LETTER OF TRANSMITTAL

Wattyl Ltd.
Date: 29
th
May 2009.
Dear Judy Taylor,
Enclosed is the Financial Statement nalysis o! Wattyl Ltd as on 29 May 2009. This re"ort is #ased on
nnual re"orts o! last !i$e year. %t is cate&ori'ed mainly as acti$ity analysis, li(uidity analysis, sol$ency
analysis, "ro!ita#ility analysis and &ro)th analysis. nalysis is #ased on some ad*ustments in ori&inal
data )ith lo&ical assum"tions and rele$ant ratios and &ra"hs. Em"hasis is &i$en on understandin& and
com"arison o! com"any+s "er!ormance in these !i$e years.
% ho"e my analysis deli$ers ans)er to your (ueries. For any other in!ormation or clari!ication "lease
!eel !ree to contact me.
Than, you,
Financial nalyst
-
TABLE OF CONTENTS
E.ecuti$e Summary 1
1 %ntroduction 4
1.1 /ur"ose 4
1.2 Sco"e 4
1.3 Methodolo&y 4
1.4 Limitations 4
2 0om"any 1$er$ie) 5
3 2atio nalysis 6
3.1 /ro!ita#ility 2atios 6
3.2 cti$ity 2atios 8
3.3 Sol$ency 2atios 10
3.4 Li(uidity nalysis 13
3.5 3aluation 2atios 15
3.6 0o$era&e 2atios 16
4 Du/ont nalysis 18
5 0om"arati$e nalysis 19
6 /ros"ecti$e nalysis 21
2
Executive Su!"#
The "ur"ose o! this re"ort is to analy'e the !inancial re"ort o Wattyl Ltd to understand the soundness
and smoothness o! com"anies #usiness. nalysis is used to determine the !uture "ros"ects o! the
com"any+s #usiness.
nalysis is "urely #ased on ration analysis o! com"any+s accounts. lthou&h most o! the data is ta,en
!rom !inancial re"orts issued #y the com"any in "u#lic !or years 2004506 to 2007508 there are some
alterations made in them to determine the true !inancial "osition o! the com"any. d*ustments and
assum"tions ta,en are #ased on ustralian %nternational Financial 2e"ortin& Standards. 2e"ort &i$es in
de"th analysis o! li(uidity, sol$ency, "ro!ita#ility and acti$ities o! com"any )ith "ro"er reasonin& !or
any chan&es in trends.
%n the later "art some em"hasis is &i$en on com"arison )ith com"etitors and !uture "ros"ects o! the
com"any.
4
1. INTRO$%CTION
1.1. &%R&OSE
The "ur"ose o! this re"ort is to analy'e the !inancial "osition o! Wattyl Ltd. Main !ocus is &i$en to ratio
analysis o! last !i$e years to chec, the current "osition o! #usiness and !orecast the u"comin& &ro)th.
1.2. SCO&E
2e"ort !ocuses mainly on !inancial analysis o! Wattyl Ltd com"arin& it )ith its other com"etitors in
"aint industry. %n this re"ort % used 2atio analysis, Du/ont analysis, 0om"arati$e analysis and
/ros"ecti$e analysis.
1.3. MET'O$OLO()
Data used in this re"ort is "urely #ased on !inancial re"orts issued #y the Wattyl Ltd !rom 2006 to 2008
)ith some minor chan&es to reco$er true !ace o! the com"any. Data !or com"etitor com"anies and
industry in!ormation is &enerated !rom the data a$aila#le on res"ecti$e com"any+s )e#site.
1.4. LIMITATIONS
Due to limited a$aila#ility o! data there are lots o! calculations )hich are done on assum"tion #asis.
Data used in this re"ort is totally #ased on annual re"ort a$aila#le to "u#lic.
