My ASS#1 draft

Step #2

British Polythene Industries

Annual Report Links for:

2014       http://www.bpipoly.com/downloads/annualreport/2015/BPI_21954_AR2014_web.pdf

2013       http://www.bpipoly.com/downloads/annualreport/2014/BPI_19952_AR_2013_Web.pdf

2012     http://www.bpipoly.com/downloads/annualreport/2013/annual_report_2012.pdf

Background information on British Polythene Industries 

British Polythene Industries PLC (BPI) is the leading manufacturer of polythene film, bags and sacks in Europe. The company and its subsidiaries produce, market and sell polythene packaging products. British merchandises its products to retail and industrial sectors throughout the United Kingdom and Europe with manufacturing capacity in excess of 300,000 tonnes per annum for a diverse range of everyday applications. In addition, BPI is also Europe's largest recycler of polythene waste recycling around 65,000 tonnes each year with 3,500 staffs.

The Greenock, UK-based company, which operates from sites across the UK, Europe, North America and China, has received its Centenary Certificate from Companies House to commemorate the 100th anniversary of the company's registration. During its remarkable history the Group has seen changes not only to its name but in its areas of expertise as it has evolved.

Incorporated on the 16th March 1910, the business which exists today has a strong, industrious heritage through the merger of two enterprising Scottish companies during the 20th Century; James Scott & Sons Ltd and J F Robertson Limited.

Although their roots in spinning and weaving sacks stretched as far back as 1797, these businesses recognised the changing industrial landscape and had the foresight to adopt new technologies and advancing raw materials. As such they laid the foundations which enabled the BPI Group to become the leading global supplier of polyethylene films it is today as well as Europe's largest recycler of polythene film waste with the ability to reprocess over 64,000 tonnes of post-use material annually.

 In late 2009, the BPI Group achieved 40th place out of 236 companies in its inaugural entry into the "Britain's Most Admired Companies" Survey. It was also recently shortlisted for both a Global Reach and Innovation Award in the annual Scotland plc Awards

Source: http://www.spra.org.uk/news/201009/british-polythene-industries-celebrate-their-centenary

Major Markets:

• Fresh Produce
• Bakery
• Nuts & Dried Fruits
• Mail Orders & Courier
• Frozen, Speciality & Fast Foods
• Printed Collation Shrinkwrap

Major Products:

• Wicketted Polythene Bags
• Lamination Solutions
• Self Seal Polythene Bags
• Printed Polythene & Polypropylene Reels
• Modified Atmosphere Packaging

Annual reports

Clear concise, well structure and professional are my first impression of the BPI's Annual reports.

• Profit for the year increased from 13.0£’m in 2013 to 16.4£’m in 2014
• Share price increased slightly from 6.7£’m  in 2013 to 6.8£’m in 2014.
• Sales of £499 million ( increased from 2013: £508million)

The challenges

• Poor Economic Conditions: Reduced demand leads to lost contribution, but can also put pressure on margins as competitors fight for remaining volumes

• Credit Risk: As the economic climate remains challenging, there is always a risk of customer insolvency.

• Raw Material Prices: Main raw material, polymer, subject to volatility on a month by month basis due to fluctuating prices for ethylene and, to a lesser extent naphtha and oil. Supplier actions can also influence prices due to maintenance periods and breakdowns at their production plants creating a risk of erosion in margins if price increases cannot be passed through immediately to customers. Recent years have seen exceptional levels of volatility and unprecedented price levels. Falling raw material prices on the realisable value of finished goods stocks also can be risks.

• Energy Costs: As a process business and a significant user of energy, our results can be affected by major price movements.

Strategies meeting these challenges

• Poor Economic Conditions: The Group has a diverse business portfolio with a large number of customers operating in a range of market sectors and locations such as European ( Belgium and Holland, France, Benelux, Germany and Scandinavia, Greece, Italy, Spain) as well as major geographical markets are the UK, Ireland and North America. In the event of adverse trading conditions steps can be taken to restructure the business and reduce costs. Most recently this was undertaken in the UK Consumer Packaging operations during 2013. The cost base of all operations is continually reviewed and significant capital expenditure targets cost savings in combination with efficiency and productivity improvements. 

•  Credit Risk: Continued focus on credit assessment and prompt action on overdue accounts. Some accounts are credit insured, particularly in Europe and in the agricultural sector. The Group’s largest customer accounts for less than 3% of Group turnover.

• Raw Material Prices: Centralised Group purchasing arrangements to ensure the best purchase price. Coordinated instructions to sales teams on forward pricing. Some linkage of customer pricing to polymer price indices. Management of stock levels depending on anticipated price movements.

•  Energy Costs: Monitor energy prices and buy forward when advantageous. Group energy saving programme implemented on each manufacturing site. Ongoing engagement with Government and User Groups to ensure policy makers understand the impact of high energy costs on manufacturing industry.

My KCQ’s on the 2014 Annual Report

Areas I have difficulty understanding:

1. KC: In Chairman's Statement he determined that they have made a good start to 2015, orderbooks are similar to the same time last year and expect good demand from the agricultural sector in the coming months. BUT reported results can be influenced by US dollar and euro translation rates.

