Question 4.
According to the Annual Report for the year 2011 we can say that during the year 2011 our
company was a success and had a positive development. For example:
 Net profit after tax grow up 110.23% to $18.5 million.
 Earnings per share grow up 74.2% to 38.5 cents per share.
 Gearing go down from 49.9% to 17.6%.
 Fully franked dividend grow up 50% to 15.0 cents.
 Grow up investment in strategic growth initiatives.
And in the end our company have 2011 Dairy Australia Grand Dairy Awards.
After a year of consolidation and recovery in 2010, this year has seen continued improvement in the
Company’s performance.
Gross revenue increased 21.1% to $504.1 millions, WCB achieved an $18.5 million net profit after
tax in 2011, this is 110.23% or $9.7 million improvement on 2010 profit. Earnings before interest
and tax (EBIT) were up by $13.7 million to $30.6 million or by 81.07%. Earnings before interest,
tax, depreciation and amortization (EBITDA) were up $13.8 million to $43.5 million or by 46.46%.
Revenue grew by 21.09%, with export revenues improving by 22.3%, consumer goods revenue
increasing by 12.2% and other revenues by 19.4%. Strong global demand combined with flat overall
world dairy supply underpinned a 4.2% increase in export volumes and a 17.3% increase in net
pricing. The full benefits of increases in export revenues was restrained by a 26.0% appreciation of
the Australian dollar. Domestic market volumes increased by 3.8%. However, in a competitive
supermarket private label environment domestic prices were subdued. Other revenue growth reflects
the higher milk price impact on direct milk sales.
This strong result will used by our company to continue to reward our stakeholders. Our final
dividend of 11.0 cents per share and our interim dividend of 4.0 cents per share made up a total
payout of 15.0 cents per share. This represented a payout ratio of 43.8% of Company profits.
Summary we have:
Change in
Earnings Summary
Year 2011
Year 2010
Change
percentage for
(A$millions)
year 2010 (%)
Revenue
504.1
416.3
87.8
21.09 %
EBITDA
43.5
29.7
13.8
46.46 %
Depreciation &
12.9
12.8
0.1
0.78 %
amortization
EBIT
30.6
16.9
13.7
81.07 %
Borrowing costs
5.8
7.2
(1.4)
(19.44 %)
Tax
6.3
0.9
5.4
600 %
expense/(benefit)
Net profit/(loss)
18.5
8.8
9.7
110.23 %
after taxes
According to the repot improved profit outcome is being reflected in shareholder returns: return on
equity was 12.2% (in the year 2010 it was 8.6%) and return on invested capital was 18.9% (in the
year 2010 it was 15.9%). It should be noted that equity includes a net $35.9 million of capital issued
in year 2011.
Also earnings per share were up by 74.2% to 38.5 cents (in the year 2010 we hade 22.1 cents per
share). Total dividends, as we say early, were 15.0 cents per share reflecting the improve earnings
outcome.
Summary we have:
Shareholds Return
Return on equity
Return on invested capital
2011
12.1%
2010
8.6%
Tax adjusted EBITDA over total
assets less cash less total current
liabilities
18.9%
15.9%
Earnings per share (cents)
Dividend per share (cents)
38.5
15.0
22.1
10.0
This represents earnings per share which the board has selected to distribute to shareholders.
Shareholding Interests
The 20 largest shareholdings at 30 June 2011 and at 18 August 2011 are shown below. The
Company has received two notices of a substantial holding, one from Bega Chees Ltd and the other
from Murray Goulburn Co-Operative Company Ltd. Other than those shareholders there are no
other shareholders known to the Company to have a shareholding in excess of 0.5% of the issued
capital and thus, there are no other known ‘substantial shareholders in the entity’ as defined by ASX
Listing Rules.
The Company shares consists of 53,934,406 ordinary shares. This includes 199,779 issues employee
shares. Over the last financial year there were the following movements share capital:
 1/10/10 – Dividend Reinvestment Plan – 168,800.
 12/11/10 – Placement to Bega Chees Ltd – 6,018,244.
 13/12/10 – 1 for 6 rights issue to shareholders – 7,694,347.
 23/12/10 – Employee Share Plan – 17,982.
 25/3/11 and 22/06/11 – Dividend Reinvestment Plan – 82,206.
As at 30 June, there were 3,209 shareholders. As at 18 August, there were 3,196 shareholders.
A distribution schedule as at 18 August 2011 follows.
Shares
Number
1 – 1,000
1,222
1,001 – 5,000
1,016
5,001 – 10,000
325
10,001 – 100,000
571
100,001 +
62
The Top 20 Shareholders as at 30 June 2011:
Name
Bega Cheese Limited
Murray Goulbum Co-Operative Co Ltd
Renyard Family Super Fund
Credit Suisse Securities (Europe) Ltd
Est Thomas C Gall
Mr John Andrew Gall
Geoffrey Charles Marsh
Bernard James Kavanagh
Est Joseph Bernard Kelly
Est Anne M Kelly
Mr Gary Rowland Umbers
Ms Sharyn Maree Merrett
Number
8,089,870
6,549,002
1,000,000
980,000
759,200
635,627
600,000
596,809
456,500
455,712
433,118
433,118
Keith Allan Bonnett & June Maree Bonnett
Myrtle I Gall
J & K McKinnon Pty Ltd
Donald J Gall
Berko Pastoral Co
Parsley Investments Pty Ltd
Elizabeth Marie Kelly
Myrtle I Gall & John A Gall & Donald J Gall
Myrtle I Gall
The Top 20 Shareholders as at 18 August 2011:
The list was the same other than:
Name
Citicorp Nominees Pty Limited
In lieu of Myrtle I Gall
407,593
406,075
384,636
373,657
324,334
300,000
292,334
281,812
280,000
Number
283,313
280,000
Shareholding Restrictions: there is currently no restriction on the amount of shares in the Company
that may be owned by a person.