6
2. COM&AN) O*ER*IE+
Wattyl Ltd is one o! the second lar&est ustralian o)ned "aint manu!acturin& com"any. %ts o"erations
s"read across )hole ustralia and 9e) :ealand. 0om"any manu!actures "aints, $arnishes, lac(uers
and other s"ecial "ur"ose coatin&s. %t started its o"erations in -9-; )hen Mr. <.2. Walters de$elo"ed a
"roduct named 0rystal 3aneer !or !urniture "olishin& and it #ecome a &reat success
-
. The com"any has
already !aced &reat de"ression o! -980s and #oom o! !i!ties. 9o) com"any is !acin& the current
!inancial recession in mar,et. Wattyl &rou" consists o! Sol$er /aints, Wattyl 9e) :ealand and Wattyl
ustralia. %t &i$es em"loyment to o$er -000 )or,ers. 0om"any "roduces di!!erent #rands !or domestic,
commercial and industrial uses. So !ar it has sho)n &reat results e.ce"t under current recession. %ts
share "rice is runnin& lo) #ut constant !rom this year. Due to recent introduction o! international
com"anies li,e Ja"anese com"any 9i""on in ustralian mar,et and risin& ra) material cost Wattyl+s
mar,et share has !allen do)n. lso its #i& retailer =unnin&s has sto""ed shel$in& its "roducts. With
these "ro#lems com"any+s "er!ormance has &one do)n.
1 Wattyl Ltd, Wattyl nnual 2e"ort 2008: 20 u&ust 2008
;
3. RATIO ANAL)SIS
3.1. &ROFITABILIT) ANAL)SIS
/ro!ita#ility analysis is done to &et the "ro!ita#ility o! #usiness. This analysis tells a#out the trend in
"ro!it and its &ro)th. %t tells a#out the o$erall return on e(uity
2ET>29 19 E?>%T@
2eturn on e(uity sho)s the com"rehensi$e return earned #y shareholders. %t doesn+t include de#t
ca"ital #ecause )hile calculatin& return )e deduct the cost o! de#t ca"ital !rom re$enues. Wattyl earned
an almost constant return in last !i$e years as 2.;A, 2.BA, -0.BA and 8.9A in 200; to 2008
res"ecti$ely
2
. lthou&h the !i&ures sho) there is a si&ni!icant increase in year 2007 and 2008 #ut that is
not only #ecause o! hi&h earnin&s. %n year 2007 com"any slashed almost 22 million in its cost in a
ma*or reconstruction "ro*ect. %n s"ite o! hi&h earnin& in year 2007 com"any issued hi&h di$idend also
and its retained earnin&s is in ne&ati$e )hich a!!ected the shareholder e(uity in$ersely and increased
the return on e(uity. s in 2008 net income )ent do)n due to economic do)n!all return on e(uity !all
do)n shar"ly.
2ET>29 19 SSETS C T1TL 0/%TL
2eturn on assets is the total return di$ided #y total assets. Li,e 2eturn on E(uity 2eturn on ssets is
also hi&h in year 2007 and 2008.
2 ""endi. ;
B
The "attern o! return on asset is similar to return on e(uity.
E=%T M2D%9
E=%T mar&in ratio sho)s the relationshi" #et)een E=%T and total sales. This ratio sho)s ho) much
com"any is earnin& a!ter deductin& direct cost. 0om"any sho)s a constant increase in E=%T mar&in. %n
Wattyl there is a decreasin& trend in sales due to !all in housin& industry in ustralia #ut rise in
earnin&s has ,e"t it hi&h
4
.
s in the &ra"h E=%T mar&in is lo) in initial years #ut rose (uite incredi#le due to hi&h "ro!its in year
2007.
D21SS M2D%9
This ratio so)s the mar&in o! "ro!it earned #y the com"any. %t only includes o"eratin& e."enses. Wattyl
sho)s a constant mar&in around 69A in last !i$e years.
