precious metals mining and refining limited annual … · precious metals mining and refining...

PRECIOUS METALS MINING AND REFINING LIMITED

ANNUAL REPORT - 31ST MARCH 2018

INDEX

Page No.

1 Report of the Directors

2 Statement by the Directors

3 -4 Independent Audit Report

5 Statement of Comprehensive Income

6 Statement of Financial Position

7 Statement of Changes in Equity

8 Statement of Cash Flows

9-13 Notes to the Financial Statements

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INDEPENDENT AUDIT REPORT ON THE FINANCIAL STATEMENTS FOR THE YEAR

ENDED 31ST MARCH 2018

Report on the Financial Statements We have audited the accompanying financial statements of PRECIOUS METALS MINING AND

REFINING LIMITED, which comprise the statement of financial position as at 31st March 2018,

the statement of comprehensive income, statement of changes in equity and statement of cash flows

for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with International Financial Reporting Standards. This responsibility includes: designing,

implementing and maintaining internal control relevant to the preparation and fair presentation of

financial statements that are free from material misstatement, whether due to fraud or error; selecting

and applying appropriate accounting policies; and making accounting estimates that are reasonable in

the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

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

that we comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance whether the financial statements are free from material misstatement.

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

in the financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal control relevant to the entity’s

preparation and fair presentation of the financial statements in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by management, as

well as evaluating the overall presentation of the financial statements.

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

for our audit opinion.

Independence

As auditor, we are required to be independent of the company and free of interests that would be

incompatible with integrity and objectivity. In respect of this engagement, we followed the

independence requirements set out by the Certified Practising Accountants of Papua New Guinea.

Qualification

The company has ceased commercial operations. Consequently we do not verify the carrying value of

the capitalised pre operating expenses as stated in the statement of financial position in the sum of

K673,834. In addition, subsequent to the balance date, the unsecured loan in the sum of K1,875,081

has been forgiven by Fortune Gems and Jewellery DMCC.

NOTE 2018 2017

K K

Income - 1,390,552 - -

Cost of sales - 1,393,416 - -

- (2,864)

Operating expenses 34,293 1,009,980 - -

(34,293) (1,012,844)

Other income

Interest - 149 - -

- 149 - -

(34,293) (1,012,695)

Finance expenses

Bank charges 71 2,725

Interest - 61,912

Realised foreign exchange loss 14,189 23,428 - -

14,260 88,065 - -

Comprehensive loss for the year before taxation (48,553) (1,100,760) - -

Taxation 5

Current period - -

Deferred tax - -

- - - -

(48,553)K (1,100,760)K - -

The accompanying notes form part of these financial statements.

FOR THE YEAR ENDED 31ST MARCH 2018

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STATEMENT OF COMPREHENSIVE INCOME

Total comprehensive loss for the year after taxation

NOTES 2018 2017

K K

SHAREHOLDER'S EQUITY

Share capital 4 25,000 25,000

Reserves (1,149,313) (1,100,760)

DEFICIT OF SHAREHOLDER'S EQUITY (1,124,313)K (1,075,760)K -K -K

Represented by:-

ASSETS

CURRENT

Cash on hand and at bank 15,904 74

Other 7 64,030 115,773

79,934 115,847

NON CURRENT

Preoperating expenses 9 673,834 909,678

Future income tax benefit 5 - -

673,834 909,678

TOTAL ASSETS 753,768 1,025,525

LIABILITIES

CURRENT

Payables 8 3,000 323,295

NON CURRENT

Unsecured loan 6 1,875,081 1,777,990

TOTAL LIABILITIES 1,878,081 2,101,285

NET LIABILITIES (1,124,313)K (1,075,760)K


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STATEMENT OF FINANCIAL POSITION

AS AT 31ST MARCH 2018

SHARE ACCUMULATED TOTALCAPITAL LOSS

K K K

Balance at 31.03.2016 25,000 - 25,000

Total comprehensive loss for the year after taxation - (1,100,760) (1,100,760)

- - -

Balance at 31.03.2017 25,000 (1,100,760) (1,075,760)

Total comprehensive loss for the year after taxation - (48,553) (48,553)

