china waste corporation limited a.b.n. 95 003 078 591 for ... · china waste corporation limited...

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China Waste Corporation Limited A.B.N. 95 003 078 591

CHINA WASTE CORPORATION LIMITED

A.B.N. 95 003 078 591

SHORT FINANCIAL YEAR 2015 ANNUAL REPORT

For the six-months ended 31 December 2015

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COMPANY DIRECTORY

DIRECTORS: Peter Harrison (Co-Chairman) Wang Qingli (Co-Chairman)

Wei Dong Li Xianglin

Ross Benson Alex Chee Leong Chow

SECRETARY: Alex Chee Leong Chow

REGISTERED OFFICE: C/- K&L Gates

Level 31 1 O’Connell Street Sydney NSW 2000

SHARE REGISTER: Computershare Investor Services Pty Ltd

Level 4 60 Carrington Street Sydney NSW 2000

Telephone 1300 787 272

BUSINESS ADDRESS: Level 5

7 Eden Park Drive Macquarie NSW 2113

Telephone: (02) 8935 9507 Facsimile: (02) 8935 9401

AUDITORS: Grant Thornton Audit Pty Ltd

Level 1 67 Greenhill Road Wayville SA 5034

Telephone: (08) 8372 6666

STOCK EXCHANGE LISTING: China Waste Corporation Limited shares are listed on Australian Securities Exchange

ASX Code: CWC

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TABLE OF CONTENTS Chairman’s Review 4

Directors’ Report

6

Auditor’s Independence Declaration

14

Statement of Profit or Loss and Other Comprehensive Income

15

Statement of Financial Position 16

Statement of Changes in Equity 17

Statement of Cash Flows 18

Notes to the Financial Statement

19

Director’s Declaration

40

Independent Auditor Report 41

Stock Exchange Requirements 44

Reconciliation of Appendix 4E to Financial Report 45

Corporate Government Statement 46

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Chairman’s Review

I am pleased to be able to present the December 2015 result for China Waste Corporation Limited to our shareholders. As you will note as you read the financial statements, the Company has changed its accounting year-end from 30 June to 31 December.

In the six months since the last Chairman’s Review, the Company have entered into agreements to establish two significant joint ventures, which will become the platform of the future success of our company. The agreements are with the Institute of Urban Environment (IUE), Chinese Academy of Sciences (CAS) and CECEP Asset Management Co ltd (CECEPAM).

The Company established the first joint venture with IUE-CAS called CAS Fortune Environmental Co Ltd (CAS-Fort), and the second joint venture with CECEPAM called CECEP Clean Technology Development Co Ltd (CECEP Clean Tech).

CAS Fortune Environmental Co Ltd (CAS-Fort)

On the 27 November 2015, the Company announced that it had, through its subsidiary Fortune Technology (HK) Limited (Fortune), entered into a formal agreement in relation to the joint venture with IUE-CAS., known as CAS Fortune Environmental Co Ltd.

The main business of the CAS-Fort will be hazardous waste and/or medical waste treatment and disposal as well as related services.

The amount to be invested in CAS-Fort by Fortune and CAS will be RMB 60,000,000. CAS will contribute software copyrights valued at RMB 3,000,000 for a 5% interest in CAS-Fort, and Fortune will contribute RMB 57,000,000 for a 95% interest in CAS-Fort.

CAS-Fort will initially target the projects for the development and operation of hazardous waste treatment in selected cities in China.

Chinese Academy of Sciences (CAS)

Chinese Academy of Sciences has a staff of 60,700, including about 48,500 professional researchers. Of these, approximately 19,000 are research professors or associate professors. CAS' strategy is to emphasize the combination of research and education and interdisciplinary and cross-sector cooperation in innovation.

Chinese Academy of Sciences attaches great importance to international cooperation and has established many productive partnerships with research institutes, universities and corporations around the world. These partnerships include joint research centres, partner groups, research projects, conferences and training programmes, as well as personnel exchanges. It has also created multiple commercial enterprises, with Lenovo being one of the most well-known.

CECEP Clean Technology Development Co Ltd (CECEP Clean Tech)

On 10 December 2015, the Company announced that it had, through its subsidiary China Urban Mining signed a conditional agreement on 27 October 2015 to form a joint venture with CECEPAM, a wholly owned subsidiary of the CECEP Group. Under the agreement, China Urban Mining will acquire a 30% shareholding in CECEP Clean Tech.

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The last of the approvals required by CECEP Clean Tech was received on 10 December 2015 and the Joint Venture between CECEPAM and China Urban Mining is now established. China Urban Mining’s due date for the contribution to CECEP Clean Tech will be determined in due course.

The main business of the CECEP Clean Tech is hazardous waste treatment and disposal (including the treatment and disposal of medical waste) as well as related services.

China Urban Mining will contribute RMB 270,000,000 for a 30% interest in CECEP Clean Tech. CECEP Group will retain a 70% interest in CECEP Clean Tech following completion of China Urban Mining's investment.

CECEP Group

CECEP Group is one of the largest state-owned enterprises in China, and is the only central state owned enterprise in China whose main business is energy conservation and environmental protection.

CECEPAM is a wholly owned subsidiary of the CECEP Group.

CECEP Group has been operating in the Chinese hazardous waste industry since 2001. It established CECEP Clean Tech as its main entity in the hazardous waste entity industry after consolidating all of its hazardous waste related businesses within the CECEP Group into CECEP Clean Tech. CECEP Clean Tech’s primary functions include engineering, procuring, constructing and operating hazardous waste treatment facilities and hazardous waste landfill sites throughout China.

Currently, CECEP Clean Tech owns and operates three fully operational hazardous waste treatment facilities located in Nanning in the Guangxi Province, Panzhihua in the Sichuan Province, and Xuzhou in the Jiangsu Province. All three operating facilities have government sanctioned hazardous waste operating licenses allowing treatment and disposal of hazardous waste. Together, these three facilities are capable of handling more than 100,000 tons of hazardous waste annually.

CECEP Clean Tech is also looking to expand its hazardous waste operations through the development of additional treatment facilities and landfill sites, several of which are currently under construction or are in the process of obtaining the relevant licenses from the Chinese authorities. CECEP Clean Tech believes that these additional treatment facilities and landfill sites will, once they are completed and operational, position CECEP Clean Tech as a market leader in the Chinese hazardous waste industry, with a potential treatment capacity of over 1,000,000 tons annually.

These joint ventures provide an exciting opportunity for the Company and will provide the basis of its growth. The waste management industry in China in the coming years have been projected for considerable growth, and I believe the company is in a position to take full advantage of that growth. I am excited by the opportunities that are ahead of us and I look forward to updating you as we continue to progress.

Dr. Wang Qingli

Chairman

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Directors’ Report

The directors of China Waste Corporation Limited present the annual report of the Company for the six months ended 31 December 2015. Directors The names and details of directors in office during the 6 months and continuing up to the date of this report, unless otherwise stated are:

Peter Harrison Wang Qingli Wei Dong Li Xianglin Ross Benson Alex Chee Leong Chow Information on current Directors and Company Secretary

Peter Harrison – (Independent Non-Executive Co-Chairman)

Mr Harrison is an Australian born business developer who has been closely involved in international renewable energy initiatives in the UK, Asia, and Northern America. Peter is passionate about environmental protection through scientific study of waste and the resultant technologies that will lead to the transformation of the waste management industry worldwide. In addition, he has expertise in marketing and finance and brings international perspective and strategic creative thinking to business opportunities. Peter founded and ran several successful international businesses in Australia and the UK. Prior to moving to the UK, Peter was personally advising the Ford Motor Company on Project Ford 2000 – a five year worldwide Company refocusing project.

Other current listed company directorships: None.

Previous directorships: Mr Harrison has not held any listed company directorships in the three years preceding the date of this report.

Wang Qingli – (Independent Non-Executive Co-Chairman)

Mr Wang is a widely respected expert in China’s environmental protection academic community. He has published more than 200 scientific articles in the environmental protection and ecology sector, and co-edited 7 books. Before joining the board, he was general director of Kunming branch of Chinese Academy of Sciences. Before that, he was the general director of Shenyang branch of Chinese Academy of Sciences. He was adjunct professor at the University of British Colombia, Canada. Mr Wang obtained his PhD in ecology from the University of British Colombia, Canada.

Other current listed company directorships: None

Previous directorships: Mr Wang has not held any listed company directorships in the three years preceding the date of this report.

Wei Dong – (Executive Director) Mr Wei is the CEO of CWC. He is meanwhile the vice chairman of the board to CECEP Clean Tech. He has more than 15 years of experience in large scale multi-national enterprises and state-owned-enterprises. He participates and manages various aspects of operations including marketing, infrastructure management, and thermal power management. He is familiar with corporate operation, company management, and fundraising. He has especially intensive knowledge in environmental protection industry. Mr Wei obtained his PhD in Environmental Economy and Management from University of Chinese Academy of Science.


Previous directorships: Mr Wei has not held any listed company directorships in the three years preceding the date of this report.

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Directors’ Report (continued)

Information on current directors and company secretary (continued)

Li Xianglin – (Executive Director)

Mr Li is the Chief Operating Officer of CWC. Prior to joining the board, he worked in the Imaging Systems Laboratory in University of Hong Kong. Before that, he spent two years as research assistant in Rochester Centre for Brain Imaging, Rochester, NY, US.

In addition to his science and engineering background, he also has experience in venture capital investment. He was a member of Charles Xue Angel Investment Team, where he reviewed business plans in TMT (Technology, Media, and Telecommunications) sector. He obtained his Master of Science degree from University of Rochester (US) and Bachelor of Engineering degree from Zhejiang University (China).


Previous directorships: Mr Li has not held any listed company directorships in the three years preceding the date of this report.

