Sheet1 Formula2020Units Liquidity Ratios Current RatioCurrent Assets/Current Liabilities2.3ratio Quick Ratio(Current Assets – Inventory – Prepaid Expenses)/ Current Liabilities1.1ratio...

1 answer below »
I need a report that undertakes a general financial analysis, comparing financial position and performance over the two most recent financial years, of Bega Cheese Ltd.
3000 words.
Referencing: APA 6th Edition.

Liquidity Ratios
Current RatioCurrent Assets/Current Liabilities2.3ratio
Quick Ratio(Current Assets – Inventory – Prepaid Expenses)/ Current Liabilities1.1ratio
Profitability Ratios
Gross Profit MarginGross Profit/Sales36Percent
Net Profit MarginPAT/Sales6Percent
Operating Profit MarginEBIT/Sales12Percent
Return on AssetsPAT/Average Assets2.73Percent
Return on EquityPAT/Average Equity6.12Percent
Efficiency Ratios
Accounts Receivable Turnover ratioCredit Sales/Average Accounts Receivables13.62times
Days Receivables (DR)Average Accounts Receivables/ (Credit Sales/365)26.8days
Accounts Payable Turnover RatioCredit Purchases/Average Accounts Payables9.06times
Days Payables (DP)Average Accounts Payables/ (Credit Purchases/365)40.28days
Inventory turnover ratioCost of Goods Sold/Average Inventory5.47times
Days Inventory (DI)Average Inventory/ (Cost of Goods Sold/365)66.7days
Cash Conversion CycleDR+DI - DP53.22times
Capital Structure Ratios
Debt to AssetsDebt / Total Assets36Percent
Equity to AssetsEquity / Total Assets65Percent
Debt to EquityDebt/Equity55Percent
Interest coverage ratioEBIT/Interest4.22times
Market Performance Ratios
Earnings per sharePAT/Number of Shares0.11$
Dividend per shareDividend/Number of Shares0.05$
Price Earning MultipleMarket price of share / EPSNA

2020 Annual Report
Performance Highlights 02
Chairman’s Report 04
Chief Executive Officer’s Review 06
Directors’ Report 12
Auditor’s Independence Declaration 36
Corporate Governance Statement 37
Financial Statements 39
Notes to the Financial Statements 44
Directors’ Declaration 88
Independent Auditor’s Report 89
Shareholder Information 95
Corporate Directory 96
A special thanks to the staff, farmers and customers whose images we have used through
the report to illustrate relevant facts of our business. They represent the many people that
together make Bega the Great Australian Food Company it is today.
Performance Highlights
32 ▲
Revenue ($m)
Revenue has increased by $73 million, or 5%, compared to the prior year.1,493 millionFY20
1,420 millionFY20
International all
business units
Bega International
Export sales totalling $523 million, being an increase of 15% on
the prior year, comprised 35% of total sales.
FY2020 Revenue
* the Group has two new reporting segments:
i. Branded – the manufacture of bulk ingredients into value added consumer products for internal or external brands.
ii. Bulk – the manufacture of bulk dairy ingredients, nutritional and bio nutrient products.
32 ▲
Financial results
The statutory result for each of FY2020 and FY2019 included a number of non-recurring items, which in FY2020 related primarily to legal costs
and in FY2019 related primarily to business acquisitions, impairment of Coburg assets and other corporate activity. On a statutory basis for
FY2020 earnings before interest, tax, depreciation and amortisation (EBITDA) was $87.8 million, profit before tax (PBT) was $31.0 million and profit
after tax (PAT) was $21.3 million. On a normalised basis for FY2020 EBITDA was $103.0 million, down 2%, PBT was $46.2 million, up 3%, and
PAT was $31.9 million, up 3%.
EBITDA ($’000) Basic earnings per share (cents)
Normalised* Statutory
FY2019** FY2020
Normalised* Statutory
14.9 14.9
FY2019** FY2020
Normalised* Statutory
Profit after tax ($’000) Total dividend per share (cents)
30,929 31,886
FY2019** FY2020
Production volume (tonnes)
Production has decreased by 2%, compared to the prior year,
reflecting the impact of drought and supply competition.
Total dividend per share
Bega Cheese Group has declared a final dividend of 5.0 cents per
share, taking the total dividend relating to FY2020 up to 10.0 cents per
share. This represents a total payment of $21.4 million, being 67% of
the normalised profit after tax and a decrease of $2.0 million, or 9%, on
the prior year.
*Normalised results exclude the impact of significant events occurring during the year.
**Amounts have been restated, see note 32 of the financial statements for details.
4 ▲
Chairman’s Report
In the last two decades, it has often been the case that leaders from all
walks of life have talked about a particular year as being tumultuous, a
year of challenge, a year of change, a year of opportunities, a year the
likes of which we have never seen before. While these statements are
with good reason and foundation it is my view that FY2020 has made
many of the preceding 20 years look simple and peaceful by
comparison. At Bega Cheese we have faced highly competitive milk
procurement markets, significant drought impacting our supply base,
substantial increases in input costs across the supply chain, volatility
in our markets and currency, never before experienced fires in Bega
and Gippsland, and this was all prior to the arrival of COVID-19 and the
disruption it has brought to our markets, customers, suppliers, staff
and the global community.
It is in the above context that I am proud to report on the sound and
stable business performance of Bega Cheese for FY2020. While it has
been a challenging year on many levels the strength of Bega Cheese’s
strategy, experience and culture has once again been demonstrated
and continues to position us well to manage challenge and change.
It is important that the company acknowledges the misstatement in our
FY2019 accounts which was discovered and corrected in our 1H FY2020
report. The misstatement was related to accounting systems changes
associated with our Koroit acquisition and meant that EBITDA was
overstated in the FY2019 year by $10.5 million. The company was very
embarrassed by the error in our accounts and has conducted an internal
and external review resulting in structural, personnel and process
changes to ensure this does not happen again. Comparisons in my
report will be to the corrected FY2019 EBITDA, EBIT, PBT and PAT.
I am pleased to once again report that Bega Cheese has continued to
grow with total revenues in FY2020 being $1.49 billion, an increase of
5%. While revenues continue to grow, a highly competitive milk supply
environment and market both in Australia and internationally meant
that normalised EBITDA and PAT were relatively stable at $103.0 million
and $31.9 million respectively. Importantly, the company has reduced
net debt significantly with FY2020 net debt being $236.4  million a
reduction of 18%.
The impact of drought and supply competition meant that overall
production decreased by 2% to 298 thousand tonnes. Bega Cheese
has continued to review and integrate its infrastructure to reflect
changes in both our supply profile and the market. Following the
closure of Coburg in FY2019 we have completed the integration of
Koroit, continued to focus Tatura on high value dairy proteins and
nutritionals, commenced consolidation of some of our processed
cheese capacities between our Bega and Strathmerton facilities,
created greater capacity flexibility at our Port Melbourne facilities and
progressed toll manufacturing arrangements with other dairy industry
The ongoing refinement of our manufacturing infrastructure reflects
both changes in our supply regions and the market and is a great
demonstration of the agility and experience of the business.
The strategy of having diversified supply regions producing high value
dairy ingredients for both the retail and dairy nutritionals markets
continues to be a priority for the business. An important initiative this
year was the construction and commissioning of our new lactoferrin
infrastructure at Koroit. I am pleased to report that despite the
challenges of COVID-19 the plant was commissioned on time and the
company will receive the full benefit of the new capacity in FY2021.
It has been an important year for our Bega Foods business. Sales in
our peanut butter range continue to grow, particularly as a result of the
successful launch of our Simply Nuts products, additionally we
continue to develop our Farmer’s Table cream cheese and butter
branded business, and the promotion of Vegemite has seen a return to
growth, and the iconic status of this much loved brand reinforced.
