Accounting Research Project: East Energy Financial Performance Report

This accounting research project assesses the financial performance of East Energy Resources, focusing on the years 2015 and 2016. The study evaluates corporate governance, financial performance, and sustainability disclosure practices. The financial analysis reveals poor profitability and liquidity positions compared to AGL. Key findings include negative net margins, high debt-equity ratios, and a lack of dividend payments. The report suggests strategic measures to improve performance, such as attracting shareholders and streamlining operations. Additionally, the analysis touches upon carbon disclosure policies and emphasizes the need for East Energy to address environmental concerns. The conclusion highlights the need for technological advancements and improved financial strategies for East Energy to enhance its overall financial health and competitiveness in the market.

Accounting Research Project

ABSTRACT
Objective: The main objective behind carry out the present study is to assess challenges
which are facing by East Energy pertaining to the aspects of corporate governance, financial
performance and sustainability disclosure practices.
Methods: For analyzing and evaluating the aspects of corporate governance as well as
financial performance annual reports of East Energy resources in relation to the year of 2015 &
2016 has been considered.
Results: By doing financial assessment, it has found that profitability and liquidity
position of East Energy was poor in the year of 2015 and 2016.
Conclusion: It can be concluded from overall evaluation that financial performance of
East Energy was poor in 2015 & 2016 as compared to AGL. Thus, East Energy is required to
take strategic measures or actions for making improvement in performance.

TABLE OF CONTENTS
PART 3: PERFORMANCE TRENDS............................................................................................1
Financial analysis.........................................................................................................................1
Carbon disclosure policies...........................................................................................................2
Suggestions..................................................................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4
APPENDIX......................................................................................................................................5
Financial performance.................................................................................................................5

PART 3: PERFORMANCE TRENDS
Financial analysis
See appendix
By doing assessment of financial data set, it has found that in the year of 2015 and 2016
net margin of East energy resources was negative such -2 & -51 respectively. Hence, in both the
concerned years business unit failed to generate sales revenue which in turn resulted into
negative margin. On the other side, net profit margin of AGL energy resources was -3.17% at the
end of 2016. Hence, by considering the financial trends and aspects it can be said that due to
having high indirect expenses negative margin was generated by AGL irrespective of having
sales revenue of $11150. On the basis of such evaluation, it can be said that profitability aspect
of Easy energy was not good in the financial year 2015 & 2016 over the rival firms. Thus, East
energy resources are required to take strategic measures for creating demand in relation to the
products or services offer by it.
Liquidity ratio analysis presents that in 2015 & 2016, there was no current liabilities
pertaining to the business operations and functions of East Energy. Thus, now company can
make use of assets in other productive activities and thereby would become able to enhance
revenue as well as margin. On the other side, in 2016, current and quick ratio of rival firm, AGL
Energy, accounted for 1.41 & 1.24 respectively (Financial statements of AGL, 2017). In
accordance with the ideal ratios it can be said that AGL energy was capable enough in relation to
meeting obligation from current assets. Thus, East energy should take resort of creditors,
overdraft facility etc. by considering the ideal ratio such as 2:1.
Outcome of debt-equity ratio clearly shows that solvency position of AGL was sound in
the year of 2016 as compared to East Energy. Moreover, in FY 2016, debt-equity ratio of East
Energy rose by .40 to 11.5 respectively (Financial statements of East Energy, 2017). This aspect
shows that, in the year of 2016, East Energy fulfilled its financial needs from debt sources rather
than equity. Further, debt-equity position of the company was higher than the ideal ratio such

as .5:1. Hence, by considering such aspects it can be presented that for making improvement in
the solvency position East Energy is required to issue more equity rather than taking resort of
only debt sources.
Financial statement analysis of both East Energy and AGL exhibits that both the
companies failed to offer enough earnings to the investors pertaining to per share. The main
reason behind this, negative profit margin which was generated by East Energy and AGL in 2015
& 2016. Further, no dividends were offered by East Energy to the shareholders due the lack of
profit or the condition of loss. In comparison to this, with the motive to maintain the faith of
shareholders AGL offered .94 in the form of dividend per share irrespective of having negative
margin. Thus, on the basis of overall evaluation, it can be said that financial position and
performance of East Energy Resources Ltd was not good in the accounting year 2015 & 2016.
Carbon disclosure policies
East Energy Resources has accountability to take initiatives for the well-being or welfare
of society. Business operations or activities of East Energy produce carbon and other substances
that may cause of environmental pollution. Thus, company is responsible for taking corrective
measures in relation to exerting control on the same. As per BBC 1 and GHGE, East Energy is
required to take strategic action which in turn positively contributes in both climatic aspects and
welfare of society. On the basis of policies and process company should make focus on taking
actions that avoids wastage of water and other resources to a great extent.
(Source: 2015 annual report of East energy resources limited, 2017)

(Source: Annual report of East energy resources limited, 2017)
Suggestions
On the basis of overall evaluation, it is suggested to East Energy Resources that
management team of the firm should lay emphasis on attracting large number of shareholders.
This in turn helps firm in reducing the interest burden and thereby improves profitability and
solvency aspects. Moreover, in shares, business unit offers dividend to the shareholders only
when it generates enough profit margin. Along with this, it is recommended to East Energy that
emphasis needs to be placed on streamlining business operations and functions pertaining to the
activities such as oil and gas exploration as well as production. By doing this, firm would
become able to get high margin and provide investors with higher returns in the form of
dividend.
CONCLUSION
By summing up this report, it has been articulated that profitability and solvency position
of East Energy was not good as compared to AGL. Thus, it can be stated that East Energy needs
to make focus on the adoption of latest technological aspect which in turn maximizes both
productivity and profitability. Besides this, as per the solvency position East Energy should lay
emphasis on issuing 1 debt in against to 2 equities.

REFERENCES
East energy resources limited. 2017. [Pdf]. Available through:
<http://www.eastenergy.com.au/wp-content/uploads/2011/03/2-2-Annual_Report_2015-
final-signed-with-audit-pages.pdf>.
2016 annual report of East energy resources limited. 2017. [Pdf]. Available through:
<http://www.eastenergy.com.au/wp-content/uploads/2011/03/EER-ASX-20160923-EER-
Annual-Report-FINAL-with-audit-pages.pdf >.
Financial statements of AGL Ltd. 2017. [Online]. Available through:
<http://financials.morningstar.com/ratios/r.html?t=AGLNF&region=usa&culture=en-
US>.
Financial statements of East Energy. 2017. [Online]. Available through:
<http://financials.morningstar.com/balance-sheet/bs.html?
t=XBER:3HK&region=deu&culture=en-US>.

APPENDIX
Financial performance
FY 2015 FY 2016
Revenue from
ordinary activities
(1) 0
Net profit for the year 0 0
Ratios Formula East
energy
resource
s (2015)
East
energy
resources
(2016)
AGL
Energy
Ltd
(2016)
($'000) ($'000) ($'000)
Profitability
ratios
Sales revenue - - 11,150
Net profit -2 -51
-408
Net margin Net
profit/total
sales *100
-3.7%
Liquidity Ratio
Current assets 1 1
3,587
Inventory - -
414
Current
liabilities
0 0
2553

Current ratio Current
assets/current
liabilities
- -
1.41
Quick ratio/acid
test ratio
(Current
assets -
Stock)/Current
liabilities
- - 3173 /
2553 =
1.24
Solvency/gearing
ratio
Long-term debt 21 23
3067
Equity 52 2 7926
Debt-equity
ratio
(Long-term
Debt/ Equity
capital
employed
0.40 11.5
0.39
Investment ratio
DPS 0.94
Earnings per
share
-0.01 -0.14
-0.6
Carbon disclosure practices
BBC I Climate change: Risks and opportunities Measure
CC1 Risks and actions for climate management 0
CC2 Assessing financial performance 0
CC3 Opportunities for climate management 0
BBC 2 Greenhouse gas emissions (GHGE) 0

GHG 3 GHGE 0
BBC 3 Energy consumption accounting 0
EC1 Energy consumed 0
EC2 Quantification 0
EC 5 Comparison with PY 0
BBC 4 GHGE reduction and costs 0
RC1 Plan details 0
RC2 Specification of emission 0
RC 3 Reduction achievements 0
Total score 0