Bre Inc Final Audit Report

8/6/2019 Bre Inc Final Audit Report

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Certified Public Accountants

BUCHANAN RENEWABLE ENERGIES (LIBERIA), INC. (BR INC.)

AUDITORS REPORT AND FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2010

VO SCON INC.


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CONTENTS PAGE

GENERAL INFORMATION 1

BOARD OF DIRECTORS REPORT 2

AUDITORS REPORT 4

STATEMENT OF INCOME & EXPENSES 5

BALANCE SHEET 6

STATEMENT OF CHANGES IN EQUITY 7

STATEMENT OF CASH FLOWS 8

NOTES TO THE FINANCIAL STATEMENTS 9


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GENERAL INFORMATIONFOR THE YEAR ENDED DECEMBER 31, 2010

BOARD OF DIRECTORS: Xavier GiboinDonald J. DurandJames J. Steele

REGISTERED OFFICE: Buchanan HouseTubman Boulevard19 th Street Sinkor

AUDITORS: VOSCON Inc.

(Certified Public Accountants)FedEx Plaza, 80 Broad StreetMonrovia

BANKERS : International Bank Liberia Limited (IBLL)Global Bank Liberia Limited (GBLL)Ecobank Liberia Limited (EBLL)

LEGAL COUNSEL : Sherman & ShermanSuite 203, KLM Building56 Broad StreetP O Box 474Monrovia, Liberia

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BOARD OF DIRECTORS REPORTFOR THE YEAR ENDED DECEMBER 31, 2010

The board of directors presents their report and audited financial statements for the year ended December 31, 2010.

Board of Directors responsibility statement

The Companys directors are responsible for the preparation and fair presentation of thefinancial statements, comprising the balance sheet as at December 31, 2010, the statement of income and expenses, the statement of changes in equity and statement of cash flows for the

period then ended, and the notes to the financial statements. The notes to the financialstatements include a summary of significant accounting policies and other explanatory notes,and the report of the board of directors in accordance with International Financial ReportingStandards (IFRS), and in the manner required by the Associations Law Title 5 of theLiberian Code of Laws Revised .

The directors responsibility includes: designing, implementing and maintaining internalcontrols relevant to the preparation and fair presentation of these financial statements that arefree from material misstatement, whether due to fraud or error; selecting and applyingappropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.

The board of directors responsibility also includes maintaining adequate accounting recordsand an effective system of risk Board of Directors.

The directors have made an assessment of the companys ability to continue as a goingconcern and have no reason to believe the business will not be a going concern in the yearsahead.

Principal activities

The principal activities of the company are to render administrative, financial, economic andmanagerial services; and to rehabilitate ports and salvage ships. Results

The results for the periods and the state of the Companys affairs are shown in the attachedfinancial statements.

Approval of the financial statements

The financial statements were approved by the board of directors on , 2010.

Going concern

The financial statements have been prepared on the going concern basis of accounting whichassumes that the company will and can continue to exist as a going concern and that theassets will be realized in the normal course of the companys business for at least the values

contained in the financial statements. The company will continue to meet its obligations for its liabilities in the normal conduct of its business.


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2BUCHANAN RENEWABLE ENERGIES (LIBERIA), INC. (BR INC.)BOARD OF DIRECTORS REPORT ( continued )FOR THE YEAR ENDED DECEMBER 31, 2010

Board of Directors

The members of the board that acted during the period are listed on page 1.

Auditors

The auditors, VOSCON Inc. has expressed their willingness to continue in office.

By Order of the Board of Directors

. Director

. Director

. Director


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3 Box 10 - 0011

1000 Monrovia 10, Liberia Telefax: (231) 226 707

Certified Public Accountants FedEx Plaza Cell: +231 6 514 965Business Solutions Consultants 3 rd Floor Email: [email protected]

80 Broad Street, Monrovia Website: vosconafrica.Com

AUDITORS REPORT

Independent auditors report to the shareholders of Buchanan Renewable Energies (Liberia), Inc. (BR Inc.)We have audited the accompanying balance sheet of Buchanan Renewable Energies(Liberia), Inc. (BR Inc.) as at December 31, 2010, and the related statements of income &expenses, changes in equity, and cash flows for year then ended. These financial statementsare prepared in accordance with the accounting polices set out on pages 9 to 14.

