Develop an annual report of a company of my choice

ASSIGNMENT BRIEF
Develop an Annual Report for a Company of your choice.
From a technological point of view, the "internet" is all the computers in the world that are
connected, including the technologies as well as the wires and antennas that keep all the computers
talking to each other. From a professional point of view, however, the internet is an endless source
of useful information. All decisions in the corporate world today are based (and should be based)
on valid, reliable and credible information. This information comes from investigations of the
external environment of a company and a realization of the company’s strengths, weakness,
opportunities and threats. But not all the available information over the net is credible and reliable.
So where can we (as corporate managers) find the right information?
Following this line of inquiry, you are required to apply the knowledge you have accumulated
throughout the module (and the development of assignment 1) in terms of research, intelligence
gathering, strategy analysis and formulation, mission set-up, and control, towards analysing a
company’s published annual report. More specifically, you are required to:
Step 1: Identify a PLC company that uses strategic management – this company may be prosperous,
booming, in decline, or in economic difficulties;
Step 2: Visit the corporate website, examine the annual statement and investor information and
develop a comprehensive analysis;
Step 3: Write a full analysis of the company and suggest possible strategic alternatives to follow;
Step 4: Guide potential investors on whether it worth investing their money in the company (or not) and
why.
Specifics:
Wordage: 5000 words
Deadline: End of week 7
This is an independent piece of work
Reference all sources according to Harvard Referencing, both in the text and reference list

Virgin Atlantic Airways MBALN685 2
Virgin Atlantic Airways
Daniel Kangwa
University of Nicosia

Virgin Atlantic Airways
INTRODUCTION
Strategic management - Virgin Atlantic Airways
Virgin Atlantic Airways was established in 1984 with the name British Atlantic Airways
and it was on that time planned by the co founder Randolph Fields and Alan Hellary to run the
airline from London to Falkland Island. Very soon the name of the airline was changed from
British Atlantic Airways to Virgin Atlantic Airways and then the co founder Randolph Fields sold
his shares after there was disagreement with Richard Branson over the management issues. The
first flight of this airline took off on 22 June 1984 from Gatwick to Newark Liberty International
airport. Virgin Atlantic Limited is parent company that holds Virgin Holidays and Virgin Atlantic
Airways. The fleet of Virgin Atlantic Airways is comprised of Airbus and Boeing jets that operates
between United Kingdom, The Caribbean, Africa, Asia and North America. The main Bases of
Virgin Atlantic Airline are at London Heathrow and Gatwick and from there it operates overall
flights.
Sir Richard Branson’s business strategy is premised on the belief that business market entry
has to succeed within a year. If he does not succeed, then then market must be exited. This business
approach of success within a year limit includes everything that is associated with business start-
up. Thus, based on this approach, Virgin Atlantic Airways became very profitable in the first year
of its operations. (Wikipedia, n.d.)
Virgin Atlantic Airways continued on its path of the success story with the addition of more
aircrafts, route destination across the globe and the breaking of new ground in passenger service,

both on the ground and in the air. On 20th
December, 1999, Virgin Atlantic Airways sold a 49%
stake in the company to Singapore Airlines to form a unique global partnership, valued at a
minimum of £1.225bn. Within the same year, the queen of England honoured Richard Branson for
his services in entrepreneurship with a Knight order. (virginatlantic.com, n.d.)
Virgin Atlantic Airline started to operate the domestic flights within United Kingdom in 31st
March
2013. The airline carried over 5.4 million passengers in 2012 which made it seventh largest airline
in United Kingdom in terms of volume of passenger.
In 2003, Virgin Atlantic conveyed 3.8 million travelers. With the time it expanded to 4.6
million in 2006, putting it seventh largest aircraft of United Kingdom. Marketing campaigns were
initiated to create marketing awareness and that also included humanitarian activities to show
Corporate Social Responsibilities (CSR). Amid the 2012 Summer Olympics offers, Virgin Atlantic
connected London 2012 decals to the back of a large number of its planes including Boeing 747-
400s. In October 2005 the Virgin Atlantic went for CSR as helpful sanction was guided to
Islamabad, Pakistan carrying 55 tons of help as a support to general population influenced by 2005
earthquake in Kashmir seismic tremor. Right after the 2006, the management worked on to reduce
the green house effects by reducing the weights of the plane and by changing the ways of fuel
utilization.
The head office of Virgin Atlantic is called “The Office” which is located in the business
park of West Sussex, United Kingdom which is near to Gatwick Airport. The head office of airline
also operates corporate office of Virgin Holidays. The company runs a number of offices and call
centres around the world, with a large office in Swansea, Wales, dealing with reservations and
sales, baggage claims and looking after the tracing and taking on customer’s feedback. Virgin