3 Wattyl Ltd, nnual 2e"ort 2007, 22 u&ust 2007
7
%ts cost o! sales is also $ery constant )ith an a$era&e o! ;0.7A o! sales )hich ,e"t &ross mar&in in a
constant ro)
6
.
3.2. ACTI*IT) ANAL)SIS
cti$ity analysis sho)s the ca"acity o! com"any to &enerate return !rom its resources and assets. This
ratio )ill hel" in calculatin& e!!iciency o! #usiness acti$ities and mana&ement.
S'ORT TERM ACTI*IT) RATIOS ,O&ERATIN(-
These ratios analyse short term acti$ities o! com"any li,e return on current assets an accounts
recei$a#le turno$er.
%93E9T12@ T>2913E2
%n$entory turno$er tells ho) (uic,ly com"any is a#le to con$ert its in$entory into mar,eta#le &oods
and sold out. <i&h $alue o! this ration sho)s &ood e!!iciency o! mana&ement. 2atio is calculated #y
di$idin& cost o! sales to a$era&e in$entory. %n$entory turno$er !or last !our year o! Wattyl is 2.B, 2.7,
2.B and 2.B res"ecti$ely
;
. %t sho)s that com"any+s "er!ormance in this acti$ity has not chan&ed a lot in
recent years. %n s"ite o! rise in ra) materials in recent years com"any is a#le to continue its "roduction
to same le$el. This can #e com"ared )ith a$era&e num#er o! days in$entory stays in stoc,.
4 ""endi. ;
5 i#id
8

s )e can see that turno$er in days is &oin& do)n #ecause o! entrEe o! some international com"anies
in ustralian mar,et. %n 2008 one o! the #i&&est retailer =unnin&s sto""ed sellin& !or Wattyl.
001>9TS 2E0E%3=LE T>2913E2
This ration sho)s ho) (uic,ly com"any can reco$er its cash !rom de#tors. <i&her the ratio #etter !oe
the com"any as slo) reco$ery leads to hi&h chances o! #ad de#ts. %! )e loo, to)ards Wattyl it is doin&
a#out !ine. Last !our year ratio )as on an a$era&e o! 7.7 times #ut reco$ery in days is !allin& as )e can
see in the chart. This is due to recent do)nturn in "ro"erty mar,et
B
. Lots o! constructors are sellin&
houses in $ery lo) rate so they can+t "ay#ac, (uic,ly. This can+t #e said as #ad "er!ormance o!
com"any as this trend is common in all other com"etitors.
LON( TERM ACTI*IT) RATIO ,IN*ESTMENT-
Lon& term acti$ity ratios ta,e consideration o! lon& term assets. These ratios are #ased on assets o! lon&
li!e and )hich a!!ects the !uture trends o! com"any.
6 Wattyl Ltd, nnual 2e"ort 2008, 20 u&ust 2008
9
SSET T>2913E2
This ratio sho)s ho) e!!iciently com"any+s assets are used in #usiness. %t also tells i! there is
o$erin$estment or underin$estment in assets. <i&her the ratio #etter it is. <i&h !i.ed asset turno$er
sho)s that com"any is usin& e!!iciently its assets to &enerate sales )here as lo) ratio sho)s
o$erin$estment in !i.ed assets. This can #e calculated #y di$idin& sales to a$era&e assets. Wattyl+s data
sho)s that there is an o$erin$estment in its assets. For analytical "ur"ose )e can com"are total asset
turno$er )ith !i.ed asset turno$er. Data !or "re$ious years is dis"layed in the &ra"h.
We can see that total asset turno$er is $ery lo) as com"ared to !i.ed asset turno$er. %n year 200B and
2007 com"any made ma*or reconstruction in the com"any structure
7
. We can also say that com"any has
$ery hi&h current assets as com"ared to !i.ed assets.
