AXIOM MINING LIMITED
ANNUAL REPORT 2015
Notes to the
for the year ended 30 September 2015
COMPANY FINANCIAL REPORT
4. Summary of significant accounting
An assessment for impairments is undertaken at least
at the end of each reporting period whether or not
there is objective evidence that a financial asset or a
group of financial assets is impaired. Impairment loss
on loans and receivables is recognised when there is
objective evidence that the Company will not be able
to collect all the amounts due to it in accordance with
the original terms of the receivables. The amount of
the impairment loss is determined as the difference
between the asset’s carrying amount and the present
value of estimated future cash flows.
b. Financial liabilities
The Company’s financial liabilities include trade and
other payables and borrowings. Financial liabilities are
recognised when the Company becomes a party to
the contractual provisions of the instrument.
Financial liabilities are initially recognised at fair value,
net of transaction costs incurred and subsequently
measured at amortised cost using the effective interest
rate method. Financial liabilities are derecognised when
the obligation specified in the contract is discharged or
cancelled, or expire.
Convertible notes which do not contain an equity
component are accounted for as follows:
At initial recognition the derivative component of the
convertible notes is measured at fair value and presented
as part of derivative financial instruments. Any excess
of proceeds over the amount initially recognised as
the derivative component is recognised as the liability
component. Transaction costs that relate to the issue
of the convertible note are allocated to the liability and
derivative components in proportion to the allocation of
proceeds. The portion of the transaction costs relating to
the liability component is recognised initially as part of the
liability. The portion relating to the derivative component
is recognised immediately in profit or loss.
At the end of each reporting period the derivative
component is re-measured. The liability component
is subsequently carried at amortised cost. The
interest expense recognised in profit or loss on the
liability component is calculated using the effective
If the note is converted, the carrying amounts of the
derivative and liability components are transferred to
share capital and share premium as consideration for the
shares issued. If the note is redeemed, any difference
between the amount paid and the carrying amounts of
both components is recognised in profit or loss.
A provision is recognised when a present obligation (legal
or constructive) has arisen as a result of a past event and
it is probable that a future outflow of resources will be
required to settle the obligation, provided that a reliable
estimate can be made of the amount of the obligation.
When the effect of discounting is material, the amount
recognised for a provision is the present value at the
end of the reporting period of the future expenditures
expected to be required to settle the obligation. The
increase in the discounted present value amount arising
from the passage of time is included in profit or loss.
Provision for product warranties granted by the Company
on certain products is recognised based on sales volume
and past experience of the level of repairs and returns,
discounted to its present value as appropriate.
Deferred tax is provided using the liability method, on
temporary differences at the end of the reporting period
arising between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Tax rates enacted or substantively enacted by the
end of the reporting period are used to determine the
Deferred tax liabilities are provided in full while deferred
tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which
the temporary differences can be utilised.
Revenue is recognised when it is probable that the
economic benefits will flow to the Company and the
revenue can be reliably measured. Revenue is measured
at the fair value of the consideration received or
receivable, net of returns and discounts.
Interest income is recognised using the effective interest
Cash and cash equivalents
For the purpose of the statement of cash flows, cash
and cash equivalents include cash on hand, deposits
held at call with banks, and other short term highly liquid
investments with original maturity of three months or less
when acquired, less bank overdrafts.
Borrowing costs are expensed in profit or loss in the year
in which they are incurred.