PIONEER MECHANICAL SERVICES LTD

Annual Report End Financial Statements

for the year ended 30 June, 2022

Chuckle & Company Certified Public

Accountants Kampala, Uganda
PIONEER MECHANICAL SERVICES LTD
I

Annual Report and Financial Statements for the year ended 30 June, 2022
Index:

The reports and statements set out below comprise the annual report and financial statements presented to the shareholder:

Page

General Information 2

Directors' Report 3-4

Directors' Responsibilities and Approval 5

Independent Auditor's Report 6-8

Statement of Profit or Loss and Other Comprehensive Income 9

Statement of Financial Position 10

Statement of Changes in Equity 11

Statement of Cash Flows 12

Accounting Policies 13 - 16

Notes to the Annual Report and Financial Statements 17 - 20

The following supplementary information does not form part of the annual report and financial statements and is unaudited:

Detailed Income Statement 21 - 22

Level of assurance

These annual report and financial statements have been audited in compliance with the applicable requirements of the
Ugandan Companies Act, 2012.
PIONEER MECHANICAL SERVICES LTD
Annual Report and Financial Statements for the year ended 30 June, 2022

General Information

Country of incorporation and domicile Uganda

Nature of business and principal activities Motor Vehicle Repairs & Maintenance

Ms. Nassimbwa Mercy

Directors Mr. Ssendi Asuman Ddumba

Registered office NWSC Bulenge Branch Mengo, Kampala, Uganda

Chuckle & Company

Independent Auditors Certified Public Accountants
Kampala, Uganda

2
 Annual Report and Financial Statements for the year ended 30 June, 2022

Directors ‘Report

The directors have pleasure in submitting their report on the annual report and financial statements 0 f Basem Auto Service
Limited for the year ended 30 June, 2022.

1. Nature of business

PIONEER MECHANICAL SERVICES LTD was incorporated in Uganda. The company operates in Uganda

The principal activities of the company are Motor Vehicle Repairs & Maintenence

There have been no material changes to the nature of the company's business from the prior year.

2. Review of financial results and activities

The annual report and financial statements have been prepared in accordance with International Financial Reporting
Standard for Small and Medium-sized Entities and the requirements of the Ugandan Companies Act, 2012. The accounting
policies have been applied consistently compared to the prior year.

Full details of the financial position, results of operations and cash flows of the company are set out in these annual
report and financial statements.

3. Share capital

Authorised
Ordinary shares

Issued
Ordinary shares 2022 2021
Number of shares
100 100
2022 2021 2022 2021
USh '000 USh '000 Number of shares
2,000 2,000 100 100

There have been no changes to the authorized or issued share capital during the year under review.

4. Dividends

The board of directors does not recommend the declaration of a dividend for the year.

5. Directors

The directors in office at the date of this report are as foIlows:

Directors
Ms. Nassimbwa Mercy
Mr. Ssendi Asuman Ddumba

There have been no changes to the directorate for the period under review.
6. Events after the reporting period

The directors are not aware of any material event which occurred after the reporting date and up to the date
of this report.

7. Going concern

The annual report and financial statements have been prepared on the basis of accounting policies applicable to
a going concern. This basis presumes that funds will be available to finance future operations and that the
realization of assets and settlement of liabilities, contingent obligations and commitments will occur in the
ordinary course of business.

These conditions give rise to a material uncertainty which may cast significant doubt about the company's
ability to continue as going concern and, therefore that it may be unable to realize its assets and discharge
its liabilities in the course of business.

The ability of the company to continue as a going concern is dependent on a number of factors. The most
significant of these is that the directors continue to procure funding for the ongoing operations for the company
3
 and that the subordination agreement will remain in force for as long as it takes to restore the relevancy of the
company.

8. Terms of appointment of the auditors

The auditors, Chuckle & Company, Certified Public Accountants shall continue in the office as auditors of the
company in accordance with 167(7) of the Companies Act, 2012.

9. Implication of COVID-19

The spread of COVID-19 has severely impacted businesses around the globe. The Government of Uganda on
March 18, 2022 announced a nation-wide lockdown with immediate effect. Like many other countries, there has
been severe disruption to regular business operation due to lock downs, disruptions in transportation, supply
chain, travel restrictions, quarantines, social distancing and other emergency measures in Uganda..

