DIVIDENDS The amounts paid or declared by way of dividend since the start of the financial year are: A final dividend of 155 cents per share fully franked in respect of the year ended 30 June 2018, as detailed in the Directors' Report for that financial year, was paid on 12 October 2018 An interim dividend of 150 cents per share fully franked in respect of the year ended 30 June 2019 was paid on 20 March 2019 . On 14 August 2019, Directors declared a final dividend for the year ended 30 June 2019 of 70 cents per share fully franked, payable on 12 September 2019 to shareholders registered on 28 August 2019. This will bring total ordinary dividends to 220 cents per share fully franked (2018: 305 cents per share fully franked) for the full year. e) You are trying to value Blackmores share today (End of 2019). Assume the current price of the share in the stock market is $88.16 and that you would like to hold the investment for 5 years. Assume that the total dividend paid by Blackmores in the 2019 year were paid as a lump sum (at once) today. You also estimate that for the next two years dividends will grow respectively at 30%, 25% per year. After this (starting in time 3) you estimate dividends will grow at a constant rate of 6% forever. Assume that today the Australian treasury notes 2.5%, the market risk premium is 8% and the beta of Blackmores is 1.16. Based on this price would you purchase the share? Why or why not? (10 marks) f) Assume that the Blackmores Group would like to replace its bank loan facilities (2019) with a new issuing of bonds. Assume that the issue will have a coupon rate of 1.5% with a 10 year maturity. Assume this are semi-annual coupon bonds and each have a face value of $1.000 and the required rates of return for similar bonds in the market is 2.5%.What would be the issuing price of these bonds? (8 marks) GHTS S'000 2019 2018 2016 2015 2017 552,160 Revenue 609,502 601,136 5 98,659 388,366 Earnings before interest, tax, depreciation and amortisation (EBITDA) Depreciation and amortisation Earnings before interest and tax (EBIT) Net interest expense Profit before tax Income tax expense (Lossgain attributable to non-controlling interests Profit after tax attributable to shareholders of Blackmores Limited (NPAT) 3 CHAIRMAN & CEO 91,414 10,874 80,540 4,995 75,545 22,115 (39) 110,552 8,940 101,612 3,930 97,682 28,459 (782) 94,642 152,266 8,4117 ,045 86,231 145,221 4,180 1,810 82,051 143,411 24,023 43,391 (985) 12 78,655 6,391 72,264 3,432 68,832 22,276 53,469 70,005 59,013 100,008 46,556 4 YEAR IN REVIEW Net debt Shareholders' equity Total assets Current assets Current liabilities Net tangible assets (NTA) Cash generated from operations 94,484 207,292 490,928 305,526 150,509 122,508 51,806 49,532 192,875 464,850 302,507 174,467 123,869 90,131 44,717 177,541 412,174 258,662 142,556 107,369 95,310 17,793 178,263 443,362 294,624 192,279 116,484 123,022 7,069 132,915 293,407 187,844 114,998 90,809 89,791 5 STRATEGIC PRIORITIES Number of shares on issue ('000s) Earnings per share (EPS) - basic (cents) Ordinary dividends per share (DPS) (cents) Share price at 30 June NTA per share 17,362 309.2 220 $89.91 $7.06 17,227 406.4 305 $142.50 $7.19 17,226 342.6 270 $95.84 $6.23 17,225 580.6 410 $131.39 $6.76 17,224 270.7 203 $75.27 $5.27 100.7% 33.2% 6 OPERATING REVIEW 20.2% Cash conversion ratio Return on shareholders' equity? Retum on assets Dividend payout ratio Gearing ratio EBIT to revenue ratio Effective tax rate 56.7% 25.8% 16.9% 71.2% 31.3% 13.2% 29.3% 81.5% 36.3% 23.2% 75.0% 20.4% 16.9% 29.1% 78.8% 20.1% 15.6% 29.3% 80.8% 56.1% 39.4% 70.6% 7.1% 24.3% 30.3% 114.2% 35.0% 27.3% 75.0% 5.1% 18.6% 32.4% 2.03 Current assets to current liabilities (times) Net interest cover (times) Gross interest cover (times) 16.1 1.73 25.9 23.4 1.81 20.6 18.9 1.53 80.2 63.9 1.63 21.1 18.8 7 BLACKMORES DIFFERENCE 15.3 14 % change on prior year Revenue EBITDA EBIT NPAT EPS DPS (17.3) (20.7) (23.6) (23.9) (27.9) 8.9 16.8 17.8 18.6 18.6 13.0 (7.8) (37.8) (40.6) (41.0) (41.0) (34.1) 54.1 93.6 101.0 114.8 114.5 102.0 35.1 70.8 81.6 83.1 81.4 60.0 8 FINANCIAL REPORT 1. Calculated as cash generated from operations divided by EBITDA 2. Calculated as net profit after tax divided by closing shareholders' equity 3. Calculated as EBIT divided by average total assets. 