2009 SP4 - UniSA ACG27 - Assignment 2 - Financial Report

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PMA Limited Annual Report 2010

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PMA Limited Australian Business Number (ABN): 33 051 248 363

Financial Report

As at 30 June 2010

Corporate Governance Statement .......................................................................................................... 4

Director’s Report ..................................................................................................................................... 7

Directors’ Declaration ........................................................................................................................... 13

Independent Auditor’s Report .............................................................................................................. 14

Statement of Comprehensive Income .................................................................................................. 16

Statement of Financial Position ............................................................................................................ 17

Statement of Changes in Equity ............................................................................................................ 18

Statement of Cash Flow ........................................................................................................................ 19

Notes to the Financial Statements ........................................................................................................ 20

1. General Information ..................................................................................................................... 20

2. Statement of Significant Accounting Policies ............................................................................... 21

3. Income .......................................................................................................................................... 24

4. Analysis of Expenses ..................................................................................................................... 25

5. Sale of Equipment ......................................................................................................................... 26

6. Analysis of Trade and Other Receivables ...................................................................................... 26

7. Analysis of Property, Plant and Equipment .................................................................................. 27

8. Analysis of Intangible Assets ......................................................................................................... 27

9. Analysis of Trade and other Payables ........................................................................................... 28

10. Analysis of Provisions .................................................................................................................. 28

11. Reserve ........................................................................................................................................ 29

12. Analysis of Distributions.............................................................................................................. 29

13. Share Capital ............................................................................................................................... 29

14. Auditor ........................................................................................................................................ 30

15. Non-adjusting events after the reporting date ........................................................................... 30

16. Adjusting events after the reporting date .................................................................................. 30

17. Contingent Liabilities................................................................................................................... 31

18. Non-Financial Disclosures ........................................................................................................... 31

19. Capital ......................................................................................................................................... 32

References ............................................................................................................................................ 33

Appendix A - Calculations ..................................................................................................................... 34

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Corporate Governance Statement

While PMA Limited is not a listed Company, ‘it has adopted, where applicable, practices in

compliance with the relevant section of the ASX Corporate Governance Council, Corporate Principles

and Recommendations’. (TT-Line Company Pty Ltd 2009).

Principle 1. Lay solid foundations for management and oversight:

‘The Board is accountable to the shareholders and is responsible for:

Setting strategic and financial objectives;

monitoring the Company’s performance and financial position and overseeing the financial

accounts and reporting;

identifying and managing business and compliance risk;

managing the Company’s investment portfolio;’ (Australian United Investment Company

Limited 2009)

determining the dividend policy of the Company;

appointing and determining conditions of service including remuneration and performance

monitoring procedures for the Chief Executive Officer and senior management;

reviewing and monitoring risk management and internal compliance control;

reviewing and monitoring all major policies.’ (TT-Line Company Pty Ltd 2009)

Principle 2. Structure the Board to add value:

‘The composition of and appointments to the Board are prescribed by the Company’s constitution.

Appointments are made directly by the two shareholders.’ (TT-Line Company Pty Ltd 2009)

‘The Chairman and all other Directors are independent non-executive Directors. The details of the

individual Directors are set out on page 5.’ (TT-Line Company Pty Ltd 2009)

Principle 3. Promote ethical and responsible decision-making:

PMA Limited has adopted a Code of Conduct and Ethics which governs the Company commercial

operations and the conduct of Directors, employees, consultants and all other people engaged

somehow with PMA Limited operations. The Company Code of Conduct and Ethics can be found on

its website www.pmalimited.com.au. (TT-Line Company Pty Ltd 2009)

http://www.pmalimited.com.au/

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Corporate Governance Statement (continued)

Principle 4. Safeguard integrity in financial reporting:

The Chief Executive Officer is responsible for assuring that the Company’s financial reports represent

the concept of true and fair view and are in accordance with Australian Accounting Standards or any

other relevant accounting standards.

The Company’s external auditor is ABC Accounting. (TT-Line Company Pty Ltd 2009)

Principle 5. Make timely and balanced disclosure:

PMA Limited is not a public listed Company and therefore is not required reporting to the stock

exchange. (TT-Line Company Pty Ltd 2009)

Principle 6. Respect the rights of the shareholders:

‘The Company communicates with shareholders through:

The annual report;

the half year report;

the website, including email contact;

telephone availability of the Company Secretary at the representative office;

Annual General Meeting including Chairman’s address and question time;

mailing of Chairman’s Address to all shareholders and posting to website.

the external auditor is to be available for questioning at the Annual General Meeting.’