-

Balance at 31.03.2018 25,000K (1,149,313)K (1,124,313)K -


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STATEMENT OF CHANGES IN EQUITY


2018 2017

K K

Cash flows from operating activities

Comprehensive income/loss before taxation (48,553) (1,100,760)

Non cash flow items

Depreciation - 39,741

Fixed assets disposed and written off - 380,776

Preoperating expense amortisation 235,844 101,076

Loans forgiven (319,976) -

Movement in statement of financial position

Increase in debtors 51,743 18,952

Increase in inventory - 14,775

Payments for preoperating expenses - (368,227)

Decrease in creditors (319) 248,657

(81,261) (665,010)

Taxation paid - - - -

Net cash used in operating activities (81,261) (665,010) - -

Cash flows from investing activities

Proceeds of share issue - -

Purchase of fixed assets - (210,157) - -

Net cash used in investing activities - (210,157) - -

Cash flows from finance activities

Repayment of borrowings - 108,457

Borowings 97,091 - - -

Net cash generated from finance activities 97,091 108,457 - -

Net cash used during the year 15,830 (766,710)

Cash and equivalents at the beginning of the year 74 766,784

Cash and equivalents at the end of the year 15,904K 74K - -

Cash and equivalents are comprised as follows:

Cash on hand - -

Cash at bank 15,904 74 - -

15,904K 74K - -



STATEMENT OF CASH FLOWS


-8-

1 SIGNIFICANT ACCOUNTING POLICIES

(a) Historical Cost Convention

(b) Foreign Currencies

(c) Fixed Assets

(d) Stock

(e) Income Tax

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS


The financial statements have been prepared under the historical cost convention and have not been adjusted to take account of the current costs of specific assets or their impact on the operating results, or changes in the general purchasing power of the kina.

Foreign currency transactions are recorded in Kina at the exchange rate at the date of the transaction. Monetary assets and liabilities are recorded at the exchange rate at the balance date. All gains and losses arising from exchange rate fluctuations are included in the statement of comprehensive income.

Fixed assets are stated at cost or at valuation less accumulated depreciation. The carrying amount of fixed assets is reviewed annually by the directors to ensure it is not in excess of the recoverable amount for those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employed and subsequent disposal.

Depreciation is calculated on the diminishing value method so as to write off the net costs of the various classes of fixed assets during their effective working lives.

Additions are depreciated from the date of purchase in the year of acquisition.

These financial statements are presented in accordance with the Papua New Guinea Companies Act 1997 and comply with applicable financial reporting standards and other mandatory professional reporting requirements approved for use in Papua New Guinea by the Accounting Standards Board (ASB). The ASB has adopted International Financial Reporting Standards (IFRS) and interpretations issued by the Standing Interpretations Committee as the applicable financial reporting framework.

The fundamental accounting assumptions recognised as appropriate for the measurement and reporting of results, cashflows and the financial position have been followed in the preparation of these financial statements.

Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.

The financial statements have been prepared on a going concern basis.

The company has commenced winding down its operations and to accommodate this process, the company’s holding company has agreed to provide ongoing funds until the company is deregistered.

Stock is valued at the lower of cost or net realisable value. Cost is calculated at an average cost and does not include any proportion of overheads.

Tax effect accounting procedures have been adopted whereby the income tax expense in the income account is matched with the accounting profit (after allowing for permanent differences). The future tax benefit relating to tax losses is not carried forward as an asset unless the benefit can be regarded as being virtually certain of realisation. Income tax on net cumulative timing differences is set aside to the deferred income tax and future tax benefit accounts at the rates which are expected to apply when those timing differences reverse. The current rates have been used for this purpose.

(f) Cash

(g) Goods and Services Tax (GST)

(h) Provisions

2 FINANCIAL INSTRUMENTS

(a) Financial Risk Management

(b) Foreign Exchange Risk

(c) Credit Risk

(d) Liquidity Risk

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For the purposes of the statement of cash flow, cash includes cash on hand, in “at call” deposits with banks or financial institutions and investments in money market instruments maturing within less than two months, net of bank overdrafts.

