Financial Analysis of Blackmore Company †Get a Complete Report

Question: Discuss about the Report for Financial Analysis of Blackmores Company. Answer: Introduction of Blackmores It is a natural health company which is leading in Australia. The founder of this company Maurice Blackmore (1906-1977) was actually passionate about the natural health from the vision of the naturopath. He actually believes that health is more important than anything in life and also he encourages the people that they should take care of themselves as well as their health. This company offers products and services which provides natural approach at a large extent to health which is based on the experts advice of vitamins, minerals, herbs and nutrients. They provide the good quality range in vitamin, minerals, herbal, and nutritional supplements. This company has the most trusted name in the field of natural health as it is concerned about the community and environment and also supports it. This company offers the best natural health care products and also provides services to the customers in order to meet the highest quality standards. They actually work on the customer satisfaction along with their expectations and to fulfill that expectation. This company was also awarded as the Australias Most trusted brand in the field of vitamins which is the supplements for the seventh year running in the year of 2015. Blackmores was established across 80 years ago by the naturopath Maurice Blackmore. This company adopted the naturopathic heritage which affects the Blackmores approaches about the health condition and the prosperity of the wellbeing at a large extent. They actually use their traditional approach and also adopt the current approaches for products like they have the knowledge about the herbal things but they also acquire the knowledge about the nutrition for the making of medicines. They research and innovate new things for their product and adopt those changes only which minimize the adverse affect and support the environment as well as community and have the identification as an employer of choice. This company produced products more than 250 range of vitamins, minerals, herbal and nutritional supplements in their house of experts with the help of ingredients which has the highest quality in the whole world. They produced products according to the requirement of the International Pharmaceutical inspection convention and pharmaceutical inspection co-operation scheme (PIC/s) standards of goods manufacturing practice (GMP). This company offers the wide range of innovative services to the customer which includes naturopathic advisory service which is absolutely free which is used by the 50000 customers or people last year. This company also has the award-winning website which provides the information to the customer or any person according to their health problem and also about the wellbeing resource. They also provide training and education in order to support their retail partners. They believe in social responsibility towards environment, society which includes about the sustainability like the world wildlife fund sustainable fish oils partnership and supports the community and take innovative steps. They also give charities about millions of dollars according to the running festival (Blackmores 2014). The Blackmores group It is the ASX 100 publicly- listed company which has the 1000 employees or even more than that in Australia, New Zealand and Asia. They have many consumers in 17 countries which includes- Bioceuticals It is the leading provider about the therapeutic supplements and the healthcare practitioner nutritional in Australia. They adopt the quality, innovation and integrity as their principles in order to guide their work. It has the most important position in order to ensure the complementary and also they have alternative option for the medicines which becomes the important part of the Australian allied healthcare industry. Pure animal wellbeing (PAW) With above the 80 years of experience for human beings in natural healthcare, Blackmores has now decided to extend itself to the animals health also and get an experienced about animal health and also the passionate about the animal health division. For this experience, they provided the experts like vet nary doctor which develop the natural healthcare products for animals which is clinically proved. Blackmores institute This institute was launched in 2012. This institute provides the education and training to the experts as well as the new comer who are interested in the field of medicines and they have the experts such as Dr Lesley Braun who is the researcher in the field of natural health. This institute focuses on activities like research, review of natural medicines and knowledge about the programs. This institute also provides credit education like in previous year 4000 healthcare professionals and 10000 pharmacy assistant was got educated. Blackmores Asia This company operated in china, Singapore, Thailand, Malaysia, Taiwan, Hong Kong, Korea, Indonesia, Vietnam, Cambodia, Kazakhstan, Myanmar, Mongolia and Japan. Fusion