Ross Benson – (Independent Non-Executive Director)

Mr Benson founded Investorlink in 1986 and has 28 years of experience in the Australian financial services industry, with extensive knowledge in securities, deal structuring and business strategy. He has lead negotiations for divestment and acquisition strategies for medium to large enterprises and has a depth of experience in prospectus and other document preparation. Subsequent to the formation of Investorlink, he has established associated business units in wealth management, private equity, property syndication and structured financial products. Over 9 years he has spent significant time in China originating inbound and outbound investment activity.

Other current listed company directorships: 99 Wuxian Limited (ASX: NNW) (Appointed 28 June 2013) and Enice Holding Company (ASX: ENC) (Appointed 12 June 2015).

Previous directorships: Mr Benson has held a directorship position in TTG Fintech Limited (ASX: TUP) (Resigned 12 September 2014).

Alex Chee Leong Chow – (Independent Non-Executive Director & Company Secretary)

Mr Chow is an experienced Chief Financial Officer and Company Secretary operating at the executive level for more than 17 years, mainly in the technology and infrastructure industries. He has an excellent track record in managing external and internal relationships, cash management, driving profitability, raising capital, strategic planning, budgeting/forecasting, tax management and managing change. Recognised as an empowering leader with a focus on sound ethical corporate governance while achieving commercial outcomes. He is a Certified Practicing Accountant. He obtained his Bachelor degree from the University of New South Wales.

Other current listed company directorships: None

Previous directorships: Mr Chow has not held any listed company directorships in the three years preceding the date of this report.

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Directors’ Shareholdings

Particulars of shares and options over shares in China Waste Corporation Limited in which directors have a relevant interest at the date of this report are as follows:

Director Fully paid ordinary shares

Partly paid ordinary shares Share options

P Harrison - - - Q Wang - - - D Wei - - - X Li - - - R Benson 16,000 - - ACL Chow - - -

Principal Activities

The principal activity of the Company during the 6 months is waste management and related technologies specialising in hazardous waste (in particular industrial, toxic and medical waste), with a focus on opportunities in the People’s Republic of China.

In the period the Company formed and announced to the market 2 strategic joint ventures, being;

(a) on 27 November 2015 the Company announced that it had, through its Hong Kong based subsidiary Fortune Technology (HK) Limited (Fortune), entered into a formal agreement in relation to the joint venture with the Institute of Urban Environment, Chinese Academy of Sciences (CAS). The joint venture entity will be known as CAS Fortune Environmental Co Ltd (CAS-F). Under this agreement Fortune will acquire a 95% in CAS-F.

The main business of the CAS-F will be hazardous waste and/or medical waste treatment and disposal as well as related service; and

(b) on 10 December 2015 the Company announced that it had, through its wholly owned subsidiary China Urban Mining Holdings Limited (CUMHL) signed a conditional agreement on 27 October 2015 to form a joint venture with CECEP Asset Management Co Ltd (CECEPAM), a wholly owned subsidiary of the China Energy Conservation and Environmental Protection Group (CECEP Group). Under the agreement CUMHL will acquire a 30% shareholding in CECEP Clean Technology Development Co., Ltd (CECEP Clean Tech),

Currently, CECEP Clean Tech owns and operates three fully operational hazardous waste treatment facilities located in Nanning, in the Guangxi Province; Panzhihua, in the Sichuan Province; and Xuzhou, in the Jiangsu Province. All three operating facilities have government sanctioned hazardous waste operating licenses allowing treatment and disposal of hazardous waste. Combined together, these three facilities are capable of handling more than 100,000 tons of hazardous waste annually.

CECEP Clean Tech is also looking to expand its hazardous waste operations through the development of additional treatment facilities and landfill sites, several of which are currently under construction or are in the process of obtaining the relevant licenses from the Chinese authorities. CECEP Clean Tech believes that these additional treatment facilities and landfill sites will, once they are completed and operational, position CECEP Clean Tech as a market leader in the Chinese hazardous waste industry, with a potential treatment capacity of over 1,000,000 tons annually.

The two joint venture agreements represent a material change in the scope of its business operation that require shareholder approval. Refer to Events arising since the end of the reporting period.

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Review of Operations and Financial Results

The net loss of the consolidated group for the 6 months ended 31 December 2015 was $2,881,487 (June 2015: $1,396,873 loss). The increase in the Company’s loss compared with the previous year is mainly attributable to the additional cost incurred in setting up the joint ventures. Such as Consultancy fees of $1,141,457 (June 2015: $15,140), Employee benefit expenses of $602,765 (June 2015: $26,796), legal and professional fees of $260,111 (June 2015: $45,958), and Travel expenses of $320,108 (June 2015: $123,216).

At the Annual General Meeting on 30 November 2015, it was resolved to change the financial year-end date to 31 December. As a result, the financial period runs from 1 July to 31 December 2015 and is a short financial period. China Waste Corporation Limited will close its short financial period as of 31 December 2015, with the reporting period from 1 July 2015 to 31 December 2015. Upon changing the financial year to the new reporting period of 1 January to 31 December, the financial year will now correspond to the calendar year. Therefore, a comparison of the financial statements as of 31 December 2015 (short financial year) with the previous financial year is only possible to a limited extent. This change was made in order to better align the financial planning and reporting processes and timing with its operational entities, presently resident in China. To present developments during the short financial year 2015, statements referring to the reporting date of 31 December 2015 are compared with the previous year’s figures as of 30 June 2015. For statements referring to the reporting period, the short financial year 2015 will be compared with the previous fiscal year’s period (1 July 2014 to 30 June 2015).

The Directors see the commercial rationale for both the CAS-F and CECEP Clean Tech transactions is;

(a) the Transactions will allow the Company to expand its business in the waste technologies sector so that it is not solely reliant on the Harvest Champion waste management business and subject to the risks associated with that business.

(b) they sees value and a strategic opportunity for the Company and its shareholders in acquiring an interest in both CAS-F and CECEP Clean Tech.

(c) they believe that the Transactions will raise the profile of the Company and potentially create more liquidity in trading for its shares; and

(d) they view the Transactions as a way to drive value for shareholders.

Dividend

No dividend has been paid during the year nor have the Directors recommended that dividends be paid.

Events Arising Since the End of the Reporting Period

On the 8 January 2016 the Company received advice that ASX has determined that the proposed joint venture arrangements between the Company and each of the Institute of Urban Environment, Chinese Academy of Sciences and CECEP Asset Management Co Ltd (Transactions) amount to a significant change in the scale of its current business activities.

The ASX has advised that pursuant to Chapter 11 of the ASX Listing Rules the Company will be required to:

(a) obtain shareholder approval for the Transactions for the purposes of Listing Rule 11.1.2; and

(b) re-comply with Chapters 1 and 2 of the ASX Listing Rules pursuant to Listing Rule 11.1.3.

In response the Company advises that it intends to prepare and dispatch to its shareholders a Notice of Meeting and related documents for the shareholder meeting required to approve the Transactions.

In addition, the Company intends to lodge a prospectus in accordance with the requirements of the Corporations Act 2001 (Cth) in order to re-comply with Chapters 1 and 2 of the ASX Listing Rules. The prospectus will also contemplate the previously announced fundraising to be undertaken by the Company in relation to each of the Transactions.

There are no other matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect either:

• The Company’s operations in future financial years; • The results of those operations in future financial years; or • The Company’s state of affairs in future financial years.

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Events Arising Since the End of the Reporting Period (continued)

On 31 March 2016, the Group secured a short-term financial facility from a potential investor of up to $2million repayable in 1 year at 12% per annum interest rate. Meetings of Directors During the six-months ended 31 December 2015, one meeting was held. Attendance at these meetings were as detailed below.

Board Meeting Audit and Risk

Committee Remuneration and

Nomination Committee

Director Eligible Attended Eligible Attended Eligible Attended Peter Harrison 1 1 - - - -

Wang Qingli 1 1 - - - -

Wei Dong 1 1 - - - -

Li Xianglin 1 1 - - - -

Ross Benson 1 1 - - - -

Alex Chee Leong Chow 1 1 - - - -

Remuneration report (audited) The Key Management Personnel comprise the Directors and Executives. Per below, they all served throughout the six months and received the following amounts as compensation for their services to the Company for the six months ended 31 December 2015:

China Waste Corporation Limited

Short term benefit Post-employment

benefit – Superannuation

Termination benefits Totals

Directors fees

Salary/Con-sulting

fees Other

Peter Harrison Dec 2015 $30,000 - - - - $30,000 Non-Executive Co-Chairman Jun 2015 $10,296 - - - - $10,296

Wang Qingli Dec 2015 $32,500 - - - - $32,500 Non-Executive Co-Chairman Jun 2015 $3,667 - - - - $3,667

Wei Dong Dec 2015 $25,000 $59,500 - - - $84,500

Executive Director Jun 2015 $3,361 - - - - $3,361

Li Xianglin Dec 2015 $25,000 $62,475 - - - $87,475

Executive Director Jun 2015 $3,056 - - - - $3,056

Ross Benson Dec 2015 $25,000 - - - - $25,000

Non-Executive Director Jun 2015 $3,056 - - - - $3,056

Alex Chee Leong Chow Dec 2015 $27,500 $17,500 - - - $45,000


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Remuneration report (audited) (continued)

China Waste Corporation Limited




Directors fees

Salary/Con-sulting fees Other

He Rongcheng Dec 2015 - $30,604 - - - $30,604

Chief Financial Officer Jun 2015 - - - - - -

Total (December 2015) $165,000 $170,079 - - - $335,079 Total (June 2015) $26,797 - - - - $26,797

Central West Gold Limited (CWG)(1)




Directors fees

Salary/Con-sulting fees Other

Chris Ryan(2) Dec 2015 - - - - - -

Non-Executive Chairman Jun 2015 $35,833 - - - - $35,833

Grant Williams(2) Dec 2015 - - - - - -


Maxwell Davis(2) Dec 2015 - - - - - -


Total (December 2015) - - - - - -

Total (June 2015) $107,499 - - - - $107,499 (1) Relates to directors fees recorded in CWG prior to the acquisition of Harvest Champion. (2) Resigned 9 June 2015.

