Step 4 - Chapter 3 - Introducing Financial Statements

Chapter 3 – Introducing Financial Statements

The first issue/difficult I have with this chapter is getting my head about the different names of Balance Sheets and Income Statement. I always get confused when I see Statement of Financial Position or a Statement of Financial Performance. This goes back to my personal experience at High School. When we were going Financial Statements at High School we always called them “Balance Sheets and Income Statements” now they have two different names. I know that throughout my course at university I am going to have difficulties remembering Statement of Financial Position means Balance Sheets and Statement of Financial Performance means Income Statement. The third statement called Changes of Equity I remember briefly doing a simpler statement in High School in regards to Petty Cash. But now coming to think about it, I think it would be reconciliation of the Cash at Bank account. So the Statement of Changes in Equity and Cash Flow Statement are completely new to me. Hopefully they are easy to understand and get my head around.

Secondly, a firm’s business sheet shows its financial position on a particular day. I thought the Balance Sheet was the financial position over the financial year but it is not. A balance sheet could be done monthly, quarterly, semi-annually, annually or daily. I personally, thing Balance Sheets in Australia should automatically done on the 30 June each year to make it easier for the accountants and businesses. Otherwise companies would have to do adjustments to record the correct amount for the assets, liabilities, equity, revenue and expenses. I know from personally experiences at Dimmey’s that they do a physical stocktake on 1 July every year. Companies do this to actually account of the inventories the company has on a specific data. From other person’s experience I know Woolworths and Coles do a stocktake ever quarter to ensure they have accurate figures on inventory. Balance sheets are an important aspect of a business and they need to be accurate figures.

Thirdly, I realised what the term consolidate means and how it relates to the company I was given. Basically, consolidate means it is the ‘parent’ entity and it has subsidiary companies. This means that Oz Brewing Limited has the majority shares in another company which means it the ‘child’ company to Oz Brewing Limited. Until I read this Chapter I always thought a Consolidate Statement of Financial Position and Statement of Financial Position means the same think. The difference is that a Statement of Financial Position would have one company such as a sole trader and Consolidate Statement of Financial Position would have other assets, liabilities and equity that do not directly relate to Oz Brewing Limited, it may be attached to one of the subsidiary companies. For my company that I have been assigned over the last four years it has sold some of the subsidiary companies off and has tried to buy new subsidiary companies. One of the subsidiary companies Oz Brewing Limited sold was Mad Monks Proprietary Limited to another company. However, when trying to buy new subsidiary companies the deal fell through. Overall, my company needs to aim to get a balance sheet rather than a negative number for equity.

The following statement is so true that ‘businesses are active, doing things all the time, firms are currently changing all the time and can often be very fast-moving’. My personally experience of this would be when Dimmey’s went into Voluntary Administration. In less than 4 months of being in Voluntary Administration they had another company that was interested in buying Dimmey’s. When the new company bought Dimmey’s there whole direction of Dimmey’s change. One product line that they did not want to carry was groceries but then when Crazy Clark’s and Sam’s Warehouse went into Voluntary Administration the Director of Dimmey’s changed their mind. The Director decided to have a small product line in groceries because Crazy Clark’s and Sam’s Warehouse had a huge selection of groceries so Dimmey’s decided to try and capitalised in this line. I can also relate this to the company I got assign - Oz Brewing Limited. If the acquisitions deal with 333D goes head Oz Brewing Limited direction is going to change from brewing, distribution and producing beer to printing 3D objects. Directors of business and managers change direction all the time, employees have to decide whether to change with the business or to find a new job in the similar field.

Fifthly, the Income Statement shows how things are changing in a firm, this is extremely important in business. From the experience at looking at Oz Brewing Limited you can have one fantastic year and then three horrible years. If we are looking at the Oz Brewing Limited financial statements they had a profit in 2011 and then ever sense they have made losses. In one financial year everything can change from stating a flow to going broke. In Oz Brewing Limited case it was the cost of trying to open a Café that sent them broken and from then on that have had miss-management in regards to business decisions. For Oz Brewing Limited to stay operating they need to make a profit this financial year otherwise we will see Oz Brewing Limited in Voluntary Administration again.

The bit I found confusing would be the ‘Other Comprehensive Income’ and Statement of Changes in Equity. If the accounts are supposed to be in the Statement of Changes in Equity why do they have to make it difficult and add an extra statement in? The Australian Accounting Standards Board should make it mandatory that the Comprehensive Income Statement be a part of the Statement in Changes in Equity. I think it would make more sense there. Another question if they do not want to do that than just record it as one big statement of the Income Statement. Do we really need a separate Comprehensive Income Statement?

The Cash Flow Statement is extremely important because it shows the opening cash balance at the beginning of the period, cash inflows and outflows during the period and the closing cash balance. As the Lecturer said in Week 3 “the Cash Flow Statement is the only statement companies cannot forge because money does not lie”. What Maria said is so true, the business bank account can either be a positive or negative number, the business will not liar because they have rules and regulations they are bind to by the Government. In Companies if they are defrauding the Government they will be in huge trouble because they have specific taxation agents whose job is to find people how are defrauding the Government. The Taxation Agents can also do an audit on the company if they think something ‘fishy’ is going on. Anyway, the Cash Flow Statement is the statement that always tells the truth.

To interpret, systemically analyse and assess a business people need to use ratios to get an accurate view of four or more financial statements. Managers and directors can calculate different ratios and compare one company’s ratios to another company in the same or similar line of work to see if the company is working effectively, efficiently and making a reasonable profit for a particular financial year. I personally would use ratios every year and compare a year that has a significantly loss with another company because it could be due to an environment factor, financial factor or any other reasons. If everyone’s figures in that particular financial year dropped then you have nothing to worry about but if it was only your company then you should be looking at the possible reasons as to why it dropped. I personally think ratios are extremely important in business because it helps you compare your figures with someone else in the same industry.

The bit that I found unless was in the ‘Ratios’, ‘Just do what ‘works’’ and ‘Use a Structure’ section when it was talking about centuries. I understand that you need to know how it was created to fully understand how to apply it. But I think this section could have been shortened and Martin could have got quicker to the point rather than talking about Euclid’s Elements, United States Economy and so on. Martin should have spoken about the Australian Economy instead of the United States Economy.

Finally, the Dividends and Cash Flow sections for Chapter 3 is important and it shows how to actually calculate the dividends and cash flow. After reading this chapter I realised you need to calculate the dividends before you can do the cash flow because they are related, even in the formula. Some of the aspects of the formulas I am having trouble with such as: the Capital Outlays and how to calculate the Present Value of Expected Future Dividends. However, this is a significant problem because I have to get my head around Present Value of Expected Future Dividends because it is the key practical difficulty of valuing the equity in a firm using the Discounted Dividend (DD) model. I understand what net dividend is and what the cash flow is it is just specific pieces in the formula on how to calculate it that I do not understand. By when I actually have to calculate the dividend and cash flow I am should I will under the formula more because I can apply the theory I know.  

To me the author is trying to tell me that here are two key financial statements business needs to prepare that shows the five key elements of accounting accounts which are the Balance Sheet and the Income Statement. Then there are two other financial statements that are interconnected to the firms Balance Sheet and Income Statement those statements are: Statement of Changes in Equity and Cash Flow Statement. The final point Martin is trying to get across is that businesses can use ratios to compare a company in the same or similar industry to see how well they are performing.

To summary my key concepts and questions would be the following: 

• What are their so many different names for the Balance Sheet and Income Statement?
• Balance Sheet shows its financial position on a particular day. This day can be anytime through the financial year. There is no set date or day for this.
• What does ‘consolidate’ mean?
• What is the difference between Consolidate Statement of Financial Position and Statement of Financial Position?
• What is the difference between Consolidate Statement of Financial Performance and Statement of Financial Performance?
• What is the difference between Consolidate Statement of Changes in Equity and Statement of Changes in Equity?
• Does Oz Brewing Limited have any subsidiary companies?
• Business are active, doing things all the time, firms are currently changing all the time and can often be very fast-moving.
• Income Statement shows how things are changing in a firm.
• Why is the ‘Other Comprehensive Income’ underneath the Income Statement if some of the accounts relate to the ‘Statement of Changes in Equity’?
• Cash Flow Statement shows the opening chase balance at the beginning of period, cash inflows and outflows during the period and the closing cash balance.
• To interpret, systemically analyse and assess a business people need to use ratios to get an accurate view over four or more financial statements.
• Businesses use ratios to compare companies that are similar or the same in a particular industry.
• Did you real need to go into background knowledge in the ‘Ratios’, ‘Just do what ‘works’’ and ‘Use a Structure’ section?
• Dividends and Cash Flows show how to actually calculate the dividends and cash flow.
• Dividend and Cash Flow are related.
• How do you calculate the Present Value of Expected Future Dividends?
• How do you calculate the Capital Outlays?
• How do you calculate the Discounted Dividend?
• Two key financial statements that shows the five key elements of accounting which are the Balance Sheet and Income Statement.
• Two other financial statements that are interconnected to the firms Balance Sheet and Income Statement those are: Statement of Changes in Equity and Cash Flow Statement.

Above are my key concepts and questions about Chapter 3 – Introducing Financial Statements. 

Step 4 - Chapter 1 - A Way of Viewing Business

Chapter 1 – A Way of Viewing Business

In Australia there is a number of accounting software packages businesses can use to record their business transactions and produce their financial statements. I personally, have used MYOB (Mind Your Own Business) and Quicken/QuickBooks. When I was a senior in High School I did Business Communication and Technology as a subject and a specific assignment piece was to create a business and record its financial transactions using MYOB. MYOB is a fantastic product however, I found if accidently entered the incorrect amount or posted it to the incorrect account it was a nightmare to fix it. I found that with MYOB you need to remember the guide to ensure you are not wasting time trying to fix a mistake. My mistake was I tried to jump in without reading the manual on MYOB which lead to all sorts of mistakes – this is the main reason I do not like MYOB. I also have been exposed to Quicken/QuickBooks due to my family owned their farm and rental properties. Personally, Quicken/QuickBooks I found easier to use and get your mind around then MYOB’s setup. I found it was easier to fix mistakes when you either entered the incorrect amount or posted to the incorrect account in Quicken/QuickBooks. If I was going to open a business I would use Quicken/QuickBooks accounting system over the MYOB accounting system any day but that is just from my personally experience.    

When Martin wrote “accounting is also not like a corporate camera taking precise photo of what is going on” this is absolutely correct. I had and still do have a part-time job with a company called “Dimmey’s” in late 2013 Dimmey’s went into Voluntary Administration. Now you might be wondering why I have bought this up, the reason is because many people think Dimmey’s went into Voluntary Administration was due to financial miss-management. This idea/perception is false, the reason Dimmey’s went into Voluntary Administration was because Dimmey’s was fined $3 million for breaching product safety laws. The owner could not raise the capital to pay the fine so he decided to put the company into Voluntary Administration. Therefore I have come to the conclusion that the financial statements and accounting may not paint the full picture of a company.

People are surrounded by markets everywhere where we go such as: suppliers, employees, customers, debt investors and equity. When people walk down to the store and go to Woolworths or Coles they could possible buy products that are domestic grown or international grown to eat. The buyers of any company needs to research the products they are buying and ensure they are up to the Australian Standards otherwise they will end up like Dimmey’s with a huge fine for breaching the rules and regulations. If you think about it when you walk down the street you have markets everywhere. For example Women’s Clothes you have Target, K-mart, Ice, Alley, Dimmey’s, Big-W, BMAC, Cotton On, Bras-N-Things and many more small boutiques. All these have markets with different suppliers that are why Women visit a range of shops because no two shops have exactly the same stock. Shops many have the same brand but they do not have the same style or colours. By having a range of shops selling the same line the shops have to be competitive otherwise they will destroy the business they have. A personally experience I have with destroying the value of a product would be when working at Dimmey’s. Dimmey’s sells a range of children’s clothing, women’s clothing and men’s clothing at a realisable price anywhere from $10 up. Management recycles clothing that means that if it did not sell great one winter we would pack it up and bring it out the next winter which means the style is two or more years old. Customers are not going to buy two or more years old when they can go to K-mart or somewhere with the same pricing and get the latest fashion. This is an example of destroying the value of a particular line (Women’s Clothing) and the problem now is getting the customers to come back to Dimmey’s after they have found somewhere with realisable pricing and the latest fashion. Shops need to have products the customer wants at a realisable price to be successful in a business.

Business is all around us in everything we do and people who say that is not true has no real concept of business. People may not realise but business is every time you spend your money. When people are ensuring they have enough money to pay the bills, entertainment, going out with friend or for dinner you are using accounting to keep track of your personal financials. People who go bankrupt are a business that has miss-managed their finances. Every time when a person walks into a shop or shops online they have used accounting to record their transactions. People are going to say but that is different. No, it is not there are three types of businesses they are: sole trader, partnerships and companies. Companies are bound by different rules and regulations then sole traders or partnerships however they still have to pay tax and purchase items that are necessary in their line of work. I like to think everyone is a sole trader and then when you are married or financially living with someone you two then become a partnership.  So my main point is that everyone uses business and is in a type of business someway some people just don’t see it.

