Analysis of Vocus Group: Risk Assessment and Corporate Governance

This report provides a comprehensive analysis of the Vocus Group, an Australian telecommunications company, focusing on its risk assessment practices and corporate governance implementation. The report delves into how Vocus Group adheres to the corporate governance fundamentals of the Australian Securities Exchange (ASX), including the structuring of the board, maintenance of ethical conduct, and opportune disclosure of information to shareholders. Furthermore, the report conducts a detailed financial analysis of Vocus Group, examining its income statement, balance sheet, and key financial ratios such as the current ratio and quick ratio. The analysis reveals the company's financial performance, highlighting a significant loss in net income and a decrease in current assets, indicating potential financial distress. The report also examines Vocus Group's risk management policy, emphasizing the importance of addressing risks in the unstable telecommunications sector. The conclusion underscores the need for proactive management to secure the company's operations and protect stakeholder interests, as well as the successful implementation of corporate governance principles.

Running head: AUDIT, ASSURANCE & COMPLIANCE
Name of the Student
Name of the University
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Table of Contents
Introduction:...............................................................................................................................3
How Vocus group implements the corporate governance fundamentals of ASC?....................3
Administration of risks:..............................................................................................................6
Conclusion:................................................................................................................................9
References:...............................................................................................................................10

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Executive Summary:
Since the day business had started, risk was closely associated with it. From the days
of the barter trade, till today’s e-commerce, risk has become an integral part of the business
proceedings. Similarly, proper management of the company has always been necessary for its
overall success. It is important for protecting the interests of the stakeholder of the company.
Through this project, an effort has been made in order to understand the concept of risk
assessment and corporate governance in the context of telecom companies. For this report,
Vocus Group has been chosen as the company for showcasing the risk assessment
proceedings and various financial analysis. How the principles of company governance are
implemented have also been extensively shown.

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Introduction:
Careful assessment of risks and proper governance of any organisation is of
paramount importance to its overall success. Business are always conducted in a risky
environment, nevertheless, the aim of the management of the remains to conduct the business
in a swift and smooth manner. Be it financial risks, material risks of any nature or risks
associated with the environment, safety of employees, the management always aims to find
ways to mitigate these sort of risks. In similar fashion, corporate governance is also
imperative for any organisation’s overall success. Governance of the organisation in
accordance with the established rules and regulations, is necessary for protecting the interests
of the various stakeholders of the business organisation. In this report, a risk assessment
analysis and governance of corporate laws have been made for Vocus Group, a leading
Australian telecommunications.
How Vocus group implements the corporate governance fundamentals of
ASC?
Vocus Group is an Australian telecommunications company, which is based in
Sydney, Australia. It deals in providing high quality wholesale and business
telecommunications services across New Zealand and Australia. It is a young company and
was founded in the year 2008 by entrepreneur James Spenceley (Vocus Group). Since then, it
has become one of the most important telecommunications company in the Australian
telecom market. Its implementation of the corporate rules of ASX are as follows:
 Rock solid foundation for better management: The aim of the board of directors
remains to implement the strategic aims of Vocus along with the protection of the
interest of its stakeholders. It has a board charter which has helped to define the roles
and responsibilities of the board. The board is directly responsible and accountable to

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the CEO of the Vocus. It has delegated the implementation of the daily executive
operations of the company to a special executive team of the company. Every member
of the board and the executive team is accountable to the CEO of the company. A
diagrammatic overview of the composition and tenure of the Vocus team:
(Source: Vocus group)
 Structuring of the board for value addition: The nomination committee of the
company is one of the most important committees of the group. It consists of the
Chair, the Deputy Chair, both of whom are the independent non-executives of the
company. The selection, appointment, re-appointment and removal of the board
members forms the working mandate of the nomination committee. Both the board
and the nomination committee advocates strong understanding and usage of business
skills which are important for Vocus’s retail and wholesale telecommunication. An
overview of the nomination committee is as follows:
(Source: Vocus group)

