Annual Report Analysis of Lanka Milk Food PLC.

 

HORIZONTAL ANALYSIS

Horizontal Analysis is a technology that use to identify the Percentage Change of the Elements of Financial Statements comparing to the previous year Data.

 

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

 

2019

For the Year Ended 31 March

2019	Company		Change	%Change
	2019	2018
	Rs.000's	Rs.000's
Revenue	1,922,137	1,840,687	81,450	4.4%
Cost of Sales	-1,895,416	-1,739,751	-155,665	8.9%
Gross Profit	26,721	100,936	-74,215	-73.5%
Other Operating Income	516,741	466,777	49,964	10.7%
Administrative Expenses	-196,976	-180,567	-16,409	9.1%
Distribution Expenses	-134,592	-137,362	2,770	-2.0%
Other Operating Expenses	-11,292	-261	-11,031	4226.4%
Profit from Operations	200,602	249,523	-48,921	-19.6%
Finance Income	8,966	33,557	-24,591	-73.3%
Finance Expense	-94,163	-4,734	-89,429	1889.1%
Net Finance Income / (Expense)	-85,197	28,823	-114,020	-395.6%
Profit / (Loss) Before Income Tax Expense	115,405	278,346	-162,941	-58.5%
Income Tax Expense	-13,922	-1,945	-11,977	615.8%
Profit / (Loss) for the Year	101,483	276,401	-174,918	-63.3%
Other Comprehensive Income
Items that are or may be reclassified to Profit or Loss
Net Change in Fair Value of Equity Securities - at FVOCI /Available for Sale Investments	-3,386,323	182,485	-3,568,808	-1955.7%
Items that will never be reclassified to Profit or Loss
Actuarial Gain / (Loss) on Retirement Benefit Obligations	8,033	-3,007	11,040	-367.1%
Tax on Other Comprehensive Income	-2,249	842	-3,091	-367.1%
Other Comprehensive Income / (Expense) for the Year	-3,380,539	180,320	-3,560,859	-1974.7%
Total Comprehensive Income / (Expense)	-3,279,056	456,721	-3,735,777	-818.0%

 

There is a noticeable decline in year-end profit when comparing to the 2018. Significance increases in Operating Expenses, Finance Expenses, and Income Tax Expenses are negatively impact on Year-end Profit.

 

2018

For the Year Ended 31 March

2018	Company		Change	%Change
	2018	2017
	Rs.000's	Rs.000's
Revenue	1,840,687	2,053,427	-212,740	-10.4%
Cost of Sales	-1,739,751	-1,898,491	158,740	-8.4%
Gross Profit	100,936	154,936	-54,000	-34.9%
Other Operating Income	466,777	376,899	89,878	23.8%
Administrative Expenses	-180,567	-184,999	4,432	-2.4%
Distribution Expenses	-137,362	-128,414	-8,948	7.0%
Other Operating Expenses	-261	-232	-29	12.5%
Profit from Operations	249,523	218,190	31,333	14.4%
Finance Income	33,557	17,257	16,300	94.5%
Finance Expense	-4,734	-18,528	13,794	-74.4%
Net Finance Income / (Expense)	28,823	-1,271	30,094	-2367.7%
Profit / (Loss) Before Income Tax Expense	278,346	216,919	61,427	28.3%
Income Tax Expense	-1,945	16,924	-18,869	-111.5%
Profit / (Loss) for the Year	276,401	233,843	42,558	18.2%
Other Comprehensive Income
Items that are or may be reclassified to Profit or Loss
Net Change in Fair Value of Equity Securities - at FVOCI /Available for Sale Investments	182,485	1,161,622	-979,137	-84.3%
Items that will never be reclassified to Profit or Loss
Actuarial Gain / (Loss) on Retirement Benefit Obligations	-3,007	-813	-2,194	269.9%
Tax on Other Comprehensive Income	842		842
Other Comprehensive Income / (Expense) for the Year	180,320	1,160,809	-980,489	-84.5%
Total Comprehensive Income / (Expense)	456,721	1,394,652	-937,931	-67.3%

Even though Revenue is reduced comparing to the 2017, Company has managed to record an increased Year-end Profit in 2018.

