Presented To: Mr.

Mukhtar Presented By:
  Mubashar Sharif Umer Shahzad

Hamza

Maple Leaf Cement Factory Limited

Company Introduction

Came into being on 1st July 1992 MLCF WCIL PCGL MLCFL
Kohinoor Group

Financial Statements Analysis
Analysis could be performed in three ways, Economic Analysis Industry Analysis Firm Analysis

1.Economic Analysis
Economic indicators:
GDP growth Inflation Per Capita Income ($1085,Rs.7142)

Real GDP Growth
The real GDP growth in financial year 2008 is found to be 5.8 percent that was expected at 7.2 percent. This deficiency is due to:  Unexpected weakness in commodity producing sectors, leads to the revival of inflationary pressure.  High energy cost.  Large external current account deficit.
Trade balance $1.96 bn Exports Imports $1.53 bn $2.72 bn

Inflation
The inflation rate in the economy in financial year 2008 is 10.5 percent that is very high as compared to the last year 7.8 percent.  Low Demand  Inability to reduce prices of petroleum products.  High international commodity prices  Domestic demand for construction inputs (e.g. metal, copper,etc.)

Oil prices changes Inflationary pressures Higher interest rates. High international commodity prices (e.g. steel, wheat etc.)

Prevailing inflation rates
INFLATION RATE
20 15
2005-06H

10 5 0 CPI Food Group Non Food Group

2006-07H 2007-08H

Industry Analysis

Learning Objective in Industry Analysis

To determine the opportunities and threats that exists for firms within a competitive environment. When analyzing an industry, taking all factors into account, should we as a corporation, enter this industry? The end result will be an understanding of what it takes to compete successfully.

Forces

Threat of New Entrants Suppliers Buyers Substitute Products

Obstacles of Growth of Local industry
    

Expensive New Technology Lack of Trained Teachers Lack of skilled Personnel Government Regulations Economic Situations

Attract New Firm in Industry

Government Rules & Regulations Policy must be set for the investors in the industry in case of taxation. Availability of skilled Labor Cheaper new technology

Affect on Industry and Firm

GDP growth decreased the growth of per capita cement consumption from 22.2% in FY07 to 2.9% in FY08. Pakistan’s Cement sector is correlated to GDP growth. In the past years, Pakistan’s cement sector witnessed a robust growth due to the country’s strong economic growth.

However, in FY08, lower GDP growth has affected the construction activity in the country and thus affected the demand for cement in local market. Sales volume achieved during the first quarter was 749,492 mt of grey cement, 18,664 mt white cement.(FY08-373,830..FY07-15003) Despite these high sales volume, the company suffered losses.

Reasons of losses
 

 

Higher production costs. Due to inflationary spiral afflicting our economy. Huge input cost of coal. Rapid depreciation in exchange rate and mounting interest rate. Which adversely affected operating margins of company.

     

High federal and provisional taxes Very low selling prices Cut throat domestic competition High export expenses Exorbitant fuel cost Rise in electricity charges

Cost of production
Fuel and power raw material 20% 40% 11% 6% 10% 3% 10% depreciation other overhead admin and selling finacial charges salaries

Firm Analysis

Maple Leaf Cement Factory Limited

Mission Statement

“The Maple Leaf Cement Factory Limited stated mission is to achieve and then remain as the most progressive and profitable company in Pakistan in terms of industry standards and stakeholders interests”

Board of Directors
     

Mr. Tariq Sayeed Saigol (Chairman) Mr. Sayeed Tariq Saigol (Chief Executive) Mr. Waleed Tariq Saigol Ms. Jahanara Saigol Mr. S. M. Imran Mr. Zamiruddin Azar

Sales Graph

Total Sale
10000000 8000000 Sale 6000000 4000000 2000000 0
2008 2007 2006

Local & Export Sale
5000000 4000000 3000000 2000000 1000000 0 2008 2007 Export Local

Years

Liquidity Ratios
Ratios Current Ratio 2009 0.51:1 2008 0.81 :1 2007 1.08:1

The decrease in ratio of FY08 is due to the increase in current liabilities (96%) while current assets were increased only by 48%.