3.3. SOL*ENC) ANAL)SIS
%n this analysis )e analy'e lon& term sol$ency o! the com"any. We com"are com"any+s de#t )ith its
share ca"ital. Some com"anies choose to" ha$e hi&h de#t than share ca"ital as it may sa$e ta.. Some
com"anies "re!er hi&h share ca"ital as it is much chea"er !inancin& method. Moreo$er in this analysis
)e also *ud&e the "ayin& ca"acity o! com"any.
T1TL DE=T T1 T1TL 0/%TL%ST%19
%n this ratio )e calculate the "ercenta&e o! de#t in total ca"itali'ation. <i&h de#t in ca"ital can #e a ta.
sa$in& instrument #ut it can increase e."ense #urden on com"any.
%t is calculated #y di$idin& total de#t )hich includes #oth short and lon& term de#t #y total ca"ital.
Total ca"ital includes short term de#t, lon& term de#t and shareholder e(uity. %! )e loo, at the data o!
Wattyl it has an a$era&e 2BA o! de#t in its ca"ital. %n year 2007 and 2008 it increased #ecause in au&ust
7 Wattyl Ltd, nnual 2e"ort 200B, 22 u&ust 200B
-0
200B Wattyl rene&otiated o$erdra!t !acility )ith #an, and increased it to -00 million
8
. Wattyl increased
its lon& term #orro)in& in year 200B. There is also some e!!ect o! decreasin& shareholder e(uity.
s in the &ra"h )e can see it decreased in 200; #ut it increased in year 200B and 2007 )hen there are
lar&e lon& term #orro)in&s. lso in these later years share ca"ital !all shar"ly due to decrease in share
"rices.
L19D TE2M DE=T T1 T1TL 0/%TL%ST%19
%n this ratio )e com"are lon& term de#t to total ca"itali'ation. This ratio considers only lon& term
sol$ency as"ects. %! lon& term de#t is hi&h it sho)s that com"any has a hi&h ris, o! outsider "ayments
!or a lon& term. %! outside #orro)in&s is chea" than raisin& shareholder e(uity then this ratio can #e
considered as &ood. s in this case com"any is &oin& to sa$e money in ta. also. Lon& term de#t can #e
de#entures or lon& term loan !rom #an,s. %n Wattyl )e ha$e a a$era&e 2-A o! lon& term de#t in total
ca"itali'ation. =ut there are lots o! u"s and do)ns.
s in the &ra"h there is stee" !all in year 200B and a sudden increase in year 2007. %n year 2007
com"any #orro)ed almost 70 million )here as there )as only -.; million o! #orro)in&s in year 200B.
8 Wattyl Ltd, nnual 2e"ort 2008, 20 u&ust 2008
--
%n au&ust 200B com"any increased its o$erdra!t !acility to -00 million !or three years )hich hel"ed it to
raise more #orro)in&s as com"ared to "re$ious years.
DE=T T1 E?>%T@
De#t to e(uity com"ares "ro"ortion o! outsider to money to shareholder money in com"any !inance.
This ratio is used to set the ca"ital structure o! the com"any. <i&h de#t e(uity ratio sho)s there is more
de#t than shareholder e(uity. This sho)s com"any is ha$in& hi&h ris, o! de#t on lon& term. %n Wattyl
)e ha$e an a$era&e de#t e(uity o! 47A )hich is &ood. This sho)s that com"any is ha$in& less ris, o!
lon& term sol$ency, althou&h there is a sli&ht !all in year 2008.
s )e can see in the &ra"h there is a constant &ro)th !rom 200; to 2007 then a sli&ht !all in year 2008.
s )e ha$e already loo,ed in other ratios that there is an increase in #orro)in&s in year 2007 )hich
caused de#t e(uity ratio to rise. s the recent !all in share mar,et com"any has !elt o! maintainin& its
ca"ital structure )ith the hel" o! outsider money. %n year 2007 Wattyl too, around 70 million o! lon&
term loan to !und its #usiness.