Notes to remuneration

The level of Directors’ remuneration is determined by the Board and subsequently ratified by the shareholders.

At the Annual General Meeting on 30 November 2015, the shareholders approved an increase in aggregate remuneration for non-executive directors from $200,000 per year to a maximum of $500,000 per year. No subsequent changes to the date of this report have been made to these parameters. The Remuneration Report submitted to the shareholders at the Annual General Meeting on 30 November 2015 was unanimously approved without comment with 100% of the ‘yes’ vote.

The terms of appointment for each non-executive director require an annual assessment of performance, however there is no performance based component of remuneration paid/payable to Directors and other KMP during the period.

No Directors were paid bonuses, termination benefits, post-employment benefits, other long-term benefits or share-based payments during the period.

Use of remuneration consultants

No remuneration consultants were used during the year.

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Remuneration report (audited) (continued) Service agreement

Name Base Salary Term of Agreement Notice Period

Executive Directors

Li Xianglin HKD$700,000(1) n/a(1) 30 days

Wei Dong HKD$1,000,000 n/a(2) 12 months

(1) The term of agreement with Li Xianglin was not fixed. In additional to the base salary Li Xianglin is entitled to a one-off payment of HKD$233,000 within two months of signing the agreement and is entitled to the equivalent to one month’s basic salary end of year payment. The service agreement is effective from 1 July 2015.

(2) The term of agreement with Wei Dong was not fixed. The service agreement is effective from 1 September 2015.

Transaction/Balance at end of year for directors related party information

As at 31 December 2015, $127,052 is due and payable to Directors, consisting of $13,523 (June 2015: $15,410) to Dr Wei Dong for advances made to the Company for operating cash flow, $12,362 (June 2015: nil) to Mr Li Xianglin for advances made to the Company, and $101,167 (June 2015: $64,530) for Director’s Fees outstanding.

During the prior year, China Urban Mining Holdings Limited advanced an unsecured and interest-free loan of $669,240 (approximately RMB3.2million) to Dr Wei Dong, an executive director for purpose of establishing operations and set up an office in Beijing, People Republic of China on behalf of the Group. During the prior period, an office lease was entered into during the period by Dr Wei Dong on behalf of the company. Total amount of lease commitments amounts to RMB 653,192 (AUD$139,195).

Investorlink Corporate Limited, a company associated with Mr Ryan and Mr Benson, provided consultancy services, capital raising service, administration services and office accommodation to CWG during the prior financial year amounting to $667,268 for these services.

Directors’ Shareholdings

The aggregate number of shares and options over shares of China Waste Corporation Limited acquired or disposed of by key management personnel during the year is as follows:

Director Opening Balance

Received as Compensation

Options Exercised

Purchases/ (Sales)

Closing Balance

P Harrison - - - - - Q Wang - - - - - D Wei - - - - - X Li - - - - - R Benson 29,000 - - (13,000) 16,000 ACL Chow - - - - - Total 29,000 - - (13,000) 16,000

Interest in Contracts

The company has signed a contract with A&B Designs Pty Ltd, of which Director Alex Chow is a Director/Shareholder, to provide company secretarial and other consulting services with an ongoing fee of $35,000 per annum and a notice period of one month. During the six-month period ended 31 December 2015, $17,500 was paid/payable to A&B Designs Pty Ltd. Refer to above compensation table.

Since the end of the previous financial year no other Director has received or become entitled to receive a benefit by reason of a contract made by the Company.

End of audited remuneration report

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Likely Future Developments

The directors intend the Company to continue to pursue its opportunities to participate in the hazardous waste management industry in the People’s Republic of China.

Options

At the date of this report, there were no unissued ordinary shares of the Company under option.

Environmental Regulations

The Company is subject to environmental regulations in respect to its waste management activities and considers it has fully complied with its obligations.

No known rehabilitation commitments exist at the date of preparation of these accounts.

Indemnities Given and Insurance Premiums Paid to Auditors and Officers

During the year the Company paid a premium to insure the officers of the Company. The officers of the Company covered by the insurance policy include all the directors.

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 as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of 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 themselves or someone else to cause detriment to the Company.

Details of the amount of premium paid in respect of the insurance policy are not disclosed as such disclosure is prohibited under the terms of the contract. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the Company against a liability incurred as such by an officer or auditor.

Non-Audit Services

The auditor provided no non-audit services for the six months ending 31 December 2015.

Details of the amounts paid to the Company’s auditors, Grant Thornton, and its related practices for audit services provided during the year are set out in Note 25 to the Financial Statements.

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 Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 327 of the Corporations Act 2001 is set out on the following page and forms part of this Director’s report.

Signed in accordance with a resolution of the Board of Directors of China Waste Corporation,

Dr. Wang Qingli Chairman Dated the 31st day of March 2016

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Level 1,

67 Greenhill Rd

Wayville SA 5034

Correspondence to:

GPO Box 1270

Adelaide SA 5001

T 61 8 8372 6666

F 61 8 8372 6677

E [email protected]

W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context

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acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities.

GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

AUDITOR’S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF CHINA WASTE CORPORATION LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead

auditor for the audit of China Waste Corporation Ltd for the six month period ended 31

December 2015, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001

in relation to the audit; and

b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

I S Kemp Partner – Audit & Assurance Adelaide, 31 March 2016

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Statement of Profit or Loss and Other Comprehensive Income


Notes

1 July-31 December 2015

$

1 July 2014 - 30 June 2015

$

Revenue 3 547 574

Administration expenses 4 (659,686) (143,585)

Legal and professional expenses 4 (260,111) (45,958)

Consultancy fees (1,141,457) (15,140)

Employee benefit expenses (602,765) (26,796)

Foreign exchange expenses 4 (88,632) (74,163)

Depreciation and amortisation expense (1,604) -

Impairment loss on mining and exploration assets 8 (100,000) (150,000)

Share based payments (27,779) (941,805)

(Loss) before income tax (2,881,487) (1,396,873)

Income tax expense 2 - -

(Loss) for the period (2,881,487) (1,396,873) Other comprehensive income: Items that may be reclassified to profit or loss: -exchange difference on translation

117,590 36,913

Total comprehensive (loss) for the period (2,763,897) (1,359,960)

Basic loss per share (cents) 14 (0.40) (0.22)

Diluted loss per share (cents)

14 (0.40) (0.22)

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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Statement of Financial Position As at 31 December 2015

Notes

31 December

2015 $

30 June 2015

$

CURRENT ASSETS

Cash and cash equivalents 5 262,020 1,719,522 Trade and other receivables 6 100,725 695,398 Other assets 7 127,598 - Non-current assets classified as held for sale 8 300,000 - TOTAL CURRENT ASSETS 790,343 2,414,920 NON-CURRENT ASSETS Investment available for sale 630 630 Non-current deposits 26,926 26,926 Exploration and evaluation assets 9 - 400,000 Property, plant and equipment 10 26,903 - Intangible assets 11 32,025 7,552

TOTAL NON-CURRENT ASSETS 86,484 435,108 TOTAL ASSETS 876,827 2,850,028 CURRENT LIABILITIES Trade and other payables 12 1,079,831 289,135 TOTAL CURRENT LIABILITIES 1,079,831 289,135

TOTAL LIABILITIES 1,079,831 289,135

NET ASSETS/ (LIABILITIES) (203,004) 2,560,893 EQUITY Issued capital 13 3,931,457 3,931,457 Exchange reserve 15 154,619 37,029 Accumulated losses (4,289,080) (1,407,593)

TOTAL EQUITY/ (DEFICIT) (203,004) 2,560,893

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

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Statement of Changes in Equity


Issued Capital

$

Foreign Exchange

Reserve $

Accumulated Losses

$ Total

$ Balance at 1 July 2014 95 116 (10,720) (10,509) Total Loss for the year - - (1,396,873) (1,396,873) Other comprehensive income

- 36,913 - 36,913

Total comprehensive income - 36,913 (1,396,873) (1,359,960) Transactions with owners in their capacity as owners:

Contributions of equity 2,832,319 - - 2,832,319 Deemed acquisition of China Waste Corporation Ltd

1,099,043 - - 1,099,043

Balance at 30 June 2015 3,931,457 37,029 (1,407,593) 2,560,893

Balance at 1 July 2015 3,931,457 37,029 (1,407,593) 2,560,893 Total Loss for the period - - (2,881,487) (2,881,487) Other comprehensive income

- 117,590 - 117,590

Total comprehensive income - 117,590 (2,881,487) (2,763,897) Balance at 31 December 2015 3,931,457 154,619 (4,289,080) (203,004)

The above accompanying Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Statement of Cash Flows


Notes 1 July-31 December 2015

$

1 July 2014 - 30 June 2015

$

CASH FLOWS FROM OPERATING ACTIVITIES Deposit refunded - 10,575 Interest received 547 574 Payments to supplies & employees (1,375,684) (91,582) Finance costs (1,971) (74,163) Cash provided to prepaid expenses (94,433) (24,242) Net (decrease) in cash from operating activities 17 (1,471,541) (178,838) CASH FLOWS FROM INVESTING ACTIVITIES Cash acquired upon acquisition of subsidiary - 15,905 Purchase of property, plant and equipment (28,482) - Purchase of intangible assets (25,029) - Cash provided to non-related parties (86,924) (669,240) Net increase (decrease) in cash from investing activities (140,435) (653,335) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares - 2,832,319 Proceeds from application for shares - - Proceeds from borrowings from non- related parties 58,103 - Proceeds (to)/ from borrowings from related parties 12,363 (317,537) Net increase in cash from financing activities 70,466 2,514,782 Net increase/(decrease) in cash held (1,541,510) 1,682,609 Exchange rate adjustments 84,008 36,913 Cash and cash equivalents at the beginning of the financial period/year 1,719,522 - CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD/ YEAR 5 262,020 1,719,522

The above Statement of Cash Flows should be read in conjunction with the accompanying notes. F

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Notes to the Financial Statements


1. Statement of Significant Accounting Policies (a) Nature of operations

China Waste Corporation Limited (“CWC”) is a public company listed on the ASX, incorporated and domiciled in Australia.

