr. Brett Crowley
Non-Executive Chairman
Mr. Xipeng Li
Non-Executive Director
Company Secretary:
Mr. Justyn Stedwell and Mr Brett Crowley
Registered Office:
Suite 303 Office B, 521 Toorak Road
TOORAK VIC 3142
Phone: +61 488 248 138
Website:
www.jatenergy.com
Share Registry:
Auditor:
Security Transfer Australia Pty Ltd
770 Canning Highway
Applecross WA 6153
Phone: 1300 992 916
LNP Audit and Assurance Pty Ltd
Level 14, 309 Kent Street
SYDNEY NSW 2000
Stock Exchange Listing:
Jatenergy Limited shares are listed on the
Australian Securities Exchange (ASX) under JAT.
Page 2 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Table of Contents
(cid:3)
2
Directors’ Report ....................................................................................................................................................................... 4
18
Auditor’s independence declaration ....................................................................................................................................... 20
19
Consolidated Statement of Profit or Loss and Other Comprehensive Income ........................................................................ 21
20
Consolidated Statement of Financial Position ......................................................................................................................... 22
Consolidated Statement of Changes in Equity ......................................................................................................................... 23
21
Consolidated Statement of Cashflows ..................................................................................................................................... 24
22
Notes to Financial Statements ................................................................................................................................................. 25
23
Directors Declaration ............................................................................................................................................................... 54
52
Independent Audit Report ....................................................................................................................................................... 55
53
Corporate Governance Statement ........................................................................................................................................... 62
60
Shareholder Information ......................................................................................................................................................... 75
73
Page 3 of 76
1
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Your Directors present their report on the consolidated entity (referred to hereafter as “the Group”) consisting of Jatenergy
Limited (“Jatenergy”, “JAT” or “Company”) and its controlled entities during the year ended 30 June 2019.
Directors
The following persons were Directors of Jatenergy during the whole of the financial year and up to the date of this report.
• Wilton Yao
•
•
•
Brett Crowley
Xipeng Li
Anthony Crimmins
Executive Director
Non-Executive Chairman (appointed on 23 August 2018)
Non-Executive Director
Executive Chairman (resigned on 25 January 2019)
Principal activity
The Group is an Asia Pacific trade specialist. This activity encompasses:
•
•
•
the origination, development and manufacture of a range of consumer products;
associated brand development, marketing and promotion; and
the sale of client and in-house products, primarily in Australia and China via a multichannel strategy including
traditional retail, and e-commerce platforms.
Operating and Financial Review
2019 has been a year of substantial growth for the Group with the completion of two large acquisitions, Green Forest
International Pty Ltd and Sunnya Pty Ltd, adding significantly to its FMCG trading revenues in China and Australia. The
acquisitions contributed to Jatenergy delivering on its plan to transition to higher-margin sales of FMCG products, which
include milk powders, wine, cosmetics, skin care products, nutraceuticals, cereals, oats and biscuits.
Sunnya has established its own highly successful brand, Neurio, and extended its product range and expanded its sales and
distribution channels in Australia and throughout Asia. Neurio lactoferrin series products have been extremely successful in
both local and Asian markets and additional Neurio products have been developed during the period with strong initial
demand within these markets.
The Group achieved its first positive EBITDA / and pre impairment trading result for the Financial Year 2019 reporting revenue
of $66.44 million and EBITDA of $5.28 million as compared to reporting revenue of $2.32 million and EBITDA of $(1.27) million
for the Financial Year 2018.
This improvement trend is expected to continue in the 2020 Financial Year.
The loss for the year after tax was $20,492,541 (2018: $1,268,891). This was mainly attributable to impairment of goodwill
and tradename of $24,072,574 and also includes write back of earnout liability provision of $2,568,933 relating to Golden
Koala Group Pty Ltd as it did not satisfy the conditions specified in the buy and sell agreement.
The net assets of the Group have increased from $27,174,761 at 30 June 2018 to $32,141,437 at 30 June 2019 and includes
cash of $7,844,671 (2018: $4,218,478).
2
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Sunnya has established its
own highly successful brand,
Neurio, and extended its
product range and expanded
its sales and distribution
channels in Australia and
throughout Asia.
3
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Operating and Financial Review (continued)
The performance of the subsidiaries Sunnya Ltd and Green Forest International Pty Ltd are as follows.
Green Forest International Pty Ltd and controlled entity: Date of Acquisition (DOA): 11 August 2018
Particulars
Revenue
Net Profit
EBITDA
2019 (11 months from DOA)
$59.2M
$0.98M
$1.9M
Sunnya Ltd : Date of Acquisition (DOA): 10 October 2018
Particulars
Revenue
Net Profit
EBITDA
2019 (9 months from DOA)
$5.02M
$1.46M
$2.09M
Green Forest International Pty Ltd
On 11 August 2018, Jatenergy acquired 50% of Green Forest International Pty Ltd (Green Forest), a Sydney-based wholesaler,
distributor and exporter selling to more than 50 shops and pharmacies in Hong Kong and over 200 gift shops, duty-free shops
and Daigou warehouses in Australia. Green Forest also distributes through dominant Chinese online platforms such as
Taobao and Wechat.
JAT completed the acquisition of Green Forest in August 2018. Refer to Note 23(a)(1) for details.
The purchase of Green Forest included a working capital injection of $4 million (in the form of loans from JAT and from the
vendors) to fund the expansion of the operations of Green Forest.
In September 2018, Green Forest entered into an agreement with Chinese medical and healthcare group, Sinopharm Group
Co. Ltd, a company based in China, to supply vitamins, cosmetic products, dairy products and other health-related consumer
goods. The Group expects a boost to revenue from supplying to the 5,000-store pharmacy chain across China which
Sinopharm is in the process of establishing.
Sunnya Pty Ltd
On 10 October 2018, Jatenergy broadened its in-house product range substantially by purchasing 51% of Sunnya Pty Ltd
(Sunnya), a brand owner and exporter with a portfolio of infant and child health products including NEURIO Lactoferrin Milk
Powder, DHA Algae Oil Softgel, and Probiotics Liquid. Shareholders voted to approve the issue of 35,000,000 shares to the
vendors of Sunnya International Pty Limited to facilitate the acquisition. Refer to Note 23(a)(2) for details.
Sunnya’s NEURIO Lactoferrin has established a strong reputation and sales in both Australian and Chinese markets, selling in
Australian pharmacies, gift shops and Daigou stores. In China, Sunnya products are sold through Woolworths flagship stores,
together with major e-commerce platforms such as JD.com, Kaola.com, Xiaohongshu, Momtime, Hipac Eastran and Bei Dian,
and Sunnya continues to negotiate access to more e-commerce platforms and stores across China. Sunnya products are also
distributed in Korea, Hong Kong and Macau.
In line with its business expansion strategy, Sunnya is expanding the NEURIO product range to appeal to the health
requirements across a wider age group.
NEURIO Lactoferrin proved to be very popular with Chinese consumers, driving both immediate sales and consumer
awareness of the brand, which also includes DHA algae oil, D3 Mushroom Drops and NEURIO Probiotic Drops.
4
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Premium Australian milk
products for all ages are
manufactured in Australia
and distributed into China,
Vietnam and Indonesia.
5
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Operating and Financial Review (continued)
In the December 2018 quarter, Sunnya’s NEURIO Lactoferrin hit the shelves of 3,000 mother and baby stores in China as part
of JAT’s distribution agreement with Cyclone, announced in June 2018. Sales of the product were boosted by promotional
days, where JAT promoted the premium product, NEURIO Formulated Milk Powder with Lactoferrin. These promotional
events generated sales of more than 2 million Chinese Yuan (approx. A$412,000).
In the March 2019 quarter, Sunnya further boosted its sales and distribution channels with several new agreements:
-
-
A five-year agreement with Guangzhou Niurui Trading Co Ltd for Sunnya’s products to be distributed into 150
BABEMAX maternal retail outlets. Under the agreement, Guangzhou Niurui agreed to purchase 1.5 million units of
Sunnya’s Neurio Lactoferrin milk powder, commencing with 100,000 units in the first year.
A one-year agreement to sell through the popular online store, BON BON and its fast-growing subsidiary,
WANWUSTORE.
These new agreements will extend the reach of Sunnya’s popular premium health products into a range of new retail outlets.
During the March quarter, Sunnya developed a premium milk product for adults, called Neurio Middle-Aged Formulated
Nutritional Powder with Lactoferrin. Sales of this product commenced in mid-July 2019.
In June 2019, Sunnya appointed Health One Pty Limited as its exclusive distributor for its products in Australia, Vietnam,
Indonesia and Singapore.
Products to be distributed under the agreement include Neurio Formulated milk powder with lactoferrin, Neurio Formulated
goat milk powder with lactoferrin, Neurio Formulated middle-aged nutritional powder with lactoferrin, Neurio Algae DHA
(Kids) Gel Candy, Neurio Mushroom Powder Gel Candy, Neurio Seaweed Calcium Gel Candy.
Health One works with a range of healthcare suppliers in Australia and overseas in retail, GP and specialist channels to
position their products within retailers, especially pharmacies.
In June 2019, Sunnya announced it had extended its product range to include Australian-made goat milk infant formula to
be sold in China, Hong Kong and Macao.
The development of the Neurio goat milk infant formula builds on the success of the Neurio lactoferrin series products. It is
estimated that a very large proportion of the Chinese population has a certain degree of cow lactose intolerance and cow
milk protein allergy. There is a significantly lower goat milk lactose intolerance to goat milk powder formula in China.
The Neurio goat milk infant formula has been developed to provide for three stages of child development by providing three
separate products, being Neurio Goat Infant Formula, Neurio Goat Follow-on Formula and Neurio Goat Formulated
supplementary food for young children. The Neurio goat milk infant formula products are being manufactured in Australia
to ensure the high quality of the products.
The products will be distributed by BSC Trading, a well-known distributor based in China. The first order of more than
$450,000 was received during the current financial year, together with a security deposit. The first shipment of the products
will occur in August 2019.
Golden Koala Group Pty Ltd
The Company acquired a 51% interest in Golden Koala in March 2018 with the expectation that Golden Koala would continue
to distribute infant milk formula to Chinese consumers. However, registration and licensing of the infant milk product
formulation from the Chinese Food and Drug Administration (CFDA) has been delayed for an uncertain period due to changes
in control policies and trading conditions in China.
Taking a prudent approach and based on the most recent available information, the Board of Directors decided to fully impair
goodwill and tradename totalling to $24,072,574 during the current financial year.
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Jatenergy Limited
Jatenergy Limited
Year ended 30 June 2019
Year ended 30 June 2019
Annual Report
Annual Report
Directors’ Report
Directors’ Report
Matters subsequent to the end of the financial year (continued)
Operating and Financial Review (continued)
General meeting of shareholders
Golden Koala continues to produce English-label infant formula to sell in the Australian and China market through cross-
border channels while other products, such as full-cream high-calcium milk powder, which are not affected by the CFDA
JAT intends to hold a general meeting of shareholders on 24 September 2019 to approve the issue of JAT shares as part
approval. Golden Koala is developing new products and negotiating with a range of other Asian markets to distribute its
consideration for the acquisition of ANMA. The Company will circulate meeting details shortly via the ASX platform.
infant formula.
Other than the above, no other matters have arisen since 30 June 2019 that have significantly affected the Group’s
operations.
Jatpharm Joint Venture
Likely developments and expected results of operations
During the March quarter, Jatenergy became the major shareholder in a joint venture, Jatpharm Pty Ltd, a new company
preparing to establish an Australian manufacturing operation to produce health products, including vitamins and
Additional comments on expected results of certain operations of the Group are included in this annual report under the
supplements, diary product and other over-the-counter products. The company did not trade during the year.
Operating and Financial Review.
Jatpharm intends to seek registration with the Therapeutic Goods Administration in Australia and the relevant regulatory
Environmental regulations
authorities in China. Jatpharm directors are continuing to search for a suitable site in Australia.
The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or
Dividends paid or recommended
of a state or territory in Australia.
No dividends were paid or declared since the start of the period. No recommendation for payment of dividends has been
made (2018: $nil).
Significant changes in state of affairs
Information on directors and company secretaries
Jatenergy’s 51% owned subsidiary Golden Koala Group Pty Ltd has paid Nutritional Choice Australia Pty Ltd (NCA) security
Wilton Yao
deposit of $2,000,000 pursuant to manufacturing agreement along with an advance of $500,000 to fund a CNCA application
MANAGING DIRECTOR – Appointed in November 2018
in relation to the products produced by NCA. NCA has granted Golden Koala a security interest over all its personal property
Wilton Yao has been involved in business broking industry for more than 10 years and specialises in franchise recruitment
to secure its obligations under the manufacturing agreement.
and development. He has worked with a number of franchise firms to develop franchise businesses for both local and
However, NCA has defaulted under the manufacturing agreement and never produced any milk formula for Golden Koala,
international markets. Mr Yao has also been involved in managing several retail and franchise businesses for many years and
resultantly Golden Koala terminated the manufacturing agreement and demanded the repayment of $2.5 million from NCA.
has great experience and knowledge in management and marketing. Mr Yao has strong connections with overseas investors,
As no repayment has been received despite the demand, Golden Koala has appointed a receiver in order to recover the
especially from mainland China and he has worked closely with Australian Government organisations and local companies
amount outstanding.
to promote successful investment projects for Chinese investors. He also provides consulting services to several ASX listed
companies, focusing on project exploring and seeking investment funds from overseas investors.
Golden Koala is seeking other options for the manufacturing of its infant formula products for the Chinese market. At this
point in time Jatenergy is working closely with BDO Australia Pty Limited to recover this $2.5 million and based on the current
Brett Crowley
situation, Management is certain about the recovery of this outstanding deposit and the amount has not been provided for
NON-EXECUTIVE CHAIRMAN – Appointed on 23 August 2018,
or impaired.
COMPANY SECRETARY – Appointed 11 December 2017
There have been no other significant changes in the state of affairs of the Group during the financial year other than those
Mr Crowley is a practicing solicitor and a former Partner of Ernst & Young in Hong Kong and Australia, and of KPMG in Hong
noted in this annual report.
Kong. He established and managed a joint venture company in China. Mr Crowley is an experienced chairman, finance
director and company secretary of ASX-listed companies, and is a former Senior Legal Member of the NSW Civil and
Matters subsequent to the end of the financial year
Administrative Tribunal.
Acquisition of Australian Natural Milk Association Pty Ltd (“ANMA”)
Other current directorships in listed entities of which Mr Crowley hold are Non-Executive Director of both Uscom Limited
(UCM) and Bisan Limited (BSN).
