Introduction: Blackmore is one the Australia’s leading natural health brand based on latest science and research. It provides the world’s best natural health solutions in healthcare industry. To meet the standard or requirement of the people they convert their supreme inheritance and knowledge into advanced, innovative, best quality recognized healthcare solutions in the market. There good quality products, reliable and free naturopath advisory service and many more reasons make them one of the most trusted names in the natural health industry in Australia.
A company’s earning capability and financial position can be projected, compared ND evaluated by analyzing the important financial statements which is balance sheet and income sheet. Balance sheet gives the financial condition of the company and Income sheet gives the earning capacity and financial strength of a company. To understand the concept of financial statements and to execute the analysis in the realistic data, the following study has been conducted on the company Blackmore. This study tries to analyses the financial statements of Blackmore and comment on the changes that took place from financial year 2010 to 2012.
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There are various methods for performing uncial analysis such as Ratio Analysis, Time Series Analysis, Cross sectional Analysis, Industry Analysis and Performa Analysis. With the help of Ratio Analysis from the balance sheet of the Blackmore Company for the year 2010 to 2012, the following details are summarized: Profitability Ratios: Profitability ratio is used for calculating the profit of the company and it is measured in percentage by five ratios like Return on equity is used calculating the profit which gives to the shareholder on their investment.
Return on asset is used for measuring how well the management converts their investment in to assets. Gross profit margin or understanding the sale revenue of the company by subtracting the cost of goods sold. Return on capital employed is to measure the conversion of investment on employment to goods and services. Net profit margin is to calculate the revenue from sales. In Blackmore case the ROE, ROAR, ROCK, Net profit margin has decreased because of more share issued than the previous year, more depending on the outside investment and less of net income.
The income is higher and the capital is employed more. Net profit because more of inventory in warehouses and less of sales revenue more of fixed and variable cost occurred in 2012. Only gross profit margin has increased only by 0. 45% which is Just based on more of asset in company than sales. The efficiency ratio is used for understanding the inventory management by the company and it is calculated in days. A ratio like average inventory turnover is used for calculating the number of days the inventory is held.
Average settlement period (debtors and creditors) shows how many number of days does the customer takes to pay and the business takes to pay their lenders. Average asset turnover period shows how the company turns it assets into sales revenue. In Blackmore case the ratios are increasing from 2010 to 2011 (19. Days) and 2011 to 2012 (9. 96 days) which is not good for the company because the inventory is being held in warehouse for a longer period of time. The debtor are paying the bills on time which leads to their decrease in days by 1. Days in 2010-2011 but from 2011-2012 the debtor are not paying in time by 7. 7 days. Which has lead the company to not to pay to their creditor on time in 2011-2012 by 2. 3 days but in 2011-2010 the company has paid their bills on time because of receiving payment on time by 1. 65 days. The asset turnover period has men management effectively by the company because they have maintained their conversion on time whether the payment coming on time or not, from 2010-2011 decreased by 9. 3 days and 2011-2012 by 9. 93 days. Liquidity Ratio: Liquidity ratio is used to calculate the short term debt of the company.
Ratios like current ratio is used for calculating the ability to pay their short term debt, higher the ratio better the company performance. Acid test ratio is also the same concept but removing the inventory from current asset because it takes longer to convert them so to have a clear picture of the liquidity it is used. Cash flow from operating ratio is used for calculating the cash generated from the operating expense and no long term. In case of Blackmore the current ratio is doing well from year to year because of their high liquidity of cash. In 2010-2011 it has increase from 0. % but from 2011-2012 it has 0. 5% hike. The acid test ration has not been affected to a greater level but it has decreased by 0. 3% and 0. 1% respectively. But the cash flow from operating has decreased because less management of inventory in the profitability ratios which has an impact on cash flow from operating, 2010-2011 (0. 141) and 2011-2012 (0. 38%). Financial Gearing Ratios: Gearing ratio consist of two ratios gearing ratio and interest coverage ratio. These types of ratios are used to calculate the management of owner equity with the borrowed funds in long term aspect.
In Blackmore the gearing ratio is fluctuating, but in 2010 the company was very risky to invest but it gradually improved in 2011 by percentage increased by 1. 21% . This mean the company is dependent on long term equity fund and outside borrowing. The interest coverage ratio in Blackmore has declined from 0. 21% in 2012 which is riskier for the shareholders but this can be maintained if the company depends less on outside income and equity. Investment Ratios: This is the ratio calculated for the shareholder to know the ability of the company.
