Assessment #1 Getting Started

AMALGAMATED HOLINGS LIMITED

Step #1;

Set up Moodle Profile and listed Blog via blogger.com

My blogs address is found at 

http://amalgamatedholdings.blogspot.com/

Step #2;

AMALGAMATED HOLDINGS LIMITED

ASX CODE: AHD (listed 1962)

My company Amalgamated Holdings Limited AHL is an Australian run organisation which has diversified itself into hospitality, entertainment and leisure organisation.

Established in 1910, its pioneers had a vision to ‘create a business dedicated to the art of moving pictures’. In 1913 Union Theaters was formed which the developed into the well-known Greater Union in the 1930’s.

After a successful company was imprinted into Australia’s entertainment industry Amalgamated Holdings Limited strives to continue to grow. It was branched into other Cinema complexes such as Birch, Carroll and Coyle, Cinestar (operations in throughout the world), as well as investment into moving art picture technology which has also contributed to its financial success. Its movement didn’t stop here and since has established quite a successful portfolio of hospitality venues and hotels, including the 4 and 5 star Hotel Chain The Rydges (which was my initial employer when I left school and a great stepping stone into my hospitality career), QT hotels and Resorts and the Atura Hotels. This was the followed by the Leisure sector of the business which includes one of Australia’s premier ski fields, The Thredbo Alpine Ski Resort, and until recently (sold in 2013) Featherdale Wild Life park, which to me was a place of school excursions when I was in primary school.

AHL has since widened its boarders with investment properties in leasing office and retail spaces as well as other investments in listed and non-listed companies.

It is clear that my company has been under the supervision of strong management which has enabled such successful performance to span over 100 years. Its operations have attracted growth and allowed a shareholder base of over 500.

I am very happy to be given such a company that I can relate to with prior experience within the industry, however doing requisitions for stock, managing rosters and maintaining key relationships with staff, customers and suppliers seems to be a world away from the nitty-gritty business of the management and their Financial Statements.

  

KCQ of AHL Financial Statements

After reading through the annual Financial Statements for the past three year I suddenly felt inadequate with what I was reading and felt lost trying to comprehend, leaving me with some serious questions regarding the Key Concepts and the terminology used. This type of terminology is extremely foreign to me and I have had to get definitions for the following:

Statements of Movements In Equity;  

Shows the various changes in shareholders’ equity

• Movements in shareholders' equity over an accounting period comprises the following elements:
• Net profit or loss during the accounting period attributable to shareholders
•  Increase or decrease in share capital reserves
•  Dividend payments to shareholders
• Gains and losses recognized directly in equity
• Effect of changes in accounting policies
• Effect of correction of prior period error

Statement of changes in equity helps users of the financial statement to identify the factors that cause a change in the owners' equity over the accounting periods. Whereas movement in shareholder reserves can be observed from the balance sheet, statement of changes in equity discloses significant information about equity reserves that is not presented separately elsewhere in the financial statements which may be useful in understanding the nature of change in equity reserves. Examples of such information include share capital issue and redemption during the period, the effects of changes in accounting policies and correction of prior period errors, gains and losses recognized outside income statement, dividends declared and bonus shares issued during the period.

Comprehensive Income;

The change in a company's net assets from non-owner sources over a specified period of time. Comprehensive income is a statement of all income and expenses recognized during that period. The statement includes revenue, finance costs, tax expenses, discontinued operations, profit share and profit/loss.

Cash Flow Hedges;

A Cash Flow Hedge is used when an entity is looking to eliminate or reduce the exposure that arises from changes in the cash flows of a financial asset or liability (or other eligible exposure) due to changes in a particular risk, such as interest rate risk on a floating rate debt instrument.

Reserves and Capital Reserves;

In financial accounting, reserve is any part of shareholders' equity, except for basic share capital.

A reserve is profits that have been appropriated for a particular purpose. Reserves are sometimes set up to purchase fixed assets, pay an expected legal settlement, pay bonuses, pay off debt, pay for repairs and maintenance and other relating matters

Share Capital Reserves;

Share capital is the money invested in a company by the shareholders. Share capital is a long-term source of finance. In return for their investment, shareholders gain a share of the ownership of the company. Such reserves would the allocated funds to be put aside for future investments.

Balance Sheet;

A firm’s representation of its financial position at a particular period- this outlines Assets, Liabilities, Revenue, Expenses and Owners Equity.

The fundamental algebraic expression to find the Owner’s Equity is

A+E=OE+R+L

Intangible Assets and Goodwill;

Intangible assets are assets like trademarks, copyrights, patents, formulas, franchises, goodwill, ect.

Goodwill; Goodwill is a special type of intangible asset that represents that portion of the entire business value that cannot be attributed to other income producing business assets, tangible or intangible

Deferred Taxes;

An account on a company's balance sheet that is a result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year

Provisions;

Is an account which records a present liability of the entity. The recording of the liability in the entity's balance sheet is matched to an appropriate expense account in the entity's income statement.

Income statement;

The Income statement identifies how the various activities have changed the Owners Equity

Diluted Earnings;

A performance metric used to gauge the quality of a company's earnings per share (EPS) if all convertible securities were exercised. Convertible securities refers to all outstanding convertible preferred shares, convertible debentures, stock options (primarily employee based) and warrants.

