Business Performances of Fantastic Holdings Limited and Super Retail Group - Term Paper Example

Running head: Business reporting and Analysis Title: Business reporting and Analysis Name of Student: Course Title: Date: May 06, 2012 Table of contents Abstract 3 Introduction 4 Conclusions 4 Recommendation Recommendation to the management 5 Recommendation to investors 5 Discussion A) Common size statement 6 B) Trend Analysis 7 C) Ratio analysis 9 a) Liquidity 9 b) Profitability 11 c) Efficiency 13 d) Long-term financial solvency 15 e) Market –based ratios (investment ratios) 16 D) Non financial analysis 18 III) Works Cited 21 IV) Appendix 23 a) Appendix 1: Fantastic holdings limited Balance Sheet common size b) Appendix 2: Fantastic holdings limited income statement common size c) Appendix 3: Super Retail Group Balance Sheet common size d) Appendix 4: Super Retail Group Income statement common size Abstract This analysis is the study of the performances of two retail Fantastic holdings limited and Super retail group. In the process of studying the financial performances of these companies we prepared a common size balance sheet and income statements for both the companies for three years and did a comparative analysis and ratio analysis of the financial performance of these companies. Based on the analysis that was performed, recommendations have been made on the best company to invest in. Introduction In this assignment we would be preparing a common size balance sheet and income statements for Super retail group and Fantastic holdings limited for three years, doing a comparative analysis and ratio analysis and then comment on the analytical reports of the two companies besides providing recommendations on the best company to invest in. The perspective is to provide an opinion on the financial diagnosis of this company such that it will assist the investor towards making a sound decision with respect to either purchasing a major chunk of shares or subscribing for issues unless the analysis suggest otherwise(Woelfel 218). Analysis will be conducted by considering both internal and external factors. While internal factors will be represented via ratio analysis, this crude form of examination will only involve figure work. Ratio will be analyzed on a broader scale to derive the actual picture. However non financial factors represent a significant and vital portion as well. Strengths, weakness, opportunities and threats will all be a part of non financial portion as it will show not just the future outlook of the company but its current state of affairs. Conclusions In conclusion, Fantastic holdings limited is faring better overall than Super retail group. However, they must find away to liquidity to the same level with the competitor and keep debt level constant. The profitability of Fantastic holdings limited has generally increased as indicated by the profitability ratios and it has performed well than the competitor. The entity has a poor liquidity as both the current and quick ratios are low and deteriorating then the competitor, Super retail group. Debt to equity ratio shows that the company has improved its ability to utilize debt and is able to pay interest expenses than Super retail group. Further, price/earnings ratio has declined but is good than that of Super retail group, this may paint a good picture to the potential investors. Recommendation Recommendation to the management There is need of improving the profitability of the Fantastic holdings limited so that there is an increased flow of cash into the company which will also require efforts to increase sales volume. The increase in cash inflows due to increased sales revenue will allow the company to keep its current assets at a much higher levels and thus improve its liquidity position further, thereby resulting in a favorable change in the financial position For the company to maintaining efficient levels of inventory, rather than acquiring raw material at once in bulk quantities, which ties up significant amount of cash resources. The optimum of efficient level for inventory stocks may be attained by way of following a particular method of evaluating and determining the need of raw materials required for production, as for instance, “Economic Order Quantity” or “Just-In Time”. The company should improve the average collection period in order to ensure that the cash inflows are maintained at a high level. This will in turn affect the current