ASS#1 DRAFT

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

1.     http://mcolesy.blogspot.com.au/

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.  

2.     http://theadventuresoftanyahoward.blogspot.com.au/

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.

3.     http://rhianahp.blogspot.com.au

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: