PNG CHAMBER OF MINES AND PETROLEUM INC. FINANCIAL STATEMENTS AND REPORTS FOR YEAR ENDED 31ST DECEMBER 2016 PNG CHAMBER OF MINES AND PETROLEUM INC FINANCIAL STATEMENTS FOR 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 REPORT FOR 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 forming part of the financial statements are drawn up so as to give a true and fair view of the state of the affairs of the 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 Mayberry M. Com, FCA, FCPA PNG Email: myjC ak. opg admin@dfk.com.pg MAYBERRY CHARTERED Telephone: (675) 321-2466 ACCOUNTANTS (675) 320-1988 Facsimile: (675) 321-7548 (675) 320-1989 INDEPENDENT AUDIT REPORT TO THE MEMBERS OF PNG CHAMBER OF MINES AND PETROLEUM INC. Scope We have audited the financial report of PNG Chamber of Mines and Petroleum Inc. comprising the balance sheet and income statement for the financial year ended 31 December 2016 and accompanying notes to the financial statements and the statement by Council. Management's Responsibility for the Financial Statements The Chamber's Executive Committee is responsible for the preparation and true and fair presentation of the financial report in accordance with the financial reporting requirements of the Chamber's constitution and are appropriate to meet the need of the members. This responsibility includes designing and implementing and maintaining internal controls relevant 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 estimates that are reasonable in the circumstances. Audit Approach We have conducted an independent audit of the financial report in order to express an opinion on it to the members of the Chamber. Our audit has been conducted in accordance with International Standards on Auditing to provide reasonable assurance as to whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material aspects, the financial statements give a true and fair view of the matters to which they relate, in accordance with the accounting policies described in Note 1 to the financial statements. These policies do not require the application 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 is sufficient and appropriate to provide the basis of our opinion. Qualification - Revenue Recognition As is common for organisations of this type, it is not practicable for the Chamber to maintain an effective system of internal 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 Opinion In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had the limitation discussed in the qualification paragraph not existed, the financial report presents fairly in accordance with the accounting policies described in Note 1 of the financial statements the income and expenses of the PNG Chamber of Mines and Petroleum Inc. for the year ended 31 December 2016 and its balance sheet as at that date. Other Information We 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 MAYBERRY Chartered Accountants By: Michael Mayberry CSM MBE Registered under the Accountants Act 1996 Page 2 Rabaul: PO Box 1595, Kokopo, ENBP, Papua New Guinea. Ph: (675) 982-9112 Fax: (675) 982-9113 AUDITED PNG CHAMBER OF MINES AND PETROLEUM INC. BALANCE SHEET AS AT 31 DECEMBER 2016 2016 2015 Notes K K CURRENT ASSETS Cash at Bank 5 1,871,170 534,304 Investments 6 9,284,364 8,543,481 Trade and Other Receivables 7 555,431 751,660 TOTAL CURRENT ASSETS 11,710,965 9,829,445 NON-CURRENT ASSETS Property, 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 LIABILITIES Trade Creditors & Accruals 8 727,615 260,613 TOTAL CURRENT LIABILITIES 727,615 260,613 NON-CURRENT LIABILITIES Provisions 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 Anderson President Executive Director The accompanying notes form part of these financial statements. Page 3 AUDITED PNG CHAMBER OF MINES AND PETROLEUM INC. INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2016 2016 2015 K K INCOME Membership & Levies 1,555,748 1,593,440 Conferences - Australia 6,807,869 - Conferences - PNG (7,882) 1,172,450 Interest Received 283,085 173,403 Exchange Gains 358,682 (147,394) Publication Sales 227,453 258,806 Seminars/Training - 134,973 Project Income-Funded - 270,846 Project Income Reimbursed - 108,689 Other Income 31,457 3,675 TOTAL INCOME 9,256,412 3,568,888 LESS: EXPENDITURE Accommodation 162,748 106,173 Accountancy & Audit Fees 16,500 26,500 Advertising & Public Relations 17,098 7,950 Bad Debts 218,216 100,731 Bank Charges 2,266 3,351 Books & Newspapers 1,095 417 Chamber Funded Projects 692,881 859,597 Conferences Costs Conference - Australia 3,424,420 Conference - PNG 3,500 1,504,639 Consultancy 85,131 459,314 Depreciation 80,632 72,533 Donations 1,550 Electricity 21,907 29,926 Freight & Postage 11,752 40 General Expenses 46,812 2,174 Insurance/Medical 55,790 39,348 Internet/Emails/Websites 44,735 39,787 Late Fees Paid - (621) Legal Professional Fees - 10,148 License Fees 810 Long Service Leave 40,212 76,245 Loss on