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 Maintenance of ethical conduct: The code of conduct of the group applies to all the
employees as well as the executive team members of the company. The code set out
the board’s expectation of each employee and member of the group, in accordance
with the honesty and integrity as advocated by the code of conduct charter.
 Guarding of company reports’ integrity: The Company in order to protect the
integrity and inherent transparency of corporate reporting, has established an
elaborate structure for proper presentation of the financial reports. Vocus has
established an Audit committee for ensuring this.
 Opportune disclosure: All the employees, members of the executive team, directors
have an inherent accountability and obligation under the Communications &
Continuous Disclosure Policy, to disclose all the important and sensitive information.
Specific responsibilities are entrusted to the Chair, board, CEO, CFO and the
Company Secretary for ensuring timely publishing and communication of important
information.
 Regarding Shareholder’s rights: The board of Vocus rightly recognises and honours
the importance of information, for every shareholder of the group for their timely
decision making. (Encyclopaedia Of Corporate Social Responsibility, Vocus Group)
This mission is inherent in the Communications & Continuous Disclosure Policy.
This policy oversees the overall disclosure procedure of important information.
 Administration of risks: Risk committee has been established in order to administer
and manage the risks of the company, be it risk of financial nature, environmental,
consumer or any other external risk. A risk committee has been established for this
purpose. They have devised a robust risk management policy to counter the various
kinds of risks associated with the business.

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 Fair remuneration: It has always been the aim of the remuneration committee to
ensure fair and just remuneration to the company’s employees. Remuneration for non-
executives are different from that of the executives and the members of the executive
team. Non executives are not entitled to receive any kind of benefits post retirement.
In this way, the company ensures a proper and better remuneration policies in
accordance with the company’s policies and plans.
Administration of risks:
It has always remained the objective of Vocus to properly manage the risks faced by
the company by taking prior measures. It involves reporting, reviewing, monitoring and
maintenance of a comprehensive risk management policy for addressing the risks of the
concern. The business is primarily involved in the telecommunications sector, which is
pretty unstable in nature, subject to the constant digital demands and up gradations of the
digital media. In addition, there always remains the risk of material misstatement which
might occur internally to present a beautified financial picture to the investors (Emmeret al.).
For this purpose, the auditor of the company must be able to exercise their impartialness and
ethical professional conduct to perform their duties. The analysis of the financial statements
of the company has been done below in order to facilitate a better understanding:

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Common size income statement of the company for the year ended 3st March, 2017:
Particulars 2017 2016 % of Sales (2017) % of sales (2016)
Revenue & Other income 1,821 830 -124.2815209 1294.851794
Enterprise & whole sale Australia 703 398 -47.95549184 620.4368175
Consumer Australia 795 288 -54.27674244 1240.405616
New Zealand 323 145 -2205% 22559%
Others
Underlying EBITDA 366 216 -25.01194621 336.349454
Enterprise & whole sale Australia 364 186 -24.87541812 290.7956318
Consumer Australia 125 60 567.7272727 93.13572543
New Zealand 58 29 -3.925182606 44.61778471
Australian/Group Overheads -51 -29 3.474639907 -44.46177847
netwrok and Technology Costs -112 -31 7.611441054 -47.73790952
Depreciation -88 -37 5.979930371 -57.56630265
Underlying Amortisation -19 -9 1.269711243 -13.26053042
Underlying EBITDA 260 170 -17.74865179 265.5226209
Net Financing costs -41 -24 2.791999454 -38.06552262
Underlying Profit before tax 219 146 -14.97030514 227.4570983
Underlying tax Expense -67 -44.1 4.594170251 -68.79875195
Underlying net Profit after Tax and min. interest 152 102 -10.3966141 158.6583463
Significant items before tax -1,650 -54 112.6356748 -83.93135725
Significant items after tax -1,617 -38 110.3829613 -58.65834633
Net profit/(loss) after tax -1464.9 64 100 100
Income statement is one of the most important aspects of the financial performance of any
company, be it retail, manufacturing, or any other kind of business like telecomm or real
estate. It is also one of the most vulnerable areas of financial mishaps, which must be checked
and controlled by the external auditors of the company (Bonner et al.). On analysis of the
income statement of the Vocus group, it could be seen that in the case of the net income of
the company, the telecom company has incurred a huge loss. When compared with the
financial performance in 2016, the company has faced a loss of 1464.million dollars. This
kind of loss is detrimental to the financial well-being of the company. It could even endanger
the existence of the company. The auditor must immediately report this matter to the senior
management of the company, as it comes within the purview of the duties of the auditor
(Kandasamy et al.). The management must seek to find out the main causes of such a

