FINAL-TERM PAPER

Analysis of PT. Campina Ice Cream Industry Tbk. and PT. Diamond Food
Indonesia Tbk Financial Statement

To fulfill an assignment on the course:

Financial Analysis and Reporting

 Lecturer:

Widhi Astono S.E., MM

Written by:

GROUP 3:

Muhammad Fakhri Azhari - 2006584850

Muhammad Ikhsan Nur Hidayat - 2006584043

Ariq Irfan Satrio - 2006464480

Tasaney Emeraldo Leonart Kobba - 2006465376

FACULTY OF ECONOMICS AND BUSINESS

UNIVERSITAS INDONESIA

2022
STATEMENT OF AUTHORSHIP

We, whose autograph signed below, declare that the attached scientific paper is purely our own
work. Not other people's work we use without citing the source. The material contained in this
report has never been presented or used as material for a scientific paper in another scientific
paper, unless we clearly state that we use it. We understand that the tasks that we collect may
be reproduced and/or communicated for the purpose of detecting plagiarism.

Title: Analysis of PT. Campina Ice Cream Industry Tbk. and PT. Diamond Food Indonesia Tbk
Financial Statement

Depok, 15 December 2022

Name Autograph

Muhammad Fakhri Azhari

Muhammad Ikhsan Nur Hidayat

Ariq Irfan Satrio

Tasaney Emeraldo Leonart Kobba

TABLE OF CONTENTS Error! Bookmark not defined.

CHAPTER I 8
COMPANY OVERVIEW 8
1.1 PT. Campina Ice Cream Industry Tbk. 8
1.2 PT. Diamond Food Indonesia Tbk. 9
CHAPTER II 10
FINANCIAL REPORTING QUALITY 10
2.1 Financial Shenanigans Analysis 10
2.1.2 Quality of Campina Financial Reporting 10
2.1.3 Quality of Diamond Financial Reporting 14
2.2 Quality of Financial Report 17
2.3 Evaluating the Quality of Financial Reports 18
2.4 Earnings Quality 20
2.5 Cash Flow Quality 22
2.6 Balance Sheet Quality 25
2.7 Sources of Information about Risk 29
2.7.1 Limited Usefulness of Auditor’s Opinion as a Source of Information about Risk
29
2.7.2 Risk-Related Disclosures in the notes 30
2.7.3 Management Commentary 32
2.7.4 Financial Press as a Source of Information about Risk 34
CHAPTER III 36
FINANCIAL STATEMENT ANALYSIS 36
3.1 Common-Size Analysis 36
3.1.1 Common-Size Income Statements Analysis 36
3.1.2 Common-Size Balance Sheet Analysis 37
3.1.3 Common-Size Cash Flow Statement Analysis 38
3.2 Liquidity Ratio Analysis of Campina & Diamond 39
3.3 Solvency Ratio Analysis of Campina & Diamond 39
3.4 Activity Ratio 40
3.4.1 Inventory Turnover 40
 3.4.2 Days of Inventory on Hand (DOH) 41
3.4.3 Receivables Turnover 41
3.4.4 Days of Sales Outstanding (DSO) 42
3.4.5 Fixed Asset Turnover 42
3.4.6 Total Asset Turnover 43
3.5 Trend Analysis 43
3.6 Profitability Ratio 45
3.6.1 Net Profit Margin 45
3.6.2 Gross Profit Margin 46
3.6.3 Operating Profit Margin 47
3.6.4 Pretax Margin 47
3.6.5 Return On Asset 48
3.6.7 Return On Equity 48
3.7 Du-Pont Analysis 49
3.8 Intercorporate Investment & Post-Employment Benefit 50
3.8.1 Investments in Financial Asset 50
3.8.2 Investments in Associates 50
3.8.3 Business Combinations 52
3.8.4 Defined Benefit Obligations 53
3.9 Sustainability (ESG Reporting) 56
3.9.1 Sustainability Reporting of PT. Campina Ice Cream Industry Tbk. 56
3.9.2 Sustainability Reporting of PT. Diamond Foods 61

CHAPTER IV 64
INFORMATION ANALYSIS FOR MANAGERIAL DECISION-MAKING 64
4.1 Risk That May Affect The Sustainability of Returns 64
4.1.1 PT Diamond Food Indonesia Tbk. Risk Management Systems 64
4.1.2 PT Campina Ice Cream Industry Tbk Risk Management Systems 65
4.2 Market Capitalization 67
4.3 P/E Ratio 68
CHAPTER V 69
CONCLUSION AND RECOMMENDATION 69
APPENDIX 70
REFERENCES 72
 CHAPTER I

COMPANY OVERVIEW

1.1 PT. Campina Ice Cream Industry Tbk.

PT Campina Ice Cream Industri Tbk. born from skilled hands of Mr. Darmo
Hadipranoto’s family which was established as a cottage industry in the form of a firm called
CV Pranoto with the trademark “Campina”. CV Pranoto was established by Darmo
Hadipranoto on 22 July 1972 and now Campina have Ticker code as CAMP.

In accordance with the purpose and purpose of the establishment of the Company, the
business activities organized by Campina are Ice Cream Processing and Ice Cream Trade.
Campina is committed to continuing to bring the standard of its business practices higher.
Through its implementation, Campina’s business operations have obtained several
certifications and standards that have been recognized internationally. The following is the
certification obtained by PT Campina Ice Cream Industry, Tbk; #1Champion Indonesia
Original Brand 2021, LRQA Certificate of Approval, TOP BRAND AWARD 2021 in
Recognition of Outstanding Achievment in Building the Top Brand, Brand For Good Club
Member 2021, MARKET LEADER 2021, INDONESIA WOW BRAND 2021 Bronze
Champion, Sertifikat Halal PT Campina Ice Cream Industry Tbk., Digital Marketing Award
Geart Performing Website.

The Company has a governance structure consisting of the Main and Supporting Organs
of the Company. The main organs of the Company consist of the General Meeting of
Shareholders, the Board of Commissioners and the Board of Directors. And the Company’s
Supporting Organs are the Audit Committee, Corporate Secretary and Internal Audit.
1.2 PT. Diamond Food Indonesia Tbk.

PT Diamond Food Indonesia Tbk (IDX: DMND) was established in 1995 under the
name PT Jayapure Tritunggal based on the Deed of Establishment No. 1 dated February 3,
1995 made before Jusnita Gunawan, S.H., Notary in Rangkasbitung. In 2016, PT Jaya Pure
Tritunggal changed its name to PT Diamond Food Indonesia based on the Deed of Minutes of
Meeting No. 13 dated 17 November 2016, made before Emilia, S.H., Notary in Jakarta.

Established in 1974 as an ice cream company, the Company and its Subsidiaries have
become one of the most prominent suppliers of food and beverage products in Indonesia. The
Company operates a start-to-finish cold chain distribution platform, which is spread throughout
Indonesia with 21 distribution points supported by more than 900 distribution fleets that supply
34 provinces in Indonesia. The products offered by Diamond include dairy products,
confectionery, meat and seafood, fruits, vegetables and their derivatives, grocery and bakery
products. Customers can get these products through modern markets, traditional markets, food
services, the Company's retail stores, and e-commerce sites and platforms.

Through its Subsidiaries and Associates, the Company has four production facilities,
three of which are located in the MM2100 industrial area, West Cikarang and one production
facility is located in Cimahi. With these facilities, Diamond is able to maintain quality and
respond to changes in demand immediately based on information from the Research and
Development Team who processes trends and feedback from customers to improve existing
product lines and develop new products.
 CHAPTER II

FINANCIAL REPORTING QUALITY

2.1 Financial Shenanigans Analysis

There are ten clues to detect whether financial shenanigans had happened.

1. Dishonest Management

2. Inadequate control environment

3. Changes in auditors, outside legal counsel, or CFO

4. Changing in accounting principles or estimates

5. Large deficit of operating Cash Flow relative to net income

6. Substantial disparity between sales and receivable growth

7. Substantial disparity between sales and inventory growth

8. Large increase or decrease in gross margins (GP/sales)

9. Recording revenue when risks remain with seller

10. Presence of commitments and contingencies

We will analyze these clues from Campina and Diamond’s 2021 and 2020 financial statement.

2.1.2 Quality of Campina Financial Reporting

From Campina’s financial statements, we can see on the third page that there is the board of
director’s statement of responsibility with the signatures and stamp. This means that the board
of directors is directly responsible for the preparation and presentation of financial statements
in accordance with Indonesian financial accounting standards and Campina's internal controls.
Therefore, we can conclude that the possibility of dishonest management is low because of
how the BODs were prepared in case of any material misstatement. For the same reason, we
can also conclude that there is no inadequate control environment.