(Australian United Investment Company Limited 2009)

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Corporate Governance Statement (continued)

Principle 7. Recognise and manage risk:

‘The Company is committed to ensuring that all key risks are identified, assessed and appropriately

managed. In this regard, consideration is given to balancing the potential costs of the risk, the

benefits from exposure to the risk and the cost of controlling the risks.

The Board, and in particular the audit and risk committee, oversee the establishment,

implementation, and periodic review of the Company’s risk management systems. Management has

established and implemented a system for assessing, monitoring and managing operational,

financial reporting, and compliance risks for the Company.

A formal risk assessment process, to document the organisational strategic risk profile, has been

undertaken and this profile is subject to regular periodic update. The outputs from this process are

reviewed by management and the audit and risk committee and ultimately are reported to the

Board. Each business unit is responsible and accountable for implementing and managing the extent

of exposure to identified risks.’ (TT-Line Company Pty Ltd 2009)

Principle 8. Remunerate fairly and responsibly:

‘The Board has established a remuneration committee which is responsible for ensuring that PMA’s

remuneration policies and practices are fair and nationally competitive. The remuneration

committee is responsible for reviewing and approving changes to executive and senior management

remuneration policies and incentive programmes. The committee approves market movement

increases as part of the annual remuneration review for executives and senior managers. The

remuneration committee is responsible for recommending to the Board movements in senior

management salary levels.’ (TT-Line Company Pty Ltd 2009)

The remuneration committee is chaired by A Cole and its other members are P Paterson and M

Barendrecht.

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Director’s Report

Introduction

The Board of Directors of the consolidated entity PMA Limited (‘the company’) has the pleasure in

submitting the company’s annual financial report for the year ended 30 June 2010. In order to

comply with the provisions of the Corporations Act 2001, the directors report as follows:

Directors and senior management

The Directors of the company in office during the financial year and until the date of this report are

as follows:

Mr A Cole (Chairman)

Ms P Paterson (CEO)

Mr M Barendrecht

Miss E Liot

Dr A Dobe

The senior management team are the following persons, considering their current position was held

during the financial year and until the disclosure date of this report:

H.P. Boak (CFO)

I.B. Man (GM, manufacturing goods department)

P.G. Howard (Operation Manager)

B.R. Lee (GM, service and repair department)

A.K. Mohammad (Company secretary)

Company Secretary

Mr A.K. Mohammad, Chartered Accountant, has held the position of company secretary of the

company since last financial year. He joined the company in 2008 and previously held a company

secretary position at another large manufacturing company.

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Director’s Report (continued)

Principal activities

The principal activities of the company during the financial year were the research, development,

manufacture, marketing and distribution of agricultural implements. During the financial year the

company decided to pursue a new arm of the business, service and repair, to supplement the

existing manufacturing and retail arms. Details of the revenue are in note 3 to the financial

statements.

Operating Results

The profit of the company for the financial year, after providing for income tax, amounted to $9,765

million. This resulted in an increase of the company’s retained earnings to $18,419 million, a 41%

increase on the previous figure of $13,054 million.

Other revenue of $7,5 million from sale of equipment was collected during the year as well as $1,5

million from the new service arm implemented by the company in May 2010.

Dividends

According to the financial year ended 30 June 2009, as declared by the directors in last year’s

directors report a dividend of 10.00 cents per share, fully franked at 30%, was paid to the holders of

shares on 10 October 2009.

As for this year, a final dividend of 20.00 cents per share, fully franked at 30%, has been declared to

be taken out of this year’s profit, but has not been paid yet nor any date supplied.

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Ordinary shares

In May 2004, the company issued 6 million shares at a cost of $2.50 each. A final call was made on

these shares of $0.50 per share in October 2009, with all the money received by December 2009.

As at 30 June 2010 2009 Note $000’s $000’s

PMA Limited - Ordinary Shares Number of shares issued ............................................................................... 6 000 6 000 Amount paid for shares ................................................................................. $ 2.50 $2.00 Amount unpaid for shares ............................................................................. - 0.50

On the 15 September 2010, the company announced plans to raise capital via an issue of 2 million

ordinary shares at $4.50 per share. A prospectus will be released by the 31 October 2010.