 

2017

For the Year Ended 31 March

2017	Company		Change	%Change
	2017	2016
	Rs.000's	Rs.000's
Revenue	2,053,427	2,394,015	-340,588	-14.2%
Cost of Sales	-1,898,491	-2,171,741	273,250	-12.6%
Gross Profit	154,936	222,274	-67,338	-30.3%
Other Operating Income	376,899	198,177	178,722	90.2%
Administrative Expenses	-184,999	-172,743	-12,256	7.1%
Distribution Expenses	-128,414	-186,768	58,354	-31.2%
Other Operating Expenses	-232	-6,749	6,517	-96.6%
Profit from Operations	218,190	54,191	163,999	302.6%
Finance Income	17,257	807	16,450	2038.4%
Finance Expense	-18,528	-92,468	73,940	-80.0%
Net Finance Income / (Expense)	-1,271	-91,661	90,390	-98.6%
Profit / (Loss) Before Income Tax Expense	216,919	-37,470	254,389	-678.9%
Income Tax Expense	16,924	20,014	-3,090	-15.4%
Profit / (Loss) for the Year	233,843	-17,456	251,299	-1439.6%
Other Comprehensive Income
Items that are or may be reclassified to Profit or Loss
Net Change in Fair Value of Equity Securities - at FVOCI /Available for Sale Investments	1,161,622	-1,302,080	2,463,702	-189.2%
Items that will never be reclassified to Profit or Loss
Actuarial Gain / (Loss) on Retirement Benefit Obligations	-813	-1,005	192	-19.1%
Tax on Other Comprehensive Income			0
Other Comprehensive Income / (Expense) for the Year	1,160,809	-1,303,085	2,463,894	-189.1%
Total Comprehensive Income / (Expense)	1,394,652	-1,320,541	2,715,193	-205.6%

 

Increased Operation Income and Finance Income has led to a huge increase in Year-end Profit as 2016 has come up with a loss.

2016

For the Year Ended 31 March

2016	Company		Change	%Change
	2016	2015
	Rs.000's	Rs.000's
Revenue	2,394,015	1,957,046	436,969	22.3%
Cost of Sales	-2,171,741	-1,894,013	-277,728	14.7%
Gross Profit	222,274	63,033	159,241	252.6%
Other Operating Income	198,177	254,758	-56,581	-22.2%
Administrative Expenses	-172,743	-140,115	-32,628	23.3%
Distribution Expenses	-186,768	-130,339	-56,429	43.3%
Other Operating Expenses	-6,749	-4,766	-1,983	41.6%
Profit from Operations	54,191	42,571	11,620	27.3%
Finance Income	807	16,636	-15,829	-95.1%
Finance Expense	-92,468	-37,178	-55,290	148.7%
Net Finance Income / (Expense)	-91,661	-20,542	-71,119	346.2%
Profit / (Loss) Before Income Tax Expense	-37,470	22,029	-59,499	-270.1%
Income Tax Expense	20,014	46,264	-26,250	-56.7%
Profit / (Loss) for the Year	-17,456	68,293	-85,749	-125.6%
Other Comprehensive Income
Items that are or may be reclassified to Profit or Loss
Net Change in Fair Value of Equity Securities - at FVOCI /Available for Sale Investments	-1,302,080	1,423,556	-2,725,636	-191.5%
Items that will never be reclassified to Profit or Loss
Actuarial Gain / (Loss) on Retirement Benefit Obligations	-1,005	-4,069	3,064	-75.3%
Tax on Other Comprehensive Income			0
Other Comprehensive Income / (Expense) for the Year	-1,303,085	1,419,487	-2,722,572	-191.8%
Total Comprehensive Income / (Expense)	-1,320,541	1,487,780	-2,808,321	-188.8%

 

Year End resulted with a Loss to the company. But the Gross Profit was considerably high comparing to the 2015. But Other expenses and incomes grant negative contribution to the End result.

 

2015

For the Year Ended 31 March

2015	Company		Change	%Change
	2015	2014
	Rs.000's	Rs.000's
Revenue	1,957,046	2,446,113	-489,067	-20.0%
Cost of Sales	-1,894,013	-2,274,881	380,868	-16.7%
Gross Profit	63,033	171,232	-108,199	-63.2%
Other Operating Income	254,758	125,847	128,911	102.4%
Administrative Expenses	-140,115	-140,458	343	-0.2%
Distribution Expenses	-130,339	-109,985	-20,354	18.5%
Other Operating Expenses	-4,766	-7,156	2,390	-33.4%
Profit from Operations	42,571	39,480	3,091	7.8%
Finance Income	16,636	10,171	6,465	63.6%
Finance Expense	-37,178	-35,589	-1,589	4.5%
Net Finance Income / (Expense)	-20,542	-25,418	4,876	-19.2%
Profit / (Loss) Before Income Tax Expense	22,029	14,062	7,967	56.7%
Income Tax Expense	46,264	29,957	16,307	54.4%
Profit / (Loss) for the Year	68,293	44,019	24,274	55.1%
Other Comprehensive Income
Items that are or may be reclassified to Profit or Loss
Net Change in Fair Value of Equity Securities - at FVOCI /Available for Sale Investments	1,423,556	1,385,595	37,961	2.7%
Items that will never be reclassified to Profit or Loss
Actuarial Gain / (Loss) on Retirement Benefit Obligations	-4,069	-3,529	-540	15.3%
Tax on Other Comprehensive Income			0
Other Comprehensive Income / (Expense) for the Year	1,419,487	1,382,066	37,421	2.7%
Total Comprehensive Income / (Expense)	1,487,780	1,426,085	61,695	4.3%

 

Other Operating Income and Finance income has noticeable increase and Year-end profit is higher than 2014.

