FIAC214 Financial Accounting: Detailed Analysis of Amani Gold Ltd

This report provides a financial analysis of Amani Gold Limited, an Australian company involved in the exploration of precious metals. It examines key sections of the annual report, including the directors' report, independent auditor's report, and changes in revenue, cash flow, and loans. The a...Read More

Financial Accounting
Financial Accounting
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Financial Accounting
Table of Contents
1. Brief of the Company:..............................................................................................................................3
2. Dominating Section of Annual Report:....................................................................................................3
3. Brief Summary of Directors Report:........................................................................................................4
4. Brief Summary of Independent Auditor’s Report:...................................................................................6
5. Changes in the Revenue:.........................................................................................................................6
6. Changes in cash flow from operating activities:......................................................................................7
7. Changes in the loans & reserves:.............................................................................................................7
8. Key Ratios:...............................................................................................................................................8
Conclusion:..................................................................................................................................................8
References:..................................................................................................................................................9
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1. Brief of the Company:
In our report we have selected the company Amani Gold Limited. The company is retail sector
company and mainly engaged in the exploration of precious metals and minerals like gold etc. he
company is situated in Australia and listed on ASX. The company has more than 50 percent
stake in the Giro Gold Project. Main motive of the company is to explore the quality gold. There
are ongoing projects which are a) Giro Gold, b) Kebigada and c) Douze Match. It holds 85
percent stake in the Amani Consultant. The Amani Consultant holds 65 percent shareholding in
the Giro Goldfields sarl. The Giro Goldfields sarl is a DRC registered company. The company
BNP Paribas Nominees Pty Ltd. holds 20.897 percent stake in the company. That has been
reported as the shareholder who holds the highest stake in the company. In addition to that, J P
Morgan Nominees Australia Limited and Luck Winner Investment Limited also hold around 19
percent each shareholding in the company.
2. Dominating Section of Annual Report:
In the Annual Report many sections are there. We can summarise these areas in the below
mentioned points:
 Message from the Chairmen or promotors of the company: In this section chairmen of the
company provide overview over the financial position and financial performance of the
company. He also present his message in regard to the new areas in which company is
expanding his business. He also report over the capital issued by the company to explore
the new opportunities.
 About the company and their products. It should also include bout the review of
operations of the company. In this area, comments over every segment of the company
should be done. Review of operations of the company with regard various project is
addressed by the company. One of the major projects of the company is GIRO GOLD
PROJECT.
 Directors Report in compliance of corporation act.
 A declaration from the Directors for Auditors independence.
 Consolidated Statement of Comprehensive Income i.e. Consolidated Profit & Loss A/c
 Consolidated Statement of Financial Position i.e. Consolidated Balance Sheet
 Consolidated Statement of Changes in Equity
 Consolidated Statement of Cash Flow i.e. Consolidated Cash Flow Statement
 Notes forming parts of the Accounts.
 Declaration from the Directors
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 Independent Auditor’s Report
 Additional Shareholders Information
3. Brief Summary of Directors Report:
The Directors are mandatorily required to present directors report as required in compliance of
the Corporation Act. Directors Report shall include the following:
 First of all detail about the all the existing directors and appointed during the year. Also
the Brief profile of the directors and detail of his last appointment as director. In our case
company has 7 directors from the various field as below:
 Klaus Peter Eckhof, Executive Chairman
 Mark Andrew Calderwood, Non-Executive Director
 Susmit Mohanlal Shah, Non-Executive Director / Company Secretary
 Kevin Peter Thomson, Non-Executive Director
 Qiuming Yu, Chairman
 Sheng Fu, Non-Executive Director
 Sik Lap Chan, Non-Executive Director
 Then the directors are required to report about the corporate structure of the company. In
our case Amani Gold Limited is incorporated in Australia and listed in ASX. The
company has five subsidiaries, out of which two disposed of in the current year.
 Further directors are required to report about the principal activities carried out by the
company. In our case the Amani Gold Limited is exploring minerals and dealing in the
area of precious metal and energy.