Indemnity and Insurance to officers and auditors

Over the course of the financial year, the company has paid an insurance premium for the directors,

executive officers, company secretary, all named above, of the company and any subsidiaries against

a liability ‘incurred as such a director, secretary or executive officer to the extent permitted by the

Corporations Act 2001’ (Deloitte 2009, p. 9)

Disclosure of the nature of the liability and the premium amount paid cannot be released under the

circumstances of the insurance contract.

During the financial year, the company has not indemnified an auditor, or officer of the company, or

any subsidiaries bodies, against a liability that happened as such an auditor or officer.

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Review of Operations

The most significant activity during the year has been the implementation of a new service arm. The

services offered by this arm consist of servicing and repairing products manufactured in the existing

arm of the company. This new activity has generated extra revenue for the year which amounted to

$1,5 million. The directors are very confident on expanding this new venture and generating more

profit in the coming years.

The company holds a strong financial position. The extra revenue of the new service only reflects 2

months of the financial year presented in this annual report. The forecast revenue of this new arm of

the business could generate up to $9 million, based on the 2 months figures.

Another one of the director’s strategies is to raise the capital via an issue of 2 million shares at $4.50

each. The newly generated capital of $9 million would be used to acquire other businesses and to

retire debt.

Changes in state of affairs

Other than those disclosed in this report, or in the financial statements, there are no significant

changes in the state of affairs of the company during the financial year.

Significant events after year end

Other than those disclosed in this report, or in the financial statements, the company, and its

directors are not aware of any matter or circumstance which has arisen since the end of the financial

year, which has significantly affected or may significantly affect the operations of the consolidated

entity, the results of those operations or the state of affairs of the company in subsequent financial

years.

Likely Developments Business Strategies and Future Prospects

In the medium term, the Company will continue to grow through developing the new service and

repair arm of the business. Refer to section ‘review of operations’ of this director’s report for further

information.

Also, as mentioned in the same section, the directors of the company are planning on acquiring

other businesses which will have a positive impact on the Company’s financials.

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Remuneration report

Remuneration of directors and senior management:

The total remuneration package comprises of options of shares and fixed remuneration. The key

standards for composing the package take into account the market competition, so the highly skilled

executives can be attracted and retained within PMA Limited.

Share options granted to directors and senior management

The directors and the five highest remunerated officers of PMA limited have been granted shares, as

part of their remuneration packages during the course of the year and until the release of this

report:

Year Ending 30 June 2010 2009 Note Shares Shares

Ordinary Shares granted to Directors and Senior Management P. Paterson ..................................................................................................... 150 000 - H. P. Boak ....................................................................................................... 100 000 - I. B. Man ......................................................................................................... 35 000 - B. R. Lee .......................................................................................................... 35 000 - P. G. Howard .................................................................................................. 5 000 -

Total Ordinary Shares granted to Directors and Senior Management ........ 325 000 -

Fixed remuneration:

In respect of the financial year report, this information cannot be completed due to a lack of

accurate information at the end of the financial year and after, until the release of this report for

PMA Limited.

Year Ending 30 June 2010 2009 Note $000’s $000’s

Fixed Remuneration of Directors and Senior Management P. Paterson ..................................................................................................... 100 80 H. P. Boak ....................................................................................................... 85 75 I. B. Man ......................................................................................................... 50 45 B. R. Lee .......................................................................................................... 50 45 P. G. Howard .................................................................................................. 35 30

Total Fixed Remuneration of Directors and Senior Management .............. 320 275

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Environmental regulations

The company maintains management systems for the environment that are consistent with

recognised internationally standards to help ensure that its facilities operate to those standards to

help protect the environment.

Also, the consolidated entity’s environmental obligations and waste discharge quotas are regulated

under applicable Australian laws. All environmental obligations are monitored by the Directors and

subjected here and then to government agency audits and site inspections.

The consolidated entity also focus on minimising the environmental impact of its operations by

recycling waste paper, oil, glass and other materials and by the responsible management and

disposal of all product packaging.

The Environmental Protection Authority has not notified PMA limited of any environmental breaches

in the Australian Capital Territory, Australia, in relation to the Company’s operations during the year

ended 30 June 2010.