The principal activity of the Company during the 6 months is waste management and related technologies specialising in hazardous waste (in particular industrial, toxic and medical waste), with a focus on opportunities in the People’s Republic of China.

At the Annual General Meeting on 30 November 2015, it was resolved to change the financial year-end date to 31 December. As a result, the financial period runs from 1 July to 31 December 2015 and is a short financial period. China Waste Corporation Limited will close its short financial period as of 31 December 2015, with the reporting period from 1 July 2015 to 31 December 2015. Upon changing the financial year to the new reporting period of 1 January to 31 December, the financial year will now correspond to the calendar year. Therefore, a comparison of the financial statements as of 31 December 2015 (short financial year) with the previous financial year is only possible to a limited extent. This change was made in order to better align the financial planning and reporting processes and timing with its operational entities, presently resident in China. To present developments during the short financial year 2015, statements referring to the reporting date of 31 December 2015 are compared with the previous year’s figures as of 30 June 2015. For statements referring to the reporting period, the short financial year 2015 will be compared with the previous fiscal year’s period (1 July 2014 to 30 June 2015). The recognition and measurement methods applied are consistent with those applied in the previous year.

(b) Statement of compliance

The financial statements of China Waste Corporation are general purpose financial statements prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards ensures that the consolidated financial statements and notes of China Waste Corporation Limited and its controlled entity comply with International Financial Reporting Standards (IFRS). The Company’s financial statements for the period ended 31 December 2015 were approved and authorised for issue by the board of directors on 31 March 2016. The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated.

(c) Basis of preparation The significant accounting policies that have been used in the preparation of these financial statements are summarised below. The financial statements have been prepared using the measurement bases specified by Australian Accounting Standards for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.

The financial statements has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. China Waste Corporation Limited is a for-profit entity for the purpose of preparing the financial statements. The Financial statements are presented in Australian dollars.

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1. Statement of Significant Accounting Policies (continued) (d) Principles of consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by China Waste Corporation (CWC) at the end of the reporting period. A controlled entity is any entity over which China Waste Corporation (CWC) has the power to govern the financial and operating policies so as to obtain benefits from its activities. Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 20 to the financial statements.

In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated group have been eliminated in full 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 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 other comprehensive income.

(e) Business Combinations

The Group applies the acquisition method in according for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair value of assets transferred, liabilities incurred and the equity interest issued by the Group, which included the fair value of any asset of liability arising from a contingent consideration management. Acquisition costs are expensed as incurred. The Group recognise identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition- date fair values.

(f) Investments in associates and joint arrangements Associates are those entities over which the Group is able to exert significant influence but which are not subsidiaries. A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. A joint arrangement in which the Group has direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation. Investments in associates and joint ventures are accounted for using the equity method. Interests in joint operations are accounted for by recognising the Group’s assets (including its share of any assets held jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its share of the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation and its expenses (including its share of any expenses incurred jointly). Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not recognised separately and is included in the amount recognised as investment. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.

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1. Statement of Significant Accounting Policies (continued)

(g) Goodwill Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of: (i) the consideration transferred; (ii) any non-controlling interest (determined under either the full goodwill or proportionate interest method); and (iii) the acquisition date fair value of net identifiable asset acquired.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall for the cost of the investment in the separate financial statements. Fair value re-measurements in any pre-existing equity holdings are recognised in profit or loss in the period in which they arise. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested for impairment annually and is allocated to the Group’s cash generating units or group of cash generating units, representing the lowest level at which goodwill is monitored being not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of. Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not affect the carrying amounts of goodwill. (h) Other intangible assets Recognition of other intangible assets Acquired intangible assets Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and install the specific software. When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses. (i) Property, plant, and equipment Office Equipment Office equipment are initially recognised at acquisition cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Group’s management.

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(i) Property, plant, and equipment (continued) Depreciation is recognised on a straight-line basis to write down the cost less estimated residual values. The following useful lives are applied:

Office equipment – 3 years Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses.

(j) Income taxes

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and /or liabilities comprise those obligations to, or claims from, the Australian Taxation Office (ATO) and other fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have not been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Company and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income, based on the Company’s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full. Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land recognised directly in equity), in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.

(k) Exploration and evaluation expenditure

For each area of interest, expenditures incurred in the exploration for and evaluation of mineral resources shall be either expensed as incurred or partially or fully capitalised and recognised as an exploration asset.

The Company assesses each area of interest separately. During the year all expenditure was exploration and evaluation expenditure was expensed as incurred. Estimated costs of site restoration, where material, are provided over the life of the mine from when the lease is acquired. Security deposits have been lodged with the Department of Mineral Resources in relation to potential site restoration costs.

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1. Statement of Significant Accounting Policies (continued) (l) Financial instruments

Recognition and Initial Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is 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 either discharged, cancelled or expire. 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 and loss. Classification and Subsequent Measurement Financial assets Financial assets can be classified into the following specified categories: financial assets at fair value through profit or loss, held to maturity investments, available for sale financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial Assets at Fair Value through Profit and Loss (FVTPL) Financial assets at FVTPL include financial assets that are either classified as held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by to active market transactions or using a valuation technique where no active market exists. Financial Liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

(m) Non-current assets classified as held for sale

A non-current assets classified as held for sale (including disposal groups) is measured at the lower of its carrying amount and fair value less costs to sell, and are not subject to depreciation. Non current assets, disposal groups and related liabilities assets are treated as current and classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset’s sale (or disposal group sale) is expected to be completed within 12 months from the date of classification.

(n) Impairment of financial assets

Financial assets, other than those at ‘fair value through profit or loss’, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial assets the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

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For the six-months ended 31 December 2015 1. Statement of Significant Accounting Policies (continued) (n) Impairment of financial assets (continued)

With the exception of ‘available-for-sale’ equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In the case of available for sale financial instruments, a prolonged decline in the value is considered to determine impairment has arisen. Impairment losses are recognised in the profit or loss.

(o) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over it recoverable amount is expensed to the statement of profit and loss or other comprehensive income.

Where the asset does not generate cash flows that are largely independent from other assets, the entity estimates the recoverable amount of the cash generating unit to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset, excluding goodwill, is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(p) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and bank overdraft. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

(q) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the assets or as a part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from or payable to the Australian Taxation Office, are classified as operating cash flows.

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1. Statement of Significant Accounting Policies (continued) (r) Revenue

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.

Other revenue is recognised when the right to receive the revenue has been established.

All revenue is stated net of the amount of goods and services tax (GST).

(s) Earnings per Share

Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(t) Comparative Figures

Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Refer to note 1(a) for explanations of comparative figures resulting from the change in financial reporting period.

(u) Going Concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. The Group incurred a loss of $2,881,487 for the six months ending 31 December 2015 and a negative net asset position of $203,004. The ability of the Group to continue to pay its debts as and when they fall due is dependent upon the Group;

• successfully raising further cash to fund its operations. The Group is negotiating with potential investors for either equity or debt funding. The Group believes that it will be successful in raising this capital in the near term. After 4 months of intense effort, several potential channels have been identified. The Group will make an appropriate announcement to the market following any successful conclusion to these discussions;

• continuing to develop the solid foundation it has laid for its hazardous waste treatment business by establishing the joint venture arrangements with CECEP Asset Management Co Ltd and Institute of Urban Environment, Chinese Academy of Sciences following shareholder approval;

• ongoing expectations of income growth and positive cash flow; and • on 31 March 2016, the Group secured access to a short-term financial facility of up to $2million at 12% per annum

interest rate from a potential investor. The Directors will utilise this facility to meet ongoing operating expenditures until further capital is secured.

The Directors believe the above items will be resolved in the Group’s favour and therefore it is appropriate to prepare these accounts on a going concern basis. As a result, the accounts have been prepared on the basis that the Group can meet its commitments as and when they fall due and can therefore continue normal business activities, and the realisation of assets and liabilities in the ordinary course of business.

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(v) Critical accounting estimates and judgements

When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The estimates and judgements incorporated into the financial statements are based on historical experiences and the best available current information on current trends and economic data, obtained both externally and within the company. The estimates and judgements made assume a reasonable expectation of future events but actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision effects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. There were no key adjustments during the year which required accounting estimates and judgements.

Key estimates include: Impairment The Company assesses impairment at each reporting date by evaluating conditions specific to the company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable expectation amounts incorporate a number of key estimates.

Exploration and evaluation costs For each area of interest, expenditures incurred in the exploration for and evaluation of mineral resources shall be either expensed as incurred or partially or fully capitalised and recognised as an exploration asset

Share based payment Under the principles of AASB 3: Business Combinations, the transaction between China Waste Corporation and Harvest Champion is being treated as a reverse acquisition. The acquisition date fair value of the consideration transferred is subject to estimation and judgement.

(w) Leases Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

(x) Foreign Currency Transactions and Balances

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 the parent entity’s functional and presentation currency. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Nonmonetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss and other comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognized directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the statement of profit or loss and other comprehensive income.