SSET LE3E2DE
sset le$era&e sho)s the "ro"ortion o! total assets to shareholder e(uity. %t sho)s ho) much o! assets
are !inanced !rom direct shareholders !und. %! this ratio is hi&h it sho)s more o! !inance is !rom e(uity
than outside #orro)in&s. Lo)er the ratio #etter it is as it sho)s com"any is !unded lar&ely #y e(uity
!unds. %n Wattyl a$era&e asset le$era&e is -.9 )hich is (uite &ood. =ut i! )e loo, at the trend there is an
risin& trend in this ratio )hich is not &ood.
-2
s )e can see ratio is increasin& &radually )hich could #e the e!!ect o! !allin& $alue o! shareholders
e(uity. %n recent economic do)nturn com"any has lost too much $alue in its e(uity. E$ery year
com"any is loosin& its shareholder e(uity at a rate o! -0 million. Due to current economic do)nturn
share "rices o! com"any are in all time lo). 0urrently it is tradin& at around 0.60 cents as com"ared to
4.2; in 2007
9
.
3.4. LI.%I$%T) ANAL)SIS
s sol$ency analysis is #ased on lon& term li(uidity as"ect o! com"any in same )ay li(uidity analysis
chec,s i! com"any is a#le to meet its short term !inancial constraints. Li(uidity analysis hel"s in
chec,in& the short term li(uidity means )hether com"any ha$e enou&h !unds to meet its short term
lia#ilities or not. %ts main t)o ratios are current ratio and (uic, ratio.
0>22E9T 2T%1
0urrent ratio analy'e a#out the ca"acity o! #usiness to "ay o!! its lia#ilities arisin& )ithin a "eriod o!
one year. <i&her the ratio #etter it is as it sho)s com"any is ha$in& enou&h cash to "ayo!! its lia#ilities,
althou&h $ery hi&h current ratio also sho) o! lac, o! "ro"er usa&e o! com"any !unds. n ideal current
ratio is 2:- that is t)o times current assets and one times current lia#ilities. %n Wattyl also this ratio is
9 i#id
-4
on an a$era&e remains to 2.0B )hich is a &ood indication. =ut o$er the "eriod there are re&ular
!luctuations in the ratio.
s )e can see there is a re&ular #ut slo) !all in current assets due to !allin& le$el o! cash in Wattyl.
There is a sudden rise in current lia#ilities )hich re"resents the short term loan ta,en #y com"any o!
nearly 62 million and rest o! them is (uite same.
?>%0F 2T%1
?uic, ratio is one ste" ahead o! current ratio. %t sim"ly narro)s the conditions o! li(uidity
re(uirements. Whereas current ratio su#sidi'ed its li(uidity re(uirements !or around one year, (uic,
ratio analy'e it !or much shorter "eriod and also it narro)s the de!inition o! current assets to cash and
cash e(ui$alent only. Li,e current ratio here also hi&her the ratio #etter it is. %n Wattyl this ratio is not
so stron&.
s )e can see in the &ra"h most o! the time it is near -. Moreo$er in year 200B it )ent e$en lo) to 0.B;
)hich means com"any had !ar more lia#ilities than its recourses. <o) e$er )ith increase in "ro!it in
year 2007 and 2008 it im"ro$ed a lot. Still there is sli&ht reduction in year 2008 due to economic
do)nturn. %n "re$ious years !rom 2006 to 200B it !ell shar"ly. %n these years com"any+s returns also !all
-6
es"ecially in year 200; and 200B )hen com"any re"orted "ro!it o! around 6.2 million only. lso in
these years there is shar" !all in return on e(uity.
3.5. *AL%ATION ANAL)SIS
3aluation analysis is used to chec, the "er!ormance o! com"any+s #usiness. This analysis is mainly
used #y in$estors to !ind out the $alue o! #usiness.
E29%9D /E2 S<2E
Earnin& "er share re"resents the allocation o! earnin&s "er share. This ratio hel"s in *ud&in& the $alue
o! com"any as it also sho)s the net return o! com"any. Wattyl is &i$in& return on an a$era&e o! 0.-0
cents "er share. =ut there are lots o! u"s and do)n in "re$ious !i$e years. %n earlier years E/S )as $ery
lo) e$en ne&ati$e in 2006. %n year 2006 com"any su!!ered hu&e losses due to discontinuation o! its
o"erations in >nited States. %n later years com"any increased it &radually to -6 cents, althou&h )e can
see there is a sudden *um" in 2007 due to hi&h "ro!its earned in this year. Later on in year 2008
com"any !ailed to maintain that &ro)th due to economic do)nturn.
D%3%DE9D /E2 S<2E
s an in$estor di$idend is $ery im"ortant #ecause this is the only return shareholder &ets holdin& that
share. hi&h di$idend "ayin& com"any is o!ten attracti$e !or in$estment "ur"ose than a non di$idend
or lo) di$idend "ayin& com"any. Wattyl &a$e (uite !luctuatin& di$idends in these !i$e years. From
2006 to 200B it &a$e -7 cents, 29 cents and -6 cents res"ecti$ely #ut in year 2007 it &a$e a )hoo"in&
;- cents a share. @ear 2007 )as $ery contro$ersial !or com"any as t)o com"anies tried to ta,e o$er its
-;
#usiness. %n year 2007 Wattyl announced that it )ill &i$e 60 cent di$idend i! lco E(uity "artner !ails
its ta,eo$er #id as Wattyl )as not con$inced )ith lco+s #id "rice
-0
.
s in the a#o$e &ra"h )e can see com"any &a$e hi&h di$idend in 2007 #ut a&ain it !all do)n in 2008
due to shrin,in& economy. %! )e com"are it to the income earned in corres"ondin& years )e can see
that com"any "aid hi&h di$idend in 200; )hich also caused lo) retained earnin&s in later years. Where
as in 2007 )hen com"any "er!ormed #rilliantly &a$e di$idend on same "ro"ortion as in 200B. @ear
2008 )as not &ood !or com"any, its earnin&s !all and in antici"ation o! comin& recession it &a$e lo)
di$idend.
3.6. CO*ERA(E RATIO ANAL)SIS
0o$era&e ratio sho)s ho) much earnin&s )e ha$e to co$er com"any+s e."ense.
E=%T T%MES %9TE2EST 013E2DE
This ratio sho)s "osition o! earnin&s to co$er interest e."ense. %! this ratio is hi&h it sho)s com"any
has enou&h earnin&s to co$er its interest char&es. Wattyl sho)s (uite handsome co$era&e ratio o! 4.09
on an a$era&e, althou&h it came a!ter lots o! !luctuation.
10 2och!ort Scott, Glco retreats !rom Wattel DuelH, htt":II))).smh.com.auIne)sI#usinessIallco5
retreats5!rom5)attyl5duelI200BI04I29I--6466-2-B4B9.html J0ollected on 2B May 2009K.
-B
s )e can see in the &ra"h it )as ne&ati$e in year 2006 due to hi&h losses su!!ered #y the com"any in
this year a!ter discontinuin& its o"eration in >nited States. Later on it a&ain !all a #it in 200B #ecause o!
#ad "er!ormance in 200B #ut "lun&ed u" a&ain in 2007 )ith o$er)helmin& results in this year. @ear
2008 )as the startin& o! another di!!icult trend o! de"ression in housin& industry in ustralia.
-7
4. $%&ONT ANAL)SIS
Du/ont analysis is used to loo, return on e(uity in a more ela#orate )ay. ccordin& to !i$e !actors
Du/ont model return on e(uity is #ased on !i$e !actors. These are
Ta. =urden: This !actor calculates ta. e!!ect on earnin&s. Ta. #urden remains moreo$er
constant.
