Page 1 XXXXXXXXXXKaplan Business School Assessment Outline
Document Classification: Public
Assessment 2 Information
Subject Code: FINM4000
Subject Name: Finance
Assessment Title: Individual Assignment
Assessment Type: Written Assignment and Excel Spreadsheet
Word Count: 1000 Words (+/-10%)
Weighting: 30%
Total Marks: 50
Submission: Online (MyKBS)
Due Date: Friday (19:55pm AEST) Week 11
Assessment Instructions
• Submit written answers and final numbers using the Turnitin “Written Report” link and submit
one excel spreadsheet used in calculating your answers using the “Excel Submission” link.
• The written part of your assignment will be put through Turnitin and any plagiarism will be
traced and penalised. Refer to the policy for details.
• Answer the questions using the following two sources:
Source 1: Coles Limited (COL) Annual Report 2022
https:
www.colesgroup.com.au/FormBuilde
_Resource/_module/ir5sKeTxxEOndzdh00hWJw/fil
e/Annual_Report.pdf
Source 2: Yahoo Finance
https:
au.finance.yahoo.com/quote/COL.AX/
Page 2 XXXXXXXXXXKaplan Business School Assessment Outline
Document Classification: Public
1. Company Perspective (25 marks)
Consider the 2022 Annual Report for Coles Limited (COL).
a) Briefly illustrate how COL governance is organized. Do you notice any strategies in place to align
manager and shareholder interests at COL based on the Annual Report? Provide one example.
(3 marks)
) What is the net working capital for COL in 2021 and 2022? What type of cu
ent asset
management strategy is COL probably pursuing? Explain why, and what are the pros and cons
of this strategy? (3 marks)
c) Identify two of the major risks discussed in the annual report. Are these risks systematic or
unsystematic? Why? (2 marks)
d) You are trying to value COL shares today (end of XXXXXXXXXXAssume the cu
ent price of COL shares
is $ XXXXXXXXXXAssume that the total dividend paid by COL in 2022 was a lump sum. You also estimate
that for the next two years dividends will grow respectively at 15% and 10% per year. After this
(starting in time 3) you estimate dividends will grow at a constant rate of 4% forever. Assume that
today the Australian 10 year government bond has a yield of 3.6%, the market risk premium is
6.5% and the beta of COL is XXXXXXXXXXThe yahoo finance page says the beta is 0.20, but let’s use
0.6.) Based on this price would you purchase COL shares? Why or why not? (7 marks)
e) What was the market capitalization of COL on 31 December 2022, assuming that the total number
of shares outstanding on this day is the same as that reported in the annual report? (Use the
closing price on that day). (2 marks)
f) What source of funding (non-cu
ent) is COL primarily using to finance its operations? What are
the advantages and disadvantages of this source of financing? (3 marks)
g) Consider the COL bond issue with a coupon rate of 2.65% and a 10 year original maturity. Assume
the bonds are semiannual with payment dates of 6 May and 6 November of every year, the bonds
have a face value of $10,000 and the required rate of return for similar bonds in the market is
4.87%. Calculate the market price of these bonds today (end of XXXXXXXXXXYou may like to visit:
https:
xtbs.com.au/xtbs-profile/ytmcol/) (5 marks)
Page 3 XXXXXXXXXXKaplan Business School Assessment Outline
Document Classification: Public
2. Capital Budgeting (25 marks)
Consider the following information.
In order to satisfy a sharp increase in demand, COL is evaluating investing in one of two “mega
warehouse” projects in Australia (called Project A and Project B). COL has already identified two
existing warehouses that might meet their needs. In order to mitigate risk and assess these facilities,
COL asked Rachel Consulting Ltd to conduct technical due diligence. Rachel Consulting is asking
$400,000 as a fixed fee for its consulting services.
Project A has an initial outlay of dollars $150 million and Project B has an initial outlay of $85 million.
Project A will generate additional revenues of $45 million starting at the end of year 1 until the end of
year 10. It will also incur additional working capital expenses of $1 million immediately, this working
capital will be recovered at the end of the project.
Project B will generate additional revenues of $25 million starting at the end of year 1 until the end of
year 10. It will also incur additional working capital expenses of $2 million immediately, this working
capital will be recovered at the end of the project.
The operating costs of both projects will be 30% of the revenues from years 1 to 10. Both investment
projects will be depreciated on a straight line basis over ten years to zero book value. COL has
estimated that the mega warehouse can be sold at the end of year 10 respectively for $25 million
(Project A) and $10 million (Project B). The tax rate is 30%. All cash flows are annual and are
eceived at the end of the year. The weighted average cost of capital for both projects is 6%.
a) Calculate the FCFs for each project. (10 marks)
) What is the NPV for each project? (5 marks)
c) What is the discounted payback period for each project? (2.5 marks)
d) What is the IRR for each project? (2.5 marks)
e) Assume that the risk of investing in these mega warehouses is higher than the overall risk of the
company. What would happen to the discount rate and consequently NPV of the two projects if
this was the case? Why? (2 marks)
f) Suppose that COL has a payback rule of 8 years. Based on your analysis in b), c) and d) which
project should be chosen? Justify your answer with reference to theory. What other factor might
affect the final decision? (3 marks)
Page 4 XXXXXXXXXXKaplan Business School Assessment Outline
Document Classification: Public
Important Study Information
Academic Integrity Policy
KBS values academic integrity. All students must understand the meaning and consequences
of cheating, plagiarism and other academic offences under the Academic Integrity and Conduct
Policy.