The area I thought was boring is about the “We Build on the Past” section. I understand how Martin is trying to relate music to accounting however with the other examples in the Chapter I don’t think he needed to restate it. I also found the bit about his Law degree and typing boring, he could have left this whole section out of the study guide. The “We Build on the Past” section did not contribute to me understanding Accounting, the whole time while reading this section I was thinking how does this help me to understanding Accounting and broaden my knowledge on accounting. Secondly, with the QWERTY information, yes it is good to know about however did it really need to be in Chapter 1? Does it help me in any way to “using accounting for decision making”? The answer to both of those questions is no. Martin could have left this out and just kept the topics that directly relate to accounting.  

Having two sides to everything is a great concept and method to use to ensure you have entered the correct amount and your books balance. The whole concept of Journals and Ledgers is great because it allows the people to check the amounts they have entered. It is a way of double checking without physical re-entering everything. This leads to people ensuring they know the five key elements of accounting and which accounts are classified under which element. This is important when doing bookkeeping because each element is given a nature, if the account is increasing the nature is the same however if the account is decreasing the nature becomes the opposite. An example of this with the Cash at Bank account would be if you are banking the sales of the business, the asset is going to be increasing which will make it a debit. But if you are required to pay bills the asset will be decreasing and the amount will be entered in as a credit. This is how the double –entry accounting works. I am quite familiar with the five key elements and the accounting equation because I have worked in businesses ever seen I was 15 years old.  

To me the author is trying to tell me that business and accounting is used in every part of our lives. That without the five key elements, double-entry book keeping and the two journals trying to record business transactions would be a nightmare. People would not be able to interpret or analysis businesses because there would be no rules and society would see more people and businesses going bankrupt without the key principles and regulations.

To summary my key concepts and questions would be the following:

• There are a number of Accounting Software Packages Businesses could use.
• My favourite is Quicken/QuickBooks and MYOB is difficult when you have entered the incorrect amount or posted to the incorrect account.
• Accounting is also not like a corporate camera taking precise photo of what is going on.
• Financial Statements tell you one thing put you need to understand what the business has currently done throughout the financial year to get the full picture.
• Markets, Suppliers, Employees, Customers, Equity and Debt Investors are everywhere where we go.
• Business is all around us in everything we do and people who say that is not true has no real concept of business.
• Business is in our personal lives and professional lives.
• What did Martin include “We Build on the Past” section? This had nothing to do with accounting. It was about Martin mainly and very little if any on accounting.
• What did we need to know about typing and QWERTY in the ‘We Build on the Past” section?  
• Having two sides, debit and credit, to everything is a great concept and method to use to ensure you have entered the correct amount and your books balance.
• Without the five key elements, double-entry book keeping and the two journals trying to record business transactions would be a nightmare. 
• Without business and accounting people would not be able to interpret or analysis businesses because there would be no rules.
• Businesses would go bankrupt without the key principles and regulations of Accounting.

Above are my key concepts and questions about Chapter 1 – A Way of Viewing Business. 

Step 3: Company Spreadsheet

The Financial Statements for Oz Brewing Limited have been entered into the company spreadsheet. There is a restatement of financial figures for the Financial Year ended 30 June 2013 – this is to do with the Issued Capital and Accumulated Losses however the Total Equity and Net Assets amount are the same and they match. Please find the “Oz Brewing Limited Company Spreadsheet” below. 

Oz Brewing Limited - Income Statement - Year Ended 30 June

Oz Brewing Limited - Balance Sheets - as at 30 June

Oz Brewing Limited - Statements of Movements in Equity - Year Ended 30 June

Discussion with Other Students and Tutor in the Course

Throughout this assignment I have discuss my company and other people’s company face-to-face and on their blogs. First of all I like to mention that I have commented on three companies through their blogging page. If you click on the students names it will take you to there I have commented about their companies. Madison Briskey, Jade Tringale and Sarah Ellen have fantastic blogs until I read their blog I had no idea Cellnet Group Ltd, Joyce Corporation Ltd and Abcam was companies. I have more knowledge now about these three companies after interacting with their bloggers page.

The second discussion I had was with Matthew Barone who is in the same course on the 23^rd of March. I told him about “Oz Brewing Ltd” and he told me about “Big Air Ltd” – which is a telecommunication company. This discussion happened face-to-face about both our company’s Financial Statements. After discussing his financial statements and looking at me I realised there was something seriously wrong with my company. This is when I started to look into the background information to figure out why “Oz Brewing Ltd” had made a loss for the last three years.