(take a look at the picture below)

Next, from Campina’s Note of Financial Statement, it’s stated their accounting principles,
method, and changes in accounting policies. Campina used accrual basis, except The
Statement of Cash Flows is presented using the direct method, presenting receipts and
disbursements of cash and cash equivalents classified into operating, investing and financing
activities. For changes in accounting policies caused by amendments to PSAK. Therefore, we
can conclude that the probability of financial shenanigans related to changes in accounting
principles or estimates is low.

Then, we should compare operating cash flow with net income in 2021 and 2020. From the
picture above, we can say it that amount of operating cash flow consistently higher than net
income. The trend in net income is also in line with the operating cash flow, the more in
operating cash flow the more increase in net income.

Next up, we will analyze between the sales growth, receivable growth, inventory growth, and
gross margin

2021 2020 Growth

Sales revenue 1.019.133.657.275 956.634.474.111 6,53%

Account receivable 110.549.359.898 124.395.919.918 -11,13%

Inventory 120.967.227.625 138.318.505.104 -12,54%

Gross Profit 555.095.162.776 516.978.759.283

Gross Margin 54,47% 54,04%

Based on the table above, we can conclude that there is no large increase or decrease in gross
margin. However, it absolutely yes substantial disparity between sales and receivable growth
and yes substantial disparity between sales and inventory growth.

The notes of the financial statement also reveals that at least there are 2 or 3 presence of
significant agreements. In the other side, there are no presence of commitments and
contingencies.

Therefore, based on these analysis of clues of financial shenanigans, we conclude that Campina
has high financial reporting quality.
2.1.3 Quality of Diamond Financial Reporting

From Diamond’s financial statements, we can see on the second page that there is the board of
director’s statement of responsibility with the signatures. This means that the board of directors
were directly responsible for the preparation and presentation of the financial statement and the
internal control of Diamond. Therefore, we can conclude that the possibility of dishonest
management is low because of how the BODs were prepared in case of any material
misstatement. For the same reason, we can also conclude that there is no inadequate control
environment.
From Diamond’s notes of the financial statement, it is stated about the method of accounting
estimates used. Diamond used observable market data to determine fair value, with the
corresponding hierarchy of levels. Diamond also had some changes in accounting policies;
however, these changes are caused by the amendments of PSAKs. Therefore, we can conclude
that the probability of financial shenanigans related to changes in accounting principles or
estimates is low.
If we compare Diamond’s operating cash flow with its net income from 2021 and 2020, we can
see that the operating cash flow is consistently higher than the net income. The trend in net
income is also in line with the operating cash flow (increasing). Consistently higher net income
compared to OCF is a sign of accrual accounting policies that shift later income to the current
period, which is not the case for Diamond.

In the following analysis, we will calculate the sales growth, receivable growth, inventory
growth, and gross margin (in millions of Rupiah).

2021 2020 Growth

Sales revenue 6.973.718 6.110.155 14,13%

Account receivable 993.941 913.991 8,75%

Inventory 1.417.084 1.312.678 7,95%

Gross Profit 1.476.592 1.319.205

Gross Margin 21,17% 21,59%

From the calculation, we can see that there is no large increase or decrease in gross margins,
no substantial disparity between sales and receivable growth, and no substantial disparity
between sales and inventory growth.

The notes of the financial statement also reveals that there is presence of significant
agreements, but there is no presence of commitments and contingencies.

2.2 Quality of Financial Report

Before we look further into the Quality of Financial Report from Diamond and
Campina, we must know the relationships between Financial Reporting Quality and Earnings
Quality. Low financial reporting quality can make it difficult or impossible to assess a
company’s results, and as a result, it is difficult to make investment and other decisions, such
as lending and extending credit to the company. High-quality financial reporting alone is an
insufficient condition to ensure the presence of high-quality results, but the existence of high-
quality financial reporting allows the investor to make such an assessment.

The quality of financial reporting varies from company to company. Financial reports
range from containing relevant and truthful information to purely fictitious information. The
quality of returns (results) can range from high and sustainable to low and unsustainable. The
existence of quality financial reporting is a prerequisite to enable investors to assess quality
results. Quality financial reporting alone is insufficient to ensure the existence of quality
results, but the existence of quality financial reporting enables investors to make such
assessments.

By combining the two dimensions of quality (financial reporting and results), the
overall quality of financial reporting from the user's perspective can be viewed as a continuum
from best to worst. Essentially, the analyst needs to consider two basic questions:
 1. Are the financial reports GAAP-compliant and decision-useful?

2. Are the results (earnings) of high quality? In other words, do they provide an
adequate level of return, and are they sustainable?

2.3 Evaluating the Quality of Financial Reports

We must take a note that the steps provided here are intended to serve as a general guide
only. Analysts can choose to add steps, emphasize or tone down steps, or change the order of
steps. Every business is unique and each variation of a particular analytical project requires a
particular approach.

1. Develop an understanding of the company and its industry.

Understanding a company's economic activity provides a basis for understanding why

certain accounting policies are appropriate and why certain financial measures are
important. Understanding the accounting standards used by a company and its
competitors provides a basis for understanding what constitutes standards and assessing
whether a company's treatment is appropriate.

2. Learn about management.

Evaluate whether the company’s management has any particular incentives to misreport.
Review disclosures about compensation and insider transactions, especially insiders’
sales of the company’s stock. Review the disclosures concerning related-party
transactions.

3. Identify significant accounting areas especially those in which management

judgment or an unusual accounting rule is a significant determinant of reported financial
performance.

4. Make comparisons

a. Compare the company’s financial statements and significant disclosures in the

current year’s report with the financial statements and significant disclosures in
the prior year’s report. Are there major differences in line items or in key
disclosures, such as risk disclosures, segment disclosures, classification of
specific expense, or revenue items? Are the reasons for the changes apparent?

b. Compare the company’s accounting policies with those of its closest competitors.
Are there significant differences? If so, what is the directional effect of the
differences?

c. Using ratio analysis, compare the company’s performance with that of its closest
competitors.

5. Check for warning signs of possible issues with the quality of the financial
reports. For example

a. declining receivables turnover could suggest that some revenues are fictitious or
recorded prematurely or that the allowance for doubtful accounts is insufficient;

b. declining inventory turnover could suggest obsolescence problems that should be

recognized; and

c. Net income greater than cash provided by operations could suggest that
aggressive accrual accounting policies have shifted current expenses to later
periods.

6. Review segment result

For businesses, especially multinationals, that operate in multiple segments by geography

or product, consider whether inventory, sales, and spending are shifting to

 manufacturing. Companies appear to be actively involved in geographic regions or

product segments that the investment community sees as desirable areas for growth.

Analysts might suspect this change is occurring when a segment performs well while

consolidated results are flat or deteriorating.

7. Use appropriate quantitative tools to assess the likelihood of misreporting.

2.4 Earnings Quality

Earnings quality is a measure of how reliable a company's earnings are for assessing a
company's current and future performance. It is important for analysts to determine a
company’s performance. A high earnings quality is indicated with its recurring earnings and
persistence. On the other hand, a low earnings quality is indicated by a big portion of a non
recurring item driving the net income high.

Campina and Diamond have the same issue in presenting their Income statement. The
booth companies include their other income and other expenses that do not have a direct
relation to the company’s operation and are non recurring items. Hence this will make the
operating income doesn't reflect the company's actual performance. Beside that this would also
make the both companies reporting quality to be low because the misclassification of the other
income and expenses impedes assessment of companies performance

Campina's Income Statement

Breakdown of Campina's non recurring item

The following are the the items in the other income and other expenses of Campina

The other incomes such as gain on foreign exchange, insurance claim income, sales of scraps,
Gain on Sale of fixed assets, etc are not recurring, so in assessing the company's performance
we need to take into account this factor. Even though Campina’s operating income is affected
by a certain amount of its non recurring items, Campina’s main driver of its high operating
income still came from its main business activity which is its sales. Hence, we still can classify
Campina’s earnings quality as high.

Diamond's Income Statement

On the other hand, Diamond did not disclose its other income items as Campina did, so we
can’t analyze further what activities comprises its other income. Hence, this will impede the
assessment of its earnings quality so Diamond’s reporting quality is low. Also, Diamond
included the gain on currency exchange, impairment loss of trade receivables and other
expenses to calculate its operating income, so in assessing the company's performance we need
to take into account this factor. Same as Campina, even though Diamond’s operating income
is affected by a certain amount of its non recurring items, Diamond’s main driver of its high
operating income still came from its main business activity which is its sales. Hence, we still
can classify Diamond’s earnings quality as high.

2.5 Cash Flow Quality

High quality cash flow means that cash flow can cover all loans, capital expenditure,
and all other debts. This is indicated by a positive operating cash flow (OCF). High quality
cash flow is also indicated by the sustainable source of OCF and low volatility of OCF related
to the industry peer.
 Diamond’s OCF of 2021 and 2020 were positive. These positive OCF are also derived
mostly from their main activities of selling products (cash receipts from customers).
 Same as Diamond, Campina’s OCF also showed positive result in 2021 and 2020.
Campina’s positive OCF is also derived mostly from their cash receipt from customers (sales),
which is a sustainable activity.

Diamond (2021) Campina (2021)

OCF 570.500.000.000 218.469.033.697

Capital expenditure (370.260.000.000) (40.537.288.425)

Changes in NWC (100.041.000.000) 35.048.554.647

FCFF 100.199.000.000 212.980.299.919

To determine the coverage capability of a company to cover all of its loans, capital
expenditure, and all other debts, we can calculate the Free Cash Flow to Firm (FCFF). Based
on the FCFF, we can conclude that both companies have positive FCFF. This means that they
have adequate cash flow to cover their financial obligation. However, despite Campina having
lower OCF than Diamond, Campina’s FCFF is higher than Diamond. The difference lies in
changes in net working capital.

2.6 Balance Sheet Quality

High balance sheet quality is indicated by completeness, unbiased measurement, and

clear presentation. Unbiased measurement is required for accounts that use accounting
estimates.
 The highlighted accounts are accounts that need estimation. Campina presented their
accounts that use estimates clearly. This is shown with the presence of disclosure in their
financial statement, noted by the code between the account name and the account balance.
Campina even disclosed their accumulated depreciation and amortization to the PPE, ROU,
and intangible assets account. We can also see that all accounts have their own disclosure,
regardless of whether it needs an accounting estimate or not.
 Like Campina, Diamond presents their accounts that need an accounting estimate with
disclosure, also noted by the code between account name and the account balance. However,
in Diamond’s case, they don’t have disclosure for every accounts like Campina. The
highlighted accounts on two pictures below are the accounts of Diamond's balance sheet
without disclosure. While those accounts are not the ones that need estimation, questions may
arise about the validity of those account's balances.
2.7 Sources of Information about Risk

Operating risks can be indicated by financial data, such as highly variable operating
cash flows or negative trends in profit margins. Additional information about risk can be
obtained from sources other than the financial statements. The other source that we use as
information about risk from Campina and Diamond are audit opinion(s), notes, management
commentary, and financial press.

2.7.1 Limited Usefulness of Auditor’s Opinion as a Source of Information about Risk

Auditor's opinion is generally the auditor's opinion on historical (past) events so that
not provide information on a timely enough basis to be a useful source of information about
risk. An auditor’s opinion is unlikely to be an analyst’s first source of information about a
company’s risk. if we use the auditor's opinion as a risk consideration then we will have the
potential to experience misinterpretation because the presentation is only in the form of a
statement without looking in detail about the assessment so that the Auditor's opinion is called
"limited".

If we take a look for auditor’s opinion for Diamond by KPMG, we can see the auditor's
opinion in the financial statement annually or in the annual report. Often the auditor's opinion
presented in the annual report only changes on the date and year that adjusts to the related audit
year so that the information obtained will not be relevant for decision making.
 However, under certain conditions, the auditor's opinion will highlight several notes
which can later become more relevant information when compared to an opinion that only
differs in date and year from the previous opinion. Such as the opinion given by the public
accounting firm Supoyo, Sutjahjo, Subyantara regarding Campina's financial report in 2019
where the auditor gives point "Penekanan Suatu Hal" which can make the auditor's opinion
more meaningful than simply stating fair or clean. Regardless of the quality of the public
accounting firm that conducted the audit, Campina has an auditor's opinion that can be
interpreted as a prospect for the following year than Diamond.

2.7.2 Risk-Related Disclosures in the notes

1. Credit risk mainly arises from risk of loss if customers fail to discharge their contractual
obligations.
Credit risk owned by Diamond from 2020 to 2021, an increase in the amount of receivables
indicates an increase in the probability of Diamond customers defaulting which means an
increase in credit risk.

Campina's credit risk has decreased as seen from the total receivables which have
decreased from 2020 to 2021 which means there are fewer receivables that are likely to be
uncollectible. However, if you look further, receivables that are due within 1-30 days are the
largest in both 2020 and 2021 which indicates a considerable risk because this period is the
earliest to mature and there is a greater risk of default. because the time span is shorter than
other timeframes and the amount of receivables is greater than other receivables. Campina is
better, because it is able to reduce the amount of receivables which means it is able to convert
receivables into cash, while Diamond has additional receivables which means increased credit
risk.

2. Liquidity risk is the risk that the Diamond will encounter difficulties in meeting the
obligations
 If we look at it at a glance, the total number of financial liabilities held by Diamond
increased from 2020 to 2021 which means its liquidity level has also increased. however, this
does not mean the increase is entirely bad because it increases the level of liquidity but can also
be a sign that Diamond can use more funds from debt as "leverages" in running its business
(but with the risk of greater profits or more losses).

Campina has experienced a decrease in liquidity risk when viewed from debt that has
not yet matured, but debt that matures within 1-30 days has increased and also in total debt
from 2020 to 2021 which could be an interpretation that Campina's liquidity level in 2021 is
worse than 2020 , and if Campina cannot maximize the leverage effect of the debt then
increased liquidity will only be a risk without any benefits from the leverage effect. If we make
a comparison between Campina and Diamond apart from the leverage effect arising from debt,
so it can be said that Diamond's liquidity level is greater which is also a greater risk of default
but has greater potential to profit from the leverage effect.

2.7.3 Management Commentary

Management commentary is another source of information that can show concerns

highlighted by management and what actions the company has taken to address existing
problems and prevent their reoccurrence or worsening conditions. Each company has different
attention regarding the attention described because each company has different conditions that
make the company even though it is engaged in the same type of business but can have different
attention like Diamond and Campina.
 Diamond’s main concern is they are greatly depends on the subsidiaries business
activities and business revenue. thus the declining performance od a subsidiaries with
significant contribution may bring material and adverse impacts towards Diamond’s business
activities. Diamond has made a strategy by places a director and/or a commissioner in each
subsidiaries but the efforts made by Diamond are still lacking because they have not directly
targeted the individuals in each subsidiary. The recommendation that can be made is to analyze
each of the most vital areas in each subsidiary and provide training to improve the skills of
members of the field and/or better incentives as work motivation for each of them.

Unlike Diamond, which is concerned about the performance of its subsidiaries,

Campina is concerned about credit risk. Campina faces credit risk from operating activities and
funding activities, especially those derived from receivables from customers and miscellaneous
receivables. Credit risk derived from receivables and other receivables is managed by the
Campina's management in accordance with the Campina's policies, procedures, and controls.
Credit limits are determined for all customers based on internal assessment criteria. The balance
of customer receivables is monitored regularly by the Campina's management.

To reduce the risk that will arise the Campina conducts business relations only with
recognized and trusted parties. Campina has a policy for all customers who will trade on credit
must go through a credit verification procedure. In addition, the amount of receivables is
monitored continuously to reduce the risk of decreased value of receivables. In addition to
supervising parties wishing to apply for trade on credit, Campina can also carry out internal
controls such as setting a maximum amount of receivables that can be issued (this figure should
not be stagnant but flexible according to net income, so that the maximum number is set using
a percentage) so that credit risk can be more controlled.

2.7.4 Financial Press as a Source of Information about Risk

Financial press is an external source that is obtained through discussion of parties other
than the company which can add information, especially to open views on financial and non-
financial conditions which are also often a concern for many people such as environmental
sustainability and the welfare of the company's human resources.

Base on Kusuma Bintari, C. (2022). Analisis Perbedaan Kinerja

Keuangan Perusahaan Manufaktur Sektor Konsumsi Di Indonesia
Sebelum Dan Saat Covid-19 (Studi Kasus Pada Perusahaan Listing
BEI 2019-2020) (Doctoral dissertation, Universitas Muhammadiyah Surakarta).