Atlantic has also offices in Connecticut, Dubai, Barbados, New Delhi, Tokyo, Hong Kong and
Johannesburg.
Business trends
The key patterns for Virgin Atlantic over late years are demonstrated as follows:
2005 2006 2007 2008 2009 2010 2011 2012 2013
Turnover (£ m) 1,630 1,912 2,141 2,337 2,579 2,357 2,700 2,740 2,870
Profit £m 68 77.5 46.8 22.9 68.4 -132 18.5 -80.2 -69.9
Number of
Passengers (m)
4.5 4.9 5.7 5.8 5.5 5.5 5.3 5.4 5.5
(Study.doc, 2015)
There can be seen a drastic changes in the turnover and profit for Virgin Atlantic Airline
for the period from 2005 to 2013 (Dombrowski, J., 2014). With a turnover of £1630 m in 2005
saw gradual increase since then. Each year there was increase in the turnover as it was £2,337 m
in 2008. Finally the turnover of Virgin Atlantic Airways was £2,870 m in 2013.
Like many companies the Virgin Atlantic Airways went on to crisis as a result of Global
Crisis 2009-10 (Bekaert, 2014.). Gradual increase in the profit from 2005 to 2007 saw the decline
in the profit even from 2010-13 negative figures was recorded. Overall there was increase in the
number of passenger carried by the Virgin Atlantic Airways as in 2013 the carrier carried 5.5 m
passengers overall.
Aircraft Fleet
Virgin Atlantic Airways has fleet that provides services to Boeing and Airbus that normally
fly for an average age of nine year. The flights from Gatwick and Glasgow used the Boeing 747-
400s and Airbus A330-300s whereas the rest of the flights utilize the A330. Virgin Atlantic became

first airline to take the first Boeing 787-9 in October 2014. The organization likewise has a request
for the Airbus A380-800, with conveyance due in 2018.
Examine the annual statement and investor information
It is very important and critical for every organization to critically evaluate the financial
performance over the period of time as to take on the major decisions (Fullan, 2014). The decisions
can be for the sustainability or to look for the growth opportunity. Analysis of the financial aspects
through the ratio always provide comprehensive results that helps firms to note down the key areas
that need improvement. Financial ratios not only helps in to compare the results for the period of
time but helps companies to compare the figures with other companies and on to the industry
average sot that financial health of the company can be checked (Banerjee et.al, 2015). This report
will consider and evaluate the financial health of Virgin Atlantic Airways based upon the following
categories of ratios:
1. Profitability Ratios
2. Liquidity Ratios
3. Financial Gearing
4. Investment Ratios
Ratio analysis technique is very significant in terms of evaluating the financial and
operating performance of any company (Gelman et.al, 2014). With this technique the results of
specific ratio can also be compared with previous data or with the industry as to see where the
company stands. Key ratios that are considered for analysis are classified as: liquidity, profitability,
efficiency, capital, and investor.
Profitability

Profitability ratios measure the profit of company with compare to assets, sales and equity
(Lartey, Antwi and Boadi, 2013). Profitability ratios and that attempt to evaluate how effectively
company is generating its revenue as compare to the expenses (Lartey, Antwi and Boadi, 2013).
Stockholders also consider the profitability ratio as to evaluate the performance of the company.
As the profitability ratio will improve it will provide more good results for the investors as they
will get more return.
Return on Ordinary Shareholders’ Funds
This ratio evaluates the performance or returns generated from the funds invested by
owners (Travlos, Trigeorgis and Vafeas, 2015). This ratio is closely watched and analyzed by the
owners or shareholders as their returns are based upon this performance. As the figure of this ratio
improves the return to the shareholders improves accordingly.
Virgin Atlantic Airways did not perform up to standard in year 2009. Even it was said that
instead of investing into the Virgin Atlantic if the investors had placed their money in the banks
they could have earned more returns. Atlantic Airways was badly hit by the global crisis and as a
result overall financial performance was not up to standard. As a result of global crisis the financial
indicators kept on going down and investors were kept on losing more of their returns.Finally the
Virgin Atlantic Airways managed to get a net profit t in the year 2010. Virgin Atlantic was able
to secure the £2.5 million profit in year 2010. Once again in year 2011 it went on to the losses as
it made a negative return of 93%. In case of Virgin Atlantic it was analyzed that the cost of
operations and procedure was more enough than what they were generating in terms of revenue or
profit. The story of making losses did not stop up till here as Virgin Atlantic continued to make

loss in year 2012. It was reported that Virgin Atlantic Airways made a comprehensive loss of
202% in year 2012.
Return on Capital Employed
This ratio is considered to be one of major to evaluate the operating performance or profit
of the company (Sheidu and Yusuf, 2015). It takes into the account about how much long term
invested capital is contributing in generating the profit for the company. Analysis goes in such a
way that for a particular period of time the amount invested in the long term capital is measured
and evaluated as to see how much they have contributed to generate the revenue. This ratio is also
very useful in such a way that it allows companies to stick with only those projects that are
generating more returns and get rid of all the options that are consistently making losses.
Analyzing the performance of Virgin Atlantic Airways the return on capital employed did
not provide the adequate return in year 2009. Overall the performance of airline got better in year
2010. In the year 2011 and 2012 the Virgin Atlantic Airways once again started to make losses as
it was reported that it was hit with £87.9 loss in year 2011 and for year 2012 the loss was recorded
as £82.1 million.
Analysis of the company and suggest possible strategic
Net Profit Margin ratio examines the contribution of sales in generating the net income. It
figures out that how much percent of sales is equal to the amount of net income. This ratio highlight
the performance of management and how it utilized all the procedures to generate the sales and
ultimately those sales is contributing in the net profit. As the net profit margin is improving that
means the operations and processes are efficient and effective. Likewise a firm with lower

estimation of net revenue recommends its failure to control the cost or different firms inside the
business are putting forth bring down costs which can decrease its intensity.
The Net Profit Margin of Virgin Atlantic Airways was not very good for the year 2009
(Heikal, Khaddafi and Ummah, 2014.). The overall impact of global crisis and performance was
not up to standard and as a result the ratio of net margin also kept on going down. In between the
drastic period there was a good year in 2010 when the airline made a positive figure of net profit
margin. Virgin Atlantic Airways recorded not an impressive result as it recorded loss of £87.9
million. Virgin Atlantic was not having strong operational practices and as a result the cost of
operations kept on going up and this scenario resulted in net profit to go down as the time passed
on. For Year 2013 Virgin Atlantic Airways once again started to improve the Net Profit Margin.
Liquidity
Liquidity ratios evaluate the company’s ability to pay back its short and long term financial
obligations (Lartey, Antwi and Boadi, 2013). Under liquidity ratio there is current ratio that
describe the company’s ability to pay financial obligations out of its total current assets. Any firm
that goes behind in improving the liquidity ratio feels very weak in attracting new investors.
Current Ratio
This ratio also holds much significance as it describes the firm ability to pay back its short
term obligation (Shih et.al, 2014). More the ratio of current is that means the firm is utilizing the
resources in a better way and this will generate the good results overall. Current proportion thinks
about the fluid resources, money or money counterparts with the present liabilities. Higher the
figure of current ratio that means company is capable enough to payback its short term obligations.
In any case, a higher estimation of current proportion additionally suggests that assets are tied up

as money or fluid resources and are not being utilized profitably as they may be utilized something
else.
Virgin Atlantic Airways did not perform as what was expected. In terms of current ratio
the ratio kept on going down form the year 2009 to 2012. This shows Virgin Atlantic Airline did
not manage to secure better liquidity in year 2012.
It was claimed by Virgin Atlantic that there was increase in the current and liquidity ratio
overall. Virgin Atlantic Airways has figured out how to build its Stock and Work In Progress.
However, the 2015 annual reported that Virgin Atlantic operated for a second consecutive
year of profits as a result of lower fuel costs due to the falling global oil prices.
The company saw the rise of 81 per cent in profit before tax and exceptional items of £22.5m
for 2015, compared with £12.4m in 2014. This feat was achieved after three years of losses.
According to Craig Kreeger, the Chief executive officer of Virgin Atlantic America, the
company was poised for “significant growth” in profit for 2016. “We achieved these improved
results in a year in which we also transformed our business and network, laying the foundations
for a robust and enduring Virgin Atlantic,” Mr Kreeger said. (Tanya Powley, 2016)
He said the carrier was on target to beat its record annual pre-tax profit of £99m, achieved
in 1999, by 2018. Like other airlines, Virgin Atlantic’s profits were boosted by low fuel prices,
which helped cut its airline operating costs by £196m at constant currency rates. Shai Weiss, chief
financial officer, said the airline would benefit more from falling fuel prices in 2016 as its hedging
position continued to unwind from 85 per cent to about 50 per cent.
Virgin Atlantic has been lifted in recent years by its 2012 transatlantic joint venture with
Delta Air Lines. That has given the Airline the ability to mount a stronger competitive threat to
British Airways, which has a similar partnership with American Airlines. (Wild, n.d.)

In the last three years, the company reduced its operational costs, restructured its
management team and closed a number of the airline’s international routes to refocus on its core
strength, the transatlantic market. The repositioning of the business appears to have started paying
off. Virgin Atlantic said it had close to 400,000 customers connecting between Virgin and Delta
due to the partnership .
From 2009 to 2013 the company had racked up more than £300m total pre-tax losses.
However, the fortunes changed in 2015 which saw Virgin Holidays netting a positive performance
of £10.9m profit before tax.
Acid-Test Ratio
The analysis proportion is a measure of a liquidity of a firm which is intended to defeat the
imperfection of the present proportion and frequently eluded as fast proportion. This ratio figures
out the efficiency of the company to quickly convert the assets and how it uses its assets and
resources to generate the revenue. The term fast proportion was given since it is the estimation of
an association's capacity to change over resources rapidly into trade out request to meet its present
liabilities. The analysis proportion is the proportion of the brisk current resources and current
liabilities ascertained by separating fast resources by the present liabilities, whereby snappy
resources alludes to the present resources which can be changed over into money quickly or at
inside short notice of day and age without division of its esteem. An analysis proportion estimation
of no less than 1 is best however again what is a satisfactory esteem changes from industry to
industry.

Virgin Atlantic started to become more liquid. It has been reported that Virgin Atlantic
Airways showed better performance for the last five years which is for sure better news. Year
2009, the business normal brisk proportion is in the vicinity of 1 and 2. Quick ratio Virgin for
Atlantic stood at 0.98 which can be interpreted that Virgin has more resources to cover up the
expenses. As the figure get to strong and better that means that company is getting more strength
and capability to return the short term commitment.

Financial Gearing
Outfitting centres around the monetary structure of the business that implies the extent of back
contributed by obligation to the fund gave by the value (or shareholder). The adapting level
importantly affects level of the hazard related with the business. In principle the higher the level
of obtaining (adapting) the higher is the hazard related with business, on the grounds that the
installment of the intrigue and capital reimbursements are not as discretionary in the way profits
works. Two proportions broadly used to get to outfitting are:
 Gearing Ratio
 Interest Cover Ratio
Gearing Ratio
The outfitting proportion mirrors the level of getting that organization has obtained in type
of advances and thinks about that to the aggregate long haul fund that business has. In nutshell, it
is the extent of an organization's obligation to its value and demonstrates the monetary hazard a
business is related with. Moneylenders/Investors are especially intrigued by adapting proportion,
since unnecessarily higher estimation of this proportion will put their advances at the danger of
not being paid.
Virgin Atlantic has high shares of long haul obligations in their capital structure. There is
impressive measure of hazard joined with both organizations, Virgin Atlantic, despite what might
be expected, and expanded its obligation to top at 890% in the last money related year 2013. Virgin
Atlantic Airline did not profit itself from positive execution returns, driving them to go for more
obligations keeping in mind the end goal to pay off their caused misfortunes.

Guide potential investors on whether it worth investing
Investment Valuation
Correlation of speculation proportions implies the distinction between putting resources
into great organization or an awful organization. Few speculation proportions are usually refered
to and used to evaluate the budgetary wellbeing of an organization; thusly, knowing how to
decipher those numbers is exceptionally vital for the financial specialists. Venture proportions
won't just permit speculators to think about ventures yet one can utilize these proportions to
conclude exchanging techniques and wipe out failing to meet expectations offers.
Dividend Yield
This proportion measures how much each share issued by a firm produces for the financial
specialist as far as the benefit earned. In spite of the fact that not each and every pennies benefit is
come back to shareholders in type of profits, the benefit which is not appropriated is held and will
develop the business, conceivably prompting capital development of share cost.
Looking at the EPS for same organization over a timeframe will empower speculators to
know whether the organization is developing or not. Be that as it may, looking at over changed
firms may not really give important information as various firm may have essentially extraordinary
capital structures.
In conclusion Virgin Atlantic Airline has demonstrated proviso in their execution
throughout the previous 5 years. However still there is room of much change for bearer to get their
money related wellbeing stable. As money related advisor, it merits putting resources into Virgin
Atlantic at the present market value thinking about every single above component. Since, the

airline industry has been in a wake of constant competition due to the emergence of local and
regional cheap airfares; different types of local airlines have come into existence. This has not only
threatened the financial stability of industry’s juggernauts but also threatens the monopoly of larger
organziations. This has also been reflected in the annual financial reports of the company, which
suggests that it has to look towards the pricing strategies in order to stay competitive and maintain
its financial records in a positive manner.

References
Atlantic, V., n.d. VAL_FY15_ANNUAL_REPORT 2015. [Online]
Available at:
https://www.virginatlantic.com/content/dam/vaa/documents/footer/mediacentre/VAL_FY15_An
nual_Report.pdf
[Accessed 17 03 2017].
Banerjee, A., Duflo, E., Glennerster, R. and Kinnan, C., 2015. The miracle of microfinance?
Evidence from a randomized evaluation. American Economic Journal: Applied
Economics, 7(1), pp.22-53. Data Retrieved from
https://dspace.mit.edu/bitstream/handle/1721.1/79070/BanerjeeDuflo13-
09.pdf?sequence=1 on 24th
Mar’ 2017
Bekaert, G., Ehrmann, M., Fratzscher, M. and Mehl, A., 2014. The global crisis and equity
market contagion. The Journal of Finance, 69(6), pp.2597-2649. Data Retrieved from
https://www.econstor.eu/bitstream/10419/89109/1/77618783X.pdf on 24th
Mar’ 2017
Dombrowski, J., 2014. Business Model Changes of an Incumbent Player in the European Airline
Industry: A Case of the Lufthansa Group (Bachelor's thesis, University of Twente). Data
Retrieved from
http://essay.utwente.nl/65284/1/Dombrowski,%20Julian_BA_Management%20and%20G
overnance.pdf on 24th
Mar’ 2017
Fullan, M., 2014. Leading in a culture of change personal action guide and workbook. John
Wiley & Sons. Data Retrieved from http://files.eric.ed.gov/fulltext/ED467449.pdf on 24th
Mar’ 2017
Gelman, A., Carlin, J.B., Stern, H.S. and Rubin, D.B., 2014. Bayesian data analysis (Vol. 2).
Boca Raton, FL, USA: Chapman & Hall/CRC. Data Retrieved from

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.550.6951&rep=rep1&type=pdf
on 24th
Mar’ 2017
Heikal, M., Khaddafi, M. and Ummah, A., 2014. Influence analysis of return on assets (ROA),
return on equity (ROE), net profit margin (NPM), debt To equity ratio (DER), and
current ratio (CR), against corporate profit growth in automotive In Indonesia stock
exchange. International Journal of Academic Research in Business and Social
Sciences, 4(12), p.101. Data Retrieved from
24th
Mar’ 2017
Lartey, V.C., Antwi, S. and Boadi, E.K., 2013. The relationship between liquidity and
profitability of listed banks in Ghana. International Journal of Business and Social
Science, 4(3). Data Retrieved from
http://www.academia.edu/download/34802095/Liquidity_vs_profitability_-
_Victor_Curtis_Lartey.pdf on 24th
Mar’ 2017
Lartey, V.C., Antwi, S. and Boadi, E.K., 2013. The relationship between liquidity and
profitability of listed banks in Ghana. International Journal of Business and Social
Science, 4(3). Data Retrieved from
http://www.academia.edu/download/34802095/Liquidity_vs_profitability_-
_Victor_Curtis_Lartey.pdf on 24th
Mar’ 2017
Sheidu, A.D. and Yusuf, H., 2015. Bank consolidation and improvement of shareholder value:
An empirical evaluation of return on capital employed following bank mergers in
Nigeria. American International Journal of Contemporary Research, 5(5), pp.240-246.

Data Retrieved from
http://www.aijcrnet.com/journals/Vol_5_No_5_October_2015/28.pdf on 24th
Mar’ 2017
Shih, C.J., Wang, Q.H., Son, Y., Jin, Z., Blankschtein, D. and Strano, M.S., 2014. Tuning on–off
current ratio and field-effect mobility in a MoS2–graphene heterostructure via Schottky
barrier modulation. ACS nano, 8(6), pp.5790-5798. Data Retrieved from
http://faculty.engineering.asu.edu/wang/wp-
content/uploads/2014/10/Shih_ACSNano_2014.pdf on 24th Mar 2017
Study.doc, C. S. M. -. C., 2015. http://icm.education/documents/past-
papers/2015%20Exam%20Series/June/Contemporary%20Strategic%20Management%20-
%20Case%20Study.pdf./June/Contemporary%20Strategic%20Management%20-
%20Case%20Study.pdf.. [Online]
Available at: http://icm.education/documents/past-papers/2015%20Exam%20Series/June/
[Accessed 24 March 2017].
Tanya Powley, 2016. Virgin Atlantic’s pre-tax profits soar 81%. [Online]
Available at: https://www.ft.com/content/e9396bf0-f0f3-11e5-aff5-19b4e253664a
Travlos, N.G., Trigeorgis, L. and Vafeas, N., 2015. Shareholder wealth effects of dividend policy
changes in an emerging stock market: The case of Cyprus. Data Retrieved from
on 24th
Mar’ 2017
virginatlantic.com, n.d. [Online]
Available at: http://www.virginatlantic.com/gb/en/footer/our-story.html
Wikipedia, n.d. en.wikipedia.org. [Online]
Available at: https://en.wikipedia.org/wiki/Virgin_Atlantic

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