This report is made in accordance with a resolution of the directors.

Andrew Cole

Andrew Cole

Chairman

Canberra, 19 August 2010

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Directors’ Declaration

The directors of PMA Limited (‘the Company’) declare that:

a) The financial statements, notes and director’s report are in accordance with the corporation

Act 2001 which state that:

The company must give a true and fair view of the performance and financial

position of PMA Limited at the financial year ending the 30 June 2010.

The company must comply with the Australian Accounting Standard, the

International Financial Reporting Standard and the Corporation regulation 2001.

b) There are reasonable grounds to believe that the company will be able to pay its debts as

and when they become due and payable (Deloitte 2010, p.24)

There are reasonable grounds to believe that the company will be able to meet any obligations or

liabilities to which they are or may become subject to by virtue of the deed of cross guarantee by

reference to ASIC Class Order 98/1418. (Deloitte 2010, p.24)

Signed in accordance with resolution of the directors.

Andrew Cole Patricia Paterson

Andrew Cole Patricia Paterson

Chairman CEO

Canberra, 30 September 2010

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Independent Auditor’s Report

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Independant Auditor’s Report (continued)

The financial notes below form part of these statements.

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Statement of Comprehensive Income

For the year ended 30 June 2010

Year ended 30 June 2010 2009 Note $000’s $000’s

Income ......................................................................................................... 3 82 250 - Expenses ...................................................................................................... 4 (67 700) - Loss on Sale of Equipment ........................................................................... 5 (600)

Profit before income tax expense ............................................................ 13 950 -

Income tax expense ....................................................................................... (4 185) -

Profit for the year ................................................................................... 9 765 -

Other Comprehensive Income ....................................................................... - -

Total Comprehensive Income for the Year ............................................... 9 765 -


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Statement of Financial Position

As at 30 June 2010

As at 30 June 2010 2009 Note $000’s $000’s

Current assets Cash and Cash Equivalents ............................................................................. 515 - Trade and Other Receivables ....................................................................... 6 32 225 - Inventories ..................................................................................................... 9 590 -

Total Current Assets ....................................................................................... 42 330 -

Non-current Assets Property, Plant and Equipment ................................................................... 7 23 850 - Intangible Assets .......................................................................................... 8 5 900 -

Total Non-current Assets ............................................................................... 29 750 -

Total assets ............................................................................................. 72 080 -

Current Liabilities Trade and Other Payables ............................................................................ 9 11 250 - Current Tax Liabilities..................................................................................... 4 185 - Damages Payable ........................................................................................... 200 Provisions ................................................................................................... 10 1 773 Final Dividend Payable ................................................................................... 1 200 -

Total Current Liabilities .................................................................................. 18 608 -

Non-current Liabilities Borrowings ..................................................................................................... 15 000 - Provisions ................................................................................................... 11 1 118

Total Non-current Liabilities .......................................................................... 16 118 -

Total liabilities ........................................................................................ 34 726 -

Net assets ............................................................................................... 37 354 -

Equity Share capital ................................................................................................... 14 985 - Reserve ....................................................................................................... 11 3 950 - Retained earnings .......................................................................................... 18 419 -

Total equity ............................................................................................ 37 354 -


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Statement of Changes in Equity For the year ended 30 June 2010

Share Capital

Reserve Retained Earnings

Total

Note $000’s $000’s $000’s $000’s

Balance as at 1 July 2008 ................................ 11 985 750 13 654 25 789 Comprehensive Income ..................................... - - - - Share call received ............................................. - - - - Dividend ......................................................... 12 - - (600) - Transfers ............................................................ - - - -

Balance as at 30 June 2009 11 985 750 13 054 25 789

Balance as at 1 July 2009 ................................ 11 985 750 13 054 25 789 Total Comprehensive Income ............................ - - 9 765 9 765 Share call received ............................................. 3 000 - - 3 000 Dividend ......................................................... 12 - - (1 200) (1 200) Transfers ............................................................ - 3 200 (3 200) -

Balance as at 30 June 2010 ............................. 14 985 3 950 18 419 37 354

The above Statement of Changes in Equity should be read in conjunction with notes 11 and 13.


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Statement of Cash Flow

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Notes to the Financial Statements

1. General Information AASB101 paragraph 138

AASB101 paragraph 46a

Professional Manufacturing Australia Limited (‘the Company’) is a public company incorporated and

operating independently in Australia.