Step #3;

I have input my financial statements into the excel sheet for the past 3 financial years

Step #4;

Study Guide KCQ

The study guides have been a great learning tool, however I thought at first it was highly impractical to have a subject of (especially) accounting to not have a textbook which lead me to believe that I was destined for failure. This however changed my perception once I got my head around the navigation and utilization of the Moodle website and all of the components included in them.

Since I completed Accounting Fundamentals in Sydney for my bridging course into university after a change of career I have found the first chapter a pleasant refresher for me, however this course was, along with statistics was not my strong point.

The history of Accounting has drawn me deeper into its subject to realise that the first forms of accounting principles, along with most history in general. There had been findings of records of detailed expenditures and goods traded and received dating back to Mesopotamia which was an ancient area of the Greeks, (nowadays Iraq-Syria) more than 7000 years ago. This developed further through the times through the various empires including Eculids ‘Elements’ written around 300BC. In 1299-1300 the Double Entry method was surfaced by a company known as Giovanno Farolfi & Company. In 1494 when the ‘godfather of accounting’ Italian Luca Pacioli’s publish a 27 page manifest on bookkeeping incorporating various parts of the Giovanno Farolfi & Company methods that it used including that of Double Entry Accounting. This was a great insight to the depth and time that such vital studies have evolved.

Accounting has allowed me to look at businesses as a model and description of the life span of a business, one that must be looked at as a business with an ongoing and continuous life span. It allows us to measure performance of specific time frames and then being able to access its performances with other periods of time. Such collaborated details are for the use of managers to not only access but to predict and allow budgets, as well as the operations of key fundamentals of the business itself since a business is continuously in a process of exchange often referred to as being static

A business is any organisation that aims to provide good or services to the public in exchange for benefits most commonly goods of monetary value, if not money. This is broken up into sole traders, partner ships and corporations. The principles of businesses are set out by legislation drafted in and throughout the world’s legal systems.

Accountants use 5 key elements when drafting a company’s Financial Reports

1. Assets
2. Liabilities
3. Equity
4. Revenue
5. Expenses

Of these 5 elements we have now been introduced to 3 statements;

• Balance Sheet
• Income Statements
• Changes in Equity

Balance Sheets is a firms representation of its Financial position on a single day (usually done at specified dates, monthly, quarterly and or annually).

A Balance Sheet details the balance of each of the 5 elements, and the health of the economic entity including Assets, Liabilities, Revenue, Expenses and Owners Equity.

Income Statements show how the firms economic status has changed overtime ( again done at specified intervals) and how such change has effected the stakeholders, of creditors which is known as Owners Equity. To calculate the companies economic status it is a desire to find out the companies income which is calculated by Expenses – Revenue = Income

Next which I have found the most challenging, and foreign is the changes in equity statement.

The reason for this is due to the worded descriptions and unfamiliar terminologies. Another reason behind this difficulty is that although the expenses are detailed, it is not mandatory to list the total of expenses a company has paid, is this true?

Previously I have studied the Australian Wheat Board scandal, which saw kickbacks being paid to the Iraq regime, which at the time was Saddam Hussein- which to me not disclosing all expenses and choosing how a business presents its statements and reports ‘undermining’ people and authorities. Forgive me if I’m wrong but I do believe that doing something in the best interest of money generally creates greed- and this we have seen create some devastating events throughout history.

Also mentioned in Chapter 3 is ratios. Again in my previous accounting course I had to implement these and was for the final exam (closed book) tested for each of them- which I didn't know which was which and I believe that having such demands on my memory is one way to fail- I am sure that accountants if need be can look into books an methods if needed, so why should we if we still implement the correct values and methods.

I hope I have answered through by little reflection the difficulties I have and probably will continue to face (until I can get a grip), I do not find much boring due to the charities I have submerged myself in whilst living in Bali as I see such poverty I really do not take w whole lot for granted any more, especially the opportunity to be educated, and although it may not be exciting as me going for a surf I do quite like learning new concepts in deeper context

Key Challenges and Strategies

The challenges for the last financial year (LFY) was the decrease of 8.4% in Net Profit (NP) after tax. Such a significant drop in NP was due to the sale of Featherdale Wildlife Park and investment property in Melbourne leasing office space in the prior FY.

This however was counteracted with a fair value gain of $4.9 million of the acquisition of the remaining interest in a joint venture operation. To me the management of AHL have dealt with the economic and other external environments very effectively, as they are having consistent increments in building a stronger organisation and adjusting to the current environments and demands of the marketplace.

The breakdown of its portfolios show that the entertainment (Australia, New Zealand and Germany in positive growth as well as its Hospitality and Leisure sector with the exception of Thredbo Alpine Ski Resort. The strategies to counteract this problem has been outlined in the directors report to consist of

• continuing to ensure the popularity, high-quality and ambiance of the winter-time resort facility;
• continuing to improve snow making capability to mitigate risk in poor snow seasons;
• increasing the number and quality of sporting and cultural events to increase visitation outside of the snow season;
• expanding the mountain bike trail network to appeal to a broader range of riders; and
• ensuring that the environmental integrity of the Resort is maintained and, where possible, improved.

Other strategies that will be considered (in relation to the external environments including economic, political and industrial trends) and executed involve identifying the evolving customer needs and demands by investing in additional attractive opportunities and focusing on enhancing customer experience.

Step #5-

I have provided adequate feedback to the peers assigned to me.