HI5020 Corporate Accounting: Financial Analysis of ASX Mineral Firms

This report provides a comparative financial analysis of three ASX-listed companies in the Australian minerals industry: Australian Bauxite Limited, Australian Mines Limited, and ATECO Minerals Limited (formerly Monax Mining Limited). The analysis focuses on equity and liabilities, cash flow statements, other comprehensive income statements, and accounting for corporate income, utilizing the companies' annual reports from the past two years. The equity analysis details issued capital, reserves, and accumulated losses, while the liability section examines current and non-current liabilities. The cash flow analysis covers operating, investing, and financing activities, and the report concludes with a comparison of corporate income accounting practices among the three companies. The report highlights variations in cash flow generation and capital structure strategies.

Accounting
Assignment

A comparative analysis of the Financial
Information
Prepared by
Student Name:
Date: 31st January, 2019
Page 1

Executive summary
This report is intended to present the brief summarized financial comparison of the equity and
liability, cash flow statement and other comprehensive income statement and the measure for the
accounting for the corporate income of the three ASX listed companies in the Australian
minerals industry naming Australian Bauxite limited, Australian Mines Limited and ATECO
Minerals Limited formerly known as Monax Mining Limited. To assist our study, the latest
annual report of all the companies for last two years have been analyzed.
Page 2

Table of Contents
Introduction................................................................................................................ 5
Main Body................................................................................................................... 6
Equity and Liability..................................................................................................... 6
Comparative position of the Debt and Equity of the latest financial year................10
CASH FLOW STATEMENT.......................................................................................... 11
v. Comparative analysis of broad categories of the cash flows for the three years..16
vi. Comparative understanding from the above in relation to the three companies
................................................................................................................................. 18
OTHER COMPREHENSIVE INCOME STATEMENTS......................................................19
ACCOUNTING FOR CORPORATE INCOME..................................................................20
Conclusion................................................................................................................ 21
References............................................................................................................... 22
Page 3

Introduction
Our study is aimed at making a comparative analysis of the elements of the financial information
of the three ASX listed companies engaged in the Minerals Industry. The main areas covered by
our study are equity and liabilities, cash flow statement, other comprehensive income statement
and accounting for corporate income. The three companies as chosen for our analysis are
Australian Bauxite Limited, Australian Mines Limited and ATECO Minerals Limited, which
was earlier known as Monax Mining Limited.tc 3452
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Main Body
Equity and Liability
Equity basically consists of the equity share capital and the reserve and surplus or in other words
the retained earnings of the company. When we talk about the liability it can be of two types
which are long term and the short-term liability. In the general accounting terms, it is known as
Current liability and the Noncurrent liability. Current liability includes the items which are
repayable in a period of one year, whereas the long-term liability can be paid in more than one
year. In terms of considering the capital structure of the company we always mean the non-
current liability or the long-term debt (Borit & Olsen, 2012).
i. Details of the Equity of the three companies are provided hereunder the table
Australian Bauxite Limited
Particulars 2017($000) 2016($000) 2015($000)
Issued capital 25075 24823 24740
Reserves 593 593 593
Accumulated
losses
(8353) (8532) (8369)
Total 17315 16884 16964
From the above items listed from the consolidated financial position of the
Australian Bauxite limited its equity primarily consists of the three items, the first
being raised through the issue of the shares, the second being the reserve and the third
being the Accumulated losses.
During the year 2015, the opening balance of the issued capital was $24483627 and
further issue made during the year was $256620 that made the final figure of $27740,
during the year 2016 the share placement fund received were $583380 from which
the share placement cost of $580600 was deducted and the further share issued in lieu
of services were $80000 (Kang, et al., 2016).
There has not been any change in the figure of the reserve as it could be depicted
from the above tables.
Page 5