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For the six-months ended 31 December 2015 1. Statement of Significant Accounting Policies (continued) (x) Foreign Currency Transactions and Balances (continued)

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

• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; • Income and expenses are translated at average exchange rates for the period; and • Retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of functional currency to presentation currency are transferred directly to foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss and other comprehensive income in the period in which the operation is disposed.

(y) New and revised standards that are effective for these financial statements A number of new and revised standards became effective for the first time to annual periods beginning on or after 1 January 2015. Information on the more significant standard(s) is presented below.

AASB 2014-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010–2012 and 2011–2013 Cycles)

Part A of AASB 2014-1 makes amendments to various Australian Accounting Standards arising from the issuance by the IASB of International Financial Reporting Standards Annual Improvements to IFRSs 2010–2012 Cycle and Annual Improvements to IFRSs 2011–2013 Cycle.

Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010–2012 Cycle:

• clarify that the definition of a ‘related party’ includes a management entity that provides key management personnel services to the reporting entity (either directly or through a group entity)

• amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management in applying the aggregation criteria

Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011–2013 Cycle clarify that an entity should assess whether an acquired property is an investment property under AASB 140 Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine whether the acquisition of the investment property constitutes a business combination.

Part A of AASB 2014-1 is applicable to annual reporting periods beginning on or after 1 July 2014.

The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements.

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For the six-months ended 31 December 2015 1. Statement of Significant Accounting Policies (continued) (z) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company

The accounting standards that have not been early adopted for the year ended 31 December 2015, but will be applicable to the Group in future reporting periods, are detailed below. Apart from these standards, other accounting standards that will be applicable in future periods have been reviewed, however they have been considered to be insignificant to the Group.

AASB 9 Financial Instruments (December 2014) (Application date: 1 January 2018)

The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 31 December 2018.

AASB 15 Revenue from Contracts with Customers (Application date: 1 January 2018)


AASB 16 Leases


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For the six-months ended 31 December 2015 2. Income Tax Expense 31 December

2015 $

30 June 2015

$ The components of tax expense comprise: - - Current tax - - Deferred tax - - Current tax expense - -

Reconciliation of tax expense Loss before income tax (2,881,487) (1,396,873) Prima facie tax payable on profit before income tax at rate of 30% (864,446) (419,062) Deferred tax asset in respect of tax losses not brought to account 864,446 419,062 Total income tax expense - -

The applicable weighted average effective tax rate 0% 0%

No Income Tax is payable in respect of either this year or the previous year. Recognition of a deferred tax asset A deferred tax asset has not been recognised in relation to the carried forward tax losses of China Waste Corporation (formerly known as China West Gold) due to the uncertainty surrounding the flow of economic benefits that will flow in future periods. An assessment is required to be undertaken by the Directors of CWC to determine the likelihood of these carried tax losses being able to be utilised in the future. The tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed, and the consolidated entity is generating sufficient taxable income. 3. Revenue 31 December

2015 $

30 June 2015

$ Interest received 547 574 547 574

4. Loss for the Period from 1 July 2015 to 31 December 2015 31 December

2015 $

30 June 2015

$ Loss before income tax has been determined after charging/(Crediting):

Travel & Accommodation 320,108 123,216 Insurance - 8,746 Company secretarial fees 7,073 8,437 Entertainment expenses 47,422 - Share registry fees - 1,365 Rent 99,902 - Recruitment expenses 40,910 - Renovation fees 28,601 - Chess Fees 17,780 - Office expenses 21,576 - Motor vehicle running expenses 54,074 - Other Administration expenses 22,240 1,821 Total Administration expenses 659,686 143,585 Accounting and audit fee 67,074 38,475 Legal and professional fee 121,971 6,959 Finance Service Fee 71,066 - Other professional fees - 524 Total Legal and Professional expenses 260,111 45,958 Foreign exchange losses 88,632 74,163 Total Foreign exchange losses 88,632 74,163

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Notes to the Financial Statements For the six-months ended 31 December 2015

5. Cash and Cash Equivalents 31 December 2015

$

30 June 2015

$ Cash at bank 254,520 1,712,022 Interest bearing deposits(1) 7,500 7,500 262,020 1,719,522

(1) The interest bearing deposit is linked to two bank guarantees totalling $7500. The unused amount of the facility as at 31 December 2015 was $7,500 (June 2015: $7,500).

6. Trade and Other Receivables 31 December 2015

$

30 June 2015

$

Other receivables (1) 86,926 26,158 GST receivable 13,799 - Advances to director-Dr. Wei Dong - 669,240 100,725 695,398

(1) Within Other receivables include an amount of $86,926 (June 2015: nil) paid to employee Guo Wei for the setup of the Company’s Baoding Project. Amounts are expected to be utilised within the next 12 months.

7. Other assets 31 December 2015

$

30 June 2015

$ Prepayments 127,598 - 127,598 -

8. Non-Current Assets classified as held for sale 31 December 2015

$

30 June 2015

$ Mining Tenement Opening Value - - Reclassification from exploration and evaluation assets to held for sale assets (1)

400,000

Impairment write down (100,000) - Carrying value at 31 December 2015 300,000 -

(1) The Group holds mining and exploration tenements surplus to its operational requirements. Various properties have been

identified as property for future sales. The Group anticipates that all the mining and exploration tenements in the closing balance will be disposed of in the next reporting period. See also note 1(m) non-current assets (or disposal groups) classified as held for sale.

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9. Exploration and evaluation assets 31 December

2015 $

30 June 2015

$ Opening Value 400,000 - At acquisition - 550,000 Reclassification held for sale assets (1) (400,000) - Impairment write down - (150,000) Carrying value at 31 December 2015 - 400,000

(1) The Group holds mining and exploration tenements surplus to its operational requirements. Various properties have been

identified as property for future sales. The Group anticipates that all the mining and exploration tenements in the closing balance will be sold in the next reporting period. See also note 1(m) non-current assets (or disposal groups) classified as held for sale.

Commitments for Expenditure In order to maintain current rights of tenure to exploration tenements, the Company is required to meet the minimum expenditure requirements of the New South Wales Department of Industry & Investment. These obligations are subject to re-negotiation upon expiry of the exploration leases or when application for a mining licence is made. These obligations are not provided for in the accounts. Farm-in arrangements On 19th March 2012 the Company entered into a Farm-in Agreement with Fisher Resources Pty Ltd (FR), which provides that FR can earn an interest in EL 6837 and ELA 4360 (now EL8058). An initial deposit of $50,000 was paid to the Company in the previous financial year. FR is required to expend up to $600,000 on exploration of the tenements over 3 years in order to earn a 70% interest in the tenements. At that point the Company will have the right to elect to contribute to further expenditure on the tenements on a pro rata basis, or dilute to a free carried interest of 10%. On 19 June 2013 FR acquired a 51% beneficial interest and elected to earn a 70% interest by 28 February 2016 by virtue of a Supplemental Agreement dated 18 February 2015. The Company is in the process of negotiating of the election date.

10. Property, Plant and Equipment 31 December

2015 $

30 June 2015

$ Plant and Equipment Office Equipment At cost 28,482 - Accumulated depreciation (1,579) - Total Office Equipment 26,903 - Total property, plant and equipment 26,903 -

11. Intangible assets 31 December

2015 $

30 June 2015

$ Intangible assets – Software and Website 24,077 - Goodwill 7,948 7,552 32,025 7,552

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12. Trade and other payables 31 December 2015

$

30 June 2015

$ Trade and other payables 125,502 209,195 Other payables and accruals (1) 827,277 - Amount due to directors-Director fees 101,167 64,530 Amount due to directors-Loans/Advance (Li Xianglin) 12,362 - Amount due to directors-Loans/Advance (Dr. Wei Dong) 13,523 15,410 1,079,831 289,135

(1) Other payables and accruals represents expenses, such as consulting fees ($416,000) in relation to capital raising and technical support and staff salaries ($147,000), incurred during the period which are outstanding as at 31 December 2015.

13. Issued Capital

31 December 2015

$

30 June 2015

$

Fully paid ordinary shares 3,931,457 3,931,457 Ordinary shares

Number

$

Balance 1 July 2015 717,764,969 3,931,457 Shares issued during the period - - Closing Balance 717,764,969 3,931,457

Fully paid ordinary shares carry one vote per share and carry the right to dividends and have no par value. Share Options on Issue There are no share options issued at balance sheet date. Capital Management The Company’s objective when managing capital is to safeguard the ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Management effectively manages the Company’s capital by assessing the Company’s financial risks and adjusting its capital structure in response to changes in these risks and in the market.

31 December 2015

$

30 June 2015

$

Total liabilities 1,079,831 289,135 Less: cash and cash equivalents (262,020) (1,719,522) Net liabilities/(Net cash and cash equivalents) 817,811 (1,430,387) Total equity (203,004) 2,560,893 Net liabilities/(Net cash and cash equivalent) to equity ratio (402%) (56%)

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14. Earnings per Share 31

December 2015

$

30 June 2015

$

Basic earnings per share- cents per share (0.40) (0.22) (a) Loss used in calculation of basic EPS (2,881,487) (1,396,873) (b) Weighted Average Number of Ordinary Shares outstanding during the year used in calculation of basic EPS 717,764,969 633,441,609

Basic earnings per share are calculated by dividing net profit/loss for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share amounts are calculated by dividing the net profit/loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. There are no dilutive securities on issue as at 31 December 2015 (June 2015: nil).