Directors Responsibility for the Financial StatementsThe companys directors are responsible for the preparation and fair presentation of thesefinancial statements in accordance with International Financial Reporting Standards and inthe manner required by the Associations Law Title 5 of the Liberian Code of Laws Revised.

Auditors Responsibility for the Financial Statements

Our responsibility is to express an opinion on these financial statements basedon our audit. We conducted our audit in accordance with International Standardson Auditing Those standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance whether thefinancial statements are free from material misstatementWe conducted our audit in accordance with International Standards on Auditing (ISA). Thosestandards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements and accompanying notes are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

OpinionIn our opinion, the financial statements referred to above give a true and fair view of thefinancial positions of Buchanan Renewable Energies (Liberia), Inc. (BR Inc.) as at December 31, 2010, and of the results of its operations and its cash flows for the year then endedDecember 31, 2010, and are in accordance with International Financial Reporting Standards(IFRS) and the manner required by the Associations Law Title 5 of the Liberian Code of Laws Revised .

(Certified Public Accountants)

September 25, 2010Monrovia

______________________________________________________________

Vincent O. Sackeyfio, CA. George K. K. Founderson, CPA Theo. Dekonty Joseph, CPA

VO SCON INC.
mailto:[email protected]:[email protected]


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A MEMBER FIRM OF VOSCON INTERNATIONAL SERVICES

BUCHANAN RENEWABLE ENERGIES (LIBERIA), INC. (BR INC.)STATEMENTS OF INCOME AND EXPENSESFOR THE YEAR ENDED DECEMBER 31, 2010

For Eight Year Ended Months

In United States dollars Note 12 /31/09 12 /31/08INCOME

Revenue 5 1,810,275 468,529

Total revenues 1,810,275 468,529

EXPENSES

Office & Administrative expenses 6 (3,391,644) (1,187,713)Production costs 7 (537,669) -Finance costs 8

(235,294)

(15,507)

Depreciation expense 9 (416,428) (861)

Total expenses (4,581,034) (1,204,081)

Loss before tax (2,770,759) (735,552)

Corporate tax 16 - -

Net loss for the period (2,770,759 ) (735,552 )

The notes on pages 9 to 17 are an integral part of these financial statements


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5

BUCHANAN RENEWABLE ENERGIES (LIBERIA), INC. (BR INC.)BALANCE SHEETSAS AT DECEMBER 31, 2010

For Eight

Year Ended Months In United States dollars Note 12 /31/09 12 /31/08

A SSETS

Non-current assetsFixed assets (net) 9 4,756,465 1,355,772Prepaid leases 104,868 94,525

Total non-current assets 4,861,333 1,450,297

Current assetsIntercompany receivables 10 3,609,890 501,889Receivables & prepayments 11 127,510 541,813Cash & bank balances 12 128,361 1,000

Total current assets 3,865,761 1,044,702

Total assets 8,727,094 2,494,999

LIABILITIES AND EQUITY

EquityShare capital 50 50

Additional capital 9,419 9,419Retained earnings (3,507,105 ) (735,552)

Total equity (3,497,636 ) (726,083)

Non-current liabilitiesInter-company loan payables 13 10,510,000 1,500,000

Total non-current liabilities 10,510,000 1,500,000

Current liabilitiesIntercompany payables 14 813,466 1,658,407

Payables & accruals 15 901,264 62,675Total current liabilities 1,714,730 1,721,083

Total liabilities and equity 8,727,094 2,494,999

The financial statements set on pages 5 to 8 were approved by the Board of Management on __________ 2010 and were signed on their behalf by:

_________________ ____________________ Don Durand Ethel Knuckles

Director Financial Controller

The notes on pages 9 to 17 are an integral part of these financial statements.6


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BUCHANAN RENEWABLE ENERGIES (LIBERIA), INC. (BR INC.)STATEMENT OF CHANGES IN EQUITYFOR THE PERIOD ENDED DECEMBER 31, 2010

Share Additional RetainedCapital Capital Earnings Total

Addition / changes in equity 50 9,419 - 9,469

Loss for the period - - (736,346) (736,346)

Balance at 31 December 2008 50 9,419 (736,346 ) (726,083 )

Balance at 1 January 2010 50 9,419 (736,346) (726,083)

