Busn1110 Accounting For Business: Report Assessment Answers

You are required to use the financial statements for Capilano Honey Limited (Capilano).  Capilano is listed on the Australian Stock Exchange and involved with packaging of honey for domestic and export sales. It’s product range includes classic honey, pure Manuka honey, premium honey and kids honey.

The financial statements can be download from Capilano website via the following link, http://www.capilanohoney.com/au-en/corporate/annual-reports

In addition to the financial statements, consider sourcing additional information about the company.  The library resources would be a good place to start (refer to DatAnalysis under eResources) and the Australian Stock Exchange website (www.asx.com.au) with the code for trading Capilano shares being CZZ.  Lastly, search for articles in Australian newspapers which again can be accessed through the library eResources.

Task:

1. Remuneration Report

Capilano introduced a Long Term Incentive Plan in 2016 which provides for the granting of options to eligible employees.  An option is a right to acquire the company’s share at a price.  Normally, the price at which you can buy the share is attractive and therefore the options have value to an employee.  The 2017 and 2018 annual reports outline a number of advantages associated with this Plan.  Outline two potential disadvantages to the Long Term Incentive Plan from the perspective of the financial performance of Capilano. 

1. Corporate Social Responsibility

Compare the corporate social responsibility initiatives by Capilano as outlined in their 2017 and 2018 annual reports with the corporate social responsibility initiatives undertaken by Teachers Mutual Bank Limited and outlined in their Annual Report and sustainability Update 2016-2017 (source: https://www.tmbank.com.au/~/media/about-us/corporate/pdf/annual-report/teachers-mutual-bank-annual-report-2016-2017.ashx).

Be specific in your answer about the difficulties likely to be faced in assessing the value of the Capilano’s corporate social responsibility initiatives and how they could improve on their disclosure.

Employee Stock Option Plan is a long term incentive plan to retain talents within the company and to award those employees who have been serving the organisation for a very long time in the form of ownership interest in the company. In layman terms, it offers ownership interest in the organisation. This incentive plan has a vesting date and exercise period. These are convertible into equity of the company.

The company has proposed issue of 30000 options in 2017 and 30000 options in 2018 that are convertible to equity under the proposed incentive scheme and are subject to performance.

The following are some of the advantages that have been highlighted in the annual report of the company for two years i/e/ 2017 and 2018:

• It helps the company to improve long term performance as employees are motivated and they start feeling as their own company being incentivised to be offer shares in long term. The employees try to align their goals and vision in alignment with goals and vision of the company;
• The incentive plan attracts, retains and motivate eligible employees which has been essential for the development and continued growth of the company. Further, it plays a crucial role in enhancing and strengthening the relationship between the company and eligible employees and the employees start treating the company as their own company. The plan fully motivate the employees.

The company officially launched the plan on 18^th November, 2016  at Annual General Meetings of Shareholders and the above two advantages are linked with long term performance perspective of the company.

Corporate Social Responsibility

Corporate Social Responsibility is a business model that helps an organisation to be socially accountable- to itself, to the society, stakeholders etc. The same was launched to enable companies to contribute a portion of their profit to social welfare. The activities can range from donating money to implementing environmental friendly policies at work place.

The initiatives that have been taken by Capilanohoney as underlined in their annual report has been detailed here-in-below:

• Rewarding the employees for achievement through incentive payments when annual results exceeds targets. These are in the form of annual general incentive plan of the company. It has been endorsed by the HRRN committee of the organisation and approved by board;
• Code of conduct: The company has developed an appropriate code of conduct to make the business environmental friendly for its employees;
• Maintaining diversity in board;
• Incentivising of employees;
• Fair pay in alignment with industry;
• Gender diversity

The initiatives that have been taken by comparable company i.e. Teachers Mutual Bank has been detailed here-in-below:

• Focus and priority is on customer care;
• Innovation and technology to enable quick payments for users;
• Fair incentives and talent retention;
• Gender diversity;
• Creating opportunities for indigenous students;
• Creation of investment opportunity to ethical investment;
• Creating Housing Affordability;
• Supporting Financial literacy around the world;
• Supporting teachers;
• Backing leading educators etc.
• Supporting firefighting community

Thus, on the basis of above it shall be seen that capilanaohoney has restricted its Corporate Social Responsibility to its employees while Teacher Mutual Bank has expanded it to a broad range of people including employees, stakeholders and society at large.

References:

Capilanohoney. (2018). Annual Report 2018. Richlands: Capilanohoney.

Defmacro Software Pvt. Ltd. (2018, October 19). ESOP – The employer perspective. Retrieved from cleartax.in: https://cleartax.in/s/esop

Limited, C. H. (2018). Corporate Governance Statement. Richlands: Capilano Honey Limited.

Limited, T. M. (2018). Annual Report and Sustainability Update 2018. New South Wales: Teachers Mutual Bank Limited.