The accumulated losses of the above table resulted from the past years losses
cumulative balances which showed that in 2016 the result of the operation was loss
hence accumulated loss figure increased, but the result of operation for the year 2017
was profit that caused the decrease in the total accumulated loss figure in the year
2017 (Epstein, 2018).
Australian Mines Limited
Particulars 2018($000) 2017($000) 2016($000)
Contributed Equity 67076 45062 37243
Reserves 3013 1573 1550
Accumulated losses (41820) (36497) (34821)
During the year 2015, the opening balance of the equity was lying as $34455957;
addition to this was made through the further issue of $3025000 and from it the cost
of the issue was deducted $237580 and the final figure thus came as $37243376.
During the year 2016 the further issue made, and the cost of issue was deducted, and
the similar things can be noticed in the year 2018.
The figure of the accumulated reserve is primarily because of the share-based
payments made to the employees and directors in the company and finally the
accumulated losses were the result of losses resulting from the operation of that year
(Grundy, et al., 2017).
Monax Mining Limited
Particulars 2018($000) 2017($000) 2016($000)
Issued capital 24127 23085 21583
Reserves 85565 42165 785
Accumulated losses (23851) (22446) (21609)
Total 361 681 758
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The first item of the issued capital primarily consisted of issue made during the year
from which the cost of the issue had been deducted; the reserve was the result of
options issued during the year and the reserve accumulated because of sale of asset
(Truong, et al., 2008).
ii. Details of the Liability of the three companies are provided hereunder the table
Australian Bauxite Limited
Particulars 2017($000) 2016($000) 2015($000)
Current Liabilities
Trade and
miscellaneous
payables
905 890 2256
Employee Benefits
Provisions
119 101 106
Other liabilities 21 9 0
Non- current
liabilities
Employee Benefits
Provisions
85 73 79
Other liabilities 435 435 435
Total 1565 1509 2877
Particulars 2017($000) 2016($000) 2015($000)
Current Liabilities
Trade and other
payables
905 890 2256
Employee Benefits
Provisions
119 101 106
Other liabilities 21 9 0
Page 7

Non- current
liabilities
Employee Benefits
Provisions
85 73 79
Other liabilities 435 435 435
Total 1565 1509 2877
From the above table it is quite clear that the short-term trade payable had been
decreased in the year 2016 and showed a bit increase again in the year 2017, though no
major changes noticed for the employee benefits either as current and noncurrent
liabilities during the last three years and the other noncurrent liabilities remained
constant in last three years (Webster, 2017).
Australian Mines Limited
Particulars 2018($000) 2017($000) 2016($000)
Current Liabilities
Trade and
miscellaneous
payables
3388 98 460
Employee Benefits
Provisions
92 40 30
Other liabilities
Non- current
liabilities
Employee Benefits
Provisions
0 0 0
Page 8

Other liabilities
Total 3480 138 490
Particulars 2018($000) 2017($000) 2016($000)
Current Liabilities
Trade and other
payables
3388 98 460
Employee Benefits
Provisions
92 40 30
Other liabilities
Non- current
liabilities
Employee Benefits
Provisions
0 0 0
Other liabilities
Total 3480 138 490
From the above table it is quite evident that short term payables drastically increased
for the company though initially it showed the decrease in the year 2016 when
comparing with the year 2015, the same can be seen for the employee benefits
provision, but its capital structure did not have any long-term liability.
Monax Mining Limited
Particulars 2018($000) 2017($000) 2016($000)
Current Liabilities
Trade and 113 278 162
Page 9

miscellaneous
payables
Provisions( short
term)
6 0 0
Non- current
liabilities
Liabilities (Long
term)
0 0 0
Total 119 278 162
Particulars 2018($000) 2017($000) 2016($000)
Current Liabilities
Trade and other
payables
113 278 162
Short term
provisions
6 0 0
Non- current
liabilities
Long term
Liabilities
0 0 0
Total 119 278 162
For the Monax Mining the amount of the short-term payables had been showing a
declining trend and again there is absence of long term debt.
Page 10

