ACCT13017 – Financial Statement Analysis



ACCT13017 – Financial Statement Analysis Assignment Stage 1 (ASS#1): Understanding the Past STEP THREE: My Profile: Link to Profile My Blog: Link to my Blog My company website: Southern Cross Austereo Links to Financial Statements: HYPERLINK "" 2019 Annual Report2018 Annual Report HYPERLINK "" 2017 Annual Report Company BackgroundMy Blog: Background information of my company Before I get into the financial statement analysis here is a blog with some background information on my company.? I am sure that most of you would have heard of my company SCA which stands for Southern Cross Austereo they deliver entertainment media solutions across an unrivalled portfolio of Australian multimedia banks. SCA is Australia’s biggest entertainment company they have the ability to reach more than 95% of the Australian population through their radio, television and digital assets.SCA is led by the Triple M and Hit Networks, SCA owns 86 radio stations plus an additional 10 digital radio stations across metropolitan and regional Australia and represent another 36 regional radio stations.SCA broadcasts 92 free to air TV signals across regional Australia with Nine Network, Seven Network and Network Tens programming. All supported by leading social media, live events, video, online and mobile assets that deliver national and local entertainment and news content. SCA is committed to delivering the best entertainment, music, sport, comedy and big events. With their vision being to provide services that covers most of regional Australia, with affiliation arrangements with all the metropolitan commercial networks.KCQsMy Blog: Financial Statement KCQsWhen I saw that my company was SCA I was excited as I know of this company but in saying that I know very a little about how they operate. There is even a SCA based in the town I live in being Rockhampton, I didn’t know this till I happened to walk past the office building on my walk earlier this week. SCA latest financials on their website are 2017, 2018 and 2019. SCA’s financial year is ending 30th June. As I started reading the financial statement for company it was soon brought to my attention how long and detailed, they are. The first few pages of the financial statements contain a lot of extra information about what the company does, its brand and even some advertising. As there were so many pages in the financials, I thought I would skip and move straight to the chairman’s letter and then onto the financial statements. I remember from previous subjects that the chairman’s letter can be a helpful place to start, as it can give you a helpful insight into the company’s financial statements and understand any difficulties the company undertook during the financial year. From, very earlier in the Chairman’s letter it has become clear that 2017 has been an impressive year for SCA with improvements across all key financial measures. I am intrigued to see if the financial reports look as impressive to me as the Chairman makes out that they are in the letter. It doesn’t seem that the company faced any serious challenges in the 2017 financial year. However, they did make the most of many opportunities throughout the year. SCA have taken advantage of opportunities being created by technology and the company also started a new business partnership with PodcastOne and QIC. I was now up to looking at the statement of comprehensive income for 2017 financial year. At first glance it looks like SCA has had a very successful year, with making profits of $108.6M after income tax expense for the year. This is an increase of approx. $31.4M from the 2016 financial year. Nothing major stood out in the accounts most were inline with last years. Revenue for the period had increased by $47.7M which indicate the company had a good year. I was surprised to see in the statement of financial position that cash and cash equivalents had decreased by approx. $45.8M. I found it very strange that there was no note for the cash and cash equivalents detailing what makes up these amounts. Why would this be? I haven’t come across financial statements before that doesn’t have a note for cash and cash equivalents. The second thing I noticed on the balance sheet was that in the Equity sections there was an account called ‘Non-controlling Interest’ which mean SCA has a partly owned subsidiary. The 2018 financial year wasn’t as successful for SCA, they undertook a number of challenges for the period. The financial statement position was heavily affected by the disposal of its former northern NSW TV operations. SCA also had a greater decline in 3 aggregated regional television advertising markets than expected. Performance was also down for the first 3 quarters in the metro radio business. Revenue decreased by approx. $34.2M in the 2018 financial year however, profit after income tax expense for the year decreased by approx. $107.1M. There is a new account called ‘Impairment of intangibles and investments’ of $104.7M which is the main reason for the decrease. I don’t fully understand what this amount is. I assume it might have something to do with the company disposal that was mentioned in the Chairman’s letter. I believe the company disposal has also affected the company’s share prices for the 2018 financial year. 2019, was another challenging year for SCA. The advertising markets have been challenging throughout the 2019 financial year. SCA during the financial year made the decision to sell Broadcast Australia and to outsource broadcast transmission functions which has had an impact on the financial position of the company. Other challenges the company is facing is the increasing demand from audiences seeking out personalized on-demand audio experiences. SCA has taken this onboard and has significantly strengthened its investments in smart audio consumed through internet enabled devices such as smartphone and smart speakers. The sale of Broadcast Australia has resulted in a loss and can be seen in the statement of comprehensive income under ‘fair value loss on assets held for sale’ of $9.2M. SCA overall after income tax expense for the year made a loss of $91.4M. The Statement of Financial Position accounts are roughly in line with previous years. Cash and cash equivalents have again decreased by $23.6M. SCA remains to be in a strong financial position. However, I believe they will continue to have challenging times ahead as technology keep improving and users demand keeps changing. Know Your FirmMy Blog: Know Your Firm SCA make their own media releases to advertise, note any changes being made and to make company announcements. The only recent article I could find not released by SCA was an article written by The Sydney Morning Herald. Link to Article: Southern Cross Austereo hit by weak advertising market The article was written on the 20th of February 2020. The article explains that SCA has posted a revenue decline for the first half of the financial year as difficult advertising spending conditions continue to hurt its television and radio divisions. Which we saw when exploring and detailed KCQs for the financial statements. In October, SCA released a trading update warning that the first half earnings would fall as much as 27 per cent, affected by the “volatile’ advertising market. However, from this article and exploring the SCA financial statement it is evident the company have faced serval challenges in the past and these challenges are going to continue. From, the financial statements it was clear that the SCA make the most of any industry opportunities and are trying to change and develop to meet the needs of their customers. StudiosityFavorite Three Blogs: STEP FOUR:STEP FIVE: STEP SEVEN:STEP EIGHT:Reference: ................
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