 The directors are required to report over the financial performance of the company. In
this section they need to provide the profit of the current as well as for last year. They
also require to report over changes in the profit as compared to last year. In our case the
company has earned profit as compared to last year loss. The gain is due to currency gain
over disposal of foreign subsidiary. The directors also need to report over the dividend
policy of the company. If any declaration of dividend made during the year then the
directors are required to report over the same. The Amani Gold limited has not declared
any dividend during the year.
 The directors are also required to report on Earning per Share of the company. In the
Amani Gold Limited Basic EPS is 0.02 cents in the year 2017.
 The Directors are required to comment upon the review of operations of the company.
They also required reviewing the financial performance of the company. As reported in
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the director’s report the company does not have any operating revenue. The directors
have also reported over risk areas of the company. The company is in exploring industry,
and risk is very high so future performance of the company cannot be measured.
 The directors are also required to report over subsequent changes in the state of affairs of
the company after the balance sheet date. They also required reporting the events
occurring after the balance sheet date and that have major impact over Financial
Statement. The Company has reported two significant events and reported the same.
 The Directors are required to report over future plan and expectations of the company. In
Amani Gold Limited, dealing in the area of exploration. As this activity is in the nature of
speculation and directors are unable to comment upon the same. So the directors of
Amani Gold Limited have not been commented upon the future profitability of the
company.
 The Directors are required to conduct some specified no. of board meetings and
mandatorily required to attain certain number of meetings. In case of Amani Gold
Limited 4 Board Meetings held by the Directors and every meeting is attended by all the
directors except one meeting has not been attended by the one director i.e. K P Thomson.
 The Directors are also required to report director’s interest into the company. They also
need to report over the Share options and performance rights if any issued. During the
year the Amani Gold Limited has issued 19,00,000 unlisted options but no unlisted
option is exercised.
 The directors also required to report over remuneration report. Remuneration report
should include the amount of remuneration, Working Area past performance and their
packages. Remuneration report should be audited as required by the Corporation Act.
Remuneration report includes detail of remuneration committee, remuneration structure,
non-executive director remuneration, executive director’s remuneration, fixed
remuneration, variable remuneration, detail of service Agreement, details of Key
management personals and their right & responsibilities (Calla, 2011).
 The directors should report over the indemnify policy of the company with regard to
officers and auditors of the company.
 The Directors are also required to report over the compliance policy of the company with
regard to environment regulation. The directors should report over the issues pending in
relation to the environmental regulation.
 The Directors should report if any services, other than audit services have been taken
from the auditors. In last the directors need to provide declaration for independence of
Auditors.
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4. Brief Summary of Independent Auditor’s Report:
In the Auditors Report auditors is issuing opinion based on the various matters reported into the
report. The Auditor of Amani Gold Limited has issued unqualified report. He has issued the
declaration for independence along with the independent auditor’s report. The Auditor has also
reported key audit matters and hoe that matter is addressed in our audit (Nidhi, no date). The
Key audit matter is relating to the capitalisation of exploration and evaluation assets with regard
to the AASB 6. The Auditor has also reported over the responsibility of the management with
regard to the financial statement. Directors are responsible for preparation of financial statement
in accordance with AASB and the Corporation Act. Auditor has also reported that my
responsibility is only provide reasonable assurance that financial statement are free from material
misstatement. The Auditor has also issued opinion over the remuneration report. It should be in
compliance of sec. 300A of the Corporation Act.
5. Changes in the Revenue:
Revenue of the company has been increased to $ 98,321 in the year 2017 from $ 13568 in the
year 2016. As per latest financial statement of the company, it is noticed that there was a major
changes in the revenue of the company in the year 2017 in comparison to the year 2016. The
main reason for the increase in the revenue is 80 times increase in the ‘Interest from other
parties’ i.e. in the year 2016 interest was $ 1,137 but in the year 2017 interest comes at $ 81,581.