In line with JAT’s strategy to expand its in-house range of dairy, infant formula and other health products, Jatenergy has
agreed to acquire 70% of the issued shares in ANMA a Melbourne-based dairy product canning manufacturer with
Xipeng Li
CNCA/SAMR approval to export infant formula to China. The acquisition allows JAT to take control of the supply chain of one
NON-EXECUTIVE DIRECTOR – Appointed on 15 April 2011
of its major growing products. As a result, JAT will eliminate reliance on contract manufacturers for its milk powder products,
it will increase its profits by capturing the manufacturer’s margin and business risk will be reduced.
Xipeng Li is an experienced executive and has served as a Director and Chief Executive Officer of Pinglin Expressway Limited.
He has also served as Chairman of Pinglin Expressway Limited since May 2003. Prior to that, Mr Li served as Chairman of
The purchase consideration is $14 million, payable by instalments of cash totalling $12 million and, subject to shareholder
HSV, China since May 2001 and as Chairman of Henan Shengrun Real Estate Co Ltd, China, since May 2000. Mr Li graduated
approval, the issue of JAT shares in the amount of $2 million.
from Zhongnan University of Economics and Law and he earned his EMBA at Cheung Kong Graduate School of Business.
The remaining 30% of ANMA will be retained by a current shareholder. None of the vendors are related parties of JAT. Refer
to ASX announcement dated 8 August 2019 for details.
7
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Page 9 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Matters subsequent to the end of the financial year (continued)
ANMA’s manufacturing facility in Derrimut, Victoria
8
Page 8 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Matters subsequent to the end of the financial year (continued)
General meeting of shareholders
JAT intends to hold a general meeting of shareholders on 24 September 2019 to approve the issue of JAT shares as part
consideration for the acquisition of ANMA. The Company will circulate meeting details shortly via the ASX platform.
Other than the above, no other matters have arisen since 30 June 2019 that have significantly affected the Group’s
operations.
Likely developments and expected results of operations
Additional comments on expected results of certain operations of the Group are included in this annual report under the
Operating and Financial Review.
Environmental regulations
The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or
of a state or territory in Australia.
Information on directors and company secretaries
Wilton Yao
MANAGING DIRECTOR – Appointed in November 2018
Wilton Yao has been involved in business broking industry for more than 10 years and specialises in franchise recruitment
and development. He has worked with a number of franchise firms to develop franchise businesses for both local and
international markets. Mr Yao has also been involved in managing several retail and franchise businesses for many years and
has great experience and knowledge in management and marketing. Mr Yao has strong connections with overseas investors,
especially from mainland China and he has worked closely with Australian Government organisations and local companies
to promote successful investment projects for Chinese investors. He also provides consulting services to several ASX listed
companies, focusing on project exploring and seeking investment funds from overseas investors.
Brett Crowley
NON-EXECUTIVE CHAIRMAN – Appointed on 23 August 2018,
COMPANY SECRETARY – Appointed 11 December 2017
Mr Crowley is a practicing solicitor and a former Partner of Ernst & Young in Hong Kong and Australia, and of KPMG in Hong
Kong. He established and managed a joint venture company in China. Mr Crowley is an experienced chairman, finance
director and company secretary of ASX-listed companies, and is a former Senior Legal Member of the NSW Civil and
Administrative Tribunal.
Other current directorships in listed entities of which Mr Crowley hold are Non-Executive Director of both Uscom Limited
(UCM) and Bisan Limited (BSN).
Xipeng Li
NON-EXECUTIVE DIRECTOR – Appointed on 15 April 2011
Xipeng Li is an experienced executive and has served as a Director and Chief Executive Officer of Pinglin Expressway Limited.
He has also served as Chairman of Pinglin Expressway Limited since May 2003. Prior to that, Mr Li served as Chairman of
HSV, China since May 2001 and as Chairman of Henan Shengrun Real Estate Co Ltd, China, since May 2000. Mr Li graduated
from Zhongnan University of Economics and Law and he earned his EMBA at Cheung Kong Graduate School of Business.
9
Page 9 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Information on directors and company secretaries (continued)
Anthony Crimmins
CHAIRMAN – Appointed on 22 May 2012 and resigned on 25 January 2019
Anthony has been actively involved in the business development of numerous start-up companies that have been funded
and listed on the ASX. He was fundamental in identifying projects and businesses that could be successfully listed, particularly
in “breakthrough” businesses. He worked for 6 years as an environmental engineer and business development manager in
Asia, and has a level fluency in Mandarin and an understanding of Asian business practices. He has also previously worked
as a general manager, project manager and in commercialisation of technology-based products and services.
Justyn Stedwell
COMPANY SECRETARY – Appointed on 8 January 2019
Justyn is a professional company secretary consultant, with over 12 years’ experience as a company secretary of ASX-listed
companies in various industries including biotechnology, agriculture, mining and exploration, information technology and
telecommunications. Justyn’s qualifications include a Bachelor of Commerce (Economics and Management) from Monash
University, a Graduate Diploma of Accounting from Deakin University and a Graduate Diploma in Applied Corporate
Governance from the Governance Institute of Australia. He is currently company secretary at several ASX-listed companies.
Board meetings
The number of meetings of the Company’s Board of Directors held during the year ended 30 June 2019 and the numbers of
meetings attended by each Director were:
Anthony Crimmins
Wilton Yao
Brett Crowley
Xipeng Li
A
2
8
6
-
B
2
8
8
8
A
B
Number of meetings attended
Number of meetings held during the time the Director held office
Corporate Governance
The Board of Directors of Jatenergy is responsible for the corporate governance of the Group. The Board guides and monitors
the business and affairs of Jatenergy on behalf of the shareholders by whom they are elected and to whom they are
accountable.
Jatenergy’s corporate governance practices were in place for the year and were compliant with the ASX Governing council’s
best practice recommendations, unless otherwise stated. Information on corporate governance is included in this Annual
Report and further information can be requested from the Company’s corporate office – Suite 303 Office B 521 Toorak Road,
TOORAK VIC 3142.
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Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Risk management
The Company takes a proactive approach to risk management. Management, through the Managing Director, is responsible
for designing, implementing and reporting on the adequacy of the Company’s risk management and internal control system.
Management reports to the Board on the Company’s key risks and the extent to which it believes these risks are being
managed. This is performed informally on a six-monthly basis or more frequently as required by the Board.
The Board is responsible for satisfying itself annually, or more frequently as required, that management has developed and
implemented a sound system of risk management and internal control.
The Company has developed a series of risks which the Company believes to be inherent in the business and industry in
which the Group operates.
These include:
•
•
•
•
•
•
•
•
operating risk;
environmental risk;
branding and reputation risk;
legal, compliance and regulatory risk;
competitor and market risk;
intellectual property risk;
occupational health and safety risk; and
financing and adequacy of capital risk.
These risk areas are provided here to assist investors to understand better the nature of the risks faced by our Group and
the industry in which we operate. This is not necessarily an exhaustive list.
The Board receives regular reports on addressing and management of the key risks associated with the Group’s business.
The Board has the right to appoint external professional advisers to carryout investigations into control mechanisms, and
report their findings and recommendations in relation to control improvements, processes and procedures to the Board.
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Page 11 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Remuneration Report
This report outlines the remuneration arrangements in place for Directors and key management personnel of the Group for
Financial Year 2019. The remuneration report is set out under the following main headings:
A.
B.
C.
D.
E.
Principles used to determine the nature and amount of remuneration;
Details of remuneration;
Service agreements;
Share-based compensation; and
Other Information.
These disclosures have been audited, as required by section 308(3C) of the Corporations Act 2001.
Role of the remuneration committee
Currently the role of the Remuneration Committee is undertaken by the Board given the number of directors and the nature
and size of the Company. Its role is to make recommendations on:
•
•
•
non-executive director fees;
executive remuneration (directors and other executives including key management personnel); and
the over-arching executive remuneration framework and incentive plan policies.
Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-
term interests of the Company. In doing this, the remuneration committee seeks advice from independent remuneration
consultants.
The Corporate Governance Statement provides further information on the role of this committee.
Principles used to determine the nature and amount of remuneration
The performance of the Group depends on the quality of its Directors, Executives and other key management personnel.
To prosper, the Group must attract, motivate and retain highly skilled Directors, Executives and other key management
personnel. To this end, the Group embodies the following principles in its remuneration framework:
•
•
•
•
provide competitive rewards to attract high calibre executives;
link executive rewards to shareholder value;
ensure that a significant portion of executive remuneration is ‘at risk’, and therefore dependent on meeting pre-
determined performance benchmarks; and
establish appropriate performance hurdles in relation to variable executive remuneration.
The Board of Directors assesses the appropriateness of the nature and amount of remuneration of Directors and senior
managers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high-quality Board and executive team. Currently the Board has
determined that Directors and senior managers will be remunerated at fixed rates per month to enable the Group to have
control of its costs and cash flows.
Directors will reintroduce remuneration policies which place a significant portion of executive remuneration ‘at risk’.
Remuneration structure
In accordance with the corporate governance principles and recommendations, the structure of Non-Executive Director
and Executive and key management personnel remuneration is separate and distinct.
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Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Remuneration Report (continued)
Non-executive director remuneration
Objective
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain
Directors of the highest calibre, while incurring costs that are acceptable to shareholders.
Structure
The constitution and the ASX Listing Rules specify that the maximum aggregate remuneration of Non-Executive Directors
shall be determined from time to time by a general meeting of shareholders. At the general meeting of shareholders held
on 17 November 2019, this maximum amount was set at $350,000 per annum. The Group has two Non-Executive Directors.
Mr Xipeng Li received $Nil in remuneration (2018: $Nil) and Brett Crowley received $66,825 in 2019 financial year. Previously
Mr Wilton Yao was considered a non-executive director, but he has taken on the role of Managing Director and is therefore
now an Executive Director.
The amount of aggregate remuneration sought to be approved by shareholders and the fixed fees paid to Directors are
reviewed annually. The Board considers fees paid to Non-Executive Directors of comparable companies when undertaking
the annual review process.
Executive and Key Management Personnel remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Group and so as to:
•
•
•
•
reward executives for group and individual performance against targets set by reference to appropriate
benchmarks;
align the interests of executives with those of shareholders;
link reward with the strategic goals and performance of the Group; and
ensure total remuneration is competitive by market standards.
There are currently no full-time executives of the Company and the remainder of this policy reflects the current policy,
however, when the financial situation of the Company changes in the future and full-time executives are appointed then this
policy will be reviewed and updated to incorporate appropriate market conditions prevailing at that time.
Structure
A policy of the Board is to establish employment or consulting contracts with the chairman, managing director and other
senior executives. At the time of this report there is a consulting agreement with Wilton Yao, while a consulting agreement
with Anthony Crimmins was ended in January 2019.
Remuneration consists of fixed remuneration under a consultancy agreement and long-term equity-based incentives that
are subject to satisfaction of performance conditions. The equity-based incentives are intended to retain key executives and
reward performance against agreed performance objectives.
Fixed remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration that is both appropriate to the position
and competitive in the market.
Fixed remuneration is reviewed annually by the Board and the process consists of a review of group-wide and individual
performance, relevant comparative remuneration in the market, and internal and (where appropriate) external advice on
policies and practices.
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Page 13 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Remuneration Report (continued)
Remuneration Policy and Performance
KPIs are set annually, with a certain level of consultation with Key Management Personnel. The measures are specifically
tailored to the area each individual is involved in and has a level of control over. The KPIs target areas the Board believes
hold greater potential for group expansion and profit, covering financial and non-financial as well as short and long-term
goals. The level set for each KPI is based on budgeted figures and/or operational targets for the Group and respective industry
standards.
Performance in relation to the KPIs is assessed annually, and bonuses may be awarded from time to time depending on the
number and deemed difficulty of the KPIs achieved and overall Group performance. Following the assessment, the KPIs are
reviewed by the Board in light of the desired and actual outcomes, and their efficiency is assessed in relation to the
consolidated entity’s goals and shareholder wealth, before the KPIs are set for the following year.
Voting and comments made at the Company’s last Annual General Meeting
The Remuneration Report was passed unanimously on a show of hands at the 2018 Annual General Meeting. The Company
did not receive any feedback on the Report during this meeting.
Relationship between remuneration policy and Group performance
Information is provided below in relation to revenue, profitability and share price for the past 5 years. The Company does
not currently have any full-time executives, other than Key Management Personnel and therefore there is no comparative
remuneration information and how it relates to the performance of the company. The Managing Director’s contract is a fixed
fee per month and does provide for any incentive performance payments which can be in the form of capital raising and/or
to assist in bringing in a Daigou store or business into Jatenergy.
2019
$
2018
$
2017
$
2016
2015
$
$
Revenue
Net loss
66,444,062
2,316,886
9,826,738
967,052
32,851
(20,492,541)
(1,268,891)
(406,025)
(1,978,817)
(1,127,373)
Share price
0.047
0.060
0.014
0.01
0.019
The Company is currently reviewing its remuneration policies as indicated above.
Incentive performance payments related to capital raising for the current financial year.
14
Page 14 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Remuneration Report (continued)
B – Details of remuneration
The remuneration of the Directors and other key management personnel of Jatenergy are set out below. Key management
personnel for the year ended 30 June 2019 include Anthony Crimmins, Wilton Yao, Brett Crowley and Parag Khandekar.
Contracts between Mr Crimmins and the Group were ended in January 2019 while Mr Yao has contracts currently in place
with the Group.
Cash salary and
fees
Total
Performance
related
Name
2019
Non-executive directors
Xipeng Li
Brett Crowley *
Total non-executive directors
Executive directors
Anthony Crimmins
Wilton Yao
Total executive directors
Other key management personnel
$
-
$
-
60,750
60,750
60,750
60,750
255,000
255,000
440,480
440,480
695,480
695,480
%
-
-
-
-
69%
40%
47%
-
-
Parag Khandekar (appointed on 12 June 2018)
164,249
164,249
Total other key management personnel
164,249
164,249
Total
920,479
920,479
47%
* Payments to Brett Crowley included director fees of $30,000, secretary fees and other reimbursement of $30,750.
Name
2018
Non-executive directors
Xipeng Li
Total non-executive directors
Executives directors
Anthony Crimmins
Wilton Yao
Total executive directors
Total
Cash salary and
fees
Total
Performance
related
$
-
-
$
-
-
208,000
208,000
256,000
256,000
464,000
464,000
464,000
464,000
%
-
-
-
-
-
-
-
15
Page 15 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Remuneration Report (continued)
C.
Service Agreements
The following executives are employed under consulting contracts. The major provisions of the agreements are as follows.
Name
Terms of agreement
Notice period
Anthony
Crimmins
Wilton Yao
Consultant to provide minimum 7
the
days written notice
company.
to
Consultant to provide minimum 7
the
days written notice
company.
to
-
-
-
-
-
-
Contract dated 1 March 2018 for $11,000/month (ex GST)
increased to $14,000/month (ex GST)
subsequently
effective from 1 April 2018 by Board Resolutions, plus
$100,000 (ex GST) for bringing in a business by acquisition
into Jatenergy. The total payable under the contract is
$223,000 (ex GST).
Contract dated 15 October 2018 for $5,000/month (ex
GST) from December 2018. Contract ended in January
2019 due to his resignation. The total paid under the
contract was $10,000 (ex GST).
31 October 2018 consultation fee for $75,000 (ex GST) for
raising share capital of $5 million.
Contract dated 1 March 2018 for $15,000/month (ex
GST), plus $100,000 (ex GST) for bringing in a business by
acquisition into Jatenergy. The total amount payable
under the contract was $160,000 (ex GST).
Contract dated 1 July 2018 for $20,000/month (ex GST)
from 1 July 2018 for 12 months ending 30th June 2019.
Contract was subsequently increased to $25,000/month
(ex GST) in January 2019 for another 12-month period
(ending February 2020). The total amount payable under
the contract was $265,000 (ex GST).
Contract dated 31 October 2018 for $75,000 (ex GST)
Consultation fees for raising share capital of $5 million.
16
Page 16 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Remuneration Report (continued)
D. Shareholding of Key Management Personnel and Directors
Details of ordinary shares held by key management personnel and directors are shown below
Balance at the start
of the year
Changes during the
year
Balance at the end of
the year
Directors and key management
personnel of Jatenergy ordinary
shares
No.
No.
No.
2019
Xipeng Li
Anthony Crimmins
Wilton Yao
Brett Crowley
2018
Xipeng Li
Anthony Crimmins
Wilton Yao
Brett Crowley
81,188,999
39,478,582
18,811,111
1,112,111
13,411,222
38,367,568
17,700,000
1,112,111
(1,111,111)
(6,354,224)
1,000,000
-
67,777,777
1,111,014
1,111,111
-
80,077,888
33,124,358
19,811,111
1,112,111
81,188,999
39,478,582
18,811,111
1,112,111
Director and executive options
No options were granted as remuneration in the financial year ended 30 June 2019, or the year ended 30 June 2018.
There were no options held by key management personnel in 2019 (2018: nil).
E.
Other Information
There were no loans to Directors or executives during or since the end of the year or during the prior year.
END OF REMUNERATION REPORT
17
Page 17 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Insurance and Indemnification of officers and auditors
During the financial year, the Company paid premiums to insure the Directors and officers of the Company. The liabilities
insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers
in their capacity of officers of the Company and any other payments arising from liabilities incurred by the officers in
connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of
duty by the officers or the improper use by the officers of their position or of information to gain advantage for them or
someone else or to cause detriment to the Company.
The Company entered into Deeds of Indemnity, Insurance and Access with each of the Directors and the Company Secretary.
Each deed provides officers with the following:
•
•
•
a right to access certain Board papers of the Group during the period of their tenure and for a period of seven years
after that tenure ends;
subject to the Corporations Act an indemnity in respect of liability to persons other than the Company and its
related companies that they may incur while acting in their capacity as an officer of the Company or a related
company, except where that liability involves a lack of good faith and for defending certain legal proceedings; and
the requirement that the Company maintain appropriate Directors’ and officers’ insurance for the officer.
No liability has arisen under these indemnities as at the date of this report. No insurance or indemnification has been given
to the auditors.
Options on issue
There were 86,666,667 options issued based on approval granted by shareholders during the general meeting held on 21
December 2018. The options are exercisable at 6c each and expire on 30 November 2019.
Of the 86,666,667 options, 11,616,666 options were exercised during the year ended 30 June 2019 resulting in 11,616,666
shares being issued at 6c each.
There remain 75,050,001 unexercised options as at 30 June 2019.
No further shares have been issued since year end. No amounts are unpaid on any of the shares.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on
behalf of the Group for all or part of those proceedings.
There are no other proceedings have been brought or intervened in on behalf of the Group with leave of the Court under
section 237 of the Corporations Act 2001.
Future Developments
Any future developments required to be disclosed as per ASX Listings Rules have either been disclosed previously or are
included in commentary or notes to this report. Any future items requiring to be disclosed will be disclosed according to
recent listing rules.
Environmental Issues
The Group is not subject to any environmental laws in the Commonwealth or States or Territories of Australia.
18
Page 18 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors’ Report
Non-audit services
The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Group and/or the Company are important.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are detailed
in Note 18.
The Board has considered the position and in accordance with the advice received from the audit committee is satisfied that
the provision of the non-audit service is compatible with the general standard of independence for auditors imposed by the
Corporations Act 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.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 20.
This report is made in accordance with a resolution of the Board of Directors:
Managing Director
Wilton Yao
Dated this 27 day of August 2019
19
Page 19 of 76
www.lnpaudit.com ABN 65 155 188 837
L14 309 Kent St Sydney NSW 2000
+61 2 9290 8515
L24 570 Bourke Street Melbourne VIC 3000
+61 3 8658 5928
L1 180 Main Street Kangaroo Point QLD 4169
+61 7 3391 6322
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF JATENERGY LIMITED AND ITS
CONTROLLED ENTITIES
As lead auditor of Jatenergy Limited and its controlled entities for the year ended 30 June 2019, I
declare that, to the best of my knowledge and belief, there have been:
1.
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
2.
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Jatenergy Limited and its controlled entities during the financial year.
LNP Audit and Assurance Pty Ltd
Anthony Rose
Director
Melbourne, 27 August 2019
Liability limited by a scheme approved under Professional Standards Legislation
20
20
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2019
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Revenue
Cost of sales
Gross Profit
Other income
Administration
Advertising & marketing
Consultancy & professional fees
Depreciation & amortisation
Directors’ fees
Employee benefits
Finance costs
Impairment loss
Other expenses
Loss before income tax
Income tax expense
Total comprehensive loss for the year
Loss attributable to:
- Members of parent entity
- Non-controlling interest
Loss per share for loss attributable to the ordinary equity
holders of the company:
Basic loss per share
Diluted loss per share
Note
4
4
10
5
25
25
2019
$
66,444,062
(59,696,079)
6,747,983
3,955,906
(1,561,390)
(604,063)
(625,025)
(518,352)
(756,230)
(1,295,372)
(523,048)
(24,072,574)
(582,151)
(19,834,316)
(658,225)
(20,492,541)
2018
$
2,316,886
(2,232,836)
84,050
86,817
(314,521)
(83,534)
(335,000)
-
(464,000)
(157,402)
(634)
-
(84,667)
(1,268,891)
-
(1,268,891)
(9,796,969) (1,221,111)
(10,695,572)
(47,780)
(20,492,541)
(1,268,891)
Cents
(1.35)
(1.35)
Cents
(0.34)
(0.34)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
21
Page 21 of 76
Consolidated Statement of Financial Position
As at 30 June 2019
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Financial Assets
Inventory
Total current assets
Non-current assets
Plant and equipment
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Tax liabilities
Provisions
Total current liabilities
Non-Current liabilities
Provisions
Borrowings
Deferred Tax Liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Accumulated losses
Total Parent Entity
Non-controlling interests
Total equity
Note
2019
$
2018
$
6
7
8
9
10
11
13
12
12
13
14
7,844,671
4,744,319
-
3,267,750
15,856,740
4,218,478
2,966,354
400,000
-
7,584,832
63,379
28,799,052
28,862,431
44,719,171
-
24,072,574
24,072,574
31,657,406
1,121,600
1,675,806
919,384
5,305,470
9,022,260
231,712
-
-
-
231,712
-
2,527,374
1,028,100
3,555,474
12,577,734
32,141,437
2,568,933
1,274,000
408,000
4,250,933
4,482,645
27,174,761
15
57,556,005
(40,267,593)
45,216,805
(30,470,624)
17,288,412
14,853,025
32,141,437
14,746,181
12,428,580
27,174,761
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
22
Page 22 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Contributed
Equity
$
Non-
Controlling
Interest
$
Accumulated
Losses
Total
$
$
Balance at 1 July 2017
28,497,444
880,720
(29,249,513)
128,651
Loss for the year
Total comprehensive income
Issue of Capital
Non-Controlling Interests
-
-
(47,780)
(1,221,111)
(1,268,891)
(47,780)
(1,221,111)
(1,268,891)
16,719,361
-
-
11,595,640
-
-
-
16,719,361
11,595,640
28,315,001
Transaction with owners
16,719,361
11,595,640
Balance at 30 June 2018
45,216,805
12,428,580
(30,470,624)
27,174,761
Balance at 1 July 2018
45,216,805
12,428,580
(30,470,624)
27,174,761
Loss for the year
Total comprehensive income
Issue of Capital
Non-Controlling Interests
-
-
(10,695,572)
(9,796,969)
(20,492,541)
(10,695,572)
(9,796,969)
(20,492,541)
12,339,200
-
-
13,120,017
-
-
-
12,339,200
13,120,017
25,459,217
Transaction with owners
12,339,200
13,120,017
Balance at 30 June 2019
57,556,005
14,853,025
(40,267,593)
32,141,437
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
23
Page 23 of 76
Consolidated Statement of Cashflows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income tax paid
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Note
2019
$
2018
$
72,242,117
2,191,565
(74,635,172)
(3,667,957)
258,255
(523,048)
(146,841)
3,175
(634)
-
Net cash outflow from operating activities
24
(2,804,689)
(1,473,851)
Cash flows from investing activities
Deposits paid to NCA
Payments for the acquisition of controlled entities
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Proceeds from issues of shares
Proceeds from issue of convertible notes
Net cash inflow from financing activities
-
(2,500,000)
(4,600,000)
(2,400,000)
(4,600,000)
(4,900,000)
2,841,682
1,274,000
8,189,200
3,030,212
-
6,189,149
11,030,882
10,493,361
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
3,626,193
4,119,510
4,218,478
98,968
Cash and cash equivalents at end of year
6
7,844,671
4,218,478
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
24
Page 24 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
Corporate Information
Jatenergy is a public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal
place of business is Suite 303 Office B, 521 Toorak Road, Toorak VIC 3142.
This financial report covers the consolidated entity consisting of Jatenergy and its controlled entities.
General Information and Statement of compliance
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. The Group is a for-profit entity for financial reporting
purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial
statements are presented below and have been consistently applied unless stated otherwise.
The financial report has been prepared on an accruals basis.
The financial report is presented in Australian currency. The financial report was authorised for issue by the Directors on 26
August 2019. The Company has the power to amend and reissue the financial report.
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases,
financial reports and other information are available on our website: www.jatenergy.com.
1 Summary of significant accounting policies
(a)
Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Jatenergy) and all of
the subsidiaries. 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 22.
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.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”.
The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to
a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’
proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed
their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown
separately within the equity section of the statement of financial position and statement of profit or loss and comprehensive
income.
(b)
Comparatives
Comparatives are consistent with previous year unless stated.
25
Page 25 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1 Summary of significant accounting policies (continued)
(c)
Revenue and other income
For comparative year
Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits
associated with the transaction will flow to the Company and specific criteria relating to the type of revenue as noted below,
has been satisfied.
Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts
and rebates.
Sale of goods
Revenue is recognised on transfer of goods to the customer as this is deemed to be the point in time when risks and rewards
are transferred and there is no longer any ownership or effective control over the goods.
Revenue from contracts with customers
For current year
The core principle of AASB 15 is that revenue is recognised on a basis that reflects the transfer of promised goods or services
to customers at an amount that reflects the consideration the Group expects to receive in exchange for those goods or services.
Revenue is recognised by applying a five-step model as follows:
Identifying the contract with a customer;
Identifying the performance obligations;
1.
2.
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when/as performance obligation(s) are satisfied.
Specific revenue streams
The Group recognises revenue from the following major sources:
•
•
sale of formulated milk powder with lactoferrin to wholesale and retail customers; and
sale of vitamins, cosmetic products, dairy products and other health-related consumer goods to wholesale and retail
customers.
Sale of goods
Revenue from sales is recognised when control of the goods has transferred, being the point in time when the goods have
been shipped to the customer. Revenue is only recognised where it is highly probable that a significant reversal of revenue will
not occur and control gets completely passed on to the wholesaler or to the ultimate customers.
The Group’s sales are accompanied by an obligation that the Group will provide a refund where the goods are deemed to be
faulty. This obligation is accounted for in accordance with the requirements of AASB 137 Provisions, Contingent Liabilities and
Contingent Assets however based on history, the level of refunds for faulty products has been minimal and therefore there is
no provision at 30 June 2019.
The general credit terms vary between 2-4 weeks from the date of despatch of goods and hence there is no financing element
to the Group’s sales.
On delivery of the goods to the wholesaler (i.e. when they are shipped and received by wholesaler) the Group recognises a
receivable as this represents the point in time at which the Group’s right to consideration becomes unconditional as an invoice
is issued immediately post shipment.
26
Page 26 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1 Summary of significant accounting policies (continued)
(c)
Revenue and other income (continued)
Statement of financial position balances relating to revenue recognition
Costs to obtain a contract
Costs incurred that would have been incurred regardless of whether the contract was won are expensed, unless those costs
are explicitly chargeable to the customer in any case (whether or not the contract is won).
Other income
Other income is recognised on an accruals basis when the Company is entitled to it.
(d)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the tax
rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the financial statements and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences
arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did
not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the group is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
(e)
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
expenses in the periods in which they are incurred.
(f)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors.
27
Page 27 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1
(g)
Summary of significant accounting policies (continued)
Business combinations
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 entities or
businesses under common control. The business combination will be accounted for from the date that control is obtained,
whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised
(subject to certain limited exemptions).
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 in each reporting period to fair value, recognising any change to fair value in profits or loss, unless the
change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial
instrument, are recognised as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Management uses independent external valuations to assist in determining the fair values of the various elements of each
business combination. Particularly, the fair value of separable intangibles, provisions for contingent consideration relating to
earn out liabilities, and the resulting goodwill arising from acquisitions.
(h)
(i)
Intangible assets
Goodwill
Goodwill on acquisitions of subsidiaries (note 23) is included in intangible assets. Goodwill is not amortised but it is tested for
impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which the
goodwill arose.
(ii)
Tradename and customer relationships
Separately acquired tradename and customer relationships are shown at historical cost. Tradename and customer
relationships acquired in a business combination are recognised at fair value at the acquisition date. They have a finite useful
life and are subsequently carried at cost less accumulated amortisation and impairment losses.
(i)
Impairment of non-financial assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources of information. If such an indication exists, an
impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s
fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its
recoverable amount is expensed to the statement of profit or loss. Where it is not possible to estimate the recoverable amount
of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill.
28
Page 28 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1
(j)
Summary of significant accounting policies (continued)
Employee benefits
Short-term employee benefits
Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related service. Examples of such benefits include wages
and salaries. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities
are settled.
