Financial analysis of Webster Limited Essay

Group Project

1.Describe what the company’s chief concerns are.

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Webster Limited has multiple specializations in a diverse scope of concern sectors over a period crossing 182 old ages. It is considered Australia’s 4th oldest company – of which started from being a provider of stuffs and services to chiefly husbandmans.

Webster Limited is a company which is more known for its concern within the agricultural industry. Webster has two operational divisions all of which are based within Australia. Both ‘Field Fresh Tasmania’ and ‘Walnuts Australia’s, are divisions which are to a great extent focussed on the exportation of onions and in-shell walnuts.

Webster is presently the largest walnut manufacturer with about 1,365 hectares of land for turning of walnut groves. Today, Webster is considered Australia’s largest agriculturist and exporter of onions, but besides nearing a position of being an exporter and high-quality manufacturer of in-shell walnuts. Therefore, Webster has made an imperative selling determination to distribute the word of its production of safe nutrient merchandises but besides a dependable manufacturer.

Field Fresh Tasmania, is known as Webster Limited’s onion sector and has exported brown and ruddy onions for around 40 old ages. Over the recent twosome of old ages, Webster Limited has invested the promotion of production engineering in order to labor workers. Field Fresh Tasmania incorporates scientific discipline and gardening engineering into its production of onions to see that it will stay in its topographic point as a diverse horticultural specializer within its industry on a planetary graduated table. Recently Field Fresh Tasmania held an official mill reopening which was attended by about 50 different stakeholders. Luc Delabie is presently the European Business Manager who is from Belgium, Delabie is responsible for the quality from different Fieldss based on consistence. During March, brown and ruddy onions are of high criterions and is sing regular fall conditions and harvest conditions. The brown onions were of 60 % completed during March, but has fortuitously been harvested and completed late due to the Autumn season about at a coating.

Walnuts Australia, on the other manus is considered the largest grove proprietor and manufacturer of walnuts within the Southern Hemisphere, this is due to the fact that they produce 6500 to 7000 metric tons of in-shell walnuts. It is estimated that by 2016, the company will bring forth around 11000 metric tons of in-shell walnuts. Walnuts Australia strives from exporting about 85 % of their merchandise around the universe to chiefly China and other European states. With more and more healthy eating wonts being adopted around the universe, the demand for walnuts are said to spread out greatly due to their wellness benefits. Therefore, as a response, over the following 5 old ages the company will seek upon spread outing their grove estate in Riverina by 1000 hectares. Presently as of March 2014, Walnuts Australia possesses a walnut grove based in Leeton this is where walnuts are foremost harvested by machinery and so processed to by big treating machinery to filtrate out dust from walnuts. After filtration, walnuts are so transferred to the freshly expanded drying shed based in Leeton, this is where high tech machinery is used to automatically dry and reassign any walnuts to be ready for transit. Furthermore, Walnuts Australia has invested in a trade name new quality confidence installation to see walnuts are run intoing the criterions of consistence and coloring material. Much of the procedures are automated, nevertheless manual labor is besides involved within the procedure such as review.

2.Answer the followers:

a.Who is the president of the company, and what is his background.

The president of Webster Limited is presently Roderick Roberts – who worked his manner up the heirarchy from Spetember 1994 where he was appointed with the function as non-executive manager. Later in the old ages between October 1996 and October 2001, Roberts was officially pull offing manager. Following that month, his president place was appointed from October 2001 to August 2007 and of all time since November 2008. Roberts, has besides had experiences within senior functions of primary fabrication and banking sectors. He has such experiences including Head of Corporate Finance at Bain Co Director of County NatWest Australia Limited and Chairman Harris Co Limited. Roberts is a manager of Tassal Group Limited Deputy Chancellor of the University of Tasmania. His other functions include being a Council Member of Australian Institute of Company Directors and manager of multiple proprietary companies. It can besides be noted that Roberts is one of the persons found on the audit and hazard commission and the wage commission, farther he is besides president of the nominations and assignments commission.

hypertext transfer protocol: //www.macroaxis.com/invest/manager/WBA.AX — Roderick_Roberts

B.Who is the Chief Executive Officer of the company, and what is his background.

Presently, the Chief Executive Officer of Webster Limited is John Hosken. Hosken is extremely experienced within the field of gross revenues and selling chiefly due to holding 20 old ages of experience. For this ground, the last 4 old ages Hosken has been portion of the Gross saless and Marketing scetor of Webster Limited, therefore ensuing in his portion of the Senior Executive Group. Hosken’s primary function as a member of the Gross saless and Marketing squad was to guarantee full maximization of stockholder returns and to supply Webster Limited steady a place within its industry. He besides has experience within the field of gardening and agribusiness whilst turning his accomplishments within export selling, moreover he is besides analyzing concern at UTAS. Due to these grounds, Hosken has late received publicity to go the Chief Executive Officer of Webster Limited.

hypertext transfer protocol: //nutindustry.org.au/files/nrteUploadFiles/122F042F201313A373A32PM.pdf

degree Celsiuss.How many stockholders does the company hold?

The company presently has 1365 ordinary stockholders, and 198 cumulative penchant stockholders as of 30ThursdayJune 2013.

3.Calculate the followers, based on the current portion monetary value ( i.e. as at 18ThursdayMarch 2014 ) :

a.Market capitalization at 18th March 2014. As at 18ThursdayMarch 2014 the company has issued 137,987,365 to the full paid ordinary portions listed at monetary value of $ 1.24 per portion. Market Capitalisation = Number of portions x Share monetary value = 137,987,365 x $ 1.24 = 171,104,332.6 The Market value of the company every bit at 18ThursdayMarch 2014 is $ 171,104,332.6.

B.PE multiple at 18th March 2014 ( based on full-year net incomes for the latest full-year consequences reported )

Based on the 2013 one-year study,

Basic Earning per portion were $ 0.0562 at a portion monetary value $ 1.24.

PE Multiple = PE Ratio = Market Value per share/Earnings per portion

= 1.24/0.0562 = 22.0641 times ( 4 denary topographic points )

degree Celsiuss.Dividend output at 18th March 2014 ( based on the dividend for the latest full-year net incomes reported ) .

Based on the 2013 one-year study, Annual dividends per portion were $ 0.025 at a portion monetary value of $ 1.24.

Dividend output = Annual Dividend per share/ Price per portion = 0.025/1.24 = 0.0201612… . = 2.0161 % ( 4 denary topographic points )

vitamin D.Enterprise value ( EV ) at 18th March 2014. ( based on the latest set of full-year consequences )

EV + Cash = Interest bearing debt + Market value of OEI +Market value of equity Based on 2013 one-year study,

Interest bearing debt = Current Borrowing + Non current adoption + Non redeemable cumulative penchant portions

= $ 109,000 + $ 257,000 + $ 567,360

= $ 933,360

Market Value of OEI = 0 [ Given ]

Market Value of Equity = Market Capitalisation

= 171,104,332.6

EV + Cash = Interest bearing debt + Market value of OEI +Market value of equity EV + 8,178,000 = 933,360 + 0 + 171,104,332.6

EV = 163,859,692.6

vitamin E.EV/EBIT multiple based on the latest set of full-year consequences.

EV = 163,859,692.6

EBIT = Net Net income before Income revenue enhancement disbursal – Net Interest disbursal = 9,922,000 – [ Interest paid ( include finance rentals ) – Interest received ]

= 9,922,000 – [ -95,000 + 740,000 ]

= 9,922,000 – 645,000

= 9,277,000

EV/EBIT Multiple = 163,859,692.6/ 9,277,000

= 17.6630 Timess

degree Fahrenheit.EV/EBITDA multiple based on the latest set of full-year consequences.

EV = 163,859,692.6

EBIT = 9,277,000

EBITDA = EBIT + Depreciation + Amortisation

= 9,227,000 + 2,827,000 + 252,000

= 12,306,000

EV/EBITDA = 163,859,692.6/12,306,000

= 13.3154 Timess

g.The P/NTA multiple based on the latest set of full-year consequences. ( NTA = Net touchable assets. )

Net assets= $ 102,971,000

Intangible Assets= $ 4,758,000.

NTA =Net assets – Intangible assets

=102,971,000 – 4,758,000

= $ 98,213,000

NTA per share= $ 98,213,000/ 137,987,365

= $ 0.7117 per portion

Price per share= $ 1.24

P/NTA = 1.24/0.7117

=1.7423 Timess

4.Calculate: [ for at least the last three ( 3 ) old ages. ]

a.Dayss stock list

For 2013

Get downing stock list = $ 8,030,000 Ending inventory= $ 12,034,000

COGS = $ 26,453,000

Inventory Days = 365 x ( Get downing Inv + Ending Inv/ 2 ) / COGS = 365 x $ 10,032,000/ $ 26,453,000