The company’s registered office and its principal place of business are as follows:

Registered Office

12 Chandler St,

Belconnen

ACT 2617

Australia

Principal place of business

Heard Street

Mawson

ACT 2607

Australia

The company’s principal activities are the manufacturing and retailing of agricultural implements. In

May 2010 the business decided to pursue a new arm of the business, service and repair, to

supplement the existing business.

The company is required to prepare financial reports in accordance with Part 2M.3 of the

Corporations Act, and is a reporting entity.

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Notes to the Financial Statements (continued)

2. Statement of Significant Accounting Policies AASB101 paragraph 117

These general purpose financial statements have been prepared in accordance with Australian

Accounting Standards, in particular:

AASB 5 Non-current Assets held for Sale and Discontinued Operations;

AASB 7 Financial Instruments: Disclosures;

AASB 101 Presentation of Financial Statements;

AASB 102 Inventories;

AASB 107 Cash Flow Statements;

AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors;

AASB 112 Income Taxes;

AASB 116 Property, Plant and Equipment;

AASB 118 Revenue;

AASB 121 The Effects of Changes in Foreign Exchange Rates;

AASB 137 Provisions, Contingent Liabilities and Contingent Assets;

AASB 138 Intangible Assets; and

AASB 139 Financial Instruments: Recognition and Measurement.

As well as the Framework for the Preparation and Presentation of Financial Standards.

These statements comply with the requirements of the IFRSs.

Statement of Compliance

AASB 101 paragraph 114 (a)

‘This financial report is a general purpose financial report prepared in accordance with the requirements of the Australian Corporations Act 2001 and Accounting Standards applicable in Australia. This financial report also complies with Accounting Standards and Interpretations published by the International Accounting Standards Board’ (Telstra annual report 2009). Basis of Preparation

AASB 101 paragraph 16

‘The financial report has been prepared on the basis of historical cost, except for the revaluation of

certain non-current assets and financial instruments. Cost is based on the fair values of the

consideration given in exchange for assets. All amounts are presented in Australian dollars, unless

otherwise noted’ (Deloitte report 2009) and are rounded to the nearest thousand dollars.

AASB set out accounting policies that would generate a sum of information being reliable and

relevant contained in the financial report.

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2. Statement of Significant Accounting Policies (continued)

Summary of Accounting Policies AASB 101 paragraph 117

a. Income tax

Income tax is the current tax payable on the taxable income of the year ending 30 June 2010 b. Inventories

Inventories are measured at the lower cost or net realisable value. c. Property, Plant and Equipment

Items of property, plant and equipment are carried out at cost or fair value less accumulated

depreciation and impairment losses.

An annual revision and assessment of the carrying amount ensure residual value and useful life are

up to date.

Fixed assets are depreciated using the straight line method over its expected useful life and the rates

are as follow:

Rate Years

Buildings ......................................................................................................... 2.5% Equipment ...................................................................................................... 4 The Gain or loss on disposal of items of property, plant and equipment is determine by comparing carrying amount against proceeds from the sale and is included in the statement of comprehensive income. d. Intangible assets

Goodwill: ‘Goodwill represents the difference between the cost of acquisition and the fair value of the net identifiable asset required’ (Qantas Airways Limited 2009) Patent: at cost and net of amortisation / depreciation, without a specific period of time. e. Financial instruments

Ensure that PMA Limited will be able to continue as a going concern.

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2. Statement of Significant Accounting Policies (continued)

f. Employee benefits

‘Liabilities for employee benefits for wages, salaries, annual leave and sick leave vesting to employee

expected to be settled within 12 months of the end represent present obligations resulting from

employees services provided to balance date’ (Qantas Airways Limited 2009).

Contributions are made by the company to an employee superannuation fund.