assets and henceforth the liquidity of the company. Although the average collection period of the company is stable than the competitor, but a further improvement in the ratio will signify strengthening the liquidity position of the company The management of Fantastic holdings limited shall make sure that the financing of fixed assets with working capital at hand is avoided; because in such a case the working capital available will be wiped out by the large financing requirements of the fixed assets Recommendation to investors Fantastic holdings limited share is a good for holding as it has a price earning ratio that has less standard deviation compared to the competitor. Discussion Common size statement Looking at the common size financial statements of Fantastic holdings limited, one will note that the gross profit margin appears to be constant and it is doing better than a competitor Super retail group as shown in appendix 2 and appendix 4. However, the net income shows a mixed result. The net income grew between 2009 to the year 2011, for the competitor while Fantastic holdings limited trend is that the net income decreased for the same period. However, this ratio shows a better performance but the amount of profits involved is minimal because of the amount of sales. Both companies show growth in sales but in the case of Fantastic holdings limited. Looking at the financing of current asset, you will find that most of the current assets of Fantastic holdings limited are financed by long- term capital as compared to Super retail group. The percentages of current assets to total assets remain stable of 63% with a standard deviation of 5%. However, the competitor’s current asset percentage of the total appears to have declined substantially in the year 2009 to the year 2011 the decline cannot be explained using any action taken to stabilize the current except changes made in short-term investment. In this case, they changed short-term investment to long-term investment. The figure in the appendix shows the trend in the two companies. Looking at the percentage of liabilities to total assets, one will note that Fantastic holdings limited percentage of liabilities was unstable as compared to the percentage for Super retail group which decreased in the year 2011. This ratio shows how the assets of the company are financed and in the case of Fantastic holdings limited, it appears they are reducing their reliance on debt capital to finance assets while Super retail group, are increasing the reliance. Figure 3 in the appendix shows the performance of these two companies in relation to this ratio. In this aspect, Fantastic holdings limited are performing well as compared to Super Retail Group. Trend analysis Trend analysis of past four years show mixed trends in relation to sales growth and this observation is suggestive of the fact that the company shall take steps to bring in efficiency and consistency with regard to its operational activities and manufacturing and selling procedures with an objective to lower down its costs and maintain a steady growth rate. In this way, the stability of the company will be ensured in future in relation to profitability, in case when actual figures come out to be different (Berman, Knight, & Case, 2006). The following graph shows the net change of total revenue compared with Super Retail Group. The change in sales revenue lead to a change in the cost of sales, however, the change in total revenue is greater than a change in cost of sales resulting in a net increase in the gross profits for the company in years 2008-2009, 2009-2010 and 2010-2011. Moving further, it is observed that the selling expenses experienced a significant net change owing to a net change in the revenue. At the end, the considerable point to note is that the operating income of the company decreased by more than 0.12% in year 2008-2009, -0.35% in 2009-2010 and5.06% in 2010-2011. The following graph shows the net change in net profit and total expenses for the company and the competitors; On the other hand, the current liabilities of the company increased, which is understandable on the basis that increase in sales volume have increased the amounts payable to suppliers. The equity portion of the balance sheet does not show any significant variations in year 2010-2011, apart from a 15% increase in retained earnings and a small change in the common stock equity due to issuance of new shares. The assets