Accounting Case Study

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ASSIGNMENT (Stage 1)
ACCT 11059 – Using Accounting For Decision Making

Prepared By Lingdi Fu (s0210541)
Lecturer & Tutor’s Name: Mitch Hsu
Due Date: Saturday, 4th August 2012, 11:00 PM

Step1

During carefully and thoughtfully read through the firm’s latest annual report. We can find the company is called GR Engineering Services. It is an Australian Securities Exchange (ASX) listed public company located in 183 Great Eastern Highway, Belmont. The principle activities of the company is providing high quality process engineering design and construction services to the mining and mineral processing industry. The company’s market is focus on Western Australia, New South Wales and Solomon Islands. After access all the figures and numbers in the financial statements of GR engineering Services Limited Company including the Statement of Comprehensive Income, the Statement of Financial Position and the Statement of Change in Equity, it’s obviously that the company has achieved great success and operated profitable in recent years, especially in the last financial year ended as 30th June 2011. There are some areas in the financial report have some difficult to understand are shown below: (1) The Earnings Per Share in the Statement of Comprehensive Income compare with the dividend per share; (2) The Issued Capital balance as at 1st July 2009 is only $1,000 and the then the company made a profit over 7 million; (3) Some definition of specific item such as issue of options in Statement of Change in Equity and the Deferred tax assets in Statement of Financial Position. The GR Engineering Services Limited Company’s businesses are mainly focus on two areas: the first one is project design and constructions (89%); the second one is studies and consulting (11%). Even though the company has achieved great success so far, but the company is not complacent and focus more on study activities to support the company’s strategy of continued revenue growth and earnings growth through capitalize high quality studies, capitalize excellent reputation, maximize the utilization of capital, foster excellent employees and geographic expansion, particularly into Africa, South East Asia, Pacific Rim and Eastern States. Because of the company’s business areas, the accidents may occur unavoidably, so how to provide employees with a safe and healthy work environment become one of the key challenges that the firm appears to be facing. As shown in the Chairman’s letter to the shareholders, the Company achieved a Last Time Injury Frequency Rate of zero for the 2011 financial year. In addition, due to the uncertainty and volatility in European and United States’ financial markets, how to manage the company successfully and operate the business activities profitably becomes another major challenge of the company. In such a situation, the company decides to operate with minimal capital investment in plants and equipment to minimize the potential financial risks in order to have a strong Statement of Financial Position and technical and operational excellence. As a result, the revenue during the financial year 2011 ended as at 30th June 2011 was $142.5 million, $4.2 million ahead of Prospectus forecasts and increased by 11.1% compare with the previous year’s results which is $128.2 million. The net profit for the financial year 2011 was $21.1 million and 18.3% ahead of the previous year’s result of $17.8 million Except that, the company declared a fully franked dividend of 4.0 cents per share, an aggregated of $6,000,000 on 22nd August 2011. The next step is compare with other people’s annual report and finds the similarities and differences of the companies and the way to present the company’s financial statements. Here, we will work with Clough and Ausenco for comparison. All of these companies are engineering industry companies. Their services provided and revenue sources are very similar. And all of three companies are facing the...
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