‘Provision has been recognised for employee benefits relating to long service leave. In calculating the

present value of future cash outflow, the probability of long service leave being taken is based on

historical data’. (Canberra Raiders Leagues Club (Southside) Limited 2009)

g. Payable

‘Liabilities for trade creditors and other amount payable are carried at cost’. (Qantas Airways Limited 2009) h. Provisions

Provisions are put together when an entity has obligations, resulting from past events, for which there is a probability of a cash outflow. The measurement of outflow must be reliable. i. Cash and cash equivalents

‘Cash and cash equivalents include cash on hand, deposits held at call with banks and bank overdrafts’. (Canberra Raiders Leagues Club (Southside) Limited 2009) j. Revenue recognition

Revenue from the sale of goods, revenue from the rendering of services and revenue from interest are recognised for the entity. ‘Revenue from the sale of goods and services are recognised upon delivery of goods and services to customers’. (Canberra Raiders Leagues Club (Southside) Limited 2009) ‘Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount’ (Deloitte 2009). k. Good and service tax (GST)

It is assumed that all revenue, expenses and assets are recognised net of GST.

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3. Income AASB 101 paragraph 81

AASB 178 paragraph 35b


Sales Revenue ......................................................................................... 80 650 -

Other revenue/income Service and repair revenue ............................................................................ 1 500 Interest ........................................................................................................... 100

Total Other revenues/income ................................................................. 1 600 -

Total Income ........................................................................................... 82 250 -

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4. Analysis of Expenses AASB 101 paragraph 97


Costs of Sales .......................................................................................... 50 500 - Administration Expense Printing, Postage and Stationary.................................................................... 350 - Insurance ........................................................................................................ 515 -

Total Administration Expense .................................................................. 865 -

Employee Benefit Expense Salaries and Wages ........................................................................................ 5 100 - Employee Benefits ......................................................................................... 520 -

Total Employee Benefit Expense 5 620 -

Finance Costs Auditors ...................................................................................................... 14 90 - Doubtful Debts ............................................................................................... 250 - Interest Expense on Loan ............................................................................... 350 -

Total Finance Costs ................................................................................. 690 -

Occupancy Expense Retail Outlets Rent ......................................................................................... 1 500 - Electricity........................................................................................................ 900 - Repairs ........................................................................................................... 600 - Depreciation – Buildings ................................................................................ 250 -

Total Occupancy Expense ........................................................................ 3 250 -

Warrantee Expense ................................................................................. 2 100 -

Other Expense Depreciation – Equipment ............................................................................. 900 - Expense for Legal Case ................................................................................... 550 - Auditors (Non-Auditing Services) ............................................................... 14 90 - Other .............................................................................................................. 3 135

Total Other Expense ................................................................................ 4 675 -

Total Expense ......................................................................................... 67 700 -

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5. Sale of Equipment AASB 101 paragraph 98 c

As at 30 June 2010 2009 Note $000’s $000’s

Equipment At Cost ............................................................................................................ 20 000 - Accumulated depreciation ............................................................................. (11 900) -

Carrying amount ............................................................................................ 8 100 -

Carrying amount ............................................................................................ (8 100) - Proceed from sale .......................................................................................... 7 500 -

Gain / (Loss) ................................................................................................... (600) -

To record the disposal of a non-current asset with an historic cost of $20 million which generated a

sale of $7,5 million, but a loss of $600 000 against the carrying amount.

6. Analysis of Trade and Other Receivables AASB 101 paragraph 78 b

As at 30 June 2010 2009 Note $000’s $000’s

Receivables from trade customers Accounts Receivable ...................................................................................... 32 900 - Less: Allowance for Doubtful Debts ............................................................... (740) -

Total Receivables from trade customers .................................................. 32 160 -

Prepayments Prepaid Insurance .......................................................................................... 65 -

Total Prepayments .................................................................................. 65 -

Total Trade and other receivables ........................................................... 32 225 -

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7. Analysis of Property, Plant and Equipment AASB 101 paragraph 54 a

As at 30 June 2010 2009 Note $000’s $000’s

Land

At Cost ............................................................................................................ 11 500 -

Equipment At Cost ............................................................................................................ 4 500 - Accumulated depreciation ............................................................................. (900) -

3 600 -

Buildings At Cost ............................................................................................................ 10 000 - Accumulated depreciation ............................................................................. (1 250) -

8 750 -

Total property, plant and equipment ........................................................... 23 850 -

8. Analysis of Intangible Assets AASB 101 paragraph 54 c

As at 30 June 2010 2009 Note $000’s $000’s

Patent ............................................................................................................. 3 900 - Goodwill ......................................................................................................... 2 000 -

Total Intangible Assets ............................................................................ 5 900 -

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9. Analysis of Trade and other Payables AASB 101 paragraph 54 h