(k)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value, and bank overdrafts.
(l)
Financial instruments
Financial instruments are recognised initially on the date that the Group becomes party to the contractual provisions of the
instrument. On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for
instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).
Financial assets
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on
the classification of the financial assets.
Classification
On initial recognition, the Group classifies its financial assets at amortised cost. Financial assets are not reclassified subsequent
to their initial recognition unless the Group changes its business model for managing financial assets.
Assets measured at amortised cost are financial assets where the business model is to hold assets to collect contractual cash
flows and the contractual terms give rise on specified dates to cash flows are solely payments of principal and interest on the
principal amount outstanding. The Group's financial assets measured at amortised cost comprise trade and other receivables
and cash and cash equivalents in the statement of financial position. Subsequent to initial recognition, these assets are carried
at amortised cost using the effective interest rate method less provision for impairment.
Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Gain or loss on derecognition
is recognised in profit or loss.
Impairment of financial assets
Impairment of financial assets is recognised on an expected credit loss (ECL) basis for financial assets measured at amortised
cost. When determining whether the credit risk of a financial assets has increased significant since initial recognition and when
estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost
or effort. This includes both quantitative and qualitative information and analysis based on the Group's historical experience
and informed credit assessment and including forward looking information.
Credit losses are measured as the present value of the difference between the cash flows due to the Group in accordance with
the contract and the cash flows expected to be received. This is applied using a probability weighted approach.
Impairment of trade and other receivables have been determined using the simplified approach in AASB 9 which uses an
estimation of lifetime expected credit losses. The Group has determined the probability of non-payment of the receivable and
contract asset and multiplied this by the amount of the expected loss arising from default.
29
Page 29 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1
(l)
Summary of significant accounting policies (continued)
Financial instruments (Continued)
Financial liabilities
The Group measures all financial liabilities initially at fair value less transaction costs, subsequently financial liabilities are
measured at amortised cost using the effective interest rate method. The financial liabilities of the Group comprise trade and
other payables, borrowings and finance lease liabilities.
Financial assets
The company classifies its financial assets in the following categories: financial assets at fair value through profit or loss, and
loans and receivables. The classification depends on the purpose for which the investments were acquired. Management
determines the classification of its investments at initial recognition.
Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All
interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included
in the income statement line items "interest paid". Financial liabilities are classified as either financial liabilities ‘at fair value
through profit or loss’ or other financial liabilities depending on the purpose for which the liability was acquired.
The Group‘s financial liabilities include trade and other payables, borrowings and finance lease liabilities, which are measured
at amortised cost using the effective interest rate method. Trade and other payables represent liabilities for goods and services
provided to the Group prior to the year end and which are unpaid. These amounts are unsecured and are usually paid within
30 to 60 days of recognition.
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that the Group commits itself to either the purchase or sale of
the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction
costs.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date
which are classified as non-current assets. They are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement
within 30 to 90 days from date of invoice.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with
the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired. The
difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value
of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
Subsequent Measurement
Loans and receivables are carried at amortised cost using the effective interest method or cost.
30
Page 30 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1
(l)
Summary of significant accounting policies (continued)
Financial instruments (continued)
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets
is impaired. Impairment losses are recognised as profit or loss. Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance
account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor,
the probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable maybe impaired. The amount of the impairment allowance is the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective
interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The
amount of any impairment loss is recognised in profit or loss within administration expenses. When a trade receivable for
which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are credited against other income in profit
or loss.
(m)
Inventories
Inventories are stated at the lower of cost or net realisable value. Cost includes all expenses directly attributable to the
manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs
of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated
selling price in the ordinary course of business less any applicable selling expenses.
(n)
Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation on assets is calculated using the straight-line method.
The depreciation rates used for each class of depreciable assets are:
• Motor vehicle 25%
(o)
(i)
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollars, which is Group’s functional and presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement
of profit or loss.
31
Page 31 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1
(p)
Summary of significant accounting policies (continued)
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
(q)
Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of a past event, it is probably
that an outflow of economic resources will be required from the Group and the amounts can be estimated reliably.
Provision for earnout liabilities are calculated based on the conditions stated within the sale agreement for both Green Forest
and Sunnya. Provisions are discounted to their present values, where the time value of money is material.
(r)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are
deducted against the share capital account. When any entity within the Group purchases the Company’s ordinary shares, the
consideration paid including any directly attributable incremental cost is presented as a component within equity attributable
to the Company’s equity holders, until they are cancelled, sold or reissued.
(s)
Earnings per shares
The calculation of basic EPS has been based on the profit/loss attributable to ordinary shareholders and weighted-average
number of ordinary shares outstanding (see note 25 for details).
(t)
Change in accounting policies
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (“AASB”) that are mandatory for the current reporting period.
(i)
AASB 15: Revenue
AASB 15 introduces a changed process for revenue recognition based on identifying when performance
obligations are met. Revenue from sale of goods are recognised by the company when the goods are transferred
to the customer, namely from the time the customer gains controls of the goods. Revenue from services is
recognised at the point the services are provided. Where the company’s contracts comprise a variety of
performance obligations including, but not limited to, equipment delivery, training, and installation, under AASB
15, the company must evaluate the separability of the promised goods or services based on whether they are
‘distinct’. A promised good or service is ‘distinct’ if both:
▪
▪
the customer benefits from the item either on its own or together with other readily available
resources; and
it is ‘separately identifiable’ (i.e. the company does not provide a significant service integrating,
modifying or customising it).
While this represents significant new guidance, the implementation of this new guidance did not have a
significant impact on the timing or amount of revenue recognised by the company during the year. Application
of AASB 15 did not impact the way in which the company accounts for revenue from sale of goods or provision
of services.
32
Page 32 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1
(t)
Summary of significant accounting policies (continued)
Change in accounting policies (continued)
(ii)
AASB 9: Financial Instruments
AASB 9 sets out new requirements for the classification and measurement of financial assets and liabilities and
include forward-looking expected loss impairment model. This standard replaces AASB 139 Financial
Instruments: Recognition and Measurement. The adoption of AASB 9 did not have a significant effect on the
Group’s accounting policy relating to financial liabilities. Trade receivables is the only financial asset that has
been impacted by the adoption of the standard, specifically the measurement basis for the impairment of trade
receivables which is now based on expected credit loss (ECL). When determining the credit risk for trade
receivables, the Group uses quantitative and qualitative information and analysis, based on the Group’s
historical experience and informed credit assessment including forward looking information.
The company applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade
receivables as these items do not have a significant financing component. In measuring the expected credit
losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk
characteristics. They have been grouped based on the days past due and also according to the geographical
location of customers which is predominantly Australia. The expected loss rates are based on the payment
profile for sales over the past 36 months before 30 June 2019 as well as the corresponding historical credit losses
during that period. The historical rates are adjusted to reflect current and forwarding looking economic factors
affecting the customer’s ability to settle the amount outstanding. The company has identified the borrowing
rate for small to large business and the unemployment rate to be the most relevant factors and accordingly
adjusts historical loss rates for expected changes with reference to these factors. However, given the short
period exposed to credit risk, the impact of these economic factors has not been considered significant within
the reporting period. Trade receivables are written off when there is no reasonable expectation of recovery.
Failure to make payments and to communicate alternative payment arrangements may be considered
indicators of no reasonable expectation of recovery. Given the prudent approach to estimating losses on
receivables in accordance with the previous standards, the company did not need to adjust the estimated
recoverability of trade receivables on transition to AASB 9.
The adoption of these Accounting Standards and Interoperations did not have any significant impact on the financial
performance or position of Group.
33
Page 33 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
1
(u)
Summary of significant accounting policies (continued)
New accounting standards and Australian accounting interpretations
The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for
future reporting periods. The Group has decided not to early adopt these Standards. The following table summarises those
future requirements, and their impact on the Group where the standard is relevant.
Standard Name
Effective Date
Requirements
Impact
AASB 16 leases
1 January 2019
AASB 16 will cause the majority of leases to
be brought onto the statement of financial
position.
There are limited exceptions relating to
short-term leases and low value assets which
may remain off-balance sheet.
The calculation of the lease liability will take
into account appropriate discount rates,
assumptions about lease term and increases
in lease payments.
A corresponding right to use asset will be
recognised which will be amortised over the
term of the lease.
Rent expense will no longer be shown, the
profit and loss impact of the leases will be
through amortisation and interest charges.
The entity currently has $781,876
worth of operating leases at year-
end. Management has performed
the assessment and expects that as
at 1 July 2019, right to use assets of
$661,447,
a
corresponding liability of $661,447
will be brought to the balance
sheet.
together with
Interest and amortisation expense
will increase, and rental expense
will decrease.
The Group is applying the modified
Retrospective
and
therefore will
restate
comparatives.
approach
not
The low value exception will be
used for all leases of laptops and
mobile phones.
2 Critical Accounting Estimates and Judgements
The Group makes estimates, judgements and assumptions concerning the future, which by definition, seldom equal the actual
results.
The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities in the future as a result of not being correct in are set out below.
i. Going concern basis of accounting
The financial statements have been prepared on a going concern basis. The Group incurred a loss after tax in the year from
continuing operations of $20,492,541 (2018 loss: $1,268,891) and has negative cash flows from operating activities for the year
of $2,804,689 (2018: $1,473,851). The Company raised equity of $8,189,200 from external investors throughout the year and
at 30 June 2019 had cash at bank of $7,844,671 (2018: $4,218,478). The company announced on 8 August 2019 that it proposes
to acquire 70% of the issued shares in Australian Natural Milk Association Pty Ltd (ANMA) which is expected to be settled by
way of $12 million in cash, and $2 million through issue of shares in the parent company. Therefore, the company may be
required to raise further capital to facilitate this acquisition. These conditions along with other matters indicate that a material
uncertainty exists that may cast significant doubt in relation to the Group’s ability to continue as a going concern. No
adjustments have been made to the financial report relating to the recoverability or classification of the recorded asset
amounts and classification of liabilities that may be necessary should the Group not continue as a going concern.
34
Page 34 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
2 Critical Accounting Estimates and Judgements (continued)
ii. Recoverability and value of Nutritional Choice Australia Pty Ltd (NCA) security deposit and advance of
$2,500,000 (refer note 7)
(cid:3)
Jatenergy’s 51% owned subsidiary Golden Koala Group Pty Ltd has paid Nutritional Choice Australia Pty Ltd (NCA) a security
deposit of $2,000,000 pursuant to manufacturing agreement along with an advance of $500,000 to fund a CNCA application in
relation to the products produced by NCA. NCA has granted Golden Koala a security interest over all its personal property to
secure its obligations under the manufacturing agreement.
However, NCA has defaulted under the manufacturing agreement and never produced any milk formula for Golden Koala.
Golden Koala terminated the manufacturing agreement and demanded the repayment of $2.5 million from NCA. As no
repayment had been received despite the demand, Golden Koala appointed a receiver in order to recover the amount
outstanding.
Golden Koala is seeking other options for the manufacturing of its infant formula products for the Chinese market. At this point
in time Jatenergy is working closely with BDO Australia Pty Limited to recover this $2.5 million and based on the current
situation. Management is certain about the recovery of this outstanding deposit and the amount has not been provided for or
impaired.
iii. Goodwill arising from the acquisition of Golden Koala Group Pty Ltd, Green Forest International Pty Ltd,
and Sunnya Pty Ltd (refer note 22)
Golden Koala Group Pty Ltd
Jatenergy acquired 51% of the issued capital of Golden Koala in March 2018 and recognised goodwill of $22,712,574, and
tradenames of $1,360,000. The expectation was that Golden Koala would continue to distribute infant milk formula to Chinese
consumers. However, registration and licensing of the infant milk product formulation from the Chinese Food and Drug
Administration (CFDA) has been delayed for an uncertain period due to changes in control policies and trading conditions in
China.
Accordingly, taking a prudent approach based on the most recent information, the Directors have fully impaired the goodwill
and the tradename due to the delay in production and sales to external customers and uncertainty in obtaining the CFDA
licence in the immediate future.
Green Forest Pty Ltd
On 11 August 2018, Jatenergy acquired 50% of the issued capital of Green Forest International Pty Ltd. Goodwill of $13,984,244
was recognised and the directors believe that as at 30 June 2019, there is no indication of impairment because sales from
existing customers have increased in the current financial year.
Sunnya Pty Ltd
On 10 October 2018, Jatenergy acquired 51% of the issued capital of Sunnya Pty Ltd (Sunnya). Goodwill of $11,902,161 was
recognised on the acquisition date based on valuations performed by an independent third party commissioned by
management. The directors believe that as at 30 June 2019, there is no indication of impairment as the company has entered
several new agreements with Chinese distributors which expected to contribute to its projected growth in sales.
35
Page 35 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
2
iv.
Critical Accounting Estimates and Judgements (continued)
Tradenames arising from the acquisition of Golden Koala Group Pty Ltd and Sunnya Pty Ltd (refer note 10
and 22)
Golden Koala Group Pty Ltd
A tradename of $1,360,000 was acquired in March 2018. Due to the factors stated above in Note 2 (iii), the Directors have fully
impaired the tradename at year-end.
Sunnya Pty Ltd
Tradenames of $597,000 were recognised as a result of the acquisition. Management has considered the useful life of the
brand based on customers and sales to date and present value estimates of future sales and considers 10 years to be a
reasonable estimate. Key assumptions used were:
•
a revenue growth rate at 1.5%, reflecting the expected growth for the product lines and the geographical segments
(Australian and Chinese Markets). This rate has been determined taking into consideration historical growth of the
segments combined with the expected industry outlook in both China and Australia;
a discount rate of 15%. The discount rate reflects assumptions relating to market risk and specific risk factors of each
business unit including the uncertainty relating to the successful registration and licensing by Chinese Food and Drug
Administration;
stable profit margins, based on past and recent experience in both markets, which management believes is the best
available input for forecasting and budgeting; and
No expected efficiency improvements have been taken into account and prices and wages reflect publicly available
forecasts of inflation for the industry.
•
•
•
v.
Customer Relationships arising from the acquisition of Green Forest International Pty Ltd and Sunnya Pty
Ltd (refer note 10 and 22)
Green Forest Pty Ltd
Customer relationships of $1,900,000 have been recognised based on the current sales from existing customers, the directors
estimate these have an effective useful life of 5 years.
Sunnya Pty Ltd
Customer relationships of $930,000 have been recognised based on the current sales and market demand, the directors
estimate these have an effective useful life of 5 years.
(vi) Golden Koala contingent consideration provision
During the period, the provision for contingent consideration of $2,568,933 relating to the earnout from the acquisition in the
prior period of Golden Koala has been written back and recognised as other income as it did not satisfy the conditions specified
in the buy and sell agreement. This did not affect the value of goodwill recognised on this acquisition as the goodwill amount
has been fully impaired during the year.
