Q.No. 11. Business Model of BingoAnswer:Bingo Industries is one of the ASX Listed company and it operates its business since 2017. Followed by this company operates as a residential and commercial waste services, recycling services and bin manufacturing. For the waste collection service the company operates in a strategy of diversion of waste from landfill which will be through a recycling led solution and the after the recycling the amount so generated will be a source of investment in technology and continuous innovation to enhance sustainability outcomes and maximize returns.(Annual report, Bingo industries.com, 2018)So, on the above strategy intent the enablers are:a.Protect and optimize the core by means of ensuring the adequacy of business system, develop a customer centric model which will ensure that a reliable and high quality service is been provided to the customer and taking the feedback. b.Expansion of Geographic expansion in across Australia so that the company should concentrate on the market from where to optimize their business operations.c.Once the market has settled then it enhance their vertical integration by means of Alternate Waste Treatment for putrescible waste, solution for Refuse derived Fuel and build scale in C&I business to capture efficiencies.2. Summarise what key issues (both favourable and adverse) have been affecting BINGO profits in the 6 months to 31 December 2018. Answer: As per the financial year ending june, 2018, the revenue for the year has been increased 32% from the year 2017 and so the net profit has been increased to $38,003,000 which is increased by91% form last year. And for the First half year to 2019, the figures of revenue and profit has also been increased by 24% in compare to last 6 months of 2018. The reason for such increase in revenue and profit during the 6 month from the annual report are:Favourable:-There was contribution from the victorian business initially at lower margins in terms of material in post collection;-The operating free cash flow of the company has been increased by 33% which also help to increase the cash conversion to 103%, so the turnover cycle impressed the profitability of the company.
-NSW network reconfiguration plan is ongoing and the operational efficiencies makes the difference in increase in profitability of the company.Adverse: -Headwinds in the multi-dwelling residential construction market in NSW and VIC has been impacted and due to which the EBITDA margin was been underlying during the 6 months.-Carrying cost for the operating business has been increased for the period and due to which the annual price rise has been delayed for the company. -The facility cost from the banks were also on the higher side.(F19 Report, 2018)Q.no. 2Calculate (provide workings) and verify the following financial items for BINGO for in respectof the 6 month half year period ending 31 December 2018 (i.e. 1H19): A. Equity market capitalisation of BINGO at period end 31 December 2018 (3 marks) Answer: The market capitalization of the company is $1,249 million. (Reuters.com, dec 2018)Calculation: No. of shares * Current Market Price = 748137000*1.67= $1,249,388,790B. Enterprise Value of BINGO at period end 31 December 2018 (4 marks) Answer: Enterprise value of the company = Market Capitalization + Total Debt – Cash or cash equivalent = 1249388790+97779000-140308000= 1,206,859,790C. Annualised Return on Equity (ROE) for 1H19 (4 marks) Answer: ROE = Net income / Average shareholders equity= 13359/706193= 1.89%D. Statutory EBITDA for 1H19 (4 marks)
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