GEODRILL LIMITED GEODRILL LIMITED
CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2023 and 2022
(in United States dollars)
GEODRILL LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
As at December 31, 2023 and 2022
CONTENTS | |
Page | |
INDEPENDENT AUDITOR'S REPORT | 3-7 |
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | 8 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | 9 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | 10 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | 11 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 12-48 |
GEODRILL LIMITED | ||
CONSOLIDATED FINANCIAL STATEMENTS | ||
As at December 31, 2023 and 2022 | ||
INDEX TO THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
Contents | ||
1. | GENERAL INFORMATION | 12 |
2. | MATERIAL ACCOUNTING POLICIES | 12 |
3. | CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS | 20 |
4. | NEW AND FUTURE ACCOUNTING STANDARDS | 23 |
5. | DETERMINATION OF FAIR VALUES | 23 |
6. | SEASONALITY OF OPERATIONS | 24 |
7. | SEGMENT REPORTING | 24 |
8. | EXPENSES BY NATURE | 25 |
9. | TAXATION | 25 |
10. | PROPERTY, PLANT AND EQUIPMENT | 28 |
11. | RIGHT-OF-USE ASSETS | 30 |
12. | FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS | 31 |
13. | INVENTORIES | 31 |
14. | TRADE AND OTHER RECEIVABLES | 31 |
15. | NON-CONTROLLING INTERESTS | 32 |
16. | LOANS PAYABLE | 32 |
17. | TRADE AND OTHER PAYABLES | 34 |
18. | EMPLOYEE BENEFIT OBLIGATIONS | 34 |
19. | FAIR VALUES OF FINANCIAL INSTRUMENTS | 34 |
20. | FINANCIAL RISK MANAGEMENT | 35 |
21. | RELATED PARTY TRANSACTIONS | 40 |
22. | COMMITMENTS | 41 |
23. | SHARE CAPITAL AND RESERVES | 42 |
24. | EARNINGS PER SHARE | 43 |
25. | DIVIDENDS | 44 |
26. | EQUITY-SETTLEDSHARE-BASED PAYMENTS | 45 |
27. | CONTINGENCY | 46 |
28. | POST BALANCE SHEET EVENTS | 46 |
2
Independent auditor's report
To the Shareholders of Geodrill Limited
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Geodrill Limited and its subsidiaries (together, the Company) as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Company's consolidated financial statements comprise:
- the consolidated statements of financial position as at December 31, 2023 and 2022;
- the consolidated statements of comprehensive income for the years then ended;
- the consolidated statements of changes in equity for the years then ended;
- the consolidated statements of cash flows for the years then ended; and
- the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215, ca_toronto_18_york_fax@pwc.com
"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
3
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Revenue recognition for drilling revenue
Refer to note 2 - Material accounting policies and note 3 - Critical accounting estimates and judgments to the consolidated financial statements.
For the year ended December 31, 2023, the Company recognized revenue from drilling services of $130.5 million. Revenue is measured based on the consideration specified in contracts with customers. The Company has service contracts with customers with varying terms. Judgment is required when considering contractual terms that may impact performance obligations and the amount of revenue that can be recognized. Drilling service is recognized as revenue when all the following conditions are satisfied:
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the drilling service rendered will flow to the Company; and
- control of the service has passed to the customer and the work performed of the drilling service at the end of the reporting period has been agreed with the customer.
We considered this a key audit matter due to the audit effort required to assess the revenue that is generated from customers with contracts having varying terms, which require judgment in the applicability of the revenue recognition criteria.
How our audit addressed the key audit matter
Our approach to addressing the matter included the following procedures, among others:
- For a sample of revenue transactions, tested the revenue recognized, which included the following:
- agreed key contractual terms to signed contracts with customers;
- evaluated the contractual terms against revenue recognition criteria; and
- agreed the drilled meters to customer approved daily drill reports.
- Tested that revenue recognized, for a period close to year-end, was recognized in the correct period by comparing, for a sample of transactions before and subsequent to year- end, the date the revenue was recognized to the date of the drilling service as per the customer-approved daily drill report.
4
Key audit matter
Allowance for expected life-time credit losses (ECL) for trade receivables
Refer to note 2 - Material accounting policies, note 3 - Critical accounting estimates and judgments and note 14 - Trade and other receivables to the consolidated financial statements.
As at December 31, 2023, the Company's trade receivables amounted to $35.8 million, of which $15.2 million aged greater than 90 days. An ECL allowance of $5.4 million was recorded against the trade receivables as at December 31, 2023.
Management uses the simplified approach to measure the allowance for ECL for trade receivables. Management uses judgment in choosing estimation techniques, selecting key inputs and determining significant assumptions about future economic conditions and credit behavior of the customers, including the likelihood of customers defaulting and the resulting losses.
Management used a provision matrix to estimate future credit losses based on the Company's historical credit loss experience, to determine the ECL for trade receivables. The ECL determined by the provision matrix was adjusted for current and forward-looking information relating to future economic conditions and factors specific to the individual debtors that were identified to be at higher risk of default. Significant judgments were made by management in determining the adjustments for these factors. There are large, aged trade receivables balances for which judgment is required to determine the measurement of the impairment provision at the reporting date.
We considered this a key audit matter due to the estimation uncertainty around collectibility of the trade receivables and, more specifically, the large, aged trade receivables balances and the significant judgments by management when determining the ECL allowance. This has resulted in a high degree of subjectivity and audit effort in performing procedures to test the ECL allowance.
How our audit addressed the key audit matter
Our approach to addressing the matter included the following procedures, among others:
- Tested how management determined the allowance for ECL for trade receivables, which included the following:
- evaluated the appropriateness of management's estimation techniques;
- tested the underlying data used in the provision matrix;
- evaluated the reasonableness of key inputs and significant assumptions used in the provision matrix by comparing the likelihood of customers defaulting and the resulting losses by ageing bucket to actual historical loss rates for such ageing bucket; and
- evaluated the reasonableness of the adjustments made to the provision matrix related to the large-aged trade receivable balances by considering publicly available information on the financial condition of these counterparties.
- Tested the disclosures made in the consolidated financial statements.
5
Other information
Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
6
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Michael Eric Clarke.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
March 3, 2024
7
GEODRILL LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31, 2023 and 2022
December 31, | December 31, | ||
2023 | 2022 | ||
Assets | Note | US$ | US$ |
Non-current assets | |||
Deferred tax asset | 9(v) | 877,813 | - |
Property, plant and equipment | 10 | 62,258,943 | 57,058,742 |
Right-of-use assets | 11 | 706,520 | 1,302,488 |
Total non-current assets | 63,843,276 | 58,361,230 | |
Current assets | |||
Financial assets at fair value through profit or loss | 12 | 174,631 | 720,511 |
Inventories | 13 | 35,193,455 | 31,552,877 |
Prepayments | 1,095,180 | 1,905,736 | |
Trade and other receivables | 14 | 32,664,221 | 34,297,462 |
Cash | 15,638,682 | 14,391,470 | |
Total current assets | 84,766,169 | 82,868,056 | |
Total assets | 148,609,445 | 141,229,286 | |
Equity and liabilities | |||
Equity | |||
Share capital | 28,258,711 | 28,106,386 | |
Share-based payment reserve | 3,735,982 | 3,379,386 | |
Retained earnings | 78,123,286 | 75,589,126 | |
Capital and reserves attributable to owners of | 110,117,979 | 107,074,898 | |
Geodrill Limited | |||
Non-controlling interests | 15 | (154,540) | (17,376) |
Total equity | 109,963,439 | 107,057,522 | |
Liabilities | |||
Non-current liabilities | |||
Deferred tax liability | 9(v) | 2,497,387 | 3,267,679 |
Loans payable | 16 | 333,333 | 1,980,303 |
Lease liabilities | 207,078 | 591,458 | |
Total non-current liabilities | 3,037,798 | 5,839,440 | |
Current liabilities | |||
Trade and other payables | 17 | 23,347,961 | 22,136,451 |
Loans payable | 16 | 11,646,970 | 2,627,273 |
Lease liabilities | 437,876 | 620,037 | |
Taxes payable | 9(ii) | 175,401 | 2,948,563 |
Total current liabilities | 35,608,208 | 28,332,324 | |
Total equity and liabilities | 148,609,445 | 141,229,286 | |
Contingency | 27 | ||
Approved by the Board of Directors |
Chairman of the Board of Directors | Chairman of the Audit Committee |
8
GEODRILL LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2023 and 2022
December 31, | December 31, | ||
2023 | 2022 | ||
Note | US$ | US$ | |
Revenue | 130,544,622 | 138,625,412 | |
Cost of sales | 8 | (99,956,530) | (98,047,949) |
Gross profit | 30,588,092 | 40,577,463 | |
Selling, general and administrative expenses | 8 | (20,485,424) | (12,959,471) |
Foreign exchange gain | 162,597 | 179,625 | |
Other (loss) / income | (819,366) | 523,521 | |
Results from operating activities | 9,445,899 | 28,321,138 | |
Finance costs | (927,066) | (690,840) | |
Income before taxation | 8,518,833 | 27,630,298 | |
Income tax expense | 9(i) | (4,754,680) | (8,712,499) |
Income and total comprehensive income for | |||
the year | 3,764,153 | 18,917,799 | |
Income and total comprehensive income for | |||
the year is attributable to: | |||
Owners of Geodrill Limited | 3,901,317 | 18,915,563 | |
Non-controlling interests | (137,164) | 2,236 | |
3,764,153 | 18,917,799 | ||
Earnings per share for income attributable to | |||
the ordinary equity holders of the Company | |||
Basic | 24(i) | $0.08 | $0.41 |
Diluted | 24(ii) | $0.08 | $0.40 |
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Geodrill Ltd. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 00:34:09 UTC.
