ACCT11059
USING ACCOUNTING FOR DECISION MAKING
ASSIGNMENT 1
NAME: Ian Eisenhuth STUDENT ID: s0274317
- Step 1: Personal profile set up with
a photo, description of photo as well as a brief introduction about myself and
a link to my personal blog, which is: http://theaccountingdream.blogspot.com.au/
- Step 2:
·
The
Company I have been assigned is Salmat
·
I have attached Annual Reports ending June
2014, June 2013 and June 2012 to Assignment 1 submission section on the CQU Moodle
site.
About Salmat
Salmat
is a publicly company listed on the Australian Stock Exchange (ASX) and trades
under the ticker SLM. It currently has a market capitalisation of $174.2
million. The company’s current share price is $1.05 (as at COB 16/03/2015) with
their shares trading in the range of $1 to $2 over the past 12 months (ASX
website).
Salmat
was founded by good mates and entrepreneurs Phil Salter and Peter Mattick in
1979 in Sydney. The company is a player in both the traditional and digital
based marketing industries and provides a range of ‘multichannel marketing
solutions for leading Australian Companies’ (Wikipedia, 2014). For example;
·
they
offer traditional direct mail of catalogues and brochures. Some might refer to
these catalogues as junk mail,
·
they
offer SMS marketing for retailers like Mitre 10 Hardware,
·
they
have speech recognition based call booking for clients like Auckland Taxi
Services, and,
·
also
have speech recognition based automatic phone answering service for NSW Police
and others.
Some
of Salmat’s other clients include leading Australian companies such as
Woolworths Limited, Target Australia, Telstra and the Australian Government.
There
are currently over 6000 people employed at Salmat in Australia, New Zealand and
the Philippines. The company ‘manages over six billion customer interactions
across multiple channels’ (Salmat website, 2015) every year.
They
have 2 main divisions: Consumer Marketing Solutions (CMS) and Customer
Engagement Solutions (CES). The CMS division comprises of letterbox media and
digital catalogue solutions; digital marketing, SMS services and e-commerce
solutions, customer loyalty and feedback services, as well as local area
marketing solutions. The CES division designs and delivers multichannel contact
centre services and technology solutions, field sales services, and learning
and development solutions. Salmat’s contact solutions include outsourced
contact centre, on-demand contact centre, cloud contact centre, and speech
technology (source Wikipedia).
As a
company they aim to help their clients build and maintain relationships with
potential customers, help them connect with these clients and keep them as
regular and loyal customers. They do this with the primary goal of helping
their clients boost their overall profits and revenue and ultimately achieve
their organisation’s goals. They engage and get closer to their clients
customers through 5 different service lines. These being;
1.
Media: through letterbox media
(catalogue distribution), and digital catalogues.
2.
Contact:
through help desks and consulting and outsourcing solutions
3.
Digital:
through email and direct SMS, data services and facebook competitions
4.
Field:
through face to face direct sales and field, retail and event sales
5.
Local:
they use their tools and expertise to help find a local market, how to appeal
to this market and how to keep them close.
Some of my
KCQs after looking through Salmat’s Annual Reports
I
have to admit up until last Friday I had never heard of the company Salmat nor
did I have any idea as to what they do. The question of being happy with the
company I have been assigned has been raised and in all honestly I don’t think
it really matters whether you’ve been assigned a company you have some
knowledge or little to no knowledge of. Yes having some knowledge of your
company will may make things a little easier to begin with because you will
already know the organisation's goals and their primary business purpose but I think
once it comes to reading through each company’s annual reports the majority of
students will find this to be something new to them and quite challenging. So I
guess overall yes I am happy with the company I have been assigned and I am
enjoying learning about what they do and the different business strategies they
employ to achieve their overall organisational goals.
Like
many other students I initially found the amount of information and content within
the annual reports to be quite overwhelming. I did find quite a few things
within their financial statements and throughout the report, which I didn’t
quite understand. I have noted some of these below along with some of the
aspects of the report I found to be of importance to me.
There
were some acronyms throughout the report, which I didn’t recognise but after
doing some research I am starting to understand.
