ACCY801 Business Accounting Report Assignment Help

ACCY801 Business Accounting Report Assignment Help

ACCY801 Business Accounting Report Assignment Help

Introduction

This ACCY801 Business Accounting Report Assignment Help contains information regarding Newcrest Mining Ltd. that is operating in the mining industry or sector. In this report summary about Newcrest Mining Ltd and its board of directors has been provided. Matters related to corporate governance and recommendation provided by Australian stock exchange to Newcrest Mining Ltd has been reported and analysed. Another concept that is discussed in this report is of ratio analysis that is calculated from the financial statements of Newcrest Mining Ltd. Liquidity, profitability, solvency and efficiency ratios has been demonstrated in this report. At last significance of majority or large investors or stakeholders were analysed.

 ACCY801 Business Accounting Report Assignment Help,Assignment help

 

1: Brief summary of Newcrest Mining Ltd

In 1990, Newmont Australia Limited is converted into Newcrest Mining Ltd i.e. Newmont Australia acquired Australmin holding limited and then merged with BHP Gold to form new company i.e. Newmont Australia Limited. Newcrest Mining Ltd has its business operations wide spread in many countries of the world. Newcrest Mining Ltd is engaged in mining business or belongs to mining industry. Apart from gold extraction they are engaged in gold reserves and pipeline of growth options. They are engaged mainly in exploration and mining of gold in different countries. Newcrest Mining Ltd is Australian company and has been listed in Australian Stock Exchange. Primary activities of Newmont Australia Limited include mining and exploration of gold in different countries of the world (Limited 2015). As per present business operations of Newmont Australia Limited, they had extended their business operation of gold extraction to mainly four countries Indonesia, Australia, PNG and Cote D’lvoire. Newmont Australia Limited has earnings before interest and tax margin of 23% which is better than other companies operating under same industry. Newmont Australia Limited has earned cash from business operations of AUD 1589 million during 2015. During 2015 they has 29.3% of gearing ratio that suggests better solvency position in terms of long term debt and equity in the total capital employed. Sales revenue of Newmont Australia Limited during 2015 is $ 4344 which is 7.52 % more than previous year.

2: Details of Board of Directors

Table showing details of board of directors of Newmont Australia Limited

1: Peter Hay

Name

Peter Hay

Gender

Male

Age

65 years

Education

LLB, FAICD

Career

Experience in business, corporate law, finance and investment banking. He is CEO of legal firm from 1997 to 2015.

Remuneration

AUD 601,000

Current Directorship

Chairman of Federation Limited, Australian institute of Company Directors, ACID Corporate Governance Committee, Alumina Ltd, Myer Holding Ltd, tec.

2: Sandeep Biswas

Name

Sandeep Biswas

Gender

Male

Age

53 years

Education

B.Eng. (Chemical) (Hons.)

Career

He is CEO of Pacific Aluminium. He began his career at Mount Isa Mines. He has experience in research, operations, business development and project management.

Remuneration

AUD 5653,000

Current Directorship

Director of Minerals Council of Australia

(Limited 2015)

 3: Gerard Bond

Name

Gerard Bond

Gender

Male

Age

47

Education

B.Com, Graduate Diploma Applied Finance and Investment, CA, F Fin

Career

Experienced in Global Financial and Resources Industry, PWC, BHP Billiton, etc. He has experience of working for 14 years in BHP Billiton as senior executive. He was president of the Nickel business, Deputy CEO of Aluminium business. One of his great achievements is become Head of Group  human resources of BHP Billiton.  

Remuneration

AUD 2153,000

Current Directorship

No other directorship

4: Philip Aiken AM

Name

Philip Aiken AM

Gender

Male

Age

66

Education

B.Eng.  (Chemical), advanced Management Program (HBS)

Career

He has international business experience in engineering and natural resource industry. Group President Energy BHP Billiton, CEO of BTR Nylex and MD of BOC. He had also acted as senior advisor Macquarie Capital.   

Remuneration

AUD 241,000

Current Directorship

Chairman of Aveva group Plc and Balfour

5: Vince Gauci

Name

Vince Gauci

Gender

Male

Age

73

Education

B.Eng. (Mining)

Career

He has experience in Global mining Industry of 40 years as MD of MIM Ltd. He was chairman of Runge Ltd and director of Liontown Resources Ltd. and Coates Hire ltd.

Remuneration

AUD 241,000

Current Directorship

Chairman of broken hill Community Foundation

He will retire from board of Newmont Australia Limited w.e.f. end of 2015 Annual General Meeting

(Limited 2015)

6: Lady Winifred Kamit

Name

Lady Winifred Kamit

Gender

Female

Age

62

Education

BA, LLB

Career

She has experience and knowledge in terms of Papua New Guinea. She has experience of Directorship in Lihir Gold limited and was senior partner at Gadens Lawyer and working in same firm as consultant.

Remuneration

AUD 241,000

Current Directorship

Director of Steamships trading Company limited. Director of Post courier ltd, South pacific Post Limited, ANZ banking group, etc. 

7: Richard Knight

Name

Richard Knight

Gender

Male

Age

74

Education

BSc. (Mining Engineering), MSc. (Mine Production management), Charted Engineer, FAICD

Career

He is very experienced i.e. has 40 years of experience in mining industry. He has built his career as he was Executive Director of North Limited, President of Iron Ore Company of Canada. He has experience in Directorship at OZ Minerals Limited, Zinifer Ltd, Portman Limited and many other companies.

Remuneration

AUD 256,000

Current Directorship

Chairman of Mining Engineering Advisory Board, Monash University and Director of Mining Education Australia

8: Roger Higgins

Name

Roger Higgins

Gender

Male

Age

64

Education

BE (Civil engineer) (Honours), M. Sc (Hydraulics), PhD (Water resources)

Career

He has experience in terms of leading mining companies and managing their operations. He was Managing Director of Ok Tedi Mining Limited. He was former Senior vice President at Canadian Metals and Teck resources limited. He has experience in lectureship as well at University of Queensland.    

Remuneration

AUD 221,000

Current Directorship

Director of Metminco Limited. Other directorship includes Institution of Engineering PNG, PNG Professional Engineers Registration board, South Australia Museum Foundation and chairman of International River Foundation 

9: Rick Lee AM

Name

Rick Lee AM

Gender

Male

Age

65

Education

B.Eng.  (Chemical) (Honours), MA (Econ) (Oxon), FAICD

Career

He has experience in banking, finance and international dealing or commercial. He has vast experience of 16 years at CSR Limited and was CEO of NM Rothschild Australia Limited for 9 years.     

Remuneration

AUD 266,000

Current Directorship

Chairman of Oil Search limited. He was deputy chairman at Ridley Corporation Limited and Salmat limited

(Limited 2015)

10: Xiaoling Liu

Name

Xiaoling Liu

Gender

Female

Age

58

Education

PhD (Extractive Metallurgy), B.Eng.  (Extractive Metallurgy), MAICD, FAusIMM

Career

She has Global Mining and business management experience. She was President and CEO of Rio Tinto Minerals. She has experience in supply chain management, integrated mining and processing of minerals in US, Europe and Asia.

Remuneration

AUD 231,000

Current Directorship

No other directorship

11: John Spark

Name

John Spark

Gender

Male

Age

66

Education

B.Com, FCA, MAICD

Career

He has experience in accounting, financial analysis, and reconstruction of companies and improvement of profits. He is compony auditor and Managing Partner at Ferrier Hodgson. He has experience in directorship as well in many companies.   

Remuneration

AUD 251,000

Current Directorship

No other directorship

Brief about board composition

Newmont Australia Limited has consists of 11 members in its board composition. It can be observed that there are majority of non-executive directors in board of Newmont Australia Limited. Newmont Australia Limited has diversified composed board of directors in terms of qualification and experience. There are vastly experienced board members in terms of different fields, companies, institutions and other organisations. Newmont Australia Limited has only one board member which belongs to finance and banking back ground i.e. Mr. Gerard Bond. On the other hand, there is only one non-executive director in overall board composition.

3: Corporate Governance recommendation

A: Outline the key recommendations of the ASX CGC in table format.