They have ratios like dividend per share helps the shareholder to know the amount of dividend paid in the company if the company pays good and high then the shareholder trust the company and if low then it does trust the company. Dividend payout is measured the amount of dividend pay in the financial period. Dividend yield ratio show how much a company pay each year on their investment on shares. Earnings per share the amount earn per share in the company. Operating cash flow per share show after tax income plus depreciation, the higher the better.
Price per earnings ratio is how much earning is earned on share and it is compared with the same sector industry. In Blackmore case the dividend per share, dividend payout, dividend yield and earnings per share are increasing which is better for the company and the shareholder because of higher returns on share because of the higher dependence on outer income which are shares. The operating cash flow and price earnings per share are decreeing but that is sustainable because of higher payout or the shareholders.
Critical analysis of Blackmore Annual report based on the Coo’s report and social responsibilities for the year 2012 with respect to the financial health and management of the company Coo’s Report: “The Blackmore campus achieved 13% increased output including a record of 1. 75 million units of product in March 2012, Christine Halter CEO” (annual report 6). Australian Market condition plus Blackmore investments in growth program for Australia and Asia helped them to make net profit up to $27. Million in the market with increased sales of $261 million. Their success for the year includes many things such as: Net profit after tax of $27. 8 million Increase in the sales growth up to 11%, $261 million Growth in Asia was up to 20%, $53 million; Asia also stands for 20% of group sales and 6% of group profit. There are now in the preparation of launching them into China and also wants to make other agreements to develop Bio-Cuticles group of companies. They came up with strong balance sheet and interest cover on their debts and also strong dividends. A) Establishing Brand: Blackmore also proclaimed their interest of establishing the Blackmore Institute with ND education. The main outcomes include research funding; distributing research updates and offering various education programs. They decided to partner with some leading education and research centers like University of Sydney, Monish Alfred Integrated Research Centre, University of West Sydney and Southern Cross University. (B) Blackmore Online: The online offering of Blackmore plays the vital role for their marketing strategies and education program.
Their websites attract common people which help them to generate revenue in sales, net profit after tax and also earning per share. For the ear 2012 their sales revenue increased with a growth of 1 1. 3%, net profit after tax increased with a growth of 1. 8% and their earning per share increased up to 1. 6% compared to last years. They have online personal health system known as Embraceable in Australia which provides customers with the support of qualified naturopath to maintain their personal health regime.
It became one of the first companies to have an App approved and available on Apple’s App store. The mobile App offers users with pharmacy assistance, extensive information about health conditions, how to manage the health issues naturally, natural remedies and advice n Blackmore products. They launched 102 new products in the market and made 43 renovations to the existing product in the market. On the other they have continued to develop in other fields such as animal health, weight management and sport supplements. C) Dividends and Opportunities: The ordinary dividends for the year 2012 were 127 per share, including the year’s final dividend of 83 cents per share. There was 2% increase over last year’s total ordinary dividends which were 124 cents per share. By the month of June 2012 the net debt level of the company was $29. 8 million then last year. Net Debt plus shareholder’s equity was approve 27. 7% compared to 27. 4% last year. The acquisition was fully debt funded. Even with additional borrowings, Blackmore’ gearing Levels were within the debt targets.
The company have launched their business in China and have also developed agreements with Bio-Cuticles group of companies. They also encourage women employment in their company and give them opportunities to work in board positions, country manager roles and other management roles. In total the year 2012 was rewarding for the Blackmore Company. Social Responsibilities: Blackmore education team trained more than 11,000 pharmacy assistants, 4000 general practitioners, 1500 pharmacists and 650 pharmacy students” (annual report 12).
When it comes to social responsibilities of the company, during the year 2012 вЂў Pat Farmer’s Pole to Pole run вЂў Muscular Degeneration Foundation of Australia вЂў MIND Foundation вЂў The McGrath Foundation вЂў Heart Research Institute вЂў Australian Business and Community Network вЂў Elephant Sanctuary Malaysia вЂў Outing for 200 underprivileged children at FRI… (Forest Research Institute of Malaysia) in Keeping вЂў Support for Thailand Floods through Red Cross Ђў Heart Foundation Thailand вЂў Biology Surf Life Saving Club вЂў Young Endeavourer Youth Scheme The company have supported Australian Business and Community Network.
Their main focus was on education, they planned to provide improved opportunities for schools and students in various areas by offering mentors and support programs in school. Mentors coached students in special workshops held at their company to help gain practical knowledge. They also took part in various reading program for primary school students to help them develop their literacy, vocabulary and other learning skills. Mentors offered special programs like improving language skills and personality development for the students for their schooling and community.
Their main aim was to come with such a program which provides the participants or students and other people with their coaching skills and development, Job awareness, satisfaction and exposure to the community. The company sponsor Biology Surf Life Saving Club. The club is located close to Blackmore campus on Sydney Northern Beaches. They promote beach safety for the community by providing trained lifesavers on the beach. The surf club and the many share a common interest, they encourage people to stay fit and healthy and also promote Australian beach culture.