15. Exchange Reserve

The exchange reserve relates to all currency differences arising from the translation of the financial statements of the group into Australian dollars (rather than the functional and presentation currency of Hong Kong dollars and Chinese Renminbi in its subsidiaries). 16. Post Balance Date Events

On the 8 January 2016 the Company received advice that ASX has determined that the proposed joint venture arrangements between the Company and each of the Institute of Urban Environment, Chinese Academy of Sciences and CECEP Asset Management Co Ltd (Transactions) amount to a significant change in the scale of its current business activities.

ASX has advised that pursuant to Chapter 11 of the ASX Listing Rules the Company will be required to:

(a) obtain shareholder approval for the Transactions for the purposes of Listing Rule 11.1.2; and

(b) re-comply with Chapters 1 and 2 of the ASX Listing Rules pursuant to Listing Rule 11.1.3.

In response the Company advises that it intends to prepare and dispatch to its shareholders a Notice of Meeting and related documents for the shareholder meeting required to approve the Transactions.

In addition, the Company intends to lodge a prospectus in accordance with the requirements of the Corporations Act 2001 (Cth) in order to re-comply with Chapters 1 and 2 of the ASX Listing Rules. The prospectus will also contemplate the previously announced fundraising to be undertaken by the Company in relation to each of the Transactions.

On 31 March 2016, the Group secured a short-term financial facility from a potential investor of up to $2million repayable in 1 year at 12% per annum interest rate.

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For the six-months ended 31 December 2015 17. Cash Flow Information

Reconciliation of Cash Flow from Operations with profit / (loss) after income tax:

31 December 2015

$

30 June 2015

$ Net loss after income tax (2,881,487) (1,396,873) Add/(Less) non-cash items: Impairment on exploration and evaluation assets 100,000 150,000 Share based payment 941,805 Depreciation 1,604 - Amortisation 969 - Effects of foreign exchange differences 35,757 - Changes in operating assets and liabilities: (Increase)/Decrease in trade and other receivables 581,678 (9,666) Increase/(Decrease) in trade and other payables 689,938 135,896 Net cash from/ (used in ) outflow from operating activities (1,471,541) (178,838)

18. Contingent Liabilities

As a condition for the granting of Exploration Licences the Company is obliged to lodge security deposits with the Department of Industry & Investment, some as cash deposits and some as bank guarantees. At 31 December 2015 the total of such deposits and guarantees was $34,426 (June 2015 $34,426). In the event of the Company failing to fulfill any of its obligations in relation to the grant of the Exploration Licences the security deposits may be applied at the discretion of the Minister for Industry & Investment towards the costs of fulfilling such obligations. The directors are not aware of any events that have occurred either before or since 31 December 2015 which may result in the forfeiture of any of the above-mentioned funds.

19. Segments Reporting

The Company has historically explored for gold, copper and tin in New South Wales, Australia, operating in the mining and exploration industry. The acquisition of shares in Harvest Champion Limited will result in a significant change in the nature and scale of the Company's activities form June 2015 onwards. Harvest Champion Limited is focused on the procurement, development and exploitation of green technologies, processes and products including in the area of waste disposal and treatment and recycling of waste products. The nature of the Company's business has changed to a waste technology and processing company with a focus on the Chinese market. The Board has considered the requirements of AASB8 operating segments and the internal reports that are reviewed by the chief operation decision maker in allocating resources and have concluded at this that there are no separately identifiable segments as there is currently no discrete financial information received by the chief operation decision maker.

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For the six-months ended 31 December 2015 20. Controlled Entities

Name of Entity Country of Incorporation 31 December 2015

30 June 2015

Parent Entity

China Waste Corporation Limited Australia

Controlled Entity

Harvest Champion Limited Cayman Island 100% 100%

China Urban Mining Holding Limited Hong Kong 100% 100%

Fortune Technology (HK) Limited Hong Kong 100% 100%

Asia Environmental Investment Limited Samoa (incorporated 26 October2015) 100% -

21. Parent entity information

Parent entity- China Waste Corporation 31 December

2015 $

30 June 2015

$ Asset Current assets 443,626 48,788 Non-current assets 2,833,000 2,790,956 Total assets 3,276,626 2,839,744 Liabilities Current liabilities 1,988,537 550,332 Non-current liabilities - - Total liabilities 1,988,537 550,332 Equity Issued capital 11,892,185 11,892,185 Share based payment (99,371) (99,371) Retained earnings (10,504,725) (9,503,402) Shareholder equity 1,288,089 2,289,412 Financial performance Loss for the year (1,365,818) (81,227) Other comprehensive income - - Total comprehensive income (1,365,818) (81,227)

The parent entity has not entered into a deed of cross guarantee. Total security deposits given to the Department of Industry & Investment, some as cash deposits and some as bank guarantees amounting to $34,426 (June 2015 $34,426). Refer to Note 18 for further information.

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22. Financial Instruments Disclosures The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise adverse effects on the financial performance of the Company. The Company uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rates and other price risks and aging analysis for credit risk. Risk management is carried out under policies approved and supervised by the Board of Directors. (a) Market Risk (i) Foreign exchange risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The company’s exposure relates primarily to the Group’s operating activities (when revenue or expense is denominated in a foreign currency) and the company’s net investment in foreign subsidiaries.

(ii) Price Risk

The Company in the current year did not have any significant exposure to investment or commodity price risk. Directors have not made any determination at this stage as to whether they will consider commodity price hedge arrangements.

(iii) Cash flow and fair value interest rate risk

The Company has exposure to interest rate risk which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate on those financial assets and the financial liabilities.

The Company policy is to ensure that the best interest rate is received for the short-term deposits. Interest rates are reviewed prior to deposits maturing and re-invested at the best rate.

(b) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security in respect of recognised financial assets, is the carrying amount as disclosed in the statements of financial position and notes to the financial statements. Receivables are not past due and are not impaired. (c) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through adequate amount of committed credit facilities and the ability to close out market positions. The Company manages liquidity risk by continuously monitoring forecast and actual cash flows matching maturity profiles of financial assets and liabilities. Surplus funds are generally only invested in instruments that are tradable in highly liquid markets.

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For the six-months ended 31 December 2015 22. Financial Instruments Disclosures (continued) (d) Net Fair Values

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three (3) levels of a fair value hierarchy. The three (3) levels are defined based on the observability of significant inputs to the measurement, as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

or indirectly • Level 3: unobservable inputs for the asset or liability

The fair value of financial assets and financial liabilities with standard terms and conditions and traded on organised markets are determined with reference to quoted bid prices in active markets at the reporting date and are categorised within Level 1 of the fair value hierarchy.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statements of financial position and in the notes to the financial statements.

(e) Sensitivity Analysis

The Company has not performed a sensitivity analysis on price risk or interest rate risk and its impact on current six monthly results and equity which could result from a change in these risks as the likely impact is insignificant given that no operating revenues was generated for the six month ending 31 December 2015 and only $547 of interest revenue was generated during the six months ending 31 December 2015.

23. Related Parties Key Management Personnel

23.1 Transactions with Key Management Personnel

Details of Key Management Personnel during the financial year are as follows:

Directors Peter Harrison (Non-Executive Co-Chairman) (appointed 9 June 2015) Wang Qingli (Non-Executive Co-Chairman) (appointed 9 June 2015) Ross Benson (Non-Executive Director) (appointed 9 June 2015) Alex Chow (Non-Executive Director) (appointed 9 June 2015) Wei Dong (Executive Director) (appointed 9 June 2015) Li Xianglin (Executive Director) (appointed 9 June 2015)

Key Management Personnel He Rongcheng (Chief Financial Officer) (appointed 1 September 2015)

(a) Aggregate compensation made to the Key Management Personnel

31 December 2015

$

30 June 2015

$

Short-term employee benefits 335,079 26,797 Post-employment benefits - - Termination benefits - - Share-based payments - - Salaries and fees paid prior to the acquisition of Harvest Champion

- 107,499

Total compensation to Key Management Personnel 335,079 134,296

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For the six-months ended 31 December 2015 23. Related Parties Key Management Personnel (continued)

(b) Advances/Loan to/from a director

During the previous year, China Urban Mining Holdings Limited advanced an unsecured and interest-free loan of $669,240 (approximately RMB3.2million) to Dr Wei Dong, an executive director for purpose of establishing operations and set up office in Beijing, People Republic of China. The funds have been fully utilised in the current period through acquisition of tangible and intangible assets and other corporate expenditure.

31 December

2015 $

30 June 2015

$

At the beginning of the year/period 669,240 - Additions - 669,240 Usage (669,240) - At the end of the year - 669,240 Amounts Due to Directors

Directors Fees 101,167 64,530 Loans/Advances (Li Xianglin) 12,362 - Loans/Advances (Dr Wei Dong) 13,523 15,410

Total amount due to directors 127,052 79,940 (c) Other

During the prior period, the Group leased an office building under an operating lease signed on behalf of the company by Dr. Wei Dong. The total amount of lease commitments amounts to RMB653,192 (AUD$139,195).

24. Commitments 24.1 Leases Non-cancellable operating leases contracted for but not capitalised in the financial statements as at 31 December 2015 are as follows:

• On 3 July 2015, the Group entered into a lease in respect to office premises at room 11H, No 48 DongZhiMenWai Street, DonCheng District, Beijing 100027, China for a period of 12 months. On 21 September 2015, the Group entered into a lease in respect to office premises at Room 11J, No 48 DongZhiMenWai Street, DonCheng District, Beijing 100027, China for a period of 12 months.

• On 1 September 2015, the Group entered into two leases in respect to the leasing of motor vehicles for a period of 24 months.

