JATCORP LIMITED
(formerly JATENERGY LIMITED)
ABN 31 122 826 242
Annual Report
for the year ended
30 June 2020
Page 1 of 68
CORPORATE DIRECTORY
Directors:
Mr. Wilton Yao
Executive Director
Mr. Brett Crowley
Non-Executive Chairman
Mr. Xin Sun (appointed on 20 August 2020)
Non-Executive Director
Company Secretary:
Mr. Justyn Stedwell and Mr Brett Crowley
Registered Office:
Suite 306 521 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:
Jatcorp Limited shares are listed on the
Australian Securities Exchange (ASX) under JAT.
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Page 3 of 68
Managing Director’s Statement
Dear Fellow Shareholder,
I am pleased to present the 2020 Annual Report for Jatcorp Limited (ASX: JAT, formerly Jatenergy Limited). This year has
been a significant one for JAT as we have cemented our position as a leading China-Australia trade specialist and achieved
stronger profitability by focusing on higher-margin products and operations. Highlights included our acquisition of ANMA,
the launch of several new products and the signing of several new manufacturing, supply and distribution agreements.
The emergence of the coronavirus pandemic caused some disruption to our markets. Challenges included a restriction on
movements which impacted the Daigou network, mainly affecting Green Forest International Pty Ltd, which also bore the
brunt of ongoing uncertainties in Hong Kong. However, the upside was that the pandemic drove an increase in demand for
our lactoferrin products, we achieved record monthly revenue in February and March 2020, and although we expect to see
an impact on group sales for the local market continuing for the next few months, our business continued to expand
throughout FY20 and we delivered gross profit of $14.6 million, representing year-on-year growth of 142%.
In our key target market of China, we are seeing a slowly-recovering economy, but note that retail trade declined in July 2020
for the seventh straight month. Chinese people continue to avoid crowded places, including shops, restaurants and cinemas
amid the COVID-19 crisis. In general, September 2020 and onward are a busy season for China retail trade, and management
is optimistic of a sales recovery.
We expect to see Chinese demand for immunity-enhancing and other health-related products continue to grow sustainably,
first online and then through other channels as markets emerge from COVID-19 lockdown. We are well-placed to capture
this future source of consumer demand with our developing product suite.
This year we made considerable progress towards the vertical integration of our business. The acquisition of the ANMA
manufacturing facility in Victoria has been an important step forward as it allows us to increase profits by retaining the
manufacturer’s margin. Expansion at the facility has allowed us to increase the production of milk powders for our Neurio
range, and the profitability of these operations has increased significantly as our business has focused more on in-house
brand development. The expansion will also allow us to increase manufacturing for third parties.
JAT launched a range of promising new products during the year including the first product under the Abbeyard brand, an
A2 protein milk, and Nature’s Drops under the Hopefern brand. Trials of our VMeat products resulted in positive feedback,
and we are pleased to be rolling this out to restaurants in China.
Securing of $5 million in new funding for capital expenditure and working capital will allow us to fund the expansion at the
ANMA facility and to meet an expected continuation of increased consumer demand. We thank our investors for continuing
to support our visions for expansion.
We look forward to JAT’s Shanghai Maternity and Infant Boutique opening later this year. The opening of the boutique will
see us complete our end-to-end supply and delivery chain. Unfortunately, JAT had to delay the opening of it the boutique
due to pandemic restrictions limiting access to the site.
We are hopeful that there will be some lifting of restrictions in the coming year to allow the re-opening of Daigou channels.
JAT will also continue to investigate other distribution avenues.
We thank management and staff for their efforts in advancing the business through a year which brought unexpected
challenges but resulted in growth in operational cashflow.
We look forward to moving forward in the coming year, delivering value for our shareholders and providing the market with
updates on new and existing growth projects.
Wilton Yao
Managing Director
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Directors’ Report
Your Directors present their report on the consolidated entity (referred to hereafter as “the Group”) consisting of Jatcorp
Limited formerly Jatenergy Limited (“Jatcorp”, “JAT” or “Company”) and its controlled entities during the year ended 30 June
2020.
Directors
The following were Directors of Jatcorp Limited during the whole of the financial year and up to the date of this report.
• Wilton Yao
•
•
•
Brett Crowley
Xipeng Li
Xin Sun
Executive Director
Non-Executive Chairman
Non-Executive Director (resigned on 20 August 2020)
Non-Executive Director (appointed on 20 August 2020)
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.
There have been no changes in the principal activity during the year.
Operations and financial review
Although the coronavirus pandemic created some challenging situations in FY20, as announced in July, Jatcorp (‘JAT’ or ‘the
Company’) ended FY20 with positive cashflows from operating activities of $1,457,075 compared to operating cash outflows
for 2019 of $2,804,689.
The Total Comprehensive Loss for the year was $26,590,036 (2019; $20,492,541 loss). This was affected by impairment
losses of $26,134,266 in 2020 and $24,072,574 in 2019. Earnings before Interest, tax, depreciation, amortisation and
impairments increased in the year to $7,081,117 from $5,279,658 in 2019.
Beginning in December, the emergence of the Coronavirus pandemic created an unprecedented demand for JAT’s lactoferrin
dairy products. As reported in April, JAT achieved record monthly revenue of $8.5 million in February closely followed by
$8.1 million in March. Sales were driven by increased demand due to the coronavirus pandemic coupled with increased
awareness generated from the China International Import Expo (“CIIE”) in Shanghai in November 2019. To meet the
increased demand, JAT increased production at its ANMA dairy manufacturing plant in Victoria.
The pandemic created some difficulties due to government lockdowns and restrictions on travel which constrained the
movement of overseas visitors and students. Government restrictions also caused delays to work on JAT’s Maternity and
Infant Boutique in Shanghai.
JAT expected a very strong and profitable FY20 prior to the impacts of COVID-19 and Hong Kong uncertainties. Due to the
uncertain economic factors, the Board decided to fully impair Green Forest's goodwill. ANMA's goodwill has also been fully
impaired due to delays in new equipment arrival and the completion of factory upgrading. These factors drove a net loss for
the Company, mainly driven by non-cash expenses.
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Directors’ Report
Operations Review (continued)
Acquisition of Australian Natural Milk Association Pty Ltd
In August 2019, JAT acquired 70% of the issued shares in ANMA. The acquisition was completed in October 2019 with
minority shareholders in JAT’s subsidiary, Sunnya Pty Limited, subsequently acquiring 5% of ANMA leaving JAT owning the
remaining 65%.
ANMA operates a 5,000m2 manufacturing facility on 8,000m2 of land in Derrimut, Victoria. The facility is equipped with state-
of-the-art processing lines specialising in handling infant formula, milk powder and other dairy products. ANMA is one of
only 15 milk powder manufacturers in Australia approved by China’s Certification and Accreditation Administration (CNCA)
for exporting infant formula into China under regulatory requirements administrated by China’s State Administration for
Marketing Regulation.
ANMA’S manufacturing facility in Derrimut, Victoria
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Directors’ Report
Operations Review (continued)
ANMA’s manufacturing facility in Derrimut, Victoria
As announced in August 2019, consideration for the acquisition was $14 million, with $12 million payable by cash and issue
of $2 million worth of JAT shares. The acquisition allowed JAT to take control of the supply chain of Neurio, one of its major
products, removing the reliance on contract manufacturers, thereby increasing profitability and reducing business risk.
ANMA also produces products for third parties.
As announced in April 2020, ANMA was experiencing significant demand and operating at near full capacity. In April, the first
stage of installation and commissioning of new manufacturing equipment at ANMA was completed. Further expansion at
ANMA is underway with construction works due to start in late September 2020 and due for completion in November 2020.
The expansion includes the acquisition of two further pieces of equipment which will enable ANMA to produce a broader
range of products, including probiotics.
Manufacturing and supply agreements
Beta A2 Australia Manufacturing Pty Ltd (“Beta”)
ANMA entered into a five-year manufacturing and supply agreement with Beta in November 2019 which required ANMA to
manufacture and supply Beta with Beta’s “Farmers Beta A2” milk products formula.
The agreement was for an expected amount of $6.7 million in the first year, which commenced with an initial order of $1.8
million followed by orders of more than $4.9 million scheduled for the eight months commencing September 2020.
Ultinature Nutritional Australia Pty Ltd (“Ultinature”)
In Q3 FY20, ANMA signed a two-year manufacturing and supply agreement with Ultinature. Ultinature provides premium
quality nutritional supplement products to international markets. Under the agreement, Ultinature will place orders with
ANMA for the manufacture of four specific Ultinature products as well as any new products which Ultinature may develop.
The agreement specifies an indicative non-binding cumulative order quantity over three years which represents
approximately $6 million in revenue to ANMA over the period. Although the agreement is for two years, the parties expect
the agreement to be extended and a three-year indicative order quantity was specified in the agreement.
Distribution agreements from China International Import Expo
Directors’ Report
Operations Review (continued)
3rd CIIE signing ceremony
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Directors’ Report
Operations Review (continued)
JAT signed three distribution agreements at the second China International Import Expo in November 2019. The agreements
included a two-year distribution agreement with Kigobaby which provides for Kigobaby to be the exclusive distributor in
China of a single Neurio product line – Neurio Formulated Milk Powder with Lactoferrin + Sialic Acid.
Also at the expo, JAT signed a 12-month distribution agreement with China-based health, wellness and maternity product
distributor, Cyclone E-Commerce Co. Ltd (Cyclone), under which Cyclone intends to purchase more than A$7.5 million in
product over 12 months.
JAT also signed a three-year non-exclusive distribution agreement with Kiss Kangaroo for the sale of most Neurio products
through its online platform and offline channel.
Operations Review (continued)
2019 China Australia Agribusiness Association forum in CIIE
Ocker Products Pty Ltd / Beijing Grain Group Co distribution agreement
In January 2020, JAT announced it had entered a three-year distribution agreement with Ocker Products Pty Ltd (“OPP”) for
the non-exclusive distribution of JAT dairy products in China for the next three years. OPP has a strategic partnership with
Beijing Grain Group Co Ltd and Beijing JingLiang Logistics Co Ltd to procure food and farm produce on behalf of both
companies.
JAT received its first order from OPP in March 2020 which reflected a contract value of US$1.517 million. Under the
agreement, OPP agreed to purchase a minimum of A$80 million of JAT dairy products in the first year. The Company is
currently optimising its working capital to position JAT to rapidly fulfil further orders anticipated from Ocker.
Lactoferrin milk products
JAT’s lactoferrin products saw strong sales growth in the second half of FY20. Lactoferrin has a unique iron-binding capacity
that helps to deprive pathogens, such as bacteria, viruses and fungi of iron, an essential nutrient for their growth and
replication. As outlined above, the coronavirus pandemic saw revenue for these products reach record levels in February
and March. JAT also continued to develop additional products in this range.
JAT developed three new product formulations within its Neurio range of milk powders with lactoferrin. These products have
a renewed focus on children’s intestinal health, brain development and immune system support, which JAT believes will
meet the needs of consumers.
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Directors’ Report
Operations Review (continued)
JAT also introduced two new camel milk powder products with lactoferrin. The first two batches of this product have shipped
to Australia and China and more orders received. JAT believes there will be strong demand for these products based on
favourable customer feedback and therefore plans to expand its production of the powders at the ANMA facility.
Establishment of plant-based meat manufacturing and supply business
In October 2019, JAT entered into a joint venture with Sydney-based Oppenheimer Pty Ltd to develop a range of plant-based
meats for sale into China and other Asian markets.
JAT and Oppenheimer formed a separate company, JAT Oppenheimer Pty Ltd, for the new business with each owning 50%
of the new company. The joint venture will allow JAT to develop its own plant-based meat products and brands to take
advantage of the fast-growing plant-based meat industry. The products will be marketed under the tradename “VMeat”.
The first batch of products was ordered under the joint venture agreement in March 2020 and was introduced to restaurants
and major food chains in China in May 2020. The products in the first batch included substitutes for Wagyu beef, pork and
beef balls and minces, fish, chicken strips and hot pot meatballs.
Testing on the first batch of products has occurred in restaurants with positive feedback.
JAT Oppenheimer commenced discussions for the products to be produced in Chinese facilities to enable savings in
production and transport costs and the products to get to market more quickly.
Sales of the products into Australian supermarket chains also progressed.
Shanghai Maternity and Infant Boutique
JAT’s plans to open a Maternity and Infant boutique in Shanghai in March 2020 were delayed due to the coronavirus
pandemic and movement restrictions impeding access to the site. JAT now expects that the shop will open by
November2020.
The boutique will stock JAT’s dairy products, and JAT believes it will be the first Australian company to sell dairy products in
China through its own retail outlet. JAT has significant stock in storage in Shanghai to meet expected retail demand when
the boutique opens.
The boutique is in a prime retail location which adjoins Sinopharm Pharmacy and is located directly opposite Shanghai
Children’s Hospital, Shanghai Pregnancy School, Shanghai Putuo Maternity and Infant Health Institute and Shanghai Oasis
Kindergarten.
Abbeyard brand
JAT established the Abbeyard brand as part of its strategy of developing its own products to sell into its China distribution
network.
JAT successfully rolled out the first of the Abbeyard branded products in Q4 FY20. The first product launched under the brand
was an A2 protein children’s milk powder. The brand is used exclusively for distribution by Hipac, which is China’s largest
B2B e-commerce platform for mother and baby care products. Hipac plans to order $4.8 million of products in the first year
with the first shipment of the A2 milk powder delivered to China in June 2020, all pre-sold, and a second shipment shortly
after. Total revenue from the sale of the first two batches was $231,108. The ANMA facility produced both batches.
JAT is working to develop further products under the Abbeyard brand.
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Directors’ Report
Operations Review (continued)
Hopefern brand
In June 2020, JAT achieved the first sales of its Nature’s Drops, a Manuka honey, eucalyptus and lemon flavoured candy,
under its Hopefern brand. JAT believes Nature’s Drops can soothe sore throats and refresh the breath. There was a strong
response to promotional samples of the product, and first sales were achieved through selected pharmacies and Daigou
stores. The product has been accepted by Woolworths and will start to sell through Woolworths’ Tmall Flagship Store by
early September 2020. JAT is currently negotiating broader distribution through supermarkets, pharmacies and retail stores.
University of Sydney research agreement
As announced in March 2020, JAT entered into a commissioned research agreement with the University of Sydney in March
2020 to develop a novel food supplement with potential antiviral properties against a broad range of pathogens. The food
supplement will be based on lactoferrin, and JAT aims to develop a new formula from natural products with
potential potent antiviral activity against several common infectious diseases such as influenza, herpes simplex virus and
norovirus.
JAT will provide lactoferrin and lactoferrin-based products for testing to be undertaken by the University of Sydney. JAT will
also provide management support and general assistance.
JAT will work with the university to ensure the compounds developed are registered with the Australian Therapeutic Goods
Administration and JAT will seek corresponding approvals with regulatory authorities outside Australia. The first stage of
analysing JAT’s lactoferrin has been completed and has now moved into the next stage for analysing other natural food
ingredients. JAT expects that the research will be complete in April 2021, with marketing commencing in late 2021 or early
2022.
Certification agreement with CCIC Australia Pty Ltd (“CCIC Aust”)
In October 2019, JAT entered into an agreement with CCIC Aust under which CCIC will manage the Chinese registration,
approval, certification and traceability of products produced in Australia by JAT. This agreement will ensure that JAT’s
products meet the national standards of China. The traceability service is to guarantee that only genuine Group products are
sold in China. The assistance from the CCIC will provide greater opportunity for ANMA’s infant formula registration to be
accepted and approved by Chinese authorities. It will be an invaluable resource to ensure the new products being developed
and produced at the ANMA factory will meet Chinese standards and requirements.
Outlook
JAT will continue to drive growth in its dairy products business, expects that increased demand for its Neurio lactoferrin dairy
products will continue, and looks forward to generating cash in 2021.
The expansion at ANMA will allow JAT to increase profit margins by increasing the production of its own products as well as
generating revenue through increased manufacturing of products for third parties. The ANMA factory upgrade completion
in early FY21 will empower ANMA to produce a broader range of products as well as increase the capacities of its operations.
The opening of the Shanghai Maternity and Infant Boutique by late 2020 will allow JAT to complete its end to end supply and
delivery chain and provide great opportunity for the Company’s in-house branded products to be sold directly to the Chinese
consumers.
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Directors’ Report
Operations Review (continued)
The introduction of new products, including JAT's clinical skincare product range, its newly-developed clinical formulas and
health-based consumer products, will broaden the range of products sold into Australia, China and the Asian region.
JAT will continue to develop and produce high quality and high margin innovated in-house products for both the Australian
and Chinese markets, particularly those with a health focus. A marketing research agreement with Monash University will
provide insight into consumer demand for health products in the Chinese market, and we expect our first clinical skincare
products developed through our Hong Kong JV to be ready by late September or early October 2020.
The purchase of a new office in Western Sydney for $1.28 million through subsidiary Sunnya will also support the company’s
growth plans.
To overcome the constraints of the Daigou channel, JAT will continue to explore new sales channels including the
introduction of “Group Buy” via WeChat, which will enable it to make sales direct to Chinese consumers.
Dividends paid or recommended
No dividends were paid or declared by the parent company Jatcorp Limited since the start of the period. No recommendation
for payment of dividends has been made (2019: $nil).
During the year Green Forest International Pty Ltd has paid $980,000 fully franked dividend of which $490,000 was paid to
non-controlling interest. Sunnya Pty Ltd has paid $1,466,653 fully franked dividend of which $718,660 was paid to non-
controlling interest.
Significant changes in state of affairs
Change of name
As announced in June 2020, Jatenergy Limited changed its company name to Jatcorp Limited after shareholders passed a
resolution. There was no change to its ASX code of JAT.
There have been no other significant changes in the state of affairs of the Group during the financial year other than those
noted in this annual report.
Matters subsequent to the end of the financial year
Appointment and resignation of Directors
As announced in August 2020, Mr Sun Xin was appointed a director of JAT. Mr Sun is Managing Director of Guangdong RYS
Investment Ltd, a midmarket private equity buyout firm with a focus on mainland China. He has also worked for a number
of securities firms including CDB Securities Ltd. Mr Sun is a Representative Sponsor of the China Securities Regulatory
Commission. His appointment coincided with the resignation of Mr Xipeng Li as a Director, who helped develop JAT’s business
and contacts in China.
Share buy-back
As announced in July 2020, JAT completed a share buy-back after gaining shareholder approval at a general meeting on 18
June 2020. The buy-back was of 7,361,900 ordinary shares issued to shareholders as a result of a systems error as part of a
December 2017 Share Purchase Plan. There are a number of shareholders who have not yet entered into buy-back
agreements, and JAT will continue to take appropriate action against those shareholders, including court proceedings to seek
orders for cancellation of those shares.
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Directors’ Report
Matters subsequent to the end of the financial year (continued)
Convertible Notes
As announced on 22 April 2020, the Company has entered into an agreement in relation to a convertible note facility with
Obsidian Global GP, LLC with a subscription price of up to AUD4,000,000 dated 22 April 2020. On 8 July 2020 the Company
issued 2,771,600 convertible securities with a face value of US$1.20 each raising AU$4,000,000 before costs pursuant to
the convertible note facility with Obsidian Global GP, LLC. On 8 July 2020 JAT also issued 49,000,000 ordinary, fully paid
shares (Collateral Shares) on the issue of the Convertible Securities, as security for the Company’s obligations under the
convertible securities agreement, with such Collateral Shares to be credited upon retirement of the convertible
securities. The remaining number of Convertible Notes following Conversion is 2,677,900.
Green Forest
In October 2019, legal proceedings commenced against Green Forest International Pty Ltd (GFI), a subsidiary of Jatcorp
Limited, in relation to copyright and trademark infringement in respect of products sold by GFI. GFI is defending these
proceedings and has filed a cross-claim against the applicant. The directors believe that GFI will have be successful in these
proceedings.
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).
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Directors’ Report
Information on directors and company secretaries (continued)
Xipeng Li
NON-EXECUTIVE DIRECTOR – Appointed on 15 April 2011 and resigned on 20 August 2020
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.
Xin Sun
NON-EXECUTIVE DIRECTOR – Appointed on 20 August 2020
Mr Sun is currently Managing Director of Guangdong RYS Investment Ltd, a midmarket private equity buyout firm with a
focus on mainland China. RYS is based in Shenzhen, China, and currently employs a team of 20 professionals. Prior to
commencing with RYS, Mr Sun worked for a number of securities firms including CDB Securities Ltd, a company within the
China Development Bank group. Mr Sun is well experienced in Chinese securities and business regulation as well as the
development and execution of strategic transactions in China and the Asia-Pacific. Mr Sun is a sponsor of the China Securities
Regulatory Commission.
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 2020 and the numbers of
meetings attended by each Director were:
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Directors’ Report
Corporate Governance
The Board of Directors of Jatcorp is responsible for the corporate governance of the Group. The Board guides and monitors
the business and affairs of Jatcorp on behalf of the shareholders by whom they are elected and to whom they are
accountable.
Jatcorp’s corporate governance practices were in place for the year and were compliant with the ASX Governing council’s
best practice recommendations. In compliance with the “If not why not” reporting regime, where the Company’s corporate
governance practices do not follow a recommendation, the Board has explained its reasons for not following the
recommendation and disclosed what, if any, alternative practices the company has adopted instead of those in the
recommendation.
Information on corporate governance is listed on JAT website (www.jatenergy.com) and further information can be
requested from the Company’s corporate office – Suite 306, 521 Toorak Road, TOORAK VIC 3142.
Risk management
The Group takes a proactive approach to risk management. Management, through the Managing Director, is responsible for
designing, implementing and reporting on the adequacy of the Group’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 Group has developed a series of risks which the Group 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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Directors’ Report
Remuneration Report
This report outlines the remuneration arrangements in place for Directors and key management personnel of the Group for
Financial Year 2020. 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.
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.
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Directors’ Report
Remuneration Report (continued)
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 had two Non-Executive Directors
during the year. Mr Xipeng Li (resigned in August 2020) received $Nil in remuneration (2019: $Nil) and Brett Crowley received
$110,000 in 2020 financial year (2019: $60,750).
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.
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.
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.
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.
Page 16 of 68
Directors’ Report
Remuneration Report (continued)
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 2019 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 Jatcorp.
2020
$
2019
$
2018
2017
2016
$
$
$
Revenue
EBITDA
59,452,615
66,444,062
2,316,868
9,826,738
967,052
7,081,117
5,279,658
(1,268,258)
(402,366)
(750,754)
Loss After Income Tax
(26,590,035)
(20,492,541)
(1,268,891)
(406,025)
(1,978,817)
Share Price
0.040
0.047
0.06
0.014
0.01
The Company is currently reviewing its remuneration policies as indicated above.
Incentive performance payments related to capital raising for the current financial year.
B – Details of remuneration
The remuneration of the Directors and other key management personnel of Jatcorp are set out below. Key management
personnel for the year ended 30 June 2020 include Wilton Yao, Brett Crowley and Parag Khandekar. Mr Yao has contracts
currently in place with the Group.
Page 17 of 68
Directors’ Report
Remuneration Report (continued)
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
Cash salary and fees
Total
Performance
related
$
-
$
-
60,750
60,750
60,750
60,750
225,000
225,000
440,480
440,480
665,480
665,480
%
-
-
-
-
69%
40%
47%
-
-
Parag Khandekar
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
C.
Service Agreements
The following executives are employed under consulting contracts. The major provisions of the agreements are as follows.
D. Shareholding of Key Management Personnel and Directors
Details of ordinary shares held by key management personnel and directors are shown below.
Page 18 of 68
Directors’ Report
Remuneration Report (continued)
Director and executive options
No options were granted as remuneration in the financial year ended 30 June 2020, or the year ended 30 June 2019.
There were no options held by key management personnel in 2020 (2019: 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
Page 19 of 68
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
7,905,000 Options with an exercise price of 6 cents were exercised during the financial year.
There were 4,000,000 options with exercise price of $0.10 per option issued on 9 July 2020.
There remain 71,145,001 unexercised options as at 30 June 2020. 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.
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 are detailed in Note 21, no non-audit
services were provided by the auditors in the year or the prior year.
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.
Page 20 of 68
Directors’ Report
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 22.
This report is made in accordance with a resolution of the Board of Directors:
Managing Director
Wilton Yao
Dated this 31 day of August 2020
Page 21 of 68
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF JATCORP LIMITED
As lead auditor of Jatcorp Limited (formerly Jatenergy Limited) for the year ended 30 June
2020, I declare that, to the best of my knowledge and belief, there have been:
1.
no contraventions of the audit or independence requirements as set out in t he Corporations
Act 2001 in relation to the audit; and
2.
no contraventions of any applicable code of professional conduct in relation to the audit.
LNP Audit and Assurance Pty Ltd
Anthony Rose
Director
Melbourne, 31 August 2020
Page 22 of 68
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2020
Revenue
Cost of Sales
Gross Profit
Other Income
Advertising & Marketing
Consultancy & Professional Fees
Employee Benefits
Directors' Fees
Administration Expenses
Other Expenses
Finance Costs
Share Based Payments
Depreciation & Amortisation
Impairment Loss
Loss Before Income tax
Income Tax Expense
Total Comprehensive Loss for the year
Loss attributable to:
- Member of parent entity
- Noncontrolling 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
5
4
26
6
29
29
2020
$
2019
$
59,452,615
(44,883,862)
14,568,753
880,768
(1,026,351)
(636,705)
(2,400,400)
(510,000)
(1,716,945)
(1,646,336)
(2,115,414)
(431,667)
(2,490,306)
(26,134,266)
(23,658,869)
(2,931,167)
(26,590,036)
(17,596,981)
(8,993,055)
(26,590,036)
Cents
(2.02)
(2.02)
66,444,062
(60,413,679)
6,030,383
3,955,906
(604,063)
(625,025)
(1,295,372)
(756,230)
(843,790)
(582,151)
(523,048)
-
(518,352)
(24,072,574)
(19,834,316)
(658,225)
(20,492,541)
(9,796,969)
(10,695,572)
(20,492,541)
Cents
(1.35)
(1.35)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Page 23 of 68
Consolidated Statement of Financial Position
As at 30 June 2020
Note
2020
$
2019
$
CURRENT ASSETS
Cash & Cash Equivalents
Trade and Other Receivables
Inventory
Financial Assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, Plant and Equipment
Right of Use Asset
Investment in Joint Ventures
Intangible Assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and Other Payable
Borrowings
Lease Liabilities
Tax Liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease Liabilities
Deferred Tax Liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed Equity
Unissued Shares
Accumulated Losses
Total Parent Equity
Non-controlling Interests
TOTAL EQUITY
7
8
10
11
9
12
13
15
16
14
15
16
17
18
18
11,419,725
6,482,872
4,596,492
129,167
22,628,256
3,550,139
5,049,165
523,247
26,542,383
35,664,934
58,293,190
7,413,007
12,592,508
441,817
2,182,761
168,526
22,798,619
7,467,033
4,883,789
5,117,460
17,468,282
40,266,901
18,026,289
7,844,671
4,744,319
3,267,750
-
15,856,740
63,379
-
-
28,799,052
28,862,431
44,719,171
1,121,600
1,675,806
-
919,384
5,305,470
9,022,260
2,527,374
-
1,028,100
3,555,474
12,577,734
32,141,437
63,977,915
320,175
(57,864,574)
6,433,516
11,592,773
18,026,289
57,556,005
-
(40,267,593)
17,288,412
14,853,025
32,141,437
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page 24 of 68
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Balance at 1 July 2018
Loss for the year
Total comprehensive loss
Shares issued during the
year net of cost
Recognition of Non-
controlling Interests
Contributed
Equity
$
45,216,805
Non-Controlling
Interest
$
12,428,580
Accumulated
losses
$
(30,470,624)
Unissued
Shares
$
-
-
-
(10,695,572)
(9,796,969)
(10,695,572)
(9,796,969)
12,339,200
-
-
13,120,017
-
-
Balance at 30 June 2019
57,556,005
14,853,025
(40,267,593)
Balance at 1 July 2019
57,556,005
14,853,025
(40,267,593)
Total
$
27,174,761
(20,492,541)
(20,492,541)
12,339,200
13,120,017
32,141,437
32,141,437
(26,590,036)
-
-
-
-
-
-
-
(8,993,055)
(17,596,981)
(8,993,055)
(17,596,981)
-
(26,590,036)
Loss for the year
Total comprehensive loss
Dividend declared by
Subsidiaries
Shares issued during the
year net of cost
Recognition of Non-
controlling Interests
Unissued Shares
-
-
-
(1,208,660)
6,421,910
-
-
-
6,941,463
-
-
-
-
-
-
(1,208,660)
-
-
6,421,910
6,941,463
320,175
320,175
Balance at 30 June 2020
63,977,915
11,592,773
(57,864,574)
320,175
18,026,289
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page 25 of 68
Consolidated Statement of Cashflows
For the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income taxes paid
Note
2020
$
2019
$
56,135,155
72,242,117
(51,178,724)
(74,635,172)
283,848
(2,115,414)
(1,667,790)
258,255
(523,048)
(146,841)
Net cash inflow in operating activities
28
1,457,075
(2,804,689)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for the acquisition of controlled entities
Payments for investment in joint ventures
Earnout payment
(2,962,890)
(7,000,000)
(523,247)
(2,600,000)
-
(4,600,000)
-
-
Net cash outflow in investing activities
(13,086,137)
(4,600,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Net Proceeds from borrowings
Right of Use asset payment
Dividends Declared by Subsidiaries
Net cash inflow in finance activities
754,137
16,319,197
(660,558)
(1,208,660)
8,189,200
2,841,682
-
-
15,204,116
11,030,882
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
7
3,575,054
7,844,671
11,419,725
3,626,193
4,218,478
7,844,671
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page 26 of 68
Notes to Financial Statements
For the year ended 30 June 2020
Corporate Information
Jatcorp Limited (formerly known as Jatenergy Limited) is a public company limited by shares, incorporated and domiciled in
Australia. Its registered office and principal place of business is Suite 306 521 Toorak Road, Toorak VIC 3142.
This financial report covers the consolidated entities consisting of Jatcorp Limited and its controlled entities (the Group).
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 accrual basis.
The financial report is presented in Australian currency. The financial report was authorised for issue by the Directors on 31
August 2020. 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 company (‘Jatcorp’) and
all of the subsidiaries. The parent company controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries
is provided in Note 25.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the
date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control
ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully
eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary
to ensure uniformity of the accounting policies adopted by the Group.
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 otherwise stated.
Page 27 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(c) Revenue and other income
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.
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; Determining the transaction price; Allocating the transaction price to the performance obligations;
and Recognising revenue when/as performance obligation(s) are satisfied.
Revenue from contracts with customers
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 2020. The general credit terms vary between 30 days to 120 days 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.
The Group recognises revenue from the following major sources:
•
•
sale of formulated milk powder with lactoferrin to wholesale and retail customers;
sale of vitamins, cosmetic products, dairy products and other health-related consumer goods to wholesale and retail
customers; and
• Manufacturing OEM products.
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 Group is entitled to it.
Page 28 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(d)
Income tax
The income tax expense or revenue for the year is the tax payable on the current year 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)
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.
(f)
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. The estimated value of the separable intangibles and goodwill related to the
acquisition of Australian Natural Milk Association Pty Limited (‘ANMA’) during the year have been assessed by management
based on valuation performed by an independent third party commissioned by management. Refer to note 12 and note 25 for
details.
Page 29 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(g)
(i)
Intangible assets
Goodwill
Goodwill on acquisitions of subsidiaries (note 25) 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. Tradename has an estimated
useful life of ten years and customer relationships has an estimated useful life of five years.
(iii)
Import Licence
Import Licence has a finite life and is carried at cost less any accumulated amortisation and impairment losses. Import Licence
has an estimated useful life of eight years. Amortisation is recognised in profit or loss on a straight-line basis over the estimated
useful lives. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
accordingly.
(h)
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.
(i)
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. Example 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.
(j)
Cash and Cash equivalents
Cash and cash equivalents include 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.
Page 30 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(k) Leases
Prior period
In the prior period, leases were accounted for as operating leases under AASB 117 Leases, and the policy was to recognise
payments as an expense on a straight-line basis over the lease term.
Current period, from 1 July 2019
Right of use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the relevant commencement date less any lease incentives
received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the relevant lease term,
the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the
relevant lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the relevant lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate (initially measured using the index
or rate as at the relevant commencement date), and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of
penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.
The Group applies the practical expedient to not separate non-lease components from lease components, and instead accounts
for each lease component and any associated lease components as a single lease component.
The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event
or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses the incremental
borrowing rate at the relevant lease commencement date if the interest rate implicit in the lease is not readily determinable.
After the relevant commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying
asset.