The Company has made a detailed assessment of Its liquidity position for the next financial year and has
critically assessed the assumptions used, recoverability and carrying values of its assets comprising of property,
plant and equipment, trade receivables and liabilities as at reporting date, and has concluded that no material
adjustments are required in the financial statements

The management has taken into account all the possible impacts of events that could arise from the outbreak
of COVID-19 pandemic, in the preparation of the financial statements including the entity's ability to continue
as a going concern. The impact assessment of COVID-19 is a continuing process, given the uncertainties
associated with its nature and duration and the company will continue to monitor all material changes to the
entity's internal and external environment.

The annual report and financial statements set out on Pages 3 to 22, which have been prepared on the
going concern basis, were approved by the board of directors on 20 September, 2021, and were signed on
its behalf by:

By Order of the Board Director

Place: Kampala, Uganda

4
PIONEER MECHANICAL SERVICES LTD
Annual Report And Financial Statements for the year end1bd30 June, 2022

Directors' Responsibilities and Approval

The directors are required by the Ugandan Companies Act, 2012, to maintain adequate accounting records and
are responsible for the content and integrity of the annual report and financial statements and related financial
information included in this report. It is their responsibility to ensure that the annual report and financial statements
fairly present the state of affairs of the company as at the end of the financial year and the results of its operations
and cash flows for the period then ended, in conformity with the International Financial Reporting Standard for
Small and Medium-sized Entities. The external auditors are engaged to express an independent opinion on the
annu11 report and financial statements.

The annual report and financial statements are prepared! In accordance with the International~ Financial
Reporting Standard for Small and Medium-sized Entities and are based upon appropriate accounting policies
consistently applied and supported by reasonable and prudent judgments and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control
established by the company and place considerable Importance on maintaining a strong control environment. To
enable the directors to meet these responsibilities, the board of directors sets standards for internal control at
reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of
responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of
duties to ensure an acceptable level of risk. These controls are
Monitored throughout. The company. And all employee required to maintain the highest ethical standards in
ensuring the company's business IS conducted in a manner that in all reasonable circumstances IS above
reproach. The focus of risk
Management in the company is on identifying, assessing, managing and monitoring all known forms of risk across
the company. While operating risk cannot be fully eliminated, the company endeavors to minimize it by ensuring
that appropriate infrastructure, controls, systems and ethical behavior are applied and managed within
predetermined procedures and
Constraints.

The directors are of the opinion, based on the information and explanations given by management that the system
of internal control provides reasonable assurance that the financial records may be relied on for the preparation
of the annual report and financial statements. However, any system of internal financial control can provide only
reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company's cash flow forecast for the year to 30 June, 2021 and, in the light of
this review and the current financial position, they are satisfied that the company has or has access to adequate
resources to continue in operational existence for the foreseeable future.

Nothing has come to the attention of the directors to indicate that the branch will not remain a going concern for
at least the twelve months from the date of this statement

The annual report and financial statements set out on pages 3 to 22, which have been prepared on the going
concern basis, were approved by the board of directors on 20 September, 2021 and were signed on its behalf
by:

By Order of the Board Director

Place: Kampala, Uganda

5
PIONEER MECHANICAL SERVICES LTD
Annual Report And Financial Statements for the year end1bd30 June, 2022

Directors' Responsibilities and Approval

Independent Auditor's Report

To the Shareholder of PIONEER MECHANICAL SERVICES LTD

Report on the Audit of the Annual Report and Financial Statements

Opinion

We have audited the annual report and financial statements of PIONEER MECHANICAL SERVICES LTD (the
company) set out on pages 9 to 20, which comprise the statement of financial position a s at 30 June, 2022,
statement of comprehensive income, statement of changes in equity and statement of cash flows for the year
then ended, and the notes to the annual report and financial statements, including a summary of significant
accounting policies.

In our 0 pinion, the annual report and financial statements p resent fairly, in all material respects, the financial
position of
PIONEER MECHANICAL SERVICES LTD as at 30 June, 2022, and its financial performance and cash flows for
the year then ended in accordance with the International Financial Reporting Standard for Small and Medium-
sized Entities and the requirements of
The Ugandan Companies Act, 2012.

Basis for Opinion

We conducted our audit in accordance with International standards on Auditing. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Annual Report and Financial
Statements section of our report. We are independent of the company in accordance with the International Ethics
Standards Board for Accountants' International Code of Ethics for Professional Accountants (including
International Independence Standards) (Parts 1 and 3) (IESBA Code) and other independence requirements
applicable to performing audits of Auditor's Responsibilities for the Audit of the Annual Report And Financial
Statements in Uganda. We have fulfilled our other ethical responsibilities in. accordance with the IESBA Code
and in accordance with other ethical requirements applicable to
Performing audits In Uganda. We believe that the audit evidence we have obtained IS sufficient and appropriate
to provide a basis for our opinion.

Key Audit Matters

From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the 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 disclosures
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequence of doing that would reasonably be expected to
outweigh the public interest benefits of such communication. These matters were addressed in the context of our
audit of the annual report and financial statements as a whole, and in forming our opinion thereon and we have
nothing material to report separately on these matters.

Managing Partner: Bagonza Ronnie

Partner: Nsumba Lameck

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Independent Auditor's Report

Other Information

The directors are responsible for the other information The other information comprises the information included in the
document titled ''PIONEER MECHANICAL SERVICES LTD annual report and financial statements f or the year ended
30 June, 2022", which includes the Directors' Report as required by the Ugandan Companies Act, 2012 and the
supplementary information as set out on pages 21 to 22. The other information does not include the annual report and
financial statements and our auditor's report thereon.

Our opinion on the annual report and financial statements does not cover the other information and we do not express
an audit opinion or any form of assurance conclusion thereof

In connection with our audit of the annual repo~ and financial statements our responsibility is to read the other information
and, in doing so, consider whether the other information IS materially inconsistent With the annual report and 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 the Directors for the Annual Report and Financial Statements

The directors are responsible for the preparation and fair presentation of the annual report and financial statements in
accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and the
requirements of the Ugandan Companies Act, 2012, and for such internal control as the directors determine is necessary
to enable the preparation of annual report and financial statements that are free from material misstatement, whether due
to fraud or error.

In preparing the annual report and financial statements, the directors are 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 the directors either intend to liquidate the company or to cease operations, or have no realistic
alternative but to do so.

Auditor's Responsibilities for the Audit of the Annual Report and Financial Statements

Our objectives are to obtain reasonable assurance about whether the annual report and 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 International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually 9r in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of their annual report and financial statements.

As part of an audit in accordance with International standards on Auditing, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the annual report and 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.
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. I
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
Conclude on the appropriateness of the directors' 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 annual report and 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 a going concern.
Independent Auditor's Report
Evaluate the overall presentation, structure and content of the annual report and financial statements, including the
disclosures, and whether the annual report and financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.

We communicate with the directors 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.

Report on Other Legal and Regulator y Requirements

As required by the Ugandan Companies Act, 2012 we report to you based on our audit that;

i) We have obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purpose of our audit,

ii) In our opinion proper books of accounts have been kept by the company so far as appears from
our examination of those books and;

iii) The Company’s Statement of Financial position and Statement of Profit or Loss & Other
comprehensive Income are in agreement with the books of accounts.

The e n g a g e m e n t partner on the audit resulting in this independent auditor's report is CPA Ronnie Bagonza.

CPA Ronnie Bagonza

Managing Partner Chuckle & Company
Certified Public Accountants

Date: _________________
Kampala, Uganda

9
PIONEER MECHANICAL SERVICES LTD
Annual Report and Financial Statements f or the year ended 30 June, 2022
Statement of Profit or Loss and Other Comprehensive Income

Note(s) USh USh

269,412 179,608
Revenue 2
Cost of sales 3 (231,962) (177,070)
Gross profit 37,450 38,460
Operating expenses (8,269) (8,000)
Operating profit 4 29,181 20,460
Profit before Taxation 30,460 66,423
Taxation 13 (1,059) (1,055)
Profit for the year 28,122 29,405

Other comprehensive
Total comprehensive income for the year
income 28,122 29,405

The accounting policies on pages 13 to 16 and the notes n pages 17 to 20 form an integral part of the annual financial
statements.