Addition / changes in equity - - - -

Loss for the period - - (2,770,759) (2,770,759)

Balance at 31 December 2010 50 9,419 (3,507,105 ) (3,497,636 )

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STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2010


In United States dollars 12 /31/09 12 /31/08

Cash flows from operating activities

Deficit for the period (2,788,161) (735,552)

Adjustment to reconcile deficit with cashProvided from operations:Depreciation 416,428 861F.A. Adj. & Reclassification (Net) 1,010 -

Total adjustments 417,438 861

Net (Loss)/income before changes in working capital (2,353,321) (734,691)

Changes in assets and liabilities:

Prior Year Adjustment (794) -Prepaid leases (10,343) (94,525)Receivable & prepayments 414,303 (541,813)Intercompany receivables (3,108,001) (501,889)Payables & accruals 838,589 62,675Intercompany payable (844,941 ) 1,658,407Net changes in working capital (2,711,187 ) 1,052,085

Total cash used in operating activities (5,064,508 ) (151,836)

Cash flows from investing activities:

Purchase of fixed assets (3,818,131) (1,356,633)

Total cash used in investing activities (3,818,131) (1,356,633)

Cash flows from financing activities:

Share capital - 50Capital surplus - 9,419Inter-company loan 9,010,000 1,500,000

Net cash flows from financing activities 9,010,000 1,509,469

Net increase in cash and cash equivalents 127,361 1,000

Cash and cash equivalents at the beginning of the year 1,000 -

Cash and cash equivalents at the end of the year 128,361 1,000

The notes on pages 9 to 17 are an integral part of these financial statements8


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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2010

1. Reporting entity

Buchanan Renewables Inc. (the Company) is a company domiciled in Liberia. Itwas initially incorporated as Buchanan Renewables Energies (Liberia) Inc. on May28, 2007 in Monrovia, and then amended on August 26, 2008. The address of theCompanys registered office is Buchanan House, Tubman Boulevard, Congo Town,Monrovia.

The financial statements of the Company as at and For the year ended December 31,2010 comprise those of the Company alone. The company renders administrative,financial, economic and managerial services; and also rehabilitates ports andsalvages ships.

2. Basis of preparation

(a) Basis of presentation of the financial statement

These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) and Generally Accepted AccountingPrinciples (GAAP).

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis.

(c) Functional and reporting currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates (the Source andFunctional currency). The financial statements are presented in United StatesDollars, which is the companys functional and reporting currency.

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Basis of preparation (continued)

(d) Use of estimates and judgments

The preparation of financial statements requires management to make judgments,estimates and assumptions that affect the applications of accounting policies and thereported amounts of assets, liabilities, income and expenses. Actual results maydiffer from these estimates.

Estimates and underlying assumptions are reviewed on an on going basis.Revisions to accounting estimates are recognized in the period in which the estimateis revised and in any future periods affected.

In particular, information about significant areas of estimation, uncertainty andcritical judgments in applying accounting policies that have the most significanteffect on the amount recognized in the financial statements are described in thefollowing notes:

Notes 3 (b) (iii) DepreciationNotes 3 (d) Provisions

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functionalcurrency of the company at exchange rates at the dates of the transactions.Monetary assets and liabilities denominated in foreign currencies at the reportingdate are retranslated to the functional currency at the exchange rate at that date.

(b) Fixed assets (operating assets)

(i) Recognition and measurement

Items of operating assets are measured at cost less accumulated depreciationand impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the assets. The cost of self constructed assets includes the cost of materialsand direct labor, any other costs directly attributable to bringing the assets toa working condition for its intended use, and the cost of dismantling andremoving the items and restoring the site on which they are located.Purchased software that is integral to the functionality of the relatedequipment is capitalized as part of that equipment.


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10BUCHANAN RENEWABLE ENERGIES (LIBERIA), INC. (BR INC.)


Significant accounting policies (continued)

When parts of an item of fixed assets have different useful lives, they areaccounted for as separate items (major components) of fixed assets.

(ii) Subsequent costs

The cost of replacing part of an item of fixed assets is recognized in thecarrying amount of the item if it is probable that the future economic

benefits embodied within that part will flow to the company and its cost can be measured reliably. The cost of the day-to-day servicing of fixed assets isrecognized in profit or loss as incurred.

(iii) Depreciation

Depreciation is recognized in profit or loss on a straight line basis over theestimated useful lives of each part of an item of fixed assets. Leaseholdimprovements are amortized over the life of the improvement or the life of the lease, whichever is shorter. Land is not depreciated.

The estimated useful lives of the assets for the period are as follows:

Assets Useful Life

Office equipment 5 yearsHousing furniture 5 yearsProduction equipment 8 yearsTools 5 years

(iv) Disposals

Gains or losses on the disposal or scrapping of fixed assets are determined asthe difference between the sales price less the cost of dismantling selling andre-establishing the assets and the carrying amount. Any gains or losses arerecognized in the income statement as other operating income or externalexpenses respectively.

(c) Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables,cash and cash equivalents, loans and borrowings and trade and other

payables.


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Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair value, through profit or loss, any directlyattributable transaction costs, except as described below. Subsequent toinitial recognition, non-derivative financial instruments are measured asdescribed below.

A financial instrument is recognized if the company becomes a party to thecontractual provisions of the instrument. Financial assets are derecognizedif the companys contractual rights to the cash flows from the financialassets expire or if the company transfers the financial asset to another partywithout retaining control or substantially all risks and rewards of the asset.

Cash and cash equivalents comprise cash balances and call deposit.

Bank overdrafts that are repayable on demand and form an integral part of the companys cash management are included as a component of cash andcash equivalents for the purpose of the cash flows statement.

Accounting for finance expenses is discussed in note 3(e).

Other non-derivative financial instruments are measured at amortized costusing the effective interest method, less any impairment losses.

Derivative financial instruments

The company does not hold derivative financial instruments to hedge itsforeign currency and interest rate risk exposures.

(d) Provisions

Provisions for legal claims are recognized when the company has a present legalor constructive obligation as a result of past events; and it is more likely than notthat an outflow of resources will be required to settle the obligation; and theamount has been reliably estimated. Provisions are not recognized for futureoperating losses.

Where there are a number of similar obligations, the likelihood that an outflowwill be required in settlement is determined by considering the class of obligationsas a whole. A provision is recognized even if the likelihood of an outflow withrespect to any one item included in the same class of obligations may be small.


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(e) Finance expenses

Finance expenses comprise mainly bank charges and commission recognized inthe income statement.

(f) Office & Administrative expenses

Administrative expenses comprise expenses relating to administrative staff andmanagement, including office expenses, salaries and depreciation as well as other indirect costs.

(g) Borrowings

Borrowings are recognized initially at fair value, being the proceeds net of transaction costs incurred. If the amount borrowed is denominated in UnitedStates Dollars which is the companys functional and reporting currency, it ismaintained at the initial amount recorded, less any repayments made as at thereporting date. If the amount is denominated in a currency other than the reportingcurrency of the company, it is revaluated and adjusted though the incomestatement at each reporting date.

Borrowings are classified as current liabilities unless when the company has an

unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(h) Employee benefits

Pension obligations

The company operates a defined contribution scheme. The scheme is generallyfunded through payments to the National Social Security and Welfare Corporation(NASSCORP). A defined contribution is a pension plan under which thecompany pays fixed contribution into the separate entity.

The company has no legal or constructive obligations to pay further contribution if the fund does not hold sufficient assets to pay all employees the benefit relating toemployees service in the current and prior period. The company also has nofurther payment obligations once the contributions have been paid. Thecontributions are recognized as employee benefit expense when they are due.

(i) Revenue

Revenue is recognized after management services rendered have been invoiced tothe entity which benefited from services.


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4. Financial risk factorsThe companys activities expose it to a variety of financial risks, including:

(a) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketablesecurities, and the availability of funding through an adequate amount of committed credit facilities. The company manages this risk by maintainingsufficient cash, and investing any excess cash over its anticipated requirements.