36
Page 36 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
3 Segment information
The Group has identified its geographic segments based on the internal reports that are reviewed and used by the Executive
Director (chief operating decision maker) in assessing performance and determining the allocation of resources. Geographic
segments are determined based on location of its markets and customers which are Australia, China and New Zealand.
Australia
$
China
$
New Zealand
$
Total
$
34,890,836
29,467,859
2,085,367
66,444,062
(57,129,631)
(3,491,475)
(1,061,650)
(61,682,756)
(523,048)
(23,664,574)
(1,066,225)
-
-
-
-
(523,048)
-
(23,664,574)
-
(1,066,225)
Revenue
Expenses
Finance cost
Impairment
Income tax expense
Profit/(loss) after income tax
(47,492,642)
25,976,384
1,023,717
(20,492,541)
Total assets
Total liabilities
Net assets
30,230,271
14,488,900
-
44,719,171
(12,303,601)
(269,984)
(4,149)
(12,577,734)
17,926,670
14,218,916
(4,149)
32,141,437
37
Page 37 of 76
Notes to Financial Statements
For the year ended 30 June 2019
4 Revenue
Revenue
Trading Income
Total Revenue
Other Income
Interest
Rental income
Earnout liability written back
Miscellaneous Income
Total Other Income
(cid:3)5
Income tax expense
(a) Numerical reconciliation of income
tax expense to prima facie tax payable
Loss before income tax expense
Tax (benefits) at the Australian tax
rate of 30%* (2018: 27.5%)
Tax effect of amounts which are not
deductible in calculating taxable
income:
-
Tax effect of
-
non-deductible expenses
-
changes in recognised
temporary differences
Adjusted income tax
Tax losses not brought to account
Income tax expense
Jatenergy Limited
Year ended 30 June 2019
Annual Report
2019
$
2018
$
66,444,062
2,381,886
66,444,062
2,381,886
258,255
-
2,552,637
1,145,014
3,955,906
2019
$
3,175
60,027
-
23,615
86,817
2018
$
(19,834,316)
(1,268,891)
(5,827,895)
(348,945)
6,951,519
20,478
27,973
1,151,597
(85,372)
658,225
-
(328,467)
328,467
-
*
The Group has a turnover more than $60 million for the year ended 30 June 2019. It is over the base rate entity
threshold and therefore, tax rate of the Group increased to 30% in 2019 due to increase in turnover of the Group
The Parent company has unrecognised available tax losses of $3,391,496 as at 30 June 2019. These tax losses have not
been recognised due to uncertainty of their recoverability in future periods.
Tax consolidation legislation
Jatenergy has not formed a tax consolidated group.
38
Page 38 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
2018
$
7,844,671
4,218,478
7,844,671
4,218,478
Consolidated Entity
2019
$
2018
$
1,362,859
2,500,000
495,493
385,967
214,229
2,500,000
37,479
214,646
4,744,319
2,966,354
Notes to Financial Statements
For the year ended 30 June 2018
6 Cash and cash equivalents
Cash at bank and in hand
Total
7 Trade and other receivables
Current
Trade receivables
Deposit paid to Nutritional Choice Australia (refer to note 2(ii))
Prepayments
Other receivables
Total
Impairment
Trade receivables
2019
2018
<30 days
<60 days
<90 days
>90 days
Total
$
891,006
212,099
$
448,324
-
$
22,557
2,130
$
972
-
$
1,362,859
214,229
Standard customer credit terms are generally less than 30 days depending on the customer. The amount of trade receivables
past due but not impaired at 30 June 2019 was $471,853 (2018: $2,130).
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use
of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristics and the days past due. The expected credit loss rate has been
estimated at 0.1% and has been determined based on historic experience of sales and bad debts.
NCA deposits have been considered in detail for impairment, refer note 2(ii).
Other receivables have been assessed and no impairment is considered necessary.
39
Page 39 of 76
Notes to Financial Statements
For the year ended 30 June 2018
8
Financial Assets
Deposit paid
Total
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
-
-
2018
$
400,000
400,000
The deposit paid related to the acquisition of Sunnya Pty Ltd. This acquisition took place on 11 October 2018.
9
Inventory
Finished goods
Raw materials
Packaging materials
Total
10
Intangible assets
Consolidated Entity
2019
$
3,100,652
138,000
29,098
3,267,750
2018
$
-
-
-
-
-
Consolidated Entity
2018
$
22,712,574
2019
$
25,886,406
Goodwill (a)
Tradenames (b)
Accumulated amortisation
Impairment loss
Carrying Value
Customer relationship (c)
Accumulated amortisation
Carrying Value
Total
1,957,000
(43,017)
(1,360,000)
553,983
2,830,000
(471,337)
2,358,663
1,360,000
-
-
1,360,000
-
-
-
28,799,052
24,072,574
40
Page 40 of 76
Notes to Financial Statements
For the year ended 30 June 2018
10
Intangible assets (continued)
Movement in carrying amount of intangible assets
(a) Goodwill
Balance as at 1 July
Acquired (refer note 22(a))
Impairment loss – Golden Koala
Carrying Value
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2018
$
-
2019
$
22,712,574
25,886,406
(22,712,574)
25,886,406
22,712,574
-
22,712,574
(b) Tradenames
Consolidated Entity
2018
$
-
1,360,000
Balance as at 1 July
Acquired (refer note 22(a))
Impairment loss – Golden Koala
Amortisation
2019
$
1,360,000
597,000
(1,360,000)
(43,017)
Carrying Value
553,983
-
1,360,000
(c) Customer Relationships
Consolidated Entity
2018
$
-
-
-
-
2019
$
-
2,830,000
(471,337)
2,358,663
Balance as at 1 July
Acquired (refer note 22(a))
Amortisation
Carrying Value
The total impairment charge to profit in the period comprises;
Golden Koala Goodwill
Golden Koala Tradenames
11
Trade and other payables
Trade payables
Sundry accruals and other payables
Total
22,712,574
1,360,000
24,072,574
-
-
-
Consolidated Entity
2019
$
209,476
912,124
2018
$
211,964
19,748
1,121,600
231,712
Trade payables are non-interest bearing. Their fair value approximates their carrying amount.
41
Page 41 of 76
Notes to Financial Statements
For the year ended 30 June 2019
12
Provisions
Current
Earnout liabilities
Provision for annual leave
Total
Non-Current
Earnout liabilities*
Total
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
5,250,000
55,470
5,305,470
2018
$
-
-
-
-
-
2,568,933
2,568,933
* The Earnout liability provision was written back because the conditions specified in the buy and sale agreement were not
met and the amount did not become payable.
13
Borrowings
Current
Loans from shareholders
Loans from Directors
Other
Total
Non-Current
Loans from shareholders
Other
Total
Consolidated Entity
2019
$
1,328,482
338,269
9,055
1,675,806
2018
$
-
-
-
-
2,460,509
1,274,000
66,865
-
2,527,374
1,274,000
These borrowings are due in more than a 12-month period. There is no interest payable on these borrowings.
14
Deferred Tax Liabilities
Balance as at 1 July
Acquired through business combination (note 22)
Write back
Total
Consolidated Entity
2019
$
408,000
1,028,100
(408,000)
1,028,100
2018
$
-
408,000
-
408,000
42
Page 42 of 76
Notes to Financial Statements
For the year ended 30 June 2019
15
Contributed equity
Share capital
Ordinary Shares
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
2018
$
798,486,181 (2018: 588,816,182) Fully paid shares
57,556,005
45,216,805
Total Share Capital
57,556,005
45,216,805
Movements in ordinary share capital
Opening balance
Share issues during the year:
Sep 2017 (Share placement)
Nov 2017 (Share placement)
Dec 2017 (Share placement)
Dec 2017 (Share purchase plan)*
Jan 2018 (Share placement)
Apr 2018 (Acquisition of Golden Koala)
Apr 2018 (Conversion of loan notes)
May 2018 (Conversion of loan notes)
May 2018 (Issue of shares to investors)
May 2018 (Issue of shares to directors)
May 2018 (Issue of shares per prospectus)
Aug 2018 (Acquisition of Green Forest)
Aug 2018 (Share placement)
Aug 2018 (Share placement)
Oct 2018 (Share placement)
Oct 2018 (Acquisition of Sunnya)
Oct 2018 (Share placement)
Dec 2018 (Share placement)
Feb 2019 (Conversion of options)
Closing balance
2019
$
45,216,805
2018
$
28,497,444
2019
Number
588,816,182
2018
Number
219,161,351
120,000
384,500
644,450
542,572
1,000,000
7,500,000
1,129,800
5,060,149
37,800
300,000
90
2,680,000
960,000
300,000
5,000
1,470,000
1,027,200
5,200,000
697,000
57,556,005 45,216,805
40,000,000
10,633,333
3,000,000
333,333
35,000,000
22,420,000
86,666,667
11,616,666
798,486,181
10,000,000
28,799,998
42,963,333
43,533,287
66,666,666
83,333,333
32,280,000
56,223,881
2,520,000
3,333,333
1,000
588,816,182
* 7,361,900 ordinary fully paid shares (“Error Shares”) were issued to shareholders on 11 December 2017 due to an error. No
payment was received from shareholders of Error Shares. Jatenergy Limited is in the process of undertaking a buyback of the
Error Shares pursuant to section 257A of the Corporations Act. The buyback agreements, which are subject to shareholder
approval, are in the process of being completed with the holders of the Error Shares. Once these agreements have been
completed, the buyback will be completed for no consideration payable to the holders of the Error Shares.
Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital. There were no changes in the Group’s approach to capital risk management during the year.
Neither the Group nor any of its subsidiaries are subject to externally imposed capital requirements.
43
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Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
16
Financial risk management
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management
framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limited and controls, and to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Group’s activities expose it to a limited number of financial risks as described below. The Group’s overall risk management
program seeks to minimise potential adverse effects on the financial performance of the Group. To date, the Group has not
had the need to utilise derivative financial instruments such as foreign exchange contracts or interest rate swaps to manage
any risk exposure identified. The Group holds the following financial instruments.
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total
Financial liabilities
Trade and other payables
Borrowings (current and non-current)
Total
Note
6
7
8
11
13
2019
$
7,844,671
4,744,319
-
2018
$
4,218,478
2,966,354
400,000
12,588,990
7,584,832
1,121,600
4,203,180
5,324,780
231,712
1,274,000
1,505,712
Specific financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk, credit risk
and liquidity risk.
(a)
Interest rate risk
The Group’s main interest exposure arises from cash at bank and bank term deposits. The bank term deposit has an interest
rate which is fixed for the term of the investment and the bank accounts have a floating interest rate.
As at the year end the groups cash was all held at bank at call, there were no term deposits.
(b)
Foreign exchange risk
Foreign exchange risk arises from commercial transactions and assets and liabilities held in a currency that is not the entity’s
functional currency, which is Australian dollars. The risk is measured using sensitivity analysis and cash flow forecasting.
The Group has one USD foreign currency bank account and the balance of this account at 30 June 2019 was $486,972 (2018:
Nil).
44
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Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
16
Financial risk management (continued)
(c)
Credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, deposits and banks as well credit
exposure including outstanding receivables and committed transactions.
(i)
Risk management
Credit risk is managed on a group basis. For banks and financial institutions, only independently rated parties with a minimum
rating of ‘A’ are accepted.
Management assesses the credit quality of the customer, taking into account its financial position, past experience and other
factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The
compliance with credit limits by wholesale customers is regularly monitored by line management.
Sales to retail customers are settled in cash or using major credit cards. There are no significant concentrations of credit risk,
whether through exposure to individual customers, specific industry sectors and/or regions.
Impairment of financial assets
(ii)
The group mainly has one type of financial assets that are subject to the expected credit loss model, being trade and other
receivables (see note 7).
While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss
was immaterial.
In respect of the group, credit risk relates to loans with subsidiary. In order to achieve stated corporate objectives, the parent
entity provides financial support to subsidiary but only to the level which the Board considers necessary to achieve these
objectives and meets agreed conditions. Any loans to subsidiaries considered to be unrecoverable have been provided for.
Trade receivables
Impairment of trade receivables have been determined using the simplified approach in AASB 9 which uses an estimation of
lifetime expected credit losses. The Group has determined the probability of non-payment of the receivable and contract asset
and multiplied this by the amount of the expected loss arising from default.
The expected loss rates are based on the payment profiles of sales over a period of 12 month before 30 June 2019 and the
corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
The amount of the impairment is recorded in a separate allowance account with the loss being recognised in finance expense.
Once the receivable is determined to be uncollectable then the gross carrying amount is written off against the associated
allowance. Where the Group renegotiates the terms of trade receivables due from certain customers, the new expected
cashflow are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised
in profit or loss.
45
Page 45 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
16
(d)
Financial risk management (continued)
Liquidity risk
The Group maintains sufficient liquidity by holding cash in readily accessible accounts. The Group manages liquidity risk by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The Group has no access to borrowing facilities at the reporting date. The Group’s financial assets of $12,588,990 have a
maturity within 12 months of 30 June 2019 and financial liabilities of $5,324,780 have a maturity as the following:
Trade and other payables (note 11)
Borrowings (note 13)
(e)
Fair value
Due in
1 year
$
1,121,600
1,675,806
2,797,406
Due in
1 to 5 year
$
-
2,527,374
2,527,374
Total
$
1,121,600
4,203,180
5,324,780
The carrying amount of financial assets and liabilities recorded in the financial statements represents their respective net fair
values unless otherwise noted, determined in accordance with the accounting policies disclosed in the summary of significant
accounting policies.
(f)
Sensitivity analysis
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk and foreign currency risk. This
demonstrates the effect on the current year results and equity which could result from a change in these risks.
Interest rate sensitivity analysis
The Group as 30 June 2019 held cash in low interest-bearing bank accounts. The Directors do not consider that any reasonably
possible movement in interest rates would cause a material effect on Group’s performance or equity.
Foreign currency risk sensitivity analysis
The Group sells goods overseas and is affected by movement in the US dollar exchange rate. All purchases are performed in
Australia in AUD. To mitigate foreign currency risk for US dollar transactions the Group has a US dollar bank account. Payments
made from this US dollar account are from foreign customer deposits or transfers of cash at a time the exchange rate is deemed
favourable. The Directors do not consider that any reasonably possible movement in foreign currency rates would cause a
material effect on Group’s performance or equity given transactions are predominantly carried out in AUD.
17
Key management personnel
Directors and Key Management Personnel of Jatenergy (refer to Remuneration report for details) during the financial year
were paid the following amounts.
