Assignment One ACCT11081 Jackson Hutchins

ACCT11081Introductory Financial Accounting

Term 3 2017

Assignment 1: Step 3-6Student: Jackson Hutchins – 12069878

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Assignment One ACCT11081 Jackson Hutchins

Step 3BNN Technology is the company that has been allocated to me this term. This is a company that I was unfamiliar with prior to commencing, although I am looking forward to gaining knowledge of the company and the services or products it offers. By completing research through BNN Technology website and related articles I will be explaining the products this firm offers to customer, suitability of the market in order to expand and increase revenue, stock prices, analysis of public financial statements and finally how BNN Technologies may be looking to improve and diversify in the future.

Starting my research through the website of this company I initially struggled to comprehend exactly what BNN Technologies provided in terms of goods or services. After deeper examination of the financial reports and related articles I was able to gain a good understanding of the services offered and learnt that this company is linked to a number of my interests through sponsorship. BNN Technologies is a technology-based company, with an increasing presence in the Chinese online mobile payment software field since its inception in 2008. Formerly known as DJI Holdings and rebranding in 2015, BNN Technology is a UK based company operating in China. Prior to rebranding this company was a mobile provider of the online Chinese lottery, the Chinese government in 2015 subsequently banned this form of online gambling. This resulted in the company having to explore an alternate focus on technology. I am very interested to discover the financial impact this transition had on BNN Technology through analysis of the financial statements, demonstrating their ability to manipulate trading procedures as a result of external events.

BNN Technology now provides online technology to facilitate mobile online payments such as traffic fines, utility bills, mobile credit top ups and sporting venue bookings throughout China. Such as the nature of the product means that many people may have utilized the services without acknowledging or knowing that the software belongs to BNN Technology. The most prominent recent investment undertaken by BNN Technology was the partnership with Xinhua news agency, a mobile news app used by millions of Chinese residents. By partnering with this app BNN Technology is able to generate revenue through mobile payments and advertisement revenue. The most interesting investment that I discovered is that BNN Technology has commenced a sponsorship partnership with European Football Clubs Manchester City, Arsenal & Barcelona. BNN Technology distributes news and runs competitions for fans of these clubs through its partnership with Xinhua News app. This partnership provides news updates from these clubs through the Chinese mobile news app, appealing to the Chinese fans of these clubs. I believe that this is a very positive investment for BNN Technology as it promotes use of their mobile app and payment software by providing a unique product appealing to a range of the Chinese population.

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Assignment One ACCT11081 Jackson Hutchins

The transformative process that BNN Technology underwent following the banning of online lottery gambling successfully resulted in an alternate product suited to the technology and demand throughout China. As depicted in figure 1 below BNN Technology has expanded throughout a number of regions in China. This is a positive sign for BNN Technology as it has only been two years since offering the products yet they have been able to reach agreements to provide services within 12 provinces of China. I believe that if BNN Technologies can sustain growth throughout the country then there will be exponential increase of revenue into the future. Figure 2 below demonstrates that BNN Technologies has emerged in a very suitable industry with the number of mobile phone users in China growing exponentially since 2006, increasing the potential customer base.

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Figure 1. BNN Technology agreements with Xinhua News

Figure 2. Mobile Phone User Tracking in China

Figure 1. BNN Technology agreements with Xinhua NewsFigure 1. BNN Technology agreements with Xinhua NewsFigure 1. BNN Technology agreements with Xinhua News

Figure 2. Mobile Phone User Tracking in ChinaFigure 2. Mobile Phone User Tracking in ChinaFigure 2. Mobile Phone User Tracking in China

