*** December 2021 ACCA SBL exam – Instant Poll and comments ***

Was relatively ok felt less pressured than mock attempts just struggled to see what overall issues Achilles had other than less profitability which seemed to be due to not increasing prices while costs had increased.

1) Operational comments I think I did ok but didn’t use any models.
Comment on financial results and position was hard and struggled to write anything meaningful.

Used SAF to evaluate the different proposals but was quite tedious doing SAF 4 times over and not sure that’s what the marker wants to see.

Also found the risk manager role & responsibilities quite tough to score marks on.

Performance excellence on the slides I had to use alot of common sense.

Generally found it hard to link to the exhibits when answering questions.

First question struggled with operations – clearly though they are spending more on marketing to maintain their current customer base – sales increased but prices didn’t increase. Lots of good tangible assets to make acquisitions, interest cover increased, current stayed the same etc

The second question on the spillages risks – reputation, environment, regulation, legal etc that was straightforward.

Sceptism on the acquisition wasn’t too bad

Big data wasn’t bad to finish either.

Totally agree to the comment above.

The questions overall were not difficult. However, I overrun with time with Q1 and then hastily answered the rest of the questions. I guess, I would have written more relevant points if I hadn’t lagged behind with Q1.
Q3 was a bit confusing, and I couldn’t i

The case was about premium customers cruise ship company:

Q1. (a) Evaluate financial and operational perfromance based on PL and BS
(b) Change in corporate governance arrangements
Q2. Assess strategic choices
Q3. Risk manager for food quality in the ship, risk awareness
Q4. Baldrige model of operational excellence – to prepare 2 slides on why operational excellence is important and how to achieve it.

Mine had big data

And a oil slick

Did the operation part of question 1 rely on reviewing the accounts only

The PE was key on purchase price mate

You needed the pe of competitors to know if the P/E ratio was comparable of the industry or the company was overvalued

What calculations did everyone do for the options of financing question?

You didn’t have enough information to do calculations in my opinion

I think it just wanted options imho

I had the question on Achilles. Overall it was an okay paper.
On the operations question I discussed the issue of their potentially being boundaries within the organisation as they had different operational units and could be following their own goals. Another issue was that budgets were set by head office and would have resulted in lack of staff buy in. For the strengths of their operations I mentioned E business capability (online booking system, communications technology etc), Marketing ability (segmenting and targeting customers). Performance and position were covered by mentioning at least 3 ratios.

The governance question was relatively easy. They were required to have an internal audit function as they are a listed company but were missing one. Insufficient number of NEDs was another issue. For the strengths I mentioned that they had already sub committees in place and they were operating a unitary structure.

I found the risk and performance excellence questions very difficult to link to the case. I ended up mainly regurgitating book knowledge and applying this in bits. The question on embedding risks was particularly difficult.

We might have had different questions. Mine was to evaluate the governance arrangements and then make recommendations for improvement. I mentioned a few strengths and weaknesses and then made suggestions.

I was going to suggest a two tier board structure but I didn’t want to contradict myself as I mentioned a unitary board as a strength. What points did you make about diversity? I couldn’t find anything in the extract.

Didn’t it say all directors were all associated with the ship industry no one had any outside experience

I think there was a line after CEO details , mentioning they all from Ship industry

I forgot to click end button after I finished with exam. Is it ok if I didn’t click the end button?

Got the Achilles case and found the case itself to be fairly straight forward, but the amount of hints in exhibits to support the tasks appeared relatively limited which is what drives it challenging.

Task 1
– Operation – board want to ‘learn more about operation’ – felt unclear what exactly question was after. Attempted various angles including the generic strategy, porter’s value chain etc.
– Performance –
a) no price increase but increased revenue hints improvement in occupancy ratio? – driven by increase marketing spend but whether this is worth it given the already high occupancy ratio.
b) what’s driving cost increase? – poor cost control? higher depreciation as seen in increase in fixed asset?
c) higher interest > despite plenty of bank deposit > should explore why?
d) overall low level of ROE / ROCE / Profit margin, reduction in these.
– Financial position –
a) high gearing but due to nature of industry – no industry comparison.
b) strong working capital thanks to strong procurement (AP) and customer booking system (deposits)?
c) plenty of cash surplus / current ratio > can be better utilised?
Felt in general not a lot to talk about.

– Governance:
Strong points: some NED, NED in 3 committees
Weak points to improve: lack of NED, lack of risk committee, 8y board. Why independence and NED is important for good governance, in light of being a listed company. Why best to recruit NED from other industries.
– Felt definitely missed stuff for this question – could have probably talked about CEO’s role in governance maybe?

Task 2:
Options:

Started with FAS criteria then half way through realised we can also perhaps use the Ansoff matrix. Basically talked the pro/con of each Ansoff sections in conjunction of source of funding.
Recommanded the partnership approach and talked about risk of partnership.

Task 3

Role of risk manager:
– Design, implement risk control > food hygiene procedures
– Monitor risk with designing risk indicators
– Support to manage risk > e.g. press release
– Support to identify risk and advocate risk culture
– Deal with insurance comp

Also talked the catering manager is not suitable for the role as not capable of doing some of above. > probably should have talked the need for training etc.

Task 4:

Why achieving performance excellence is important for Achilles and how to use the Baldrige model to achieve this.

Mind was blank with this one as didn’t focus on Baldrige model in study and there’s barely any supporting exhibit for this.

Tried to talk about the need to explore into all areas to support strategic success – especially how Achilles is a differentiation model, model supports this by promoting integrated thinking. > Then basically tried to use common sense on how each element is relevant to the company…

Was also conscious have mis-spelt Achilles in several ways multiple times…

Guys firstly I had issues where I couldn’t highlight or copy and paste from the exhibits …

However I wasn’t gonna let that make me fail I just had to double time with the typing

Task 1 : Operations and Financial performance and governance structures I think I did quite well here for 32 marks.

Task 2 : oil spillage and main risks , Stakeholder analysis

Task 3 : evaluate the proposal of acquisition, here I found numerous issues like the revenues being 71million but the passenger fees are only 1250per passager they operate 16 river with 42 cabins so the revenue seems inflated .

I also picked up on that the current owners of the river cruise wanted to sell because they want to fund their retirement with 114million which seems questionable

They also have book values which should have been net realizable values on sale

Then there were a lack of info , no liabilities how they determined the 65% dividend payout, also no prior year info to do a comparison on performance .

Financing Options was tricky cause there was nothing obvious in the exhibits .
I used issue right shares , issue new share, loan but they already had high finance costs and also retained earnings that can be used

Task 4 : Big Data slides for operational and future benefits which I hopefully made enough reference to the actual cruise company

All the best ! I am studying for AAA and SBR to write in March

so what was your exam technique please