Current Ratio Graph
CURRENT RATIO
1.50

TIMES

1.00 Series1 0.50

2004 2005 2006 YEARS 2007 2008

Profitability Ratios
Ratios
2008 2007 2006

Gross Profit Margin Net Profit Margin Return on Asset Return on Equity

16.94%

8.35%

37.63%

-8.65% -2.59% -8.09%

1.13% 0.18% 0.47%

18.55% 5.53% 14.02%

Profitability Ratios

The Profit of MLCFL declined drastically because of an excess supply situation in industry and falling net retention prices. Financial charges formed 20% of production cost increased by 96% because of the increse interest rate in the economy.

profit (loss) afte r taxation
1,200,000 900,000 600,000 300,000 (300,000) (600,000) (900,000) 2,006 2,007 2,008 Series 1

4200000 3500000 2800000 2100000 1400000 700000 0 Fuel &power Raw &packing Material Salaries Depreciation & Amortization Admin & Selling Financial charges

Production cost (2007& 2008)

2008

2007

Asset Management Ratios
Ratios
2008 2007 2006

Inventory turnover Ratio Days to sell inventory Days sale Outstanding Operating Cycle Total asset turnover

14.96

9.20

17.72

24.06 34.24 58.30 0.30

39.13 18.88 58.01 0.16

20.31 10.31 30.62 0.30

Asset Management

The inventory turnover rate increase showing that it took lesser days for the company to sell its stock trade. However the company average collection period of account receivable increase and so did its operating cycle. The total asset turnover ratio Improved in FY08 indicating that the company was able to generate sufficient sales volume given it total asset investment.

Asset Management Graph
Asset management
70.00 60.00 50.00 times 40.00 30.00 20.00 10.00 2008 2007 2006 2005 ye ars Days sales outstanding Inventory Turnover in Days operating cycle(days)

Debt Management Ratios

Ratios

2008

2007

2006

Debt to asset Debt / Equity (times) Time interest earned (times) Long Term debt to equity

0.68 2.13 0.25 0.03

0.62 1.61 0.59 0.98

0.61 1.53 5.79 1.04

Debt Management

Firms profitability decline when economy takes a downturn and in tight monitory policy. As interest rate increase in FY08 the cost of borrowing for the firm has increased. The firm can’t pay for its expenses through earnings and will have to take extra debt to pay its obliogation.

Debt Management Graph
Debt Management
7.00 6.00 5.00 4.00 3.00 2.00 1.00 2005 2006 years 2007 2008 Debt To Asset Debt To Equity Time interst earned

BALANCE SHEET
Rupees in “000”

Non Current Assets Property, Plant And Equipment Intangible Assets Investments Loans to employees Deposits and prepayments Total

2008 20,081,448 15,082 6,121 54,014 20,156,665

2007 19,330,866 4,578 6,373 43,200 19,385,017

2006 16,088,505 368,881 7,127 15,923 16,480,436

BALANCE SHEET
Current Assets Stores,Spare and loose tools Stock in trade trade debts Fair value derivative financial instruments Loans and advances Investments 2008 33,25,744 433,952 743,366 365,748 82,814 734,859 2007 2,014,580 369,709 194,587 242,226 85,544 944,669 2006 1,847,926 200,946 163,459 299,257 -

BALANCE SHEET
Current Assets Deposits and short term prepayments Accrued profit Sale tax, customs and excise duty Due from gratuity fund trust Other receivables Taxation - net Cash and bank balances TOTAL ASSETS 2008 54,532 763 57,769 9,768 21,780 44,907 118,894 5,994,896 2007 15,373 402 37,742 8,539 1,198 14,029 123,359 4,051,957 2006 7,314 559 34,611 9,452 100,938 2,664,462

BALANCE SHEET
EQUITY AND LIABILTIES 2008 2007 2006

Share Capital and Reserves Authorized Capital Issued, subscribed and paid up capital Reserves Unappropriated profit

5,000,000 4,264,108 4,644,355 (547,574) 8,360,889

5,000,000 4,264,108 4,457,328 271,601 8,993,037

5,000,000 3,519,581 3,063,529 972,594 7,555,704

Total Equity

BALANCE SHEET
NON - CURRENT LIABILTIES Loans from related parties Long Term loans and finance Redeemable capital Syndicated term finance Liabilities against assets subject to finance lease 2008 35,224 241,539 8,000,000 1,000,000 957,434 2007 250,000 8,576,657 268,040 2006 7,868,948 12,226

BALANCE SHEET
NON - CURRENT LIABILTIES Lease finance advances and accured interest thereon Long Term deposits 2008 2007 2006

2,582

979,676 2,702

76,146 2,977

Deferred taxation Employee' compensated absences TOTAL NON -CURRENT LIABILTIES

154,741 16,688 10,408,208

897,183 13,192 10,687,450

971,128 10,250 8,939,675

BALANCE SHEET
CURRENT LIABILTIES Current portion of: redeemable capital Long Term loans and finances syndicated term finance Liabilities against assets subject to finance lease 2008 1,080,000 188,011 2007 1,792,519 13,858 2006 41,650 538,530 4,481