The third discussion I had was with Grace Taylor, Rikki Knight and Jessica Atkins in the Using Accounting for Decision Making tutorial class. On the 25^th March I helped Grace Taylor, Jessica Atkins and Rikki Knight with their company’s spreadsheet to do with excel formulas for the Statement of Movements in Equity, the Income Statement and the Balance Sheet. By doing this it reinforced the principles of accounting and we were able to see any corrects that a person made. One error we found was in Grace’s Statement of Movements in Equity, she had accidently forgot to put the amount in as negative instead she put possible which made her Statement of Movements in Equity greater than what the company had recorded. We also told about the lengths of our Annual Reports and realised that all four of us have received a small company – which we are happy about.

The fourth discussion I had was with John McGrath relating to the Statement of Movements in Equity. The discussion was to do with the Comprehensive Profit / (Loss) for the year, the company I was given just shows one line with the amount in it where other companies shows the breakdown of the Comprehensive Profit / (Loss). I asked John McGrath if I had the right statement of was the information somewhere else, he then told me it could be on the bottom of the Profit or Loss Statement however it was in. John McGrath then advised me to record the Comprehensive Profit / (Loss) as the one line. This was one Key Concept Questions a few people had because I know Rikki Knight and Grace Taylor was wondering the same thing. 

My Three Favourite Blogs

My top three blogs are Madison Briskey, Jade Tringale and Sarah Ellen. If I was rating on attractiveness and appealing my winner would be Madison Briskey and if I was rating on information about your personally company the winner would be Jade Tringale.

Madison Briskey is my favourite of the three blogs because of the attractive and up-beat colours and pictures she choose. My rating for this blog would be 8 out of 10. Madison has given in-depth background knowledge of her company called “Cellnet Group Ltd”. Madison has designed her blog so that it attracts the attention of her customers through bright and bubbly colours. However, the area she could improve on would be linking the company’s Annual Reports to her blog page. Madison Briskey’s Blog is found at the following link http://madisonbriskey.blogspot.com.au/.  

My second favourite of the three blogs is Jade Tringale because of the attractive banner Jade as designed for this blog. The image at the start of the blog lightens the mood of the blog and brings humour into the blog. Jade has gone into great detail about her company “Joyce Corporation Ltd”. I liked how you incorporated links to your articles that you have used for background information and statistics about the subsidiary companies. My rating for this blog would be 9 out of 10. I like how you have all the assignment information about your company on the blog however the background colour did not appeal to me. Jade Tringale’s Blog is found at the following link https://jadetringale.wordpress.com/.

My third favourite of the three blogs is Sarah Ellen because of the attractive picture and information about her company. The image about ‘My Favourites’ draws the customers into the blog and makes you want to read the information you have posted. I liked how she has linked external websites to the blog relating to her company called “Abcam” it shows the audience that she reads a broad range of texts. I really liked the way she incorporated a youtube clip which made her blog inactive. My rating for this blog would be 9 out of 10. Sarah Ellen’s Blog is found at the following link http://sarahbacct11059.blogspot.com.au/.

The blogs I have commented on about their company and blog design is:

·         Madison Briskey

·         Jade Tringale

·         Sarah Ellen

What concerns do you have at this stage? Are you happy with Oz Brewing Limited or would you have preferred to be given a different company?

At this stage of the assignment I am happy with the company I have been given and have a concern but it is to do with the Company’s financial situation. Oz Brewing Limited is a small company which has a small annual report, the only concern I have is that the Annual Report does not go into great detail like better companies have. An example of this is when I was doing the Company’s Spreadsheet they only give one line of the Comprehensive Income. The company does not break the Comprehensive Income into separate accounts; the company just shows it has one figure. John, the Bundaberg Tutor has said to just show the Changes of Equity exactly like your Company in their Annual Report has. I am happy with the Oz Brewing Limited because of my background experience with working at Dimmey’s Bundaberg. As people probably already know Dimmey’s Bundaberg went into Voluntary Administration in 2013 to 2014 but then another company bought Dimmey’s and is currently running Dimmey’s now. So I can relate my personal experience of a company going into Administrator and be able to understand and relate more in-depth to this company because of this similar experience.  

What similarities or differences are there between your firm and the firms of other people and in the way they present their financial statements?

