business valuation and financial analysis

Topics: Inflation, Foreign exchange market, Currency Pages: 14 (2207 words) Published: May 4, 2015

Table of Contents
Company Profile2
Firm’s Economic Environment2
Exchange rates2
Interest Rates2
GDP Growth Rate (YoY)3
The influence of economic environment on firm’s historical performance3 The influence of economic environment on firm’s future performance3 Industry Analysis3
Rivalry between existing firms3
Threat of new entrants4
Threat of substitute products4
Bargaining power of customers4
Bargaining power of suppliers4
SWOT Analysis5
Key successful factors5
High level of competitive5
Profitable organization5
Market leader5
Risk of the business strategy5
Interest rate risk5
Foreign currency risk5

Company Profile
Breville Group Limited is a public entity that is listed on the Australian Securities Exchange under the code BRG. The company focuses on the development, marketing and distribution of a large range of culinary appliances which could be classified into three categories: Beverage, cooking and food preparation (IBISworld 2014). The predecessor of BRG was Housewares International Limited (HWI) that was established in 1957 and became listed in 1999. With a successful acquisition of the Breville company in 2001 and the expansion of the global market of electrical business, HWI decided to change the business strategies and dispose of its homewares and cleaning business in 2007. A year later, the HWI changed the name to Breville Group Limited (Breville 2015). Today, BRG owns and operates more than three brands and distributes its premium products in many different countries and areas globally including Australia, New Zealand, Hong Kong, North America and United Kingdom through online retail platforms and local third party distributors (DatAnalysis Premium 2014). The group is now ranked of 653 out of the top 2000 companies in Australia (IBISworld 2014). Firm’s Economic Environment

The following information of economic environment helps to understand the BRG’s past performance and provide predictions of future performance in its principle markets in Australia, New Zealand, Hong Kong and United Kingdom. Exchange rates

Over the past five years (from 15 Mar 2010 to 9 March 2015), Australian dollar (AUD) have been depreciating against New Zetland dollar by 19.57%; British Pound by 17.04%; Hong Kong dollar by 16.75%. Furthermore, due to the most of appliances are designed in Sydney, but assembled in China, the currency against Chinese Yuan which has depreciated by 23.80%, has to be taken into consideration. (Appendix 1)

The inflation rate needs to be controlled to maintain stable, too high or too low of the inflation rate will cause uncertainty such as unemployment and consequently harm the overall economy. As of January 2015, the inflation rate in Australia is 1.7%; in New Zealand is 0.8%; in Hong Kong is 4.1% and in United Kingdom is 0.3%. (Appendix 2)

Interest Rates
The current interest rate in Australia is 2.25%; in New Zealand is 3.5%; in Hong Kong is 0.5% and in United Kingdom is 0.5%. (Appendix 3)

GDP Growth Rate (YoY)
In 2014, the GDP expanded in Australia by 2.5%; in New Zealand by 3.2%; in Hong Kong by 2.2% and in United Kingdom by 2.7%. (Appendix 4) Population
Population indicates the number of potential customers. By January 2014, the population of Australia was 23.13 million; New Zealand was 4.51 million; Hong Kong was 7.23 million and United Kingdom was 64.31 million. (Appendix 5) The influence of economic environment on firm’s historical performance With the effect of a stable interest rate, it has a positive effect on the current revenue. According to the company report (Appendix 6), under the condition that BRG’s worldwidely developing, marketing and distributing its electrical products, the revenue shows an upward trend annually and an general increasing growth rate from -0.2% to 13.8% from 2011 to 2013, but with a slow decline to 11.3% in 2014. The...
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