31 December

2015 $

30 June 2015

$

Payable – minimum lease payments Not longer than 1 year 205,356 139,595 Longer than 1 year and not longer than 5 years 40,531 - Longer than 5 years - -

245,887 139,595

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Notes to the Financial Statements For the six-months ended 31 December 2015

24. Commitments (continued) 24.2 Other commitments CTD Project An agreement was signed on the 27 October 2015 between China Urban (‘CU’)(subsidiary of CWC) and CECEP Asset Management (‘CAM’) to establish a joint-venture CECEP Clean Tech Development (‘CTD’) with CU to contribute RMB270million (AUD$56.9million). According to the agreement, CWC will need to make first payment of RMB40million (AUD$8.4million) within 40 business days of obtaining the business licence and the remaining RMB230million (AUD$48.5million) to be paid within 80 business days of obtaining the business licence. CWC will hold a 30% interest in the joint-venture. CAS-F Project An agreement was signed on the 27 November 2015 between Fortune Technology (HK) (‘FT’)(subsidiary of CWC) and the Institute of Urban Environment of the Chinese Academy of Science to establish a joint-venture with FT to contribute RMB57million (AUD$12million). According to the agreement, CWC will need to make first payment of RMB7million (AUD$1.5million) within 30 business days of obtaining the business licence and the remaining RMB50million (AUD$10.5million) to be paid within 180 business days of obtaining the business licence. CWC will hold a 95% interest in the joint-venture. Consulting Services As at 31 December 2015, CWC has commited to suppliers for the provision of consulting services amounting to HKD2.14million (AUD$378,000). 25. Auditors Remuneration During the financial year the following fees were paid or payable for service provided by Grant Thornton, the auditor of the Company, its network firms and unrelated firms:

31 December 2015

$

30 June 2015

$

Audit services Auditing or reviewing the financial report 28,000 38,475 Independent Limited Assurance Report - 15,000

Total audit services 28,000 53,475

Other services Independent Expert’s Report - 80,000

Total other services - 80,000 Total auditor’s remuneration 28,000 133,475

26. Company Details The registered office and principal place of business is: C/- K&L Gates Level 31 1 O’Connell Street Sydney NSW 2000

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Directors’ Declaration 1. In the opinion of the Directors of China Waste Corporation Limited: a) the financial statements and notes of China Waste Corporation Limited are in accordance with the Corporations Act

2001, including:

(i) Giving a true and fair view of the financial position of the China Waste Corporation Limited as at 30 June 2015 and its performance for the year ended on that date; and

(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations and the

Corporations Regulations 2001, and as disclosed in note 1; (iii) There are reasonable grounds to believe that China Waste Corporation Limited will be able to pay its debts as

and when they become due and payable. 2. The Directors have been given the declarations required by section 295 A of the Corporation Act 2001 from the chief

executive officer and chief financial officer for the financial period ended 31 December 2015. 3. Note 1(b) confirms that the financial statements also comply with International Financial Reporting Standards.

Signed in accordance with a resolution of the Board of Directors of China Waste Corporation,

Dr. Wang Qingli Chairman Dated the 31st day of March 2016

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Level 1,

67 Greenhill Rd

Wayville SA 5034

Correspondence to:

GPO Box 1270

Adelaide SA 5001

T 61 8 8372 6666

F 61 8 8372 6677

E [email protected]

W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context

requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal

entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s

acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities.

GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF CHINA WASTE CORPORATION LIMITED

Report on the financial report

We have audited the accompanying financial report of China Waste Corporation Limited (the

“Company”), which comprises the statement of financial position as at 31 December 2015, the

statement of profit or loss and other comprehensive income, statement of changes in equity and

statement of cash flows for the six months period then ended, notes comprising a summary of

significant accounting policies and other explanatory information and the directors’ declaration

of the company the consolidated entity comprising the Company and the entities it controlled at

the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report that

gives a true and fair view in accordance with Australian Accounting Standards and the

Corporations Act 2001. The Directors’ responsibility also includes such internal control as the

Directors determine is necessary to enable the preparation of the financial report that gives a true

and fair view and is free from material misstatement, whether due to fraud or error. The

Directors also state, in the notes to the financial report, in accordance with Accounting Standard

AASB 101 Presentation of Financial Statements, the financial statements comply with

International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We

conducted our audit in accordance with Australian Auditing Standards. Those standards require

us to comply with relevant ethical requirements relating to audit engagements and plan and

perform the audit to obtain reasonable assurance whether the financial report is free from

material misstatement.

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An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial report. The procedures selected depend on the auditor’s judgement,

including the assessment of the risks of material misstatement of the financial report, whether

due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the

Company’s preparation of the financial report that gives a true and fair view in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by the Directors, as well as evaluating the overall presentation of the financial

report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the

Corporations Act 2001.

Auditor’s opinion

In our opinion:

a the financial report of China Waste Corporation Limited is in accordance with the

Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity’s financial position as at

31 December 2015 and of their performance for the six month period ended on that

date; and

ii complying with Australian Accounting Standards and the Corporations Regulations

2001; and

b the financial report also complies with International Financial Reporting Standards as

disclosed in the notes to the financial statements.

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Emphasis of matter

Without qualifying our opinion, we draw attention to Note 1(u) in the financial report which

indicates that the consolidated entity incurred a net loss of $2,881,487 and cash outflows from

operating and investing activities equates to $1,611,976 during the six month period ended

31 December 2015 and, as of that date the consolidated entity was in a negative net asset position

of $203,004. These conditions, along with other matters as set forth in Note 1 (u), indicate the

existence of a material uncertainty which may cast significant doubt about the consolidated

entity’s ability to continue as a going concern and therefore, the consolidated entity may be

unable to realise its assets and discharge its liabilities in the normal course of business, and at the

amounts stated in the financial report.

Report on the remuneration report

We have audited the remuneration report included in the directors’ report for the six month

period ended 31 December 2015. The Directors of the Company are responsible for the

preparation and presentation of the remuneration report in accordance with section 300A of the

Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,

based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of China Waste Corporation Limited for the six month

period ended 31 December 2015, complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

I S Kemp Partner – Audit & Assurance Adelaide, 31 March 2016

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Stock Exchange Requirements Issued Capital As at 21 March 2016 the Company had 717,764,969 ordinary fully paid shares on issue.

Substantial Shareholders At 21 March 2016 the Company had the following substantial shareholders:

Golden Voyage Holdings 236,898,327 shares Elite Connection Limited 129,188,722 shares Diamond Grid Holdings Limited 71,785,469 shares Aldrich Investments Limited 62,804,435 shares Copious Century Holdings Limited 62,804,435 shares Solar Vantage Limited 60,983,106 shares

Distribution of Shareholders There were 484 shareholders at 21 March 2016. Each shareholder is entitled to one vote for each share held. The analysis of the number of holders was:

Size of Holding No of Holders

1 - 1,000 67 1,001 - 5,000 131 5,001 - 10,000 60 10,001 - 100,000 176 100,001 and over 50

484

There are 32 shareholders who hold less than a marketable parcel. The top twenty holders held 98.25% of the Company’s share capital. Top twenty holders of ordinary shares as at 21 March 2016

Name Shares % Golden Voyage Holdings 236,898,327 33.00 Elite Connection Limited 129,188,722 18.00 Diamond Grid Holdings Limited 71,785,469 10.00 Aldrich Investments Limited 62,804,435 8.75 Copious Century Holdings Limited 62,804,435 8.75 Solar Vantage Limited 60,983,106 8.50 HSBC Custody Nominees (Australia) Limited 31,927,749 4.45 Citicorp Nominees Pty Limited 11,621,721 1.62 JP Morgan Nominees Australia Limited 10,498,760 1.46 BNP Paribas Noms Pty Ltd <UOB KH P/L AC UOB KH DRP> 9,892,002 1.38 ABN Amro Clearing Sydney nominees Pty Ltd 4,447,951 0.62 Galactic Group limited 3,579,853 0.50 Reynolds (Nominees) Pty Limited <Reynolds Super Fund a/c> 3,430,000 0.48 Ms Kwai Sau Hau 1,212,500 0.17 Zhuxi Ou 1,000,000 0.14 Pershing Australia Nominees Pty Ltd <Phillip Securities (HK) a/c> 858,594 0.12 John Cregan 641,000 0.09 Ms Nyok Chin Wong 615,000 0.09 Mr Malcolm Bird <Malcolm Bird Super Fund a/c> 540,000 0.08 Rod Campbell & Associates Pty Limited <Highlands Retirement FD a/c> 452,000 0.06 Total 705,181,624 98.26

There is no on-market buy back currently in place. There are 628,044,347 restricted securities on issue by the Company or securities subject to voluntary escrow.

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Reconciliation of Appendix 4E to Financial Report

Reconciliation of Appendix 4E to Final Financial Report

Between the release of the Appendix 4E and the finalisation of the financial report, the following adjustments were identified:

Reconciliation Profit/(Loss) - Owners of the

Parent

Other comprehensive

income

Total other comprehensive

income Current Assets

Non-current Assets

Total Assets

Current Liabilities

Total Liabilities

Issued Capital

Accumulated losses

Foreign Currency

Translation Reserve

Equity

Per unaudited Appendix 4E (2,781,487) 117,589 (2,663,898) 490,343 486,484 976,827 1,079,832 1,079,832 3,931,457 (4,189,080) 154,618 (103,005)

Reclassification of Exploration and Evaluation Assets

1 - - - 400,000 (400,000)

-

-

-

-

-

-

-

Adjustment for impairment recognised 2 (100,000) - (100,000) (100,000)

- (100,000) -

-

- (100,000)

- (100,000)

Rounding error - 1 1

-

-

- (1) (1)

-

-

1

1

Revised balances per financial report (2,881,487) 117,590 (2,763,897) 790,343 86,484 876,827 1,079,831 1,079,831 3,931,457 (4,289,080) 154,619 (203,004)

Notes

1 Reclassification of Exploration and Evaluation Assets ('EEA') to Non-Current Assets classified as held for sale ('HFS').