 

STATEMENT OF FINANCIAL POSITION

2019

For the Year Ended 31 March

2019	Company		Change	%Change
	2019	2018
	Rs.000's	Rs.000's
Assets
Non-Current Assets
Property, Plant and Equipment	136,226	143,342	-7,116	-5.0%
Investment in Subsidiaries	1,076,022	755,001	321,021	42.5%
Investment in Equity Securities	6,118,831	9,505,154	-3,386,323	-35.6%
Deferred Tax Asset	75,266	91,437	-16,171	-17.7%
Total Non-Current Assets	7,406,345	10,494,934	-3,088,589	-29.4%
Current Assets
Inventories	659,652	498,088	161,564	32.4%
Investment in Equity Securities	209,839	270,283	-60,444	-22.4%
Trade Receivables	173,475	172,375	1,100	0.6%
Other Receivables	96,324	52,811	43,513	82.4%
Amounts Due from Related Companies	415,355	516,814	-101,459	-19.6%
Current Tax Assets	31,395	34,523	-3,128	-9.1%
Cash and Cash Equivalents	22,861	38,010	-15,149	-39.9%
Total Current Assets	1,608,901	1,582,904	25,997	1.6%
Total Assets	9,015,246	12,077,838	-3,062,592	-25.4%
Equity and Liabilities
Equity
Stated Capital	999,950	999,950	0	0.0%
Capital Reserves	105,116	105,116	0	0.0%
Available for Sale Reserve	5,547,745	8,934,068	-3,386,323	-37.9%
Revenue Reserves	1,666,558	1,662,306	4,252	0.3%
Total Equity	8,319,369	11,701,440	-3,382,071	-28.9%
Liabilities
Non-Current Liabilities
Retirement Benefit Obligations	58,007	62,227	-4,220	-6.8%
Total Non-Current Liabilities	58,007	62,227	-4,220	-6.8%
Current Liabilities
Trade and Other Payables	346,795	70,800	275,995	389.8%
Amounts Due to Related Companies	37,094	55,349	-18,255	-33.0%
Bank Overdraft	253,981	188,022	65,959	35.1%
Total Current Liabilities	637,870	314,171	323,699	103.0%
Total Liabilities	695,877	376,398	319,479	84.9%
Total Equity and Liabilities	9,015,246	12,077,838	-3,062,592	-25.4%

 

Total Assets has experienced a deduction. Mainly the deduction of Non-Current Assets has impacted the Total Assets. Total Liabilities has Increased but Equity has decreased.

 

2018

For the Year Ended 31 March

2018	Company		Change	%Change
	2018	2017
	Rs.000's	Rs.000's
Assets
Non-Current Assets
Property, Plant and Equipment	143,342	162,710	-19,368	-11.9%
Investment in Subsidiaries	755,001	755,262	-261	0.0%
Investment in Equity Securities	9,505,154	8,989,283	515,871	5.7%
Deferred Tax Asset	91,437	89,152	2,285	2.6%
Total Non Current Assets	10,494,934	9,996,407	498,527	5.0%
Current Assets
Inventories	498,088	262,735	235,353	89.6%
Investment in Equity Securities	270,283	244,838	25,445	10.4%
Trade Receivables	172,375	113,453	58,922	51.9%
Other Receivables	52,811	15,868	36,943	232.8%
Amounts Due from Related Companies	516,814	958,492	-441,678	-46.1%
Current Tax Assets	34,523	27,736	6,787	24.5%
Cash and Cash Equivalents	38,010	161,432	-123,422	-76.5%
Total Current Assets	1,582,904	1,784,554	-201,650	-11.3%
Total Assets	12,077,838	11,780,961	296,877	2.5%
Equity and Liabilities
Equity
Stated Capital	999,950	999,950	0	0.0%
Capital Reserves	105,116	105,116	0	0.0%
Available for Sale Reserve	8,934,068	8,751,583	182,485	2.1%
Revenue Reserves	1,662,306	1,488,064	174,242	11.7%
Total Equity	11,701,440	11,344,713	356,727	3.1%
Liabilities
Non-Current Liabilities
Retirement Benefit Obligations	62,227	51,429	10,798	21.0%
Total Non-Current Liabilities	62,227	51,429	10,798	21.0%
Current Liabilities
Trade and Other Payables	70,800	182,427	-111,627	-61.2%
Amounts Due to Related Companies	55,349	124,650	-69,301	-55.6%
Bank Overdraft	188,022	77,742	110,280	141.9%
Total Current Liabilities	314,171	384,819	-70,648	-18.4%
Total Liabilities	376,398	436,248	-59,850	-13.7%
Total Equity and Liabilities	12,077,838	11,780,961	296,877	2.5%

 

Even though Current Assets has decreased, Total Assets showing a slight increment. Total Liabilities has decreased but Equity has increased.

