Blogs

A few people have asked me how to create a drop down menu under their blog posts. I have created a step-by-step guide as well as linked a how to video.

When deciding who and how to give feedback to I rested on the following three items.

• Give feedback to one person who inspired me to write a better assignment.
• Give feedback to one person I felt was just starting out at Uni (post year 12).
• Give feedback to a random person – someone who I hadn’t engaged with regularly or followed their blog

The results are as follows:

Here is the feeback so far…

Just posting my compnay spreadsheet up for review. Enjoy

Rules and regulations…I feel my stomach sinking as I read that as I can only begin to imagine the amount of regulatory red tape involved in business accounting. It may be one of the most off-putting things about the financial sector for myself. However, its undeniable that the more intimately you know the regulations behind these types of “games” the better placed you are to play them.

The not so wise peers…

Currently completing some questions in relation to Chapter two and I thought it would be good to reflect on PeerWise.

If the aim of PeerWise is a P2P study model whereby you can test your knowledge about Accounting than it becomes rather convoluted when you start to sift through some of the questions that have been presented on the platform.

Questions of a trivial nature do not add to the learning experience nor do subjective questions about general knowledge non-related to the subject. To the contrary they clog up the question feed. There are currently 714 unanswered questions on my feed. Asking a question about what year a movie was released that is mentioned within the study guide to enforce a generalised quote would be one example I can think of that adds no value whatsoever.

Furthermore, it appears the real game here is to post as many questions one can to try and inflate one’s reputation score. Now I know this can be combated by marking down people’s questions with a “poor” score but that in itself seems de-valued the process especially when anyone can rate a question of yours as “poor” and you can’t see who has done this or rebut the fact.

Perhaps a better idea would be multiple filter categories where you could filter questions not only on someone’s reputation by also the question ranking. However, some of these questions have been marked “good” or even “very good” which makes my mind boggle. Perhaps an even better scenario is where you could un-follow an author, so you don’t have to see any of their questions in the future. This unfortunately doesn’t give much leeway to a redemption path or second chance.

AIA – Auckland International Airport

I think you could be forgiven for assuming that an airport wouldn’t be a publicly listed company, in fact I often never gave it much thought until I started being more involved with purchasing shares and managing how my superannuation was invested. Moreover, many people including myself often would think of an airport as a government owned infrastructure much like roads. I’m interested to see the relationship between the New Zealand government and AIA in this assessment.

Martin has the company listed under the guise of airports and infrastructure and undoubtedly it is, however reading the company bio its surprising to see that AIA lists itself not only as an infrastructure player but also a service provider providing “a world-class business park, commercial office buildings, transport and logistics warehouses, hotels and leisure and recreation facilities”.

Diversification is an important part in the business world and airports have seen rapid change over the last 50 years especially as they reach into international and business markets. It appears from the outset that the AIA has set out on some large-scale capital developments over the last few years. In fact, reading the FY18 annual report the first two pages peel the lid back on AIA’s planning from FY18 through to FY28.

Delivering, Planning and Building are the three key markers used in the graphic and this sets the foundation to the message AIA is pushing in their report. It seems AIA has delivered on more international aircraft gates across FY17/18 an airfield expansion and even a Bunnings distribution center. Further airfield expansions are set for 2022 with a second runway set for 2028. This would appear to be in-line with the rapid growth NZ has seen in its tourism sector over the last 5 years as reviewed on the Tourism Industry Aotearoa’s website.

• Total annual tourism expenditure is $39.1 billion – $107 million per day.
• Annual international tourism expenditure is $16.2 billion – $44 million per day.
• Annual domestic tourism expenditure is $23.0 billion – $63 million per day.
• Total annual tourism expenditure has increased by $11.9 billion or 44% in the past five years.
• Tourism is our biggest export industry, contributing 21% of foreign exchange earnings.
• Tourism generates a direct annual contribution to gdp of $15.9 billion, or 6.1%, and a further indirect contribution of $11.1 billion, another 4.3%.
• 216,000 people are directly and another 149,000 indirectly employed in tourism in new zealand – almost 1 in 7 jobs.
• The annual gst paid by tourists is $3.7 billion, including $1.7 billion collected from international visitors.

Source: https://tia.org.nz/about-the-industry/quick-facts-and-figures/

Reading through the opening lines of the report from AIA gets me thinking about value. Study guide chapter one discussed how business is about creating value. It appears AIA has seized the opportunity to piggy back off the tourism demand and create significant value to serve demand and need. There is also substantial interaction within markets in their business plan. The fact they are an airport displays their interaction with various markets from the airlines that are using their infrastructure to deliver their own service through to the hotels restaurants and shops that have set up businesses within the AIA percent. Just thinking about it holistically all three markets (input, product and capital markets) appear to be receiving interaction with AIA.

Interestingly, the annual report opens up discussing how AIA has recently sold their stake in North Queensland Airports for a whopping $A370 million. I decided to do a little research into this and it appears this was a capital grab in order to help facilitate the major CAPEX projects planned for AIA into the next 5 years which were estimated at $1.8 billion whilst reducing some of AIA’s debt. After the NQA had had significant turnaround in earnings after a weak FY16 it appears AIA were keen to strike while the iron was hot and leverage the turnaround for their own developments. As seen below it appears the sale of stake in NQA has related to an upward trend in AIA value over the year.

Source: https://www.asx.com.au/asx/share-price-research/company/AIA

Another fascinating point in some of the opening monologue is that Chinese arrivals into AIA growth was around 10.9%. Doing some reading recently on the impact of the Chinese markets across Australia I decided to look into the Chinese economy and if the reports on it “cooling” would bring impact to a company like AIA especially noting one of AIA’s key aspirations is to “double Chinese arrivals to 400k” in FY17. The Yuan has been reasonably steady in relation to the NZD over the last year, hovering around 0.22c on the dollar with only mild fluctuations. There have been many analytical reports that the outlook across the Chinese market has been glim, however it would appear this may affect industries such as manufacturing and trade rather than tourism such as NZ.

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Source: google

So, what about the numbers?

FY18 results looked pretty good for AIA. Total profit after tax to 30 June 2018 was up 95.3% to $650.1 million, while underlying profit after tax increased 6.2% to $263.1 million. 95.3% increase in profit seems very dramatic from the outside looking in. Revenue saw an 8.7% increase to $683.9 million which the company attributes to “strong growth in retail, transport and investment property revenues. The AIA report details a 13.6% increase in operating expenses due to operational resources and asset management. EBITDAFI sits at $506.4 million up 7%. Interestingly I have only ever been exposed to EBITDA a first for the fair value adjustments and investments in associates part of the acronym for me.

One of the key areas I have struggled to comprehend within this report is a statement pertaining to derivate fair value movements.

“We have reversed out the impact of derivative fair value movements. These are unrealised and relate to basis swaps that do not qualify for hedge accounting as well as the ineffective valuation movement in other derivatives. The group holds its derivatives to maturity, so any fair value movements are expected to reverse out over their remaining lives”

I have absolutely no idea what this means. A quick google search brings up topics on hedge accounting and buying stock. Perhaps this is something that will become clearer throughout this unit?

I’m looking forward to inputting the financial numbers of AIA into the spreadsheet provided by Martin. I like to think of myself as reasonably handy with excel so perhaps some pivot tables can be developed across the three years’ worth of data to establish some trend analysis and extrapolate onto some graphs.

From the outset it appears AIA is a reasonably solid company with a very diversified business and investment structure. Positive results across the FY18 report indicate the company is in a reasonably strong position with regard to financials and there is a streamlined vision for infrastructure development across the next 5 years. It seems their plan for growth across the Asian and Chinese markets are statistically in-line with the tourism figures and New Zealand and Australasia.   

Full Step 3 with KCQs below…

Step 1: Introduction and Chapter One Reflection

As I read the introduction to this unit and the plethora of other mediums such as blogs and posts my initial feeling was “be organized”. This is a comforting concept because I am borderline OCD or, so my fiancé tells me. However, a sinking feeling washes over me as I read Martins breakdown of the hourly commitment required each week. I am currently running a large packaging company in Bundaberg and juggling fatherhood for the first time, so I am glad I have only committed to one unit in Term 1 as I find my feet at university.

“After all, you only find out who is swimming naked when the tide goes out” – Warren Buffet

This blog will explore the weekly activities of my foray into the world of accounting.

Currently enrolled in my first ever accounting unit whilst study a double major business degree.

Hopefully you find some of my journey insightful and helpful.

Happy reading.