Assignment One (Draft)

Hi all, please see where I am up to on assignment one, not quite where I'd hoped to be but unfortunately not enough hours in the day in my life at the moment! I am open to any feedback on any part of what I have written so far, I hope you find it interesting!

Step 1

The description box in moodle contains a few words about me with a photo, and a link to my newly created blog. I also added a link to my blog in the Blog Links Forum. The link to my blog is http://martystephenson.blogspot.com.au/

 

Step 2

The company I have been assigned is Mission NewEnergy Limited. I have attached the link to their latest Annual Report for the year ended 30 June 2014 from their website.

http://www.asx.com.au/asxpdf/20140925/pdf/42sg4s2nkjjg81.pdf

 

Background information on Mission NewEnergy Limited

Mission NewEnergy Ltd is a renewable energy company based in Western Australia. The company is listed on the Australian Securities Exchange (ASX). The share price is currently $0.15, whilst it was $13.00 in 2010 according to the annual report. According to the ASX website, the highest price reached in the last 12 months is $0.315, whilst the lowest is $0.006.

The company concentrates on producing biodiesel in the markets of Malaysia and the US.  The company owns a 20% interest in one of the largest biodiesel refineries in Malaysia. It has two joint venture partners who are Felda Global Venture and Benefuels Inc. According to their website Felda are the largest producer of crude palm oil in the world and they have operation in more than 10 countries worldwide. Benefuel is a US company that have produced the technology to improve the biodiesel process. Biodiesel is produced from renewable plant or animal feedstock’s and is an environmentally friendly replacement for diesel.  It can also be used as an additive in diesel engines. According to the Mission NewEnergy website, governments around the world have mandated the use of biodiesel in an effort to reduce global warming.

 

Thoughts & concerns at this stage

Initially I was disappointed with the company I was given, especially when I looked at the list of companies that were distributed. I hoped to get a world brand name or perhaps a company similar to any of the companies I have been employed at throughout my career. However, now I have had a couple of weeks to read and learn about my company I am now feeling comfortable. One of things that disappointed me initially was viewing the company website. I have looked at a lot of websites in my career and to me Mission’s website is ticking a box. There has been very little effort in making the website attractive and informative. When I viewed the websites of the joint venture companies (Felda Global Venture and Benefuels) this confirmed my initial thoughts as these two companies gave so much more information about their history, vision and mission. It made me want to find out more about them!

 

KCQ’s after viewing the 2014 Annual Report

The report itself is 100 pages, which is not as bad as some others which are over 200 pages. I have looked over several annual reports before so although I don’t know what everything means I am familiar with the layout and presentation of the financial reports. The report stated that the company had continued its ongoing restructure that began in 2012 which was due to negative market conditions. This made sense when I reviewed the balance sheet ($11.3 million deficit in net assets) and cash flow statement (outflow of $2.9 million from operating activities). I must point out here I learnt about how to read a cash flow statement from a previous course run by Maria Tyler.  One of the first questions I had was from the CEO report. The company had to sell refineries and restructure its convertible notes liability of $25 million. I had no idea what convertible notes were until I checked on the ATO website and discovered that they are some sort of investment in companies which have to be repaid with interest.  Another thing to catch my eye was the deficit in net assets of over $11 million as noted above. The report states that this is due to the policy of impairment of its refineries. I am trying to find out whether that is normal practise or not. Finally, I didn’t particularly understand the statement of changes in equity. At this stage I still do not know what a lot of those entries actually meant, but hope to gain more knowledge as this course progresses.

After reading the annual report my concern with this company was raising cash and the area of the business that seems the most critical to me is the joint venture relationships with Felda Global Venture and Benefuel. This looked to me like the last noteworthy asset the company had from my understanding of reading the report. At this stage I was thinking, this company has had to sell its refinery (whilst retaining a 20% stake) to raise cash to meet its liabilities (such as the convertible notes). This deal has to go through or this company is in serious trouble. On page 33 of the report the company also commented that if the sale did not go through there was significant doubt as to whether the company could continue as a going concern. A few days later I read through the recent announcements on the company website and found that in February of 2015, Mission NewEnergy had announced to the ASX that they had successfully completed the restructuring plan that commenced in 2012. This was due to the sale of the refinery and the cash this raised. All convertibles note debt has now been settled and the company has enough working capital to utilise for the next two years. This is good news as the company can now concentrate on its strategy of managing the joint venture interests and pursuing new opportunities. It will be interesting to see how the rest of 2015 pans out for the company. However 2016 will be more exciting as that is when the biodiesel refinery is expected to start production.

 

Other people’s blogs

My favourite blogs in no particular order are below:

http://rianajp.blogspot.com.au

I think Riana’s blog is presented very well and is easy to follow. The layout of the blog is attractive to me; I think it must be the colour schemes Riana has used combined with the width of the reading pane. Another attraction for me as that Riana’s company is Mastermyne who are one of our competitors in my current employment. It’s very interesting to me to see their financial reports and to understand their positioning in the mining arena. I was also impressed with the layout of their annual report for 2014. This made the report brighter and easier to read. I am keen to follow Riana and see what else she uncovers about Mastermyne and mining in general.

http://theaccountingdream.blogspot.com.au/

I picked Ian’s blog as this was exactly the format I was looking to create for my blog, but I failed miserably! I like the colours of the blog and the use of the calculator and pen in the background. I might try and update the layout of my blog if I get time. I think for a first time blog creator Ian has done very well.

 

http://yasmineschultenkamp.blogspot.com.au

I think the layout of Yasmine’s blog is eye catching and very funky! She has a talent there I believe. The use of colours make the blog attractive to read. As I am from the UK the British telephone boxes bring back memories from my youth! Also, from reading the blog it is clear Yasmine has put a lot of effort into understanding her company and its business. I think she has the balance just right so far in making her blog interesting to read and informative.

 

I have had some interaction with others on facebook and through blogs. This was useful for me to get some feedback on my blog and also others would have found the feedback I gave as being useful too. I had to email Dr Maria Tyler and Martin Turner a couple of time so far just to help me understand what was required with regards to step 3. I found that my company had changed its presentation of is financial figures from 2013 to 2014.  Thus I have not yet completed steps 3 and 4 as yet.