BALANCE SHEET
CURRENT LIABILTIES Short term finance Trade and other payable Accured profit and interest / mark-up Taxation -net Dividends TOTAL EQUITY AND LIABILTIES 2008 3,369,738 2,495,559 194,568 54,588 26,151,561 2007 797,585 719,311 378,675 54,539 23,436,974 2006 947,160 752,172 279,112 31,828 54,586 19,144,898

BALANCE SHEET
CURRENT LIABILTIES Short term finance Trade and other payable Accured profit and interest / mark-up Taxation -net Dividends TOTAL EQUITY AND LIABILTIES 2008 3,369,738 2,495,559 194,568 54,588 26,151,561 2007 797,585 719,311 378,675 54,539 23,436,974 2006 947,160 752,172 279,112 31,828 54,586 19,144,898

INCOME STATEMENT
2008 Sale Less: cost of sale Gross profit Administrative expenses Distribution cost Other operating expenses 7,815,829 (6,491,999) 1,323,830 (121,236) (834,849) (24,838) 2007 3,711,081 (3,401,188) 309,893 (67,291) (69,021) (18,371) 2006 5,709,792 (3,561,212) 2,148,580 (60,474) (20,961) (118,024)

INCOME STATEMENT
2008 Other operating income 105,656 2007 43,224 198,434 (338,453) (140,019) 2006 26,671 1,975,792 (340,978) 1,634,814

Operating profit from operation 448,563 Finance cost Profit / (Loss) before taxation Taxation Current: Deferred: Profit (loss) after taxation Earning Per Share (1,812,807) (1,364,244)

44,815 (732,924) (676,135) (1.96)

(94,77) (172,589) (42,047) (0.03)

(28,536) (547,038) (1,059,240) 3.38

COMMON SIZE ANALYSIS

BALANCE SHEET
Non Current Assets Property, Plant And Equipment Intangible Assets Investments Loans to employees Deposits and prepayments 2008 76.79% 0.06% 0.00 0.02% 0.21% 2007 82.48% 0.02% 0.00 0.03% 0.18% 2006 84.04% 0.00 1.93% 0.04% 0.08%

BALANCE SHEET
Current Assets Stores, Spare and loose tools Stock in trade trade debts Fair value derivative financial instruments Loans and advances Investments 2008 12.72% 1.66% 2.84% 1.40% 0.32% 2.81% 2007 8.60% 1.58% 0.83% 1.03% 0.36% 4.03% 2006 9.65% 1.05% 0.85% 0.00 1.56% 0.00

BALANCE SHEET
Current Assets Deposits and short term prepayments Accrued profit Sale tax, customs and excise duty Due from gratuity fund trust Other receivables Taxation - net Cash and bank balances TOTAL ASSETS 2008 0.0029% 0.22% 0.04% 0.04% 0.08% 0.17% 0.45% 100% 2007 0.07% 0.0017% 0.16% 0.04% 0.01% 0.06% 0.53% 100% 2006 0.04% .0029% 0.18% 0.00 0.05% 0.00 0.53% 100%

BALANCE SHEET
EQUITY AND LIABILTIES 2008 2007 2006

Share Capital and Reserves Authorized Capital Issued, subscribed and paid up capital Reserves Unappropriated profit

---------16.31% 17.76% -2.09% 31.97%

----------18.19% 19.02% 1.16% 38.37%

-----------18.38% 16.00% 5.08% 39.47%

Total Equity

BALANCE SHEET
NON - CURRENT LIABILTIES Loans from related parties Long Term loans and finance Redeemable capital Syndicated term finance Liabilities against assets subject to finance lease 2008 0.13% 0.92% 30.59% 3.82% 3.66% 2007 1.07% 36.59% 0.00 0.00 1.14% 2006 0.00 41.10% 0.00 0.00 0.06%

BALANCE SHEET
NON - CURRENT LIABILTIES Lease finance advances and accured interest thereon Long Term deposits Deferred taxation Employee' compensated absences 2008 0.00 0.01% 0.59% 0.065 2007 2.90% 0.01% 3.83% 0.06% 2006 0.39% 0.02% 5.07% 0.05%

BALANCE SHEET
CURRENT LIABILTIES Current portion of: redeemable capital Long Term loans and finances syndicated term finance Liabilities against assets subject to finance lease 2008 0.00 0.00 4.13% 0.72% 2007 0.00 7.65% 0.00 0.06% 2006 0.22% 2.81% 0.00 0.02%

BALANCE SHEET
CURRENT LIABILTIES Short term finance Trade and other payable Accured profit and interest / mark-up Taxation -net Dividends TOTAL EQUITY AND LIABILTIES 2008 12.89% 9.54% 0.74% 0.00 0.21% 100% 2007 3.40% 3.07% 1.62% 0.00 0.23% 100% 2006 4.95% 3.93% 1.46% 0.17% 0.29% 100%