The similarities between a few firms such as: Joyce Corporation Ltd, Big Air, RCG Corporation, Ahlers and Tabcorp Holdings are the classification of accounts under the five elements. When looking at other companies Financial Statements they have similar expense accounts such as: Administration Expense, Accounting Fees, Impairment and Advertising. They have similar assets and liabilities accounts such as: Cash and Cash Equivalents; Receivables; Property, Plant and Equipment; Payables; Investments; Issued Capital and Equity Compensation Reserve. The format and formulas between all of these companies are the same to calculate the Equity Balance at 30 June, Net Assets, Total Equity and Profit.

The major difference between a few firms such as: Joyce Corporation Ltd, Big Air, RCG Corporation, Ahlers and Tabcorp Holdings is that there companies are making a profit and increasing their Equity whereas Oz Brewing Ltd is making a loss and decreasing their Equity. Currently, Oz Brewing Ltd has a negative figure for Equity of the company. This meant that in the Income Statement these companies have higher and more accounts in the Revenue section. Another difference between these firms and Oz Brewing Ltd is that they have more Assets, Liabilities, Equity, Revenue and Expenses accounts which is because they have higher profit. I have also notice a few of these companies have subsidiary companies that are also making a profit and their subsidiary companies are listed in the notes section of the Annual Report.

Everyone in the Using Accounting for Decision Making used the Company Spreadsheet to present their financial statements. People are formatting this document the way their company has complete their Financial Statements. For example, in the Financial Statements if they have a thick bottom border underneath “Total Comprehensive Profit / (Loss) for the Year” then we do and where the company has the figures bolded in specific questions then we do. 

How successful it appears to be in meeting these challenges and its apparent strategy

According to the 2014 Annual Report and a New Article on Oz Brewing Limited the company will be successful in acquiring 333D Group depending on 333D Group’s financial figures. Oz Brewing Limited has terms under the Heads of Agreement to execute a Share Sale Agreement. The apparent strategy is for Oz Brewing to issue:

• 1 416 666 667 fully paid ordinary Consideration Shares
• 66 666 667 fully paid ordinary Facilitation Shares
• 500 000 000 Options, exercisable at $0.0045 per share and expiring 18 months after Completion
• 250 000 000 Options, exercisable at $0.006 per share and expiring 24 months after Completion

Oz Brewing has already undertaken a placement under the Heads of Agreement in 2014. There was two tranches which raised $66 223 at $0.003 by issuing 222 074 335 shares. The tranche details were as followed:

1. Tranche 1 – 62 074 335 Shares at $0.003 were issued on 6 August 2014 raising $186 223
2. Tranche 2 – 160 000 000 Shares at $0.003 raising $480 000 1 October 2014

However, Oz Brewing Limited needs to focus on improving Revenue to get Oz Brewing out of the red otherwise Oz Brewing Limited is going to be in Administrator.

This information was acquired from the following sites:

·         2014 Annual Report for Oz Brewing LTD

Key Challenges the firm appears to be facing

Oz Brewing Limited has a number of key challenges they face which falls into two categories they are:

1. Likely Developments and Expected Results of Operations
2. Environmental Regulation and Performance.

The Likely Developments and Expected Results of Operations relate to the company continuing its due diligence investigations into the 3D Group Proprietary Limited now known as 333D Group acquisition. When Oz Brewing Limited is satisfied with the findings, Oz Brewing Limited will seek the approval of the Shareholders and regulatory authorities before acquisition of 333D Group also known as the 3D Group Proprietary Limited. Another challenge Oz Brewing Limited is facing this financial year, once the acquisition has gone through, would be changing the main focus of Oz Brewing Limited. Once the acquisition of 333D has gone through the main focus of the company will be focusing on opportunities associated with 3D printing.

The third key challenge Oz Brewing Limited will be facing will be replacing the current Oz Brewing Directors. Once the acquisition has gone through the current Oz Brewing Directors will be retiring and the new Directors will be appointed by 333D Group. This is a positive change due to the company is changing direction to focus more on 3D printing and with 333D Group appointing the Directors of the company the shareholders will be assuming the Directors will have in-depth knowledge about 3D printing. Within Oz Brewing Limited the company might find a number of employees will change jobs and left Oz Brewing Limited because the company is going into a completely new direction and some employees will decide they do not want to learn a new field and just try and get a job in the field they already know.

The final key challenge Oz Brewing Limited will be facing is the Environmental Regulation and Performance. All activities that have been undertaken in Oz Brewing limited are in compliance with all relevant environmental regulations. The company is required to uphold these regulations with all aspects and future projects to avoid fines and to help the environment. Especially, when the company moves towards 3D Printing, Oz Brewing will have to look into Environmental Friendly products that are biodegradable to reduce their Carbon footprint otherwise Oz Brewing Limited will be receiving bad publicity which will bring the company’s revenues down due to customers/clients will not shop with the company.

