Financial Analysis and Business Decisions: Collins Foods Limited

This report provides an analysis of Collins Foods Limited's business decisions based on their annual reports from 2015 to 2017. It examines the impact of different business models, particularly comparing Sizzler Australia and Sizzler Asia, on the company's risk and return profile. The report notes the overall revenue increase of Collins Foods Limited over five years and discusses the challenges faced by Sizzler Australia, including store closures and impairment charges, alongside the growth in Sizzler Asia. It further analyzes the Underlying Net Profit after Tax (NPAT) and the effects of declining revenue turnover due to Sizzler Australia's performance, concluding with an outlook on the potential revenue increase for Collins Foods Limited following the closure of Sizzler Australia. The analysis is supported by references to Collins Foods Limited's annual reports and other relevant sources.

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Business Decision making

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Contents
Answer to question no-2.............................................................................................................................2
The impact of the difference in business model on the risk and return profile of Collins Foods Limited 2
Answer to question no-3.............................................................................................................................2
References...................................................................................................................................................3

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Answer to question no-2
After assessing the annual report of Collins Foods Limited, it is observed that overall
revenue of the Collins Foods Limited has increased by average 9.41% in 5 years which shows
that company has created value on its investment throughout the time. Sizzler Australia has
delivered positive stores sales growth and on the other hand, Sizzler Asia sales and earnings
reflects the consistent increment in its business. Nonetheless, the revenue of the Sizzler has
increased by 4% in Thailand since last four year which reflects eh positive increment in the
consolidated revenue of Collins Foods Limited. The business model of Sizzler is more clients
oriented which focus on delivering the best quality of services. However, the charges and price
picked by the Sizzler is quite high in Australia. Nonetheless, the consistent dropdown in the
overall revenue of the Sizzler also resulted to destruction of its process working chain. On the
contrary to that, Collins Foods Limited has structured business model and proper linked is set up
in it’s all the business activities. The business model of Collins Foods Limited is based on the 9
key activities such as employee’s turnover, client’s satisfaction, use of advance technologies,
process working chain, cyber computing system to communicate, organizational culture and
other Key managerial persons (Gitman, Juchau, & Flanagan2015).
The impact of the difference in business model on the risk and return profile
of Collins Foods Limited
The main risk would be decrease in the overall revenue of the organization. The closure
of 6 Sizzler restaurants in Australia will damage its brand image on international level which
may not be good indicator for its sustainable business (Collins Foods Limited, 2015).
In context with the return, it will result to decline in the overall return on capital
employed. However, close of 6 Sizzler restaurants in Australia will increase the overall return on
capital employed as they were operated at the break-even point. In Asian Countries, Sizzler has
adopted clients oriented business model which have been increasing its overall revenue
throughout the time (Collins Foods Limited, 2017).

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Answer to question no-3
It is analysed that the Underlying Net Profit after Tax (NPAT) of the Sizzler was $24.6m in 2015
which went up from $17.9m as compared to 2019. However, $37.5 million pre-impairment
charges were made on Sizzler Australia, due to decrease in its sales. Company had to record
statutory NPAT loss of $10.4m (Collins Foods Limited, 2016). Nonetheless, it does not impact
on the Collin Food funding and Sizzler Asia.
Collins Foods Limited had to face decrease in its business efficiency due to the declined revenue
turnover by 10.5% of Sizzler. However, the main reason of the decline of $ 65 million of revenue
was based on the closure of 6 Sizzler stores in Australia (Collins Foods Limited, 2015). Net
assets of Sizzler were $189.7m, which went up from $171.3m in 2015. The total segment
revenue of Sizzler is $ 65,049000 which is 12% higher as compared to last five year data.
The total impairment loss of $ 1.2 Million was charged on the Sizzler Restaurant which
eventually reduced the total revenue of Sizzler by $ 1,538000 (Finnie, 2012).
This shows that company will have to face decline in its overall revenue but after closure of
Sizzler Australia, it will eventually increase the revenue of the Collins Foods Limited in
upcoming years (Collins Foods Limited, 2017).

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References
Collins Foods Limited, 2015, annual report, 20th April, 2018 available at
https://www.google.co.in/search?
q=collins+foods+limited+annual+report+2015&oq=Collins+Foods+Limited
%2C+201&aqs=chrome.2.69i57j0l2.8268j0j7&sourceid=chrome&ie=UTF-8
Collins Foods Limited, 2016, annual report, available at http://member.afraccess.com/media?
id=CMN://2A1025994&filename=20170727/CKF_01877341.pdf accessed on 20th April, 2018
Collins Foods Limited, 2017, annual report, available at http://member.afraccess.com/media?
id=CMN://2A1025994&filename=20170727/CKF_01877341.pdf, accessed on 20th April, 2018
Finnie, J. 2012. The role of financial appraisal in decisions to acquire advanced manufacturing
technology. Accounting and Business Research, 18(70), 133-139.
Gitman, L. J., Juchau, R., and Flanagan, J. 2015. Principles of managerial finance. Pearson Higher
Education AU.