Short term benefits*
Total
Consolidated Entity
2019
$
920,479
920,479
2018
$
464,000
464,000
*These amounts include fees and benefits paid to the Chairman, executive director and non-executive directors as well as all
salary, paid leave benefits, short term incentive payments awarded to each KMP. There were no transactions with key
management personnel during the financial year ended 30 June 2019 or 30 June 2018 other than noted here, in the
remuneration report, and Note 21.
46
Page 46 of 76
Notes to Financial Statements
For the year ended 30 June 2019
18
Auditors remuneration
During the year the following fees were paid or payable for services
provided by the auditor and a non-related audit firm. No other services
were provided by the auditor.
LNP Audit and Assurance Pty Ltd
Hall Chadwick
Total remuneration - audit or review of financial reports
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
70,000
42,682
112,682
2018
$
-
26,098
26,098
Fair value measurement
19
The Group measures Goodwill, Customer relationships, and tradenames at fair value on a recurring basis:
Assets and liabilities measured at fair value are assigned to a level in the fair value hierarchy as follows:
Level 1
Level 2
Level 3
Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access
at the measurement date.
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Unobservable inputs for the asset or liability.
All the assets held at fair value by the group, being Goodwill, Customer relationships and trademarks are classified as level 3.
The value of these assets is disclosed in note 10.
Contingencies and Commitments
20
There are no contingent liabilities as at 30 June 2019 (2018: none).
Operating lease commitments
Commitments for minimum lease payments in relation to operating
leases contracted for the reporting date but not recognised as
liabilities, payable:
Within one year
Over one year
Consolidated Entity
2019
$
2018
$
262,414
519,462
781,876
-
-
-
The lease commitments are rental leases over the Sydney/Melbourne premises of the Group. Lease payments are increased
on an annual basis to reflect market rentals.
Finance lease commitments total $75,920 (2018 $nil) and are due in less than 5 years.
47
Page 47 of 76
Notes to Financial Statements
For the year ended 30 June 2019
21
Related party transactions
(a) Payable to or receivable from related parties at year-end.
Directors/secretary & consulting fees (inc GST) payable to J&Y Group Pty Ltd, a
company controlled by Wilton Yao.
Fees invoiced to Jatenergy Limited receivable from Abundant Natural Health Pty
Ltd, a company controlled by Anthony Crimmins, a director at year- end.
Fees invoiced to Jatenergy Limited payable from Abundant Produced Limited, a
company controlled by Anthony Crimmins, a director at year- end.
Fees invoiced to Jatenergy Limited payable from Abundant Produced Limited, a
company controlled by Anthony Crimmins, a director at year- end.
(b) Transactions occurring during the year:
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
28,380
-
-
-
2018
$
-
1,065
44,334
15,618
Directors & consulting fees (inc GST) paid to Top Cat Consulting Services Pty Ltd
for the provision of the services of Anthony Crimmins.
280,500
228,800
Directors & consulting fees (inc GST) paid/payable to J&Y Group Pty Ltd for the
provision of the services of Wilton Yao.
484,528
281,600
Directors/secretary & consulting fees (inc GST) paid to BTC Lawyers for the
provision of the services of Brett Crowley.
Ecomag Limited, a company in which Anthony Crimmins is a director, paid rent
to Jatenergy during the period.
Ecomag Limited, a company in which Anthony Crimmins is a director, received
rent from Jatenergy during the period.
Top Cat consulting Services Pty Ltd, a company controlled by Anthony Crimmins,
received payment for expenses incurred during the period.
Abundant Produce Limited a company of which Anthony Crimmins is a director,
paid rent to Jatenergy during the period.
66,825
-
33,387
36,379
-
-
-
75,201
4,236
10,650
Abundant Produce Limited a company of which Anthony Crimmins is a director,
paid Jatenergy for staff expenses during the period.
16,346
-
Abundant Seeds Pty Ltd, a company of which Anthony Crimmins is a director,
paid rent to Jatenergy Limited during the period.
Abundant Natural Health Pty Ltd, a company of which Anthony Crimmins is a
director paid rent to Jatenergy Limited during the period.
Abundant Natural Health Pty Ltd, a company of which Anthony Crimmins is a
director, received payments from Jatenergy Limited for expenses.
Jatenergy Limited paid Abundant Natural Health Pty Ltd, a company of which
Anthony Crimmins is a director during the period.
J&Y Group Pty Ltd, a company controlled by Wilton Yao, received payment for
administration and accounting services provided during the period.
TAT Commercial Property Pty Ltd, a company of which Anthony Crimmins is a
director was paid rent by Jatenergy Limited.
-
-
13,708
11,715
5,000
-
-
165,220
8,230
9,761
-
71,670
Jatenergy Limited is the ultimate parent entity within the Group. Interests in subsidiaries are set out in note 22.
48
Page 48 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
22
Controlled entities
Subsidiaries of
Jatenergy which are consolidated
Country of
incorporation /
Place of Business
Percentage Owned (%)*
Percentage Owned by
Non-Controlling Interest
(%)*
Golden Koala Group Pty Limited
Jatenergy Developments Pty Limited
Green Forest International Pty
Sunnya Pty Ltd
Jatpharm Pty Ltd
Australia
Australia
Australia
Australia
Australia
* Percentage of voting power is in proportion to ownership.
Jatenergy Developments Pty Ltd, was deregistered on 3 January 2019.
2019
2018
2019
2018
%
51
-
50
51
55
%
51
75
-
-
-
%
49
-
50
49
45
%
49
25
-
-
-
Jatpharm Pty Ltd didn’t carry out any business activity during year ended 30 June 2019.
(a) Acquisition of entities
(1) A 50% ownership interest in Green Forest International Pty Ltd was acquired during the year.
Purchase consideration
Consisting of
- Cash consideration
- 40,000,000 Shares in Jatenergy
- Contingent consideration
Total Consideration
Assets and liabilities held at acquisition date
Net assets
Deferred tax liabilities
Net Identifiable Assets Acquired
Customer relationships
Goodwill on consolidation
Non-controlling equity interest in acquisition
Net Assets Acquired
(cid:3)
(cid:3)
(cid:3)
(cid:3)
2019
$
2,000,000
2,680,000
2,977,172
7,657,172
100
(570,000)
(569,900)
1,900,000
13,984,244
(7,657,172)
7,657,172
49
Page 49 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
22 Controlled entities (continued)
(2) A 51% ownership interest in Sunnya Pty Ltd was acquired during the year. Details of the transactions are:
Purchase consideration
Consisting of
- Cash consideration
- 35,000,000 Shares in Jatenergy
- Contingent consideration
Total Consideration
Assets and liabilities held at acquisition date
Net assets
Deferred tax liabilities
Net Identifiable Assets Acquired
Customer relationships
Tradenames
Goodwill & tradenames on consolidation
Non-controlling equity interest in acquisition
Net Assets Acquired
(b) Fair value of net identifiable assets
2019
$
3,000,000
1,470,000
2,256,532
6,726,532
218,218
(458,100)
(239,882)
930,000
597,000
11,902,161
(6,462,747)
6,726,532
The fair value of net identifiable assets acquired relating to Green Forest and Sunnya have been determined based on a final
valuation report received from an independent valuation specialist.
At 31 December 2018, the fair values of the assets and liabilities acquired are provisional and pending final valuations. The
valuations have been completed and the balances for the acquisition have been revised in accordance with applicable Australian
Accounting Standards. The measurement of identifiable intangible assets acquired in a business combination is highly subjective
and there are a range of possible values that could be attributed for initial recognition. The Group uses the skills and experience
of valuation specialists in establishing an initial range within which the fair value is to be recognised. Judgement is then applied
in selecting the value to be recognised on the balance sheet. Judgement is also applied in determining the useful life of the
intangible assets which impacts directly on the amortisation charges to be incurred following an acquisition. Goodwill represents
the excess of the purchase consideration over the fair value of identifiable net assets acquired at the acquisition date. None of
the goodwill recognised is expected to be deductible for income tax purposes.
50
Page 50 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Notes to Financial Statements
For the year ended 30 June 2019
22 Controlled entities (continued)
(c) Cash outflow
During the year, the Group obtained control of Green Forest International Pty Ltd and Sunnya Pty Ltd.
Cash
Inventory
Trade and other receivables
Customer relationships
Trade and other payables
Loans payables
Total purchase price paid in cash
Less: Cash of subsidiary acquired
Deposit paid in June 2018
Cash paid to obtain control net of cash acquired
Green Forest
$
309,029
846,033
-
2,000,000
-
(846,033)
2,309,029
(309,029)
-
2,000,000
Sunnya
$
-
245,458
330,906
-
(358,146)
-
218,218
-
400,000
2,600,000
Total
$
309,029
1,091,491
330,906
2,000,000
(358,146)
(846,033)
2,527,247
(309,029)
400,000
4,600,000
23 Events occurring after the reporting date
In line with JAT’s strategy to expand its in-house range of dairy, infant formula and other health products, Jatenergy has agreed
to acquire 70% of the issued shares in ANMA a Melbourne-based dairy product canning manufacturer with CNCA/SAMR
approval to export infant formula to China. The acquisition allows JAT to take control of the supply chain of one of its major
growing products. As a result, JAT will eliminate reliance on contract manufacturers for its milk powder products, it will increase
its profits by capturing the manufacturer’s margin and business risk will be reduced.
The purchase consideration is $14 million, payable by instalments of cash totalling $12 million and, subject to shareholder
approval, the issue of JAT shares in the amount of $2 million.
The remaining 30% of ANMA will be retained by a current shareholder. None of the vendors are related parties of JAT. Refer
to ASX announcement dated 8 August 2019 for details.
General meeting of shareholders
JAT intends to hold a general meeting of shareholders on 24 September 2019 to approve the issue of JAT shares as part
consideration for the acquisition of ANMA. The Company will circulate meeting details shortly via the ASX platform.
Other than the above, no other matters have arisen since 30 June 2019 that have significantly affected the Group’s operations.
51
Page 51 of 76
Notes to Financial Statements
For the year ended 30 June 2019
24 Reconciliation of loss after income tax to net cash outflow from operating activities
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
2018
$
Loss for the year including income tax
(20,492,541)
(1,268,891)
Depreciation
Impairment loss
Other income
Change in operating assets and liabilities:
(Increase)/decrease in inventories
518,352
24,072,574
(3,722,101)
(3,267,750)
-
-
-
-
(Increase)/decrease in trade and other receivables
(1,777,965)
(383,559)
Increase/(decrease) in trade and other payables
Increase/(decrease) in income tax liability
Increase/(decrease) in provision for employee
889,888
919,384
55,470
178,599
-
-
Net cash outflow from operating activities
(2,804,689)
(1,473,851)
25 Loss per share
(a)
Basic and diluted loss per share
Basic loss attributable to the ordinary equity holders of the
Company
Diluted loss attributable to the ordinary equity holders of the
Company
Consolidated Entity
2018
cents
(0.34)
(0.34)
2019
cents
(1.35)
(1.35)
(b)
Loss used in calculating basic and diluted loss per share
(9,796,969)
(1,221,111)
(c) Weighted average number of shares used as the
denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share.
Weighted average number of ordinary shares used as the
denominator in calculating diluted earnings per share.
725,777,040
358,083,512
725,777,040
358,083,512
(cid:3)
(cid:3)
52
Page 52 of 76
Notes to Financial Statements
For the year ended 30 June 2019
26 Jatenergy Limited - Parent Company Information
Parent Entity
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Total equity
Financial performance
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive income
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Consolidated Entity
2019
$
2018
$
5,526,180
28,913,148
34,439,328
5,831,797
-
5,831,797
5,907,909
12,468,932
18,376,841
643,381
2,568,933
3,212,314
57,556,004
45,216,805
(28,948,473)
(30,052,278)
28,607,531
15,164,527
1,103,804
(1,160,605)
-
-
1,103,804
(1,160,605)
53
Page 53 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Directors Declaration
In accordance with a resolution of the directors of Jatenergy Limited, the directors of the company declare that:
1.
the financial statements and notes, as set out on pages 21 to 53 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; and
b. give a true and fair view of the financial position as at 30 June 2019 and of the performance
for the year ended on that date of the consolidated group;
2.
3.
in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay
its debts as and when they become due and payable; and
the directors have been given the declarations required by s 295A of the Corporations Act 2001 from
the Managing Director and Chief Financial Officer.
Managing Director
Wilton Yao
Dated this 27 day of August 2019
54
Page 54 of 76
www.lnpaudit.com ABN 65 155 188 837
L14 309 Kent St Sydney NSW 2000
+61 2 9290 8515
L24 570 Bourke Street Melbourne VIC 3000
+61 3 8658 5928
INDEPENDENT AUDIT REPORT
TO THE MEMBERS OF JATENERGY LIMITED AND ITS CONTROLLED ENTITIES
L1 180 Main Street Kangaroo Point QLD 4169
+61 7 3391 6322
Opinion
We have audited the financial report of Jatenergy Limited and its controlled entities (“the Group”), which
comprises the consolidated statement of financial position as at 30 June 2019, 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 Company.
In our opinion, the accompanying financial report of Jatenergy Limited and its controlled entities is in
accordance with the Corporations Act 2001, including:
a) Giving a true and fair view of the Group’s consolidated financial position as at 30 June 2019 and of its
consolidated financial performance for the year ended on that date; and
b) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the company in accordance with the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia; and
we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial report of the current year. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on
these matters. For each matter below, our description of how our audit addressed the matter is provided in
that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of the
financial statements. The results of our audit procedures, including the procedures performed to address the
matters below, provide the basis for our audit opinion on the accompanying financial report.
55
Liability limited by a scheme approved under Professional Standards Legislation
55
INDEPENDENT AUDIT REPORT (CONTINUED)
Key Audit Matter
How our audit addressed the matter
Our procedures included:
• Verification of the contractual arrangements in
relation to the payment of security deposit of
$2,000,000 to secure manufacture of milk
formula and advance of $500,000 to fund a CNCA
application.
• Enquiry over and assessment of the Director’s
and management’s considerations in deciding to
appoint a receiver to recover the security deposit
of $2,000,000 and advance of $500,000.
• Review of the documentation appointing the
receiver.
• Considering the information available in relation
to the receivership and other correspondence
relating to the same.
• Evaluating the directors and management’s
assessment of the recoverability of security
deposit of $2,000,000 and advance of $500,000
and management’s strategy to do so.
• Enquiring with Jatenergy’s solicitor in relation to
these amounts.
• Assessing the disclosures made in the financial
statements.
Recoverability and disclosure in relation to security deposit
of $2,000,000 and advance of $500,000, due from
Nutritional Choice Australia Pty Ltd (NCA) an entity which
has been placed into receivership during the current
financial year
Refer Note 7 – Trade and other receivables
During 2018 financial year, Golden Koala Pty Ltd (Golden
Koala) paid to NCA a security deposit of $2,000,000
pursuant
to secure
to manufacturing agreement
manufacture of milk formula along with an advance of
$500,000 to fund a CNCA application. On 12 June 2019
Golden Koala appointed a receiver to recover the security
deposit of $2,000,000 along with the advance of
$500,000 from NCA. This action was taken by Golden
Koala after NCA failed to repay these amounts to Golden
Koala when requested to do so.