%nterest =urden: %nterest #urden calculates "ro"ortion o! interest in E=%T
1"eratin& Mar&in: This mar&in calculates o"eratin& e."ense "ro"ortion to sales.
sset Turno$er: This ratio sho)s the e!!iciency o! assets. <o) e!!iciently assets are used to
&enerate returns
Le$era&e: Le$era&e calculates ho) many assets are internally !unded.
F!ct/" F/"u0! 2004 2005 2006 2001 2008
Ta. =urden 9et %ncomeIE=T -.69 0.B2 0.92 0.B7 0.B9
%nterest =urden E=TIE=%T -.-2 0.7- 0.;; 0.79 0.74
1"eratin& mar&in E=%TISales 50.04 0.02 0.02 0.07 0.0;
sset Turno$er SalesI$era&e Total ssets -.44 -.68 -.69 -.;-
Le$era&e $era&e Total ssetsIE(uity -.90 -.84 2.-9 2.-7
ROE 0.04 0.04 0.-2 0.09
%! )e com"are return on e(uity &enerated #y Du/ont analysis )ith return on e(uity calculated #y
normal ratio, )e can+t much di!!erence e.ce"t in year 200; and 2007. %n #oth o! these years there is
hi&h !luctuation in net income. %n year 200; ta. #urden and interest #urden decreased and o"eratin&
mar&in is $ery lo) due to !all in sales. %n year 2007 a&ain there is increase in interest #urden )hich
caused in "ullin& 21E do)n)ard.
-8
5. COM&ARITI*E ANAL)SIS
%n com"arati$e analysis )e )ill com"are Wattyl )ith its other com"etiti$e com"anies in mar,et. Wattyl
is a #i& com"any and is ran,ed as second #i&&est "aint manu!acturer o! ustralia. We can com"are
Wattyl )ith 1rica 0onsumer /roducts. 1rica 0onsumer /roducts controls other #i& #rands li,e Dulu.,
=ritish /aints, =er&er etc in ustralia and 9e) :ealand
--
. 1rica 0onsumer /roducts has $ery $ast
#usiness structure and it holds &ood "osition in ustralian mar,et. =y com"arin& )ith this com"any
)e can analy'e ho) other com"anies are "er!ormin& under current industry trends as com"ared to our
Wattyl.
SLES 2E39>E
<ere )e )ill calculate the trend o! sales re$enue in these t)o com"anies. Due to limited a$aila#ility o!
data !or 1rica 0onsumer /roducts )e )ill #e com"arin& !or t)o yeas only.
S!0e2 Reve3ue 2001 2008I3c"e!2e4
1rica 0onsumer /roducts 82B.4 87;.6 BA
Wattyl 62B.8 620.4 52A
s in the ta#le )e can see that there is a hu&e &a" in the sales o! 1rica and Wattyl. 1rica is a #i&
com"any and data a$aila#le here includes lots o! other com"anies controlled #y 1rica. So instead o!
com"arin& directly )e can com"are the increase or decrease in these !i&ures. %n s"ite o! decreasin&
trend in housin& industry 1rica mana&ed to increase its sales #y BA as com"ared to Wattyl )hose sales
!all #y 2A. The reason #ehind this may #e in year 2008 =unnin&s sto""ed sellin& Wattyl+s "roduct
)hich caused a hu&e set#ac, on its sales !i&ures moreo$er !all in ustralian <ousin& %ndustry added
some more "ressure on sales.
E=%T
E=%T is the income earned #y com"any #e!ore "ayment o! any interest and ta.. This is a &ood measure
to com"are earnin&s o! t)o com"anies as it also &i$es a si&ht o! internal e."enses o! com"any. Due to
lac, o! in!ormation )e can+t analy'e the E=%T o! 1rica )ith E=%T o! Wattyl. =ut )e can chec, the
chan&e in E=%T to com"are the trend o! earnin&s in #oth com"anies. We can com"are it !or "ast !i$e
years.