Based on the press it was shown that there was a decrease in the value of the solvency ratio
through DER by Diamond which could be an indication of lower risk. It is also shown that
there is an increase in the current ratio which also indicates a lower risk
 Darisa, A. L. I. N. (2012). Identifikasi Keselamatan dan
Kesehatan Kerja (K3) dengan Metode Hazard Identification Risk
Assessment Control (HIRAC) di PT. Campina Ice Cream Industry
Surabaya.

Press for Campira more directed to the discussion of human resources, Accidents at
work are risks that must be minimized by the company. thus conducting machine feasibility
inspections and ensuring all workers understand occupational safety and health programs and
know how to operate the machine properly, so this risk can be reduced. This press was issued
in 2012 and Campina has succeeded in overcoming work safety problems as evidenced by the
statement in the annual report which states that all policies made by the company must consider
many aspects and one of them is occupational health and safety, Campina has also taken
precautions by providing training adequate.
 CHAPTER III

FINANCIAL STATEMENT ANALYSIS

3.1 Common-Size Analysis

In analyzing a company's financial statement, we usually conclude that the higher the amount
of operating income, cash flows, or assets of a company, the better. But when it comes to
comparing the performance or the structure of two different companies, there’s a thing called
the effect of size, which company has a higher amount of operating income, cash flow or asset
is considered to be the better one. In order to compare the performance of these two companies
meaningfully, we can use the common-size income statements analysis.

3.1.1 Common-Size Income Statements Analysis

In common-size income statements, we have to convert the income statements item on the
income statement as a percentage of revenue. Thus the standardization of each line item
removes the effect of size.

In the following analysis, we are comparing both companies' performance. Campina has an
IDR 115.448,34 (In million) of operating income while Diamond has an IDR 417.001,00 of
operating income.

Campina Diamond

2021 2020 2021 2020

Net Sales 100,0% 100,0% 100,0% 100,0%

Cost of Goods Sold 45,5% 46,0% 78,8% 78,4%

Gross Profit 54,5% 54,0% 21,2% 21,6%

Selling Expenses 18,1% 19,5% 9,4% 11,3%

General and Administrative Expenses 25,1% 29,5% 5,8% 6,6%

Operating Income 11,3% 5,0% 6,0% 3,7%

From the common-size income statements above we can observe that Campina’s margin is
relatively higher than Diamond. Its gross profit is almost a half of its sales, this could indicate
that Campina is producing its cost of goods efficiently or it actually had a lower cost of goods
sold relevant to Diamond. From the operating expenses, we can see that Campina also had
higher selling expenses (which include a marketing expense) than Diamond. We can conclude
that Campina’s strategy also focuses on building its brand awareness since Campina allocates
a big amount of marketing cost (included in selling expense), so from these information, we
can conclude that it is likely that Campina is Selling technologically superior products with a
better brand image relative to Diamond. On the other hand, Diamond with its high cost of goods
sold and low margin may tell us that Diamond is selling its product cheaply. In order to offset
its high cost of goods sold, Diamond saves its money from investing a low amount in marketing
expenses (included in selling expenses). Summing up, even though Campina’s operating profit
is lower in absolute Rupiah compared to Diamond, its performance in percentage term is higher
than Diamond.

3.1.2 Common-Size Balance Sheet Analysis

In a common-size balance sheet, we have to convert the balance sheet item on the balance sheet
as a percentage of total assets. Thus the standardization of each line item removes the effect of
size.

Campina Diamond

2021 2020 2021 2020

Asset 100,0% 100,0% 100,0% 100,0%

Current Asset 74,6% 69,2% 63,0% 63,1%

Non-Current Asset 25,4% 30,8% 37,0% 36,9%

Liabilities
Short Term liabilities 5,6% 5,2% 17,6% 14,5%

Long Term liabilities 10,8% 6,3% 2,7% 3,6%

Equity 89,2% 88,5% 79,7% 82,0%

Total Equity & Liability 100,0% 100,0% 100,0% 100,0%

From the above common-size balance sheet, we can assess the both companies solvency and
liquidity. Campina and Diamond has a high portion of current asset compared to their total
asset, which with that amount the company could cover multiple times of their short term
liability. Campina’s current ratios are 13,31 and 13.27 in 2021 and 2020 respectively.
Diamonds are 3.58 and 4.36 in 2021 and 2020 respectively. The current ratio of the both
companies didn’t fluctuate significantly in the 2 year. Diamond has a lower current ratio than
Campina because it has a high portion of short term liabilities. But if we trace furthermore,
Campina’s great amount of current assets is actually because of its big portion of cash and cash
equivalents which is 53,21% in 2021 and 44,05% 2020 of its total asset (Appendix 1). If the
company holds too much cash, the company will have an opportunity cost of having a higher
return if the company allocates its cash to another assets/investments that may produce higher
return. Besides current ratio, the following table shows Campina’s and Diamond’s other
liquidity ratios

3.1.3 Common-Size Cash Flow Statement Analysis

In common-size cash flow analysis of a company’s Cash Flow Statement, each operating,
investing, and financing activities line item is expressed as a percentage of net revenues (net
sales).

Campina Diamond

2021 2020 2021 2020

Operating Activities 20,9% 21,2% 8,2% 8,6%

Investing Activities -8,0% -7,5% -7,4% 11,6%

Financing Activities NA NA -0,9% -2,3%

As shown in the above table, In 2021 the both company’s operating income decreased from
2020. this may indicate that Campina and Diamond incurred more cash payment for their
operating activity rather than their receipt.

Campina’s negative percentage of investing activities indicates that the company incurred a
cash outflow for its investment. a decrease of -7,5% to -8,0% tells that Campina invested more
in 2021. While Diamond on the other hand has a positive percentage of investing activities
indicates that the company may sell its asset at 2020. Then, the next year the company shows
a negative percentage of investing activities which tells us that the company increases its
investment which incurred a cash outflow

Campina’s cash flow statement did not show any amount in the 2 years, meaning that, there’s
no financing activities took place between 2020 and 2021. While Diamond from 2020 to 2021
percentage of financing activities increased. This may indicate that Diamond incurred more
cash proceeds from its financing activity rather than its cash payment or also may indicate that
Diamond’s cash payment for its financing activities just lessened.

3.2 Liquidity Ratio Analysis of Campina & Diamond

Campina Diamond

Liquidity Ratio 2021 2020 2021 2020

Current Ratio 13,31 13,27 3,58 4,36

Acid Test Ratio 11,24 10,68 2,10 2,57

Cash Ratio 9,49 8,45 1,20 1,45

Acid test ratio and cash ratio also tells us a company’s liquidty but acid test ratio excludes
inventory from its calculation while cash ratio excludes inventory and receivables if those
assets are considered illiquid

3.3 Solvency Ratio Analysis of Campina & Diamond

Campina Diamond

Solvency Ratios 2021 2020 2021 2020

Debt-to-assets ratio 0 0 0 0,01

Financial leverage ratio 1,12 1,13 1,25 1,22

In the two years, Campina’s debt-to-assets ratio is 0, meaning that the company’s capital
structure is 100% equity, in other words we can say that Campina isn't leveraged. Sames as
Campina, Diamond in 2021 didn’t have any debts, but in its previous year, Campina had 0,01
debt-to-assets ratio which indicate that the company’s total asset is comprised of 0,01 of its
debt. The both companies have a similar financial leverage ratio since the both companies are
structured fully by their equity(except for Diamond in 2020). Thus, Campina and Diamond
still have plenty of room for leverage so that they can expand their business operation which
eventually could yield them a higher return.

3.4 Activity Ratio

Activity ratios are also known as asset utilization ratios or operating efficiency ratios.
This category is intended to measure how well a company manages various activities,
particularly how efficiently it manages its various assets. Activity ratios are analyzed as
indicators of ongoing operational performance, how effectively assets are used by a company.
These ratios reflect the efficient management of both working capital and longer-term assets.
We have computed several activity ratios for PT. Campina Ice Cream Industry Tbk. and PT.
Diamond Food Indonesia Tbk using the data from financial report in 2020-2021 and we will
elaborate each ratio into the analysis tha can show how and which company that has better
performance in managing various activities.

3.4.1 Inventory Turnover

Inventory turnover measures how many times the company’s inventory has been sold
and replaced during the period calculated (in this calculation, annually). Thus, it can be used
to indicate a company’s inventory management effectiveness. The higher the value, the faster
the company will make sales. Both companies are categorized within the food and beverage
industries. We used the cost of sales and Average inventory which can describe both companies
in a balanced manner (because they are in the same industry).