side of the balance sheet shows a mixed trend, as for instance, there is a significant fall in the cash balances of the company, whereas the amount to be cash and cash equivalents increased many manifold in 2010-2011. On the other hand, the balance sheet figures also signify a drop in the overall performance of the company in year 2009-2010. There is an overall increase shown in the balance sheet in relation to the current assets of the company which cannot be regarded to have resulted in due to the performance of the company in year 2009-2010, but in fact the increase is attributed to the receipt of significant account receivable balance, which is also justified by the decrease in the net accounts receivable balance. This trend analysis of the company’s financial statements reveals that the company is weak in managing its expenses. As can be observed, the year 2010 and 2011 comparison shows that the company’s sales, gross profit and operating profit all declined by same percent approximately, but the admin and operating expenses remained at higher levels, in fact some of the expenses increased. Similarly, the balance sheet’s trend analysis shows that the company’s working capital management is also inefficient since large amount of cash resources are held in inventory stocks. Looking at the financial performance of the company in the given period, it can be stated that the company has continued to show a stable gross margin over the three years and the asset base of the company has increased which add to the strength of the business. Ratio analysis Liquidity-Liquidity ratios indicate the financial performance of a company against short-term targets and the ability of the company to meet its short-term obligations as they become due (Besley and Brigham 145). Once again, the nature of business of the two companies analyzed comes in the way of making an effective analysis. Fantastic holdings limited Super retail group 2009 2010 2011 2009 2010 2011 Current ratio 1.8 1.55 1.73 2.37 1.956 2.34 Quick ratio 1.65 0.25 1.59 0.41 1.79 0.33 Cash flow operations to current liabilities 0.24 0.367 0.189 0.47 0.654 0.487 Current ratio is calculated to evaluate the short term liquidity of a company. This determines whether the company has sufficient current assets to meet its short term current liabilities if the business is not able to generate enough cash by liquidating its current assets. If the ratio value is less than 1 than it implies that the hospital does not have enough current assets to meet its current liabilities obligations (Fridson & Álvarez, 2002). The ratios above shows that the current ratio of the company decreased from 1.8:1 in 2009 to 1.55:1 in 2010 and increased to 1.73:1 in the years 2011. A figure over 1.5 is good but it also suggests that there is scope for the company to put more of its assets to work towards its operations and still have a strong current ratio. If this ratios are compared to the competitor’s, it will be noted that the competitor is doing very well as its ratio was 2.37 in 2009, 1.956 in 2010 and 2.34 in 2011. Quick ratio is similar to the current ratio which is aimed at evaluating the short term liquidity position of the company. However, it is more appropriate as it excludes inventory value from total current assets as inventory is considered to be less liquid item upon liquidation of business facing financial difficulties (Fridson & Álvarez, 45). A company with quick ratio value less than 1 is likely to have financial difficulties as it has lower value of current assets excluding inventory as compared to its current liabilities (Weetman 165). The acid-test ratio/ quick ratio is poor for both companies as it is less than 1:1 which is assumed to be benchmark is 1.0. This shows that the companies do keep too much inventory. This is indicative of a strong short term liquidity position of the hospital and it can be suggested that the hospital is less likely to face financial difficulties if its current liabilities fall due in the short term. Cash flow operations to current liabilities ratio is 0.24 for 2009, 0.37 for 2010 and 0.19 for 2011 for Fantastic holdings limited while Super retail group 0.47 for 2009, 0.65 for 2010 and 0.49 for 2011 showing that both companies make a small Cash flow operations. In this respect Super retail group appears to do better than Fantastic holdings limited. Profitability Fantastic holdings limited Super retail group 2009 2010 2011 2009 2010 2011 