Revenue, expenses and assets are recognised net of the amount of associated GST, unless the

GST incurred is not recoverable from the taxation authority in which case it is recognised as

part of the cost or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable.

The net amount of the GST receivable from or payable to, the taxation authority is included

with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from

investing or financing activities which are recoverable from or payable to the taxation

authority are presented as operating cash flows.

Provisions are recognised when the company has a legal or constructive obligation, as a result

of past events, for which it is probable that an outflow of economic benefits will result and

that outflow can be reliably measured.

The company’s financial instruments include cash, cash equivalents, receivables, accounts payable

and borrowings.

The company’s activities expose it to a variety of financial risks, including the effects of

changes in market prices, foreign currency exchange and interest rates. The company

monitors these financial risks and seeks to minimise the potential adverse effects of the

financial performance of the company. The company does not use any derivative financial

instruments to hedge these exposures.

The company undertakes transactions denominated in foreign currencies from time to time

and resulting from these activities, exposures in foreign currencies arise. It is not the

company’s policy to hedge these foreign currency risks.

In the normal course of business the company incurs credit risk from trade debtors and

financial institutions. The company has a credit policy which is used to manage this exposure

to credit risk.

The company aims to prudently manage liquidity risk by maintaining sufficient cash and

other liquid assets or the availability of funding through uncommitted credit facilities and

shareholder’s advances.

2 FINANCIAL INSTRUMENTS (Continued)

(e) Fair Values

2018 2017

K K

3 AUDITOR'S REMUNERATION

Auditor's remuneration- audit - - - other services - - - -

4 SHARE CAPITAL

Issued and fully paid25,000 ordinary shares of K1.00 per share 25,000 25000- -

5 TAXATION

Loss for the year (48,553) (1,100,760) - -

Prima facie tax on loss at 30% (14,566) (330,228) Tax effect of permanent differences (95,993) - Tax effect of timing differences - - Transferred to taxation losses 110,559 330,228 Taxation loss utilised - - - -

Taxation charge for the year - - - -

Provision for taxationOpening provision - - Taxation expense - - Taxation paid - - - -

Closing provision - - - -

Deferred taxationTaxation losses - - - -

- - - -

Future income tax benefit at 30% - - - -

6 UNSECURED LOAN

Fortune Gems and Jewellery DMCC, Dubai 1,875,081 1,777,990 4,856 -

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Fortune Gems and Jewellery DMCC is a company registered in

Dubai, United Arab Emirates and is related to the company’s

shareholder.

The estimated fair values of the company’s financial assets and liabilities approximate their

carrying values in the statement of financial position.

2018 2017

K K

7 OTHER

Deposits - 21,498

Funds in trust - 33,429

GST 64,030 60,846 - -

64,030 115,773 - -

8 PAYABLES

Sundry creditors 3,000 2,201

Zee Gold DMCC - 321,094 - -

3,000 323,295 - -

9 PREOPERATING EXPENSES

Preoperating expenses capitalised 909,678 515,524

Preoperating expenses capitalised this year - 495,230

Amortised (235,844) (101,076) - -

Balance at 31st December 2018 673,834 909,678 - -

10 CONTINGENT LIABILITIES

11 RELATED PARTY TRANSACTIONS

12 POST BALANCE DATE EVENTS

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Zee Gold DMCC is a company registered in Dubai, United Arab

Emirates. The advance was forgiven during the year.

At the date of this report the directors are not aware of any contingent liabilities which would

materially affect these financial statements.

All transactions with related parties were undertaken in the ordinary course of business on

the company’s normal commercial terms and conditions.

The directors are not aware of any events which occurred since the end of the financial year

to the date of this report which would materially affect these financial statements.

13 HOLDING COMPANY

14 SEGMENT INFORMATION

16 EMPLOYEES

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The company’s holding company is Zee Gold DMCC, a company incorporated in Dubai

United Arab Emirates.

The average number of employees in 2018 was nil (2017: nil).

Business segment

Precious Metals Mining and Refining Limited has ceased all business operations.

Geographical segment

Precious Metals Mining and Refining Limited has ceased operations in Papua New Guinea.

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