If we look at inventory turnover in the two years generated by Campina and Diamond,
both have the same trend (increasing) from 2020 to 2021. This increase in the ratio illustrates
that sales at the company are increasing, which is characterized by a "replacement" in
inventory. In simple terms, if this ratio increases, it indicates that sales have also increased due
to a reduction in inventory because it already sold and the company needs to replace it.

When we compare between Campina and Diamond based on inventory turnover, we

can draw the conclusion that Diamond is better that Campina both in growth of ratio and the
sum of ratio. Diamond’s position that better than Campina can indicates that Diamond have
more sales in 2020-2021 than Campina.

3.4.2 Days of Inventory on Hand (DOH)

Days of inventory on hand (DOH) are inversely related to the inventory turnover ratio
and it shows us how many days, on average, the company converts inventory into sales. When
the company can make lower DOH is preferable because it indicates a high inventory turnover
and the company needs fewer days to convert inventory into sales. In this calculation we use
365 days as 1 year (numerator) and the Inventory turnover as denominator, after the calculation
we find that Diamond have a better performance because it can make lower DOH and bigger
decreases in DOH than Campina (DMND (-13,36) CAMP (-5,66)).

As we have mention before that both of this company have work in same industry so
we can say that Diamond have a better strategy that turning it Inventory into sale faster than
previous year and better than Campina.

3.4.3 Receivables Turnover

The receivables turnover ratio measures the number of times a company collects its
average accounts receivable balance. It is a quantification of a company’s effectiveness in
collecting outstanding balances from clients and managing its line of the credit process. A
better company has a higher accounts receivable turnover ratio while an inefficient company
has a lower ratio. This metric is commonly used to compare companies within the same
industry to gauge whether they are on par with their competitors.
 In this case when we compare Campina and Diamond, we find that both Campina and
Diamond have an increase in this ratio that show that both company has experienced improved
performance based on the ability to collect receivables. When we look further, Campina has a
higher ratio than Diamond in other word Campina is better than Diamond in terms of
effectiveness in collecting outstanding balances (receivables) from clients and managing its
line of the credit process.

3.4.4 Days of Sales Outstanding (DSO)

Previously we have seen that Inventory Turnover is inversely related to DOH, and now
the same pattern (inversely related) is repeated between Receivable Turnover and DSO. Days
Sales Outstanding (DSO) represents the average number of days it takes credit sales to be
converted into cash, or how long it takes a company to collect its account receivables, when
the company can make lower DSO is preferable because it indicates that company can collect
its receivables faster (need fewer days) than company that make higher DSO.

After we calculate this ratio for Campina and Diamond, we find that both of them have
improved performance in collecting their receivables (CAMP (-2,80) DMND (-7,06)). Even
though Diamond can make better improvement, at the end of the calculation we find that
Campina can make lower DSO and indicate that Campina can convert its receivables into cash
faster than Diamond, in other word Campina can collect receivables better/faster than
Diamond.

3.4.5 Fixed Asset Turnover

This ratio measures how efficiently the company generates revenues from its
investments in fixed assets. Generally, a higher fixed asset turnover ratio indicates more efficient
use of fixed assets in generating revenue. A low ratio can indicate inefficiency, a capital-
intensive business environment.

As we can see from the table above, both companies’ fixed asset turnover ratio has
increased from 2020 to 2021 that means both of them has increased in efficient of using their
fixed assets in generating revenue. But when we talk about compare which one is better so we
can see that Diamond better than Campina that means Diamond can generates revenues from its
investments in fixed assets better than Campina. Even though Diamond is better than Campina
we cannot generalize that Campina is inefficient because it could be the fixed asset that Campina
owned is newer than Diamond (and, therefore, less depreciated and so reflected in the financial
statements at a higher carrying value).

3.4.6 Total Asset Turnover

Total asset turnover ratio can show the company's ability to generate overall income
with a given level of assets. In this case ratio from Campina in 2020 is 0,86 would indicate that
Campina generates Rp 0,86 in revenue for every Rp 1 of average assets and this number increase
to 0,91 in 2021. Diamond ratio is higher than Campina, in 2020 Diamond have ratio as 1,02
(generates Rp 1,02 in revenue for every Rp 1) and increase to 1,16 in 2021.

In this ratio, higher ratio indicates a higher efficiency. Since this ratio includes both
fixed and current assets so we can say that base on the calculation we can find that Diamond is
better than Campina in sum of ratio and the increases in ratio.

3.5 Trend Analysis

Trend analysis provides important information based on past performance and growth and, given
a sufficiently long history of accurate seasonal information, the purpose of this analysis is to see
how the rise and/or fall of some indicators in financial statements by the graph shown or its
percentage and this analysis can be a great assistance as a planning and forecasting tool for
management and analysts in each company. In this analysis we use 3(three) years so we can
compare the fluctuation in better way.

DIAMOND

Below is the financial data which shows some financial information about revenues,
cost of revenue, gross profit, and profit before tax of Diamond in 2019 to 2021
 From the data and its graph, the trends mostly fluctuated in every variable. All the data
held decreased in 2020, which indicates that the COVID-19 pandemic had a major influence on
the decline, we can also see that the cost of revenue also decreased in 2020, it can be concluded
that the analysts and management in that year managed to make a fairly accurate forecast about
the condition of the company in 2020 so that costs can be reduced. while the increase in 2021
indicates that the company has begun to adjust its business strategy so that revenue can be
increased which also increases the net profit of Diamond.

CAMPINA

Below is the financial data which shows some financial information about revenues,
cost of revenue, gross profit, and profit before tax of Campina in 2019 to 2021.
 The COVID-19 pandemic has affected all lines of business and all companies, including
Campina. We can see through the graph that net sales decreased from 2019 to 2020 as well as
profits. If we look in detail, it can be seen that Diamond and Campina are both affected by
COVID-19, but there is a difference between Campina and Diamond.

In Campina COGS continue to increase in 2020 while Diamond has succeeded in

reducing COGS (cost of revenue) which can be concluded that both Diamond and Campina are
both affected by the Pandemic but analysts and management at Diamond can forecast more
accurately so that COGS can be reduced but it is different in Campina which it increases which
of course has an impact on decreasing profits. In other hand, Campina still can not reach the
number of sales like 2019 in 2021 but Diamond can make it even better than 2019 it means that
Diamond has implemented a good strategy(ies) to boost their sales better than Campina.

3.6 Profitability Ratio

3.6.1 Net Profit Margin

Net profit margin measures the amount of income that a company was able to generate
for each dollar of revenue. A higher level of net profit margin indicates higher profitability and
is thus more desirable.
 From 2020 to 2021 Net profit margin from Campina increased slightly from 0.046 to
0.098 which occurred because the two constituent variables increased disproportionately where
Net Income increased more than the increase in sales. While in Diamond there was an increase
although not as much as an increase in Campina (0,044 to 0,065), the comparison between the
magnitude of the increase in Net Profit Margin can be an assessment of the change (increase or
decrease) in the proportion between Net Income and Revenue (sales) that occurred in Diamond
is more proportional than Campina, but Campina is able to provide better and bigger growth.

3.6.2 Gross Profit Margin

The gross profit margin measures the amount of gross profit that a company generates
for each dollar of revenue. A higher level of gross profit margin indicates higher profitability
and thus is generally more desirable, although differences in gross profit margins across
companies reflect differences in companies’ strategies.

The gross profit margin reached the highest level in 2021. This means that Campina
had enough revenue available to cover operating and other expenses and to generate profit in
2021. In addition, the higher gross profit margin also indicate that Campina had a competitive
advantage in product costs and used the combination of higher product pricing and lower product
costs. In other hand the calculate of gross profit margin from Diamond reached the lowest level
than in 2021 the lower gross profit indicate that Diamond couldn’t charges the price combination
and couldn't have a competitive advantage in its product. This might occur because of the higher
competition in the market and base on Gross Profit Margin, Campina has better position.
3.6.3 Operating Profit Margin

When the operating profit margin increasing faster than the gross profit margin that can
indicate improvements in controlling operating costs, such as administrative overheads. In
contrast, a declining operating profit margin could be an indicator of deteriorating control over
operating costs.

The increase in operating profit margin at Campina is quite large and faster than gross
profit margin (gross profit increase 0,005, Operating Profit Margin increase 0,065) which
indicates an improvement in controlling operation costs such as administrative overheads. At
Diamond there was also an increase in Operating profit margin but not as much as the increase
in Campina but Diamond has a good improvement because in gross profit margin it has a
decrease but increase in operating profit margin. Diamond also experienced an increase in
improvement in controlling operation costs but not as big as the improvement experienced by
Campina.

