BSB107 - Financial Performance And Responsibility

Assignment Task

Introduction

In Assessment 1b, you decided which of the two companies, Premier Investments or KMD Brands, is the preferred investment choice based solely on your assessment of the company’s historical financial ratios. In Assessment 2a, you decided which of the two stocks provided the best investment opportunity for your investor (a close family member or friend). Your decision was centred around the intrinsic value of the stock, which has been assessed through the application of the Discounted Free Cash Flow (DCF) model. This analytical approach incorporated three distinct cash flow scenarios, each projecting potential outcomes over the next five years. In Assessment 3, your objective is to assess the business model adopted by each company and the impact this may have on their long-term sustainability.

As more consumers become aware of the environmental and human costs of clothing production, fewer will opt for fast fashion, widely seen as the single most problematic issue in the apparel industry, according to a report from investment firm UBS. Fast-fashion retailers could face revenue declines of 10% to 30% over the next 5 to 10 years. As a USB analyst observed with respect to revenue declines of fast-fashion retailers “The compounding effect of consumers buying fewer items, but also shifting the purchases they do continue to make to items that they perceive to be more sustainable, could be severe”.

Question

Your task is to evaluate the sustainability disclosures (for 2023) of KMD Brands and Premier Investments in terms of how they are managing the impact of their fashion (clothes/shoes and packaging of) on the environment throughout its lifecycle (from birth to grave). Decide which business case/model each company is using considering the following:

• Where are they currently operating on the continuum of a linear, recycling, or circular business economy. Use 3-4 key disclosures of the companies to support your view?
• Are there any indicators of greenwashing from either company? Support your assessment with evidence extracted from their disclosed information.
• Do you believe that each company is successfully undergoing a credible sustainability transition and effectively managing their sustainability risk? Present your reasoning with supporting arguments to justify your viewpoint.
• In considering these sustainability disclosures has your view about which firm is the better investment changed since considering the financial performance in Assessment 1 and the value in Assessment 2?Provide a rationale for that decision, including how you weighted the importance of financial performance and value against environmental sustainability.

Marks will also awarded for professional report presentation, including writing fluency, attention to grammar, spelling, syntax and the use of supporting diagrammatic representations.

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