=138.4 yearss

For 2012

Get downing stock list = $ 4,033,000 Ending inventory= $ 8,030,000

COGS = $ 21,418,000

Inventory Days =365 x ( Get downing Inv + Ending Inv/ 2 ) / COGS

=365 x $ 6,031,500/ 21,418,000

=102.8 yearss

For 2011

Get downing stock list = $ 3,675,000 Ending inventory= $ 4,033,000

COGS = $ 19,685,000

Inventory Days = 365 x ( Get downing Inv + Ending Inv/ 2 ) / COGS

=365 x $ 3,854,000/ $ 19,685,000

=71.5 yearss

B.Dayss histories receivable

For 2013

Get downing A/R = $ 23,707,000 Ending A/R = $ 14,224,000 Sales= $ 41,119,000

Inventory Days = 365 x ( Get downing A/R + Ending A/R/ 2 ) / Gross saless

=365 x ( $ 18,965,500/ $ 41,119,000 )

=168.4 yearss

For 2012

Get downing A/R = $ 21,155,000 Ending A/R = $ 23,707,000

Sales= $ 34,778,000

Inventory Days = 365 x ( Get downing A/R + Ending A/R/ 2 ) / Gross saless

= 365 ten $ 22,431,000/ $ 34,778,000

=235.4 yearss

For 2011

Get downing A/R = $ 10,039,000 Ending A/R = $ 21,155,000

Sales= $ 35,708,000

Inventory Days = 365 x ( Get downing A/R + Ending A/R/ 2 ) / Gross saless

= 365 ten $ 15,597,000/ $ 35,708,000

=159.4 yearss

degree Celsiuss.Dayss histories collectible

For 2013

Get downing A/P= $ 8,828,000 $ Ending A/P= $ 8,884,000

COGS= $ 26,453,000

Dayss A/P = 365 x ( Get downing A/P + Ending A/P/ 2 ) / COGS

= 365 ten $ 8,856,000/ $ 26,453,000

=122.2days

For 2012

Get downing A/P= $ 11,293,000 Ending A/P= 8,828,000 $

COGS= $ 21,418,000

Dayss A/P = 365 x ( Get downing A/P + Ending A/P/ 2 ) / COGS

= 365 ten $ 10,060,500/ $ 21,418,000

=171.4days

For 2011

Get downing A/P= $ 7,234,000 Ending A/P= $ 11,293,000

COGS= $ 19,685,000

Dayss A/P = 365 x ( Get downing A/P + Ending A/P/ 2 ) / COGS

= 365 ten $ 9,263,500/ $ 19,685,000

= 171.8days

vitamin D.Operating rhythm

For 2013:

Operating rhythm = Inventory period + Receivables period

= 138.4 +168.4

= 306.8days

For 2012:

Operating rhythm = Inventory period + Receivables period

= 102.8 +235.4

= 338.2days

For 2011:

Operating rhythm = Inventory period + Receivables period

= 71.5 +159.4

= 230.9 yearss

vitamin E.Cash rhythm

For 2013:

Cash rhythm = Operating rhythm – Payabless Period

= 306.8- 122.2

= 184.6 yearss

For 2012:

Cash rhythm = Operating rhythm – Payabless Period

= 338.2- 171.4

= 166.8 yearss

For 2011:

Cash rhythm = Operating rhythm – Payabless Period

= 230.9- 171.8

= 59.1 yearss

Graphs for each twelvemonth

For 2013:

https://lh5.googleusercontent.com/Wf9UTxxbOdK5y4Chwhd7INyOQVygCrwRAY5TglYS-qTCoOknBSf8SDBVAxR5o5W0e6pC2lct9b77kp7YeoHqZ9hElIFCQ8aWihDNur0X2X2l1HydWeM9xpyZCn2FgLx46g

For 2012:

https://lh4.googleusercontent.com/YkT5aiOPU8YzFI6FB6zWWa1dgza_J9jsXymyyV3Q3bjoRClg6C9vIH3LNoNxKXXF3apnob0CcaEdV-pfdXq-HLL4fZ9EhUI_orl6MFZfvdI76glHgSLiom9kRmz3T1DvIA

For 2011:

https://lh3.googleusercontent.com/avn55v4SOWfjM_uPIgMG57uiZ6y-FnS-_HWgdMm92pjV6f8nRT60EaLRlwn2esc0IvicSC4PN0cJ-98i8_NO_GC3FgNu3voClFGQ0U85K5IJSqO1-pRrUHF8n3du1OUdLA

5.Calculate WACC for the company, presuming a pre-tax cost of debt of 7.0 % .WACC = ED + E ( Re ) +DD + E ( Rd ) ( 1 – T ) where: E = Market value of equity D= Market value of debt

Re= Cost of equity

Rd= Cost of debt

t = corporate revenue enhancement rate

Market Value of Equity = Market Capitalisation = 171,104,332.6 Market Value of Debt = Interest bearing debt = 0 ( Given that 171,104,332.6 & gt ; 933,360, where it was stated when Cash & gt ; involvement bearing debt D = 0 )