Gross profit margin 44.94% 41.94% 45.66% 42.91% 47.47% 45.305 Return on assets 17.81% 12.71% 15.28% 12.32% 16.66% 15.49% Net profit margin 4.62% 3.88% 4.42% 3.98% 4.46% 4.66% Return on equity 23.38% 20.55% 20.47% 13.79% 19.3% 16.79% Gross profit margin for Fantastic holdings limited is 44.94% for 2009, 41.94% for 2010 and 45.27% while Super retail group has 42.91% for 2009, 47.47% in 2010 and 45.31% in year 2011 is strength for the company. This means that the company is more competitive in its pricing strategy and it also suggests that there may be scope to raise the price of its products and still remain competitive in this market segment. Net profit margin is a ratio that is an indicator of the company’s ability to generate operating profit from its business operations. This ratio calculates the proportion of sales converted in operating margin by the business (Fridson & Álvarez, 66). Higher value of operating margin is preferable as this may be suggestive of the company’s ability to either distribute more to its shareholders or retain more earnings for future business requirements. The calculation shows that the operating margin of Fantastic holdings limited is 4.64% for 2009, 3.88% for 2010 and 4.42% which is quite similar to the compared to Super retail group. The ratio value can be interpreted such that the Fantastic holdings limited is generating $0.0442 of operating margin for every $1 of sales. Thus, the value may suggest a weaker profitability position. The following graph shows the trend of gross profit margin and net profit margin Return on Total Assets (ROA) is another profitability ratio which determines the proportion of net income generated by the company’s total assets(Maguire 152). It is calculated by dividing EBIT by the total assets (Baker & Baker, 2000). From the calculation, it can be seen that the ROA of Fantastic holdings limited is 17.81% for 2009, 12.71% for 2010 and 15.28% for 2011 while Super retail group has 12.32% for 2009, 16.66% for 2010 and 15.49% for 2011 which appears to be quite low for the total value of assets. On the basis on this, it could be suggested that the profitability position of the hospital is quite weak. In addition, Fantastic holdings limited return on equity (ROE) is 23.28% in 2009, 20.55% in 2010 and 20.47% in 2011 while Super Retail Group has 13.79% in 2009, 19.3% in 2010 and 16.79% (Super Retail group Ltd ) suggesting that Fantastic holdings limited has the ability to generate revenue and profits from its equity than the competitor. This further supports the decision to hold. Efficiency Fantastic holdings limited Super retail group 2009 2010 2011 2009 2010 2011 Assets turnover 3.21 2.02 2.66 1.96 2.6 2.0 Accounts receivable turnover 56 37 48 40 49 49 Inventory turnover (times) 3.27 2.31 2.78 2.25 2.79 1.1 Accounts payable turnover(days) 37 74 50 70 51 64 The primary assets of the two companies are used for conducting their business available through capital. This is also evident from the turnover of total assets at 3.21 in 2009, 2.02 in 2010 and 2.66 in 2011 for Fantastic holdings limited while Super retail group has 1.96 in 2009, 2.6 in 2010 and 2.0 in 2011. Once again, Fantastic holdings limited show a better performance than Super retail group. A simple reading of the accounts receivables turnover and inventory turnover for Fantastic holdings limited and Super retail group 48 and 49; and 2.78 and 1.1 respectively for 2011 shows that Fantastic holdings limited outperformed Super retail group on both these scores. However, it is important to note that these ratios are more an indication of the nature of the business. The ratios apparently have relevance because both companies do hold a substantial physical inventory and the average collection period throws up absurd numbers i.e. the average collection period (Taparia 98; Porter and Norton 54). While these ratios can throw significant light on the performance of the organizations, as they help determine the efficiency of their supply chain and effectiveness of their marketing and collection strategies(Collier 79; Montier 92). The average payable period is a major weakness for the Fantastic holdings limited. As stated earlier, the company its accounts efficiently even though the average payable period of 50 days in year 2011 suggests that the company is complying with purchase terms that were agreed upon. Therefore, the recommendation to take steps to increase payment of the company's past dues