Comparative position of the Debt and Equity of the latest
financial year
Particulars Australian
Bauxite
Limited
2017($000)
Australian
Mines
Limited
2018($000)
Monax
Mining
Limited
2018($000)
Equity 17315 28269 361
Debt 520 Nil Nil
Total 17835 28269 361
From the above it is quite clear that the Australian Mines Limited had the highest
volume of equity with no debt, whereas the Monax mining had the lowest amount of
equity contribution with no debt and the Australian Bauxite limited had a composition
of the debt and equity but to an optimum level (Pamela & Tamara, 2013).
CASH FLOW STATEMENT
Often it is questioned that a company which is showing huge book profit or the accounting
income but is unable to pay the dividend or other cash obligations. To know the reason where the
company has used its cash and cash equivalent the statement which is prepared is known as cash
flow statement. It basically consists of Cash flow from operating activities, cash flow from
investing activities and the cash flow from the financing activities. Cash flow from operating
activities generally reflect the cash inflow or outflow resulted from the operation or in other
words from the core operation of the business (Kaufmann, 2017). Similarly, the cash flow
from financing activities show those figures that resulted from the proceeds from the issue of
long term debt and equity, similarly the repayment of the debt and the share capital, payment of
dividend etc. Cash flow from financing activities show the major investment made by the
company in the fixed assets so that ling term revenue can be generated from it. In our case all the
three companies are from the same industry but showing the variation in terms of the generation
of the cash flow (Vieira, et al., 2017).
iii. Australian Bauxite Limited
Page 11

Particulars 2017($000) 2016($000) 2015($000)
A. Cash flow
from
operating
activities
Receipts from
customers
1900 2583 7.8
Payment to
suppliers, service
providers and
employees
(2630) (2980) (6202)
Interest paid (14) (56)
Interest received 28 44 110
Net cash used in
operating
activities
(716) (409) (6084)
B. Cash flow
from
investing
activities
Investment in Plant
and equipment
Investment
Acquisition
Repayment from/
Advance to
customers/suppliers
133 52
Government fund
refunded
675 1257 1467
Net cash provided
by investing
activity
808 1257 1519
C. Cash flow
from
financing
activity
Page 12

Issue of shares 262 256
Costs of issuing
shares
Advance from/
repayment to other
parties
(760) 1094
Net cash used in
financing activities
(498) 1351
Net increase/
(decrease) in cash
and cash
equivalents
92 350 (3214)
Particulars 2017($000) 2016($000) 2015($000)
Cash flow
from
operating
activities
Receipts from
customers
1900 2583 7.8
Payment to
suppliers, service
providers and
employees
(2630) (2980) (6202)
Interest paid (14) (56)
Interest received 28 44 110
Net cash used in
operating
activities
(716) (409) (6084)
Cash flow
from
investing
activities
Acquisition of
Plant and
equipment
Acquisition of
Page 13

Investment
Repayment from/
Advance to other
party
133 52
Government fund
refunded
675 1257 1467
Net cash provided
by investing
activity
808 1257 1519
Cash flow
from
financing
activity
Proceeds from
issue of shares
262 256
Share issuing costs
Advance from/
repayment to other
parties
(760) 1094
Net cash used in
financing
activities
(498) 1351
Net increase/
(decrease) in cash
and cash
equivalents
92 350 (3214)
From the above table it is quite clear that under the operating activities payment to
suppliers decreased in last three years, the interest received amount too declined. In
terms of financing activities, the amount of government grants too deceased. In terms of
financing activities, no shares were issued in the year 2018. Finally, net cash and cash
equivalent started showing the positive trend at a declining rate (Kang, et al., 2016).
Australian Mines Limited
Particulars 2018($000) 2017($000) 2016($000)
Page 14

A. Cash flow
from
operating
activities
Receipts from
customers
Sundry Income .23
Payment to
suppliers, service
providers and
employees
(3778) (1505) (578)
Interest paid
Interest received 5 7 13.86
Net cash used in
operating
activities
(3773) (1498) (563)
B. Cash flow
from
investing
activities
Acquisition of Plant
and equipment
(120) (15)
Payment for
exploration and
evaluation
(8364) (3077) (1209)
Payment for
exploration
acquisitions
(5411)
Net cash provided
by investing
activity
(13896) (3092) (1209)
C. Cash flow
from
financing
activity
issue of shares 22014 7712 2893
Share issuing costs
Page 15

Advance from/
repayment to
customers/suppliers
Net cash flow
from/ used in
financing activities
22014 7712 2893
Net increase/
(decrease) in cash
and cash
equivalents
4346 3122 1119
Particulars 2018($000) 2017($000) 2016($000)
Cash flow from
operating
activities
Receipts from
customers
Sundry Income .23
Payment to
suppliers, service
providers and
employees
(3778) (1505) (578)
Interest paid
Interest received 5 7 13.86
Net cash used in
operating
activities
(3773) (1498) (563)
Page 16