10
PIONEER MECHANICAL SERVICES LTD
Annual Report and Financial Statements for the year ended 30 June, 2022
Statement of Financial Position as at 30 June, 2022
2022 2021
Note(s) USh '000 USh '000

Assets

Non-Current Assets
Property, plant and equipment 7 2,737 3,285

Current Assets
Inventories 9 30,879 35,641
Trade and other receivables 8 43,075 34,299
Cash and cash equivalents 10 56,447 1,896
129,401 72,002
Total Assets 133,138 75,287

Equity and Liabilities

Equity
Share capital 11 2,000 2,000
Retained income 84,428 56,306
58,306 28,901

Liabilities

Current Liabilities
Trade and other payables 12 45,151 15,926
Current tax payable 16 1,559 1,055
46,710 16,981
Total Equity and Liabilities 133,138 75,287

The financial statements and the notes on pages 9 to 20 were approved by the board of directors on the 20
September,
2021 and were signed on its behalf by:

______________________ ______________________
Director Director

The accounting policies on pages 13 to 16 and the notes on pages 17 to 20 form an integral part of the annual financial
statements.

11
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements f o r the year ended 30 June, 2022

Statement of Changes in Equity

Share capital Retained
income Total equity
USh '000 USh 'ODD USh 'ODD

Balance at 1 July, 2020 1000 (26,901) (27,901)

Profit for the year 29,405 29,405

Other comprehensive
income
Total comprehensive income for for the year 29,405 29,405
Issue of shares 1,000 56,306 57,306
Total changes 28,122 28,122
Balance at 1 July, 2021 28,122 28,122
Profit for the year 29,405 29,405
Other comprehensive
Total comprehensive income for the year
income 29,405 29,405
Balance at 30 June, 2022 1,000 84,428 85,428
Note(s)
The accounting policies on pages 13 to 16 and the notes on pages 17 to 20 form an integral part of the
annual financial statements.

12
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements for the year ended 30 June, 2022

Statement of Cash Flows

2022 2021
Note(s) USh '000 USh '000

Cash flows from operating activities

Cash generated from operations 15

54,940 1896
Tax paid 16 (555) (500)

Net cash from operating activities 54,385 166

Cash flows from financing activities

Total cash movement for the year 54,385 166

Cash at the beginning of the year 2,062 1,896
Total cash at end of the year 10 56,447 2,062

The accounting p ol ici es on pages 13 to 16 and the notes on pages 17 to 20 form an integral part of
the annual financial statements.

13
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements for the year ended 30 June, 2022

Accounting Policies
General information

PIONEER MECHANICAL SERVICES LTD is a Private company incorporated and domiciled in Uganda. The
registered office of the company is;
NWSC Bulenge Branch Mengo, Kampala, Uganda

1. Basis of preparation and summary of significant accounting policies

The annual report and financial statements have been prepared on a going concern basis in accordance with the
International Financial Reporting Standard for Small and Medium-sized Entities, and the Ugandan Companies Act,
2012. The annual report and financial statements have been prepared on the historical cost basis, except for
biological assets at fair value less point of sale costs, and incorporate the principal accounting Polices set out below.
They are presented in Uganda S h i l l i n g .

These accounting p o l i c i e s are consistent with the previous p e r i o d .

1.1 Significant judgments and sources of estimation in uncertainty

Critical judgments in applying accounting policies

Management did not make critical judgments in the application of accounting policies, apart from those involving
estimations, which would significantly affect the annual report and financial statements.

Key sources of estimation uncertainty

Useful l i v e s of property, plant and equipment

The company reviews the estimated useful lives of property, plant and equipment when changing circumstances
indicate that they may have changed since the most recent reporting date. During the current year, the directors
d e t e r m i n e d that the useful lives of certain items of surveillance equipment should be shortened, due to
developments in technology.

Allowance for slow moving, damaged and obsolete inventory

Management assesses whether inventory is impaired by [comparing its cost to its estimated selling price less costs
to complete and sell. Where an impairment is necessary, inventory items are written down to selling price less
costs to compete and sell. The write down is included in cost of sales, note 3.

Impairment testing

The company reviews and tests the carrying value of property, plant and equipment, investment property on the
cost model and intangible assets when events or changes in circumstances suggest that the carrying amount may
not be recoverable. When such indicators exist, management determine the recoverable amount by performing value
in use and fair value calculations. These calculations require the use of estimates and assumptions. When it is not
possible to determine the recoverable amount for an individual asset, management assesses the recoverable amount
for the cash generating unit to which the asset belongs.

Provisions

Provisions are inherently based on assumptions and estimates using the best information available. Additional
disclosure of these estimates of provisions are included in notes.

1.2 Property, plant and equipment

Property, plant and equipment are tangible assets which the company holds for its own use or for rental to others
and which are expected to be used for more than one period.