INCOME STATEMENT
2008 Sale Less: Cost of sale Gross profit Administrative expenses Distribution cost Other operating expenses 100% 83.06% 16.94% 1.55% 10.68% 0.32% 2007 100% 91.65% 8.35% 1.81% 1.86% 0.50% 2006 100% 62.37% 37.63% 1.06% 0.37% 2.07%

INCOME STATEMENT
2008 Other operating income 1.35% 2007 1.16% 5.35% 9.12% -3.77% 2006 0.47% 34.60% 5.97% 28.63%

Operating profit from operation 5.74% Finance cost Profit / (Loss) before taxation Taxation Current: Deferred: Profit (loss) after taxation 23.19% -17.45%

0.57% 9.38% -8.65%

0.26% 4.655 1.13%

0.50% 9.58% 18.55%

INDEX ANALYSIS

BALANCE SHEET
Non Current Assets Property, Plant And Equipment Intangible Assets Investments Loans to employees Deposits and prepayments 2008 124.82% 0.00 0.00 85.88% 339.22% 2007 120.15% 0.00 0.00 89.42% 271.31% 2006 100% 0.00 100% 100% 100%

BALANCE SHEET
Current Assets Stores, Spare and loose tools Stock in trade trade debts Fair value derivative financial instruments Loans and advances Investments 2008 179.97% 215.95% 454.77% 0.00 27.67% 0.00 2007 109.02% 183.98% 119.04% 0.00 28.59% 0.00 2006 100% 100% 100% 0.00 100% 0.00

BALANCE SHEET
Current Assets Deposits and short term prepayments Accrued profit Sale tax, customs and excise duty Due from gratuity fund trust Other receivables Taxation - net Cash and bank balances TOTAL ASSETS 2008 745.58% 136.49% 166.91% 0.00% 230.43% 0.00 117.79% 136.60% 2007 210.19% 71.91% 109.05% 0.00 12.67% 0.00 122.21% 122.42% 2006 100% 100% 100% 0.00 100% 0.00 100% 100%

BALANCE SHEET
EQUITY AND LIABILTIES 2008 2007 2006

Share Capital and Reserves Authorized Capital Issued, subscribed and paid up capital Reserves Unappropriated profit

---------121.15% 151.60% -56.30% 110.66%

----------121.15% 145.50% 27.93% 119.02%

-----------100% 100% 100% 100%

Total Equity

BALANCE SHEET
NON - CURRENT LIABILTIES Loans from related parties Long Term loans and finance Redeemable capital Syndicated term finance Liabilities against assets subject to finance lease 2008 0.00 3.07% 0.00 0.00 7831.13% 2007 0.00 108.99% 0.00 0.00 2192.38% 2006 0.00 100% 0.00 0.00 100%

BALANCE SHEET
NON - CURRENT LIABILTIES Lease finance advances and accured interest thereon Long Term deposits Deferred taxation Employee' compensated absences 2008 0.00 86.73% 15.93% 162.81% 2007 916.67% 90.76% 92.39% 128.70% 2006 100% 100% 100% 100%

BALANCE SHEET
CURRENT LIABILTIES Current portion of: redeemable capital Long Term loans and finances syndicated term finance Liabilities against assets subject to finance lease 2008 0.00 0.00 0.00 4195.74% 2007 0.00 332.85% 0.00 309.26% 2006 100% 100% 0.00 100%

BALANCE SHEET
CURRENT LIABILTIES Short term finance Trade and other payable Accured profit and interest / mark-up Taxation -net Dividends TOTAL EQUITY AND LIABILTIES 2008 355.77% 331.78% 69.71% 0.00 100.004% 136.60% 2007 84.21% 95.63% 135.67% 0.00 99.91% 122.42% 2006 100% 100% 100% 100% 100% 100%

INCOME STATEMENT
2008 Sale Less: Cost of sale Gross profit Administrative expenses Distribution cost Other operating expenses 136.88% 182.30% 61.61% 200.48% 3982.87% 21.04% 2007 65% 95.51% 14.42% 111.27% 329.28% 15.57% 2006 100% 100% 100% 100% 100% 100%

INCOME STATEMENT
2008 Other operating income 396.15% 2007 162.06% 10.04% 99.26% -8.56% 2006 100% 100% 100% 100%

Operating profit from operation 22.70% Finance cost Profit / (Loss) before taxation Taxation Current: Deferred: Profit (loss) after taxation 531.65% -83.45%

-157.05% 133.98% -63.83%

33.21% 31.55% 3.97%

100% 100% 100%

The End

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