health It has joined the Blackmores group in 2016. It provides Chinese herbal medicines and has the Australias leading provider. Bemore The company has the partnership with Bega in order to produce the nutritional foods with high quality child nutrition range. There was a huge growth of the company and has the strong leadership quality that the CEO Christine Holgate was announced as the CEO of the year 2015 and is the beginning of the chair of the Australia-ASEAN Council and the Markus Blackmore who is the son of the founder of company Maurice Blackmore is now the chairman of the board (Blackmores, 2014). Blackmores strategy The company actually accepts only those brands which is trustworthy according to their needs and requirements and which is also acceptable by the customers, health care professionals and by the government and it must be natural health supplement brand. They have their presence or the name among various multiple channels on the top of e-commerce platforms and also have the distribution offline channel like personal care stores, pharmacy, department stores and hypermarkets. They provide best education class and awareness on local website about the natural health education. They also adopt innovative things and changes for the product development. Financial and operational highlights From the previous year, group sales has been increased by 36% and become $471.6 million. Net profit also increased by 83% from the previous year of $46.6 million. New products were launched and there was an extension of 170. It is recognized as most trusted brand in a category and also maintains that image from seventh year. Net debt were decreased by 87% and become $7.1 million. Operating cash flow has become doubled. Increase in net assets per share by 38%to $5.27. Earnings per share also increased by 81.4% and become 270.7cents (Blackmores 2013). Table1 $ in millions Financial year 310 13 340 14 490 15 Figure1 group revenue is $471.6millions which represents the growth of the last years profit. Table2 $ in millions Financial year 26 13 26 14 47 15 Figure2. Group net profit after tax is $46.6 million which shows the growth of 83% of last years profit. There is growth in profitability by 88% of Blackmores Australia. Sales increased by 43% and become $317.4 million. This company maintains their relationship with the retailers and with the customers also and provides them increase in investment by 20%. Blackmores New Zealand acquires growth of the sales about 13% which is effective in New Zealand market. The sales of the Asian market were increased by 26% for the year of $84 million which is doubled from the five years ago. Earnings before interest and tax were also increased up to 82% and become $8.3 million. The Malaysia branch of Blackmores has increased their sale up TO 10% and earnings before tax and interest sere also increased by 22% to 3.3 million. But the Thailand market was affected by soft market and get decline the sales up to 7% and earnings before interest and tax up to 27%, but it has the contribution towards profit at $6.3millions in group earnings, Whereas Korea, Singapore and Hong Kong were increasing their sales an d perform well. Table3 In cents Financial year 125 13 125 14 200 15 Figure3. The final dividend per share is 135cents where as ordinary cent is 203cents per share of the whole year, which means that there is 60% increase in total ordinary dividends of 127 cents per share. Table4 $ in millions Financial year 65 13 57 14 3 15 Figure4. the net debt level was $1.7million which is compared to $54.4million from the previous year. Table5 Cents Financial year 140 13 150 14 270 15 Figure5. increase in earnings per share by 81.5% to 270.7cents. 3 years history $0 2015 2014 2013 sales 471,615 346760 326603 earnings before interest, tax, depreciation and amortization 78,655 46055 44692 depreciation and amortization 6391 6266 5989 earnings before interest and tax 72264 39789 38703 net interest expense 3432 4826 4752 profit before tax 68832 34963 33951 income tax expense 22276 9534 8975 profit for the year 46556 25429 24976 net debt 7069 54401 69043 shareholder equity 132915 104226 98051 total assets 293407 236594 231477 current assets 187844 131376 124030 current liabilities 114998 58040 45035 net tangible assets 90809 65185 58860 net operating cash flow 71127 37491 22014 number of shares on issue 17224 17113 16972 earnings per share 270.7 149.2 147.9 ordinary dividend per share 203 127 127 share price at 30 June $75.27 $27.20 $26.94 net tangible assets per share $5.27 $3.81 $3.47 return on shareholders equity 35.00% 24.40% 25.50% return on assets 27.30% 17% 19.10% dividend payout ratio 75.00% 85.10% 85.90% gearing ratio 5.10% 34.30% 41.30% EBIT to sales 15.30% 11.50% 11.90% effective tax rate 32.40% 27.30% 26.40% current assets to current liabilities (times) 1.63 2.25 2.75 net interest cover 21.10 8.2 8.1 gross interest cover 18.80 7.7 7.9 % change of prior year sales 36.00% 6.20% 25.20% EBITDA 70.80% 3.10% -4.70% EBIT 81.60% 2.80% -7.80% Profit for the year 83.10% 1.80% -10.20% EPS 81.40% 0.90% -10.80% ordinary dividend per share 60.00% 0.00% 