Corporate Finance Assignment

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Corporate Finance

BWFM5013
Assignment 1
TABLE OF CONTENT

1.0 The core business or businesses of the company……………………………………...…

2.0 The sector or industry the company belongs to…………………………………………

3.0 The main shareholders of the

company………………………………………………….1

4.0 The revenue or sales the company made during the year and its growth

rate…………2

5.0 The gross profit margin of the company’s core

business……………………………….2

6.0 The net profit the company made during the year and its growth rate………………2

7.0 The dividends were paid to the shareholders……………………………………………

8.0 Changes in fixed assets during the year 2022……………………………………………

0
9.0 The net cash flow change during the

year……………………………………………….3

10.0 The challenges and effects faced by the

company during 2020/2021 COVID-19

pandemic…………………………………………………………………………………3

11.0 References………………………………

……………………………………………….4

12.0 Appendices………………………………

………………………………………………5

1.0 The core business or businesses of the company

Farm Fresh Berhad owners Loi Tuan Ee and Kin bought sixty Australian cows in 2009. They
then started a small dairy farm in Mawai, Johor, to sell milk in Malaysia. They made sure the
foods had no artificial preservatives, colorings, or flavourings and were delivered fresh to the
shop shelves. This gave the local dairy brand an edge against international brands, many of
which used powdered or reconstituted milk. With Khazanah National Berhad funding, Farm
Fresh Berhad expanded its manufacturing capacity and product selection. Farm Fresh
Berhad's fresh milk products enabled these developments. They created a "home dealer
system" to designate rural Malaysian microentrepreneurs as stockists, dealers, and agents of
our goods. This appointment gave microentrepreneurs revenue and let us reach Malaysia's
most rural places. Farm Fresh Berhad produces dairy vertically. Farm Fresh, Master Barista,
Henry Jones, Yarra Farm, Yarra by Farm Fresh, and Nubian Goat's Milk run six dairy farms
and three processing facilities in Malaysia and Australia and sell 135 SKUs. Our brands
include Nubian Goat's Milk. They sell sauces, plant-based items, ready-to-drink (RTD)
products, chilled and ambient products, and chilled and ambient yoghurt. Farm Fresh Berhad

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was the first Malaysian firm to develop kurma milk, organic milk, lactose-intolerant milk, oat
milk, and almond milk. The company's strong R&D made this feasible. Farm Fresh Berhad
meets evolving customer demands. After beginning as a homegrown upstart and becoming
Malaysia's biggest integrated manufacturer of dairy products manufactured from fresh raw
milk, the company's current emphasis is on boosting production capacity and capabilities.
They can reach more Asian markets and provide dairy products as nature intended to more
customers.

2.0 The sector or industry the company belongs to


Farm Fresh Berhad is a member of the Malaysian dairy industry, which is now active and is
located in the country of Malaysia. They are one of the most significant players in the dairy
sector in Malaysia, and they are also one of the participants whose business is growing at one
of the fastest rates. According to that, they have become the most integrated and, as a result,
the most important maker of dairy products that are manufactured from fresh raw milk. The
primary senior management team, which is led by the company's founders and has a
combined 33 years of experience in the dairy industry, has an excellent track record of
generating organic and inorganic development since the company's founding. This success
can be attributed to the fact that the company's founders have been at the helm of this team
since the beginning.

3.0 The main shareholders of the company


a. Rainforest Capital Sdn. Bhd.(30.733% of direct shares)
b. Farmchoice Foods Sdn. Bhd. (13.795% of direct shares)
c. Agrifood Resources Holdings Sdn. Bhd. (11.8% of direct shares)
d. Khazanah Nasional Berhad (11.8% of indirect shares)
e. Employees Provident Fund Board (5.582% of direct shares)
f. Loi Tuan Ee (0.395% of direct shares & 44.528% of indirect shares)
g. Loi Foon Kion (30.788% of indirect shares)

4.0 The revenue or sales the company made during the year and its growth rate
Farm Fresh Berhad made a sale of RM501,921,211 in 2022 after the sales of
RM490,498,015.

Sales growth rate = (Sales 2022 / Sales 2021)/ Sales 2021


= (RM501,921,211 - RM490,498,015)/ RM490,498,015
= 2.38%
The growth rate of company sales is 2.38% from previous year. The fact that the sales growth
rate is positive is evidence that the company's revenues and sales are on the rise. If, on the

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other hand, the company have a negative score, this indicates that their sales and revenues are
going down. Additionally, it serves as a warning to take preventative action before it is too
late. In this instance, Famr Fresh Berhad is working to develop an increase in the income that
they bring in.

5.0 The gross profit margin of the company’s core business


The gross profit margin is able to evaluate the economic state of a firm. Such margin
consumes sales and cost of goods sales,COGS of the company to be figured out. The sales of
Farm Fresh berhad 2022 is RM490,498,015 and the COGS is RM365,576,725.

