Appendix 3 – Financial performance report

Introduction

The annual financial report, including financial statement discussion and analysis, is presented
in this document alongside the financial statements.

The following financial statement discussion and analysis includes an overview of the
Organization’s operations and environment, financial objectives and strategies, financial
performance and financial position during the year to June 30, 2021.

2019/20 Performance

The information below shows the Profit & Loss Statement of Grow Management Consultant for
the financial year 2019 - 2020:

PROFIT & LOSS 2019 - 2020

Income  
$1,175,600
Consulting fees
Workshops $36,000
Publications $2,000
Executive Search Service $108,000
   
Total Income $1,321,600
   
Less Cost of Sales  
Salaries/wages (including PAYG) $504,000
Superannuation $60,000
Contract writer e-book $45,800
Gross Profit $711,800
   
Operating Expenses  
Accounting fees $6,823
Advertising & marketing $5,000
Computer Software $4,600
Insurance $4,028
Lease/loan payments $1,500
Motor vehicle expenses $5,183
Office Cleaning $9,600
 Office supplies $2,100
Rent & rates $42,960
Repairs & maintenance $1,200
Travel and Accommodation $5,386
Telephone $3,400
Utilities $3,935
Sundries $2,280
   
Total expenses $97,995
NET PROFIT (Net Income) $613,805

According to the Profit & Loss Statement, consultation fees provide the highest revenue, while
publication generates the least. In fact, when the cost of sales associated with publishing is
taken into account, publishing generates a net loss.

2019 - 2020 Income

Executive Search Service, 120000, 9%
Publications; 2000;
0%

Workshops; 36000;
3%

Total Income:
Consulting fees; 1175600;
88% $1,321,600

Consulting fees Workshops Publications Executive Search Service

This chart shows the breakdown of the income and its percentage.
 Cost of Sales
Contract writer e-book; 45800; 8%

Superannuation; 60000;
10%

Salaries/wages
(including PAYG);
Total Cost of 504000; 83%
Sales:
$711,800

Salaries/wages (including PAYG) Superannuation Contract writer e-book

This chart shows the breakdown of the cost of sales and its percentage.

Operating Expenses

$50,000
$45,000 , $42,960
$40,000
$35,000
$30,000
$25,000 , $5,000
$20,000 , $4,028
, $6,823 , $5,183
$15,000 , $5,386 , $3,935
, $4,600 , $9,600
$10,000
$5,000 , $1,500 , $2,100 , $3,400 , $2,280
, $1,200
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Total Operating Expenses:$ 97,995

This graph shows the breakdown of the operating expenses and its percentage.
Based on the information above, the profit margin for Grow Management Consultant is
computed as follows:

Profit Margin: (Net Income / Total Income) x 100

($613,805 / $1,321,600) x 100

46.44%

It is to be noted as well that 89% of the total income comes from consulting fees while 83% and
44% of cost of sales and operating expenses come from salaries/wages and rent & rates
respectively for the financial year 2019 – 2020. They mark as the highest among their
respective categories.

Over the last five years, the Management Consulting industry has seen slow growth. Due to
economic uncertainties and declining commodity prices, financial services and resource
companies reduced their spending on management consultants, limiting industry revenue
growth.

As for the company, the brand name hasn’t been fully developed yet and the company is still on
process of being a large organisation.

Businesses that use management consultants to develop new business processes and improve
operational efficiencies, on the other hand, have partially offset this trend. In addition, industry
operators are increasingly incorporating analytics into their services, which allows clients to
have a better understanding of their business and customers. In 2015-16, a 3.8 percent
increase in demand for analytics-based services is predicted.

According to research, workers are still required to have an excellent leadership and
management abilities to support collaborative management, remote team management,
empowerment, and business acumen. As a result, the demand for leadership consulting
services remains high.
Situation Analysis

Strengths Weaknesses

Value and quality Brand name not developed as yet

Strong management Small organisation

Customer loyalty

Friendly organisational culture

Level of available finance for investment

Opportunities Threats

Leadership skills in demand High level of competition

Opportunities to offer a range of services Economic downturn meaning less spent on

consultants

Failing to satisfy clients demands

Strategic goals and priorities

Key strategies

To be well led, high performing, profitable and accountable

 Ensure that all financial operations, performance indicators and results support the
strategic policies
 Identify new and expand existing sources of revenue
 Achieve profits of at least 10% per annum.