Significant judgements
The Group has made the following significant judgements with respect to its leases as lessee:
i.
Determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised.
Page 31 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(k) Leases (continued)
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised.
Under the office premise leases, the Group is able to continually exercise the option to extend the term of the lease. The Group
applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses
the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise
(or not to exercise) the option to renew (i.e. a change in business strategy). The Group has included reasonably certain renewal
options as part of the lease term for three of its facility premises leases for a further five years.
ii.
Determining the incremental borrowing rate
The Group has applied judgement to determine the incremental borrowing rate, which affects the amount of lease liabilities or
right-of-use assets recognised. The Group reassesses and applies the incremental borrowing rate on a lease by lease basis at the
relevant lease commencement date based on the term of the lease (or the remaining term of the lease at the initial date of
application).
(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 costs or fair value, depending
on the classification of the financial assets.
Classification
On initial recognition, the Group classified 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, forging exchange gains or losses and impairment are recognised in profit or loss. Gain or loss on derecognition
is recognised in profit or loss.
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. 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.
Page 32 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(l)
Financial Instruments (continued)
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).
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.
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.
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.
(m)
Inventories
Inventories are stated at the lower of cost and 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.
Page 33 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(n) Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation and impairment losses. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets’ carrying amount or
recognised as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
profit or loss during the financial period in which they are incurred.
The depreciable amount of all fixed assets is depreciated on a straight -line or diminishing value basis over their useful lives
(commencing from the time the asset is ready for use). The following useful lives are used in the calculation of depreciation:
The depreciable amount is the carrying value of the asset less estimated residual amounts. The residual amount is based on
what a similar asset of the expected condition of the asset at the end of its useful life could be sold for.
The assets’ residual values and useful lives are reviewed, and adjusted if appreciate, at each balance sheet date.
(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.
(p)
Goods and service 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.
Page 34 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(r) Share-Based payment arrangements
Equity-settled share-based payment transactions with parties are measured at the fair value of the goods or services received,
except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the goods or the counterparty renders services.
(s)
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.
(t)
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 29 for details).
(u)
New and Amended Accounting Standards adopted by the Group
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. Any new or amended Accounting
Standards and interpretations that are not yet mandatory have not been early adopted.
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 July 2019: AASB 16: Leases. The Group adopted AASB 16 Leases using the modified retrospective (cumulative
catch-up) method from 1 July 2019 and therefore the comparative information for the year ended 30 June 2019 has not been
restated. Changes to accounting policies are described below.
Effect of adopting AASB 16 at 1 July 2019
Impact on the statement of financial position at 1 July 2019:
Non – Current assets
Leased Assets
Total Non-current Assets
TOTAL ASSETS
Current Liabilities
Lease Liabilities
Total Current Liabilities
Non- Current Liabilities
Lease Liabilities
Total Non- Current Liabilities
TOTAL LIABILITIES
NET ASSETS
TOTAL EQUITY
1-Jul-19
$
1,254,876
1,254,876
1,254,876
141,958
141,958
1,112,918
1,112,918
1,254,876
-
-
Page 35 of 68
Notes to Financial Statements
For the year ended 30 June 2020
1. Summary of significant accounting policies (continued)
(u) New and Amended Accounting Standards adopted by the Group (continued)
There is no impact on the statement of profit or loss and other comprehensive income, statement of cash flows, and basic and
diluted earnings per share for the comparative period as the Group elected to adopt the modified retrospective approach when
transitioning to AASB 16.
Lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as at 30 June 2019 as follows:
The Company has recognised right-of-use assets of $1,254,876 and lease liabilities of $1,254,876 at 1 July 2019, for leases
previously classified as operating leases. The weighted average lessee’s incremental borrowing rate applied to lease liabilities
as 1 July 2019 was 5.5%.
Effect of AASB 16 on the twelve months period ended 30 June 2020.
Set out below are the carrying amounts of the Group’s right -of-use assets and lease liabilities and the movements during the
year ended 30 June 2020.
Page 36 of 68
Notes to Financial Statements
For the year ended 30 June 2020
2. Critical Accounting Estimates and Judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts in the financial statements. Management continually evaluates estimates and judgements incorporated
into the financial statements based on historical knowledge and best available current information. Estimates assume a
reasonable expectation of future events and are based on current trends and economic data, obtained both externally and
within the Group.
Management has identified the following critical accounting policies for which significant judgments, estimates and
assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may
materially affect financial results or the financial position reported in future periods. Further details of the nature of these
assumptions and conditions may be found in the relevant notes to the financial statements.
A. Impairment of security deposit of Nutritional Choice Australia Pty Ltd (NCA) – Golden Koala (refer note 8)
In 2018 financial year, Jatcorp’s 51% subsidiary, Golden Koala (GK), paid a total of $2.5 million to Nutritional Choice Australia
Pty Ltd (NCA) for the production of infant milk formula for Chinese consumers. NCA held a Chinese Food and Drug
Administration licence (now referred to as “SAMR” approvals) for the production of the GK products. Subsequent to the
payment made by GK, legal proceedings were commenced in the Federal Court of Australia against NCA. The effect of the court
proceedings was to prevent NCA supplying GK with the contracted products. As a result, GK exercised its security over the
assets of NCA and appointed a receiver to NCA to protect its position. The Federal Court proceedings have now been completed.
As the business of NCA is in the process of being sold, the directors of Jatcorp expects that Golden Koala will recover its receivable
of $2.5 million on the sale of the NCA business. In this case, the vendors of the business will need to have Golden Koala consent
to its security over the assets of NCA being discharged in full to complete the sale. Given there remains some uncertainty about
the recoverability of the receivable and taking a prudent approach, the directors of Jatcorp Limited have made decision to fully
impair the deposit of $2.5 million in the current reporting year.
B. Carrying amount of Intangible Assets (refer note 12)
The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least at each reporting date.
This requires an estimation of the recoverable amount of the cash-generating units (CGU) to which goodwill has been allocated,
using value-in-use discounted cash flow methodology. The value in use calculation requires the directors to estimate the future
cash flows expected to arise from the cash -generating unit and a suitable discount rate in order to calculate present value.
Where the actual future cash flows are less than expected, a material impairment loss may arise.
Green Forest International Pty Ltd
In August 2018, Jatcorp acquired 50% of Green Forest International Pty Ltd (‘Green Forest’), goodwill of $13,984,245 was
recognised in prior year. During the year, Hong Kong’s political instability and COVID-19 pandemic have caused disruption
across the markets, especially the local outbound Daigou market as government lockdowns have constrained the movement
of overseas visitors and students. As a result, sales have decreased significantly compared to prior year. Decreased sales and
COVID-19 pandemic disruption has resulted in the estimated recoverable amount being less than the carrying amount. After
taking a prudent approach based on the most recent information, the Directors of Jatcorp have made decision to fully impair
the Goodwill balance as at 30 June 2020.
Customer relationships of $1,900,000 was recognised as a result of the acquisition in prior year. Management has re-assessed
the useful life of customer relationships based on existing customers, sales to date and present value estimates of future sales
and considers 5 years as reasonable estimated useful life. As at 30 June 2020 the carrying value was $1,182,685.
Page 37 of 68
Notes to Financial Statements
For the year ended 30 June 2020
2. Critical Accounting Estimates and Judgements (continued)
B. Carrying amount of Intangible Assets (refer note 12) (continued)
Sunnya Pty Ltd
In October 2018, Jatcorp Limited acquired 51% of Sunnya Pty Ltd (‘Sunnya’), goodwill of $11,902,162 was recognised in prior
year. Management has critically assessed its “value in use” discounted cash flow models to assess the recoverable amount of
goodwill based on both local and global economic situations.
Management has stress tested its discounted cash flow model by assuming that the future revenue for 2021FY will reduce by
71%, in 2022FY by 48% and in 2023FY by 32% compared to the current 2020FY sales. Management’s assumption also included
that there will be no future tariff from China and that COVID-19 will dwindle down and International borders will open in early
2022. Even with these worst case scenario analysis, there is no indication of impairment as at 30 June 2020.
Customer relationships of $930,000 and tradenames of $597,000 were recognised as a result of the acquisition in prior year.
Management has re-assessed the useful life of customer relationships based on existing customers and sales to date and
present value estimates of future sales and considers 5 years as reasonable estimated useful life for customer relationships
and 10 years as reasonable estimated useful life for tradenames. As at 30 June 2020 the carrying value of customer
relationships amounted to $609,978 and tradenames amounted to $494,283.
