Delivery in day(s): 4
ACCY801 Business Accounting Report Editing and Proof Reading Services
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.
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
Experience in business, corporate law, finance and investment banking. He is CEO of legal firm from 1997 to 2015.
Chairman of Federation Limited, Australian institute of Company Directors, ACID Corporate Governance Committee, Alumina Ltd, Myer Holding Ltd, tec.
2: Sandeep Biswas
B.Eng. (Chemical) (Hons.)
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.
Director of Minerals Council of Australia
3: Gerard Bond
B.Com, Graduate Diploma Applied Finance and Investment, CA, F Fin
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.
No other directorship
4: Philip Aiken AM
Philip Aiken AM
B.Eng. (Chemical), advanced Management Program (HBS)
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.
Chairman of Aveva group Plc and Balfour
5: Vince Gauci
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.
Chairman of broken hill Community Foundation
He will retire from board of Newmont Australia Limited w.e.f. end of 2015 Annual General Meeting
6: Lady Winifred Kamit
Lady Winifred Kamit
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.
Director of Steamships trading Company limited. Director of Post courier ltd, South pacific Post Limited, ANZ banking group, etc.
7: Richard Knight
BSc. (Mining Engineering), MSc. (Mine Production management), Charted Engineer, FAICD
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.
Chairman of Mining Engineering Advisory Board, Monash University and Director of Mining Education Australia
8: Roger Higgins
BE (Civil engineer) (Honours), M. Sc (Hydraulics), PhD (Water resources)
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.
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
Rick Lee AM
B.Eng. (Chemical) (Honours), MA (Econ) (Oxon), FAICD
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.
Chairman of Oil Search limited. He was deputy chairman at Ridley Corporation Limited and Salmat limited
10: Xiaoling Liu
PhD (Extractive Metallurgy), B.Eng. (Extractive Metallurgy), MAICD, FAusIMM
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.
No other directorship
11: John Spark
B.Com, FCA, MAICD
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.
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:
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
Safety and sustainability
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:
Amount received or due by Ernst & Young for audit and review of financial reports, tax advisory and accounting advisory
Amount due or received by related parties of Ernst & Young
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
Current assets / current liabilities
1384 / 663
Quick assets / current liabilities
(1384 – 806) / 663
Cost of Goods Sold / Average inventory
3319 / ((806 + 800) /2)
4.13 or 4 days
Accounts Receivable ratio
Net Credit Sales / Average Accounts Receivable
4344 / ((206 + 169)/ 2)
23.17 or 23 days
Sales Revenue / Total assets
4344 / 15368
0.28 times or 28.26 %
Debt to Equity
Outside Debt / Equity
(4019 + 460) / 9059
Gross Profit Margin
Gross Profit / Sales revenue * 100
1025 / 4344 * 100
Net profit / Sales revenue * 100
560 / 4344 * 100
Return on Assets
Net Profit / Average Total Assets * 100
1025 / ((15368 + 13587) / 2) * 100
Return on Equity
Net Profit / Equity * 100
1025 / 9059 * 100
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:
% of issued capital
1: HSBC Custody Nominees (Australia) Limited
2: National Nominees Limited
3: J P Morgan Nominees Australia Limited
4: Citicorp Nominees Pty Limited
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).
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.
- 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.