Australia China Holdings Limited - Key Concepts

In viewing this company's financial statements and other additional information the following key concepts and questions were found:

• 47.6% decrease in net profit and 5.4% decrease in revenue is due to increase in operating expenses.

          This statement shows the overall effect of how an increase in expenses can cause revenue and the overall profit to decrease even if the sales do not change.

• No dividends were paid out in the 2013 financial year.  

Had difficulty understanding why there were no dividends given out in the 2013 financial year. The only reason I could find is because the net income did decrease as discussed above and they also did not issue any dividends in the 2012 financial year.

• The Economic Entity is exposed to fluctuations in foreign currency.

As this company is an international company it is subject to currency changes depending on where its point of business is taking place. Due to this economic recessions and government downfall takes an immediate toll on the livelihood of this company.

• No price risk in terms of the rental income from Mongolia

This is an interesting point. Even though most of the income and expenses incurred by Australia China Holdings is in foreign currency, the rental income on the land received from Mongolia is strictly in Australian Dollars. The reason for this is because when the agreement was first established it stated that all rental income was to be in Australian Dollars.