2 Adjustment for impairment write-down of EEA transferred to HFS taking into accounting current market conditions and expected recoverability.

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Corporate Governance Statement The Board and management are committed to conducting the Company’s business in an ethical manner and in accordance with the highest standards of corporate governance. The Company has adopted and has substantially complied with the ASX Corporate Governance Principles and Recommendations (Third Edition) (Recommendations) to the extent appropriate to the size and nature of the Company’s operations. This Corporate Governance Statement is accurate and up to date as at 31 December 2015 and has been approved by the Board. Unless otherwise disclosed, the Recommendations have been applied for the six months ended 31 December 2015. Ethical Standards All directors, office – holders, employees and consultants are expected to act with the utmost integrity and objectivity and to enhance the reputation and performance of the Company. A code of conduct has been established requiring directors and employees to act honestly and in good faith; exercise due care and diligence in fulfilling the functions of office; avoid conflicts and make full disclosure of any possible conflict of interest; comply with the law; encourage the reporting and investigating of unlawful and unethical behaviour; and comply with the securities trading policy outlined below. The Board of Directors The skills, experience and expertise relevant to the position of each director who is in office at the date of the annual report are detailed in the Directors’ Report. The Board regularly evaluates the mix of its skills and experience within the Company. The Board considers that collectively its directors have a level of skill, knowledge and experience that enables the Board to effectively discharge its responsibilities and duties (including the activities outlined below). The mix of skills the Board is seeking to maintain, and to build upon, includes: • Finance and Tax (e.g. financial management capability including accounting or related financial management

qualifications); • Executive leadership; • Risk management understanding and experience; • Commercial acumen; • Product development; and • Strategic capabilities. The Board held 6 formal meetings throughout the financial year. At the date of this report the Board comprises of 6 directors: Peter Harrison – Non Executive Co-Chairman Wang Qingli – Non Executive Co-Chairman Wei Dong – Executive Director Li Xianglin – Executive Director Ross Benson – Non Executive Director Alex Chee Leong Chow – Non Executive Director The Board is responsible for the overall corporate governance of the Company and its primary functions include: • The strategic direction of the Company including setting long term goals for management and monitoring the

achievement of those goals on behalf of the shareholders; • The approval of the annual and half-yearly financial statements; • The review and adoption of annual budgets for the financial performance of the Company and monitoring the results

throughout the year; • Ensuring the Company has implemented adequate systems to monitor compliance activities, risk management and

health and safety requirements.

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Corporate Governance Statement (continued)

Before appointing a director, or putting forward to shareholders a director for appointment, the Company undertakes comprehensive reference checks that cover elements such as the person’s character, experience, employment history, qualifications, criminal history, bankruptcy history, and disqualified officer status. Additionally, to enable shareholders to make an informed decision, the Company provides shareholders with information about each candidate standing for election or re-election as a director. Such information includes the person’s experience and qualifications, details of other directorships, any information the Board is aware which may affect the person’s ability to act independently on matters before the Board, and whether the Board supports the appointment or re-election. The Company does not have a formal induction or professional development program for directors. To date, such programs have been considered unnecessary as the current Board has satisfactory experience and skill set. Consideration will be given to implementing such programs should it be proposed that any new directors join the Board. The terms of the appointment of a non-executive director are set out in writing and cover matters such as the term of appointment, time commitment envisaged, required committee work and other special duties, requirements to disclose their relevant interests which may affect independence, corporate policies and procedures, indemnities, and remuneration entitlements. Executive directors and senior executives are issued with service contracts which detail the above matters as well as the person or body to whom they report, the circumstances in which their service may be terminated (with or without notice), and any entitlements upon termination. The Company Secretary reports directly to the Board through the Chairman and is accessible to all directors. Diversity Policy The Directors consider that the Company is not currently of a size or the scale of its current operations enough to approve and comply with a diversity policy. This position will be reviewed at the appropriate stages of the Company’s development and the Company will adopt a diversity policy if in the opinion of the Board it is necessary to establish a policy concerning diversity and disclosure of the gender diversity for employees in the whole organisation including senior executives and the Board. There are currently no women on the Board. However, as the Board and employee positions become available, attention will be given to identifying opportunities for improving gender diversity across the organisation.

Audit and Risk Committee An Audit and Risk Committee was established by the Board in June 2015. A majority of the members of the Committee are non-executive directors. The Audit and Risk Committee comprises of Alex Chee Leong Chow (Chair), Ross Benson and Wei Dong. Details of each member’s qualifications and experience are detailed in the ‘Information on current directors and company secretary’ section of the Company’s annual report. The role of the Audit and Risk Committee is to assist the Board in monitoring and reviewing any matters of significance affecting financial statements and compliance. The Audit and Risk Committee is required to meet at least twice per year, review annual and half year accounts, and report to the Board of Directors. As the Audit and Risk Committee was established in June 2015, a review of the Company's audit and risk management framework will be undertaken for the year ending 31 December 2016. At this current stage and given the size and nature of the Company and its business, an internal review function has not been established. However, the Board will consider implementing such a function in the future as it sees fit. An external audit is undertaken by Grant Thornton Audit Pty Ltd. The external auditor attends the annual general meetings of the Company and is available to answer shareholder questions. The full board considers the qualifications and experience of the external auditor when considering potential appointees to the position. The rotation of external audit engagement partners is also considered by the full board in the light of relevant legislative and professional standards. The charter of the Audit and Risk Committee is available at the Company’s website.

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Corporate Governance Statement (continued) Remuneration and Nomination Committee A Remuneration and Nomination Committee was established by the Board in June 2015. A majority of the members of the Committee are non-executive directors. The Remuneration and Nomination Committee comprises of Wang Qingli (Chair), Peter Harrison and Li Xianglin. Details of each member’s qualifications and experience are detailed in the ‘Information on current directors and company secretary’ section of the Company’s annual report. As the Remuneration and Nomination Committee was established in June 2015, the committee did not meet for the six months ending December 2015. However, the Remuneration and Nomination Committee intend to hold a number of meetings for the year ending 31 December 2016. The role of the Remuneration and Nomination Committee is to, among other things, support and advice the Board in fulfilling its responsibilities to shareholders by:

• reviewing and approving the executive remuneration policy to enable the Company to attract and retain executives and directors who will create value for shareholders;

• ensuring that the executive remuneration policy demonstrates a clear relationship between key executive performance and remuneration;

• maintaining a Board that has an appropriate mix of skills and experience to be an effective decision-making body; and

• ensuring that the Board is comprised of Directors who contribute to the successful management of the Company and discharge their duties having regards to the law and the highest standards of corporate governance.

The Company’s remuneration policy is disclosed in the Remuneration Report contained within the Directors’ Report. The amount of remuneration for all key management personnel for the Company including all monetary and non-monetary components is detailed in the Remuneration Report. The charter of the Remuneration and Nomination Committee is available at the Company’s website. Performance Evaluation The Nomination and Remuneration Committee reviews the Boards performance annually, as well as the performance of individual Committees and individual directors (including the performance of the Chairman as Chairman of the Board) using generally accepted industry practises. The review process includes collective Board discussions to capture observations for where improvements could be made and where processes worked well, individual interviews with each director conducted by the Chairman, and provision of anonymous feedback collected from individual Board members. As the Company was recently reinstated to official quotation and the current Board has only been appointed since 9 June 2015, no performance review was carried out for the six months ending 31 December 2015. Financial Reporting In relation to the financial statements for the six months ending 31 December 2015, the Company’s CEO and CFO has provided the Board with declarations, that in his option:

• the financial records of the Company have been properly maintained; • the financial statements comply with the appropriate accounting standards and give a true and fair view of the

financial position and performance of the Company; and • the financial statement have been formed on the basis of a sound system of risk management and internal control

which is operating effectively.

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Corporate Governance Statement (continued)

Risk Management The directors consider that the identification and management of key risk associated with the business is vital. Matters of risk are regularly reviewed at board meetings and a risk management culture is encouraged amongst directors and employees. Areas of risk that are regularly considered include performance and funding of exploration activities; budgetary control and asset protection; status of mineral exploration licences; land access and native title considerations; compliance with laws and regulations; occupational health, safety and the environment; and continuous disclosure obligations. The Board has received assurance that the s.295A declaration is founded on a sound system of risk management and internal control and that the system is operating effectively in all material aspects in relation to financial reporting risks. Continuous Disclosure The Company is committed to providing the market with complete and timely information about disclosure events in compliance with its continuous disclosure obligations and the Corporations Act 2001 (Cth). The Company has established policies and procedures to ensure compliance with ASX Listing Rule continuous disclosure requirements. All proposed Company announcements are circulated to each director for their input before release to the market. Securities Trading Policy All directors, office- holders and employees are bound by the Company’s securities trading policy which prohibits trading in China Waste Corporation Limited’s securities while they are in possession of price – sensitive information until it has been released to the market and adequate time has been given for this to be reflected in the security’s price. Shareholder Rights The Company maintains information in relation to governance documents, directors and senior executives, annual reports, ASX announcements and contact details on the Company’s website. The Board aims to ensure that all shareholders are informed of significant developments through regular shareholders communications. These include the Annual Report and distribution of material covering major events when appropriate. Shareholders are entitled to vote on significant matters impacting on the business of the Company. Shareholders are strongly encouraged to attend and participate in the Annual General Meetings of the Company, to lodge questions to be responded to by the directors and are able to appoint proxies. The Company engages its share registry to manage the majority of communications with shareholders. Shareholders are encouraged to receive correspondence from the Company electronically, thereby facilitating a more effective, efficient and environmentally friendly communication mechanism with shareholders. Other Information Further information relating to the company’s corporate governance practises and policies has been made publicly available on the company’s website at www.chinawastecorp.com.

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