Australian Natural Milk Association Pty Ltd (ANMA)
In October 2019, Jatcorp Limited acquired 65% of Australian Natural Milk Association Pty Ltd (‘ANMA’). Goodwill of $9,650,067
was recognised on the acquisition date based on valuations performed by an independent third party commissioned by
management. Victorian stage 4 lockdown restrictions and uncertainty of progression of the pandemic negatively impacted on
production capacity of ANMA in the next 12 months. After consideration of the current year’s financial outcome and future
expected performance, goodwill balance has been impaired in full as at 30 June 2020.
In addition, import Licence of $13,631,200 was recognised as a result of the acquisition. Management has considered the
estimated useful life of the licence based on present value estimates of future sales and considers 8 years to be a reasonable
estimated useful life. As at 30 June 2020, carrying value of the licence was $12,353,275.
C. Going concern basis of accounting
The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and
realisation of assets and the discharge of liabilities in the ordinary course of business.
For the year ended 30 June 2020, the Group has incurred a loss after tax of $26,590,036, which is mainly driven by non-cash
expenses, including goodwill impairment loss of $23,634,266, NCA deposit impairment of $2,500,000, and depreciation and
amortisation totalling $2,490,306.
At 30 June 2020, the Group has net current liabilities of $170,363 (2019: $6,834,480 net current assets) and has excess of
liabilities over net tangible assets of $8,516,094 (2019: $3,342,385 surplus of net tangible assets over liabilities). The excess
liabilities are caused by increased debts and convertible notes issued for funding acquisition of ANMA.
The directors believe that the going concern basis of preparation is appropriate due to: the Group having cash balances of
$11,419,725 (2019: $7,844,671); the Group having positive cash flows from operating activities for the current reporting year
of $1,457,075 (2019: $2,804,689 cash outflow). The Group has raised capital of $1,728,437 from external investors during the
reporting year; the Group expecting to deliver growth via developing new products, expanding JAT business and distribution
networks, and seeking new sales channels to offset constraint of Daigou channel; the Group expecting to convert partial debts
to equity; and the Directors consider the Group is able to scale back activities in order to preserve cash should this be required.
Accordingly, the financial report has been prepared on the going concern basis and the Group can meet its obligations in the
ordinary course of business as and when they fall due. No adjustments have been made to the financial report relating to the
recoverability or classification of recorded assets and classification of liabilities that maybe necessary should the Group not
continue as a going concern.
Page 38 of 68
Notes to Financial Statements
For the year ended 30 June 2020
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.
4
Revenue
Revenue
Trading Income
Total Revenue
Other Income
Interest Income
Rental Income
Earnout Liability Written Back
Miscellaneous Income
Total Other Income
Consolidated entity
2020
$
2019
$
59,452,615
66,444,062
59,452,615
66,444,062
283,879
95,881
-
501,008
880,768
258,255
-
2,552,637
1,145,014
3,955,906
Page 39 of 68
Notes to Financial Statements
For the year ended 30 June 2020
5
Cost of sales
Cost of Sales *
Consolidated entity
2020
$
2019
$
(44,883,862)
(60,413,679)
* Tax and import expenses in China were allocated under administrative expenses in FY2019. The tax and import expenses
are duties, VAT and agent charges paid during customs clearance process. The expenses are allocated under costs of sales in
FY2020. Cost of sales in FY2019 is revised from $59,696,079 to $60,413,679.
6
Income tax expense
(a) Reconciliation of income tax expense to prima facie tax payable
Loss before income tax expense
Tax (benefits) at the Australian tax rate of 30% (2019:30%)
Tax effect of amounts which are not deductible in calculating taxable
income
Tax effect of
non-deductible expenses
changes in temporary differences
Adjusted income tax
Tax losses not brought to account
Income tax expenses
2020
$
2019
$
(23,658,869)
(7,097,661)
(19,834,316)
(5,827,895)
7,840,281
78,327
820,947
2,110,220
6,951,519
27,973
1,151,597
(85,372)
2,931,167
658,225
The Group has a turnover of more than $59 million for the year ended 30 June 2020. It is over the base rate entity threshold
and therefore, tax rate of the Group is 30% in 2020 (2019: 30%)
The Parent company has unrecognised available tax losses of $2,110,220 as at 30 June 2020. These tax losses have not been
recognised due to uncertainty of their recoverability in future periods.
Jatcorp has not formed a tax consolidated group.
Page 40 of 68
Notes to Financial Statements
For the year ended 30 June 2020
7
Cash and cash equivalents
Cash at bank and in hand
Total
8
Trade and other receivables
Current
Trade receivables
Provision for doubtful debts
Total
Deposit paid to Nutritional Choice Australia (refer to note 2 (A))
Prepayments
Other receivables
Consolidated Entity
2020
$
11,419,725
11,419,725
2019
$
7,844,671
7,844,671
Consolidated Entity
2020
$
4,100,118
(36,044)
4,064,074
-
628,658
1,790,140
2019
$
1,362,859
-
1,362,859
2,500,000
495,493
385,967
Total
6,482,872
4,744,319
Standard customer credit terms are 30 to 120 days depending on the customers. The amount of trade receivables past due
but not impaired at 30 June 2020 was $503,806 (2019: $471,853).
The Group applies the simplified approach to provide 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 and determined based on historic experience of sales and bad debts.
Other receivables have been assessed and no impairment is considered necessary.
Page 41 of 68
Notes to Financial Statements
For the year ended 30 June 2020
9
Right of use assets
Cost as at 1 July 2019
Asset and Liability acquired during the period
Less: Accumulated Depreciation
Interest expense
Payments
As at 30 June 2020
10
Inventory
Finished goods
Raw materials
Packaging materials
Total
Consolidated Entity
2020
$
2019
$
1,254,876
4,268,502
(474,213)
-
-
5,049,165
-
-
-
-
-
Consolidated Entity
2020
$
2019
$
2,971,924
3,100,652
997,541
627,027
138,000
29,098
4,596,492
3,267,750
Page 42 of 68
Notes to Financial Statements
For the year ended 30 June 2020
11 Property, plant and equipment
Property at cost
Less: accumulated depreciation
Total property
Plant and equipment at cost
Less: accumulated depreciation
Total plant and equipment
Motor vehicles at cost
Less: accumulated depreciation
Total motor vehicles
Projects under construction
Total property, plant and equipment
Movements in carrying amounts
Consolidated Entity
2020
$
1,279,264
(1,648)
1,277,616
1,570,747
(984,659)
586,088
288,152
(43,600)
244,552
1,441,883
3,550,139
2019
$
-
-
-
-
-
-
67,377
(3,998)
63,379
-
63,379
Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of
the current financial year:
Page 43 of 68
Notes to Financial Statements
For the year ended 30 June 2020
12
Intangible Assets
Goodwill (a)
Tradenames (b)
Accumulated amortisation
Impairment loss
Carrying value
Customer relationships (c)
Accumulated amortisation
Carrying value
Import Licence (d)
Accumulated amortisation
Carrying value
Consolidated Entity
2020
$
2019
$
11,902,162
25,886,406
553,983
(59,700)
-
494,283
2,358,663
(566,000)
1,792,663
13,631,200
(1,277,925)
12,353,275
1,957,000
(43,017)
(1,360,000)
553,983
2,830,000
(471,337)
2,358,663
-
-
-
Total intangible assets
26,542,383
28,799,052
Movements in carrying amount of intangible assets
Page 44 of 68
Notes to Financial Statements
For the year ended 30 June 2020
12
Intangible assets (continued)
(c) Customer Relationship
Balance as at 1 July
Acquired
Accumulated amortisation
Carrying Value
(d) Import Licence
Balance as at 1 July
Acquired (refer to note 25 (a))
Accumulated amortisation
Carrying Value
Golden Koala goodwill
Golden Koala Tradenames
Green Forest goodwill
Australian Natural Milk Association goodwill
Total impairment
13
Trade and other payables
Trade payables
Sundry accruals and other payables
ANMA acquisition payable
Total
Consolidated Entity
2020
$
2019
$
2,358,663
-
(566,000)
1,792,663
-
2,830,000
(471,337)
2,358,663
Consolidated Entity
2020
$
2019
$
-
13,631,200
(1,277,925)
12,353,275
$
-
-
13,984,244
9,650,022
23,634,266
-
-
-
-
2019
$
22,712,574
1,360,000
-
-
24,072,574
Consolidated Equity
2020
$
1,872,169
1,611,413
3,929,425
7,413,007
2019
$
209,476
912,124
-
1,121,600
The total impairment charge to profit in the year comprises：
Consolidated Entity
2020
Trade payables are non-interest bearing. Their fair value approximates their carrying amount.