         Q: Why do US dollar and euro translation rates can effect to reported results? That is good, bad, or indifferent for the process of BPI and other organisations? What they can do to protect themselves from currency fluctuations?

 2.  Q: When I look at annual report I would like to know if BPI has created any value for a year? How do I determine if any value has been created, is it from profit, assets increase

After taken a careful look at Consolidated income statement I realized that the value of a year is the total of these profit.

3. KC: In their Business Model, Recycle is the most engaging sector with me, they stated that BPI is one of the largest recyclers of waste polythene film in Europe. Also, retaining this waste for

reprocessing in one of our UK recycling factories is not only good business sense, but also supports national and regional Government policy.

   

    Q: I wonder that is whether there any real value they can create from Recycling areas or just because of the reputation or a good marketing step?

Links to articles for BPI polythene industries

file:///C:/Users/ly/Downloads/BPI100414outlook.pdf

https://www.youtube.com/watch?v=90e0LQqYnQU

http://www.heraldscotland.com/business/13620774.BPI_expected_to_post_healthy_first_half_financials/

Am I happy with my firm?

Yes, I am. I definitely happy with the firm given. Initially I felt a little bit bored with BPI because they are a producer of polythene films which seems to be somewhat not attractive and engaging like other areas such as entertainment, hotel or technology. But step by step I find it so good for me. Firstly, I was impressed of the size of the firm, BPI is not only a leading global manufacturer of polythene films, but also Europe's largest recycler of polythene waste recycling. Secondly, their annual reports are so professional- represented and engaging supporting me to follow easily. Last but not least, it just because I want to have knowledge about the organisations producing things I use every day- plastic bags

# Step 4

Chapter 1

Through Martin’s book was the way he used words to emphasize the importance of numbers, by not using numbers. He believes in accounting power, he insists the fact that, accounting, is not simply a word, but it shows the reality and the relevance between accounting and business, the way “this relevance” concerns to all of us. As myself, I totally agree with this opinion. Moreover, I just do like the way he expresses his viewpoint, but he still respects our viewpoints. For example, all of readers who read through his book, might be conscious that he always uses rhetorical questions such as: “Can accounting makes economic and business easier or difficult? After reading this book, this is a question you can ask yourself”. He does not want to force anyone to think, or be aware like him, but he provides the facts, his research, his discovery about the concepts, for us.

I like the way he connected different businesses into “one group” that can help each other in gaining profits by serving different demands of customers. For example, as for me, I support that it might be so much easier to buy different products in one store, firstly the businesses can share the investments on infrastructures, secondly they can also provide customers all kind of products they need which leads to the situation that, customers want to come back again. The improvement of number of customers results in the progression of interests for businesses groups, and shows the incorporations between businesses and economic and accounting staff. All in all, his viewpoint about the diversity of businesses can be connected makes me overwhelming by its truth.

The part I liked most that make some real senses is part 1.2 “Keeping records” which shows clearly the perceptions about accounting and its history, its two-sided perspectives that can make difficulties for managing “journals” and “pledgers”. As a matter of fact, this two kind of concepts are essential and familiar with any accountants. However in this part, I do not really understand the concept: “Proprietorship”. When I looked up the dictionary, it showed kind of thing like possession of a business. Nonetheless, when read through the content, that seemed so much confused about Thus I think the session could be the hardest, to understand the real rights of the owners, of the proprietors who can make any changes of the business staff.

Finishing this chapter, I can conclude that, this chapter provides me a wide range of new knowledge, new concepts, new provision as well. There are also some parts, that I found difficulties in making senses, however, the overall ideas are clearly for readers. I respect author’s perception, but I also have my own thoughts. Anyway, I have not yet had any questions so far, as I want to find out through my curriculum.

Chapter 3

Like any others feedback for this chapter, I saw the chapter had been incredible in both content and the way author expressed his perceptions in terms of financial statement. He mentioned to a number of new concepts such as: financing activities, Balance Sheet, income statement that can help me have deep understanding about finance situation in contemporary life. He also emphasized that over the past 100 years so far, the financial situation in the whole circumstance has been changed that much through the development of trade, banking statement, globalisation.

The most understandable part is “The value of anything” which stated that anything has its own value, “Price is what you pay, value is what you get”. Whether all of us can have a broad perspective about anything’s value seemed a hard question. The great example author gave us for this session was almost people chose receiving $20 right now instead of after five years later. This example showed that people will always think about present value. That is awesome. I realize how the businesses can use this perception to start their work: put themselves into customers’s role, and think whether they will choose low price or high value. That should be the main point that I realised after this session.

In short, there are, of course, a number of new concepts have been introduced in this reading materials. To be honest, I’m not the kind of people who can spend a lot of myself-time just to read through all the concepts about the thing I like, and try to remember. But this chapter, author used skilfully the facts, the examples, to show that what he was taking about mostly based on reality. Again, accounting, financial statements, they are all built by the facts, and facts create more concepts. Finance seems like a harder thing more than accounting. But I made some senses, so I think the next time, I will be able to read more financial materials without wasting-time to translate the key concepts.