3.6.4 Pretax Margin

Pretax margin is the ratio of pretax income to revenue. The pretax margin reflects the
effects of profitability of leverage and other (non-operating) income and expenses.

A higher ratio indicates a company with a high degree of operational profitability. A

lower ratio indicates poorer operational profitability. Campina has increased in this ratio this
may indicate that the company’s revenue is growing faster than its expenses, meaning that the
Campina future profitability may be in good situation, there was a 0,065 increase in the pretax
margin of Campina in 2021 due to the increase in sales and increase in pretax profit that was
also supported by the lower selling expense than 2020.

At Diamond there was also an increase in Pretax margin ratio and can be indicate that
Diamond future profitability may be in good situasion but when its compare with Campina's
Pretax Margin, Diamond has a lower profitability.

3.6.5 Return On Asset

ROA measures the return earned by a company on its assets. The higher the ratio, the
more income is generated by a given level of assets.

The higher the ratio, the more income is generated by a given level of assets. In 2020
Campina has an ROA of 0.039 and in 2021 it became 0.090 which interpreted that Campina
experienced a probability growth (ROA) of 0.051 from 2020. The ROA owned by Diamond in
2020 was 0.055 (greater than Campina) and experienced growth in 2021 to 0.093 (growing by
0.038) which is also greater than Campina's ROA. But if we compare the number of increases,
then the increase in ROA by Campina is greater.

3.6.7 Return On Equity

ROE measures the return earned by a company on its equity capital, including minority
equity, preferred equity, and common equity.

The higher the ROE ratio the better, this indicates the company is able to utilize
shareholder funds to make the most of its profits. In 2020, Campina was able to utilize funds
from shareholders to generate a profit of 4.27% and increase in 2021 to 6.62% . In 2020, Diamond
was able to utilize funds from shareholders to generate a profit of 5.72% and increase in 2021
to 14.2%. Diamond's ROE is much smaller in both 2020 and 2021 and also much less growth
than Campina's ROE.
3.7 Du-Pont Analysis

The DuPont Analysis is a model to see what factors drive the ROE. This is done breaking
down the equation for ROE into three components: operating efficiency, asset efficiency, and
leverage. Operating efficiency is measured by Net Profit Margin and indicates the amount of
net income generated per dollar of sales.

Figure: DuPont Model

Formula

Net Profit Margin Asset Turnover Leverage

Net Income Sales Assets

Sales Assets Equity

PT. Diamond Food PT. Campina Ice Cream

Indonesia Tbk’s ROE Industry Tbk’s ROE

2021 2020 2021 2020

Net Profit Margin 9.8% 4.6% 6.5% 4.4%

Asset Turnover 11,16 11,02 0,91 0,86

Leverage 1,25 1,22 1,12 1,13

 ROE 14.2% 5.72% 6.62% 4.27%

From the table above we can see each component of the both companies ROE which drives
their ROE. From Diamonds Point of view, the factor that drives its ROE is its net profit margin.
Diamonds profit margin increased 5.2% from 2020 to 2021. While on the other hand PT. Campina’s
ROE growth isnt significant compared to ROE, it only increased by 2.3%. The main driver of Campina’s
2.3% ROE growth is its 2.1% increase in net profit margin. The both company have managed their costs
of sales and expenses so their sales conversion to net income is much higher.

3.8 Intercorporate Investment & Post-Employment Benefit

3.8.1 Investments in Financial Asset

Before comparing the two companies, we need to know what investment in financial
assets means. It means Investments in which the investor has no significant control over the
investee where ownership is < 20%. The accounting methods used under IFRS 9 are at
amortized cost and at fair value. So, both 2020 and 2021 at PT Diamond Food Indonesia, it has
been shown that there is absolutely no investment-related activity whose ownership is below
20%. All diamond investments have ownership above 70%. In other words, none of Diamond's
investments are classified as investments in financial assets. As well as with PT Campina Ice
Cream Industry, there is not a single explanation or record that Campina made an investment
in another company.

Moving on, we analyze the presence or absence of a joint venture (an arrangement or
partnership between two or more entities where they pool their resources to accomplish a
specific task). Based on the result of the search, the two companies did not state that they were
or had done a joint venture so we can conclude that the two companies did not have special
cooperation in carrying out the company's production.

3.8.2 Investments in Associates

Investment in associates is when a company has significant influence over another

company. We could call the latter company "associate". Significant influence is when a
company is presumed to have 20-50% influence. The accounting method for investment in
associates is the equity method. In Indonesia, accounting for investment in associates is
regulated in PSAK 15.

For Diamond, they have an associate company named PT NHF Diamond Indonesia,
which is engaged in processing and preservation of meat and poultry products in Indonesia.
Diamond has 49% ownership in the associate. Therefore, Diamond must record their
associate’s loss or profit.

We can see that Diamond recorded their associate loss or profit on their financial
statement in accordance with PSAK. Diamond also had transactions with NHF Diamond, or
transactions with associate, which were worth Rp55.865 million in 2021 and Rp11.931 million
in 2020.

For Campina, they also have an associate company called PT Ultrajaya Milk Industry
& Trading Company Tbk.. The association came from control by key personnel. However,
 Campina didn’t account any of their associate’s loss or profit on their financial statement.
Therefore, it can be assumed that Campina has no significant control over Ultrajaya.

Campina’s related transaction with Ultrajaya is about usage of shared facilities. We can
see that three accounts arose from this transaction: employee receivable, account payable, and
general and administrative expense.

3.8.3 Business Combinations

Business combinations involve the combination of two or more entities into a larger
economic entity. They are motivated by expectations of added value through synergies. In
Indonesia business combinations are regulated by PSAK 22 (Effective January 1, 2021)
concerning business combinations adopted from IFRS 3 "Business Combination"

Base On Diamond's Annual Report for 2020 Material Information on Investments,

Expansions, Divestments, Business Mergers/Consolidations, Capital Goods Acquisitions and
RestructuringIn 2020, there were no Business Combination transactions related to
Investments, Expansions, Divestments, Business Mergers/Consolidations, Capital Goods
Acquisitions and Restructuring. On December 21, 2021, through the Diamond’s subsidiary,
namely PT Sukanda Djaya, the Diamond signed a Conditional Share Purchase Agreement for
the purchase of 81% shares in PT Telunjuk Komput Indonesia from shareholders directly.
This is based on the Report of the Diamond’s Material Information or Facts that has been
submitted to the Financial Services Authority through letter No. DU/L-181/OJK/XII/2021
dated December 23, 2021. There was Even After Reporting Period. On 26 January 2022, PT
Sukanda Djaya (a subsidiary) acquired 81% ownership interest in and obtained control over
 PT Telunjuk Komputasi Indonesia (“TKI”), a third party. Total consideration paid was Rp
1,620 million.

At the end of each annual reporting, Campina assesses whether there is an indication
that an asset may be impaired. If any such indication exists or when annual impairment
testing for an asset (i.e. an intangible asset with an indefinite useful life, an intangible asset
not yet available for use, or goodwill acquired in a business combination) is required,
Campina makes an estimate of the asset’s recoverable amount. Goodwill is tested for
impairment at the end of year and when circumstances indicate that the carrying value may
be impaired. Impairment is determined for goodwill by assessing the recoverable amount of
each CGU (or Company of CGUs) to which the goodwill relates. When the recoverable
amount of the CGU is less than their carrying amount, an impairment loss is recognized.
Impairment losses relating to goodwill cannot be reversed in future periods.

3.8.4 Defined Benefit Obligations

Pension Plan Type

Every company has various types of benefits to be given to their employees for their retirement
such as pension plans, health care plans, medical insurance, and life insurance. Pension plans,
as well as other post-employment benefits, may be either defined contribution (DC) plans or
defined benefit plans (DB). The key difference between DC pension plan and DB pension plan
is that the DB plan benefits amount of future benefit is defined while the DC plan doesn't. DC
plan benefits will depend on the investment performance in which an individual account is
established for each participating employee. The accounts are generally invested through a
financial intermediary.

