Annual Report 2018 F or p er so na l u se o nl y 2018 Annual Report | Tassal Group Limited and Controlled Entities Directors Allan McCallum, Dip.Ag Science, FAICD (Chairman) Trevor Gerber, B.Acc CA...

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Annual Report 2018 F or p er so na l u se o nl y 2018 Annual Report | Tassal Group Limited and Controlled Entities Directors Allan McCallum, Dip.Ag Science, FAICD (Chairman) Trevor Gerber, B.Acc CA (SA) Christopher Leon, BScEng, MEngSci, FAICD Mark Ryan, B.Com, CA, MAICD, FAIM (Managing Director) John Watson, AM Chief Executive Officer Mark Ryan, B.Com, CA, MAICD, FAIM Company Secretary Monika Maedler, BEc, LLB, FCIS Registered Office* Level 9 1 Franklin Wharf Hobart Tasmania 7000 Telephone (03) 6244 9099 Facsimile (03) 6244 9002 E-mail [email protected] Website www.tassalgroup.com.au ABN 15 106 067 270 (*Also principal administration office) Auditors Deloitte Touche Tohmatsu Level 8 22 Elizabeth Street Hobart Tasmania 7000 Bankers Westpac Banking Corporation Level 7 150 Collins Street Melbourne Victoria 3000 BankWest Level 6 600 Bourke Street Melbourne Victoria 3000 Coöperatieve Rabobank U.A. Level 9 1 Collins Street Melbourne Victoria 3000 Stock Exchange Listing Tassal Group Limited is listed on the Australian Securities Exchange. The Home Exchange is Melbourne, Victoria. ASX Code: TGR Share Registry Register of Securities is held at the following address: Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford Victoria 3067 Enquiries (within Australia) 1300 850 505 Enquiries (outside Australia) 61 3 9415 4000 Investor Enquiries Facsimile 61 3 9473 2555 Website www.computershare.com Executive Directory Mark Ryan Managing Director and Chief Executive Officer Mark Asman Head of Aquaculture Andrew Creswell Chief Financial Officer Ben Daley Head of Supply Chain and Commercial Services Dale Williams Head of Sales and Marketing Company Directory F or p er so na l u se o nl y Tassal Group Limited and Controlled Entities | 2018 Annual Report 1 Chairman’s and Chief Executive Officer’s Report 2 Directors’ Report 9 Auditor’s Independence Declaration 26 Table of Contents 27 Income Statement 28 Statement of Comprehensive Income 29 Statement of Financial Position 30 Statement of Changes in Equity 31 Statement of Cashflows 32 Notes to the Financial Statements 33 Directors’ Declaration 75 Independent Auditor’s Report 76 Additional Securities Exchange Information 79 Contents F or p er so na l u se o nl y 2 2018 Annual Report | Tassal Group Limited and Controlled Entities Chairman’s and Chief Executive Officer’s Report 1. REVIEW OF OPERATIONS The Directors of Tassal Group Limited (Tassal) are pleased to present the Company’s Appendix 4E: Full Year Report to 30 June 2018 (FY2018). FY2018 results clearly demonstrate Tassal’s strategy in action – where the Company’s operating model, key investments in infrastructure and environmentally responsible programs, combined with fish growth and favourable market dynamics, have delivered record results across key operating metrics. The Directors believe in FY2018 Tassal delivered on its growth ambitions – generating responsible and sustainable salmon and seafood growth, while increasing operating, financial, social and shareholder returns. Overall, we are delivering on our potential. As Tassal moves into FY2019, the industry dynamics (domestic and export) continue to be favourable, with strong demand for salmon, combined with supply constraints, expected to continue in the medium term - underpinning higher salmon prices. Tassal has supply growth forecast for FY2019 and beyond. Overall, it is incumbent on Tassal to responsibly balance our initiatives and outcomes, aligned to our balanced scorecard objectives across our people, planet, product and performance. In line with the United Nations Sustainable Development Goals, and supported by world-class partnerships and certification programs, we have set long term financial, operational, social, biosecurity and environmental ambitions centred on collaboration, shared value and responsible growth. Operational highlights • Strong salmon position across all growth metrics o Strong FY2018 – average harvest size up 15.4% underpinned 21.4% growth in harvest tonnage o Well positioned for FY2019 and beyond – live fish size at 30 June 2018 up 5.3% resulting in 5.5% increase in live biomass for harvest tonnage in FY2019 • Fish size initiatives enable delivery to Asian export markets at optimal price points, while supporting domestic retail and wholesale markets. • Favourable salmon market dynamics: Strong consumer demand, particularly in the wholesale market, offsetting cost pressures. This demand has resulted in an optimisation of sales (including sales mix), and together with an improving salmon base selling price – both in wholesale and retail markets - which has allowed Tassal to optimise and grow margins. Domestically and globally, salmon demand is outpacing supply. • Seafood and salmon growth strategy is the right strategy – De Costi Seafoods continues to drive salmon and seafood growth, with strategic opportunities – like the acquisition of the Fortune Group’s prawn farms - to deliver further seafood supply chain efficiencies. • Strong results for FY2018 with an Operational NPAT of $50.3 million and a solid platform to drive continued growth in FY2019 and onwards – for our customers and shareholders. Our people Tassal’s Board has endorsed a health and safety strategy, with a Can-do Safely culture at its core – Zero Harm for Everyone, Everywhere. Tassal’s commitment to safety is consistent with the company’s focus on maximising shareholder value. Ultimately, no job is so important that it cannot be done safely. Overall, Tassal’s safety performance improved from FY2017: KPIs FY18 FY17 LTIFR 0.4 0.5 MTIFR 11.8 13.1 TRIFR 12.2 13.6 Compliance Scorecard 97.0% 96.7% Driving Safety Culture Scorecard 94.1% 93.0% 1. Definitions: LTIFR – Lost Time Injury Frequency Rate: (Number of Lost Time Injuries/Total Number of Hours Worked) X 1,000,000 hours MTIFR – Medical Treated Injury Frequency Rate: (Number of Medically Treated Injuries/Total Number of Hours Worked) X 1,000,000 hours TRIFR – Total Injury Frequency Rate: LTIFR + MTIFR+ Restricted work injuries + Fatalities From an external perspective, Tassal’s safety achievements would be considered excellent. However, until the Company delivers its core value of Zero Harm, Tassal will rank itself as operating at an unacceptable level. Salmon Across all salmon metrics – fish size and overall biomass have led to an increase in harvest tonnage – Tassal has outperformed. Through our continued focus on fish health, risk mitigation, research and development and selective breeding, we finished the year in a strong salmon supply position, which underpins future growth. As can be seen from the charts right, Tassal’s fish size initiatives have delivered larger fish. The larger fish have enabled delivery to Asian export markets at optimal price points, while supporting domestic retail and wholesale sales. The export salmon market was strategically targeted and flexed to optimise salmon returns across all markets. Export pricing softened in H1 FY2018, recovering strongly in H2. Most sales were in H1. Exports allowed cash generation and optimised returns to be generated across the business, and overall, export sales volume was up 98.4% and sales revenue up 77.3%. Over the past 12 months Tassal has benefited from favourable salmon market dynamics. Tassal, like the industry both domestically and globally, has experienced cost pressures. However, this has been offset by strong consumer demand for our salmon, which has improved pricing conditions and allowed for further optimisation of our sales mix to maximise margins. While supply pressures continue in both the domestic and global markets, pleasingly, Tassal has been able to increase its supply position. F or p er so na l u se o nl y Tassal Group Limited and Controlled Entities | 2018 Annual Report 3 For Tassal, the following points are worth noting from a salmon market dynamics perspective: • Strong pricing in the domestic salmon market o Tassal has been able to increase its supply position, despite a challenging warm summer 2017/18 for the Tasmanian salmon industry. Domestically, demand is outpacing supply o Strong pricing. Average wholesale fresh hog pricing held for most of FY2018 and then increased in the last quarter, with pricing for the month of June 2018 circa 5.2% above June 2017 • Optimising the domestic market mix o Wholesale volume at 42.4% vs. retail volume at 57.6% (FY2017: 43.5% vs. 56.5%) o Wholesale sales volume was up 6.1% - sales revenue was up 6.2% over FY2017 o Retail sales volume was up 11.2% - sales revenue was up 4.5% over FY2017 o Significant growth in retail fresh packaged products at 11.4% over FY2017 Seafood The Directors believe Tassal’s seafood and salmon growth strategy is the right strategy. De Costi Seafoods has been a very successful strategic acquisition, that