The voting Rights Attached to Shares: The ordinary shares have full voting rights. That is, on a
show of hands every member present at the meeting or by proxy shall have one vote and upon a poll
each member shall have one vote for each share.
Marketable Holdings: the number of shareholders holding less than a marketable parcel of 110
shares is 192 and they hold 6,880 shares. As at 18 August 2011 there were 209 parcels holding a
total 8,669 shares.
From the above and from the annual report totally we can say:
Dividends up 50%, from 10 cents per share to 15 cents per share.
Milk price paid second highest ever.
Donations and contributions to community-based projects numbered 2,337 and totaled $513,000.
In the presentation for the Annual General Meeting saying that the prospects for the years 2011 –
2012 are:
 Commodity prices softening with A$ remaining volatile, but export index holding up
reasonably well.
 China expected to create strong demand for dairy products over the next decade.
 Improved cash position provides strong base for initiatives to add value, diversify income
sources and expand capacity.
From all of the above we can say next about value of the organization:
1. Expansion of sales markets (exports).
2. Improvement of production.
3. Improve product quality, increased customer interest and demand.
4. Development of the company to maximize profits, increase the supply.
5. Increase in profit share holders.
6. Attracting new investors.
7. Cooperation with other large companies in the food industry
8. Reduction of risks.
9. Make prices more stability.
10. Focus on increasing consumer interest and confidence, as well as increase the confidence of
depositors, employees, – the stability of the company.
At the end I want to say, that the development of the Company is positive and fairly stable. The
company occupies a good position in the market of the offered products, strive to develop, improve
and refine their work and cooperation with investors, shareholders and employees. Such trends in
the development and in the work of the Company increased confidence and stability of it. In general,
the development of the company is directed in the right direction.
Question 5.
The Group’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they can continue to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with other listed entities, the Group monitors capital on the basis of the gearing ratio. The
ratio is calculated as net debt divided by total capital, where net debt is borrowings less cash and
cash equivalents and total capital is equity plus net debt.
During the year 2011 the Group strategy, which was unchanged from 2010, was to maintain a
gearing ratio within a 25% to 50% range or above or below for a short-term in unforeseen
circumstances. The gearing ratios at 30 June 2011 and 30 June 2010 were follows:
2011, $’000
2010, $’000
Total borrowings
32,470
101,373
Less cash and cash equivalents Net debt
32,470
101,373
Total equity
151,600
101,975
Total capital
184,070
203,348
Gearing ratio
18%
50%
According to the Annual Report we can say that politic of the company is clear and aims to increase
the profit of all the components of the company to minimize costs and loans, and
liabilities. Also, there are good insurance policies for different risks, hedging assets and the like
(more details can be found in the annual report).
Question 6.
The financial performance indicators were developed by the Bureau of Local
Government Finance (BLGF) of the Department of Finance (DOF) to provide a brief assessment
of the financial health of the financial structures. Although this system has not been widely
disseminated to them yet, this has been used by the BLGF in monitoring the fiscal and financial
situation of selected companies. Specifically, this system is a tool in strategic planning and
forecasting; performance accounting and benchmarking; early warning system; quality management;
and incentive system. These indicators attempt to measure company’s financial health beyond
mere cash surpluses and presence of physical infrastructure. The system is composed of the
three basic elements of financial policy (i.e., revenues, expenditures, and debt) which
determine the overall financial performance of organization. These elements are processed as
follows:
 revenue indicators – revenue target accomplishment rate, real property tax accomplishment
 rate, cost to collection ratio, and revenue per capita;
 expenditure indicators – expenditure rate, social expenditure rate, economic expenditure
ratio, personal services expenditure ratio, internal financing ratio, and expenditures per
capita;
 debt indicators – debt servicing ratio;
 overall financial indicators – cash target accomplishment rate, savings or dissaving rate, and
enterprise profitability rate.
Key factors arising from the interaction of the said elements provide a better understanding of the
organization financial position. These factors are quality and efficiency of resource mobilization;
quality and sustainability of spending; and capability to manage expenditure and the debt burden.
Financially strong and financially weak organization may be identified after the application of the
performance indicators. Simply, organizations are considered financially weak if at least one third
of the benchmarks fail and its regular operation incur cash deficit. Otherwise, they are financially
strong. It is advisable to sort organizations by income class, political level (i.e., municipalities,
cities, and provinces), or by level of internal revenue allotment before application of the
fiscal/financial performance indicators to make the assessment fair and meaningful (BLGF,
undated).
When some organization need improve their status and position, it can decide in which direction it
needs to change. For example, you can seek to increase demand, it is possible to conduct a PR
company to disclose to the buyer the goods, but we can strive to improve product
quality and reliance that the buyers came themselves (all depends on market research). The
same company may need more money for some new product, then it needs to attract investors
who would be interested in co-operation by showing them that it is really beneficial for them.
If you (your organization) want to change something, you need to know analyze and decided what
you want to change (with the help of management, marketing and analytics), in other case you can
loose everything you have.
Every company needs to develop and financial performance indicators show what kind of the
development organization needs (where the pluses and minuses of the company where its
strong and weak its sides). And we must always watch for this.