11 1rica Ltd, 1rica =usiness 1$er$ie) 2008, 9o$em#er 2008
-9
%n the chart )e can see a consistency in the trend o! 1rica. There is a sli&ht increase in #oth com"anies
in year 2007 #ut !luctuation in Wattyl is more than in 1rica. s )e can see Wattyl had $ery lo)
earnin&s in year 2006 and 200;. 0om"any su!!ered some losses in these years due to discontinuation o!
its o"erations in >.S. so its E=%T )as in ne&ati$e as com"ared to its com"etitor. s in 2007 Wattyl
increased its earnin&s to a &reat e.tent.
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6. &ROS&ECTI*E ANAL)SIS
%n "ros"ecti$e analysis )e !orecast the !uture earnin&s and &ro)th o! com"any. %n current conditions
)hen economy is )orsenin& day #y day it is su""osed to &o !ar do)n till year 20-0 )e can only e."ect
that Wattyl mi&ht not "er!orm )ell in these conditions. s )e ha$e already seen that com"any+s sales
ha$e started to !all !rom year 2008. From year 200B sales &ro)th rate is continuously !allin& and in
year 2008 it )ent in ne&ati$e
-2
. 0om"any+s re"ort sho)s that there is more to come and till mid year
com"any is sho)in& si&ns &oin& in hu&e losses #ecause o! mar,et do)n!all
-4
. lthou&h there are some
&ood o!!ers comin& to Wattyl as its #rand Dranosite is chosen !or Sails Lu.ury "artments at Forster at
9SW coast also the ne) tele$ision sho) G<ome madeH on channel nine can #oost its sales
-6
. With
these !eatures )e can say that its sales )ouldn+t &o as lo) #ut it still it )ill #e in ne&ati$e -A. s o!
E=%T it could &o lo) in comin& years. %n year 20-2 it is !orecasted to #e $ery )orse as in this year it
could &o in loss. The same trend )ill #e !ollo)ed in net income and it )ill diminish in comin& years. %n
#alance sheet % ha$e too, short term de#t as #alancin& !i&ure so it )ould #e ina""ro"riate to do any
analysis re&ardin& that. ccount recei$a#les are tendin& to #e increased as de#tors )ill ta,e more time
to re"ay due hard times in their #usiness also. 1ther assets )ill remain moreo$er constant. 1n an
a$era&e there is a tendency o! do)n !all in o$erall #usiness.
12 ""endi. ;
13 2och!ort Scott, GFears !or Wattyl a!ter another do)n&radeH,
htt":II#usiness.smh.com.auI#usinessI!ears5!or5)attyl5a!ter5another5do)n&rade5200902-45
874e.html J0ollected 27 May 2009K
14 htt":II))).)attyl.com.auI/a&esIde!ault.as". J0ollected 27 May 2009K
2-
BIBLIO(RA&')
1. Wattyl Ltd, nnual 2e"ort 2008, 20 u&ust 2008
2. Wattyl Ltd, nnual 2e"ort 2007, 22 u&ust 2007
3. Wattyl Ltd, nnual 2e"ort 200B, 22 u&ust 200B
4. 1rica Ltd, 1rica =usiness 2e"ort 2008, 9o$em#er 2008
5. 2och!ort Scott, GFears !or Wattyl a!ter another do)n&radeH,
htt":II#usiness.smh.com.auI#usinessI!ears5!or5)attyl5a!ter5another5do)n&rade5200902-45
874e.html, J0ollected 27 May 2009K
6. Wattyl Ltd, htt":II))).)attyl.com.auI/a&esIde!ault.as". J0ollected 27 May 2009K
7. 2och!ort Scott, Glco retreats !rom Wattel DuelH,
htt":II))).smh.com.auIne)sI#usinessIallco5retreats5!rom5)attyl5
duelI200BI04I29I--6466-2-B4B9.html J0ollected on 2B May 2009K
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