Business Valuation and Analysis of Tassal Group in Australia

This article provides an economic analysis of Tassal Group, the largest market share holder in the Australian aquaculture industry. It covers the company's performance over the last five years, economic indicators affecting the company, and the economic environment of Tassal Group.

Running Head: BUSINESS VALUATION AND ANALYSIS
Business Valuation and Analysis
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1BUSINESS VALUATION AND ANALYSIS
Table of Contents
Economic environment of Tassal group....................................................................................2
Performance of the company over the last five year..................................................................2
Economic indicator affecting the company................................................................................4
References..................................................................................................................................8

2BUSINESS VALUATION AND ANALYSIS
Economic environment of Tassal group
In Australia, the aquaculture industry has constituted a strong growth over the last five
years. The industry has accounted a growth rate of 5% per annum. Growth of the industry
continues despite interruption in fish production following outbreak of disease in 2014-2015.
Tassal group captures the largest market share with share being 16.5% (tsga.com.au 2018).
Economic environment of Tassal group is characterized by existing tax rates, stability of
global and domestic economy, market size, public investment in research and development
and sustainable growth rate. The company has experienced a low barriers to the market entry.
However, steady growth has been maintained by company with its unique product supply.
The relationship with partners and suppliers play an important role in performance of the
company. The global economic environment that affects the aquaculture industry worldwide
plays an important role for Australia and for the concerned company. The relatively high
value of Australian dollar has put limit on export penetration (aussiefarms.org.au 2018).
However, the low level of export penetration suggests a considerable scope business
expansion in the international market. The value of Australian dollar has declined providing
an opportunity for export in future.
Performance of the company over the last five year
The company is in a path of continuous growth. The per capita consumption of
salmon in Australia is growing. The company is committed to meet the growing demand for
consumption. Tassal group provides continuous support to salmon industry with its
continuous growth (tassalgroup.com.au 2018). The company offers a wide range of variety to
its customers from the perspective of both product and brand. Being dependent on
agriculture, the company often face agricultural risk. Salmon involves a growing cycle of 3
years. Therefore, there are high possibility of supply shortage. To address this issue and

3BUSINESS VALUATION AND ANALYSIS
maintain Salmon stocks throughout the year the company has focused on imported stock of
Salmon. The Tassal group is expected to be leading brand in this future following its
diversified growth strategy.
2013 2014 2015 2016 2017
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$272,805 $266,331
$309,790
$430,924 $450,453
Revenue
Revenue
Year
Revenue
Figure 1: Revenue of Tassal group in the last five years
(Source: tassalgroup.com.au 2018)
2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7
$0.00
$10,000.00
$20,000.00
$30,000.00
$40,000.00
$50,000.00
$60,000.00
$70,000.00
$80,000.00
$90,000.00
$33, 457
$41,061
$49,992 $48,493
$85,556
Net Profi t
Net Profit
Year
Net Profit
Figure 2: Net profit of Tassal group in last five years
(Source: tassalgroup.com.au 2018)

4BUSINESS VALUATION AND ANALYSIS
As shown from the above figure, revenue of the company has increased in the last five
years. This indicates growing profitability of the company.
Economic indicator affecting the company
The macroeconomic factors such as gross domestic product, inflation, saving, interest
rate, foreign exchange and business cycle volatility affect aggregate demand and investment
of the economy (tsga.com.au 2018). The five major economic factor that have influenced
performance of the company include GDP, inflation, interest rate, consumer demand and
foreign exchange rate.
Figure 3: Australia’s GDP growth in last five years
(Source: tradingeconomics.com 2018)
The GDP growth rate in Australia has declined in recent years with an accounted
growth rate that is below the expected level. The declining GDP generally is not a good sign
for business. However, tassal group has not affected from a slowdown in GDP because of a
steady growth of consumption. The household consumption grew at a rate of 1.1 percent
(tradingeconomics.com 2018).

5BUSINESS VALUATION AND ANALYSIS
Figure 4: Trend in inflation rate
(Source: tradingeconomics.com 2018)
The inflation rate in Australia has remained at a relatively stable level. The cost of
food and non-alcoholic beverages fell from -0.2 percent to -0.7 percent. The declining food
price in turn raises people’s affordability of sea food. Tassal group being a leading company
in the aquaculture industry is benefitted from increasing affordability as reflected from
increasing revenue and net profit of the company (tassalgroup.com.au 2018).
Figure 5: Interest rate in Australia
(Source: tradingeconomics.com 2018)
The interest rate in Australia has settled at a historic low level. The RBA has left the
cash rate to a rate of 1.5 percent. The low interest rate has contributed to an increase in the

6BUSINESS VALUATION AND ANALYSIS
business investment along with a strong export. The interest rate has been kept at the low
level due to raise Australia’s growth rate in line with other advanced economy. The
prosperous economy in turn implies a healthy environment for business of Tassal group.
Consumer demand for seafood in Australia has continued to grow. The per capita
consumption is expected to grow by 3.7% between 2015-16 and 2020-21. The per capita
consumption is expected to be 19.0 kilogram by 2021 (ibisworld.com.au 2015). Increase in
people’s income coupled with increasing health consciousness and health benefits from
specific seafood especially Salmon has raised demand for company’s product causing the
business to grow.
Figure 5: Australian volume of apparent consumption, production and net imports of
sea food
(Source: aussiefarms.org.au 2018)
The competitiveness of the company influenced by the movement of exchange rate
against its competitors and trading partners. Australian dollar has recorded a strong
appreciation from 2001-02 to 2007-08 against both US dollar and Japanese yen. The
appreciated currency reduced the import cost, helping the company import Salmon from its
trading partners. In 2013-14, the Australian dollar depreciated by 10 percent
(aussiefarms.org.au 2018). This puts a downward pressure on export price. The export

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revenue of the company has increased by 32.3% reaching a volume of 1172 tone in 2016
from 886 tons in 2015.

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References
Aussiefarms.org.au. (2016). Australian Fisheries and Aquaculture Statistics. [online]
Available at: https://www.aussiefarms.org.au/uploads/documents/2090-000000199-
43a87df513-australian-fisheries-aquaculture-statistics-20.pdf [Accessed 7 Apr. 2018].
Ibisworld.com.au. (2018). Soaring seafood consumption fails to deliver significant growth
for Australia’s fishing and aquaculture industries : Media Centre. [online] Available at:
https://www.ibisworld.com.au/media/2015/12/15/soaring-seafood-consumption-fails-to-
deliver-significant-growth-for-australias-fishing-and-aquaculture-industries/ [Accessed 7
Apr. 2018].
Tassalgroup.com.au. (2018). Tassal Group – Annual Reports. [online] Available at:
http://tassalgroup.com.au/investors/reports/annual-reports/ [Accessed 7 Apr. 2018].
Tassalgroup.com.au. (2018). Tassal Group – Tassal Growth Continues. [online] Available at:
http://tassalgroup.com.au/tassal-growth-continues/ [Accessed 7 Apr. 2018].
Tradingeconomics.com. (2018). Australia Interest Rate | 1990-2018 | Data | Chart |
Calendar | Forecast. [online] Available at: https://tradingeconomics.com/australia/interest-
rate [Accessed 7 Apr. 2018].
Tsga.com.au. (2018). Economic Impact Assessment, Tasmanian Aquaculture Industry.
[online] Available at: https://www.tsga.com.au/wp-content/uploads/2014/11/TSGA15-
Economic-Impact-Report.pdf [Accessed 7 Apr. 2018].

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