Analysis of Green’s Foods Limited 2002 – Business Essay
In order to satisfy and fulfill the needs of the stakeholder, companies must ensure that a comprehensive and detailed financial report is provided with the aim to meet any information needs relating to the business,
operations and financing of the company.
The analysis of Green’s Foods Limited 2002 Annual Report identifies the needs of stakeholders; such as that of the company’s position, market, future direction and goals, competition, developments, products and sales are identified and satisfied. These needs are analysed through the management analysis and discussion segment (including profit, product and sales revenue information), the analysis of the detailed financial statements provided by the company, and the analysis of social and environmental factors that are addressed though the Annual report.
In order to satisfy and fulfil the needs of the stakeholders such as shareholders, managers, employees, community, suppliers and buyers whom hold a vested interest or reliance on the business (Flemming. L, 2001, Excel HSC Business Studies, Pascal Press, Australia); each company must ensure that comprehensive and detailed financial and annual reports are provided with the aim to meet any information needs relating to the business and its operations.
A financial report is commonly known as “a written report which quantitatively described the financial heath of a company” through “income statements, balance sheets and often also a cash flow statement” (1997, Investors words, Financial Report, http://www.investorswords.com/cgi-bin/getword.cgi?1957, 09/09/03). Financial reports are often found in annual reports which are “documents dealing with a company’s activity over the previous year” (2003, money chimp, glossary, http://www.moneychimp.com/glossary/annual_report.htm, 09/09/03). Thus, through different components of financial and annual reports, stakeholders gain insight and a better understanding on the overall position and performance of the business; such that the analysis depicts the positive stance on the corporate governance (2003, Corporate Governance in Russia, http://www.corp-gov.org, 05/09/03). Likewise, both social and environmental aspects of the business are closely reviewed and linked in the financial report further enhancing the relationship between the shareholders, the Board of Directors and Management of a company.
In achieving success for Greens, Corporate Governance becomes an essential element in its business formula. It determines how a particular company is managed. This means that from the board of directors to the management team their duties, jobs or tasks must be conducted efficiently and effectively such as to adequately “report on the state of the resources under their control in the financial statements, so that the stakeholders can assess whether their interest would be better served by transferring their resources to the control of these managers”(Gaffikin M, 2003, ACCY102 Accounting 1B Principles Of Accounting, Ed 3, Pearson Custom Publishing, Sydney, p10).
According to Green’s Foods Limited 2002 Annual Report, Green’s is experiencing considerable turmoil. Within the chairman’s report found on page 2 of the 2002 Annual Report, the hard time Green undergone and the major causes of some of their poor performance in 2002 is outlined and discussed. The main problems experienced Green’s Foods during 2002 include changes to the management team in the Pasta business resulting in a 19% profit loss of $17.6 million (2002, Green’s Foods Limited Annual Report 2002, p2); and the departure of the Green family representatives in the boardroom, “the final son of Green’s Foods founder still working at the company tendered his resignation of chief executive” (2002, Ferret.com, Family era over, Green’s Foods CEO Douglas Green resigns, http://www.ferret.com.au/articles/b4/0c00c7b4.asp, 09/09/03).
Despite the severe consequences of the changes experienced by Green’s in 2002, the company has still managed to reduce some of its debt through other core business units. Notably on a positive side, the cash flow remains strong for the business and customer relationship is seen as a strong indication for future growth this is emphasized through the statement that is found in the consumer relations section of Green’s Foods Limited website, “Our success depends upon the satisfaction, trust, and goodwill we create with the millions of consumers who buy and use our products each year”
(2002, Greens Foods Limited, Consumer Relations, http://www.Greens.com.au/dir016/greenspublishing.nsf/content/consumerrelations, 05/09/03).
Through the analysis of these key indications within Green’s operations, it reflects that the stakeholders are provided with a brief description of the company’s position in respect to the market and future movement. It outlines to the stakeholders the weaknesses of the company and how these weaknesses are going to be dealt with during the next financial year; as stated in the 2002 Annual Report “Our immediate priority is to improve the profitability of the company” (2002, Green’s Foods Limited Annual Report 2002, p1). These situations demonstrate Greens attempt to clarify with its stakeholders where the company went wrong throughout the year and its focus on new strategies to improve the business performance over the coming year.