Both Diamond and Campina pension plan types are defined benefit obligations.
Diamond's Defined Benefit Obligation Calculation in 2021 & 2020

Diamond’s benefit obligation increased from 2020 to 2021 due to its additional periodic
pension cost which comprises of current service cost, past service cost, and its interest cost

Diamond's Actuarial Assumptions

Principal assumptions used in the actuarial calculations were as follows:

The discount rate is used in determining the present value of the benefit obligation at valuation
date. In general, the discount rate correlates with the yield on government bonds that are traded
in the active capital market at reporting dates. The future salary increase assumption projects
the benefit obligation starting from the valuation date through the normal retirement age. The
salary increase rate is generally determined by applying inflation adjustments to pay scales,
and by taking account of the length of service.

Diamond's Sensitivity Analysis

The sensitivity analysis above has been determined based on reasonably possible changes of
each significant assumption on the present value of the defined benefit obligation as of the end
of the reporting period, assuming all other assumptions were held constant

Campina’s Defined Benefit Obligation Calculation in 2021 & 2020

Campina's Actuarial Assumptions

Principal assumptions used in the actuarial calculations were as follows:

The discount rate is used in determining the present value of the benefit obligation at valuation
date. Campina didn't disclose any explanation for the stated explanation for the above
percentage nominal.
 Campina's Sensitivity Analysis

The sensitivity analysis above has been determined based on reasonably possible changes of
each significant assumption on the present value of the defined benefit obligation as of the end
of the reporting period, assuming all other assumptions were held constant

3.9 Sustainability (ESG Reporting)

3.9.1 Sustainability Reporting of PT. Campina Ice Cream Industry Tbk.

a. Environmental Aspects

i. Energy Efficiency

In order to fulfill the objectives in maintaining energy efficiency, Campina focuses on

optimal, integrated and sustainable management of energy resources and efficient use
of energy.

Campina has establish several program to optimize its use of energy. Below are
Campina’s programs:

1. Operational Upgrade
 Campina has repaired leaking ammonia pipes so as to reduce ammonia loose
into the air and also the replacement of compressor from piston compressor to
screw compressor.

2. Replacement of AC refrigerant from Freon to Water Chiller

In its production processes , Campina uses water chiller which is certainly more
environmentally friendly compared to Freon.

ii. Water Conservation

In an effort to do this, each production unit and sub-production monitors water use
every day and is documented monthly and a graph is then drawn up compared to
monthly production results to monitor water use both production and domestic.

The Company also produces self-contained drinking water with filtration system and
UV light since 2010. Therefore, the company provides ready-to-drink water taps that
can help reduce pollution (CO2 )
iii. Waste Management

The waste in Campina are categorized into B3 waste and Non-B3 waste. The two
categories of wastes it can be either solid or liquid waste. Every kind of wastes has
special handling based on the category. Also Campina has 3R program which was one
of the method in processing and managing B3 and Non-B3 waste.

There are another Campina’s solution to make this happen, there are :

1. Decreased Emissions And Greenhouse Gasses

Since July 2013, Campina has switched fuel for boilers from Solar to
CNG. The use of CNG at the beginning of installation is only for boiler
and kitchen operations. Only then in June 2017 was also used for the
production process of cone ice cream until now

2. Greenhouse Gas Reduction Activities

Since 2009, Campina has focused on activities that will reduce the
carbon footprint and of course on reducing Greenhouse Gasses (GHGs),
including:

a. . Producing self-contained drinking water with filtration and UV

light systems since 2010 Reduces Pollution (CO2) / leaves a high
carbon footprint

b. Procurement of teleconference (meeting online) within the city

so the participants do not travel out of the city which will usually
be taken by plane and leave a carbon footprint in the air.

c. The implementation of BOB (Bring Own Bottle) since 2015, the

bottled drinking water will increase the amount of plastic waste
 and also the carbon footprint impacted from the distribution of
the bottled water

b. Social Aspect

i. Employee Demographics
 Due to COVID-19 Pandemic, There was a decrease in total employees
so that Campina didn’t have too many new recruitment and prioritizing on
filling in the key positions

ii. Employee Competency Development

Campina has a employee development programs to improve their

employees performance and improvement so that Campina can continue to
grow. Training and learning is carried out as one of the efforts improve the
performance and competence of employees both skills, knowledge , and
attitudes and behaviors

c. Economic Aspect
3.9.2 Sustainability Reporting of PT. Diamond Foods

a. Environmental Aspect

On this aspect, Diamond brought an environmentally-pleasant fridge software

called Ozone Friendly Refrigerant to counter the negative impact of fridges on the
Earth, especially to the ozone and global warming. The program shifted the use of Freon
R22 to environmentally-friendlier freon and Diamond continued to decrease the use of
the previous with the decrease of 30% usage of the former in 2020 compared to the
preceding year.

Diamond operates wastewater treatment facilities in all their plants to make sure
that the waste is secure for the environment. All plants of Diamond have fulfilled all
waste control provisions required with the aid of using the nearby authorities and
observe applicable environmental standards. Diamond encourages the lower use of
plastic among its employees and alongside its operation. Since 2017, Diamond has used
paper-primarily based packages of their UHT milk product from certified suppliers.

b. Social Aspect

On this aspect, Diamond maintains partnerships with companies of dairy

farmers to enhance their welfare. One of the tasks was to increase the milk
manufacturing capacity and give the cooling tanks to the Indonesian Milk Cooperative
Association and Dairy Cattle Group.
 Throughout the “Diamond Peduli” program, Diamond performed various social
activities to support the victims of natural and other disasters. From March to May 2020,
amidst the Covid-19 pandemic, Diamond supplied their nutritional products (UHT
milk, juice, and yogurt) to the medical personnel responding to the pandemic, for free.

Another program of Diamond is the provision of UHT milk to orphanages and

shelters as an attempt to support SDG to end hunger, poverty, and to give them
prosperity. This programme is supposed to provide healthy products to sustain orphan’s
growth. Diamond additionally certifies orphanages as an appreciation in their attempt
to give safe space for orphans to live and educate them.

c. Governance Aspect

On this aspect, Diamond confirmed dedication to gender equality, with focus on

high-level management. In 2020, 39,2% managerial roles in Diamond are filled by
women.

Diamond is dedicated to equality and gives fair opportunities to everyone. At

any stage of employment, Diamond endeavors to give the same opportunities without
discrimination based of race, religion, or gender. Diamond helps its worker’s welfare.
This is proven with the aid of giving benefits consisting of transportation, meals, and
health allowance, which in turn will boost worker’s loyalty and contribute to Diamond’s
low annual worker turnover
 CHAPTER IV

INFORMATION ANALYSIS FOR MANAGERIAL DECISION-MAKING

4.1 Risk That May Affect The Sustainability of Returns

Risk management system is a set of activities and interventions designed to identify,

characterise, prevent or minimise risks relating to medicines, including the assessment of the

effectiveness of those activities and interventions.

4.1.1 PT Diamond Food Indonesia Tbk. Risk Management Systems

1. Key risks, are risks of significant potential impact onthe Diamond’s business
sustainability. The key risk is Diamond greatly depends on the Subsidiaries’ business
activities and business revenues so the declining performance of a Subsidiary with
significant contribution may bring material and adverse impacts towards the Diamond’s
business activities and Diamond has placed a Director and/or a Commissioner in each
Subsidiary to provide direct support in terms of strategy, operations and finance in order
to continuously increase business performance.

2. The Diamond’s dependency on brand principals for a great number of distributed

products. Diamond solve that problem with makes continuous efforts to maintain good
relationships with brand principals and to maintain strong performance as a reliable and
trustworthy distribution partner. In order to lower dependency on any individual brand
principal, the Diamond cooperates with multiple brand principals.

3. Weakening economic climate because of COVID-19 resulting in decreased consumer

buying power. On this risk, Diamond conducts revenue performance reviews and
market demand analysis on a regular basis. Any changes with potential adverse impacts
are directly anticipated with various programmes and policies.

4. Power supply failure in the Diamond’s warehouses potentially damaging the supplies.
Diamond has placed stand by power generators in all warehouses with frozen, chilled
and air conditioned temperatures within the Diamond’s distribution network.

5. Geopolitical risks and trade barriers. Diamond monitors developments in geopolitics

and trade barriers so as able to plan the purchase of raw materials and finished products
in order to anticipate potential supply disruptions.
 6. Fluctuating season demands during the month of Ramadhan and at year end, Diamond
will anticipates the increase on demand with plans supply purchase and production
months in advance.

7. Distribution chain disruption, Diamond has its distribution centres and customers
spread throughout Indonesia so that infrastructure issues taking place in any particular
area will not bring significant impacts.

8. Competition. Diamond handle it by continuously monitors market developments and

creates product innovations in order to meet consumer preferences and tastes, and
improves product quality, undertakes effective marketing activities, enhances cost
efficiency, and improves consumer service.