From the above it is well evident that due to the significant increase because of
payment to suppliers the resultant cash flow from operation went highly negative,
similarly significant investment were made for exploration and evaluation assets and
because of which the significant amount of capital was raised through the issue of
shares (Wellmer, 2018).
Monax Mining Limited
Particulars 2018($000) 2017($000) 2016($000)
A. Cash flow
from
operating
activities
42
Receipts from
operations
Payment for
operations
(565) (529) (610)
Payment to
suppliers, service
providers and
employees
Interest paid
Interest received 6 15 9
Net cash used in
operating
activities
(559) (513) (558)
B. Cash flow
from
investing
activities
Page 17

Acquisition of
Plant and
equipment
5.23 2.48
Payment for
exploration and
evaluation
(621) (574) (357)
Cash call joint
venture activities
(312)
Proceeds from sale
of plant and
equipment
30.58 11 7
Proceeds from sale
of mining
tenements
44 22
Net cash provided
by investing
activity
(551) (543) 662
C. Cash flow
from
financing
activity
Proceeds from
issue of shares
1065 1503 343
Share issuing costs (81) (96) (43)
Advance from/
repayment to other
parties
Net cash low
from/ used in
financing
activities
984 1407 300
Net increase/
(decrease) in cash
and cash
equivalents
(125) 349 (920)
From the above the cash flow from operations showed almost a constant state, similarly
no drastic change has been noticed in the investing activities, though the proceeds from
Page 18

the issue of shares showed an increasing trend in 2017 and finally a declined tendency
in the year 2018 (Cundill, et al., 2017).
v. Comparative analysis of broad categories of the cash
flows for the three years
Australian Bauxite Limited
Particulars 2017($000) 2016($000) 2015($000)
Net cash used in
operating
activities
(716) (409) (6084)
Net cash provided
by investing
activity
808 1257 1519
Net cash used in
financing
activities
(498) 1351
Net increase/
(decrease) in cash
and cash
equivalents
92 350 (3214)
Australian Mines Limited
Page 19

Particulars 2018($000) 2017($000) 2016($000)
Net cash used in
operating
activities
(3773) (1498) (563)
Net cash provided
by investing
activity
(13896) (3092) (1209)
Net cash used in
financing
activities
22014 7712 2893
Net increase/
(decrease) in cash
and cash
equivalents
4346 3122 1119
Monax Mining Limited
Particulars 2018($000) 2017($000) 2016($000)
Net cash used in
operating
activities
(559) (513) (558)
Net cash provided
by investing
activity
(551) (543) 662
Net cash low
from/ used in
financing
activities
984 1407 300
Page 20

Net increase/
(decrease) in cash
and cash
equivalents
(125) 349 (920)
From the above Three tables it is well evident that the latest year figures for all of the
above companies showed that there is negative cash flow generated for all and out of
which it is the Australian mined limited which is having the highest negative figure, the
investing activities of the latest year reflected the fact that only Australian Bauxite
limited could generate positive cash flows (Charles H, et al., 2015). Australians
mines limited made huge investment and similarly Monax limited too made significant
investment under this head and in terms of the financing activity it is seen that in the
latest year Australian Bauxite limited did not raise any fund through the issue of the
shares, but rest of the two companies significantly resorted to the same.
vi. Comparative understanding from the above in relation
to the three companies
It is quite evident from the above analysis that Australian mines limited significantly contributed
and made major improvements in the generation of the positive cash flows and for the Monax it
is quite a pity situation, though Australian Bauxite limited made improvements in terms of
generation of the cash flow.
OTHER COMPREHENSIVE INCOME STATEMENTS
Other comprehensive incomes are such categories of the income which are basically
extraordinary in nature and they generally do not reflect the true picture of the income but are
considered while making the calculation of the statement in the changes of the equity as they
from the part of the equity. It is separately representeddisclosed in the financial statement.
vii. In case of Australian Bauxite Limited no comprehensive income, items had been
reported in any one of the above financial years, i.e., 2017, 2016 and 2015.
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In case of Australian Mines Limited the similar things had been found and the similar
trend has been evident from the financial statement of the Monax Mining limited.
viii. The major reasons of reporting the comprehensive items separately and not in the
consolidated income statement is that in incorporates a long detail list of the income and
its detailed presentation is not possible in the brief income statement, hence it is to be
separately reported. But the major reason behind the separate disclosure of this is that
these are generally the extraordinary items not generated from the regular operations of
the company. If these are to be included in the profit and loss account or the normal
income statement, then unnecessarily it shall inflate the profit that may not be the true
and fair presentation of the result form operation (Cayon, et al., 2017).
ix. As there is no item of comprehensive income reported in any of the financial years in
case of any one of the above companies, hence there is no scope for the presentation of
the comparative analysis in this case.
x. No for the evaluation of the managers performance, the comprehensive income should
never be included. The first reason behind the same is that these incomes are never
generated due to their contribution but occurs due to some extraordinary events took
place.
ACCOUNTING FOR CORPORATE INCOME
XI. The amount of the tax expenses as shown in the financial statement of the Australian
Bauxite Limited for the year ending 2017 is Nil.
For the Australian Mines Limited for the financial year ending 2018 it is Nil.
For the Monax Mining Limited it is again nil because of which the benefit obtained was $12223.
Xii. There is no scope for calculation of the effective rate of the tax for all the above three
companies. There reason for the same is that all the three companies incurred losses, hence none
of them had to pay any income tax.
Xiii. For the Australian Bauxite limited though the deferred tax asset and liability existed but not
recognized during the financial year ending 2017 and 2016. The major items that resulted the
same was deferred tax liability arose due to other deductible temporary differences, deferred tax
Page 22