Assignment One ACCT11081 Jackson Hutchins

The next step involves analyzing the annual financial reports of BNN Technology. I was initially overwhelmed by this 100-page document, involving extensive pages of words yet not many numbers. This company places the financial statements at the back end of the report, could this be a tactic to prevent readers from simply discovering how the company is travelling financially? One of the first standout quotes in the annual report was that since the suspension of online lottery sales BNN Technology’s revenue decreased significantly from 5.5million to 2.1 million pounds, confirming my prediction that this event had a significant impact on the company. I also discovered that BNN Technology is currently trading at a loss, in fact the trading loss has widened from 9 million pound in 2015 to now 16.5 million. I am anticipating that this finding may make the trial balance more difficult then if the company was profitable. One positive assumption that I can denote from this increasing operating loss is that BNN Technology is currently investing in new technology in order for the company to provide new products and expand services following the set back of the online gambling business banning in 2015.

Analyzing the financial statements of BNN Technologies has proved to be a significant learning curve, as I have not read statements with this much detail. Firstly I have noticed that they have provided consolidated statements and parent company statements, I’m unsure which of these should be used in the trial balance so I will be sure to gain further understanding regarding the difference. Initially reading the income statement it is clear that BNN Technology made a substantial loss in 2016 of at least 18,000,000 pound, with the revenue decreasing and expenses increasing since 2015. It will be crucial that BNN Technology does not continue on this trend and hopefully it can reach a point where revenue increases at a larger rate than the outputs. Retained earnings has been discussed by a number of students and how it impacts their trial balance, although I have been unable to locate retained earnings within the balance sheet of BNN Technology. As a result of this I will assume that this figure will be zero, hopefully this will still allow my the trial balance to balance.

In the future BNN Technologies is looking to establish a secondary Nasdaq listing in the United States, this is to raise capital and increase investment opportunity. I believe that this move is critical for BNN Technology as the company would not be able to reach future business development goals without added capital and investment due to current operating losses. Additional services in the pipeline for this company include providing mobile credit rating services and increasing the mobile payment partnerships through further provinces of China to increase revenue. If BNN Technology can capitalize on the demand for mobile payment technology in China and successfully carry out its future goals, I believe this company has the potential to return to profitability.

I was able to claim credit for prior learning for the pre requisite of this subject which means that I was not allocated a company in the previous subject to compare with

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Assignment One ACCT11081 Jackson Hutchins

this unit. Discussions with other students in the subject have proved that most students would take preference on being allocated an Australian company rather than an overseas company from previous assessment. I have not found this foreign company difficult to analyse and applying a foreign currency hasn’t been detrimental in carrying out this assessment so far. The most challenging aspect was discovering the service BNN Technology provides to customers, but once I researched and understood those aspects I began to enjoy learning and connecting with the services. In particular the discovery that my favourite soccer teams have a business connection with BNN Technology displaying a common interest with myself. I look forward to scrutinizing the financial statements of BNN Technology to find where the company is succeeding or may need to improve.

Completing further research of BNN Technology I was able to locate articles relating to the company that can be viewed below. Unfortunately the number of articles available was limited, some requiring a paid subscription to a news outlet.

This CNBC Article outlines yet another hurdle this year when two directors were suspended following ‘serious allegations.’ As a result of these allegations BNN Technology was required to suspend their shares, which would have had a major impact on raising capital and investor interest in the company. These directors have since been reinstated from when this article had been published in September although any negative publicity would still have resulted in a damaging financial effect on the company.

This video demonstrates the growth of online mobile payments in China, which is the current industry that BNN Technology resides. The video outlines that in 2015 mobile transactions hit 2.15 trillion dollars, which is more than 10 times the United States total. This suggests that BNN Technology is currently in a great demographic by offering it services currently in China, and would definitely benefit from expanding its services throughout the provinces of China.

The following article outlines BNN Technology’s strategy of supporting grassroots football in China, working in conjunction with the partnerships formed with prominent European football teams. Establishing these services is a positive business decision of BNN Technology, by having a positive relationship with the Chinese population the company can work to regain stability from previous negative events that impacted the company financially.

BNN Technology News & Blog Updates

BNN Technology Website

Company Discussions with PeersTO BE COMPLETED!

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