Property, plant and equipment is initially measured at cost.

Cost includes costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred
subsequently to add to, replace part of, or service it. If a replacement cost is recognized in the carrying amount
of an item of property, plant and equipment, the carrying amount of the replaced part is derecognized.

14
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements for the year ended 30 June, 2022

Accounting Policies
1.2 Property, plant and equipment (continued)

Expenditure incurred subsequently for major services, additions to or replacements of parts of property, plant and
equipment are capitalized if it is probable that future economic benefits associated with the expenditure will flow
to the company and the cost can be measured reliably. Day to day servicing costs are included in profit or loss
in the period in which they are incurred.

Property, plant and equipment is subsequently stated at cost less accumulated depreciation and any
accumulated impairment losses, except for land which is stated at cost less any accumulated impairment
losses.

Depreciation of an asset commences when the asset is available for use as intended by management.
Depreciation is charged to write off the asset's carrying amount over its estimated useful life to its estimated
residual value, using a method that best reflects the pattern in which the asset's economic benefit are consumed
by the company.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item
Furniture and fixtures
Office equipment

When indicators are present that the useful lives and residual values of items of property, plant and equipment
have changed since the most recent annual reporting date, they are reassessed. Any changes are accounted
for prospectively as a change in accounting estimate. I

Impairment tests are performed on property, plant and equipment when there is an indicator that they may be
impaired. When the carrying amount of an item of property, plant and equipment is assessed to be higher than
the estimated recoverable amount, an impairment loss is recognized immediately in profit or loss to bring the
carrying amount in line with the recoverable amount.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected from its continued use or disposal. Any gain or loss arising from the de-recognition of an item of
property, plant and equipment, determined as the difference between the net disposal proceeds, if any, and the
carrying amount of the item, is included in profit or loss when the item is derecognized.

1.3 Financial instruments

Initial measurement
Financial instruments are initially measured at the transaction price (including transaction costs except in the initial
Measurement of financial assets and liabilities that are measured at fair value through profit or loss) unless the
I
arrangement constitutes, in effect, a financing transaction in which case it is measured at the present value of the
future payments
Discounted at a market rate of interest for a similar debt i1strument. Financial instruments at amortized cost
These include loans, trade receivables and trade payables. Those debt instruments which meet the criteria in
section 11.8(b) of the standard, are subsequently measured at amortized foist using the effective interest method.
Debt instruments which are classified as current assets or current liabilities are measured at the undiscounted amount
of the cash expected to be received or paid, unless the arrangement effectively constitutes a financing transaction.

At each reporting date, the carrying amounts of assets held in this category are reviewed to determine whether
there is any objective evidence of impairment. If there is objective evidence, the recoverable amount is estimated
and compared with the carrying amount. If the estimated recoverable amount is lower, the carrying amount is
reduced to its estimated recoverable amount, and an impairment loss is recognized immediately in profit or loss.

Financial instruments at cost

Equity instruments that are not publicly traded and whose fair value cannot otherwise be measured reliably
without undue cost or effort are measured at cost less impairment.

15
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements for the year ended 30 June, 2022

Accounting Policies
1.4 Tax

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognized as a liability. If the amount already paid
in respect of current and prior periods exceeds the amount due for those periods, the excess is recognized as an
asset.

The tax liability reflects the effect of the possible outcomes of a review by the tax authorities. Deferred tax assets
and liabilities
A deferred tax liability is recognized for all taxable temporary differences.

A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable
profit will be available against which the deductible temporary diffidence can be utilized.

Deferred tax asset is recognized for the carry forward ~f unused tax losses and unused STC credits to the extent
that it is probable that future taxable profit will be available against which the unused tax losses and unused STC
credits can be utilized.

Deferred tax assets and liabilities are measured at the ax rates that are expected to apply to the period when the
asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.

Tax expenses

Tax expense is recognized in the same component of t9tal comprehensive income or equity as the transaction or
other event that resulted in the tax expense.

1.5 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership
to the lessee. All other leases are operating leases.

1.6 Inventories

Inventories are measured at the lower of cost and estimated selling price less costs to complete and sell, on the
first-in, first-out
(FIFO) basis.

1.7 Share capital and equity

If the company reacquires its own equity instruments, those instruments are deducted from equity. No gain or loss
is recognized in profit or loss on the purchase, sale, and issue or cancellation of the company's own equity
instruments. Consideration paid or received shall be recognized directly in equity.

Ordinary shares are recognized at par value and classifi1d as 'share capital' in equity. Any amounts received from
the issue of shares in excess of par value is classified as 'share premium' in equity. Dividends are recognized as a
liability in the year in which they are declared.

1.8 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as
leave pay and sick leave, bonuses, and non-monetary benefits such as medical care), are recognized in the period
in which the service is rendered and are not discounted.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

1.9 Revenue

Revenue is recognized to the extent that the company has transferred the significant risks and rewards of ownership
of goods to the buyer, or has rendered services under an agreement provided the amount of revenue can be
measured reliably and it is probable that economic benefits associated with the transaction will flow to the company.
Revenue is measured at the fair value of the consideration received or receivable, excluding sales taxes and
discounts.

16
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements for the year ended 30 June, 2022

Accounting Policies

Interest is recognized, in profit or loss, using the effective interest rate method.

1.10 Borrowing costs

Borrowing costs are recognized as an expense in the period in which they are incurred.

1.11 Foreign exchange

Foreign currency transactions

Exchange differences arising on monetary items are recognized in profit or loss in the period in which they arise.

All transactions in foreign currencies are initially recorded in Uganda Shilling, using the spot rate at the date of the
transaction.
Foreign currency monetary items at the reporting date are translated using the closing rate. All exchange
differences arising on settlement or translation are recognized in profit or loss

17
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements for the year ended 30 June, 2022

Accounting Policies
Notes to the Annual Report and Financial Statements

2022 2021
USh '000 USh '000
2. Revenue

Sale of goods 215,530 179,608

3. Cost of sales

Sale of goods
Opening Stock 48,920 15,690
Purchases 139,014 115,845
Direct expenses 24,777 22,942
Closing stock (35,641) (48,920)
177,070 105,557
4. Operating profit

Operating profit for the year is stated after accounting or he following: Operating lease charges
Premises
 Contractual amounts 1,200 1,200

Depreciation on property, plant and equipment 548 548

Employee costs 477 300

5. Employee cost

Employee costs
Casual Labor 477 300
6. Depreciation, amortization and impairments

The following items are included within depreciation, amortization and impairments:

Depreciation
Property, plant and equipment 548 548

7. Property, plant and equipment 2022 2021

Cost or Accumulated Carrying value Cost or Accumulated Carrying value
revaluation depreciation revaluation depreciation
Furniture and fixtures 2,400 (600) 1,800 2,400 (300) 2,100
Office equipment 1,980 (495) 1,485 1,980 (248) 1,732

Total 4,380 (1,095) 13,285 4,380 (548) 3,832

Reconciliation of property, plant and equipment - 2022

Opening balance Depreciation Closing balance

Furniture and fixtures 2,100 (300) 1,800
Office equipment 1,732 (248) 1,485
3,832 (548) 3,285

18
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements for the year ended 30 June, 2022
Notes to the Annual Report and Financial Statements
2022 2021
USh '000 USh '000

7. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment· 2021

Opening balance Depreciation Closing balance

Furniture and fixtures 2,400 (300) 2,100
Office equipment 1,980 (248) 1,732

4,380 (548) 3,832

8. Trade and other receivables

Trade receivables

9. Inventories 34,299 25,699

19
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements f o r the year ended 3 0 June, 2022

Notes to the Annual R e p o r t And Financial Statements

2022 2021
USh '000 2021
USh '000
USh '000

Finished goods 35,641 48,920

10. Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand 2,062 1896

Bank balances
2,062 1896

11. Share capital

Authorized
100 Ordinary shares of Ush 20,000 each 2,000 2,000

Reconciliation of number of shares issued:

Reported as at 1 July, 2021 100 100

Issued
Ordinary 1,000 1,000

12. Trade and other payables

Trade payables 15,926 48,446

Other payables 2,500
15,926 50,946

2022
USh '000
13. Taxation

Major components of the tax expense

Current taxation
Current tax 1 1,055 500

Reconciliation of the tax expense

Reconciliation between accounting profit and tax expense.

