PNG CHAMBER OF MINES AND PETROLEUM INC.

FINANCIAL STATEMENTS

AND

REPORTS

FOR YEAR ENDED 31ST DECEMBER 2016

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

PNG CHAMBER OF MINES AND PETROLEUM INC

FINANCIAL STATEMENTSFOR YEAR ENDED 31ST DECEMBER 2016

CONTENTS PAGE NO.

Statement by Council 1

Independent Audit Report 2

Balance Sheet 3

Income Statement 4

Notes to and Forming Part of the Financial Statements 5 & 6

PNG CHAMBER OF MINES AND PETROLEUM INC

ANNUAL REPORTFOR YEAR ENDED 31ST DECEMBER 2016

STATEMENT BY COUNCIL

In the opinion of the Council, the profit and loss statement, balance sheet and the notes to and formingpart of the financial statements are drawn up so as to give a true and fair view of the state of the affairs ofthe Chamber as at 31 December 2016 and of the results for the year ended on that date.

DATED at Port M oresby this .............................. ............ day of .................................... ..... 2017

On behalf of the Council

President Gerea Aopi

Executive Director GDg Anderson

Page 1

Michael MayberryM. Com, FCA, FCPA PNG

Email: myjC ak. opgadmin@dfk.com.pg

MAYBERRY CHARTERED Telephone: (675) 321-2466ACCOUNTANTS (675) 320-1988

Facsimile: (675) 321-7548(675) 320-1989

INDEPENDENT AUDIT REPORTTO THE MEMBERS OF

PNG CHAMBER OF MINES AND PETROLEUM INC.

ScopeWe have audited the financial report of PNG Chamber of Mines and Petroleum Inc. comprising the balance sheet andincome statement for the financial year ended 31 December 2016 and accompanying notes to the financial statementsand the statement by Council.

Management's Responsibility for the Financial StatementsThe Chamber's Executive Committee is responsible for the preparation and true and fair presentation of the financialreport in accordance with the financial reporting requirements of the Chamber's constitution and are appropriate to meetthe need of the members. This responsibility includes designing and implementing and maintaining internal controlsrelevant to the preparation and fair presentation of the financial statements that are free from material misstatements,whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimatesthat are reasonable in the circumstances.

Audit ApproachWe have conducted an independent audit of the financial report in order to express an opinion on it to the members of theChamber. Our audit has been conducted in accordance with International Standards on Auditing to provide reasonableassurance as to whether the financial report is free of material misstatement. Our procedures included examination, on atest basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation ofaccounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion asto whether, in all material aspects, the financial statements give a true and fair view of the matters to which they relate, inaccordance with the accounting policies described in Note 1 to the financial statements. These policies do not require theapplication of all accounting standards adopted for use in Papua New Guinea.

We have obtained all required information and explanation. We believe that the audit evidence we have obtained issufficient and appropriate to provide the basis of our opinion.

Qualification - Revenue RecognitionAs is common for organisations of this type, it is not practicable for the Chamber to maintain an effective system ofinternal control over subscriptions, receipts or other fund raising activities until their initial entry in the accounting records.Accordingly, our audit in relation to income was limited to amounts recorded.

Unqualified Audit OpinionIn our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had thelimitation discussed in the qualification paragraph not existed, the financial report presents fairly in accordance with theaccounting policies described in Note 1 of the financial statements the income and expenses of the PNG Chamber ofMines and Petroleum Inc. for the year ended 31 December 2016 and its balance sheet as at that date.

Other InformationWe have no interest in the Chamber or any relationship other than that of auditor of the Chamber.

Dated at Port Moresby, this .........is. . .. ..rd day of ..-. . .KA .T..2 ........ .. 2017

DFK MAYBERRYChartered Accountants

By: Michael Mayberry CSM MBERegistered under the Accountants Act 1996

Page 2

Rabaul: PO Box 1595, Kokopo, ENBP, Papua New Guinea. Ph: (675) 982-9112 Fax: (675) 982-9113

AUDITEDPNG CHAMBER OF MINES AND PETROLEUM INC.