 

2017

For the Year Ended 31 March

2017	Company		Change	%Change
	2017	2016
	Rs.000's	Rs.000's
Assets
Non-Current Assets
Property, Plant and Equipment	162,710	186,883	-24,173	-12.9%
Investment in Subsidiaries	755,262	755,495	-233	0.0%
Investment in Equity Securities	8,989,283	7,827,661	1,161,622	14.8%
Deferred Tax Asset	89,152	68,294	20,858	30.5%
Total Non-Current Assets	9,996,407	8,838,333	1,158,074	13.1%
Current Assets
Inventories	262,735	339,698	-76,963	-22.7%
Investment in Equity Securities	244,838	247,029	-2,191	-0.9%
Trade Receivables	113,453	193,650	-80,197	-41.4%
Other Receivables	15,868	20,265	-4,397	-21.7%
Amounts Due from Related Companies	958,492	730,416	228,076	31.2%
Current Tax Assets	27,736	18,942	8,794	46.4%
Cash and Cash Equivalents	161,432	17,493	143,939	822.8%
Total Current Assets	1,784,554	1,567,493	217,061	13.8%
Total Assets	11,780,961	10,405,826	1,375,135	13.2%
Equity and Liabilities
Equity
Stated Capital	999,950	999,950	0	0.0%
Capital Reserves	105,116	105,116	0	0.0%
Available for Sale Reserve	8,751,583	7,589,961	1,161,622	15.3%
Revenue Reserves	1,488,064	1,305,032	183,032	14.0%
Total Equity	11,344,713	10,000,059	1,344,654	13.4%
Liabilities
Non-Current Liabilities
Retirement Benefit Obligations	51,429	44,765	6,664	14.9%
Total Non-Current Liabilities	51,429	44,765	6,664	14.9%
Current Liabilities
Trade and Other Payables	182,427	68,895	113,532	164.8%
Amounts Due to Related Companies	124,650	26,022	98,628	379.0%
Bank Overdraft	77,742	266,085	-188,343	-70.8%
Total Current Liabilities	384,819	361,002	23,817	6.6%
Total Liabilities	436,248	405,767	30,481	7.5%
Total Equity and Liabilities	11,780,961	10,405,826	1,375,135	13.2%

 

It is interesting that here current and non-current assets, current and non-current liabilities and Equity all has increased.

 

2016

For the Year Ended 31 March

2016	Company		Change	%Change
	2016	2015
	Rs.000's	Rs.000's
Assets
Non-Current Assets
Property, Plant and Equipment	186,883	214,959	-28,076	-13.1%
Investment in Subsidiaries	755,495	762,244	-6,749	-0.9%
Investment in Equity Securities	7,827,661	9,129,741	-1,302,080	-14.3%
Deferred Tax Asset	68,294	47,742	20,552	43.0%
Total Non-Current Assets	8,838,333	10,154,686	-1,316,353	-13.0%
Current Assets
Inventories	339,698	618,716	-279,018	-45.1%
Investment in Equity Securities	247,029	305,929	-58,900	-19.3%
Trade Receivables	193,650	231,173	-37,523	-16.2%
Other Receivables	20,265	17,688	2,577	14.6%
Amounts Due from Related Companies	730,416	837,739	-107,323	-12.8%
Current Tax Assets	18,942	11,184	7,758	69.4%
Cash and Cash Equivalents	17,493	15,767	1,726	10.9%
Total Current Assets	1,567,493	2,038,196	-470,703	-23.1%
Total Assets	10,405,826	12,192,882	-1,787,056	-14.7%
Equity and Liabilities
Equity
Stated Capital	999,950	999,950	0	0.0%
Capital Reserves	105,116	105,116	0	0.0%
Available for Sale Reserve	7,589,961	8,892,041	-1,302,080	-14.6%
Revenue Reserves	1,305,032	1,373,491	-68,459	-5.0%
Total Equity	10,000,059	11,370,598	-1,370,539	-12.1%
Liabilities
Non-Current Liabilities
Retirement Benefit Obligations	44,765	38,826	5,939	15.3%
Total Non-Current Liabilities	44,765	38,826	5,939	15.3%
Current Liabilities
Trade and Other Payables	68,895	182,721	-113,826	-62.3%
Amounts Due to Related Companies	26,022	27,689	-1,667	-6.0%
Bank Overdraft	266,085	173,048	93,037	53.8%
Total Current Liabilities	361,002	783,458	-422,456	-53.9%
Total Liabilities	405,767	822,284	-416,517	-50.7%
Total Equity and Liabilities	10,405,826	12,192,882	-1,787,056	-14.7%

 

From all five elements, Only Non-Current Liabilities has shown an increment comparing to 2015.