This information was acquired from the following sites:

·         2014 Annual Report for Oz Brewing LTD

·         Oz Brewing’s 3D Takeover Still Alive

Areas of its Business that seem most important or critical to me

The areas of Oz Brewing Limited that seem most important and critical to me would be the five accounting elements. Straight away after looking at the Statement of Profit or Loss and Other Comprehensive Income I was concerned. I can clearly see in the Statement that for the past three years Oz Brewing Limited was making a loss this was due to a number of factors that are mention in the Company’s Overview such as selling of subsidiaries companies, being in Administrator and being involved in legal proceedings over disagreements in an Head of Agreement with Volcan Australia Corporation Proprietary Limited.

When looking at the Statement of Financial Position, Oz Brewing Limited needs to improve their Revenues because at the moment the company has too many Liabilities and Expenses which out ways the Assets and Equity. When looking at the Statement of Financial Position for the last three years Oz Brewing Limited is clearly going backwards due to the Revenues and Expenses. In 2013 the Income was $19 807 and the Loss from Continuing Operations was $664, 662 while in 2014 the Income was $3 192 and the Loss from Continuing Operations was $992 156. This meant that between the two financial years the company’s revenues decreased by $16 615 and the Loss from Continuing operations increased by $327 494. Which leaded to Oz Brewing Limited in the Financial Year ended 20 June 2014 have a total Equity of $-182 295. If the company continues to trade like it has been Oz Brewing Limited will be placed into Administrator again before the Year Ending 30 June 2015.

This information was acquired from the following sites:

·         2014 Annual Report for Oz Brewing LTD

Areas of Oz Brewing LTD Financial Statements I am having difficulties understanding

The areas I am having difficulties understanding in the Financial Statement would be:

1. Why for the last three years did ‘Oz Brewing LTD’ make a loss?
2. Why are there more Expenses than Revenues?
3. What is ‘Diluted Earnings per Share’?
4. What is the Subsidiaries Companies for ‘Oz Brewing Limited’?
5.  What does ‘Consolidated’ mean in regards to the Income Statement, Balance Sheet and Changes of Equity?
6. What was the difference between 2011 and 2012?
7. Why did the company make a profit in 2011?
8. Why did the company make a loss in 2012 through to 2014?
9. Does my company have the Comprehensive Profit / (Loss) for the year broken down or is it just one figure?

Then when I read the 2014 to 2011 Annual Reports for Oz Brewing Limited I was able to answer my questions. The answers to my questions are in the above Oz Brewing Limited History section.  

Oz Brewing Limited New Articles, Websites, Blogs and Videos

The following articles was located on Oz Brewing, click the links to read the articles:

·         Oz Brewing’s 3D Takeover Still Alive

·         Oz Brewing Ltd

·         Oz Brewing Ltd updates on Gabon Potash Acquisition

·         Oz Brewing Granted Trading Halt

·         3DG Transaction Update and 333D Acquisition

·         333D Negotiating Exclusive Distribution Rights for Creopop 3D Pen Technology

Oz Brewing Limited Annual Reports

The following Annual Reports can be found at the following sites:

·         2014 Annual Report for Oz Brewing LTD

·         2013 Annual Report for Oz Brewing LTD

·         2012 Annual Report for Oz Brewing LTD

·         2011 Annual Report for Oz Brewing LTD

Oz Brewing Limited History

Oz Brewing Limited was admitted onto the Australian Stock Exchange in December of 2006 with its principal activity on brewing, distribution, marketing and sales of its Mad Monk range of beers. The way Oz Brewing Limited approached this activity was through licensing, joint venture and through acquisition of established venues. Oz Brewing Limited achieved its first premise due to a Joint Venture arrangement with the Ironbark Brewery in the Sway Valley who brew the Mad Monk beers and retailed the beer range. Through this success Oz Brewing Limited decided to grow its operation by commencing a “Mad Monk Brew Café” which started trading in October 2007. However, there were some delays with getting the Café open relating to the design and fit out activities which meant there was a higher capital cost to recover than was originally anticipated. In 2008 the company was trading steady but Oz Brewing Limited was running out of capital to support the business. In August 2008 Oz Brewing Limited made a decision where they could no longer support Mad Monk and then lead the company in sell 49% of the operating entity of Mad Monk Pty Ltd Emem Management Pty Ltd. Later in 2008 the Company was hit with the Global Financial Crisis which meant there was limited opportunity to raise additional capital for the company and in September 2008 the company was placed in Administration.