BALANCE SHEETAS AT 31 DECEMBER 2016

2016 2015Notes K K

CURRENT ASSETSCash at Bank 5 1,871,170 534,304Investments 6 9,284,364 8,543,481Trade and Other Receivables 7 555,431 751,660

TOTAL CURRENT ASSETS 11,710,965 9,829,445

NON-CURRENT ASSETSProperty, Plant and Equipment 4 282,766 296,390

TOTAL NON-CURRENT ASSETS 282,766 296,390

TOTAL ASSETS 11,993,731 10,125,835

CURRENT LIABILITIESTrade Creditors & Accruals 8 727,615 260,613

TOTAL CURRENT LIABILITIES 727,615 260,613

NON-CURRENT LIABILITIESProvisions 9 796,789 787,286

TOTAL NON-CURRENT LIABILITIES 796,789 787,286

TOTAL LIABILITIES 1,524,404 1,047,899

NET ASSETS 10,469,327 9,077,936

MEMBERS' FUNDS

Members' Funds 2 10,469,327 9,077,936

TOTAL EQUITY 10,469,327 9,077,936

.... .... .... .... ... ...Gerea Aopi re AndersonPresident Executive Director

The accompanying notes form part of these financial statements.

Page 3

AUDITEDPNG CHAMBER OF MINES AND PETROLEUM INC.

INCOME STATEMENTFOR THE YEAR ENDED 31ST DECEMBER 2016

2016 2015K K

INCOMEMembership & Levies 1,555,748 1,593,440

Conferences - Australia 6,807,869 -Conferences - PNG (7,882) 1,172,450Interest Received 283,085 173,403Exchange Gains 358,682 (147,394)Publication Sales 227,453 258,806Seminars/Training - 134,973Project Income-Funded - 270,846Project Income Reimbursed - 108,689Other Income 31,457 3,675TOTAL INCOME 9,256,412 3,568,888

LESS: EXPENDITUREAccommodation 162,748 106,173Accountancy & Audit Fees 16,500 26,500Advertising & Public Relations 17,098 7,950Bad Debts 218,216 100,731Bank Charges 2,266 3,351Books & Newspapers 1,095 417Chamber Funded Projects 692,881 859,597Conferences Costs

Conference - Australia 3,424,420Conference - PNG 3,500 1,504,639

Consultancy 85,131 459,314Depreciation 80,632 72,533Donations 1,550Electricity 21,907 29,926Freight & Postage 11,752 40General Expenses 46,812 2,174Insurance/Medical 55,790 39,348Internet/Emails/Websites 44,735 39,787Late Fees Paid - (621)Legal Professional Fees - 10,148License Fees 810Long Service Leave 40,212 76,245Loss on disposal of assets - 4,209Meeting Expenses 15,961 -

Office Rent 184,118 157,108Office Vehicle Expenses 59,322 48,728Other Employment Expenses 15,891 9,059Professional Fees - 2,475Projects - AusAID - UPNG 2,027Projects - AusAID - Unitech 172,933 114,780Projects - WIMAP - EHL - 260,643Projects - WIMAP JSDF II 46,231 170,480Publication Costs 460,257 88,716Public Relations Media 1,081Recruitment/Training 14,612 12,660Salaries 1,427,636 1,869,042Sponsorship 10,846Staff Amenities/Uniforms 27,128 15,138Stationery/Office Supplies 17,789 41,766Storage Fees 19,127 -Subscriptions 2,496 4,263Superannuation - NASFUND 44,672 32,894Superannuation - AON 119,928Telephone 23,801 25,606Travel 45,823 16,766TOTAL EXPENDITURE 7,634,266 6,218,052

OPERATING PROFITI(LOSS) BEFORE INCOME TAX 1,622,146 (2,649,164)

Operating Profit/(Loss) after Income Tax 1,622,146 (2.649,164)1,622,146 (2,649,164)

Retained Profits/(Losses) as at 31 December 2015 9,077,936 11,766,783Prior Year Adjustments Note 3 (230,755) (39,683)

Retained Profits/(Losses) as at 31 December 2016 10,469,327 9,077,936

Gerea Aopi dersonPresident Executive Director

Page 4

PNG CHAMBER OF MINES AND PETROLEUM INC.

NOTES TO AND FORMING PART OF THE STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The Financial Statements of PNG Chamber of Mines & Petroleum have been prepared in accordance with theaccounting standard as adopted by the Accounting Standards Board of Papua New Guinea (ASB) and therequirements of the Papua New Guinea's Companies Act 1997. The ASB has adopted the InternationalAccounting Standards and Interpretations issued by the Standards Interpretations committee as the applicablereporting framework.