 

2015

For the Year Ended 31 March

2015	Company		Change	%Change
	2015	2014
	Rs.000's	Rs.000's
Assets
Non-Current Assets
Property, Plant and Equipment	214,959	235,513	-20,554	-8.7%
Investment in Subsidiaries	762,244	767,009	-4,765	-0.6%
Investment in Equity Securities	9,129,741	7,706,185	1,423,556	18.5%
Deferred Tax Asset	47,742	0	47,742	-
Total Non-Current Assets	10,154,686	8,708,707	1,445,979	16.6%
Current Assets
Inventories	618,716	351,631	267,085	76.0%
Investment in Equity Securities	305,929	236,453	69,476	29.4%
Trade Receivables	231,173	209,065	22,108	10.6%
Other Receivables	17,688	33,787	-16,099	-47.6%
Amounts Due from Related Companies	837,739	874,609	-36,870	-4.2%
Current Tax Assets	11,184	8,042	3,142	39.1%
Cash and Cash Equivalents	15,767	49,277	-33,510	-68.0%
Total Current Assets	2,038,196	1,762,864	275,332	15.6%
Total Assets	12,192,882	10,471,571	1,721,311	16.4%
Equity and Liabilities
Equity
Stated Capital	999,950	999,950	0	0.0%
Capital Reserves	105,116	105,116	0	0.0%
Available for Sale Reserve	8,892,041	7,468,485	1,423,556	19.1%
Revenue Reserves	1,373,491	1,309,267	64,224	4.9%
Total Equity	11,370,598	9,882,818	1,487,780	15.1%
Liabilities
Non-Current Liabilities
Retirement Benefit Obligations	38,826	29,733	9,093	30.6%
Total Non-Current Liabilities	38,826	30,028	8,798	29.3%
Current Liabilities
Trade and Other Payables	182,721	415,916	-233,195	-56.1%
Amounts Due to Related Companies	27,689	102,045	-74,356	-72.9%
Bank Overdraft	173,048	9,796	163,252	1666.5%
Total Current Liabilities	783,458	558,725	224,733	40.2%
Total Liabilities	822,284	588,753	233,531	39.7%
Total Equity and Liabilities	12,192,882	10,471,571	1,721,311	16.4%

 

 

STATEMENTS OF CASH FLOWS 2019

 

	Company		Change	%Change
	2019	2018
	Rs.000's	Rs.000's
Cash Flows from Operating Activities
Profit / (Loss) before Income Tax Expense	115,405	278,346	-162,941	-58.5%
Adjustments for;
Depreciation on Property, Plant and Equipment	15,986	21,087	-5,101	-24.2%
Changes in Fair Value of Equity Securities at FVTPL / Financial Assets Held for Trading	76,610	-4,835	81,445	-1684.5%
Provision / (Reversal) of Impairment of Investment in Subsidiaries	-271,021	261	-271,282	-103939.5%
Provision of Impairment for Amounts due from Related Companies	10,876	0	10,876
Provision of Impairment for Fixed Deposits	2	0	2
Provision / (Reversal) of Impairment for Trade Receivables	-616	3,349	-3,965	-118.4%
ESC Written-off	10,570	0	10,570
Gain on disposal of Property, Plant and Equipment	-500	-7	-493	7042.9%
Loss on Translation of Foreign Currency	12,648	0	12,648
Provision for Retirement Benefit Obligations	11,223	11,601	-378	-3.3%
Reversal for Obsolete of Inventories	-413	0	-413
Dividend Income	-165,543	-388,720	223,177	-57.4%
Interest Income	-8,966	-18,614	9,648	-51.8%
Interest Expense	4,905	4,734	171	3.6%
Operating Profit/(Loss) before working capital changes	-188,834	-92,798	-96,036	103.5%
Changes in ;
Inventories	-161,151	-235,353	74,202	-31.5%
Trade and Other Receivables	-47,014	-99,213	52,199	-52.6%
Amounts due from Related Companies	90,583	441,678	-351,095	-79.5%
Amounts due to Related Companies	-18,255	-69,301	51,046	-73.7%
Trade and Other Payables	262,247	-111,627	373,874	-334.9%
Cash Flows generated from/(used in) Operating Activities	-62,424	-166,614	104,190	-62.5%
Interest Paid	-4,905	-4,734	-171	3.6%
Income Tax Paid	-7,445	-10,175	2,730	-26.8%
Retirement Benefit Obligation Paid	-7,410	-3,810	-3,600	94.5%
Net Cash Flows generated from/(used in) Operating Activities	-82,184	-185,333	103,149	-55.7%
Cash Flows from Investing Activities
Interest Received	8,966	18,614	-9,648	-51.8%
Dividend Received	162,391	55,334	107,057	193.5%
Investment in Equity Securities at FVTPL / Financial Assets Held for Trading	-13,016	-20,610	7,594	-36.8%
Proceeds from Disposal of Property, Plant and Equipment	500	7	493	7042.9%
Investment in new Subsidiary - United Dairies Lanka (Pvt) Limited	-50,000	0	-50,000
Purchase and Construction of Property, Plant and Equipment	-8,870	-1,719	-7,151	416.0%
Net Cash Flows generated from/(used in) Investing Activities	99,971	51,626	48,345	93.6%
Cash Flows from Financing Activities
Dividend Paid	-98,890	-99,995	1,105	-1.1%
Net Cash Flows used in Financing Activities	-98,890	-99,995	1,105	-1.1%
Net Decrease in Cash and Cash Equivalents	-81,103	-233,702	152,599	-65.3%
Cash and Cash Equivalents at the beginning of the Year	-150,012	83,690	-233,702	-279.2%
Cash and Cash Equivalents at the end of the Year	-231,115	-150,012	-81,103	54.1%