Cost of Debt = 7.0 % [ Given ] Using CAPM, Required rate of return on Equity= hazard free rate + Beta equity ( avg return in market – return of hazard free investing ) Rf = 3.96 % [ @ 14/04/2014 11:52pm Bloomberg ] Risk premium/ ( Rm – Releasing factor ) = 6 % [ Given ] B equity = 1.1 [ Given ] R equity = Rf + B equity ( Rm – Releasing factor ) = 3.96 % + 1.1 ( 6 % ) R equity = 0.1056 Therefore Cost of Equity = 10.56 % WACC = ED+E ( Re ) +DD+E ( Rd ) ( 1 – T )

= 171,104,332.6 0 + 171,104,332.6 ( 10.56 % ) +00 + 171,104,332.6 ( 7.0 % ) ( 1 – 0.3 )

= 10.56 %

6.Estimate the value of one portion in the company, utilizing the Gordon Dividend Growth Model.Would you put in the company?Why or why non?

Based on our analysis of Webster, we can gauge that Webster Ltd is expected to turn. With investings in the yet to maturate bing groves, we can anticipate increased returns from a big addition in harvested walnuts, in progress of prognosis. Value adding works and the purchase of land sufficient to spread out the grove estate by around 900 hour angles have already been put in topographic point. Webster has besides ensured an suitably low fiscal hazard with managers set to beef up the company’s equity capital base. The company is expected to execute good in the 2014 fiscal twelvemonth.

With bulk of its concern in export, the depreciation of the exchange rate should supply extra stimulation to Webster’s activity when trading with foreign concerns. In add-on to this, RBA has besides lifted its prognosiss for both economic growing and CPI rising prices for the twelvemonth to December where “growth is thought probably to beef up a small in 2014” [ RBA, Feb 2014 ] .

From this, we can reason the Webster Ltd will execute good hence have a growing rate at 3.2 % , higher than that of current rising prices rate [ 2.9 % @ Trading Economics 1:04 23/4/2014 ]

If Webster Ltd is set to execute good invariably, harmonizing Gordon’s theoretical account, its dividends will be that of changeless growing dividend with a growing rate of 3.2 % .

Using CAPM, Required rate of return on Equity= hazard free rate + Beta equity ( avg return in market – return of hazard free investing ) Rf = 3.96 % [ Ten twelvemonth authorities bond rate @ 14/04/2014 11:52pm Bloomberg ] Risk premium/ ( Rm – Releasing factor ) = 6 % [ Given ] B equity = 1.1 [ Given ] R equity = Rf + B equity ( Rm – Releasing factor ) = 3.96 % + 1.1 ( 6 % ) R equity = 0.1056

Market value of portion today = Present value of all expected cashflow to be received from portion ( dividend ) discounted at rate of return

P0 = D/ ( Re – g )

= 0.015/ ( 0.1056 – 0.032 )

= 0.2038

A portion will be deserving 0.2038 if bought today.

If I was to put in Webster today, my analysis will be based on NPV

NPV = Initial investing + Future Cashflow from dividend = -outlay + D ( Re – g ) -1

= -0.2038 + 0.015 ( 0.1056 – 0.032 ) -1

= 0

[ 0 NPV, Indifferent to accepting or rejecting the undertaking ]

As an investor, based on the consequence from NPV I would be apathetic towards puting or non in Webster Ltd. With a 0 NPV, there will be no alteration in stockholder value if invested into. Therefore, I will non accept or reject the investing of Webster Ltd.

7. Suppose you bought 10,000 portions in February 2014 in Webster.

a. What was the entire sum of dividend that you will have when the company pays its interim dividend in April 2014?

Based on the latest half twelvemonth studies, Webster limited is be aftering to pay an interim dividend of $ 0.015 per portion. Assuming we ain 10,000 portions we will have a entire Dividend payment of $ 150.

B. When was the ex-dividend day of the month?

The ex- Dividend day of the month was 31 of March 2014.

c. When was the day of the month of record?

The record day of the month for finding entitlement to this dividend was 4 of April 2014

d. What day of the month was the dividend paid?

The Interim Dividend was paid the 30 of April 2014.

e. What sum of postmarking credits did you have

Div * technetium / ( 1 – technetium ) * fp

Taking 30 % as the company revenue enhancement rate ( technetium ) , and 1 as the franking proportion ( fp ) .The sum of postmarking credits received is 64.29

f. Does the company have a Dividend Reinvestment Plan in operation?

Webster limited have already established a Dividend Reinvestment Plan, but will non yet be operational. Under the DRP any to the full paid stockholder will be eligible to have extra portions in exchange of all or portion of their dividend payment.

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