FINANCIAL STATEMENT ANALYSIS OF RAIGAM WAYAMBA SALTERN PLC

 

FINANCIAL STATEMENT ANALYSIS OF RAIGAM WAYAMBA SALTERN PLC

Introduction

Raigam Wayamba Salterns PLC is a Sri Lanka-based company, which is engaged in manufacturing, refining, packaging and marketing of salt and salt-based products .The Company, through its subsidiary, Raigam Wayamba Cereals (Pvt) Ltd, is also entering in the business of processing local grains to manufacture various value added products while promoting and assisting farmers to acquire inputs in the quality and quantity. The Company offers a range of a breakfast cereal under the brand Nenaposha comprising of Corn, Soya bean, Rice and Green Gram. The Company, through its subsidiary, Southern Salt Company (Pvt) Ltd, is engaged in the supply of crystal salt and table salt in consumer packs, as well as in bulk to the discerning customers in the south and contiguous areas.

The Company’s turnover  Rs. 924Mn and profit is around Rs. 108Mn.There’re 223 total direct employees and total assets around Rs. 1624 Mn. Raigam Wayamba Salterns PLC, which was listed in the Colombo Stock Exchange (CSE) in 2010 is the major player in the value added salt market in Sri Lanka and it produce a range of consumer salt products under the popular brands “Isi”, “Ruchi”, “Welcome” and “Triple Washed” as well as various salt products used as an input for different industries in bulk form.  Raigam Wayamba Salters are social responsible company and all the products  SLS certified for its quality and consistency and the processes are ISO certified. The Raigam Wayamba Salterns Group is having salterns, salt refineries and processing plants situated in Puttalam and Hambantota districts

 

Analysis Overview

This report contains a five year comparative financial analysis of companies performance. The analysis is done using the following techniques.

v  Horizontal analysis

ØDollar change

ØPercent change

 

v  Vertical analysis

Ø  Common size percent

 

v  Ratio analysis  

ØLiquidity and Efficiency

·         Working capital

·         Current ratio

·         Acid Test Ratio

·         Accounts receivable turnover

·         Merchandize turnover

Day’s sales uncollected

·         Days’ sales in inventory

·         Total assets turnover

 

ØSolvency

·         Debt ratio

·         Equity ratio

·         Times interest earned

ØProfitability

·         Profit margin

·         Gross margin

·         Return on total assets

·         Return on common shareholders’ equity

·         Book value per common share

Basic earnings per share

 

ØMarket                                        

·         Price Earnings per Share

·         Dividend yield

 

 

 

 

 

 