disposal of assets - 4,209 Meeting Expenses 15,961 - Office Rent 184,118 157,108 Office Vehicle Expenses 59,322 48,728 Other Employment Expenses 15,891 9,059 Professional Fees - 2,475 Projects - AusAID - UPNG 2,027 Projects - AusAID - Unitech 172,933 114,780 Projects - WIMAP - EHL - 260,643 Projects - WIMAP JSDF II 46,231 170,480 Publication Costs 460,257 88,716 Public Relations Media 1,081 Recruitment/Training 14,612 12,660 Salaries 1,427,636 1,869,042 Sponsorship 10,846 Staff Amenities/Uniforms 27,128 15,138 Stationery/Office Supplies 17,789 41,766 Storage Fees 19,127 - Subscriptions 2,496 4,263 Superannuation - NASFUND 44,672 32,894 Superannuation - AON 119,928 Telephone 23,801 25,606 Travel 45,823 16,766 TOTAL 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 11,766,783 Prior Year Adjustments Note 3 (230,755) (39,683) Retained Profits/(Losses) as at 31 December 2016 10,469,327 9,077,936 Gerea Aopi derson President Executive Director Page 4 PNG CHAMBER OF MINES AND PETROLEUM INC. NOTES TO AND FORMING PART OF THE STATEMENTS FOR 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 the accounting standard as adopted by the Accounting Standards Board of Papua New Guinea (ASB) and the requirements of the Papua New Guinea's Companies Act 1997. The ASB has adopted the International Accounting Standards and Interpretations issued by the Standards Interpretations committee as the applicable reporting framework. Basis of Preparation The financial statement have been prepared primarily on the historical cost basis and do not take into account changing money values or, except where stated, current valuations of non-current assets. The accounting policies have been consistently applied by the company and they are consistent with those of the previous year Property, Plant & Equipment Items of property, plant and equipment are stated at original cost or at valuation less accumulated depreciation and 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 an appropriate portion of construction overheads. Depreciation is provided on cost or revalued amount of all fixed assets, including buildings so as to write off the assets progressively over their estimated useful life. Fixed assets are depreciated in the year of acquisition or in the case of construction, in the year of substantial completion of the assets. Fixed Assets are first depreciated in the year of acquisition, or in the case of construction, in the year of substantial completion of the assets. 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 2015 K K Balance at beginning of the year 9,077,936 11,766,783 Surplus/(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 Adjustments Prior year adjustments relate to the following; GST 180,398 - Publication Costs 50,357 39,683 230,755 39,683 Note 4: PROPERTY, PLANT & EQUIPMENT Accumulated Written Written Cost Depreciation Down Value Down Value 2016 2016 2016 2015 K K K K Office Equipment 238,968 166,966 72,002 90,091 Computer Software & Hardware 57,007 21,101 35,906 33,209 Furniture & Fittings and Equipment 10,954 6,277 4,677 6,193 Motor 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 STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 2016 2015 K K Notes Continued ................ Note 5: CASH AT BANK AND ON HAND Cash at bank (PNG) 1,158,250 272,226 Cash at bank (PNG) - WIMP JSDF 106,437 147,895 Cash at bank (AUS) 25,980 4,234 Cash at bank Conference als (AUS) - 77,685 Cash at bank Conference a/s (AUS) 568,756 18,953 Cash at Bank Visa (AUS) 11,105 12.126 Cash on hand 642 1,185 1,871,170 534,304 Note 6: INVESTMENTS Term Deposits (PNG) 3,143,506 Treasury Bills (PNG) 3,852,337 1,908,183 Interest Bearing Deposits (AUS) 5,432,027 3,491,791 9,284,364 8,543,481 Note 7: TRADE & OTHER RECEIVABLES Staff Loans & Salary Sacrifice 22,890 12,266 Subscriptions and Levies 113,874 260,852 Provision for Doubtful Debts - (36,528) Other debtors and prepayments 20,916 89,766 Accrued Interest on Term Deposits - 3,529 JSDF Project Income Receivable 67,321 108,689 Conference income receivable 305,853 Goods & Services Tax (GST) 24,577 313,086 555,431 751,660 Note 8: TRADE CREDITORS & ACCRUALS Trade creditors 59,724 58,884 Other creditors and accruals 30,762 92,388 Conference Expenses 429,068 - AON Clearing 12,444 Payroll Cheque Clearing Account (16,643) Other Payroll Accruals (15,506) Insurance Prepayments (5,228) Deferred Interest Income - 3,529 Deferred Revenue - Membership Income 7,795 43,189 Deferred Revenue - Production Levy - 100,000 Deferred Revenue - Chamber Projects 187,822 - 727.615 260,613 Note 9: PROVISIONS Provision 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: DISCLOSURE The 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 Social and Economic Empowerment for Women in Mining and Petroleum Project areas. Only one tranche of 250K has been received from the World Bank up to this audit report with expenses of up to 46K (2015: 170K). Page 6