Likewise, there are certain positive points within Green’s business performance despite the poor showing in certain aspects of its operations. Namely these positives include it’s product divisions; blended foods, pet foods, cereals and the snacks divisions. Under the Management Discussion & Analysis section of the Annual report pages 3 to 6 aspects of Green’s business performance is discussed through the use of topic headings that address matters of importance for the stakeholders; these include such needed information as that on market position, products, sales revenue and profit. These topics are to be discussed individually as to expose the importance of them to stakeholders and how Green’s supplies this information to those that require it.
Green’s Foods limited hold a very diverse market position, as each product category obtains a different position within the consumer market and consumers mindset. With Green’s primary focus on market position for each product, they use words such as “benchmark”, “ensure”, “commit” in the 2002 Annual Report and their company website to inform the external stakeholders that Green’s is committed and ready to move into holding a larger or more complex market position and share; this is further supported by the quote “more than ever the company is focused on the margins we earn from each product” (2002, Green’s Foods Limited Annual Report 2002, p3).
The fundamental aspect of Green’s operating success in recent years has been built around its well-established and developed marketable products, with each of it’s business divisions making considerable market gains in each respective product market; such an example includes Green’s Baking Mixes as they have now reached “a market share of 30%, 3 percentage points ahead of last year” (2002, Green’s Foods Limited Annual Report 2002, p3). As a result of this success Managers and Senior Directors will be encouraged to further improve Green’s product offering and extend its current market share. This success in regards to products had also enabled consumers to become more aware of the products offered by Green’s; thus enhancing its popularity and future stakeholders.
Sales Revenue figures from the previous 2 years of Green’s operations has indicated a positive position for the company; however there has been significant changes in the sales generated from each product division such includes the $17.6 million loss in revenue sales in Green’s Pasta Division (2002, Green’s Foods Limited Annual report 2002, p2). In the Green’s Foods Limited 2002 Annual report on pages 15 to 46 these figures were well documented, in financial statements and notes, thus proving beneficial to stakeholders and acknowledging that Green’s provides adequate information to those dependent on them.
Poor performance from the Pasta division and additional costs in advertisements over the last 12 months (as documented through out Green’s 2002 Annual Report) has reduced the company’s profitability. Although the business has attracted high volumes of sales in key brands such as Poppin Popcorn and Super Coat pet food; it wasn’t enough to cover the high costs on raw materials. As for the business in the coming year, the Green’s Directors and Management Teams have singled out profitability as being one of its key focus for improvement making it their “immediate priority” (2002, Green’s Foods Limited Annual Report 2002, p1); this is addressed to stakeholders in the Annual Report so they are able to acknowledge not only Green’s current performance but the improvements to their operations and profitability that they strive to achieve in the future.
Along with the factors of market position, products, sale revenue, profits and losses; the contributing factors of environmental and social aspects must be addressed for stakeholders as they also impact on Green’s Foods business performance and operations. The provision of information in regards to these two factors are essential for stakeholders as it is often these two factors that make the initial impact on certain elements of the company leading to impacts on economic factors that later influence company’s overall performance.
Environmental aspects are mentioned in the Green’s 2002 Annual Report on page 5 due to a drought that had significant impact on the cost of raw materials required for product production. As a result of the drought increases in commodity prices forced significant impact on the raw materials. As the success of the food industry may also vary seasonally; product offering, raw materials availability, consumer tastes and food preferences will change throughout the year. Thus stakeholders must be kept informed as to these changes. Greens have provided this information effectively to their stakeholders throughout their 2002 Annual Report using brief to the point detail leading to in-depth fact and figures in latter of the report.
Similarly, Exports were also mentioned on the company website discussing the importance of Green’s ongoing success in the overseas market; operating successfully in countries such as Japan, Hong Kong, Malaysia, Vietnam, Korea, Indonesia, New Zealand, China, Taiwan, Singapore, Brunei, Fiji, and PNG; and Green’s own demanding export standards to “ensure superior quality and the sound nutritional value of out products which continue to enjoy increase demand in markets around the world”
(2002, Green’s Foods Limited, Exports http://www.greens.com.au/dir016/greenspublishing.nsf/content/Export, 05/09/03). Such information on green’s export success and quality demands informs the community of the size of Green’s operations and its competitive nature and involvement within both domestic and international markets.