assets arose due to the exploration activities and at the same time there was deferred tax liability
arose due to the exploration activities (Boghossian, 2017).
In Case of the Australian Mines Limited it is due to the tax losses but again the same had not
been recognized.
In case of the Monax Mining limited, it had again been not recognized since asset is not meeting
the recognition criteria.
The primary reasons for giving birth the factor of the deferred tax asset or the deferred tax
liabilities is difference in the Accounting income and the taxable income. It is because taxable
income is calculated as per the provisions of the relevant taxation; laws whereas the Accounting
income is also calculated keeping in mind the relevant generally accepted accounting principles.
Again, it is to be kept in mind that these differences are always temporary in nature. There is
always the prospect that it shall get reversed.
Xiv. There is no deferred tax asset or deferred tax liabilities recognized in any one of the
companies in anyone of the above financial years chosen for our analysis. Hence there is no
scope for such comparison for showing the comparative amount of increase or decrease in the
figure of the deferred tax assets or the deferred tax liabilities (Wendt, 2018).
At the same time, it is to be kept in mind that though the deferred tax asset or liability arose in
case of the above companies, but the recognition criteria was not met by themthey did not meet
the recognition criteria, hence not recognized.
Xv. In case of above three companies there is no scope for the calculation of the cash tax amount
using the book tax amount, deferred tax assets and the deferred tax liabilities as all the
companies incurred losses and finally there is no amount of book profit or the accounting profit.
If there is no book profit and at the same time it is well evident that though in case of the above
companies deferred tax asset and the deferred tax liabilities arose but was not recognized or it
remained unrecognized. Hence taking this unrecognized figure, the calculation of the cash tax
may depict the wrong picture (Abdullah & Said, 2017).
Xvi. For the calculation of the cash tax rate the basic requirements are the tax expenses as per the
financial statement and the deferred tax assets and liabilities recognised in the financial
statement. But in the given case both of the above requirements are not satisfied by any one of
the above companies in any one of the above financial years. Hence cash tax rate is not possible
to calculate.
Xvii. The major reason behind the difference between cash tax rate and the book tax rate is that
the book tax rate is simply calculated by dividing the tax expenses shown in the books by the
Page 23

amount of the profit before taxes, whereas the cash tax rate is calculated on the basis of an
average rate for which EBDIT is considered and for this adjustment is required.
Conclusion
From the above it is quite clear that the changes in equity and debt, the cash flow statement and
the comprehensive income play a majorsignificant role in determiningthe determination of the
performance of all the above three companies in the mining industries of the Australia. All have
some unique feature associated with its cash flow, equity and the debt.
But one major factor that is to be kept in mind is that all required huge investment but are
significantly lacking the source to have more cash flow to be generated, hence are highly
dependable on the owners’ equity and the long-term debt.
This analysis further says it is quite difficult for the mining industry to generate the positive cash
flow. As it demands the long gestation period to recover and make it a fruitful business.
Page 24

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