Discuss about the Evaluation of Analysis and Reporting for PwC Value Framework.
This element helps in forming the strategy and goals of an organization comprising of short-term as well as long-term goals. In other words, it aims to provide the users with the necessary information of the future plans of the organisation and accordingly, they could undertake significant decisions.
The strategic targets and objectives of Evonik could be accessed easily from Page 10 of its annual report. The target of the organisation is represented in the form of a heading in bold. The format of the extract is simple supported by clear descriptions for identifying the long-term value intended to deliver. In case of Evonik, the principles and objectives of the organisation are laid out in Page 12 of the Annual Report, in which they are associated with previous performance and future priorities to represent the significance of long-term value.
On Page 12 of the Annual Report, Evonik discloses its strategy and yearly priorities for increasing its business value and they include the following:
Along with this, quantitative data related to each of the aspects are mentioned in the annual report along with their past performance for explaining the relationship between the target of long-term value and actual outcomes achieved.
The 2017 annual report of Evonik helps in clear description of the strategic targets and objectives of the organisation via effectively formatted information and understandable reporting. Thus, the proper use of quantitative and qualitative data in association with the priorities of the organisation increases the performance indication quality.
The business model of an organisation signifies the way of creating value for the same and the interrelated factors.
The business model of Evonik could be found from pages 11 and 12 of its annual report, which is easily accessible for the readers, since it is disclosed as a separate section under the heading business model.
The extract above represents four inter-associated elements with brief descriptions of the interpretation of the business model. As a result, this enables in further explanation of the context of the ways the elements intend to accomplish the objective of long-term value.
Evonik clearly cites its business model effectively over two pages and thus, the readers could find such information easy to comprehend. This is because the elements describe the operating processes of the organisation to ensure effective element quality.
The governance performance indicator depicts the commitment of an organisation in terms of reporting transparency. It helps in identifying the operating structures and the rules for the board and its compliance committee.
The 2017 annual report of 2017 contains a section of corporate governance in order to communicate performance information about governance reporting. This section contains 23 pages of the annual report and the users could find it easily from the section of contents.
Risk management is the application of management procedures, practices and policies with regard to identification, analysis, treatment, assessment, communication and monitoring. Evonik’s risk management strategies form the central element under the management of company. At the company level the management of risk is assigned to CFO and is organized on decentralized approach in compliance with the organizational structure of the company (McNeil, Frey and Embrechts 2015). Further, the corporate divisions, segments and the service units are primarily responsible for the risk management responsibility. It assists in identification of risk at early stages and estimation of its implications.
The risk management approach and strategies of Evonik can easily be assessed from the company’s annual report for the year ended 2017. It is stated in clear and concise manner in the annual report. Therefore, it is concluded that the organization’s health with regard to risk element under the value framework is good.
The remuneration report states the principles of remuneration system applicable for the members of Supervisory Board and Executive board together with structure and individual remuneration level. The remuneration structure for Executive Board is formed to assure that the members receive sufficient remuneration for their responsibilities and tasks and to receive the direct amount due on account of performance for each member of the company and each member of Executive board (Farmer, Archbold and Alexandrou 2013). Further, the remuneration is regularly reviewed by supervisory board where appropriate, based on the remuneration reports received from the independent consultants.
The remuneration strategies of Evonik can easily be assessed from the company’s annual report for the year ended 2017. It is stated in clear and concise manner in the annual report. Therefore, it is concluded that the organization’s health with regard to remuneration under the value framework is good.
Financial assets are the assets generated from the contractual agreements from the future cash flows or from owing of equity instruments of any other company. The financial assets of the company are included in the balance sheet of the company under the distinct head of financial asset. Financial asset of the company includes securities and same kind of assets, receivables from the derivatives, loans and various other financial assets Corporate.evonik.com 2018).
The financial assets of Evonik can easily be assessed from the company’s annual report for the year ended 2017. It is stated in clear and concise manner in the annual report. Therefore, it is concluded that the organization’s health with regard to financial asset under the value framework is good.
The tangible assets are considered as the physical asset. Looking into the annual report of Evonik Industries it is identified that the physical assets are nit presented under distinct head. However, various physical assets of the company are property, plant and equipment and inventories (Brigham et al. 2016).
It is identified from the company’s annual report for the year ended 2017 that te physical assets are not clearly presented. Further, the though the current assets and non-current assets are presented clear and concise manner it is not very easy to identify the physical assets from the assets section. Therefore, it is concluded that the organization’s health with regard to financial asset under the value framework is bad.
The main strength of the company has been taken into consideration with maintaining a balanced spectrum for the business activities, end markets and regions which are in close collaboration with the customers.The future considerations of the company has been seento be identifie4d with the identificationand solving of complex problems associated to the needs of the customers (Borys, G. and Solarz2014).
The proximity to the customers has been identified with the various types of the factors which are based on the consideration for key competitive advantage as it aims to sell the products with the consideration of the specific challenges. The accessibility aspect is further seen with the three chemical segments which are in close association with the customer and markets. The indept knowledge of the business of the customers are further depicted to drive the profitable and sustainable growth among the business. In addition to this, the competitive position with the customers is also seen with the innovative capability and integrated technology platform. It can be said that overall the accessibility of the customer element is depicted to be good(Hadi, Handajani and Putra2018).
The main information on the staff working for the RAG has been discussed with the inclusion of the more than 36000 people working around the globe. The sustainable nutrition program is another area for establishing the additional products and services associated to the sustainable nutrition for the people and livestock. The disclosure on the responsible corporate management strategies are further seen to be depicted to the association of the various information that minimizes the use of scare resources (Hassanein and Hussainey 2015).
The accessibility is depicted to be seen in terms of the annual report published by Evonik and several commitments included in the Vision 2050, which is seen to act as a pathway for the attainment of a sustainable world for the people with several limitations. The consideration of the healthy performance culture has been considered with the success of the company and personal motivation of the individual employee. Henceforth, it can be said that overall the accessibility of the people and culture element is depicted to be good.
The strategic focus of the company has been taken into consideration with the various types of the consideration which are related to the focusing on the speciality chemicals and bringing innovation along with performance-oriented culture (Balvers, Gaski. and McDonald2016). In addition to this, the speciality chemical company is focused with a strong market position which is seen to be based on the various types of the consideration taken into consolation as per following sustainable business activities. The marketed oriented development and the research activities are further seen with the various types of the key drivers considered with the profitable growth (Dhaliwal et al. 2014).
The necessary information can be seen in form of the various types of the appropriate sources which is seen to be available in the annual report of the company. The accessibility of the aforementioned information was depicted to be easy in nature which is seen to be taken into consideration with the particular element of the associated field of information. Henceforth with the limited nature of the information it can be said that overall the accessibility of the Innovation element is depicted to be bad in nature.
The intangible assets are seen to be regarded with the various types of the aspects for the appropriate customer relationships, technologies and brands. The intangible assets and the brands average has been expected with the various types of the consideration for the licensing information which is considered between 5 to 15 years (Al-Zarouniet al.2015).
The aforementioned information for the brands of the Evonik industries can be traced with the annual report of the company published in the year 2017.The main form of the information on the international brands can be easily traced in terms of the gathering information as per the intangible assets information published in 2017.Henceforth, it can be said that overall the accessibility of the brands and IA is depicted to be good in nature.
The production process and products are taken into aspect with the product benefit and supply chain and benefits provided to the customers. The transparency and sustainability aspect are regarded with the entire supply chain. The disclosure on the unforeseeable production stoppages in the SC globally and procurement markets (Koo2015).
The information for the supplier is depicted to be available in the annual report of the company. The information as per the annual report is seen to be based on the various types of the consideration which are seen to be available in the annual report. However, the limited nature of the information has led to several problems, which have shown that the disclosure of the Processes and Supply Chain is bad in nature.
The company has divided the operations into three manufacturing segments, which are in close association with the customers.
The information for the operational aspects is depicted to be available in the annual report of the company. The operational aspects are depicted to be limited in nature; therefore this is seen to be ugly in nature (Guay, Samuels and Taylor 2016).
In the chemical industry of the organization of Evonik, it can be observed from its annual report that the organization is more vulnerable to the various economic fluctuations. It can be identified from the annual report of 2017 that the competitive environment and weak economic situation act as the significant impediments in the share market growth and product market share (Phillips 2016).
Based on the information provided in the 2017 annual report of Evonik, it can be identified that no particular information is inherent in a single head and for the data assessment the report has to be read comprehensively. As the information cannot be accessed easily, it is not well formatted; one has to face problems to analyse. Hence, it can be said that the performance quality for the element economic in the Value Framework is bad. The specific data should be provided under a single heading.
The social refers to the relationship of the chosen organization of Evonik with its communities, customers, professionals, healthcare regulators, investors, suppliers, distribution partners, service providers, governments and other various stakeholders. Hence, the organization has a corporate citizenship that is responsible (Ehiedu 2014). The organization deals with the primary internal and external stakeholders along with the socio-economic investment are highlighted on the delivery expansion of the products to the communities.
With the help of the annual report of Evonik in 2017, it becomes easy to access all the data (Pappa 2015). The data is presented in an appropriate format and they are listed under separate heads. Thus, it helps in clear understanding. Hence, conclusion can be made that the performance quality for the element Social in the good Value Framework.
The environmental factors consist of the natural resources that Evonik uses in order to manage its business operations. These resources include water, air, minerals, land and biodiversity. Evonik is committed to reduce carbon by implementing various strategies of site management and the formal conservation projects. The management of the firm supervises the emission throughout sites of manufacture.
The information assessment can be done from the annual report of the firm Evonik for the year 2017. The data is presented in an appropriate format and they are listed under separate heads. This signifies clear understanding of all the aspects (Fazzini 2018). Hence, it can be inferred that the performance projects of the environmental element in the value framework is effective.
Evonik analyses the accounting policies and the basis of presentation of the year ended 31th December 2017 by implementing segmental analysis in order to disclose the hyperinflationary economy. In the segmental analysis, the operation of the group is segmented and calculated based on the international countries where the business takes place. As per the integrated report of Evonik, calculation that is segment-wise has been done in the report. The calculation helps to understand the revenue earned from each segment of the business. The table is provided below:
The segment regarding information has been provided separately in the annual report of 2017. Thus the accessibility of the information is easy. The well-structured format helps to understand easily, thus it can be concluded that the quality of performance for the element Segmental in the Value Framework is good.
At the time of determining of the materiality, the entityEvonikgenerally considers the problem related to material that has the possibility to affect the organization ability to sustain and create stakeholders value of the firm (Jonas2017). The company board has considered and agreed that the strategic objectives of the company Evonik and the KPIs that are related with the stated aims would constitute the material issues of Evonik in order to risks management.
Conclusion
The strategic focus of the company has been taken into consideration with the various types of the consideration which are related to the focusing on the speciality chemicals and bringing innovation along with performance-oriented culture.The various disclosures about the accessibility of the of the most of the information is depicted to be good in nature. This is specially seen in terms of the information revealed with the Customers, People and Culture, Brands and IA is seen to be good in nature.However, the aspects such as Processes and Supply Chain and Innovation is depicted to be bad in nature. In addition to this the disclosure on the aspects such as operational aspects under Organizational Performance is seen to be ugly in nature.
Reference List
Al-Zarouni, A., Tahir, M., Ng, C. and Aljifri, K., 2015. ASSESSING THE CURRENT LEVEL OF CORPORATE FINANCIAL DISCLOSURE IN THE UNITED ARAB EMIRATES. Asia-Pacific Journal of Education, Business and Society, 1(1).
Balvers, R.J., Gaski, J.F. and McDonald, B., 2016. Financial disclosure and customer satisfaction: Do companies talking the talk actually walk the walk?. Journal of business ethics, 139(1), pp.29-45.
Borys, G. and Solarz, M. (2014). Finance and accountancy for sustainable development. Wroc?aw: Publishing House of Wroc?aw University of Economics.
Brigham, E.F., Ehrhardt, M.C., Nason, R.R. and Gessaroli, J., 2016. Financial Managment: Theory And Practice, Canadian Edition. Nelson Education.
Corporate.evonik.com., 2018. [online] Available at: https://corporate.evonik.com/Downloads/Corporate/BPK/Evonik_FB2017_E.pdf [Accessed 14 Jun. 2018].
Dhaliwal, D., Li, O.Z., Tsang, A. and Yang, Y.G., 2014. Corporate social responsibility disclosure and the cost of equity capital: The roles of stakeholder orientation and financial transparency. Journal of Accounting and Public Policy, 33(4), pp.328-355.
Ehiedu, V.C., 2014. The impact of liquidity on profitability of some selected companies: The financial statement analysis (FSA) approach. Research Journal of Finance and Accounting, 5(5), pp.81-90.
Farmer, M., Archbold, S. and Alexandrou, G., 2013. CEO compensation and relative company performance evaluation: UK evidence. Compensation & Benefits Review, 45(2), pp.88-96.
Fazzini, M., 2018. Financial Statement Analysis. In Business Valuation (pp. 39-76). Palgrave Macmillan, Cham.
Guay, W., Samuels, D. and Taylor, D., 2016. Guiding through the fog: Financial statement complexity and voluntary disclosure. Journal of Accounting and Economics, 62(2-3), pp.234-269.
Hadi, A., Handajani, L. and Putra, I.N.N.A., 2018. Financial Disclosure based on Web-ICT Determinants: Its Implications for Local Government Financial Performance in Indonesia. International Research Journal of Management, IT and Social Sciences (IRJMIS), 5(1), pp.72-85.
Hassanein, A. and Hussainey, K., 2015. Is forward-looking financial disclosure really informative? Evidence from UK narrative statements. International Review of Financial Analysis, 41, pp.52-61.
Jonas, G.A., 2017. Asian Financial Statement Analysis: Detecting Financial Irregularities.
Koo, J.H., 2015. B. Enhancing Financial Consumer Protection with Effective Disclosure of Financial Information. Korean Economic and Financial Review, 20(2), pp.49-52.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative risk management: Concepts, techniques and tools. Princeton university press.
Pappa, A., 2015. Financial statement analysis of a multinational company and equity valuation of computer-based technology group.
Phillips, F., 2016. Withholding Financial Statement Analysis Formulas When Instructing and Testing: A Desirable Difficulty.
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