12 /31/09 12 /31/085. Finance cost

In United States dollar

Management fees 1,810,275 468,5291,810,275 468,529

6. Office & administrative expenses In United States dollars

Personnel cost 1,044,504 509,039Other personnel cost 8,210 16,356

Advertising & public relations 36,858 7,375Auto repairs & maintenance 90,134 2,297Occupancy expenses 249,755 82,859Computer & internet expenses 10,992 2,375Donations - 60,000

Network Cable/DSTV - 8,840Fuel expenses 223,724 67,750Management fees 807,335 -Office supplies 20,475 18,039Postage 635 5,598Telephone & communications 100,860 44,164Car rental 7,832 1,388

Professional fees 216,695 152,709Consultant fees 88,393 -Licenses& permit 58,690 31,016Medical & insurance expenses 166,538 5,376Shipping expenses 761 8,543Travel & entertainment 245,168 157,780Miscellaneous expenses 19,523 6,209

3,391,644 1,187,713


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12 /31/09 12 /31/087. Production cost

In United States dollar

Personnel cost 224,688 -Spare parts 70,765 -Fuel expenses 84,878 -Supplies 48,412 -Repairs & maintenance 5,438 -Travel cost 82,504 -

Miscellaneous expense 984 -537,669 -

8. Finance cost In United States dollar

Bank charges & fees 32,580 13,892Interest expense BR BV 190,349 -Interest expense 12,365 1,615

235,294 15,507

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NOTES TO THE FINANCIAL STATEMENTSFOR THE PERIOD ENDED DECEMBER 31, 20109. Fixed assets

Office & Compt. Mot Production & Housing Leasehold In United States dollars Equipment Tools Equipment Furniture Improvement Vehicle Boats Total

Cost:

Jan. 1, 2010 5,755 1,347,170 1,000 2,708 - - 1,356,633

Additions 11,784 2,850,880 11,362 17,227 111,706 815,175 3,818,131

Adj. /Reclassification (1,165) - - - - - (1,165)

December 31, 2010 16,374 4,198,050 12,362 19,935 111,706 815,175 5,173,5991,356,633

Depreciation:

Jan. 1, 2010 552 - 83 226 - - 861

Current charge 3,075 396,637 1,056 4,085 11,575 - 416,428

Adj. /Reclassification/Write-Off (54) - - (101) - - (155)

,December 31, 2010 3,573 396,637 1,139 4,210 11,575 - 417,134

Carrying amount:

December 31, 2010 12,801 3,801,413 11,223 15,725 100,131 815,175 4,756,465

December 31, 2008 5,203 1,347,170 917 2,482 - - 1,355,772

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12 /31/09 12 /31/0810. Intercompany receivables

Receivable from BR Technical Service 651,280 374,935Receivable from BR Fuel 2,039,121 126,954Receivable from BR Port Project. 111,682 -Receivable from BR Power 807,807 -

3,609,890 501,889

11. Receivables & prepayments In United States dollars

Accrued receivable - 468,529Shareholders receivable 50 50Loan receivable 50,000 50,000Supplier Advance 45,988 -Employees Receivable 31,472 -Prepayments - 23,234

127,510 541,813

12. Cash & bank balances In United States dollars

Cash on hand 3,742 -Cash at bank 124,619 1,000

128,361 1,000

13. Intercompany loan payables In United States Dollar

Loan payable to BRBV 10,510,000 1,500,000 10,510,000 1,500,000

14. Intercompany payables In United States Dollar

Loan Payable to BRBV - 1,415,272Payable to BRBV Inte 161,797 -Payable to BRBV 878 -Payable to BR Power 12,260 -Payable to Technical Service 436,963 170,091Payable to Mgmt. Service 111,682 -Payable to Fuel 89,887 73,044

813,466 1,658,407


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For Eight

Year Ended Months12 /31/09 12 /31/08

15. Payables & accruals In United States dollars

Withheld taxes payable to GOL 160,774 14,095Payable to GOL - 2,030Overdraft - 18,451Accrued Payables 120,361 -3rd Party Payables 16,210 -Accounts payable 603,919 28,099

901,264 62,675

16 . Corporate Tax

Currently, the Company is experiencing loss. The Revenue Code of 2000 of Liberia provides for a company to carry losses forward for a period of five (5) years.

17 . Contingent Liability

There exists a pending litigation between J. Erastus Diggs et. al. and Buchanan Renewable inwhich the Hearing Officer rule against BR to the effect that the Union be paid US$10,366.00.BR file a Petition for Judicial Review before the National Labor Court. This Petition for

Judicial Review is pending as at December 31, 2010.

18 . Capital Commitment

There were no major commitments to Capital Expenditure at December 31, 2010.


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Bre Inc Final Audit Report

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