In December 2008 a Deed of Company Arrangement was executed which appointed Kevin Ernest Judge and Trident Capital Pty Ltd these companies and people was a shareholder of Oz Brewing Limited. Their job was to restructure and recapitalise the Company and seek reinstatement of the Company on the Australian Stock Exchange. On the 5 October 2010 Mad Monk Pty Ltd was placed into liquidation. However the company was able to raise money in June 2011 through the issue of convertible notes which is now ordinary shares. This allowed the company to pay the Creditor’s Trust in accordance with the terms of Deed of Company Arrangement. The Deed of Company Arrangement was effectuated in June 2011 and the control of the company passed from the administrator back to the Board of Directors. The company was then reinstated on the Australian Stock Exchange and recommence the brewing, distribution, marketing and sales of its Mad Monk Range of beers.

Aside from the Joint Venture activities with Ironbark, Oz Brewing Limited is seeking to gain opportunities in the following areas:

•  Identifying established beer outlets willing to carry part or all of the Mad Monk and Oz Brewing range of beers through their facility, which would be brewed in the first instance through the Joint Venture in line with a normal supplier/retailer relationship
•  Expansion through acquisition or investment of other boutique breweries, though only after a rigorous examination of the different opportunities
• Commencing retail sales of its more popular styles through packaged take home beers
• Considering expansion opportunities through other States and possible overseas.

While looking for these opportunities Oz Brewing will also be exploring all investment opportunities both within and outside the hospitality and beverage industry.

In 2012 the company then entered into a Head of Agreement with Volcan Australia Corporation Pty Ltd to acquire two wholly owned subsidiaries. However, subsequently, the company announced that the resource transactions were not proceeding and legal action against Volcan Australian Corporation Pty Ltd has commenced. Then in April 2013, the Company entered into a Head of Agreement to acquire Monomotapa Gold Limited and its 82% interest in Engrais Gabon, holder of the Gabon Potash Assets. The Gabon Potash Assets has grated concessions and applications which are located over the Aptian Salt Basin and due to this the company was performing legal and technical due diligence which was the principal activities in the 2014 Annual Report.

On the 13 May 2014 the legal proceedings brought against Volcan Australia Corporation Pty Ltd was ended with both companies dismissing their claims against each other with each party bearing its own legal costs in the action. On the 12 August 2014 the Heads of Agreement with Gabon Potash Project did not proceed which lead to the deal being terminated accordingly with no outstanding liability or obligation on either party. Then on 31 July 2014 Oz Brewing Limited announced they are entering into a Heads of Agreement to acquire 3D Group Pty Ltd which focuses on 3D printing. When the agreement has settled the current Oz Brewing directors will retire and will be replaced by directors nominated by 3D Group Pty Ltd. However, 3D Group Pty Ltd was placed into administration on 16^th January 2015 where they have decided to sell the company’s assets to a company called 333D and then Oz Brewing will acquire 333D on the same terms as the proposed deal with 3D Group.  When the takeover is complete Oz Brewing Limited will change its activities to 3D printing.

This information was acquired from the following sites:

·         2014 Annual Report for Oz Brewing LTD

·         2013 Annual Report for Oz Brewing LTD

·         2012 Annual Report for Oz Brewing LTD

·         2011 Annual Report for Oz Brewing LTD

·         Oz Brewing’s 3D Takeover Still Alive

·         Oz Brewing Ltd

·         Oz Brewing Ltd updates on Gabon Potash Acquisition

Rebecca Cavallaro

Hello Everyone,

My name is Rebecca and I am based in Bundaberg on campus. I work part-time at a retail shop in the main street as well as completing an undergraduate Bachelor of Learning Management in Secondary teaching with my major discipline being Accounting and Business and my minor discipline being Mathematics. I am also doing my Diploma of Business parallel with my Bachelor of Learning Management. This is my fourth and final year at University before I get a real job that pays the bills.

I am looking forward to working with you all throughout this course and the conversations based on the course readings and our companies.

Today, I found out I got assigned Oz Brewing as my company. Here is some background knowledge about Oz Brewing:

"Oz Brewing Limited ("Company") is focused on the brewing, distribution, marketing and sales of its Mad Monk range of beers. The company's approach to this process is through licensing, joint venture and possibly acquisition of established venues."

Above information came from http://ozbrewing.com.au/index.php.