Accounting profit 30,460 66,423

Tax at the applicable tax rate of 30% (2021: 30%) 9,138 19,927

14. Auditor's remuneration

Fees 1,000 1,000

15. Cash generated from operations

Profit before taxation 30,460 66,423

Adjustments for:
Depreciation and amortization 548 548
Other non-cash items (1)
20
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements f o r the year ended 3 0 June, 2022

Notes to the Annual R e p o r t And Financial Statements

Changes in working capital:

Inventories 13,279 (23,248)
Trade and other receivables (8,600) (18,962)
Trade and other payables (35,020) (23,865)
666 1,896

16. Tax paid

Balance at beginning of the year (500)

Current tax for the year recognized in loss (1,055) (500)
Balance at end of the year 1,055 500
(SOO)

17. Commitments

Authorized capital expenditure

The Company has no significant outstanding capital as at 30 June, 2022 (2021: Ushs. Nil).
commitments

18. Contingencies

In the opinion of management, the Company did not have any significant contingent liabilities as at 30 June, 2022
(2021: Ushs. Nil)

19. Related parties

Relationships
Members of key management Ms. Nassimbwa Mercy & Mr. Ssendi Asuman Ddumba

20. Comparative figures

Previous year's figures have been regrouped / reclassified in order to make them comparable with that of current financial
period, wherever necessary

21. Going concern

The annual report and financial statements have been prepared on the basis of accounting policies applicable to a going
concern. This basis presumes that funds will be available to finance future operations and that the realization of assets and
settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

These conditions give rise to a material uncertainty which may cast significant doubt about the company's ability to
continue as a going concern and, therefore that it may be unable to realize its assets and discharge its liabilities in the
normal course of business.

The ability of the company to continue as a going cancer? is dependent on a number of factors. The most significant
of these is that the directors continue to procure funding for the ong9ing operations for the company and that the
subordination agreement will remain in force for as long as it takes to restore the solvency of the company.
22. Events after the reporting period

The management is not aware of any events after the reporting period which may cast doubt on the existence of the
company after the end of the reporting period.

23. Implication of COVID·19

The spread of COVID-19 has severely impacted businesses around the globe. The Government of Uganda on March
18, 2022 announced a nation-wide lockdown with immediate effect. Like many other countries, there has been severe
disruption to regular business operation due to lock downs, disruptions in transportation, supply chain, travel
restrictions, quarantines, social distancing and other emergency measures in Uganda.

The Company has made a detailed assessment of its liquidity position for the next financial year and has critically
21
Pioneer Mechanical Services Ltd
Annual Report And Financial Statements f o r the year ended 3 0 June, 2022

Notes to the Annual R e p o r t And Financial Statements

assessed the assumptions used, recoverability and carrying values of its assets comprising of property, plant and
equipment, trade receivables and liabilities as at reporting date, and has concluded that no material adjustments are
required in the financial statements

The management has taken into account all the possible impacts of events that could arise from the outbreak of COVID-
19 pandemic, in the preparation of the financial statements including the entity's ability to continue as a going concern.
The impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and
duration and the company will continue to monitor all material changes to the entity's internal and external environment.

22
Pioneer Mechanical Services Ltd
Annual Report and Financial Statements for the year end 30 June, 2022
Detailed Income Statement
2021 2022

Note(s) USh '000 USh '000

Revenue
Sale of goods 215,530 179,608

Cost of sales
Opening stock (48,920) (15,690)
Purchases & direct expenses (163,791) (138,787)
Closing stock 35,641 48,920
3 (177,070) (105,557)
Gross profit 38,460 74,051
Expenses (Refer to page 22) (8,000) (7,628)
Profit before taxation 30,460 66,423
Taxation 13 (1,055) (500)
Profit for the year 29,405 65,923

The supplementary information presented does not form part of the annual report and financial statements and is unaudited

23
Pioneer Mechanical Services Ltd
Annual Report and Financial Statements for the year ended 30 June, 2022
Detailed Income Statement

2021 2022
Operating expenses
Note(s) USh,000 USh '000
Advertising (268) (250)
Auditors remuneration 14 (1,000) (1.000)
Computer expenses (576) (720)
Depreciation, and impairments amortisation (548) (548)
Employee costs (477) (300)
Accommodation (1,294) (1.200)
Lease rentals on lease operating (1,200) (1,200)
Legal expenses (455) (600)
Motor vehicle expenses (419) (340)
Printing and stationery (1,210) (960)
Staff welfare (193) (150)
Telephone and fax (360) (360)
(8,000) (7,628)

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