efficiently and vigorously. Long-term financial solvency Fantastic holdings limited Super retail group 2009 2010 2011 2009 2010 2011 Debt to total assets 45.67% 64.28% 46.2% 48.19% 40.01% 46.91% Interest & finance coverage ratio 31.75 4.05 29.37 6.14 23.33 8.08 Looking at the percentage of debt to total assets, one will note that Fantastic holdings limited percentage of liabilities was higher as compared to the percentage for Super retail group. This ratio shows how the assets of the company are financed (Fantastic Holdings Limited). The first is that while Fantastic holdings limited has 45.67% in 2009, 64.28% in 2010 and 46.2% in 2011 component of debt in its total assets, Super retail group relies more on equity and only 48.19% in 2009, 40.01% in 2010 and 46.91% in 2011 of its total assets come from borrowings. Figure below in the shows the performance of these two companies in relation to this ratio. In meeting their obligations to the lenders, the companies are required to pay interest to the lender as also fixed charges. The debt service coverage ratio assists in evaluating how well the company is poised to meet its maximum annual debt service based on the change in its EBITDA. This ratio is useful for credit analysis of the company (Groppelli and Nikbakht 108). Fantastic holdings limited has an interest coverage ratio of 31.75, 4.05 and 29.37 times for years 2009, 2010 and 2011 which makes the lender very secure in the knowledge that the company will be able to pay interest charges as and when they become due. While Super retail group has interest charge coverage of 6.14, 23.33 and 8.08 times. The conclusion is that Fantastic holdings limited provides a more secure position for its creditors, which in turn can help it negotiate better terms for future borrowings. Market –based ratios (investment ratios) Fantastic holdings limited Super retail group 2009 2010 2011 2009 2010 2011 Price/ earnings(P/E) ratio 13.94 13.34 10.58 12.06 9.66 19.35 Earnings per share 0.19 0.30 0.18 0.43 0.19 0.34 Certain ratios derived from the balance sheet and the current market price of the stock of a company help make investment decisions. The EPS (Earnings per share) is the simplest ratio that compares the earnings attributable to shareholders (Kapil 136; Schweser 45). Super retail group has a much higher EPS at 0.34 compared to 0.18 for Fantastic holdings limited. The second ratio is the market price to earnings PE ratio and indicates the wealth creation power of the company. A low PE thus represents a low price of the stock compared to the earning potential of the company and a ‘good buy’ and vice versa. The PE ratio for Fantastic holdings limited is 10.58 times making it slightly overvalued on the bourse. However, Super retail group shows an astronomical overvaluation with a PE ratio of 19.95 times. The following graph shows the trend of the Fantastic holdings limited which is compared with the competitor. The graph above shows that Fantastic holdings limited has downward trend as Super retail group. The conclusion is that while the recommendation on the Fantastic holdings limited share can only be a sell, as it is Strong Sell. Non financial analysis Non-financial influences play a crucial rule in every entity’s growth or demise. These influences may come forth through Political bodies, Economical instabilities, or Managerial efficiencies. A careful analysis reveals that some of the critical sub factors of aforementioned factors can directly or indirectly leave impact on company’s current performance and future growth. Beginning with the largest sector which shares the prime chunk of influence and not easy to avoid is Political sway. This factor includes Government Intervention, Tax Policy, Labor Laws, Trade Restriction and Tariffs, which considerably affect the company’s performance. Political stability and law and order situation in country is of utmost importance and Australia, is considered as rather secured in this regard. Law and Order situation and prevailing legislature provides legal safety, which is critical for investors and stakeholders to know. As the business is considered a going concern, any legal or political threat to its permanence may drown investors and stakeholders investment. Again, in case of Fantastic holdings limited can safely be assumed that the entity is sufficiently safe from such threat as financial statements do not show any litigation or potential claim against it. Next in line are the trade tariffs and custom duties that if not favorable, may reduce the growth and dilute the profit. Trade restriction cannot be avoided yet the custom duties can be shared with the buyer or supplier through using trade term like Free on Board or Cost, Insurance, Paid or any other term may be applicable. Economic Factors that may distort the picture are Exchange Rate and Interest Rate, which are fundament to the overall performance of the company. In view of the fact that the entity runs across the globe, exposure to Exchange rate risk is inevitable. During past three years a dramatic fluctuation on rates was witnessed worldwide that is now to a large extent has calmed down(Reserve Bank of Australia- Interest Rate Decisions.). Yet this risk has been just mitigated but not eradicated completely. To cover up the exposed position, a forward cover can always be arranged to avoid the shortcomings of the exchange rate risk. Business cannot be run without external financing, which brings interest rate into picture and if the country is facing high inflation rate than the monetary policy tend to be contracted which leave interest rates higher (Bragg 261). Interest rates, if high can considerably reduce the operating income of the company. The stakeholders and other investors keenly observe this factor as their dividend income and return on investments is based upon it. In case of Fantastic holdings limited, the management began their journey with a small entity and covered milestones in a period of a decade. This could only be achieved through consistent, experienced, competitive, and aggressive managers who can face the cutthroat marketing competition, timeliness of international demands, and foster sales through vigorous market skimming. The Managers at Fantastic holdings limited have applied all of their efforts to make best out of the given resources hence the current management can definitely be accredited with the success of company. Fantastic holdings limited have been in the retail business for a long time, this adds to their new found strength that is reflected in their recent financial statements. The financials make for an overall very good reading. This includes the amount that the company has earned in terms of Net profit for the year 2011. There has been a phenomenal increase and the company should look to the future by making sure that some of inefficiencies of the operations are ironed out in order to help them achieve bigger and better things in terms of their business vision and mission. In addition to this another factor of concern for the company should be the amount of debt that it has taken up, although manageable at these levels of profit making, it will be very hard to sustain once the company has a bad patch. It would be advisable that the company use sources of financing other than direct debt to grow organically rather than on steroids(Reserve Bank of Australia- Inflation Rates). However in line with the positive future outlook of the company, it will be a worthwhile investment since it is expected that share prices are low right now, but it’s just a matter of time before Fantastic holdings limited kicks off well resulting in a upsurge in share prices. Works Cited Besley, Scott & Eugene F. Brigham. Principles of Finance. Mason, OH: South- Western, Cengage Learning, 2009. Bragg, Steven. Wiley Revenue Recognition: Rules and Scenarios. New York: John Wiley and Sons, 2010. Print. Collier, Paul. Accounting for Managers: Interpreting Accounting Information for Decision-Making. New York: John Wiley and Sons, 2003.Print Fantastic Holdings Limited. Annual and Half-Year Reports. Feb. 2012. 02 May. 2012 Fridson, Martin & Álvarez, Fernando. Financial statement analysis: a practitioner's guide. New Jersey: John Wiley & Sons, 2002. Print. Groppelli, Angelico & Ehsan Nikbakht. Finance. New York: Barron's Educational Series, Inc., 2006. Print. Kapil, Sheeba. Financial Management, New Delhi: Pearson Education India, 2011. Print Maguire, Marion. Financial Statement Analysis. GRIN Verlag: Publisher, Amsterdam, 2008. Print. Montier, James. Behavioral Finance: Insights into Irrational Minds and Markets. London-Wiley. 2002. Print. Porter, Gary & Curtis Norton. Using Financial Accounting Information: The Alternative to Debits and Credits. Mason, OH: South-Western, Cengage Learning, 2011. Reserve Bank of Australia. Inflation Rates. Mar. 2012. 02 May. 2012 Reserve Bank of Australia. Interest Rate Decisions. Mar. 2012. 