What is academic integrity and misconduct?
What are the penalties for academic misconduct?
What are the late penalties?
How can I appeal my grade?
Click here for answers to these questions:
http:
www.kbs.edu.au/cu
ent-students/student-policies/.
Word Limits for Written Assessments
Submissions that exceed the word limit by more than 10% will cease to be marked from the point
at which that limit is exceeded.
Study Assistance
Students may seek study assistance from their local Academic Learning Advisor or refer to the
esources on the MyKBS Academic Success Centre page. Click here for this information.
http:
www.kbs.edu.au/cu
ent-students/student-policies
https:
elearning.kbs.edu.au/course/view.php?id=1481
Finance
Assessment 2 Information
Subject Code:
Subject Name:
Individual Assignment
Assessment Title:
Written Assignment and Excel Spreadsheet
Assessment Type:
Weighting:
Total Marks:
Online (MyKBS)
Submission:
Friday (19:55pm AEST) Week 11
Due Date:
30%
Word Count:
50
FINM4000
Coles Group Limited 2022 Annual Report
A
Coles Group Limited
ABN XXXXXXXXXX
2022 Annual Report
Our vision is to become the most trusted retailer in
Australia and grow long-term shareholder value
Coles Group Limited 2022 Annual Report
1
Welcome to the
Coles Group
2022 Annual Report
Contents
Overview
2022 performance 4
2022 highlights 5
Message from the Chairman 6
Managing Director and
Chief Executive Officer’s report 8
Our vision, purpose and strategy 12
How we create value 14
Sustainability at Coles 17
Governance at Coles 20
Operating and Financial Review 24
Board of Directors: Biographical Details 59
Directors’ Report 61
Remuneration Report 65
Financial Report 85
Independent Auditor’s Report 131
Shareholder Information 137
Corporate Directory 139
Acknowledgment of Country
Coles Group acknowledges the Traditional Owners and Custodians
of the lands on which we live and operate. We pay our respects to
Elders past, present and emerging and acknowledge their
continuing connection to waters, skies, seas and country.
Coles Group endorses the Uluru Statement from the Heart and its
objectives to enshrine a First Nations Voice in the Australian
Constitution. Supporting the Uluru Statement from the Heart
eflects our commitment to our Aboriginal and To
es Strait
Islander Plan and Better Together Strategy.
Coles Group has long supported elevating the voices of Aboriginal
and To
es Strait Islander peoples, and we believe this structural
eform and constitutional change is a significant step forward in
creating lasting reconciliation in Australia.
Aboriginal and To
es Strait Islander peoples are advised that this
eport may contain names and images of people who are
deceased.
All references to Indigenous and First Nations peoples in this
eport are intended to include Aboriginal and/or To
es Strait
Islander peoples.
Forward-looking statements
This report contains forward-looking statements in relation to
Coles Limited Group (‘the Company’) and its controlled entities
(together ‘Coles’, Coles Group’, or ‘the Group’), including
statements regarding the Group’s intent, belief, goals, objectives,
opinions, initiatives, commitments or cu
ent expectations with
espect to the Group’s business and operations, market
conditions, results of operations and financial conditions, and
isk management practices. This report also includes forward-
looking statements regarding climate change and other
environmental and energy transition scenarios. Forward-looking
statements can generally be identified by the use of words such as
‘forecast’, ‘estimate’, ‘plan’, ‘will’, ‘anticipate’, ‘may’, ‘believe’,
‘should’, ‘expect’, ‘intend’, ‘outlook’, ‘guidance’ and other similar
expressions.
Any forward-looking statements are based on the Group’s cu
ent
knowledge and assumptions, including with respect to financial,
market, risk, regulatory and other relevant environments that will
exist and affect the Group’s business and operations in the future.
The Group does not give any assurance that the assumptions will
prove to be co
ect. The forward-looking statements involve
known and unknown risks, uncertainties and assumptions, that
could cause the actual results, performances or achievements of
the Group to be materially different from the relevant statements.
There are also limitations with respect to scenario analysis, and it
is difficult to predict which, if any, of the scenarios might
eventuate. Scenario analysis is not an indication of probable
outcomes and relies on assumptions that may or may not prove to
e co
ect or eventuate.
Readers are cautioned not to place undue reliance on forward-
looking statements. Except as required by applicable laws or
egulations, the Group does not undertake to publicly update,
eview or revise any of the forward-looking statements or to
advise of any change in assumptions on which any such statement
is based. Past performance cannot be relied on as a guide to
future performance.
Non-IFRS information
This report contains IFRS and non-IFRS financial information.
IFRS financial information is financial information that is
presented in accordance with all relevant accounting standards.
Non-IFRS financial information is financial information that is
presented other than in accordance with relevant accounting
standards and may not be directly comparable with other
companies’ information.
Any non-IFRS financial information included in this report has
een labelled to differentiate it from statutory or IFRS financial
information. Non-IFRS measures are used by management to
assess and monitor business performance at the Group and
segment level and should be considered in addition to, and not as
a substitute for, IFRS information. Operating metrics that are
prepared on a non-IFRS basis have been included in the segment
commentary to support an understanding of comparable
usiness performance. Non-IFRS information is not subject to
audit or review.
Cover image
Coles chefs Michael Weldon and Courtney Roulston with a selection of exclusive Coles Own Brand products.
Coles Group Limited 2022 Annual Report
2
Coles Group Limited 2022 Annual Report
3
Our purpose is to
sustainably help
all