Annual Report Analysis - Garuda Indonesia and Coca Cola Amatil PDF

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The assignment is related to the analysis as well as the comparison of the annual report of two companies, Garuda Indonesia conducting business in Service, and Coca Cola Amatil conducting business in food/beverage. ...

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Financial Analysis on Annual Reports of Coca Cola Amatil and Garuda Indonesia I.

Financial Analysis of Coca – Cola Amatil

Coca Cola Amatil is one of the largest manufacturers and distributors for beverages and snacks in The Asia-Pacific region which operates throughout six countries; Australia, New Zealand, Indonesia, Papua New Guinea, Fiji, and Samoa. For this occasion, not only I will make my analysis towards The Coca Cola Amatil’s Financial Report in 2014 (previous year) and in 2015 (the latest), but also the company’s financial position comparison with its competitor which is in this paper I will choose PepsiCo, Inc as they both doing business in the similar market area. As the starter I will be analysing the CCA’s Financial Statement. From the Income Statement, I can conclude these items I listed below: Year

2015 $M

2014 $M

5,093.6

4,942.8

(2,953.4)

(2,833.8)

Delivery

(238.4)

(233.6)

Gross Profit

1,901.8

1,875.4

58.7

60.1

(1,299.9)

(1,428.3)

Net Finance Cost Income Tax Expense

(86.2) (171)

(121.9) (112.4)

Profit for the Year

403.4

272.8

Trading Revenue Cost of Goods Sold

Other Revenue Expenses

From the Profit of the Year itself we can see that the CCA has made a significant progress over the previous year, they even made it possible to reduce their Expenses without reducing the Revenue. The profit growth was largely due to the reduction in the group’s net debt, a result of The Coca-Cola Company’s US$500 million equity injection into their Indonesian business which was a large factor in delivering a reduction in finance costs of $35.7 million. It is also stated in the notes to the financial statement that CCA earned approximately 36.3% (2014: 35.2%) of its trading revenue from its top three customers, being Metcash Limited, Wesfarmers Limited and Woolworths Limited. After I analyzed the CCA’s 2013 Financial Report, I can see that the 2015’s Financial Performance is way better after the two years of decline in their financial performance.

The next one is my analyze based on its Balance Sheet. From the Balance Sheet provided by the CCA, I can conclude these items below: Year

2015 $M

2014 $M

Current Assets

3,128

2,580.1

Non-Current Assets

3,539.4

3,477.2

Total Assets

6,667.4

6,057.3

Current Liabilities

2,001.3

1,680.8

Non-Current Liabilities

2,256.3

2,689.8

Total Liabilities Net Assets

4,257.6 2,409.8

4,370.6 1,686.7

Total Equity

2,409.8

1,686.7

As we can see from the items we found on the Balance Sheet, the CCA had succeed on making a progress in increasing their Assets, both Current and Non-Current, and also decreasing their Liabilities. The arise by 17.5% from its Current Assets in 2015 from the year 2014 show that the CCA is able to repay their debts better than it was expected on the previous year. The net debt also reduced by $725 million to $1.1 billion, driven by The CocaCola Company’s equity injection in Indonesia. The last one is the comparison between CCA and PepsiCo. Before we move on to comparing CCA and PepsiCo, I’d like to explain a little bit about PepsiCo. PepsiCo is a whole lot bigger company than CCA because the company not only focuses on selling beverages but also foods and it also operates throughout more countries than the CCA. So the amount of assets, revenues and others which written on their Financial Statement will be higher than the CCA as I provided below: Year 2015

PepsiCo $M

Coca Cola Amatil $M

Total Assets

69,667

6,667.4

Net Revenue

63,056

5,093.6

Gross Profit

34,672

1,901.8

Profit for the Year

9,937

403.4

As I mentioned earlier because of the differences in the scale of the company, we cannot only compare it based on the profit both of the company make but to make a fair comparison, I will compare it through percentages. The profit throughout the year made by PepsiCo is 15,76% out of their total revenue, meanwhile the CCA only able to make a profit out of their total revenue by 7,92%. So in conclusion even thought the CCA is making a great progress on their financial performance rather than the previous years, but in the market area CCA still cannot beat the PepsiCo position. However, after I analyzed PepsiCo’s 2015 and 2014 Financial Report, they’re showing a decrease on their financial performance especially on their profit which if this won’t be taken care of in the near future, PepsiCo would lost its position in the market from other competing companies. On the other side, even though CCA is a smaller company, it shows its willingness on improving its quality performance in year 2015 and their long-term strategy plans are on track. II.