02 May. 2012/ Schweser, Kaplan. Financial Reporting and Analysis. Boston: Good Reads, 2008. Print. Super Retail group Ltd. Reports. Apr. 2012. 02 May. 2012. Taparia, Jay. Understanding Financial Statements: a journalist’s guide. Illinois: Marion Street Press Inc., 2004. Print. Weetman, Pauline. Financial Accounting: an Introduction. New York: Financial Times Prentice Hall, 2006. Print Woelfel, Charles. Financial statement analysis: the investor’s self study guide to interpreting and analyzing financial statements. USA: McGraw-Hill Publishers, 1994. Print. Appendix Appendix 1: Fantastic holdings limited Balance Sheet common size Table I Fantastic holdings limited Balance Sheet June 30th Vertical Analysis (Common Size Factors) Assets 2008 % 2009 % 2010 2011 cash and equivalents $8,071,675 7.77% $12,058,520 8.24% $5,086,461 3.02% $10,219,884 6.08% trade and other receivables 6,277,876 6.04% 8,124,477 5.55% 9,431,632 5.61% 8,534,250 5.08% current tax receivable 0.00% 0 0.00% 2,572,297 1.53% 0 0.00% inventory 56,442,098 54.30% 79,003,458 53.97% 85,020,676 50.55% 79,316,339 47.18% Current Assets 70,791,649 68.11% 99,186,455 67.76% 102,111,066 60.71% 98,070,473 58.34% long-term investments’ 0 0.00% 0 0.00% 14,287,928 8.50% 15,207,604 9.05% property plant and equipment 26,915,083 25.89% 34,097,758 23.29% 37,615,972 22.37% 39,281,964 23.37% Intangible assets 2,620,020 2.52% 7,649,025 5.23% 8,319,451 4.95% 9,655,400 5.74% deferred tax assets 3,606,887 3.47% 5,449,648 3.72% 5,808,801 3.45% 5,847,230 3.48% other 6,037 0.01% 3,200 0.00% 41,612 0.02% 35,437 0.02% total long-term assets 33,148,027 31.89% 47,199,631 32.24% 66,073,764 39.29% 70,027,635 41.66% Other Non-Current Assets 0 0.00% 0 0.00% 0 0.00% 0 0.00% Total Assets $103,939,676 100.00% $146,386,086 100.00% $168,184,830 100.00% $168,098,108 100.00% Liabilities Bank overdraft $0 0.00% $0 0.00% 0 0.00% 0 0.00% trade and other payables 17,868,986 17.19% 31,229,398 21.33% $32,194,150 19.14% $30,249,679 18.00% interest-bearing loans and borrowings 553,420 0.53% 9,570,041 6.54% 12,512,684 7.44% 6,936,787 4.13% current tax payable 2,205,108 2.12% 409,976 0.28% 0 0.00% 566,839 0.34% employee benefits 7,146,184 6.87% 11,585,600 7.91% 10,790,969 6.42% 10,076,726 6.42% provisions 1,627,472 1.57% 2,431,847 1.66% 2,767,286 1.65% 2,314,073 1.38% Current Liabilities 29,401,170 28.28% 55,226,862 37.73% 58,265,089 34.64% 50,144,104 30.26% interest-bearing loans and borrowings 9,125,483 8.78% 6,467,175 4.42% 14,092,668 8.38% 11,092,843 6.60% employee benefits 737,079 0.71% 1,146,283 0.78% 1,014,231 0.60% 1,220,172 0.73% provisions 2,625,435 2.53% 3,410,942 2.33% 3,057,635 1.82% 2,876,871 1.71% deferred tax liabilities 336,013 0.32% 599,979 0.41% 1,267,479 0.75% 1,924,111 1.14% Long-term Debt 12,824,010 12.34% 11,624,379 7.94% 19,432,013 11.55% 17,113,997 10.18% Other Non-Current Liabilities 0 0.00% 0 0.00% 0 0.00% 0 0.00% Total Liabilities $42,225,180 40.62% $66,851,241 45.67% $77,697,102 46.20% $67,258,101 40.01% Owner's Equity common stock $9,616,139 9.25% $18,654,909 12.74% $23,137,855 13.76% $23,269,935 13.84% Retained Earnings $52,118,357 50.13% $60,879,936 41.59% $67,349,873 40.05% $77,570,072 46.15% 61,734,496 59.38% 79,534,845 54.33% 90,487,728 53.80% 100,840,007 59.99% $103,959,676 100.00% $146,386,086 100.00% $168,184,830 100.00% $168,098,108 100.00% Appendix 2: Fantastic holdings limited income statement common size Fantastic holdings limited June 30th Vertical Analysis (Common Size Factors) 2008 2009 2010 2011 Total revenue $305,590,868 100.0% $402,072,609 100.0% $419,084,117 100.0% $436,712,596 100.0% cost of revenue 172,550,625 56.46% 221,367,127 55.06% 227,723,970 54.34% 229,416,063 52.53% Gross Margin 133,040,243 43.54% 180,705,482 44.94% 191,360,147 45.66% 207,296,533 47.47% other income 1,211,599 0.40% 2,776,097 4,396,355 3,774,350 employment expenses 44,679,951 14.62% 65,363,038 16.26% 66,522,598 15.87% 72,357,574 16.57% property expenses 27,818,956 9.10% 40,195,090 44,741,080 48,510,402 marketing expenses 21,363,590 6.99% 29,662,143 34,989,210 31,843,138 sales related expenses 3,203,912 1.05% 4,978,842 5,153,539 6,817,578 depreciation 3,399,865 1.11% 3,875,155 0.96% 4,996,312 1.19% 5,873,402 1.34% other expenses 7,383,398 2.42% 13,338,054 3.32% 13,649,676 3.26% 17,656,330 4.04% Total Operating Expenses 107,849,672 35.29% 157,412,322 39.15% 170,052,415 40.58% 183,058,424 41.92% Total Operating Inc/(Loss) 26,402,170 8.64% 26,069,257 6.48% 