continues to drive salmon and seafood growth. We see further potential strategic growth opportunities to deliver additional seafood supply chain efficiencies supporting a sustainable seafood business and strong returns to shareholders. Our acquisition of De Costi Seafoods is a prime example of Tassal unlocking large synergies in the seafood supply market to support increased consumption per capita of salmon and seafood and grow shareholder value. Opportunities continue to be presented and assessed in the seafood value chain to diversify earnings and provide greater shareholder certainty through operational risk mitigation. Opportunities must present strong efficiencies, be acquired at an appropriate value and be earnings per share accretive to be pursued. The Directors are pleased to announce that Tassal has signed sale agreements to acquire the land, assets and inventory of the Fortune Group prawn aquaculture business (Fortune Group). It comprises three prawn farms located at Yamba, New South Wales; Proserpine, Queensland; and Mission Beach, Queensland. Fortune Group is one of the largest footprint prawn farming operations in Australia. As a long-term supplier to De Costi Seafoods, Fortune Group is well known to Tassal. The acquisition is subject to conditions precedent, with completion expected in September 2018. The key condition precedent for the acquisition of the 3 prawn farms is for the vendor to obtain orders from the relevant authority for the Proserpine farm (on terms and conditions satisfactory to Tassal) that the development permit remains in place, and confirming that there has been no abandonment of the land that is subject to the development permit. For further
Answered 2 days AfterJan 06, 2021

Answer To: Annual Report 2018 F or p er so na l u se o nl y 2018 Annual Report | Tassal Group Limited and...

Himanshu answered on Jan 08 2021
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Cash Flow Analysis
Cash flow analysis is a financial document that tracks how money comes in and out of a business for a given duration. It will enable company to understand better about where money is flowing and how much cash company have at any particular period. Net income in the year 2018 was 57.29 million with Net cash 23.82 million. If we talk about 2019, Net income has marginally increased to 58 million with Net cash 24.5 million. While in 2020, company Net income increased by 18 percent to 69 million with 21 million cash. This depicts companies’ overall strength over the business and managerial effectiveness. During the downturn (Covid-19), business had performed massively which
reflects a successful policy implemented by the businesses to conquer any crisis. In 2020, Net cash decreased by 14 percent approx. as company has increased their financing activities which includes long term liabilities, owner’s equity and changes in short-term borrowings. In 2019, businesses operational cash flow increased substantially by more than 100 percent as corporations were successful in collecting cash-form customers. Companies cash flow form financing activities had also increased. Company has increased their investment products which suggest increasing the cash generating relating to investment activities. During 2020, companies cash flow from operating has decreased significantly to 44.5 percent. This reflects companies’ failure in consuming amount of cash from performing out its operational operations over a timeframe. Operating functions cover the production of income, the payment of expenditures and the financing of working capital. But Financing activities has increased approx. 74 percent. A significant amount of cash flow from funding operations ensures that more capital is coming into the organization than is flowing out, which raises the assets of the organization. The company paid out dividends worth 36.95 million which included final fully franked dividend for worth 9.00 cents per share and interim fully franked dividend of 9.0 cents per share. This brings the total dividend for the year to 18 cents per share, representing a payout ratio of 27 percent, which is considered to be appropriately balancing the distribution of profit to shareholders with the need to reinvest earnings for future growth. Also in the case of financial crisis, if a business decides to continue paying dividends, it implicitly signals to customers that it is positive about future expectations and growth opportunities, even though current success is in difficulties.
Calculation of Ratios
1. RETURN ON EQUITY (ROE): Net income/Average Shareholders’ equity
Average Shareholder’s equity: (Current year+ Previous year)/2
2. OPERATING PROFIT MARGIN: Operating Income/Revenue
3. INVENTORIES TURNOVER RATIO: ((Cost of goods sold)/ (Begin inventory+ Ending Inventory)/2))
INVENORY TURNOVER TIME PERIOD: 365/ (Inventory turnover ratio)
4. CURRENT RATIO: Current Assets/Current Liabilities
5. DEBT TO ASSETS RATIO: (Long-Term Debt + Short-Term Debt)/Total Assets
6. INTEREST COVERAGE RATIO: Earning before Interest and Taxes/Interest Expense
Working Capital Management Analysis
Receivable Turnover Ratio: Net sales / Average account Receivables
Receivable Turnover Period: 365/Receivable Turnover Ratio
Inventory Turnover: Cogs/ (Beginning + Ending Inventory)/2
Inventory Turnover Period: 365/Inventory Turnover Ratio
Payables Turnover: Cogs/Average Accounts Payable
Payable Turnover Period: 365/Payable Turnover
Cash Conversion Cycle
Working capital evaluation is employed to assess the liquidity and adequacy of existing assets relative to current liabilities.  The duration of other debts, such as contingent liability, will also be added to this measurement to obtain a comprehensive picture of precisely when liabilities are to be fulfilled. Four main components of Working capital management analysis are Accounts receivable, Inventories, Accounts Payables and Cash.
Accounts receivable: The receivable turnover ratio, also recognized as the debtor's profitability proportion, is a productivity proportion that calculates how effectively money is obtained by a business – and, by implication, how adequately its funds are used. The receivable turnover ratio estimates the number of days a business receives its accumulated receivable accounts within a given timeframe. In 2018, the receivable turnover ratio and the period were 26 and 14, suggesting that 14 times the company turned the receivables into cash. In 2019, the receivable turnover and period contributed to 35.9 and 10.2, which shows a drop in the exchange ratio relative to the previous year, which also depicts poor performance. In 2020, Receivable turnover decreased immensely to 17.6 and Time Period were increased to 20.7 which displays a management efficiency. Inventory turnover is a measurement that demonstrates how frequently a business has sold and substituted inventory over a given timeframe. Inventory turnover ratio and timeframe reflect a very uncertain situation, provided that the company's inventory turnover in the year 2019 was down relative to the prior year, which may be attributed to administrative inefficiency, yet again in 2020, the company improved its turnover and the frequency of the inventory transformation, which illustrates an enhancement in performance. Accounts Payable turnover indicate how many days a business paid off its accounts payable during a span of time. Accounts payable are short-term loans owed by a corporation to its customers and creditors. The turnover ratio of the accounts payable indicates how effective a business is in paying its suppliers and its short-term debts. As per the assessment, we can clearly say that company took company has high payable ration. A higher ratio of accounts payable signifies that a business pays its bills for a shorter period of time than those with a lower ratio. Low AP proportions could indicate that a business is having issues to pay its bills, but that’s not always the issue. Cash conversion cycle has given negative outcome that ensures that companies operating capital is not locked up for a long time, and company has better liquidity. Company can improve the working capital management by decreasing the gap between accounts receivable and Payable. Quickly resolve disputes with customers and suppliers, Better inventory management, analyzing expense and by reducing debt servicing expenses.
Further Company Analysis
Revenue growth rate has decreased year by year. Economic dynamics oblige consumers to make fewer disposable purchases. Cost of good sold also increased marginally. Declining sales indicates that the organization is having a peak today, but is continuing to get less and less each year. This will imply that any change in operational expenses or decreased sales would ensure that the organization would incur a loss. Further growth expected in FY21, both...
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