Develop services to meet customer needs and aspirations

 Increase range of services offered to include change management and diversity

 Plan for and establish an annual conference, starting in 2016.
 Increase range of e-books commencing with Organisational Change e-book to be
published during 2021.

Continue building deeper customer relationships

 Customer-centred practice, with a focus on meeting their total needs for a high quality
services
  Strengthen the skills of our people, to better support customers
 Drive innovation to better meet customer demands

Attract, engage and develop the best staff

 Continuing the drive to a customer centred, high performance workforce and culture
 Strengthening the skills of our people, to better support customer needs
 Empowering innovation and responsiveness to change
 Continuing to enhance the diversity of our workforce.
 Employing additional consultants

Estimated conference and e-book costs and income

Conference prices: early bird $425, standard $475

Type Cost

Venue and catering in Sydney CBD $5,000

Speaker fees and travel $10,000

Marketing $5,000

Conference bags $1,000

Staff time (appoint casual Project Officer for 6 $30,000

months, may be permanent depending on
success)

Anticipated numbers: 100 people. Price of conference to be $750. Conference tickets will start
its selling on Nov. 2020. Annual Conference will commence on Jan. 2021.

Estimated E-book costs: book to be sold at $75.00

Type Cost

Contract writer $10,000

Desktop publishing $3,000

Marketing $1,200
 Expected income: $10,000 across both e-books for 2020/21. Selling of e-books will start on July
2020.

Cash flow statements analysis

The information below shows the Profit & Loss Statement of Grow Management Consultant for
the financial year 2019 - 2020:

Grow Management Consultants Pty Ltd

Cash Flow Statement

July 2019 to June 2020

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual
INCOME
122,00
Consulting fees 97,975 85,000 82,500 0 98,000 121,000 87,625 89,500 105,000 83,000 70,500 133,500
Workshops   6,000     8,000     10,000     12,000  
Publications       250 250 350 200 150 150 250 200 200
Executive search 7,000 8,000 12,000 10,000 12,000 9,000 9,000 9,000 11,000 12,000 11,000 10,000
                         
NET INCOME 104,975 99000 94500 132250 118250 130350 96825 108650 116150 95250 93700 143700

EXPENSES
Salaries/wages 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000
Superannuation 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Cleaning 800 800 800 800 800 800 800 800 800 800 800 800
Accounting fees 0 0 6,823 0 0 0 0 0 0 0 0 0
Advertising and marketing 1,000 0 500 700 0 800 0 0 2,000 0 0 0
Contract writer (e-book) 10,000 3,580 3,580   3,580 3,580 3,580 3,580 3,580 3,580 3,580 3,580
Computer software 0 2,600 0 0 0 2,000 0 0 0 0 0 0
Motor vehicle expenses 653 451 870 177 149 263 560 0 920 590 210 340
Utilities 0 672 0 0 0 1,476 739 0 1,048 0 0 0
Insurance 0 0 0 329 329 0 0 3,370 0 0 0 0
Office supplies 100 120 180 120 150 190 180 230 230 130 220 250
Lease/loan payments 100 120 100 100 210 50 150 0 200 150 120 200
Rent 3,580 3,580 3,580 3,580 3,580 3,580 3,580 3,580 3,580 3,580 3,580 3,580
Sundries 200 200 140 170 230 200 200 140 170 230 180 220
Travel and Accommodation 1,583 0 1,435 1,947 122 0 0 0 128 171 0 0
Repairs & maintenance 100 0 400 0 0 400 0 300 0 0 0 0
Telephone 300 290 310 320 290 300 290 310 330 240 210 210
TOTAL EXPENSES 65,416 59,413 65,718 55,243 56,440 60,639 57,079 59,310 59,986 56,471 55,900 56,180

SURPLUS/ DEFICIT 39,559 39,587 28,782 77,007 61,810 69,711 39,746 49,340 56,164 38,779 37,800 87,520
*All figures are denominated as dollars.

Monthly Income for the financial year 2019 - 2020

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
160,000

133,500
140,000
122,000 121,000
120,000
105,000
97,975
100,000 85,000 87,625
83,000
98,000
80,000 89,500
82,500
70,500
60,000

40,000
8,000
20,000 12,000 10,000 9,000 9,000 11,000 12,000 11,000
12,000 9,000
7,000 10,000
6,000 8,000 10,000 12,000
0
Consulting fees Workshops Publications Executive search

This graph shows the monthly income of the company for the financial year 2019 - 2020.