Gross Profit Margin = (Net Sales – COGS)/ Net Sales


= (RM490,498,015 - RM365,576,725)/ RM490,498,015
= 25.47%
The gross profit margin of Farm Fresh Berhad in 2022 is 25.47% .The first thing that must be
accomplished in order to generate net income is to achieve a positive gross profit margin. The
higher a company's gross profit margin, the closer it is to achieving both a high operating
profit margin and a high net income. Thus, this firm is having a good gross profit margin.

6.0 The net profit the company made during the year and its growth rate.
The firms earns RM77,105,262 net profit for the year of 2022 and RM42,889,714 in 2021.

Net profit growth rate = (Net profit 2022/ Net profit 2021)/ Net profit 2021
= (RM77,105,262/RM42,889,714)/RM42,889,714
= 79.76%
The growth rate of Farm Fresh Berhad net profit from 2021 to 2022 is 79.76%. Such rate
shows the firm has been successful in generating a profit.

7.0 The dividends were paid to the shareholders


The Company has neither declared or paid any dividends since the end of the preceding fiscal
year, nor has it paid any dividends. Subject to the agreement of the shareholders at the next
Annual General Meeting, the Board of Directors has proposed a final dividend for the year
that ended on March 31, 2022 in the amount of 1.07 sen per ordinary share, for a total of
RM19,971,723 in dividends.

8.0 Changes in fixed assets during the year 2022


The total fixed assets reported in 2022 is RM480,311,036 and in 2021, the total fixed assets
which are also known as non-current assets are RM416,672,772.

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Changes in fixed assets in 2022 = RM480,311,036 - RM416,672,772
= RM63,638,264
RM63,638,264 fixed assets are increased during the year of 2022. A greater fixed asset
turnover ratio implies that a firm has efficiently utilised investments in fixed assets to
produce revenue. This may be inferred from the fact that the ratio is higher.

9.0 The net cash flow change during the year


The change in net cash flow in 2022 is RM30,651,765. A corporation is said to have positive
cash flow when it has more money coming into it than going out of it. This indicates that
Farm Fresh berhad is efficient in managing their cash and their business cash flow is in good
circumstances.

10.0 The challenges and effects faced by the company during 2020/2021 COVID-19
pandemic
As addition, in a timely response to COVID-19 and the devastation it caused to families and
communities over the course of the preceding year, Farm Fresh berhad initiated a
humanitarian initiative. As a result of a donation of RM500,000 made to Yayasan Didik
Negara (YDN) and an additional RM360,000 from public donations that we facilitated via
company website, they were able to assist students who had lost parents as a result of the
pandemic by providing the financial support that they require to continue their education in
spite of mounting difficulties. This allowed them to assist students who had lost parents as a
result of the pandemic. These two gifts were from members of the general public.
When the COVID19 pandemic first started to spread at the beginning of the year 2020, the
first Movement Control Order (often abbreviated as "MCO") was issued in the middle of
March of the same year. Because of this, customers started stocking up on necessities for the
home, which led to an increase in demand that was most visible in the sales of the UHT and
ambient milk products during the fiscal year 2021. This has resulted in lower sales figures
across the board for all of their products as the pandemic has lasted into FY2022. There has
been a natural drop as buying behaviour has returned to normal, and this has been reflected in
lower sales statistics across the board. The Group was able to create a solid performance in
FY2022, despite the lengthy COVID-19 pandemic, with total sales of RM501.9 million, an
EBITDA of RM104.1 million, and a PATAMI of RM79.9 million. This was accomplished
despite the fact that the pandemic was caused by COVID-19. This exemplifies the Group's
determination in the face of challenges. After then, the total quantity of goods that was
available increased by RM13.8 million. This was primarily due to the fact that a bigger
proportion of ingredients were kept in reserve as a buffer in order to guard against the chance
of COVID-19 interrupting the supply chain. This was done in order to defend against the risk
of COVID-19 disrupting the supply chain.

11.0 References

4
(N.d.). Bursamalaysia.com. Retrieved February 10, 2023, from

https://www.bursamalaysia.com/market_information/announcements/comp

any_announcement/announcement_details?ann_id=3279667

Bloomenthal, A. (2007, February 5). Gross profit margin (GP): Formula for how to

calculate and what GP tells you. Investopedia.

https://www.investopedia.com/terms/g/gross_profit_margin.asp

Kenton, W. (2008, April 13). Fixed asset turnover ratio explained with examples.

Investopedia. https://www.investopedia.com/terms/f/fixed-asset-

turnover.asp

Cash flow vs. Profit: What’s the difference? (2020, April 21). Business Insights Blog.

https://online.hbs.edu/blog/post/cash-flow-vs-profit

12.0 Appendices

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