As at 30 June 2010 2009 Note $000’s $000’s

Accounts Payable ........................................................................................... 10 900 - Interest Accrued ............................................................................................. 350 -

Total Trade and other receivables ........................................................... 11 250 -

10. Analysis of Provisions AASB 101 paragraph 78 d

As at 30 June 2010 2009 Note $000’s $000’s

Current Provisions Provision for Legal Case ................................................................................. 500 - Provision for Warrantees ............................................................................... 450 - Provision for Employee Benefits .................................................................... 823 -

Total Current Provisions .......................................................................... 1 773 -

Non-Current Provisions Provision for Warranties ................................................................................ 1 050 - Provision for Employee Benefits .................................................................... 68 -

Total Non-Current Provisions .................................................................. 1 118 -

Total Provisions ...................................................................................... 2 891 -

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11. Reserve AASB 101 paragraph 79 b

The company holds only one category of Reserve, that of General Reserve.

General Reserve is made up of undistributed profit, and is held to fund future expansion and to meet

future liabilities.

12. Analysis of Distributions AASB 101 paragraph 107


Distributions ................................................................................................... 1 200 - Per Share ($) ................................................................................................... 0.20 -

13. Share Capital AASB101 paragraph 79 a

AABS101 paragraph 22 f

Ordinary Shares As at 30 June 2010 2009 Note 000’s 000’s

Authorised Shares .......................................................................................... 6 000 6 000 Fully Paid ........................................................................................................ 6 000 - Not Fully Paid ................................................................................................. - 6 000

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14. Auditor AASB 101 paragraph Aus138.1

The company and these Financial Reports have been audited by:

Mickael Renou

Director

ABC Accounting

Canberra, ACT

ABC Accounting was paid the following amounts by the company:


Audit Services ................................................................................................. 90 - Non-Audit Services ......................................................................................... 90 -

Total Payments ....................................................................................... 180 -

15. Non-adjusting events after the reporting date AASB 110 paragraph 22(d)

A non-adjusting event (fire) that occurred on the 5th of July 2010 had generated a damage totalling

$1,25 million. The insurance will only cover 50% of the damage.

16. Adjusting events after the reporting date AASB 110 paragraph 9(a)

PMA Limited, which was involved in a legal dispute with one of its supplier settled out of court on

29th of July 2010 and agreed to compensate for an amount of $200 000 on the 1st of October 2010.

An amendment to the provision for legal case has been added to the financial statements.

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17. Contingent Liabilities AASB 137 paragraph 27 / 86

A provision of $500 000 for a legal case has been put together as a claim had been lodged on the 28th

of June 2010, but only advised on the 10th of August 2010 by PMA Limited’s lawyer. The lawyer

advised again, there was 70% chance of the company being found guilty. An amendment to the

provision for legal case has been added to the financial statements.

18. Non-Financial Disclosures AASB 101 paragraph 114 d ii

AASB 7

Financial Risk Management Policies

The company’s financial instruments consist mainly of deposits with bank, accounts receivable,

accounts payable and loans. The company does not have any derivative instruments as at 30 June

2010’. (Canberra Raiders Leagues Club (Southside) Limited 2009)

Financial Risk Exposures and Management

Liquidity Risk

‘The company manages liquidity risk by monitoring forecast and actual cash flows’ (Canberra Raiders

Leagues Club (Southside) Limited 2008). Cash flows are expected to increase over the next financial

year.

Credit Risk

The company has not issued any loans or material lines of credit and is therefore not exposed to any

material credit risk. The accounts receivable are expected to be paid during the next financial year,

and an Allowance for Doubtful Debts has been established against non-payment of same.

Interest Rate Risk

While the company does have significant lending, and is therefore exposed to any fluctuations in the

interest rate, this is considered an acceptable risk. The company plans to pay off its lending over the

next 12 months, through a share issue and increased revenue from new services.

- 32 -


19. Capital AASB 101 paragraph 134

‘The directors control the capital of the company in order to maintain a good debt to equity ratio

and to ensure that the company can fund its operations and continue as a going concern. There have

been no changes in the strategy since last year.’ (Canberra Raiders Leagues Club (Southside) Limited

2008)

As at 30 June 2010 2009 Note $000’s $000’s

Debt ................................................................................................................ 15 000 - Cash and cash equivalents ............................................................................. (515) -

Net Debt ................................................................................................. 14 485 -

Equity ............................................................................................................. 37 354 -

Net debt to Equity ratio .......................................................................... 38% -

- 33 -

References

Australian National Audit Office 2009, Annual Report 2008-2009, Retrieved January 19 2010, from

<http://www.anao.gov.au/annualreport_08-09/pdf/ANAO_AR_0809_whole.pdf>

Australian United Investment Company Limited 2009, Corporate Governance Statement, Retrieved

on January 25 2010, from

<http://www.aui.com.au/resources/Corporate%20Governance/Corporate%20Governance%20State

ment%20-%20Website%2024.9.09.pdf>

Avoca Resources Limited 2009, 2009 Annual Report, Retrieved January 19 2010, from

<http://www.avocaresources.com.au/downloads/company_reports/annual/avo_ar2009-7.pdf>

Canberra Raiders Leagues Club (Southside) Limited 2008, Financial Report for the year ended 31

October 2008, Retrieved January 20 2010, from

<http://www.mawsonclub.com.au/documents/2009AnnualReport.pdf >

Canberra Raiders Leagues Club (Southside) Limited 2009, Financial Report for the year ended 31

October 2009, Retrieved January 23 2010, from

<http://www.mawsonclub.com.au/documents/2010AnnualReport.pdf >

Coca Cola Amatil 2009, Annual Report 2009, Retrieved January 19 2010, from

<http://ar08.reports.ccamatil.com.au/ind_auditors_report.php>

Ngiam, J & Shying, M (eds) 2009, CPA Australia Accounting Handbook 2009, Pearson Education

Australia, Melbourne, VIC.

Qantas Airways Limited 2009, Financial Report for the year ending 30 June 2009, Retrieved 20

January 2010,

<http://annualreport.qantas.com.au/assets/pdfs/QantasFinancialReport200901DirectorsReport.pdf

>

TT-Line Company Pty Ltd 2009, Annual Report 2008-2009, Retrieved January 19 2010, from

<http://www.spiritoftasmania.com.au/dms/sot/documents/annual-report-

0809/Annual%20Report%2008-09.pdf>

http://www.anao.gov.au/annualreport_08-09/pdf/ANAO_AR_0809_whole.pdf

http://annualreport.qantas.com.au/assets/pdfs/QantasFinancialReport200901DirectorsReport.pdf%3e

http://annualreport.qantas.com.au/assets/pdfs/QantasFinancialReport200901DirectorsReport.pdf%3e

- 34 -

Appendix A - Calculations

$000’s $000’s

(a) Oct-09 Final Call 3 000

Share Capital

3 000

6,000,000 shares x $0.50

Dec-09 Cash

3 000

Share Capital

3 000

Money received for final call

(c)

Depreciation on Building Expense

$10,000,000 x 2.5% = $250,000

Depreciation on Equipment Expense - Useful life 5 years

Carrying Amount 09 $4,500,000

Carrying Amount 10 $3,600,000 = $900,000

Accum'd Dep'n 11 900

Proceeds from sale 7 500

Loss on Disposal 600

Equipment at Cost

20 000

Accounting for the disposal of equipment

(e)

Interest Expense 350

Interest Accrued

350

($15,000,000 x 7%) x (12/4 months)

(f) 29/06 Retained Earnings 1 200

Final Dividend Payable

1 200

6,000,000 shares x $0.20

- 35 -

Appendix A – Calculations (continued)

$000’s $000’s

Retained Earnings 3 200

General Reserve

3 200

Money transfer

Operating Results (refer to Directors Report):

Retained Earnings

(18419 - 13054) / 13054 = 41.09% rounded to 41%

(i)

Expense for Legal Case 500

Provision for Legal Case

500

Recognising possible court case settlement

(j)

Expense for Legal Case 50

Provision for Legal Case 150

Damages Payable

200

Recognising court case settlement

Calculations for Provisions (refer to Note 10):

Warrantees

$1,500,000 x 30% = $450,000 -- current liability

$1,500,000 - $450,000 = $1,050,000 -- non-current liability

Employee Benefits

Long service leave = $38,000 (1/7/09) + $30,000 (2010 expense) = $68,000

Documents

2009 SP4 - UniSA ACG27 - Assignment 2 - Financial Report