Only this is not the reason for increase in the revenue. In addition to that, other revenue has also
increased by $ 8,222. As long as, foreign exchange gain is concerned, it has been decreased in
comparison to the previous year (Peters, 2018).
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6. Changes in cash flow from operating activities:
Cash flow from operating activities has been varied from $ 10,44,577 (in the year 2016) to $
14,96,182 (in the year 2017). In the year there was a loss of $ 12,411,305 which has been
presented as profit ($ 257624) in the year 2016. There was a gain on the disposal of subsidiaries
of $ 1,99,1919. It was the main reason for the changes in the cash flow from operating activities.
Apart from that, share based payment also gets reduced to $ 270,579 in comparison to the year
2016. Also, the share based payment expenses are also gets reduced in comparison to the earlier
year. Interest income is also the operating activities of the company (Mcgew, no date). Interest
income has been increased to $ 81,581 (in the year 2017) to $ 1,137 (in the year 2016).
In the year 2016, expenditure on impairment of exploration is $ 87,87,234 which has now been
reversed and thus, there is no expenditure on impairment in current year (Graham, 2016).
7. Changes in the loans & reserves:
In the year 2016, company has a loan arising from acquisition of assets (Giro Project). This loan
was interest free and has been repaid in the year 2017. In the year 2017, company has taken
unsecure loan of $ 91,081 which was an interest free and it is repayable on demand.
The company has many reserves like share based payment reserves, option premium reserves,
foreign currency translation reserves etc. Share based payment reserves has been increased by $
9,11,319 in the year 2017 it means that the company has issued the share options but not yet
exercised. An option premium reserve indicates that consideration received from the subscription
of the issued option which has been exercised. In this case, the option premium reserves are
1,396,044 which have been increased in comparison to previous years. Foreign currency
translation reserves have been created for the adjustment of the exchange difference in the
foreign exchange in the translation of foreign operation into the presentation currency.
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8. Key Ratios:
Key Ratios
Net Profit Ratio 2017
Net Profit 257624
Revenue 2090240
Net Profit Ratio 12.33
Current Ratio 2017
Current Assets 1274248
Current Liabilities 487013
Current Ratio 2.62
Debt to Equity Ratio 2017
Debt 91081
Equity
2567418
3
Debt to Equity Ratio 0.00355
Debt to Assets Ratio 2017
Debt 91081
Assets
2616119
6
Debt to Equity Ratio 0.00348
Assets Turnover
Ratio 2017
Total Revenue 2090240
Assets
2616119
6
Asset Turnover Ratio 0.08
Conclusion:
From the above discussion, we can conclude that the company’s position is sound and based on
financial figures of the company in comparison to the previous year it can be conclude that the
company should be first choice for the investment purpose. The company’s growth confirms that
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it will give the higher return on investment in the upcoming year. As such, for the long term
investment purpose it should be preferred over than other.
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References:
Calla, H. (2011), What Affects Shareholder’s Equity? [Online] Available from:
https://www.sapling.com/8606124/affects-stockholders-equity [Assessed 11 September 2018]
Nidhi, B. (no date), Purpose of Statement of Changes in Equity [Online] Available from:
http://www.accountingnotes.net/equity/purpose-of-statement-of-changes-in-equity-accounting/
11716 [Assessed 11 September 2018]
Graham, C. (2016), The Cash Flow Statement [Online] Available from:
http://fearfulasymmetry.ca/theory/2016/10/16/the-cash-flow-statement [Assessed 11 September
2018]
Mcgew, M. (no date), The cash flow from operating activities in financial statement [Online]
Available from: https://smallbusiness.chron.com/cash-flow-operating-activities-financial-
statement-31876.html [Assessed 11 September 2018]
Peters, S. (2018), Revenue Recognition: The Bottom Line on The New Top Line [Online]
Available from: https://seekingalpha.com/article/4151200-revenue-recognition-bottom-line-new-
top-line [Assessed 11 September 2018]
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