There is negative Cash and Cash Equivalents at the end of the both 2018 and 2019 years. But in 2019, it went towards more decreased value.

 

CHAPTER 03

 

TREND ANALYSIS

Trend analysis is a financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time. It is a useful tool to evaluate the trend situations. The earliest period is usually used as the base period and the items on the statements for all later periods are compared with items on the statements of the base period. The changes are generally shown in percentage. The goal is to determine any increase or decline in specific values that has taken place.

FIVE YEAR SUMMARY

 

Company-Rs.000	2015	2016	2017	2018	2019
OPERATING RESULT
Turnover	1,957,046	2,394,015	2,053,427	1,840,687	1,922,137
Gross Profit	63,033	222,274	154,936	100,936	26,721
Profit/ (Loss) before Tax	22,029	-37,470	216,919	278,346	115,405
Taxation	46,264	20,014	16,925	-1,945	-13,922
Profit/ (Loss) after Tax	68,293	-17,456	233,844	276,401	101,483
Dividends	49,998	49,998	99,995	99,995	49,998
STATEMENT OF FINANCIAL POSITION
Property, Plant and Equipment	214,959	186,883	162,710	143,342	136,226
Short-term Investment	305,929	247,029	244,838	270,283	209,839
Current Assets	2,038,196	1,567,493	1,784,555	1,582,904	1,608,901
Total Assets	12,192,882	10,405,826	11,780,962	12,077,838	9,015,246
Total Equity	11,370,598	10,000,059	11,344,714	11,701,440	8,319,369
Non-Current Liabilities	38,826	44,765	51,429	62,227	58,007
Current Liabilities	783,458	361,002	384,819	314,171	637,870

 

FIVE YEAR TREND ANALYSIS

 

Company	2015	2016	2017	2018	2019
OPERATING RESULT
Turnover	100%	122%	105%	94%	98%
Gross Profit	100%	353%	246%	160%	42%
Profit/ (Loss) before Tax	100%	-170%	985%	1264%	524%
Taxation	100%	43%	37%	-4%	-30%
Profit/ (Loss) after Tax	100%	-26%	342%	405%	149%
Dividends	100%	100%	200%	200%	100%
STATEMENT OF FINANCIAL POSITION
Property, Plant and Equipment	100%	87%	76%	67%	63%
Short-term Investment	100%	81%	80%	88%	69%
Current Assets	100%	77%	88%	78%	79%
Total Assets	100%	85%	97%	99%	74%
Total Equity	100%	88%	100%	103%	73%
Non-Current Liabilities	100%	115%	132%	160%	149%
Current Liabilities	100%	46%	49%	40%	81%

 

TREND CHARTS

 

Profit (loss) before Tax and Profit (loss) after Tax is having same trend patterns but the Profit (loss) before Tax is Fluctuating in large amounts. Turnover is quite stable during the period.

Property, Plant and Equipment are reducing over time while Non-Current Liabilities are showing a growth. Other Elements are having random fluctuations.

 

CHAPTER 04

 

VERTICAL ANALYSIS

Vertical analysis is a method of financial statement analysis in which each line item is listed as a percentage of a base figure within the statement. Thus, line items on an income statement can be stated as a percentage of gross sales, while line items on a balance sheet can be stated as a percentage of total assets or liabilities. Vertical analysis makes it much easier to compare the financial statements of one company with another, and across industries. This is because one can see the relative proportions of account balances.

 

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

 

	Company
	2019	2018	2017	2016	2015
	Rs.000's	Rs.000's	Rs.000's	Rs.000's	Rs.000's
Revenue	100.0%	100.0%	100.0%	100.0%	100.0%
Cost of Sales	-98.6%	-94.5%	-92.5%	-90.7%	-96.8%
Gross Profit	1.4%	5.5%	7.5%	9.3%	3.2%
Other Operating Income	26.9%	25.4%	18.4%	8.3%	13.0%
Administrative Expenses	-10.2%	-9.8%	-9.0%	-7.2%	-7.2%
Distribution Expenses	-7.0%	-7.5%	-6.3%	-7.8%	-6.7%
Other Operating Expenses	-0.6%	0.0%	0.0%	-0.3%	-0.2%
Profit from Operations	10.4%	13.6%	10.6%	2.3%	2.2%
Finance Income	0.5%	1.8%	0.8%	0.0%	0.9%
Finance Expense	-4.9%	-0.3%	-0.9%	-3.9%	-1.9%
Net Finance Income / (Expense)	-4.4%	1.6%	-0.1%	-3.8%	-1.0%
Profit / (Loss) Before Income Tax Expense	6.0%	15.1%	10.6%	-1.6%	1.1%
Income Tax Expense	-0.7%	-0.1%	0.8%	0.8%	2.4%
Profit / (Loss) for the Year	5.3%	15.0%	11.4%	-0.7%	3.5%
Other Comprehensive Income
Items that are or may be reclassified to Profit or Loss
Net Change in Fair Value of Equity Securities - at FVOCI /Available for Sale Investments	-176.2%	9.9%	56.6%	-54.4%	72.7%
Items that will never be reclassified to Profit or Loss
Actuarial Gain / (Loss) on Retirement Benefit Obligations	0.4%	-0.2%	0.0%	0.0%	-0.2%
Tax on Other Comprehensive Income	-0.1%	0.0%	0.0%	0.0%	0.0%
Other Comprehensive Income / (Expense) for the Year	-175.9%	9.8%	56.5%	-54.4%	72.5%
Total Comprehensive Income / (Expense)	-170.6%	24.8%	67.9%	-55.2%	76.0%

 

(Revenue was taken as the Base)

 

STATEMENTS OF FINANCIAL POSITION

 

	Company
	2019	2018	2017	2016	2015
	Rs.000's	Rs.000's	Rs.000's	Rs.000's	Rs.000's
Assets
Non-Current Assets
Property, Plant and Equipment	1.5%	1.2%	1.4%	1.8%	1.8%
Investment in Subsidiaries	11.9%	6.3%	6.4%	7.3%	6.3%
Investment in Equity Securities	67.9%	78.7%	76.3%	75.2%	74.9%
Deferred Tax Asset	0.8%	0.8%	0.8%	0.7%	0.4%
Total Non-Current Assets	82.2%	86.9%	84.9%	84.9%	83.3%
Current Assets
Inventories	7.3%	4.1%	2.2%	3.3%	5.1%
Investment in Equity Securities	2.3%	2.2%	2.1%	2.4%	2.5%
Trade Receivables	1.9%	1.4%	1.0%	1.9%	1.9%
Other Receivables	1.1%	0.4%	0.1%	0.2%	0.1%
Amounts Due from Related Companies	4.6%	4.3%	8.1%	7.0%	6.9%
Current Tax Assets	0.3%	0.3%	0.2%	0.2%	0.1%
Cash and Cash Equivalents	0.3%	0.3%	1.4%	0.2%	0.1%
Total Current Assets	17.8%	13.1%	15.1%	15.1%	16.7%
Total Assets	100.0%	100.0%	100.0%	100.0%	100.0%
Equity and Liabilities
Equity
Stated Capital	11.1%	8.3%	8.5%	9.6%	8.2%
Capital Reserves	1.2%	0.9%	0.9%	1.0%	0.9%
Available for Sale Reserve	61.5%	74.0%	74.3%	72.9%	72.9%
Revenue Reserves	18.5%	13.8%	12.6%	12.5%	11.3%
Total Equity	92.3%	96.9%	96.3%	96.1%	93.3%
Liabilities
Non-Current Liabilities
Retirement Benefit Obligations	0.6%	0.5%	0.4%	0.4%	0.3%
Total Non-Current Liabilities	0.6%	0.5%	0.4%	0.4%	0.3%
Current Liabilities
Trade and Other Payables	3.8%	0.6%	1.5%	0.7%	1.5%
Amounts Due to Related Companies	0.4%	0.5%	1.1%	0.3%	0.2%
Bank Overdraft	2.8%	1.6%	0.7%	2.6%	1.4%
Total Current Liabilities	7.1%	2.6%	3.3%	3.5%	6.4%
Total Liabilities	7.7%	3.1%	3.7%	3.9%	6.7%
Total Equity and Liabilities	100.0%	100.0%	100.0%	100.0%	100.0%

 

(Total Assets / Total Equity and Liabilities was taken as the base)

When it comes to Total Equity and Liabilities, Equity is taking around 94% of total. The total non-current assets round up to an 85% of total assets.

 

CHAPTER 05

 

RATIO ANALYSIS

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by studying its financial statements. Investors and analysts employ ratio analysis to evaluate the financial health of companies by scrutinizing past and current financial statements. Comparative data can demonstrate how a company is performing over time and can be used to estimate likely future performance.

There are four kind of Ratios

01)    Liquidity and Efficiency Ratios

02)    Solvency Ratios

03)    Profitability Ratios

04)    Market Ratios

Liquidity and Efficiency Ratios

 

	2019	2018	2017	2016	2015
Current Ratio (Times)	2.52	5.04	4.64	4.34	2.6
Acid Test Ratio (Times)	12.96	32.09	27.01	25.64	14.83
Accounts Receivable Turnover (times)	11.12	12.88	13.37	11.27	8.89
Inventory Turnover/ Merchandise Turnover (times)	3.27	4.57	6.30	4.53	3.90
Average Days to Sell Inventory (Days)	32.84	28.34	27.29	32.39	41.05
Total Asset Turnover	0.182	0.154	0.185	0.212	0.173

 

The current ratio indicate the ability of a company to repay the current liabilities out of the current assets.

The acid ratio is a modified current ratio that takes into account the fact that inventory may be relatively difficult current asset to convert into cash. This ratio therefore reflects a more conservative view of the ability to repay the current liabilities within a short period.

Accounts receivable turnover indicates the entity’s credit and collection efficiency.

Inventory turnover indicated how fast inventory is turned to cash.

All of these four Ratios are showing a Bell shaped trend. Highest values are recorded about 2017.

Average Days to Sell Inventory is showing an increasing trend. This ratio measures how many days, on average, it takes to sell the inventory.

 

Solvency Ratios

 

	2019	2018	2017	2016	2015
Debt Ratio	7.72%	3.12%	3.70%	3.90%	6.74%
Equity Ratio	92.28%	96.88%	96.30%	96.10%	93.26%
Plant Assets to Long-Term Liabilities	2.35	2.30	3.16	4.17	5.54

 

 

Debt Ratio is increasing slightly in last 3 years. This ratio measures what portion of a company’s assets are contributed by creditors.

Equity Ratio is showing an inverse trend. This ratio measures what portion of a company’s assets are contributed by owners.

Plant Assets to Long-Term Liabilities in decreasing over time. This is not favorable as this ratio suggests how well long-term debt is managed to finance long-term assets.

 

Profitability Ratios

 

	2019	2018	2017	2016	2015
Earnings per share (Rs.)	2.54	6.91	5.85	-0.44	1.71
Return on equity (%)	1.01	2.40	2.19	-0.16	0.64
Return on Total Assets (%)	0.96	2.32	2.11	-0.15	0.60
Gross Profit Ratio (%)	1.39	5.48	7.55	9.29	3.22
Net Profit/(Loss) Ratio (%)	5.28	15.02	11.39	-0.73	3.49

 

Earnings per share indicates how much income was earned for each share of common stock outstanding. Huge dump on this Ratio is recorded in 2019 and that is not a good indicate for shareholders.

Return on equity measure indicates how well the company employed the owners’ investments to earn income.

Return on Total Assets is generally considered the best overall measure of a company’s profitability.

Gross Profit Ratio measures the amount remaining from $1 in sales that is left to cover operating expenses and a profit after considering cost of sales.

Net Profit Ratio describes a company’s ability to earn a net income from sales.

 

Market Ratios

 

	2019	2018	2017	2016	2015
Price earnings ratio (Times)	43.31	22.88	20.01	-260.22	81.87
Dividend Yield	1.1%	1.6%	2.1%	1.1%	0.9%

 

 

Price earnings ratio is often used by investors as a general guideline in gauging stock values.  Generally, the higher the price-earnings ratio, the more opportunity a company has for growth. It is good that company has a positive Price earning ration with a recent increasing trend.

Dividend Yield ratio identifies the return, in terms of cash dividends, on the current market price of the stock. Company has to pay attention on increasing this Ratio.