9. Insurance coverage. Diamond has ensured and will continuously ensure that all its
material assets have been insured based upon various potential events, such as fire,
flood, riot, and earthquake

10. Dependence on third parties for production, including dependence on such parties’
quality control procedures. Diamond has built and will continue to build cooperation
with leading brand principals with good quality control systems.

11. Consequences of joint venture partnership. Diamond has conducted feasibility studies
comprising various aspects of products, market potential and partnerships, and applies
at all time prudent banking principles in joint venture partnerships.

4.1.2 PT Campina Ice Cream Industry Tbk Risk Management Systems

1. Product Quality Risk. In an effort to produce high-quality products, the Campina’s

efforts begin with raw material quality control, production process control, final product
quality control, and quality control of final product distribution facilities. To obtain the
quality and supply of raw materials both raw materials and packaging materials that are
stable and consistent, Campina always improves good communication with suppliers
and looks for alternative suppliers so that it is not dependent on one supplier. In order
to ensure the quality of finished products received by consumers remains in accordance
with established standards, Campina supervises the quality of the fleet used to distribute
the final product to representative offices and distributors throughout Indonesia, the
 cooling temperature of the delivery fleet is very important so that it needs to be
monitored during the final product distribution process.

2. Liquidity Risk. Liquidity risk is a risk in the event that Campina is unable to meet its
liabilities at maturity. Campina conducts a strict evaluation and supervision of cash-in
and cash-out flows to ensure the availability of funds to meet the needs of liability
payments due. In general, the need for funds for the repayment of short-term and long-
term liabilities is obtained from sales to customers.

3. Credit Risk. Campina faces credit risk from operating activities and funding activities,
especially those derived from receivables from customers and miscellaneous
receivables. Credit risk derived from receivables and other receivables is managed by
the Campina’s management in accordance with Campina’s policies, procedures, and
controls. Credit limits are determined for all customers based on internal assessment
criteria. The balance of customer receivables is monitored regularly by the Campina’s
management. To reduce the risk that will arise Campina conducts business relations
only with recognized and trusted parties. Campina has a policy for all customers who
will trade on credit must go through a credit verification procedure. In addition, the
amount of receivables is monitored continuously to reduce the risk of decreased value
of receivables.

4. Interest Rate Risk. Interest rate risk is the risk in terms of fair value or future contractual
cash flows of a financial instrument will be affected as a result of changes in market
interest rates. Campina’s exposure affected by interest rate risk is primarily related to
cash and cash equivalents, cash and term deposits that are restricted in use, short-term
bank loans, and long-term bank loans.

5. Foreign Exchange Rate Risk. Currency risk is a risk in terms of fair value or future cash
flow from a financial instrument will fluctuate due to changes in foreign exchange rates.
Campina also purchases raw materials denominated in US Dollars in accordance with
the payment provisions required by the supplier.
4.2 Market Capitalization

PT Diamond Food Indonesia 2021 2020

30 Dec Share Price Rp 875 Rp 920

Shares Oustanding 9.468.359.000 9.468.359.000

Market Capitalization Rp 8.284 T Rp 8.710 T

PT Campina Ice Cream 2021 2020

Industry

30 Dec Share Price Rp 290 Rp 302

Shares Oustanding 5.885.000.000 5.885.000.000

Market Capitalization Rp 1.706 T Rp 1.777 T

Diamond has a higher market capitalization with its higher share price and higher quantity of
shares outstanding compared Campina. We need to know that the greater the value of market
capitalization, the greater the influence of the company in the stock market. So, in this case
the best option is Diamond. However, the bigger the company, the greater the risk. Diamond's
stock price difference between 2020 and 2021 shows negative 45. whereas, Campina's
difference is negative 12. Therefore, Diamond's volatility
is greater than Campina so to prevent greater losses Campina is a safer option in the short
run and may be profitable in the long run seeing Campina's stock performance in 2022 is
bearish.
4.3 P/E Ratio

PT Diamond Food Indonesia 2021 2020

30 Dec Share Price Rp 875 Rp 920

Basic EPS 36,6 21,17

P/E Ratio 33,5 32,2

PT Campina Ice Cream 2021 2020

Industry

30 Dec Share Price Rp 290 Rp 302

Basic EPS 16,80 7,24

P/E Ratio 16,8 38,1

The higher the P/E ratio, the more investors see bright prospects for the company in the
future. The number shown by the P/E ratio indicates that the current share price is equal to the
number of times the company's net income for one year. Ideally, the P/E ratio value should be
between 15 - 18 if it wants to be safe and attracted by investors.

Therefore, if we look at the performance of Diamond and Campina, Diamond is more

attractive to investors because investors are confident in Diamond's future, especially since
Diamond's P/E ratio has actually increased compared to Campina, which has experienced a
significant decline, although it is still within the range of safe numbers to convince investors.
 CHAPTER V

CONCLUSION AND RECOMMENDATION

Campina and Diamond face many factors that affect their performance, such as
COVID-19, especially throughout 2021. But both companies still manage to adapt to these
crisis. The both companies secure their sales by adapting to COVID 19 in their own ways.
Campina keeps improving its innovation and its operating efficiency so that it can grow
sustainably. Refreshments in Company’s prime products become one of the strategies to
improve consumer’s excitement.

Other than that, Campina continues improving our hygiene level. So That as we can
see, although in the midst of the uncertain condition, Campina’s sales didnt fall, instead it
increased by 1% from 2020 to 2021. Diamond also made an anticipation of further disruptions
caused by COVID-19 and the restrictions associated with virus control, focus on essential
products in modern trade, traditional trade, and e-commerce sales channels. As Diamond takes
this strategy, we can see that Diamond successfully increases its sales by 1.14% from 2020 to
2021.

Both companies perform ESG Reporting very well, where they still pay attention to the
surrounding environment and are responsible for improving the welfare and productivity of
their employees in their own way which also contributes to their sustainability. A company
cannot grow over the long term without the trust of society and its stakeholders. Both Campina
and Diamond had meet the environmental, social, governance aspects, they gain trust of their
investors
APPENDIX

APPENDIX 1:

PT. Campina Ice Cream Industry Tbk. and PT. Diamond Food Indonesia Tbk Operating
Income (Adjusted)

Campina(In millions) Diamond (In millions)

Absolute dollar value
2021 2020 2021 2020

Net Sales 1.019.133,66 956.634,47 6.973.718,00 6.110.155

Cost of Goods Sold (464.038,49) (439.655,71) (5.497.126,00) (4.790.950)

Gross Profit 555.095,16 516.978,76 1.476.592,00 1.319.205

Selling Expenses (184.194,99) (186.627,10) (652.913,00) -690.033

General and (255.451,83) (282.574,40) (406.678,00) -403.078

Administrative Expenses

Operating Income 115.448,34 47.777,25 417.001,00 226.094,00

APPENDIX 2:

PT. Campina Ice Cream Industry Tbk. Partial Balance Sheet (Current Asset)

Campina
ASSET
2021 2020

Amount percentage Amount percentage

Current Asset
(In Millions) of total asset (In Millions) of total asset

Cash and cash equivalents 610.486,2 53,21% 478.735,9 44,05%

Account Receivables:
 Third parties - net 110.549,4 9,64% 124.395,9 11,45%

Other receivables 1.807,4 0,16% 2.326,2 0,21%

Inventories 120.967,2 10,54% 138.318,5 12,73%

Prepaid expenses 1.454,9 0,13% 2.907,4 0,27%

Advances for purchases 10.933,5 0,95% 5.105,9 0,47%

APPENDIX 3:

PT. Diamond Food Indonesia Tbk Partial Balance Sheet (Current Asset)

Diamond
Asset
2021 2020

Amount Percentage Amount Percentage

Current Asset
(In Millions) of total asset (In Millions) of total asset

Cash and cash equivalents 1.192.996 18,94% 1.195.995 21,05%

Time deposits 140.000 2,22% - 0,00%

Trade and non-trade receivables:

third parties 993.941 15,78% 913.991 16,09%

Inventories 1.417.084 22,50% 1.312.678 23,11%

Prepaid value added tax 2.530 0,04% 8.231 0,14%

Advance payments 215.694 3,43% 150.660 2,65%

Other current assets 3.029 0,05% 2.678 0,05%

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content/uploads/2022/07/WEB_Lowress_AR-Campina-2021.pdf

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https://www.diamondfoodindonesia.com/cfind/source/files/annual-

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