The company assigned for this assessment is the London Biscuit Berhad Group.
London Biscuit Berhad Group is a composition of London Biscuit Berhad (also known as “LBB”), fully owned subsidiary Kinos Food Industries Sdn Bhd (also known as “KINOS”), and also subsidiary major stalk holder of Khee San Food Industries (also known as “KSFI”). All 3 companies together they produce, manufacture and distribute the largest range of products focusing on 4 main components that includes Cakes, Sweet Products, Wafers and Snack Confectionaries. These 4 main components sub types are categorise as : Cakes (- roll, layer and round), Sweet Products (- deposited, boiled, tablet and chewy), Wafers (- bar, cube and biscuit), a large range of Snacks (- jelly puddings, wafers, chocolate toy boxes, potato chips and biscuit chocolate dips). London Biscuit has been operating since the year 1981 until now, holding a total of 11 production plants located at Ulu Tiram and Pasir Gudang, Malaysia and been taken over by the Liew's Family which since then the company start to expand throughout the nation and 40% of its products has been exported to other nationwide, targeting the market of student, young children and early teens.
During the early 2002, LBB was successfully listed on the 2nd Board of Bursa Malaysia and was lifted to the Bursa Malaysia Main Board later on the following year 2003. Throughout the years, LBB has constantly making improvement on production availability and quality by incorporating new ideas on products and also increasing its production capacity to fulfil customer to reach market demands. By the year 2007, LBB already acquired 2 subsidiary and majority stake of the company Kinos Food Industries Sdn Bhd and Khee San Berhad. Most of their popular products retained their iconic packaging and at the same time they invested on newer production line and also expanding their business by raising consumer awareness and remain active on public marketing, participating on major media events and also obtained Disney licensee for Disney characters to be featured on their product line in Malaysia. Today, London Biscuit Berhad is one of the major confectionary manufacturer with distribution channels over 35 countries throughout the South East Asia Region and the Asia Pacific Region, holding over 200 individual products types and also acting as one of the largest cake manufacturer and one of the pioneer of swiss rolls manufacturing in Malaysia.
The Group's prospects are good though the operating environment continues to provide challenges to the Management who are responding by being proactive in terms of anticipating shifts in consumer sentiment, seasonality factors and sensitivity to foreign exchange movements. We will continue to foster our key distributors to expand the distribution network and to cultivate new business partners to ensure sustainable growth. The Group believes that its current expanding portfolio of cakes, snack confectionery and potato chips will strongly underpin its future growth.
2.0 Board of Directors & Independent Directors of The Company
Clear evidence and interpretation of Board of Directors
Independent directors of the company.
Ratio of board independency (Number of independent directors divided by board size) Over the past FOUR years?
Interpret your observations.
3.0 Descriptive Analysis
Despite competing with the stronger brands and establish confectionary, London Biscuit has been steadily growing throughout the years and slowly growing its revenue. In this section, there will be a detailed evaluation Financial Statements and descriptive analysis of London Biscuit Berhad throughout the (4) four year period 2014 to 2017. It will be seperate into (4) categories as below :
ii) Assets management
iii) Financial Leverage
3.1 Liquidity Ratio
By analysing the Figure (1.0) below, it clearly shows a growth in the company's value throughout the years. LBB has been managing its cash flow and also the availability of their fundings, ensuring that repayments and needs are all met. According to the Liquidity Chart, clearly shown that the company overall liquidity management maintains sufficient and balance cash / equivalents to meet the working capital and funding requirements. Thou, it clearly shows that the company has been having problem paying off obligations in 2014 - 2015 as its current ratio fall below 1, and improvement shown the following year 2016.
3.2 Assets Management Ratio
Figure (2.0) is the Assets Management of LBB from the year 2014-2017 period. The company have been growing and increasing especially in the year 2016. Its total assets where they required high volume and good quality of investment on expanding and improving its inventory. By it means, LBB was not effectively managing its assets to cover their inventory financial debts, and might face problems in the following years if they couldn't make a inventory turnover to repay its debts.
3.3 Financial Leverage Ratio
By analysing the Figure (3.0) below, it will be able to show how much debt a company to be able to meet its financial obligations. Which and where if a company has a high leverage, it shows that the company has been taking in too much loans and holding too much debt. LBB has been financially doing well and balanced, where their company is well financed to their stockholders or equity..
3.4 Profitability Ratio
The Figure (4.0) below, shows the ratio on how profitable the company LBB relate its total assets and how the company make use of its assets by increasing amounts and making higher earnings., which also seen as the overall financial health of the company. Throughout the year 2014 to 2017, there's a significant drop where its profit margin brought to the lowest 0.04 within the 5 years period. As it may seems the good increase in their assets and inventory, LBB should focus manage the firm's assets and efficiently controlling on cost as the higher the profit margins are, how well the company is doing well.
4.0 Comparison Analysis - Apollo Food Holding Berhad
Within the same industry, Apollo Food Holdings Bhd is one of the strongest and oldest competitor which was also one of the pioneer brands leading the market and was also the origin and first branding of layered and confectionary cake. Comparing LBB and Apollo Food Holdings side by side, although Apollo Food Holding neither improved or increase on net profit margin, its was doing better than other industrial average ratio. Apollo has been dealing well with the accounts and maintaining a good balance on overall performance and has a steady growth comparing with LBB. As the recent annual report of LBB, it has highlighted on the interest rate risk which is arising from the exposure of interest bearing borrowings of the company that required regular monitoring. In the report of edgemarketing, an analyst as well stated that LBB lack of coverage by investment analysis where investors where not comfortable with the fact where the company is run by six out of nine in the family in the board. Where also LBB finance cost another major concern for investor as it will still remain high for quite some time, as the company need manage on clearing their loans and purchasing credits. Both LBB and Apollo has been facing the same issue in high cost of raw material and the rise on production cost, yet both companies still managing well with the slight improvement on ringgit.
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