Full recovery of these amounts will be dependent on the
outcome of the receivership or other arrangements
which management may consider, which are dependent
on uncertain future events.
Management has assessed the recoverability of these
amounts and consider that they will be recovered in full.
Management considers that information relating to the
proceedings that are in progress is commercially sensitive
and disclosure would result in unreasonable prejudice to
the company.
Management has made no disclosures relating to the
timing and the amount of the recovery of these amounts
in the financial report.
This is a key audit matter due to the judgement involved
in considering the outcome of uncertain future events,
and the disclosures to be made, in relation to the
recovery of these amounts.
56
56
INDEPENDENT AUDIT REPORT (CONTINUED)
Key Audit Matter
How our audit addressed the matter
Assessment of carrying value of intangible assets including
goodwill – Golden Koala Group Pty Ltd (‘Golden Koala’)
Refer Note 10 – Intangible assets
Golden Koala was acquired in March 2018 and Goodwill
of $22,712,574 and tradenames of $1,360,000 were
recognised as a result.
Management assessed the recoverable amount of the
goodwill and separable intangibles at 30 June 2019 using
discounted
incorporate
cashflow models which
significant judgments in respect of assumptions such as
discount rates as well as economic assumptions such as
including the delay in
growth rates. Other factors
obtaining the CFDA
in China have been
license
considered. As a result, the goodwill and tradename have
been fully impaired, and an amount of $24,072,574 has
been recorded in the statement of profit or loss and other
comprehensive income.
This a key audit matter due to the judgement involved in
forecasting future cash flows and the selection of
assumptions.
Assessment of carrying value of intangible assets including
goodwill – Green Forest International Pty Ltd (‘Green
Forest’) and Sunnya Pty Ltd (‘Sunnya’)
Refer Note 10 – Intangible assets
Included in the consolidated statement of financial
position at 30 June 2019 are goodwill and separable
intangibles (tradename and customer relationships)
relating to the acquisitions of Green Forest International
Pty Ltd (‘Green Forest’) and Sunnya Pty Ltd (‘Sunnya’)
amounting to $28,799,052.
Our procedures included, among others:
•
Evaluating the “value in use” discounted cash
flow models developed by management for
each cash generating unit to assess the
recoverable amount of goodwill and separable
intangibles, including critically assessing the
following assumptions:
the discount rate;
the revenue growth rate;
a)
b)
c) other growth rate assumptions; and
d)
the timing and amounts of forecasted
cash flows.
•
in
Consideration of the assumptions used
comparison with publicly available data, and
independent valuer’s reports as provided by
Management.
• Assessing company’s impairment testing model
by subjecting the key assumptions to sensitivity
analysis and stress test.
• Assessing company’s estimates on the useful life
of the tradename.
• Assessing the appropriateness of the relevant
disclosures made in the financial statements.
Our procedures included, among others:
•
Evaluating the “value in use” discounted cash
flow models developed by management for
each cash generating unit to assess the
recoverable amount of goodwill and separable
intangibles, including critically assessing the
following assumptions:
the discount rate;
the revenue growth rate;
e)
f)
g) other growth rate assumptions; and
h)
the timing and amounts of forecasted
cash flows.
Management assessed the recoverable amount of
goodwill and separable intangibles relating to these two
cash generating units as at 30 June 2019 separately, using
discounted
incorporate
cashflow models which
significant judgments in respect of assumptions such as
discount rates as well as economic assumptions such as
growth rates. Based on management’s assessment,
Goodwill and separable intangibles relating to both
entities were not impaired.
This a key audit matter due to the judgement involved in
forecasting future cash flows and the selection of
assumptions.
•
•
Testing on a sample basis the mathematical
accuracy of forecasting of the cash flows of the
cash generating units.
Consideration of the assumptions used
in
comparison with publicly available data, and
independent valuer’s reports as provided by
Management.
• Assessing company’s impairment testing model
by subjecting the key assumptions to sensitivity
analysis and stress test.
• Assessing company’s estimates on the useful life
of the tradename and customer relation.
• Assessing the appropriateness of the relevant
disclosures made in the financial statements.
57
57
INDEPENDENT AUDIT REPORT (CONTINUED)
Key Audit Matter
Acquisitions
Refer Note 22(a)
During the year, the Group made two acquisitions being
50% of Green Forest International Pty Ltd for total
purchase consideration of $7,657,172, and 51% of
Sunnya Pty Ltd for a total purchase consideration of
$6,655,965.
judgement
is required to
Significant
identify and
determine the value of separable intangible assets
acquired, the contingent consideration that may be
payable and the resultant goodwill arising on the
acquisitions.
The separable intangible assets are material to the Group
and the Group has engaged an independent valuer to
assist them in determining the appropriate assets and
their values.
The accounting for the two acquisitions has been finalised
and independent valuation report has been received at
year-end.
This is a key audit matter due to the size of the
acquisitions and the significant judgement involved in
accounting for these transactions.
Assessment of useful
relations and tradename)
lives of
intangibles (customer
Note 2(iv) - Critical Accounting Estimates and Judgements
to $597,000 have been
Tradenames amounting
recognised upon acquisition of Sunnya during the year.
Management has considered the effective useful life of
the brand based on customers and sales to date and
present value estimates of future sales, and has assessed
10 years to be a reasonable estimate of the useful life of
this asset.
Customer relationships amounting to $2,830,000 have
been recognised upon the acquisition of Sunnya and
Management has
Green Forest during the year.
considered the effective useful
life of customer
relationships based on the current sales and market
demand and has assessed 5 years as a reasonable
estimated useful life.
•
•
This a key matter due to the judgement involved in
forecasting future cash flows and the selection of
assumptions.
58
58
How our audit addressed the matter
Our procedures included, amongst others:
•
Reviewing the purchase contracts to identify
factors impacting upon the determination of
includes
total purchase consideration. This
considering the terms and conditions relating to
any future payments to the former shareholders
of the acquired entities under the relevant
purchase contracts.
Reviewing the independent valuer’s reports.
Reviewing the tangible assets acquired and
liabilities assumed.
Reviewing the Group’s calculation of the total
consideration paid and earnout
liability
calculation expected to be paid.
Consideration of whether the recognition and
measurement of
and
disclosures are accordance with Australian
Accounting standards.
Consideration of the disclosures made in the
financial statements.
liabilities
assets,
•
•
•
•
•
Our procedures included, among others:
•
Evaluating the “value in use” discounted cash
flow models developed by management for
each cash generating unit to assess the
recoverable amounts of separable intangibles,
including critically assessing the
following
assumptions:
the discount rate;
the revenue growth rate;
i)
j)
k) other growth rate assumptions; and
l)
the timing and amounts of forecasted
cash flows.
Testing on a sample basis the mathematical
accuracy of forecasting of the cash flows of the
cash generating units.
Consideration of the assumptions used
in
comparison with publicly available data, and
independent valuer’s reports as provided by
Management.
• Assessing company’s estimates on the useful life
of the tradename and customer relation.
• Assessing the appropriateness of the relevant
disclosures made in the financial statements.
INDEPENDENT AUDIT REPORT (CONTINUED)
Material Uncertainty Relating to Going Concern
Without modification to our opinion expressed above attention is drawn to Note 2(i) of the financial report,
which sets out the basis on which the directors believe that the Group will be able to continue as a going
concern. The Group incurred a loss after tax in the year from continuing operations of $20,492,541 (2018 loss:
$1,268,891) and has negative cash flows from operating activities for the year of $2,804,689 (2018:
$1,473,851). The Company raised equity of $8,189,200 from external investors throughout the year and at 30
June 2019 had cash at bank of $7,844,671 (2018: $4,218,478). The company announced on 8 August 2019 that
it proposes to acquire 70% of the issued shares in Australian Natural Milk Association Pty Ltd (ANMA) which is
expected to be settled by way of $12 million in cash, and $2 million through issue of shares in the parent
company. Therefore, the company may be required to raise further capital to facilitate this acquisition. These
conditions along with other matters set out in Note 2(i) indicate that a material uncertainty exists that may cast
significant doubt in relation to the Group’s ability to continue as a going concern.
No adjustments have been made to the financial report relating to the recoverability or classification of the
recorded asset amounts and classification of liabilities that may be necessary should the Group not continue as
a going concern.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2019 but does not include the financial report and the
auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based upon the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibilities
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
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or cease operations, or have no realistic
alternative but to do so.
59
59
INDEPENDENT AUDIT REPORT (CONTINUED)
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting in the
preparation of the financial report. We also conclude, based on the audit evidence obtained, whether
a material uncertainty exists related to events and conditions that may cast significant doubt on the
entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in the auditor’s report to the disclosures in the financial report about the
material uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial
report. However, future events or conditions may cause an entity to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
• We communicate with the Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
60
60
INDEPENDENT AUDIT REPORT (CONTINUED)
• We are also required to provide the Directors with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
•
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 12 to 17 of the Directors' Report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of Jatenergy Limited and its controlled entities for the year ended 30
June 2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
The engagement partner on the audit resulting in this independent auditor’s report is Anthony Rose.
LNP Audit and Assurance Pty Ltd
Anthony Rose
Director
Melbourne, 27 August 2019
61
61
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Corporate Governance Statement
The Company’s compliance and departures from the Recommendations as at the date of this announcement
are set out below:
Item ASX Best Practice Recommendation
Comment
Implemented
Principle 1: Lay a solid foundation for management and oversight
1.1
A listed entity should disclose:
The Role of the Board
Yes
respective
the
(a)
responsibilities of
management; and
roles
and
its board and
(b) those matters expressly reserved
to the board and those delegated to
management.
1.2
A listed entity should:
(a) undertake appropriate checks
before appointing a person, or
putting forward to security holders a
candidate for election, as a director;
and
(b) provide security holders with all
material information in its possession
relevant to a decision on whether or
not to elect or re-elect a director.
The Board is responsible for, and has the
authority to determine, all matters relating
to strategic direction, policies, practices,
management goals and the operations of
the Company.
The Role of Management
It is the role of senior management to
manage the Company in accordance with
the direction and delegations of the Board
and the responsibility of the Board to
oversee the activities of management in
carrying out these delegated duties.
The Company undertakes checks on any
person who is being considered as a director.
These checks may
include character,
experience, education and financial history
and background.
Yes
The Company provides material information
following the guidance contained in the ASX
Corporate Governance Principles and
Recommendations (3rd Edition) about any
candidate to enable security holders to
make
informed decisions regarding the
candidate’s election or re-election.
1.3
A listed entity should have a written
agreement with each director and
senior executive setting out the
terms of their appointment.
The Company requires that a detailed letter
of appointment or employment contract is
agreed with each director and employee.
Yes
The Company’s officers and management
have all entered into service contracts which
outline the responsibilities of each of the
Company’s officers and of management
personnel when performing their roles for
the Company.
62
Page 62 of 76
Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
1.4
The company secretary of a listed
entity should be accountable directly
to the board, through the chair, on all
matters to do with the proper
functioning of the board.
The Company Secretary has a direct
reporting line to the Board, through the
Chair, on all matters to do with the proper
functioning of the board.
Yes
The Board values diversity and recognises
the benefits it can bring to the organisation's
ability to achieve its goals.
Partial
The Board has established a Diversity Policy
and will endeavour, where appropriate and
practicable, to comply with this policy. The
the
Diversity Policy
Company’s website.
is disclosed on
The Board is currently satisfied with the
level of diversity within the organisation
and no measurable objectives have been
set in regard to gender diversity.
The Company currently has 3 directors on
the Board who are male, the Company’s only
senior executive officer (CEO Wilton Yao) is
a male.
1.5
A listed entity should:
(a) Have a diversity policy which
includes requirements for the board
or a relevant committee of the board
to set measurable objectives for
achieving gender diversity and to
assess annually both the objectives
and the entity’s progress in achieving
them;
(b) Disclose that policy or a summary
of it; and
(c) Disclose as at the end of each
reporting period the measurable
objectives
for achieving gender
diversity set by the board or a
relevant committee of the board in
accordance with the entity’s diversity
policy and
its progress towards
achieving them, and either:
(1) The respective proportions of
men and women on the board, in
senior executive positions and
across the whole organisation
(including how the entity has
defined “senior executive” for
these purposes); or
(2) if the entity is a “relevant
employer” under the Workplace
Gender Equality Act, the entity’s
most recent “Gender Equality
Indicators”, as defined
in and
published under that Act.
63
Page 63 of 76
Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
1.6
A listed entity should:
evaluating
(a) have and disclose a process for
periodically
the
its
performance of
committees and individual directors;
and
the board,
Yes
Due to the current size of the Board and the
Company, a Remuneration and Nomination
Committee has not been established and the
Board is currently responsible for evaluating
its performance, and the performance of its
committees and individual directors.
in relation to each
(b) disclose,
a
reporting
performance
was
undertaken in the reporting period in
accordance with that process.
period, whether
evaluation
There were considerable Board changes
over the previous year, therefore, a review
of the current Board has not been conducted
but it is intended a Board review will occur
this year.
1.7
A listed entity should:
(a) have and disclose a process for
periodically
the
performance of its senior executives;
and
evaluating
in relation to each
(b) disclose,
a
reporting
performance
was
undertaken in the reporting period in
accordance with that process.
period, whether
evaluation
Yes
The Board is responsible for evaluating the
performance of the senior executives. The
evaluation procedure for senior executives
includes a review and assessment of
performance against key performance
indicators.
No review was conducted in the period as
the Company’s only senior executive Wilton
Yao was appointed during the year.
64
Page 64 of 76
Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
Yes
The Board is responsible for the nomination
and selection of Directors. Given the size of
the Company and
its
operations, the Board does not believe it to
be appropriate to establish a nomination
committee at this time.
the nature of
the Board,
composition of
its
The
performance and the appointment of new
Directors will be reviewed periodically by the
Board, taking advice from external advisors
where considered appropriate.
Principle 2: Structure the board to add value
2.1
The board of a listed entity should:
(a) have a nomination committee
which:
(1) has at least three members, a
majority of whom are independent
directors; and
(2) is chaired by an independent
director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee;
and
(5) as at the end of each reporting
period, the number of times the
the
committee met
period
individual
attendances of the members at those
meetings; or
throughout
the
and
(b) if it does not have a nomination
committee, disclose that fact and the
it employs to address
processes
board succession
issues and to
ensure that the board has the
of
appropriate
skills,
balance
experience,
knowledge,
independence and diversity
to
enable it to discharge its duties and
responsibilities effectively.