Basis of Preparation

The financial statement have been prepared primarily on the historical cost basis and do not take into accountchanging money values or, except where stated, current valuations of non-current assets. The accountingpolicies have been consistently applied by the company and they are consistent with those of the previous year

Property, Plant & EquipmentItems of property, plant and equipment are stated at original cost or at valuation less accumulated depreciationand impairment losses. Construction cost for self-constructed assets includes the cost of materials,depreciation and impairment losses. Construction cost for self-constructed assets, direct labour and anappropriate portion of construction overheads.

Depreciation is provided on cost or revalued amount of all fixed assets, including buildings so as to write offthe assets progressively over their estimated useful life. Fixed assets are depreciated in the year of acquisitionor in the case of construction, in the year of substantial completion of the assets. Fixed Assets are firstdepreciated in the year of acquisition, or in the case of construction, in the year of substantial completion of theassets. All assets, excluding freehold land and buildings are depreciated over their useful lives to the company

The depreciation rates used for each class of asset are:

Office Equipment 15%Furniture & Fittings 15%Motor Vehicles 20%

Note 2: Members' Funds 2016 2015K K

Balance at beginning of the year 9,077,936 11,766,783Surplus/(Deficit) for the year 1,622,146 (2,649,164)Add: Prior Year Adjustments (230,755) (39,683)Balance at end of the year 10,469,327 9,077,936

Note 3: Prior Year AdjustmentsPrior year adjustments relate to the following;GST 180,398 -Publication Costs 50,357 39,683

230,755 39,683Note 4: PROPERTY, PLANT & EQUIPMENT

Accumulated Written WrittenCost Depreciation Down Value Down Value2016 2016 2016 2015

K K K K

Office Equipment 238,968 166,966 72,002 90,091Computer Software & Hardware 57,007 21,101 35,906 33,209Furniture & Fittings and Equipment 10,954 6,277 4,677 6,193Motor vehicle 307,898 137,717 170.181 166.896

Totals as at 31 December 2016 K614,827 K332,062 282766 296390

Totals as at 31 December 2015 K691,191 K394,802 296,390

Page 5

PNG CHAMBER OF MINES AND PETROLEUM

NOTES TO AND FORMING PART OF THE STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016

2016 2015K K

Notes Continued ................

Note 5: CASH AT BANK AND ON HANDCash at bank (PNG) 1,158,250 272,226Cash at bank (PNG) - WIMP JSDF 106,437 147,895Cash at bank (AUS) 25,980 4,234Cash at bank Conference als (AUS) - 77,685Cash at bank Conference a/s (AUS) 568,756 18,953Cash at Bank Visa (AUS) 11,105 12.126Cash on hand 642 1,185

1,871,170 534,304

Note 6: INVESTMENTSTerm Deposits (PNG) 3,143,506Treasury Bills (PNG) 3,852,337 1,908,183Interest Bearing Deposits (AUS) 5,432,027 3,491,791

9,284,364 8,543,481

Note 7: TRADE & OTHER RECEIVABLESStaff Loans & Salary Sacrifice 22,890 12,266Subscriptions and Levies 113,874 260,852Provision for Doubtful Debts - (36,528)Other debtors and prepayments 20,916 89,766Accrued Interest on Term Deposits - 3,529JSDF Project Income Receivable 67,321 108,689Conference income receivable 305,853Goods & Services Tax (GST) 24,577 313,086

555,431 751,660

Note 8: TRADE CREDITORS & ACCRUALSTrade creditors 59,724 58,884Other creditors and accruals 30,762 92,388Conference Expenses 429,068 -AON Clearing 12,444Payroll Cheque Clearing Account (16,643)Other Payroll Accruals (15,506)Insurance Prepayments (5,228)Deferred Interest Income - 3,529Deferred Revenue - Membership Income 7,795 43,189Deferred Revenue - Production Levy - 100,000Deferred Revenue - Chamber Projects 187,822 -

727.615 260,613

Note 9: PROVISIONSProvision for Long Service Leave 796,789 787,286

796,789 787286

Note 10: INCOME TAX

The Chamber is exempt from income tax under the provisions of the Income Tax Act.

Note 11: DISCLOSUREThe PNG Chamber of Mines and Petroleum Inc. is the recipient of a Grant of US $2,070,000 (Grant No.TF 013887)from the Japanese Social Development Fund (JSDP), administered by the World Bank to implement the Socialand Economic Empowerment for Women in Mining and Petroleum Project areas. Only one tranche of 250K hasbeen received from the World Bank up to this audit report with expenses of up to 46K (2015: 170K).

Page 6