0.00% Statement of financial position As at 30th June 2015 2015 2014 assets $000 $000 current assets cash and bank balance 36931 18599 inventories 107076 70567 receivables 38665 38742 other assets 5172 3468 total current assets 187844 131376 non-current assets property, plant and equipment 60735 63613 investment property 2160 2160 other intangible assets 18530 18363 goodwill 16863 16863 deferred tax assets 6713 3815 other assets 562 404 total no-current assets 105563 105218 total assets 293407 236594 liabilities current liabilities trade and other payable 94908 49153 current tax liability 12862 2793 provision 6284 5471 other liability 944 623 total current liabilities 114998 58040 non-current liabilities interest bearing liabilities 44000 73000 provision 730 906 deferred tax liability 202 other liability 562 422 total non-current liabilities 45494 74328 total liabilities 160492 132368 net assets 132915 104226 equity capital and reserves issued capital 37753 34502 retained earnings 87099 66497 reserves 8063 3227 total equity 132915 104226 Notes to the financial statements trade and other receivables 2015 2014 current current trade and other receivables 107355 71329 allowance for doubtful debts -169 -688 allowance for claims -927 -800 106259 69841 goods and service tax recoverable 615 723 other receivables 202 3 107076 70567 inventories 2015 2014 ingredients 1806 1458 raw material 10420 17034 finished goods 26439 20250 38665 38742 property, plant equipments 2015 2014 cost 99935 96976 accumulated depreciation -39200 33363 60735 63613 carrying amount of: freehold land 12848 12848 building 31054 31985 leasehold improvements 350 316 plant equipments 15049 17985 motor vehicles 157 116 capital work-in-progress 1277 363 60735 63613 goodwill 2015 2014 cost $0 $0 balance at the beginning of the year 16863 17575 patent recognized during the year -712 balance at the end of the year 16863 16863 goodwill has been allocated as follows pure animal wellbeing 658 658 bioceuticals 16205 16205 16863 16863 intangible assets pure animal wellbeing 1189 1189 bioceuticals 15481 15481 16670 16670 trade and other payables 2015 2014 trade payable 52835 25928 goods and service tax payable 2940 1866 other creditors and accruals 39133 21359 94908 49153 current tax liabilities 2015 2014 $000 $000 income tax payable 12815 2793 withholding tax payable 47 12862 2793 interest bearing liabilities 2015 2014 secured at amortized cost bank bills 44000 44000 Provisions 2015 2014 current employees benefit 6136 5178 directors retire benefit 148 293 6284 5471 non-current employees benefit 730 906 issued capital 17,224,284 fully paid ordinary shares 37753 34502 earnings per share 2015 2014 cents pe cents per r share share basic earnings per share 270.7 149.2 diluted earnings per share 269.1 149.2 Conclusion: The Blackmores company has a good position in the market with a cash conversion rate of 112% and also has a working capital of $46million and operating cash flow $60million as compared to previous year. Net debt result was positive at $23million with net interest cover at 50times as compare to previous year. The company has good impact on the whole Australian market in purchasing raw material and has the $0.5million net benefit on foreign exchange (Blackmores, 2016). References: Blackmores.(2014).About Blackmores .Retrieved on 19 August 2016 from https://www.blackmores.com.au/about-us Blackmore.(2014).About blackmores.Retrieved on 19 august 2016 from https://www.blackmores.com.au/about-us/company-information/about-blackmores Blackmores.ltd.(2013). Presentation to Goldman Sachs Emerging Companies Conference. Retrieved on 19 August 2016 from file:///C:/Users/Guest/Downloads/analystbriefing.pdf Blackmores.(2016).Doing business in china. Retrieved on 19 August 2016 from file:///C:/Users/Guest/Downloads/Shareholder%20Presentation%206%20May%202016.pdf Hovers.inc.(2016).Financials Information for BLACKMORES LIMITED.Retrieved on 19 August 2016 from https://www.hoovers.com/company-information/cs/revenue- financial.blackmores_limited.90213448103eebc4.html Finance.ltd.(2016).Blackmores the best of health.Retrieved on 19 August 2016 from https://www.finnewsnetwork.com.au/CompanyReports/Blackmores-Limited/0 Blackmores.(2014).investor centre.Retrieved on 19 August 2016 from https://www.blackmores.com.au/about-us/investor-centre Blackmores.(2014).ASX announcements.Retrieved on 19 august 2016 from https://www.blackmores.com.au/about-us/investor-centre/asx-announcements Blackmores.(2014).Governance board of directors.Retrieved on 19 august 2016 from https://www.blackmores.com.au/about-us/investor-centre/corporate-governance Blackmores.(2013).Improved second quarter result for Blackmores.Retrieved on 19 august 2016 from file:///C:/Users/Guest/Downloads/ShareholderLetterHalfYearResultsDec2013%20(1).pdf Morningstar.inc.(2016).Blackmores ltd BKL.Retrieved on 19 august 2016 from https://financials.morningstar.com/income-statement/is.html?t=BKLregion=aus Blackmores.(2013).welcome to the 50th annual general meeting of Blackmores limited.Retrieved on 19 august 2016 from file:///C:/Users/Guest/Downloads/AGM%20Presentation%20ASX%20FINAL.pdf