MBA403 Financial Analysis Report: Acacia Coal Company ASX Listed

This report presents a financial analysis of Acacia Coal Company, focusing on its performance in the year ending June 2018. The analysis examines key financial indicators, including gross income, net profit/loss, and dividend payments, comparing them to previous years to identify trends and patterns. The report highlights the company's exploration projects, acquisitions, and share offerings, as well as non-financial factors such as competitive advantage, customer satisfaction, and relevant legislation. The analysis concludes with recommendations for improving the company's financial performance, emphasizing the importance of competitive advantages and the selection of profitable projects. The report uses financial statements and industry research to support its findings and recommendations.

ANALYSIS 1
Finance
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ANALYSIS 2
Executive summary
The listed ASX Company that this assignment will discuss is the Acacia Coal Limited Company.
The main business that Acacia Coal Company engages is the exploration and project
development. The main source of the coal is the tenement around the Bowen Basin situated in
Queensland. The operations of this company takes place in Australia. Some of the assets of the
company include Comet Ridge Coking Coal Project. For several years now, the company have
been identifying, acquiring and exploiting opportunities around the coal resources. These
resources are taken for production and give back coal and thermal cooking. The coal can also be
exported.
Analysis
Considering the financial report for the year ended June 2018 of the Acacia Coal Company, the
company signed two agreements to for the opportunity to explore the projects situated in
Goldfields regions of Western Australia and Pilbara. Other projects included the Mt Bruce
project together with Mt Windara project. According to the director’s report, the consolidated
loss of the company for the year ended 30th June 2018 was at $930,972, however, the 2018 loss
was at $2,470,979. Another issue evident in the report was that the company did not pay any
dividends this year. Some of the events that this company took part in include the following:
a. On 9th August 2018, the company gave out shares worth 400 million to other potential
investors at $0.001 on each share, this move could raise $400, 000 to be spent during
exploration of Mt Bruce and Mt Windara Projects.
b. On 22nd the same month, the group acquired Mt Windara project at a fee of 43,750, 000.

ANALYSIS 3
c. On 27th same month the company offered new shares to assist in raising $2,024,465, the
same was running at $0.001 on every share.
It is important to compare the company’s performance in the year 2018 with other previous
years. In the following table, it will elaborate on profits/loss, income and the dividends the
company have been getting for the past five years.
2014 2015 2016 2017 2018
Gross income Nil Nil Nil Nil Nil
Net
profit/loss
$6,613,382 $213,562 $9,976,890 $2,470,979 $930,972
Share price at
the end of the
year.
0.004 0.002 0.002 0.004 0.001
Paid
dividends
Nil nil Nil Nil Nil
From the table above, it is very clear that 2018 was the year that the company registered low
income. The reasons may be different this will be discussed in the interpretation part.
Interpretation
In this company, some of the financial indicators that one can depend on include, the gross
income, the working capital, the volume of the projects and the amount of shares in the
company. However, from the financial statements provide by the company, it realized the lowest
income in the year 2018. The company mainly deals with mining of coal and some of the factors

ANALYSIS 4
that may influenced its income would include the type of project the company ventures in, the
number of shareholders in the company and the dividend the company leadership pay according
to Williams, and Dobelman, (2017: p.150). For example, in this financial year report, it indicates
that the company management did not pay any dividend. At no moment the leadership approved
payment of the dividends. The act of paying dividends in every company always reduce its
assets. However, Flower and Ebbers, (2018: p.67) stated it is crucial that even though this
company did not pay any dividend, it is still registering low income in the financial year. The
other indicator is about the shares of the company. In this financial year, the company sold a lot
of shares to other people. When a company sells its shares, Schroeder, Clark and Cathey, (2019:
p.90) said that the shareholders also becomes the members of the company. The effect of
increased shareholders is the way the company makes its decision. The shareholders must take
part in decision making, these delays the company’s project further.
From the financial statement of this company, what have affected its net income in the year is the
choice of the project. The coal project are expensive and thus the company would spend more
income on the cost of generating the products. For example payment of the employees and hiring
of the powerful machines. From the balance and the statement of the financial position the
company incurred huge cost of the process. Another important notable thing in this institution is
the change in leadership. The company have always changed the leaders who have brought
different level of income in the industry.
Some of the non-financial indicators that could also affect this company’s income include:
a. Competitive advantage
The competitive advantage is to do with the things that the company can different from
the other companies in the same field according to Corbet et al, (2019: p.44). When a

ANALYSIS 5
company is able to identify competitive advantage, it attracts more customers than other
industries which compete it. For example in this case it is a mining company. The report
of the financial year showed a poor performance which means that the company is yet to
identify competitive advantage factors.
b. Satisfaction of customers.
For a company to get more customers, Vogel, (2016:p.98) argued that they must invent
more ways of attracting and serving the customers. For instance, the Acacia Coal
Company needed to produce high quality coals and provide after sale services to the
customers to assist them in getting more sales.
c. The legislation in the country
The company operates in Australia and there are AASB standard that the company need
to consider. When the company considers the current and future legislation, it can realize
positive financial improvement in other years.
Conclusion
From the financial record by the Acacia Coal Company, it indicates they need to do something to
improve on their profits. One of the things to recommend to this company is to analyze the
factors that could ensure that they have competition advantage over the other companies. The
second thing is to analyze the quality of the project before venturing into the idea. Some of the
projects require a lot of finance but low return.

ANALYSIS 6
References
Acacia Coal Company Financial report for the year ended June 2018, retrieved
from:http://www.openbriefing.co.uk/AsxDownload.aspx?pdfUrl=Report%2FComNews
%2F20190312%2F02085438.pdf
Corbet, S., Lucey, B., Urquhart, A. and Yarovaya, L., 2019. Cryptocurrencies as a financial
asset: A systematic analysis. International Review of Financial Analysis, 62, pp.182-199.
Flower, J. and Ebbers, G., 2018. Global financial reporting. Macmillan International Higher
Education.
Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2019. Financial accounting theory and
analysis: text and cases. John Wiley & Sons.
Vogel, H.L., 2016. Travel industry economics: a guide for financial analysis. Springer.
Williams, E.E. and Dobelman, J.A., 2017. Financial statement analysis. World Scientific Book
Chapters, pp.109-169.