Statement of financial Position

	2015	2016	2017	2018	2019	2020
ASSETS
Non-Current Assets
Property, Plant and Equipment	536,468,440	515,158,566	509,750,939	496,129,701	513,500,000	522,528,548
Intangible Assets	342,000	273,600	205,200	136,800	68,400
Investments in Subsidiary	75,140,226	75,140,226	75,140,226	75,140,226	75,140,226	75,140,226
Other Non Current Financial Assets	61,381,779	29,778,176
Deferred Tax Assets	2,045,378	2,337,405
	675,377,823	622,687,973	585,096,365	571,406,727	588,708,626	597,668,774
Current Assets
Inventories	67,927,347	33,403,243	28,389,792	42,063,059	79,258,437	101,184,359
Trade and other Receivables	116,743,050	153,370,202	229,156,988	266,516,875	300,070,885	265,380,950
Held to Maturity Financial Assets	79,062,729	119,593,724	181,989,055	299,387,411	331,191,542	363,463,448
Cash and Cash Equivalents	3,568,138	29,941,643	51,594,958	8,500,797	7,055,576	29,972,000
	267,301,264	336,308,812	491,130,793	616,468,142	717,576,440	760,000,757
Total Assets	942,679,087	958,996,785	1,076,227,158	1,187,874,869	1,306,285,066	1,357,669,531
EQUITY AND LIABILITIES
Stated Capital	604,414,640	604,414,640	604,414,640	604,414,640	604,414,640	604,414,640
Revaluation Reserve	75,799,740	75,799,740	95,821,422	88,726,445	99,851,645	98,607,740
Retained Earnings	190,228,195	234,021,978	271,141,075	362,237,269	416,623,621	500,444,281
Total Equity	870,442,575	914,236,358	971,377,137	1,055,378,354	1,120,889,906	1,203,466,661
Non-Current Liabilities
Defined Benefit Obligation	4,753,571	6,021,598	10,376,189	15,199,327	16,896,988	17,614,588
Deferred Tax Liability			16,770,540	22,644,918	25,201,343	23,590,438
Interest Bearing Loans and Borrowings			4,069,533	1,580,237
	4,753,571	6,021,598	31,216,262	39,424,482	42,098,331	41,205,026
Current Liabilities
Trade and Other Payables	37,694,001	35,763,197	41,715,478	84,436,961	134,796,392	111,286,759
Income Tax Payable	3,950,588	2,975,632	29,695,385	6,127,762	2,630,593	1,711,085
Interest Bearing Loans and Borrowings	25,838,352		2,222,896	2,507,310	5,869,844
	67,482,941	38,738,829	73,633,759	93,072,033	143,296,829	112,997,844
total liability	72,236,512	44,760,427	104,850,021	132,496,515	185,395,160	154,202,870
Total Equity and Liabilities	942,679,087	958,996,785	1,076,227,158	1,187,874,869	1,306,285,066	1,357,669,531

 

 

 

 

 

 

 

 

Statement of profit or loss and other comprehensive income

	2015	2016	2017	2018	2019	2020
Revenue	364,083,449	414,677,745	723,425,555	734,080,595	702,658,526	717,245,945
Cost of Sales	258,194,503	301,242,268	535,098,153	507,407,457	492,904,203	493,609,269
Gross Profit	105,888,946	113,435,477	188,327,402	226,673,138	209,754,323	223,636,676
Administrative Expenses	53,404,975	41,085,609	46,308,182	46,907,269	50,126,933	59,656,519
Selling and Distribution Expenses	28,560,209	32,171,561	48,842,574	60,182,900	83,244,457	80,075,314
Results From Operating Activities	23,923,761	40,447,221	96,442,954	121,225,205	77,454,088	84,776,880
Finance Income	17,804,743	13,125,244	20,538,563	43,577,756	33,543,248	35,553,409
Other Income		268,914	3,266,308	1,642,235	1,071,155	872,037
Finance Cost	4,183,200	1,782,808	291,973	2,434,009	1,985,740	800,074
Net Finance (Expense) / Income	13,621,543	11,342,436	20,246,590	41,143,748	31,557,508	34,753,335
Profit Before Tax	37,545,304	51,789,657	116,689,544	162,368,952	109,011,596	119,530,215
Income Tax (Expense) / Reversal	671,708	-8,043,762	-50,940,636	-28,014,488	-28,538,996	-25,286,155
Profit for the Year	38,217,012	43,745,895	65,748,908	134,354,464	80,472,600	94,244,060
Earnings Per Share
Basic (Rs.)	0.14	0.16	0.24	0.48	0.29	0.33
Diluted	0.14	0.16	0.24	0.48	0.29	0.33
Dividend Per Share	0.1		0.1	0.15	0.1	0.05

 

 

 

ANALYSIS

Horizontal Analysis

Dollar change=Analysis Period Amount-Base Period Amount

 