In order to articulate a better understanding of the social structure of Green’s, the Green’s the Director’s Report should be viewed on pages 7 to 12 of the 2002 Annual Report. This report clearly specifies each individuals name, job position and roll, and the date of appointment with Green’s Foods Limited. It addresses, “The Green Family disposed of the majority of their shareholdings. Czarvan Pty Ltd, Guiness Peat Group and Continent Venture Capital Ltd are now significant shareholders” (2002, Green’s Foods Limited Annual Report 2002, p8). This statement directly reflects the social structure of the company; as the fact that the Green family disposed of their shares to large corporate business such as Guinness Peat implies that Green’s no longer see it as a family centered business but a socially strong company with a highly competitive nature.
Respectively, customer relations play a social role to Greens business operations and performance in respect to gaining customer feedback and satisfaction after using their products. “The mission of our Consumer Relations Team is to listen and learn about consumers in a professional, consistent and caring manner that exceeds their expectations” (2002, Greens Foods Limited, Consumer Relations, http://www.Greens.com.au/dir016/greenspublishing.nsf/content/consumerrelations, 05/09/03)
In contrast, Green’s always sets its focus on its Corporate Governance; “recognizing the need for the highest standards of corporate behavior” (2002, Green’s Foods Limited Annual Report 2002, p9). At a certain time, or for certain period of time, financial statements show what the company owns and what it owes, its profitability, and the company’s flows of cash. The three primary financial statements relevant to stakeholders are that of the statement of cash flows, statement of financial performance and statement of financial position; these are found in Green’s Annual Report 2002.
The statement of cash flow pages 16 to 17 provides stakeholders with information on cash flows, displaying to stakeholders where cash enters and leaves the company’s accounts. The statement of financial performance page 14 reveals to stakeholders the revenue, cost, and profits for the company in a specific period of operation. The statement of financial position page 15 commonly known as the Balance Sheet, is important to the stakeholders as it outlines the company’s assets, liabilities and overall liquidity of the business. It can be seen in the Greens Annual Report on Financial Position that Total Assets is well in excess of Total Liability, (102,655,000 in assets – 58,856,000 in liabilities); Figures from these statements can be used in conjunction with the accounting ratios to depict the liquidity of the business indicating how many current asset dollars exist to pay the current liability; such liabilities include stakeholders share dividends (if the stakeholder is also a shareholder of Green’s).
Overall, the financial statements found in Green’s Foods limited Annual Report 2002 are successful in the way they present information on Green’s financial success in the form of financial reports to their stakeholders. The success of these reports also relies on Green’s ability to anticipate, interpret and read appropriately the needs of the stakeholders.
Like the way the master presents his idea to his apprentice “we create a picture of an organization, or the economy, whatever you lay on the basis of that picture, people think and act and by responding to that picture of reality, they make it so it becomes real in its consequences.” (P257 Hines Report) emphasis an idea of the Picture can be seen as Green’s Financial Report and the People who respond to the picture as the Stakeholders of Green’s. Hence, the needs of the stakeholders of Green’s Foods Limited have been met thoroughly through the many comprehensive financial statements and other relevant information available in the Annual Reports and the company website that Greens have made available.
References
2003, Corporate Governance in Russia, http://www.corp-gov.org, 05/09/03
2002, Ferret.com, Family era over, Green’s Foods CEO Douglas Greens resigns, http://www.ferret.com.au/articles/b4/0c00c794.asp, 09/09/03
Flemming. L, 2001, Excel HSC Business Studies, Pascal Press, Australia
Gaffikin. M, 2003, ACCY102 Accounting 1B Principles of Accounting, 3ed, Pearson Custom Publishing, Sydney, p10
2002, Green’s Foods Limited Annual report 2002, pp1 – 56
2002, Green’s Foods Limited, http://www.greens.com.au, 05/09/09
2002, Green’s Foods Limited, Consumer relations, http://www.Greens.com.au/dir016/greenspublishing.nsf/content/consumerrelations, 05/09/03
2002 Green’s Foods Limited, Exports, http://www.greens.com.au/dir016/greenspublishing.nsf/content/Export, 05/09/03
Hines reading p257
1997, Investors words, Financial Report,
http://www.investorswords.com/cgi-bin/getword.cgi?1957, 09/09/03