Bega Foods has successfully expanded in the spread’s category with
the launch of B honey, which combined with our existing range and
new product development gives us significant presence in Australian
retail and food service channels in dairy and spreads. Bega Foods has
continued to grow our international retail and food service business
prior to the onset of COVID-19 where sales have since stabilised.
It is noteworthy that the Bega Foods business was able to quickly
respond to changed market conditions as a result of COVID-19, the
business managed a collapse in both the Australian and international
food service markets and a short term surge in demand in retail. The
capability and flexibility of the team to quickly adjust and change in
both the dairy and food business again confirms value of the diversity
of the business and customers we serve in Australia and internationally.
We were pleased to receive a favourable decision in our legal dispute
with Kraft from the Full Court of the Federal Court of Australia in
April  2020. The Full Court judgement confirmed Bega Cheese’s
ownership of the trade dress currently associated with its peanut butter
product. Kraft has now sought leave to appeal to the High Court. The
High Court has set a date in mid-November 2020 to hear the application
for leave to appeal to the High Court. The dispute with Fonterra
regarding the Bega brand continues. The trial in the Supreme Court of
Victoria completed in July 2020 and we are now awaiting judgment.
Bega Cheese has grown substantially over the past decade making a
number of acquisitions and managing significant change. As we have
previously reported to the market it was appropriate that this year we
conduct an organisational and process review to ensure that our
business has the most effective and competitive structure available to
us. This review has been completed and is being implemented, it does
unfortunately mean that there will be some redundancies within the
business, we are always conscious of the dedication and commitment
our staff give and we will of course offer support to those whose jobs
are not required. It is always important to continue to review the
competitiveness of the business and ensure our structure and strategy
are aligned and position us to be the company of choice for suppliers,
staff, customers and shareholders alike.
CEO Paul van Heerwaarden will provide more detail on the performance
of the business and also expand on our actions and the impact of
COVID-19. Paul has led the team wonderfully through a challenging
year and his focus on the safety of all involved with Bega Cheese while
stewarding the business through
Answered 1 days AfterApr 30, 2021FIN600

Answer To: Sheet1 Formula2020Units Liquidity Ratios Current RatioCurrent Assets/Current...

Harshit answered on May 02 2021
87 Votes
Student name – ID        FIN600/FINA6017TXYYYY
        Assignment –Company
name: Student id:
Executive Summary
Bega Cheese Limited, has improved a lot as compared to the past performance of the company and can be concluded by saying that the company can still try reach the industry average. As per the profitability ratios calculated in the project, the company has improved from the past years but as it is significantly less from the industry average, the company can try to reach the same improving their share and place in the industry. Significant progress is also required as compared to the acid efficiency ratio with the industry average. When talking about the liquidity ratios cal
culated in the project, the company’s cu
ent year performance has decreased to a great extent as compared to the previous years figure making the company less capable of paying it’s debts on time by using the liquid assets of the company. Therefore, an improvement in the gearing ratio makes the company a better company as they are trying to reduce the debt portion in the company and making the company less risky from the shareholder’s point of view. Shareholders of a company are attracted towards the company if they see that the company is less risky and so they are faithful and their return is not risky.
                                            Page Numbe
1    Introduction - Background and Business                            2
2    Company Analysis - Cu
ent financial performance, Key financial highlights,
Economic outlook                                        
3    Ratio Analysis
    3.1        Profitability ratios                                
    3.2        Efficiency ratios                                
    3.3        Liquidity ratios                                    
    3.4        Gearing ratios                                    
4    Recommendations and overall assessment                            
5    References/Bibliography                                    
Appendices –Excel Spreadsheet
1    Introduction
1.1        Background and Business
Bega cheese Limited is an Australian food company which was founded in the year 1899 as an Australian cooperative and was listed in the year 2011 on ASX. The company has more than 1800 employees all over the country and has approximately 36 companies which forms the group of Bega cheese Limited. The company is in the business of
anding manufacturing and selling of dairy products. Some of the
ands under the company are Vegemite, Farmers Table, Zoosh, Picky Picky, Tatura and DairyMont. E more than 50% of the company's revenue is generated from grocery products, spreads and daily consumer goods.
Bega cheese Limited holds around 15.7% all the retail cheese market of Australia. Based on the segment reporting in the financial statements of the company, Bega cheese Limited divides its company into different segments which are bulk segment and
anded segment. Under the
anded segment the company produces the ingredients and bulk quantity and then segregates it based on value and consumer products for both the internal and external
anch. Under the bulk segment the company manufacturers bulk ingredients and bionutrient products.
The company acquired Lion dairy and drinks for $560 million company and concerted the same in a $3 billion company and became one of the top leaders and industry. The company produces cheese spreads, grocery products and farm services including the supply of milk.
2    Company Analysis
    2.1        Cu
ent Financial performance, Key financial highlights,Economic outlook
Company generated a total revenue of $1,493 million in the cu
ent financial year which was an increment from the previous year by 5% when the revenue of the company was $1,420 million. The normalised basic. Although there was not much increment in the profit after tax in the normalised but as per the statutory method the profit after tax of the company increased from $4,447,000 to $21,268,000 financial year.
Financial highlights/events of 2020
· As per segments of the company 59% of the revenue was generated through the
anded segment and the remaining revenue was generated by bulk segment.
· There has been a 15% increase in the export sales of the company and the total revenue of the company through export was $523 million in the cu
ent financial year.
· In the retail business one of the major expense is the marketing expense. The marketing expense of the company decreased by 25% in the cu
ent year and it was at $15.8 million.
· The earnings before interest tax and depreciation of the company was at $102,992,000 in the year 2020 where it has decreased from $104,867,000.
· Earnings per share of the company was same in the cu
ent and the previous financial year at $14.9 but the statutory basic Earnings per share increased from $2.1 previous year to $9.9 year in cu
ent year.
Economic Outlook
· By the use of strategic plan of diversity for the company, the company has evolved in the past few financial years. The company's focus is to reduce high quality food products and maximize consumer satisfaction.
· There has been an decrease in the production of the company by 2%. Where the volume of the company decreased from 303252 tonnes in the previous year to 297668 tonnes who is the cu
ent financial year.
· In the financial report the chairman of the company mentioned that he was more than satisfied with the performance of the company and aims at growing the production and revenue in the cu
ent financial year. He also mentioned that the performance of the company was above the Expectations level of the board and the management of the company.
3    Ratio Analysis
    3.1        Profitability and Market ratios
    (see appendix for calculations)
    Industry average
    Return on equity
    4.19 %
    6.12 %
    Return on assets
    1.37 %
    2.73 %
    Gross profit margin
    19.36 %
    36 %
    Net profit margin
    1.34 %
    6 %
    Net Interest Income (if applicable)
    Expense ratio or Cost to income ratio
    Cash flow to sales
    9.22 %
     7.06 %
    Earnings per share
    $ 9.9 per share
    $ 2.10 per share
    Dividends per share
    5 per share
    5.5 per share
    Dividend payout ratio
    Price earnings ratio
    0.43 times
    2.17 times
The return on equity ratio represents the amount that is earned by the company for the equity shareholders. The average of return on equity is 6.12% whereas the company gave the return on equity of 4.19% in the year 2020. The return of equity in the year 2019 was at 1.08%. The return on equity the company has increased reflect that other company has been focusing on increasing its profit. This ratio helps the shareholders to decide whether or not to purchase the shares or invest in the company.
The return on assets is the amount return that is owned by the company by using the Assets of the company. The industry average for this ratio is 2.73% where are the company has earned 1.37% in the year 2020. The return on message of the company for the year 2019 was 0.34%. This reflects that the company has been utilising its assets more efficiently therefore the generating better profit. Although based on the industry average return on assets is quite anunfavorable but the company is focusing on increasing the same.
The gross profit margin is the amount of that the company is earning through direct operations. This reflects the amount of profit earned by the company as a percentage of sales. When does profit increases the shows that the margin of the company over the product is higher and the company has been able to generate better profits. The...

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here