Along with club they carry various health awareness programs for local community. As a part of social responsibility of the company they also give donations and do charitable work. In the company they encourage their employees to take part in charitable activities for donation. In this activity a percentage of taxable pay is deducted from each employee and deposited in a social organization or trust account. This program is carried out twice a year where employee is given a chance o nominate a charity organization or trust of their choice to receive the donation amount.
In addition to this they carry many community activities, fundraising programs and awareness activities as a part of their social work. Blackmore has supported The Muscular Disease Foundation by helping them to raise more than $2 million dollars through the sale of eye health products. By donating percentage sales company have long term commitment for social responsibility. Review of the Blackmore financial health and management for different years by public domain: Emma Pearson from Finance News Network took a closer look at Blackmore equines, innovation and the value the company gives to the shareholders.
Sue Moore, Director Products, Developments and Innovations, Blackmore Ltd said that the company’s products are made based on the naturopath principle which yields the best quality product and is a reason for their success as well. Australian market for dietary and supplements was approximately $1. 2 million and the Blackmore research have shown that the market have grown by 6 per cent per annum, on the other side the company have grown more than twice the rate in Just 12 months and was expected to further develop in coming years. To be in par with the competitors Blackmore keeps coming up with innovations and new products in the market. Blackmore suggested the deal meant pharmacists could offer “Coke and fries” upgrades on drug prescriptions” (Collect, 2011). There was a controversy that took place in the year 2011 where different pharmacy association in Australia withdrew their deals with Blackmore. The pharmacies stopped promoting Blackmore complementary medicines as they were unaware of the various side effects of the medicines. Different pharmacies and other pharmaceutical Society in Australia use to et computer pop up to promote Blackmore medicine when they sell certain prescribed medicine.
Blackmore CEO Christine Halter was also criticized as she suggested a deal which says all the pharmacists could offer coke and fries upgrades when they sell prescribed medicine. She denied all the facts. A senior lecturer from La Tribe University said in his interview with BBC News Online that deals between the company and other pharmacy associations was a conflict of interest. The pharmacy owners were more interested in making profits than pharmacy practice. He said that the supplements would have been offered for reading side effects of medicine also including blood pressure and other medications.
He stated that there was lack of understanding about the use of complementary medicines. In the year 2010 approximately $1. 2 billion value of complementary medicines such as vitamins, minerals, herbals, aromatherapy and other homeopathic products were sold in Australia. There was no test done on the products before they go to market, in the year 2010 Department of health release a report which stated 90% of these medicines were found to be non-complaint with regulatory requirements. The trust based system between the company and harmonies failed to grow. Blackmore splashes big in $mm buy’ (Hoffmann, 2012) Blackmore acquired Sydney Biostatistics by $40 million, which is Australia’s largest supplier of supplements, naturopath and pharmacists. There products includes various protein dominant practitioners in the research market in Australia which was worth about $1 50 million. Because of the increase in the number of practitioners the research industry was growing strongly yearly up to six percent. The acquisition was said to be priced close to nine times the previous year’s revenue, which was $4. Lion. “Blackmore scores ‘most trusted’ vitamin title” (Cowling, 2012) the company topped the list of most Australians trusted vitamin brands consecutively for the fourth year; it was Reader’s Digest survey. The company recorded the most votes and topped the list. Blackmore chairman Marcus Blackmore was happy with the success of the company and pleased with the work of the companies staff, for playing important role for earning the trust of the consumers. He said company always took the responsibility for customer’s health and well being.
In the same year the company as engaged in many business developments and marketing of their products such as vitamins, supplements, herbal products and also agreed to acquired hundred percent of the issue shared capital. In total there were many developments and acquisitions took place in the company. Conclusion: From the above financial analysis even though there were ups and downs, The Blackmore had various developments and growth for the year 2012. They were many business developments in different countries like Asia, Australia and they established the business in china. The profit of the company was consistently increasing every ear.
They have also acquired Australia’s largest supplier of supplement and other products which is Sydney Biostatistics. Overall, by the end of the year 2012, the ratios helped to give proper analysis of the Blackmore financial status. References Blackmore Annual Report – 2010, 2011, 2012 Finance News Network Blackmore official website Controversial Blackmore pharmacy deal withdrawn by Collect, Michael (Cot, 2011); Article Blackmore splashes big in $mm buy by Hoffmann, Madeleine Lully, 2012); Article Blackmore scores ‘most trusted’ vitamin title by Cowling, Kate Lully, 2012); Article