2.2
A
listed entity should have and
disclose a board skills matrix setting
out the mix of skills and diversity that
the board currently has or is looking
to achieve in its membership.
2.3
A listed entity should disclose:
The Board has not, at this time adopted a
board skills matrix. However, the Company
considers its directors have an appropriate
range of skills, experience and expertise.
No
As at the date of this statement, the Board
comprises 3 directors of which one Director,
Brett Crowley is considered independent.
Yes
65
Page 65 of 76
Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
(a) The names of the directors
considered by the board to be
independent directors;
The length of service of each Director is
provided in the 2019 Annual Report.
not
(b) If a director has an interest,
position, association or relationship
of the type described in Box 2.3 but
the board is of the opinion that it
does
the
independence of the director, the
nature of the
interest, position,
in
or
association
question and an explanation of why
the board is of that opinion; and
compromise
relationship
(c) The length of service of each
director.
2.4
A majority of the board of a listed
entity should be independent
directors
As at the date of this statement, the Board
comprises 3 directors of which one
Director, Brett Crowley is considered
independent.
No
The Board considers the presence of one
independent director (who is also Chair)
provides the Board with sufficient
independence. The Board will consider the
appointment of an additional independent
director this year.
The Chair of the Board is Mr Brett Crowley,
an independent Director. The role of CEO
and Chairman are not exercised by the
same person.
The Board shall induct new directors in
accordance with the process set out in the
Company's Board Charter which is disclosed
on the Company’s website.
Yes
Yes
2.5
2.6
The chair of the board of a listed
entity should be an independent
director and, in particular, should
not be the same person as the CEO
of the entity.
A listed entity should have a
program for inducting new directors
and provide appropriate
professional development
opportunities for directors to
develop and maintain the skills and
knowledge needed to perform their
role as directors effectively.
66
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Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
Principle 3: Act ethically and responsibly
3.1
A listed entity should:
(a) have a code of conduct for its
directors, senior executives and
employees; and
(b) disclose that code or a summary
of it.
The Board has established a code of conduct
is available on the Company’s
which
website.
Yes
Principle 4: Safeguard integrity in corporate reporting
4.1
The board of a listed entity should:
(a) have an audit committee which:
(1) has at least three members, all of
whom are non-executive directors
and a majority of whom are
independent directors; and
(2) is chaired by an independent
director, who is not the chair of the
board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and
experience of the members of the
committee; and
(5)
in relation to each reporting
period, the number of times the
the
committee met
period
individual
attendances of the members at those
meetings; or
throughout
the
and
it
employs
(b) if it does not have an audit
committee, disclose that fact and the
processes
that
independently verify and safeguard
the
corporate
reporting, including the processes for
the appointment and removal of the
external auditor and the rotation of
the audit engagement partner.
integrity of
its
The Board fulfils the responsibilities of the
Audit and Risk Committee. The Board has
adopted a Charter for the Audit and Risk
Committee, which
is available on the
Company’s website.
Partial
The Directors believe it is appropriate for the
Board to act as the Audit Committee at this
stage of the Company’s development. Given
the size of the Board, it is considered that no
efficiencies or other benefits would be
gained
separate
establishing
Committee. The Board will review this
position on an ongoing basis as the Company
continues to grow.
by
a
on Board
Details
and
independence have been set out previously
in this Corporate Governance Statement.
composition
67
Page 67 of 76
Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
Yes
The Board receives a written assurance from
the CEO and CFO (or CFO equivalent) for
each financial reporting period that their
opinion is founded on a sound system of risk
management and internal control and that
the system is operating effectively in all
material respects in relation to financial
reporting risks.
4.2
it approves
The Board of a listed entity should,
before
the entity’s
financial statements for a financial
period, receive from its CEO and CFO
a declaration that the
financial
records of the entity have been
properly maintained and that the
financial statements comply with the
appropriate accounting standards
and give a true and fair view of the
financial position and performance of
the entity and that the opinion has
been formed on the basis of a sound
system of risk management and
internal control which is operating
effectively.
4.3
A listed entity that has an AGM
its external
should ensure
auditor attends
is
available to answer questions from
security holders relevant to the audit.
that
its AGM and
The Company’s auditor is required to attend
the Company’s AGM and is available to
answer questions relevant to the audit.
Yes
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Item ASX Best Practice Recommendation
Comment
Principle 5: Make timely and balanced disclosure
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
5.1
A listed entity should:
(a) have a written policy
complying with
disclosure obligations under
Listing Rules; and
for
continuous
the
its
(b) disclose that policy or a summary
of it.
The Company has adopted a Communication
and Disclosure Policy to ensure compliance
with its disclosure obligations under the ASX
Listing Rules.
Yes
To comply with the ASX Listing Rules, the
Company intends to immediately notify the
ASX of information:
• concerning
the Company
that a
reasonable person would expect to have
a material effect on the price or value of
the Company’s securities;
likely to,
that would, or would be
influence persons who commonly invest
in securities.
•
is disclosed in a timely manner;
is factual;
The Communication and Disclosure Policy
includes processes designed to ensure that
Company information:
•
•
• does not omit material information; and
is expressed in a clear and objective
•
manner that allows the input of the
information when making investment
decisions.
information
The Company is committed to ensuring all
investors have equal and timely access to
the
material
Company. Accordingly, in following and
adhering
its Communications and
Disclosure Policy the Company will comply
with its continuous disclosure obligations
concerning
to
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Item ASX Best Practice Recommendation
Comment
Principle 6: Respect the rights of security holders
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
6.1
6.2
6.3
6.4
A
listed entity
information about
governance
website.
to
should provide
its
its
itself and
investors via
Information about the Company and its
governance is available to shareholders via
the Company’s website.
Yes
A listed entity should design and
implement an
relations
program to facilitate effective two-
way communication with investors.
investor
Yes
The Board is committed to ensuring that
Shareholders receive information relating to
the Company on a timely basis and shall
endeavour
to keep Shareholders well
informed of all material developments of the
Company.
A listed entity should disclose the
policies and processes it has in place
to
encourage
participation at meetings of security
holders
facilitate
and
the option
A listed entity should give security
holders
receive
from, and send
communications
communications to, the entity and its
security registry electronically.
to
Company
developed
The
a
has
Communications and Disclosure Policy to
ensure all relevant information is identified
and reported accordingly.
The Company encourages shareholders to
attend and participate in general meetings
and will make
itself available to meet
shareholders and respond to shareholder
enquiries.
The Company encourages all shareholders to
attend General Meetings of the Company via
its notices of meeting, and in the event they
cannot attend, to participate by recording
their votes.
The Company and its share registry actively
encourage electronic communication. All
new shareholders will be issued with a letter
encouraging the registration of electronic
contact methods.
Yes
Yes
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Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
Principle 7: Recognise and manage risk
7.1
The board of a listed entity should:
(a) have a committee or committees
to oversee risk, each of which:
(1) has at least three members, a
majority of whom are independent
directors; and
(2) is chaired by an independent
director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee;
and
The Board fulfils the responsibilities of the
Audit and Risk Committee. The Board has
adopted a Charter for the Audit and Risk
Committee, which
is available on the
Company’s website.
Partial
The Directors believes it is appropriate for
the Board to act as the Audit Committee at
this stage of the Company’s development.
Given the size of the Board, it is considered
that no efficiencies or other benefits would
be gained by establishing a separate
Committee. The Board will review this
position on an ongoing basis as the Company
continues to grow.
(5) as at the end of each reporting
period, the number of times the
the
committee met
period
individual
attendances of the members at those
meetings; or
throughout
the
and
on Board
Details
and
independence have been set out previously
in this Corporate Governance Statement.
composition
if
committees
it does not have a risk
(b)
committee or
that
satisfy (a) above, disclose that fact
and the processes it employs for
overseeing
risk
management framework.
entity’s
the
7.2
The board or a committee of the
board should:
The Board reviews on an annual basis the
effectiveness
Company’s
management of its material risk.
the
of
Yes
the
review
entity’s
(a)
management framework at
annually to satisfy
continues to be sound; and
itself that
risk
least
it
(b) disclose,
in relation to each
reporting period, whether such a
review has taken place.
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Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
7.3
A listed entity should disclose:
(a) if it has an internal audit function,
how the function is structured and
what role it performs; or
This function is undertaken by the Board as
a whole via the review of risk management
and internal control processes on a regular
basis.
Yes
(b) if it does not have an internal
audit function, that fact and the
processes it employs for evaluating
and
the
effectiveness of its risk management
and internal control processes.
continually
improving
7.4
A
listed entity should disclose
whether it has any material exposure
to economic, environmental and
social sustainability risks and, if it
does, how it manages or intends to
manage those risks.
The Company may from time to time be
exposed to economic, environmental and
social sustainability risks. The Company has
adopted a Risk Management Policy to assist
with management of these risks.
Yes
Principle 8: Remunerate fairly and responsibly
8.1
The board of a listed entity should:
(a) have a remuneration committee
which:
(1) has at least three members, a
majority of whom are independent
directors; and
(2) is chaired by an independent
director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee;
and
(5) as at the end of each reporting
period, the number of times the
the
committee met
period
individual
attendances of the members at those
meetings; or
throughout
the
and
Yes
not
established
Given the size of the Board and the
Company’s current operations the Company
has
separate
Remuneration and Nomination Committee
as it is considered that no efficiencies or
other benefits would be gained by
establishing a separate committee.
a
The Board is responsible for the Company’s
remuneration policy and has adopted a
Nomination and Remuneration Policy which
outlines the processes by which the Board
shall
review officer and management
remuneration.
The Company is committed to remunerating
its officers and executives fairly and to a level
which is commensurate with their skills and
experience and which is reflective of their
performance. Further disclosure of officer
and executive remuneration will be made in
accordance with the ASX Listing Rules and
the Corporations Act.
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Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
(b) if it does not have a remuneration
committee, disclose that fact and the
processes it employs for setting the
of
and
level
remuneration
for directors and
senior executives and ensuring that
such remuneration
is appropriate
and not excessive.
composition
A
listed entity should separately
disclose its policies and practices
regarding the remuneration of non-
executive
the
directors
remuneration of executive directors
and other senior executives.
and
8.2
The Company will disclose all Director and
executive remuneration and policies on
remuneration in its annual reports and also
in its remuneration policy.
Yes
The remuneration of any Executive Director
will be decided by the Board, without the
affected Executive Director participating in
that decision- making process.
In addition, subject to any necessary
Shareholder approval, a Director may be
paid fees or other amounts as the Directors
determine where a Director performs
special duties or otherwise performs
services outside the scope of the ordinary
(e.g. non-cash
duties of a Director
performance incentives such as Options).
Directors are also entitled to be paid
travel and other expenses
reasonable
incurred by them in the course of the
performance of their duties as Directors.
The Board reviews and approves the
Company's nomination and remuneration
policy in order to ensure that the Company
is able to attract and retain executives and
for
Directors who will create value
Shareholders, having regard to the amount
considered to be commensurate for an
entity of the Company's size and level of
activity as well as the relevant Directors'
time, commitment and responsibility.
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Item ASX Best Practice Recommendation
Comment
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Implemented
8.3
A listed entity which has an equity-
based remuneration scheme should:
(a) have a policy on whether
participants are permitted to enter
into transactions (whether through
the use of derivatives or otherwise)
which limit the economic risk of
participating in the scheme; and
(b) disclose that policy or a summary
of it.
The Company does not have an equity based
remuneration scheme at this time, however,
intends to implement a scheme in 2019.
N/A
The Board is responsible for reviewing any
employee incentive and equity-based plans
including
of
performance hurdles and total payments
proposed.
appropriateness
the
The Company recognises that Director,
executives and employees may hold
securities in the Company and that most
investors are encouraged by these holdings.
The Company’s Securities Trading Policy
explains and reinforces the Corporations Act
2001
insider
trading. The Policy applies to all Directors,
executives, employees and consultants and
their associates and closely related parties.
requirements
relating
to
74
Page 74 of 76
Jatenergy Limited
Year ended 30 June 2019
Annual Report
Shareholder Information
Additional Information required by the ASX Limited listing rule and not disclosed elsewhere in this report are
set out below.
The shareholder information set out below was applicable as at 26 August 2019.
(a)
Distribution of equity securities
Analysis of a number of ordinary fully paid shareholders by size of holding:
Holders
Units
Percentage
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
And over
91
20,424
453
1,490,558
500
4,005,087
1,490
61,993,287
731
730,976,824
Total on Register
3,265
798,486,180
0.00%
0.28%
0.63%
8.70%
90.38%
100%
Total number of holders of less than a marketable parcel of ordinary shares: 5,701,303.
(b)
Substantial holders
The substantial shareholders of the Company are as follows:
Holder Name
Golden Lucky Star PL
Sheng Run Holdings Group
Zhongliang Wang
Yulong Gu
Anthony Crimmins
Yaoan Chen & Yan Li
Ordinary Shares
Percentage
83,333,333
80,077,888
36,718,290
34,735,379
33,124,358
23,050,484
10.44%
10.03%
4.60%
4.35%
4.15%
2.89%
75
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Jatenergy Limited
Year ended 30 June 2019
Annual Report
Shareholder Information
Voting rights
(c)
The voting rights attaching to each class of equity securities are set out below:
Ordinary Shares
(i)
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
Equity security holdings
(d)
Twenty largest quoted equity security holders.
The names of the 20 largest quoted equity security holders of quoted equity securities are listed below:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holder Name
Golden Lucky Star Pty Ltd
Sheng Run Holdings (Australia) Group Pty Ltd
Mr Zhongliang Wang
Mr Yulong Gu
Mr Anthony Stephen Crimmins
Mr Yaoan Chen & Mrs Yan Li
Mr Zhou Xuan Feng
Jin & Yao Investments Pty Ltd
C&L Chen Pty Ltd
Miss Yaqing He
Mr Adam Leslie Hajek & L G
Mr Lin Li
Ms Yanxia Lu
Mr Yinghan He
Hajek Superannuation Pty Ltd
Mr Bo Qiang
Mr Wesley Wei
Mr Xiaojun Zhang
Down The Line Consulting Pty Ltd
Dr Huy Tran
Total Top 20 Shareholders
Spread & Top 20 Listings
Status % of
Issued
Current
Units
83,333,333
80,077,888
36,718,290
34,735,379
33,124,358
23,050,848
21,111,111
19,811,111
16,949,152
15,000,000
13,500,000
12,479,000
10,000,000
10,000,000
7,577,659
7,487,765
5,555,555
5,256,000
4,447,379
4,170,341
444,385,169
10.44%
9.49%
4.60%
4.35%
4.15%
2.89%
2.64%
2.48%
2.12%
1.88%
1.69%
1.56%
1.25%
1.25%
0.95%
0.94%
0.70%
0.66%
0.56%
0.52%
55.65%
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