4. Gearing ratio is calculated as net debt divided by the sum of net debt and shareholders' equity 9 REMUNER DIVIDENDS The amounts paid or declared by way of dividend since the start of the financial year are: A final dividend of 155 cents per share fully franked in respect of the year ended 30 June 2018, as detailed in the Directors' Report for that financial year, was paid on 12 October 2018 An interim dividend of 150 cents per share fully franked in respect of the year ended 30 June 2019 was paid on 20 March 2019 . On 14 August 2019, Directors declared a final dividend for the year ended 30 June 2019 of 70 cents per share fully franked, payable on 12 September 2019 to shareholders registered on 28 August 2019. This will bring total ordinary dividends to 220 cents per share fully franked (2018: 305 cents per share fully franked) for the full year. e) You are trying to value Blackmores share today (End of 2019). Assume the current price of the share in the stock market is $88.16 and that you would like to hold the investment for 5 years. Assume that the total dividend paid by Blackmores in the 2019 year were paid as a lump sum (at once) today. You also estimate that for the next two years dividends will grow respectively at 30%, 25% per year. After this (starting in time 3) you estimate dividends will grow at a constant rate of 6% forever. Assume that today the Australian treasury notes 2.5%, the market risk premium is 8% and the beta of Blackmores is 1.16. Based on this price would you purchase the share? Why or why not? (10 marks) f) Assume that the Blackmores Group would like to replace its bank loan facilities (2019) with a new issuing of bonds. Assume that the issue will have a coupon rate of 1.5% with a 10 year maturity. Assume this are semi-annual coupon bonds and each have a face value of $1.000 and the required rates of return for similar bonds in the market is 2.5%.What would be the issuing price of these bonds? (8 marks) GHTS S'000 2019 2018 2016 2015 2017 552,160 Revenue 609,502 601,136 5 98,659 388,366 Earnings before interest, tax, depreciation and amortisation (EBITDA) Depreciation and amortisation Earnings before interest and tax (EBIT) Net interest expense Profit before tax Income tax expense (Lossgain attributable to non-controlling interests Profit after tax attributable to shareholders of Blackmores Limited (NPAT) 3 CHAIRMAN & CEO 91,414 10,874 80,540 4,995 75,545 22,115 (39) 110,552 8,940 101,612 3,930 97,682 28,459 (782) 94,642 152,266 8,4117 ,045 86,231 145,221 4,180 1,810 82,051 143,411 24,023 43,391 (985) 12 78,655 6,391 72,264 3,432 68,832 22,276 53,469 70,005 59,013 100,008 46,556 4 YEAR IN REVIEW Net debt Shareholders' equity Total assets Current assets Current liabilities Net tangible assets (NTA) Cash generated from operations 94,484 207,292 490,928 305,526 150,509 122,508 51,806 49,532 192,875 464,850 302,507 174,467 123,869 90,131 44,717 177,541 412,174 258,662 142,556 107,369 95,310 17,793 178,263 443,362 294,624 192,279 116,484 123,022 7,069 132,915 293,407 187,844 114,998 90,809 89,791 5 STRATEGIC PRIORITIES Number of shares on issue ('000s) Earnings per share (EPS) - basic (cents) Ordinary dividends per share (DPS) (cents) Share price at 30 June NTA per share 17,362 309.2 220 $89.91 $7.06 17,227 406.4 305 $142.50 $7.19 17,226 342.6 270 $95.84 $6.23 17,225 580.6 410 $131.39 $6.76 17,224 270.7 203 $75.27 $5.27 100.7% 33.2% 6 OPERATING REVIEW 20.2% Cash conversion ratio Return on shareholders' equity? Retum on assets Dividend payout ratio Gearing ratio EBIT to revenue ratio Effective tax rate 56.7% 25.8% 16.9% 71.2% 31.3% 13.2% 29.3% 81.5% 36.3% 23.2% 75.0% 20.4% 16.9% 29.1% 78.8% 20.1% 15.6% 29.3% 80.8% 56.1% 39.4% 70.6% 7.1% 24.3% 30.3% 114.2% 35.0% 27.3% 75.0% 5.1% 18.6% 32.4% 2.03 Current assets to current liabilities (times) Net interest cover (times) Gross interest cover (times) 16.1 1.73 25.9 23.4 1.81 20.6 18.9 1.53 80.2 63.9 1.63 21.1 18.8 7 BLACKMORES DIFFERENCE 15.3 14 % change on prior year Revenue EBITDA EBIT NPAT EPS DPS (17.3) (20.7) (23.6) (23.9) (27.9) 8.9 16.8 17.8 18.6 18.6 13.0 (7.8) (37.8) (40.6) (41.0) (41.0) (34.1) 54.1 93.6 101.0 114.8 114.5 102.0 35.1 70.8 81.6 83.1 81.4 60.0 8 FINANCIAL REPORT 1. Calculated as cash generated from operations divided by EBITDA 2. Calculated as net profit after tax divided by closing shareholders' equity 3. Calculated as EBIT divided by average total assets. 4. Gearing ratio is calculated as net debt divided by the sum of net debt and shareholders' equity 9 REMUNER