My experience
This was an interesting exercise. I did not find it too challenging as Kaiza's financial statements were quite standard, easy to read. There were not many complicated entries. The notes were pretty good and self-explanatory. Besides, we had done this exercise once before in the earlier unit ACCT11059 which helped make it easier.
What I found interesting were the notes on some of the entries in the statements. Here are some examples:
Tax Benefit
The Corporate Tax rate used to the calculate the Tax Benefit deductions were at 26% - 27.5% instead of 30%. See Note 8 of the 2021 Annual Statement. It took me to a while to realise that it was probably because the Tax benefits were from losses carried forward from past years, way back when Corporate Tax rates were much lower. The company must have been rolling over losses for quite a few years.
Other Income
Sometimes it is difficult to decide if 'Other income' belongs under 'Operating' or 'Financial' without looking further into what this item is made of. I found that in 'Kazia' case, the note 5 of the 2021 Annual Statement states that part of this item is a 'net foreign exchange gain'. This could be gain on cash assets that are sitting in the bank and not used in the operations of the business. However, in the restating exercise I had allocated this whole amount to Operating because mostly this item was made of operating income.
The restated figures – what I discovered
I found it noteworthy that in the year ending 2018, almost 45% of the losses were from impairment of financial assets. The operating activities were not affected much by the financial activities. The Operating income (OI) was only slightly different from the non-restated financial statements. The operating assets (OA) were more than financial assets in years 2021 to 2019. The reverse was true in year ending 2021. The financial assets had increased substantially. The firm had made cash earnings through licensing their products. The cash from shareholdings had also increased remarkably. The firm’s strategies seem to be working.