·
EBITA:
Earnings Before Interest, Taxes and Amortization. This basically is a financial
indicator which is commonly used to measure the efficiently and profitability
of a company.
·
NPAT-
Net Profit After Tax. This one being self-explanatory really meaning the net
profits of a company after taxation. Often referred to as the ‘bottom line’ and
is where the companies dividends are paid out of.
I noticed that Salmat put forth a three-year growth
strategy, which they launched in July 13 with the company being
refocused into two key divisions, being Customer Engagement Solutions (CES) and
Customer Marketing Solutions (CMS).
In reading the company’s ASX announcements and Annual
Report, 2014 seems to have been full of significant events for the company. The
first of these were major board and management changes. It is the first
year for the new chairman taking over from retiring long serving chairman. He
had to act as interim CEO while the company sourced a permanent CEO. They then
hired a new Chief Information Officer (responsible for IT), a new Chief
Financial Officer and a new Head of People and Culture. This seems highly
unusual and indicates that there was a problem with the old executive team that
had needed to be addressed by replacing them all.
I also noticed that the three-year growth strategy, which
had been launched back in July 2013 had run into some trouble by May 2014. The
Earnings Guidance Announcement in May 14 issued by the new CEO shows the
earning guidance cut from $14 to $16 million back to $8 million for 2014
financial year (ie a nearly 50% reduction which again seems highly unusual),
the reason given being under-performance in both the CES and CMS
divisions. In the June 2014 Annual
Report, the EBITA was confirmed at $8.6 million, a 66.7% reduction on the 2013
result. The reasons given in the Annual
Report matched those in the May 2014 Earnings Guidance Announcement.
While there was strong demand for the CES division’s
contact centre solutions and even though these new contracts had been secured
they had not yet been implemented by the company. Instead, they had to spend
their time getting existing customers on to the new IT platform. This resulted
in lower revenue and higher costs.
The CMS division also reported lower revenue and profit.
This was said to be a result of delayed spending by mid tier retailers on the
Salmat direct marketing products and lower profit margins seemingly caused by
customers not paying the prices that Salmat had budgeted for.
By the time of the FY15 first half update in February
2015, the new CEO seemed to be having an impact. In the update, the CEO announced that revenue
was growing as customers adopt its products and services but that financial
results were poor so the company would do three things:
·
Implement a cost reduction plan
·
Simplify business operations
·
Cut out non strategic work areas ie
services which don't make a profit
It will be important to see how these actions drive the
company’s performance in the coming months.
My Top 3 Blogs
I found Mitchells blog to be the most visually inviting
and easy to follow. He gave good insight into himself in his introduction and
by doing so I felt I was able to connect with him a lot better than I did with
other students blogs, which had very little information or detail about themselves
as people. I found learning about Mitchell and his love for skydiving to be
very unique and interesting. Mitchell was assigned Emeco Holdings as his
company and even though he only gave a short description and brief introduction
into this company it was straight to the point and achieved its purpose. By
reading it I was able to get a good idea as to what Emeco Holdings business is
about and where they operate.
Tanya also gave good background information about herself
which I like because it helps me not only get to know a little about her but
also connect with her better. I found her blog layout to be very on the eye as
well as easy to read and navigate.
Tanya gave a very thorough description and history of her
company Cardno. She has provided enough background information about Cardno,
the industry they’re involved in, services they provide and where the business
is operated in order for any reader to be able to leave her blog knowing
Cardno.
I enjoyed reading Rhiana’s blog. She gave a good introduction
and description of herself, which made it easy to relate to her and take a
liking to her blog. I am sure many other students are in the same boat but I feel
I can relate to her in that she is juggling full-time work and study.
It was interesting to learn about Rhiana’s company
Mastermyne Group Limited. A company which I had previously never heard of or
knew anything about. She provided good insight into the services they provide,
the coal mining industry they are involved in and some interesting facts about
the company she has discovered.
- Step 3:
See attached excel spreadsheet in Assignment 1 submission
section on CQU Moodle site.
- Step 4:
- Step 5:
