Wesfarmers Limited
As one of Australia's oldest and most successful diversified companies, Wesfarmers began in June 1914 as the Westralian Farmers Co-operative and for most of its early history was primarily involved with the provision of services and merchandise to Western Australia's rural community.Its early operations included wool and wheat merchandising, grain and fruit exporting, oil distribution to rural areas, as well as Western Australia's first public radio station.
In the 1950s Wesfarmers began a major diversification programme with the formation of Kleenheat Gas. Kleenheat pioneered the distribution of liquefied petroleum gas (LPG) and gas appliances to Western Australia's rural areas and now operates a major Australia-wide network of depots, company-operated branches, dealers and franchisees.
The 1980s saw significant changes to the company's operations and structure.
Since the first major acquisition in the 80s, Wesfarmers has continued to transform the size and shape of its business operations through strategic acquisitions and divestments. Steeped in a foundation of retailing since its formation, today Wesfarmers is one of Australia's leading retailers and diversified industrial companies. From the small farmers co¬operative three quarters of a century ago, to the nation's largest employer with over 200,000 employees and approximately 500,000 shareholders, Wesfarmers remains committed to providing a satisfactory return to shareholders.
The company aims to achieve this by:
• satisfying the needs of customers through the provision of goods and services on a competitive and professional basis;
• providing a safe and fulfilling working environment for employees, rewarding good performance and providing opportunities for advancement;
• contributing to the growth and prosperity of the countries in which it operates by conducting existing operations in an efficient manner and by seeking out opportunities for expansion:
• responding to the attitudes and expectations of the communities in which the company operates;
• placing a strong emphasis on protection of the environment; and
• acting with integrity and honesty in dealings both inside and outside the company.
You are an accountant at Poole Group Accountants & Investment Advisers. You have been approached by a group of investors for your professional advice on investing in Wesfarmers Limited.
Required:
Prepare a business report for your client. Your report should include:
a) A description of the core business of the Wesfarmers Limited including full details of its operating activities.
b) A discussion on any significant issues emerging from the Chairman's Report.
c) A discussion on any significant issues emerging from the Directors Report.
d) A discussion on companys Corporate Governance Statement.
e) Financial analysis of Wesfarmers Limited financial position and performance for the 2010, 2011, 2012, 2013 and 2014 Financial Years.
f) A calculation of the key financial ratios for 2011-2014 financial years.
g) Explain briefly what is revealed by the ratios and other calculations in the context of the company's profitability, asset efficiency, liquidity, capital structure, and market performance. In particular, any important changes over the period 2011 to 2014 should be identified, discussed and, where possible, explained.
h) An overall evaluation of Wesfarmers Limited and your recommendation on investing in the company.