Financial Analysis of Garuda Indonesia

1. The Balance Sheet One way of analyzing the Balance Sheet is through the Working Capital, which the current assets is reduced by current liabilities to determine the company’s capital used in its operation. Based on the consolidated statements of financial position, current assets – current liabilities (1.007.848.005 – 1.195.849.121) equals -118.001.116. The negative amount of working capital comes from the high number of loans from banks and other financial institutions that Garuda Indonesia owes, making the current liabilities higher than its current assets. Compared to the previous year, the working capital stood at -408.850.413, and this signifies that Garuda Indonesia has earned some improvement in the ability to pay its obligations. 2. The Income Statement Information regarding revenues and expenses can be derived from here. The biggest expense comes from the flight operations, which will affect other statements: with the balance sheet, the increase in loans from banks is justified because the fund is used for daily operations, and to receive extra cash that will be used for flight operations. With the cash flow statement, flight operations will result in cash flowing in from operating activities. Looking at the revenues, the biggest comes from its scheduled airline services, as a result of increasing the operations of the airlines itself. In comparison to the previous year’s amount of revenues and expense, Garuda Indonesia has a reduction in both matters, with total revenues reduced by

3,01% from 3.933 million to 3.814 million. The biggest revenue comes from the scheduled airline services. Total expenses are reduced by 13,06%, from 4.292 million to 3.731 million, and the biggest expenses come from the flight operations. Another important information that can be derived is about its profit of the current year. Garuda Indonesia received a total of 77.974.161, a massive improvement from the previous year which was a loss in a total of -368.911.279. As mentioned in the disclosure, this improvement was driven by the success of the company’s efficiency program in 2015, as well as taking advantage of the plummeting aviation fuel prices in the same year. 3. Statement of Cash Flows The largest amount of cash flows from the financing activities, and the reason for this is because the loans Garuda Indonesia received from banks and other financial institutions in the form of cash, with the details according to the disclosure as follows: 78.2 million from long-term loan, 1,173 million from proceeds of bank loan and financial institutions, and 496.2 million from proceeds of sukuk. Another information that can be concluded is that there is a raise from the amount of cash/cash equivalents at beginning of the year and at the end of the year by 160 million, ending with 519 million of cash/cash equivalent at the end of the year from only 434 million. This is an improvement compared to last year’s cash flow, since the cash flow was reducing instead of increasing, and the amount of loans was bigger than 2015, resulting in bigger cash flow from financing activities. 4. Comparison with Another Company Serving a larger area of air transportation and is based on more than one country, the comparison of AirAsia and Garuda Indonesia can be seen below: Per year 2015

AirAsia (RM mio)

Garuda Indonesia (US$ mio)

Total Current Assets

4,2

1.007

Net Expenses

4,261

3.731

Total Revenue

6,298

3.814

Net Profit

541

77

The difficulty in comparing these two companies lies in the difference of currency used within the annual report, thus determining the exact amount to compare may be hard. That aside, it is reasonable that AirAsia receives bigger net profit, since the company serves a larger area and is not based in Malaysia only. The comparison of net profit from year to year within the annual report tends to fluctuate, although AirAsia had never experienced loss in

the past 5 years, with the revenues increasing per year. One of the differences lies in the cash flow statement: AirAsia receives its cash mostly from Operating Activities, whereas Garuda Indonesia as mentioned above receives its cash mostly from Financing Activities....