Following is the recommendations of the ASX CGC that has been issued to the Newcrest Mining Ltd:

Recommendation

Explanation

Management representation of women shall be increased

This should take place till 31st December 2016. Till now Newcrest Mining Ltd has 13.70 % women representation in its board. Therefore they are required to increase the ratio of women in management. In management representation of women shall be increased to 2 – 4 i.e. minimum 16 % of the total management strength (Statement 2015).

Audit and Risk Committee

  • Financial reporting principles and procedures shall be managed
  • Integrity related to financial statements shall be maintained
  • Compliance with all standards should be there
  • Risk identification and internal control shall be managed

Safety and sustainability

  • There shall be proper relationship with  communities
  • Safety shall be provided to employees and their rights shall be protected (Subramanian 2015).

B: Who is NCM’s auditor?

Ernst and young is NCM’s auditor.

C: What amount of remuneration did the auditors receive from NCM during the year?

AUD 3054,000 is the amount that is received by the auditors of NCM for the audit and other for providing other services to NCM. Following is the bifurcation of AUD 3161,000:

Particulars

Amount

Amount received or due by Ernst & Young for audit and review of financial reports, tax advisory and accounting advisory

2830,000

Amount due or received by related parties of Ernst & Young

224,000

Total

3054,000

D: Briefly discuss the role of the external audit function and how this may/may not be achieved.

Role of the external audit function: External audit is the process under which company’s records and other relevant matters will be checked by some outside body. Main function of external audit is to detect and correct flaws and errors in financial statement and other records of the company for reporting period. Most important function of external audit is to conduct compliance check i.e. compliance with various laws and legal policies of government and regulatory bodies.

It may or may not be achieving in following manner:

  • Reliable and experienced audit firm shall be appointed for the external audit then only external audit function can be achieved otherwise it may not be achieved.
  • Independence of auditor is another factor that shall be taken into account for the success and failure of external audit function.

4: Financial Statement Analysis

SR. NO.

RATIOS

CALCULATION

RESULT

A

Current Ratio

Current assets / current liabilities

1384 / 663

2.09 times

B

Quick Ratio

Quick assets / current liabilities

(1384 – 806) / 663

0.87 times

C

Inventory Ratio

Cost of Goods Sold / Average inventory

3319 / ((806 + 800) /2)

4.13 or 4 days

D

Accounts Receivable ratio

Net Credit Sales / Average Accounts Receivable

4344 / ((206 + 169)/ 2)

23.17 or 23 days

E

Asset Turnover

Sales Revenue / Total assets

4344 / 15368

0.28 times or 28.26 %

F

Debt to Equity

Outside Debt / Equity

(4019 + 460) / 9059

0.49 times

G

Gross Profit Margin

Gross Profit / Sales revenue * 100

1025 / 4344 * 100

23.60 %

H

Profit Margin

Net profit / Sales revenue * 100

560 / 4344 * 100

12.89 %

I

Return on Assets

Net Profit / Average Total Assets * 100

1025 / ((15368 + 13587) / 2) * 100

3.53 %

J

Return on Equity

Net Profit / Equity * 100

1025 / 9059 * 100

11.31 %

(Peavler 2014)

Analysis of financial statements in terms of following aspects:

  • Liquidity-Liquidity is the measure under which availability of cash and cash equivalents at right time i.e. as and when obligations are required to be paid. Liquidity of the business organisation can be measured through current and quick ration i.e. they measures availability of cash and cash equivalents in the working capital during the year.
  • Efficiency-Efficiency ratios are those ratios which reflect efficiency of the business organisation in terms of its daily operations i.e. inventory management, debtors management, etc. Efficiency ratios include inventory ratio that reflect that period within which inventory is converted into sale revenue during the reporting period. Newcrest Mining Ltd has maintained this ratio at optimum level and has maintained efficiency in the business cycle. Therefore their business efficiency is at optimum level.
  • Solvency-Solvency ratio measures the solvency position of the business organisation during the reporting period. Solvency position indicates use of debt and equity in total capital employed of the business organisation. Solvency ratio includes asset turnover ratio and debt to equity ratio. According to asset turnover ratio, use of assets in earning turnover during the reporting is analysed and measured. In this case, Newcrest Mining Ltd has shown effective use of assets in earning turnover during the year. On the other hand, debt to equity ratio is the solvency ratio that denotes propionate use of long term debt and equity in the overall capital employed of the Newcrest Mining Limited. Newcrest Mining Limited has adequate level of solvency ratio.
  • Profitability-Profitability ratio is the ratio under which profit earning capacity of the business organisation is analysed and measured with the help of different ratios. Gross profit ratio indicates profit making capacity of the business from core or primary business operation. In terms of gross profit ratio Newcrest Mining Ltd, has earned adequate gross profit. Net profit ratio indicates administrative efficiency of the business organisation and in this case Newcrest Mining Ltd has not maintained adequate level of net profit during the year (Jackson 2013). Return on assets indicates profit earning capacity of the business organisation by using assets. They have earned adequate level of profit by using average assets of during the year. At last return on equity is the profitability ratio that indicates profit earned for the equity shareholders.

5: Four of NCM’s investors hold over 80% of the issued capital of the company. Who are these four investors? What is the significance of their ownership stake in NCM?

Newcrest Mining Ltd has major four investors in their company that holds more than 80 % of issued capital and they are as follows:

Company

% of issued capital

1: HSBC Custody Nominees (Australia) Limited

39.31 %

2: National Nominees Limited

19.37 %

3: J P Morgan Nominees Australia Limited

13.87 %

4: Citicorp Nominees Pty Limited

9.44 %

Majority ownership can be defined as the one or more investor having major stake in the business organisation during the year.

Significance of their ownership

In terms of Newcrest Mining Ltd, these four investors had contributed major part in terms of issued share capital. Their contribution has played major role in terms of providing funds to company so that they are able to operate their business more effectively (Jebri 2013). Since if any of these stakeholders pull back their funds from Newcrest Mining Ltd then major amount of funds will be drawn from capital and it can cause majored breakdown in business operations. Therefore it is very much important for Newcrest Mining Ltd to retain and manage these four stakeholders (Mulley, Williamson and Kirkby 2014).

Conclusion

From the above ACCY801 Business Accounting Report Assignment Help it can be concluded that Newcrest Mining Ltd has adequate level and composition of board of directors. One thing that Newcrest Mining Ltd has to change or amend is to increase women directorship on its board composition and same has been recommended by ASX CGC 2015. According to ratio analysis, Newcrest Mining Ltd has to improve their quick assets in working capital, shall manage its net profit ratio and return on assets for the business operations. Newcrest Mining Ltd shall maintain these four majority stakeholders other their employed capital may get reduced and this will made negative impact on business operations.

Bibliography

  • Campbell, Bill. Effect on Financial Statements and Ratio. 18 January 2014. http://financialexamhelp123.com/leases-iii-effect-on-financial-statements-and-ratios/ (accessed June 28, 2016).
  • Jackson, Amy. Ratio Analysis And Industry Benchmarking Reveal Hidden Messages In Your Financial Statements. 03 June 2013. http://www.mondaq.com/unitedstates/x/320334/Audit/Ratio+Analysis+and+Industry+Benchmarking+Reveal+Hidden+Messages+in+Your+Financial+Statements (accessed June 28, 2016).
  • Jebri, Aymen. “Effect of Large controlling Shareholder's Presence and BOD.” Faculty of economic science and management, 2013: 183-186.
  • Limited, Newcrest Mining. “Newcrest Mining Limited Annual Report 2015.” Newcrest Mining Ltd,2015: 92-130.
  • Mulley, Greg, Shaun Williamson, and Antonia Kirkby. “The controlling Shareholders.” PLC Magazine, 2014: 22-27.
  • Peavler, Rosemary. What are the five categories of financial ratios and what does each measure? 15 December 2014. http://bizfinance.about.com/od/financialratios/f/finratioanal2.htm (accessed June 28, 2016).
  • Statement, Corporate Governance. “Newcrest Mining Limited CGS 2015.” CGS 2015, 2015: 1-8.
  • Subramanian, Guhan. “Corporate Governance.” Harvard Business review, 2015: 1.