As shown in the graph above, the months of October, December and June have the highest
generating income of the company for the financial year 2019 – 2020.

PROFIT & LOSS Actual Budget Variance

Income      
Consulting fees $1,175,600 $1,100,000 $75,600
Workshops $36,000 $48,000 -$12,000
Publications $2,000 $5,000 -$3,000
Executive Search Service $120,000 $120,000 $0
       
Total Income $1,333,600 $1,273,000 $60,600
       
 Less Cost of Sales      
Salaries/wages (including PAYG) $504,000 $504,000 $0
Superannuation $60,000 $60,000 $0
Contract writer e-book $45,800 $11,000 $34,800
Gross Profit $723,800 $698,000 $25,800
       
Operating Expenses      
Accounting fees $6,823 $6,000 $823
Advertising & marketing $5,000 $500 $4,500
Computer Software $4,600 $4,000 $600
Insurance $4,028 $4,000 $28
Lease/loan payments $1,500 $1,300 $200
Motor vehicle expenses $5,183 $5,000 $183
Office Cleaning $9,600 $9,600 $0
Office supplies $2,100 $1,500 $600
Rent & rates $42,960 $42,960 $0
Repairs & maintenance $1,200 $1,500 -$300
Travel and Accommodation $5,386 $5,000 $386
Telephone $3,400 $3,000 $400
Utilities $3,935 $4,000 -$65
Sundries $2,280 $2,000 $280
       
Total expenses $97,995 $90,360 $7,635
NET PROFIT (Net Income) $625,805 $607,640 $18,165

The disparity between the budgeted and actual financial performance of the company is shown
in the table above. It demonstrates that the company performs slightly better than planned and
projected.

Financial Software

Quickbooks

Advantages:

 Easy to use and learn

 Integrates well with other systems and flexible with 3rd party applications
 Provides good accounting reports
 Affordable price
 Easy to access from any device – phone, tablet and computer (depending on the
version)
Disadvantages:

 Lack of key reports outside of accounting

 Instability/system crashes
 Lack of direct professional support
 File-size issues/limitations on number of transactions
 Limitations on the number of users
 Built with a “small business mindset”
 Data is not always backed-up so you risk losing information

Microsoft Dynamics GP

Advantages:

 Boosts Productivity
 Helps to connect all your business processes
 Exclusive Reporting
 Exclusive Reporting
 Provides real-time data
 Reduces training time and expenses

Disadvantages:

 Server maintenance cost and hardware cost of Dynamics GP is very high.

 You will not get advanced features such as data analysis and mobile accessibility.
 You will not get warehousing and budgeting functionalities.
 A compatible platform to access add-ons is not available.

Xero

Advantages:

 Cloud-based so no downloads or installation required.

 Relatively easy to use and you’re connected with your own advisor.
 Clean interface which gives you instant visibility of your financial position.
 Real-time bank feeds and bank reconciliation.
 Can manage personal expenses with mobile review and approval of each receipt.
 Easy access to the same files as your clients.
 Can be accessed from any device with an active Internet connection
 Easy integration with third-party apps and plugins.
 Saves you time and money.

Disadvantages:
 Although easy to install, it takes some time to learn how to use it.
 The requisition/purchase/inventory side is very, very basic.
 Limited expense claims, projects, and multi-currency support to the most expensive
plan.
 No built-in ‘Debtor Chasing’ function so businesses will need to manually follow up on
unpaid invoices.

MYOB

Advantages:

 It has a simple data entry which is typically fast, straightforward and only required
once.
 It is fast processing between a sales and invoicing, are minimal.
 Automation of report and analysis like profit and loss, debtors and creditors,
customer accounts, inventory counts, sales, etc.
 Reduction of errors like incorrect or incomplete recording of transactions,
transposition of figure, etc.
 Integration with other systems, such as online banking and e-filing

Disadvantages:

 The package cost, although small in relation to your other costs, is higher than a
paper-based system.
 Manual accounts are generally easier to set up and can be more flexible than
computerized accounting.
 You will buy yearly maintenance and support for your package.
It is for special needs – an accounts package will typically suit most types of business.