Page 45 of 68
Notes to Financial Statements
For the year ended 30 June 2020
14
Provisions
Current
Earnout liabilities *
Provision for annual leave
Total
Consolidated Entity
2020
$
-
168,526
168,526
2019
$
5,250,000
55,470
5,305,470
*During the year, earnout liabilities was settled in cash of $2,600,000 and balance of $2,650,000) via issue of shares in
December 2019 (note 18).
15
Borrowings
Current
Loans from shareholders *
Loans from directors *
Loan from Topwei Two Pty Ltd (interest rate 13%)
Loan from Topwei Two Pty Ltd *
Convertible Notes from Obsidian
HP Liability
Total
Non-current
Loans from shareholders (interest rate 15% p.a)
Loan from Topwei Two Pty Ltd( interest rate 20% p.a)
HP Liability
Total
* These loans are at call and interest free.
16
Lease Liabilities
Current
Lease liabilities
Total
Non-current
Lease liabilities
Total
Consolidated Entity
2020
$
2019
$
1,274,000
1,328,482
27,529
5,000,000
2,250,000
4,000,000
40,979
338,269
-
-
-
9,055
12,592,508
1,675,806
2,300,000
5,000,000
167,033
7,467,033
2,460,509
-
66,865
2,527,374
Consolidated Entity
2020
$
441,817
441,817
4,883,789
4,883,789
2019
$
-
-
-
-
Page 46 of 68
Notes to Financial Statements
For the year ended 30 June 2020
17
Deferred Tax Liabilities
Balance as at 1 July
Acquired through business combination (note 25 (a))
Write back
Total
18
Contributed equity
Consolidated Entity
2020
$
1,028,100
4,089,360
-
5,117,460
2019
$
408,000
1,028,100
(408,000)
1,028,100
Consolidated Entity
2020
$
2019
$
Share capital
934,548,092 (2019:798,486,181) Fully paid shares
63,977,915
57,556,005
Movements in Ordinary Share Capital
2020
$
2019
$
2020
No.
2019
No.
Balance at the beginning of year *
August 2018 (Acquisition of Green Forest)
57,556,005
August 2018 (Share Placement)
August 2018 ( Share Placement)
October 2018 (Share Placement)
October 2018 (Acquisition of Sunnya)
October 2018 (Share Placement)
December 2018 (Share placement)
February 2019 (conversion of options)
October 2019 (Shares issued for the $474,300
received in FY19) @ 6 cents
October 2019 Shares Issued for Investment in
ANMA of $2million @ 5.48 cents
December 2019 Shares Issued to Sunnya
($650,000) and Green forest ($2,000,000) as
part of Earnout
December 2019 Money Received for Right
Issue @ 5 cents
January 2020 (Shares issued to Chris Pang @ 5
cents)
January 2020 (Shares issued for $250,040)
474,300
2,043,473
2,650,000
504,097
500,000
250,040
588,816,182
40,000,000
10,633,333
3,000,000
333,333
35,000,000
22,420,000
86,666,667
11,616,666
45,216,805
2,680,000
960,000
300,000
5,000
1,470,000
1,027,200
5,200,000
697,000
798,486,181
7,905,000
36,490,596
66,583,580
10,081,935
10,000,000
5,000,800
Balance at the end of year
63,977,915
57,556,005
934,548,092
798,486,181
Page 47 of 68
Notes to Financial Statements
For the year ended 30 June 2020
18 Contributed equity (continued)
*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. Jatcorp 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 holders of the Error Shares. At the general meeting
of shareholders on 18 June 2020, a resolution was passed approving the cancellation of 3,500,000 ordinary shares in the
Company. There are a further 4,600,000 shares which were issued in error which continue to be held by shareholders who
have not yet entered into buy-back agreements, despite not having paid for the shares and despite having been requested to
enter into a buy-back agreement.
On 20 April 2020 Jatcorp has entered into a convertible note agreement with a face value of $1,000,000 with a conversion
price of 5 cents subject to shareholder approval. As at the date of this report, Jatcorp has received $320,175 pursuant to this
note. Jatcorp has recognised as an equity component at balance date.
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.
19
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 limits 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 financial instruments consist mainly of deposits with banks, financial assets, trade and other receivables, trade
and other payables and borrowings (current and non-current).
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Investment in Joint Ventures
Total
Consolidated entity
Notes
7
8
2020
$
11,419,725
6,482,872
129,168
523,237
2019
$
7,844,671
4,744,319
-
-
18,555,012
12,588,990
Financial Liabilities
Trade and other payables
Borrowings (current and non-current)
Total
13
15
7,413,007
20,059,541
27,472,548
1,121,600
4,203,180
5,324,780
Page 48 of 68
Notes to Financial Statements
For the year ended 30 June 2020
19 Financial risk management (continued)
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. Specific information regarding the mitigation of each financial risk to which the Group
is exposed is provided below.
(a)
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future profitability or the fair values of
financial instruments.
The Group is not exposed to significant interest rate risk as majority of its borrowing arrangements are at fixed rate, which
minimises any short-term downside impact of interest rate increase but limits any benefit from interest rate reductions.
(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 enters into transactions in US dollar and Chinese RMB and is exposed to currency risk arising from movements in
these foreign currencies against AUD dollar. To mitigate foreign currency risk for US dollar and RMB transactions and to avoid
the need for currency hedging the Group holds and trades in the relevant currency. Profits are then recovered by transfers of
cash at a time the exchange rate is deemed favourable. The Group has 3 USD foreign currency bank accounts and the balance
of these accounts at 30 June 2020 was $4,140 (2019: $486,972) 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.
(c)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the
Group. The objective of the Group is to minimise the risk of loss from credit risk exposure.
Credit risk arises from cash and cash equivalents, deposits and banks and financial institutions, as well as credit exposure to
customers, including outstanding receivables and committed transactions.
(i) Risk Management
Credit risk is managed on a group basis. The credit risk for cash and cash equivalents and deposits with banks and financial
institutions is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
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.
(ii)
Impairment of finance assets
The group mainly has one type of financial assets that are subject to the expected credit loss model, being trade and other
receivables (refer to note 8).
While cash and cash equivalent are also subject to the impairment requirement 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 the level which the Board considers necessary to achieve these
objectives and meets agreed conditions. The management believes the loans to subsidiaries are fully recoverable.
Page 49 of 68
Notes to Financial Statements
For the year ended 30 June 2020
19 Financial risk management (continued)
Trade Receivable
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 2020 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.
(d)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in raising funds to meet commitments associated its obligation
as they fall due. To manage this 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’s terms of sales require amounts to be paid within 30 to 60 days of sale. Trade payable are normally settled within
30 days of the date of purchase. The maturity profile is monitored by management to ensure adequate liquidity is maintained.
The Group’s financial assets of $17,902,597 have a maturity with 12 months of 30 June 2020 and financial liabilities of
$27,472,548 of which $4,000,000 is a convertible note and management expects that the non-current borrowings can continue
to be extended beyond the current loan term.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments.
(e)
Fair value measurement
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 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 2020 held cash in low interest-bearing accounts. The Directors do not consider that any reasonably
Page 50 of 68
Notes to Financial Statements
For the year ended 30 June 2020
19 Financial risk management (continued)
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 US dollar and Chinese RMB. To mitigate foreign currency risk
for US dollar and RMB transactions and to avoid the need for currency hedging the Group holds and trades in the relevant
currency. Profits are then recovered by 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 material effect on Group’s
performance or equity given translations are predominantly carried out in AUD.
20
Key management personnel
Directors and Key Management Personnel of Jatcorp Limited (refer to Remuneration report for details) during the financial
year were paid the following amounts.
Short term benefits
Total
Consolidated Entity
2020
$
770,788
770,788
2019
$
920,479
920,479
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 2020 or 30 June 2019 other than noted here, in the
remuneration report, and Note 24.
21
Auditors remuneration
During the reporting period the following fees were paid or payable for services provided by the auditors and a non-related
audit firm. No non-audit services were provided by the auditors.
LNP Audit and Assurance Pty Ltd
Hall Chadwick
Total
Consolidated Entity
2020
$
75,000
-
2019
$
70,000
42,682
75,000
112,682
Page 51 of 68
Notes to Financial Statements
For the year ended 30 June 2020
22 Fair value measurement
The Group measures goodwill, customer relationships, import licence 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, import licence and trademarks are
classified as level 3. The value of these assets is disclosed in note 12.
23
Contingencies and Commitments
There are no contingent liabilities as at 30 June 2020 (2019: none)
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
2020
$
2019
$
-
-
-
262,414
519,462
781,876
There are no operating lease commitments at 30 June 2020 due to the adoption of AASB 16, which caused operating lease to
be capitalised in the balance sheet.
The Group is committed to pay $866,430 for the purchase of new machinery in ANMA factory and $325,730 to University of
Sydney for research cost on product testing.
Page 52 of 68
Notes to Financial Statements
For the year ended 30 June 2020
24
Related party transactions
(a) Payable to or receivable from related parties at year-end
Directors/secretary & consulting fees (inc GST) payable to Aust JLY Group Pty
Ltd, a company controlled by Wilton Yao
(b) Transaction occurring during the year:
Directors/consulting fees (inc GST) paid to Top Cat Consulting Services Pty Ltd
for the provision of the services of Anthony Crimmins
Directors/consulting fees (inc GST) paid to Aust JLY Group Pty Ltd for the
provision of the services of Wilton Yao
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 Jatcorp during the period
Abundant Produce Limited, a company of which Anthony Crimmins is a director,
paid Jatcorp for staff expenses during the period
Abundant Natural Health Pty Ltd, a company of which Anthony Crimmins is a
director, received payments from Jatcorp for expenses 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
25
Controlled entities
Consolidated Entity
2020
$
2019
$
27,500
28,380
-
280,500
412,500
484,528
121,000
66,825
-
-
-
33,387
16,346
5,000
3,432
8,230
Subsidiaries of Jatcorp which are
consolidated
Country of
incorporation / Place
of business
Golden Koala Group Pty Ltd
Green Forest International Pty Ltd
Sunnya Pty Ltd
Jatpharm Pty Ltd
Australian Natural Milk Association Pty Ltd
Australia
Australia
Australia
Australia
Australia
* Percentage of voting power is in proportion to ownership.
Percentage owned
(%)*
Percentage owned by non-
controlling interest (%)*
2020
2019
2020
2019
%
51
50
51
55
65
%
51
50
51
55
-
%
49
50
49
45
35
%
49
50
49
45
-
Jatpharm Pty Ltd did not carry out any business activity during year ended 30 June 2020.
(a) Acquisition of entities
65% of Australian Natural Milk Association Pty Ltd was acquired during the year. Details of the transactions are:
Page 53 of 68
Notes to Financial Statements
For the year ended 30 June 2020
25 Controlled entities (continued)
Purchase consideration consisting of :
Cash paid
36,490,596 shares in Jatcorp Limited
Present value of future cash instalments
Total Consideration
Assets and Liabilities held at acquisition date
Other net tangible assets acquired (ii)
Deferred tax liability
Import Licence (i)
Goodwill (i)
Minority interest
Net Assets Acquired
2020
$
7,000,000
2,043,473
3,847,816
12,891,289
$
640,890
(4,089,360)
13,631,200
9,650,022
(6,941,463)
12,891,289
(i) The fair value of goodwill and import licence acquired relating to Australian Natural Milk Association Pty
Ltd (‘ANMA’) have been determined based on a valuation report received from independent valuation
specialist.
(ii) During the period the Group obtained control of Australian Natural Milk Association Pty Ltd (‘ANMA’).
Page 54 of 68
Notes to Financial Statements
For the year ended 30 June 2020
26 Share based payments
The following share-based payment arrangements in the form of share rights awards were in existence during the current
reporting period:
27 Events occurring after the reporting date
Appointment and resignation of Directors
As announced in August 2020, Mr Sun Xin was appointed a director of JAT. Mr Sun is Managing Director of Guangdong RYS
Investment Ltd, a midmarket private equity buyout firm with a focus on mainland China. He has also worked for a number of
securities firms including CDB Securities Ltd. Mr Sun is a Representative Sponsor of the China Securities Regulatory Commission.
His appointment coincided with the resignation of Mr Xipeng Li as a Director, who helped develop JAT’s business and contacts
in China.
Share buy-back
As announced in July 2020, JAT completed a share buy-back after gaining shareholder approval at a general meeting on 18
June 2020. The buy-back was of 7,361,900 ordinary shares issued to shareholders as a result of a systems error as part of a
December 2017 Share Purchase Plan. There are a number of shareholders who have not yet entered into buy-back agreements,
and JAT will continue to take appropriate action against those shareholders, including court proceedings to seek orders for
cancellation of those shares.
Convertible note facility
As announced on 22 April 2020, the Company has entered into an agreement in relation to a convertible note facility with
Obsidian Global GP, LLC with a subscription price of up to AU $4,000,000 dated 22 April 2020. On 8 July 2020 the Company
issued 2,771,600 convertible securities with a face value of US $1.20 each raising AU$4,000,000 before costs pursuant to
the convertible note facility with Obsidian Global GP, LLC . On 8 July 2020 JAT also issued 49,000,000 ordinary, fully paid shares
(Collateral Shares) on the issue of the Convertible Securities, as security for the Company’s obligations under the convertible
securities agreement, with such Collateral Shares to be credited upon retirement of the convertible securities. The remaining
number of Convertible Notes following Conversion is 2,677,900.
Green Forest
In October 2019, legal proceedings commenced against Green Forest International Pty Ltd (GFI), a subsidiary of Jatcorp Limited,
in relation to copyright and trademark infringement in respect of products sold by GFI. GFI is defending these proceedings and
has filed a cross-claim against the applicant. The directors believe that GFI will be successful in these proceedings.
Other than the above, no other matters have arisen since 30 June 2019 that have significantly affected the Group’s operations.
Page 55 of 68
Notes to Financial Statements
For the year ended 30 June 2020
28
Reconciliation of loss after income tax to net cash outflow from operating activities
Loss for the year including income tax
Non-cash flows in operating activities:
Depreciation & amortisation
Impairment loss
Share based payments
Other income
Change in operating assets and liabilities:
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
(Increase)/decrease in financial assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in income tax liability
Increase/(decrease) in provision for employees
Consolidated Entity
2020
$
2019
$
(26,590,036)
(20,492,541)
2,490,306
518,352
26,134,266
431,667
-
24,072,574
-
(3,722,101)
(1,328,742)
(3,267,750)
(3,710,045)
(129,167)
(1,777,965)
-
2,782,393
1,263,377
113,056
889,888
919,384
55,470
Net cash inflow/(outflow) from operating activities
1,457,075
(2,804,689)
29 Loss per share
Page 56 of 68
Notes to Financial Statements
For the year ended 30 June 2020
30 Jatcorp Limited - Parent Company Information
2020
$
2019
$
12,044,538
5,526,180
7,589,204
28,913,148
19,633,742
34,439,328
15,680,374
5,263,190
5,831,797
-
20,943,564
5,831,797
63,977,915
320,175
57,556,005
-
(65,607,912)
(28,948,474)
(1,309,822)
28,607,531
Parent Entity
Assets
Current Assets
Non-current Assets
Total Assets
Liabilities
Current Liabilities
Non-current Liabilities
Total Liabilities
Equity
Issued Capital
Unissued shares - convertible notes
Retained Earnings
Total Equity
Financial Performance
Profit/(Loss) for the year
Other Comprehensive Income
(36,659,438)
-
1,103,804
-
Total Comprehensive Income
(36,659,438)
1,103,804
Page 57 of 68
Directors’ Declaration
In accordance with a resolution of the directors of Jatcorp Limited, the directors of the company declare that:
1.
the financial statements and notes, as set out on pages 23 to 57 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 2020 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.
This declaration is made in accordance with a resolution of the board of directors.
Managing Director
Wilton Yao
Dated this 31 day of August 2020
Page 58 of 68
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 31 August 2020.
(a)
Distribution of equity securities
Analysis of a number of ordinary fully paid shareholders by size of holding:
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:
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:
Page 66 of 68
Shareholder Information
Page 67 of 68
Page 68 of 68
JATCORP LIMITED
ABN 31 122 826 242