Af314 Group Assignment 2020 2021
Af314 Group Assignment 2020 2021
Af314 Group Assignment 2020 2021
GROUP ASSIGNMENT-
COMMUNICATIONS FIJI LIMITED
Communications Fiji Limited (CFL) was established on 5th July 1985 as one of the first privately
owned commercial broadcasters in the region. Now it has become the South Pacific’s largest
broadcast organization having reach across both Fiji and Papua New Guinea. It is a publicly
listed company on the South Pacific Stock Exchange (SPX) which is 100% owned and managed
by the Pacific Islanders. The South Pacific Stock Exchange market is classified as the barometer
by which the degree of economic activity is evaluated but this is not true for Fiji since there are
only 20 entities listed. Consequently, the Fijian economy is not fully reflected. CFL’s overall
performance and good corporate governance practices that facilitate stakeholders with accurate
and reliable information provide an overview of the company's financial performance.
Therefore, this report will critically analyze CFL’s overall financial performance and its
corporate governance overtime followed by suggestions on how it can improve its performance
and practice good corporate governance by critically analyzing the entity’s financial reports. A
set of 8 consecutive financial year reports that is, 2012-2019 will be used to analyze the
Statement of Financial Position, Statement of Profit and Loss and Other Comprehensive Income,
Statement of Cash Flows, and Statement of Changes in Equity. Moreover, the report also aims to
discuss CFL’s corporate governance practices mainly focusing on its advantages and
disadvantages, ownership structure, management team, etc. Likewise, it will also evaluate the
audit report of CFL in terms of its trends, audit opinion, and other significant changes made to
the annual reports. Also, it will also identify how COVID-19 pandemic has had an impact on the
entity's operations and its overall performance.
Figure 1: The Statement of Comprehensive income for Communications (Fiji) Limited for
years 2012-2019:
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(SOURCE- COMMUNICATIONS FIJI LTD)
The graph above shows the Statements of Comprehensive income for Communication Fiji Ltd
from the year 2012-2019 which reflects the share of the results of operations of the associate.
From the year 2012 -2015, employee expenses, the compensation paid to employees fluctuated
every year which results in to increase in total expenses. There was a profit before tax, after tax,
and every year as well. However, earnings per share fluctuated. Communications Fiji Limited,
the parent company of Legend FM, FM96, Viti FM, Navtarang and Radio Sargam had
announced the group’s audited after-tax profit of $1.474 million for the financial year 31st
December 2014. The company’s pre-tax operational profit was up by 18.13% to $2.661 million.
This was driven by a record result from the CFL group’s Fiji operations of $1.368 million before
tax compared to $960,048 in 2013(LIMTED, 2013). Likewise, the entity had already a 97%
increase in its after-tax profit for the first six months of the year 2013. The consolidated after-tax
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profit rose to $707,958 compared to $359,380 2012. Again Communications Fiji Limited had
recorded a $2.231 million after-tax profit for 2012. From the year 2016 -2019, it decreased by
$48,530, increased by $89,000 and $84,000 respectively. For employee expenses, the
compensation paid to employees is increasing every year which results in increases in total
expenses. There was a loss before tax, after-tax, and earnings per share in 2016. Rather, 2017-
2019 shows profit afterward. Therefore, this table shows the normal operation of the business.
Figure 2: The Statement of Financial Position for Communications (Fiji) Limited for years
2012-2015:
The figure displays the Statement of Financial Position for the company from the year 2012-
2019, whereby total Net Assets are equal to Total Equity. Total inventory in 2012 stood at
$47,727 while 2013 recorded a decline recording inventory of $348,920. 2014 recorded a further
decline in inventory to $ 38,279. 2015 had recorded a major decline of $ 4,734. There was only
one inventory recorded in the year 2017 amounted to $7,805 between the years 2016 to 2019.
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Therefore, 2012 recorded total equity of $ 10, 250,542 which remained constant for 2013.
However, 2014 and 2015 recorded an increase in total equity to $ 11,115,135 and $ 11,863,656
respectively. Whereas, 2016 and 2017 noted a further decline of $10, 025,744 and $10,852,798
respectively. However, an increase was shown in 2018 to $12,657,800 which further increased to
14,170,360 in 2019.
Figure 3: Statements of Cash Flows for Communications (Fiji) Limited for years 2012-
2019:
Cash and Cash Net cash from Net cash from financing Net cash from investing
Year Equivalents operating activity activity activity
2012 1,080,685 3,332,188 - 1,074,590 - 1,837,440
2013 222,065 1,773,592 - 1,337,809 - 1,224,971
2014 190,018 2,505,990 - 813,881 - 1,731,668
2015 432,845 2,819,763 - 1,028,195 - 1,568,108
2016 1,405,902 2,662,849 1,306,827 - 3,023,482
2017 2,055,770 2,821,764 - 2,396,217 205,862
2018 1,069,433 4,365,276 - 3,594,964 - 1,774,600
2019 611,169 3,045,143 - 1,624,078 - 1,875,611
(SOURCE- COMMUNICATIONS FIJI LTD)
Figure 3.1 Graph Showing Trends from 2012-2019
The graph above shows the Statement of Cash Flows for the Company from the year 2012-2019.
Years 2012-2015, the amounts of Net Cash from operating activity from all the years showed
positive results however the Net cash from a financing activity and Net cash from investing
activities, significantly proved with negative figures. Thus, in surveying an incentive being used,
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the assessed future incomes are limited to their current worth utilizing a pre-charge markdown
rate that reflects current market evaluations of the time estimation of cash and the dangers
explicit to the resource. However, 2016-2019, the amounts of Net Cash from operating activity
from all these years shows positive results whereas the Net cash from financing activity, the year
2016 shows a positive figure and the rest had negative figures. To add on, the Net cash from
investing activities amounts on 2016 had negative figures, 2017 was positive while 2018 and
2019 had negative figures. Hence, these classifying cash flows are separately disclosed and
classified consistently across periods.
Figure 4: The Statement of Changes in Equity for Communications (Fiji) Limited for years
2012-2019:
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Companies Act[ CITATION FIJ191 \l 1033 ]. The principle-based approach is recommended
since it reduces compliance costs and greater flexibility. Hereby, the “comply or explain”
approach is used which ultimately leads to an improved corporate governance approach in CFL
and Fiji.
The table below provides detailed information on the practice of good corporate governance by
CFL from 2012-2019.
(Country)Address (City)
directorsNo of executive
No. of independent
audit committee
IndustrySector/
Date Listed
members
members
directors
Code
Year
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accountability systems. The decisions made by the board must safeguard the interests of the
shareholders. Since it is a dispersed ownership structure it has various advantages linked to it.
However, since Parkinson Holdings Ltd is the major shareholder, it holds a total of 52.51% of the
shares in the entity. Holding such a large proportion of the shares will indicate that it has a major
contribution towards the company and may prove to be risky for the entity.
Therefore, it can be argued that the entity has a concentrated ownership structure when
considering the amount of shares held by Parkinson Holdings Ltd. Practicing good corporate
governance have brought about for the entity encouraging positive behavior among all the
stakeholders, minimized cost of capital, improved top-level decision making, assured internal
controls enabled better strategic planning and attracted qualified talented directors over the years.
They have also as part of good practice and governance have recreated the Audit Risk Sub-
Committee which is chaired by Ms. Josephine Yee Joy (independent director) and Ms. Thelma
Savua [ CITATION FIJ191 \l 1033 ].
Ernest & Young had been the Group’s auditors since the Company’s inception. However, in
2019, BDO was appointed as the new auditor for the firm. In the 8 years analyzed from 2012 to
2019, the auditors provided an unqualified opinion; implying that the financial reports had
provided a true and fair report of the Group. The auditors also stated that the company did not
face any going concern problems. In 2013, the 2011 and 2012 financial statements were restated
as the trade debtors in the PNG subsidiary, PNG FM Ltd, was distorted. Since the discrepancies
were material, the 2011 and 2012 financial reports had been restated by the Group, and
significant disclosures were made in 2013 financial reports. Over the years, the Group has
adopted various accounting policies. The Group dominantly uses International Financial
Reporting Standards to prepare its financial statements. IFRS has been updating and revising the
policies as required. A major policy adopted by the Company was IFRS 16 relating to leases. The
adoption of this policy resulted in a decrease in operating profit as higher interest was calculated
in the early years of the lease term. Another disclosure was made in the Director's Report of 2016
Financial Reports. In 2016, Tropical Cyclone Winston had hit Fiji and had damaged the
company’s transmitters worth around $232,551.
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COVID-19 SPELL OVER CFL
CFL, like any other business in this pandemic has been significantly affected. In the half-year
financial statement for the period to 30 th June 2020 released on 26th August 2020, CFL has
announced that there is a significant decrease in its profits (Communications Fiji Ltd, 2020).
Profits are down by 65% for the same period last year.
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governance by critically analyzing the entity’s financial reports. A set of 8 consecutive financial
year reports that is, 2012-2019 have disclosed the major financial statements which provided
relevant information on company performance over the years. Likewise, the entity has
incorporated good corporate governance into its daily operations which will prove to be
beneficial over the years. However, the pandemic Covid-19 has proven to have negative impacts
on the entity to which it has taken various steps to various steps in order to maintain the
Company’s cash-flow and minimize cash outflows.
References
Bhagat, S. (2008). Corporate governance and firm performance. Journal of Corporate Finance, 257-273.
Communications Fiji Ltd. (2020). ANNUAL GENERAL MEETING RESOLUTIONS. Communications Fiji Ltd.
Communications Fiji Ltd. (2020). Statement to the South Pacific Stock Exchange. Communications Fiji Ltd.
LIMITED, C. F. (2012). COMMUNICATIONS FIJI LIMITED 2012. SUVA: SOUTH PACIFIC STOCK EXCHANGE.
LIMITED, C. F. (2013). COMMUNICATIONS FIJI LIMITED. SUVA: SOUTH PACIFIC STOCK EXCHANGE.
LIMITED, C. F. (2014). COMMUNICATIONS FIJI LIMITED. SUVA: SOUTH PACIFIC STOCK EXCHANGE.
LIMITED, C. F. (2015). COMMUNICATIONS FIJI LIMITED. SUVA: SOUTH PACIFIC STOCK EXCHANGE.
LIMITED, C. F. (2016). COMMUNICATIONS FIJI LIMITED. SUVA: SOUTH PACIFIC STOCK EXCHANGE.
LIMITED, C. F. (2017). COMMUNICATIONS FIJI LIMITED. SUVA: SOUTH PACIFIC STOVCK EXCHANGE.
LIMITED, C. F. (2018). COMMUNICATIONS FIJI LIMITED. SUVA: SOUTH PACIFIC STOCK EXCHANGE.
LIMITED, F. C. (2019). FIJI COMMUNICATIONS LIMITED. SUVA: SOUTH PACIFIC STOCK EXCHANGE.
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