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disastrous performance of the company in the telecomm sector and work towards its
improvement.
Common size balance sheet of Vocus group for the year ended 31st March, 2017 is as
follows:
Particulars: % of Total of Balance sheet
Current Assets 2017($) 2016($) % of 2017 % of 2016
Cash 50 129 1.2033752 2.7378595
PP&E 1,543 522 36.988206 11.121756
Intangibles 2,212 3,757 53.0252181 79.987652
Goodwill 1,475 2960.3 35.358136 63.023994
Customer intangibles 293 350.2 7.02368396 7.4556641
IRU capacity 144 127 3.44711861 2.697409
Brands and others 182 193 4.3628344 4.1004024
softwares 118 127 2.82145939
Trade receivables 167 144 4.0056573
other assets 199 145 4.77514623
Total assets 4,172 4,697 100% 100%
Liabilities
Loans and borrowings 1,080 889 57.7736152 58.379301
other liabiliites 789 634 42.2263848 41.607565
Total liabilities 1,869 1,523 100% 100%
Absolute Amounts
Analysis:
On careful scrutiny of the balance sheet of the company, it could be said that the impact of
the bad performance of the company in the fiscal year of 2017, is pretty much evident in the
balance sheet of the company. The current assets of the company has suffered significantly,
for example, the cash of the company has significantly decreased from 129 to 50 million
dollars. Lack of liquid funds leads to the failure of honouring the short term obligations of the
company (Emmer et al.). This is a distressing cause for the company’s overall performance.
The company has also seen a decrease in the total assets of the company, which is again a
serious concern for the telecom giant. The loans and liabilities of the company has also

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increased, this has led to a financial distress for the company. Despite improved and
increased investment, the company has seen a dip in its fiscal performance.
Analysis of the most important ratios of the telecom company Vocus Group is as follows:
Ratios 2017 2016
Current ratio 0.063625 0.202967
Quick ratio 0.275412 0.430871
The current ratio of the company has decreased to a significant extent as has been evident
from the dismal fiscal performance of the company. It has decreased from 0.20 to 0.06 in
2017. This states the fact that the company has failed to honour the short term obligations of
the company. The company should have adequate stock of current assets to ensure smooth
working of the company. Moreover, the quick ratio has also decreased from 0.43 to 0.27,
which is a distressing concern for the telecom company. In today’s uncertain business
environment the company must take appropriate measures to decrease the amount of risks.
Conclusion:
In today’s uncertain business world, the advent of risk factors are increasing day by
day, which needs to be addressed. On careful analysis, it has been seen that the telecom
company mentioned in this project has seen a downfall in its overall financial performance
for the year 2017. The management must take all the necessary steps in order to secure the
proper working of the company. Through this project, it has been analysed how successfully
the implementation of the corporate governance principles have been done for protecting the
interests of the shareholders. Along with this, the risk assessment of the company has been
overseen and the financial downturns and problems have been duly pointed out.

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References:
Bonner, Sarah E., Shana M. Clor-Proell, and Lisa Koonce. "Mental accounting and
disaggregation based on the sign and relative magnitude of income statement items." The
Accounting Review 89.6 (2014): 2087-2114.
Emmer, Susanne, Marie Kratz, and Dirk Tasche. "What is the best risk measure in practice?
A comparison of standard measures." (2015).
Encyclopedia Of Corporate Social Responsibility." N.p., 2018. Web. 4 May 2018.
Francis, Bill, Iftekhar Hasan, and Qiang Wu. "Professors in the boardroom and their impact
on corporate governance and firm performance." Financial management 44.3 (2015): 547-
581.
Group, Vocus. "Annual Report | Vocus Group." Vocusgroup.com.au. N.p., 2018. Web. 4 May
2018.
Group, Vocus. "Corporate Governance | Vocus Group." Vocusgroup.com.au. N.p., 2018.
Web. 4 May 2018.
Jiménez, Gabriel, et al. "Hazardous Times for Monetary Policy: What Do Twenty‐Three
Million Bank Loans Say About the Effects of Monetary Policy on Credit Risk‐Taking?."
Econometrica 82.2 (2014): 463-505.
Kandasamy, Narayanan, et al. "Cortisol shifts financial risk preferences." Proceedings of the
National Academy of Sciences 111.9 (2014): 3608-3613.
VOCUS GROUP LIMITED RISK MANAGEMENT POLICY." N.p., 2018. Web. 4 May
2018.