25,704,087 6.13% 28,012,459 6.41% Non Operating (Inc)/Expense, net 0 0.00% 0 0.00% 0 0.00% 0 0.00% Income Before Interest & Taxes 26,402,170 8.64% 26,069,257 6.48% 25,704,087 6.13% 28,012,459 6.41% Interest income 726,742 413,343 287,334 401,366 Interest Expense 331,781 0.11% 820,958 0.20% 875,180 0.21% 1,200,456 0.27% Net Income before Taxes 26,797,131 8.77% 25,661,642 6.38% 25,116,241 5.99% 27,213,369 6.23% Taxes 8,181,521 2.68% 7,068,820 1.76% 6,589,411 1.57% 7,748,430 1.77% Net Income after Taxes 18,615,610 6.09% 18,592,822 4.62% 18,526,830 4.42% 19,464,939 4.46% Dividends on Common Stock 0 0.00% 0 0.00% 0 0.00% 0 0.00% Other Adjustments 0 0.00% 0 0.00% 0 0.00% 0 0.00% Net Income $18,615,610 6.09%   $18,592,822 4.62%   $18,526,830 4.42%   $19,464,939 4.46%   Appendix 3: Super Retail Group Balance Sheet common size Table III Super Retail Group Balance Sheet June 27th( in thousands) Vertical Analysis (Common Size Factors)                     Actual   Assets 2008 % 2009 % 2010 2011 Amount cash and equivalents $8,709 2.26% $16,810 3.84% $30,200 5.78% $25,697 4.49% trade and other receivables 19,282 5.01% 25,113 5.74% 22,195 4.25% 22,160 3.87% inventory 193,975 50.36% 222,821 50.90% 253,101 48.46% 292,874 51.20% Current Assets 221,966 57.63% 264,744 60.48% 305,496 58.50% 340,731 59.56% property plant and equipment 79,552 20.65% 87,948 20.09% 105,309 20.16% 109,277 19.10% Intangible assets 76,009 19.73% 75,407 17.23% 103,830 19.88% 111,251 19.45% deferred tax assets 7,629 1.98% 9,672 2.21% 7,611 1.46% 10,789 1.89% total long-term assets 163,190 42.37% 173,027 39.52% 216,750 41.50% 231,317 40.44% Other Non-Current Assets 0 0.00% 0 0.00% 0 0.00% 0 0.00% Total Assets $385,156 100.00% $437,771 100.00% $522,246 100.00% $572,048 100.00% Liabilities trade and other payables 91,205 23.68% 116,623 26.64% $99,563 19.06% $122,373 21.39% Borrowings 56,692 14.72% 39,496 9.02% 10,096 1.93% 32 0.01% current tax payable 3,682 0.96% 4,593 1.05% 7,694 1.47% 11,013 1.93% provisions 7,696 2.00% 10,152 2.32% 11,781 2.26% 12,286 2.15% Current Liabilities 159,275 41.35% 170,864 39.03% 129,134 24.73% 145,704 25.47% trade and other payables 10,469 2.72% 12,320 2.81% 13,217 2.53% 15,538 2.72% Borrowings 71,016 18.44% 92,000 21.02% 98,912 18.94% 99,143 17.33% deferred tax liabilities 0 0.00% 0 0.00% 0 0.00% 0 0.00% provisions 8,635 2.24% 6,233 1.42% 10,426 2.00% 7,983 1.40% Long-term Debt 90,120 23.40% 110,553 25.25% 122,555 23.47% 122,664 21.44% Other Non-Current Liabilities 0 0.00% 0 0.00% 0 0.00% 0 0.00% Total Liabilities $249,395 64.75% $281,417 64.28% $251,689 48.19% $268,368 46.91% Owner's Equity common stock $84,627 21.97% $84,627 19.33% $182,158 34.88% $194,541 34.01% reserves ($3,344) -0.87% $42 0.01% $158 0.03% ($3,239) -0.57% Retained Earnings $54,478 14.14% $71,685 16.37% $88,241 16.90% $112,378 19.64% 135,761 35.25% 156,354 35.72% 270,557 51.81% 303,680 53.09% $385,156 100.00% $437,771 100.00% $522,246 100.00% $572,048 100.00% Appendix 4: Super Retail Group Income statement common size TABLE IV Super Retail Group Income Statement Vertical Analysis (Common Size Factors)         (in thousands)                           2008 2009 2010 2011 Total revenue $715,657 100.00% $829,306 100.00% $938,602 100.00% $1,093,398 100.00% cost of revenue 426,299 59.57% 481,468 58.06% 535,825 57.09% 598,067 54.70% Gross Margin 289,358 40.43% 347,838 41.94% 402,777 42.91% 495,331 45.30% other income 320 0.04% 477 163 1,359 selling and distribution 83,697 11.70% 97,441 11.75% 112,502 11.99% 138,415 12.66% marketing expenses 37,472 5.24% 40,965 43,462 51,188 occupancy 53,171 7.43% 65,141 74,716 90,307 administration 69,416 9.70% 89,133 107,903 128,155 Total Operating Expenses 243,756 34.06% 292,680 35.29% 338,583 36.07% 408,065 37.32% Total Operating Inc/(Loss) 45,922 6.42% 55,635 6.71% 64,357 6.86% 88,625 8.11% Non Operating (Inc)/Expense, net 0 0.00% 0 0.00% 0 0.00% 0 0.00% Income Before Interest & Taxes 45,922 6.42% 55,635 6.71% 64,357 6.86% 88,625 8.11% Interest income 0 0 0 0 Interest Expense 9,116 1.27% 13,749 1.66% 10,477 1.12% 10,973 1.00% Net Income before Taxes 36,806 5.14% 41,886 5.05% 53,880 5.74% 77,652 7.10% Taxes 11,006 1.54% 9,751 1.18% 15,827 1.69% 22,053 2.02% Net Income after Taxes 25,800 3.61% 32,135 3.87% 38,053 4.05% 55,599 5.08% Dividends on Common Stock 0 0.00% 0 0.00% 0 0.00% 0 0.00% Other Adjustments 0 0.00% 0 0.00% 748 0.08% 4,614 0.42% Net Income $25,800 3.61%   $32,135 3.87%   $37,305 3.97%   $50,985 4.66%   Read More