	2016	2017	2018	2019	2020
ASSETS
Non-Current Assets
Property, Plant and Equipment	-21,309,874	-5,407,627	-13,621,238	17,370,299	9,028,548
Intangible Assets	-68,400	-68,400	-68,400	-68,400	-68,400
Investments in Subsidiary	0	0	0	0	0
Other Non Current Financial Assets	-31,603,603	-29,778,176	0	0	0
Deferred Tax Assets	292,027	-2,337,405	0	0	0
	-52,689,850	-37,591,608	-13,689,638	17,301,899	8,960,148
Current Assets
Inventories	-34,524,104	-5,013,451	13,673,267	37,195,378	21,925,922
Trade and other Receivables	36,627,152	75,786,786	37,359,887	33,554,010	-34,689,935
Held to Maturity Financial Assets	40,530,995	62,395,331	117,398,356	31,804,131	32,271,906
Cash and Cash Equivalents	26,373,505	21,653,315	-43,094,161	-1,445,221	22,916,424
	69,007,548	154,821,981	125,337,349	101,108,298	42,424,317
Total Assets	16,317,698	117,230,373	111,647,711	118,410,197	51,384,465
EQUITY AND LIABILITIES	0	0	0	0	0
Stated Capital	0	0	0	0	0
Revaluation Reserve	0	20,021,682	-7,094,977	11,125,200	-1,243,905
Retained Earnings	43,793,783	37,119,097	91,096,194	54,386,352	83,820,660
Total Equity	43,793,783	57,140,779	84,001,217	65,511,552	82,576,755
Non-Current Liabilities
Defined Benefit Obligation	1,268,027	4,354,591	4,823,138	1,697,661	717,600
Deferred Tax Liability	0	16,770,540	5,874,378	2,556,425	-1,610,905
Interest Bearing Loans and Borrowings	0	4,069,533	-2,489,296	-1,580,237	0
	1,268,027	25,194,664	8,208,220	2,673,849	-893,305
Current Liabilities
Trade and Other Payables	-1,930,804	5,952,281	42,721,483	50,359,431	-23,509,633
Income Tax Payable	-974,956	26,719,753	-23,567,623	-3,497,169	-919,508
Interest Bearing Loans and Borrowings	-25,838,352	2,222,896	284,414	3,362,534	-5,869,844
	-28,744,112	34,894,930	19,438,274	50,224,796	-30,298,985
total liability	-27,476,085	60,089,594	27,646,494	52,898,645	-31,192,290
Total Equity and Liabilities	16,317,698	117,230,373	111,647,711	118,410,197	51,384,465

 

 

 

 

 

2) percentage change

Percent change =Dollar change /Base Period Amount *100

	2016(%)	2017(%)	2018(%)	2019(%)	2020(%)
ASSETS
Non-Current Assets
Property, Plant and Equipment	-3.972251192	-1.049701462	-2.672135931	3.50116088	1.758237196
Intangible Assets	-20	-25	-33.33333333	-50	-100
Investments in Subsidiary	0	0	0	0	0
Other Non Current Financial Assets	-51.48694534	-100
Deferred Tax Assets	14.27740985	-100
	-7.801536889	-6.036989573	-2.339723645	3.02794808	1.522000461
Current Assets
Inventories	-50.825044	-15.00887504	48.16261775	88.4276581	27.66383344
Trade and other Receivables	31.3741606	49.41428323	16.3031847	12.5898257	-11.5605801
Held to Maturity Financial Assets	51.26435112	52.17274696	64.50847058	10.6230689	9.744181812
Cash and Cash Equivalents	739.1391533	72.31839281	-83.52397728	-17.0010059	324.7987691
	25.81639419	46.03565993	25.52015691	16.4012203	5.912166932
Total Assets	1.730991832	12.22427174	10.37399123	9.96823825	3.93363335
EQUITY AND LIABILITIES
Stated Capital	0	0	0	0	0
Revaluation Reserve	0	26.4139191	-7.404374567	12.5387645	-1.24575314
Retained Earnings	23.02170979	15.86137222	33.5973419	15.0140134	20.11903689
Total Equity	5.03120875	6.250110106	8.647641971	6.20739963	7.367070982
Non-Current Liabilities
Defined Benefit Obligation	26.67525109	72.31620244	46.48275007	11.1693169	4.246910751
Deferred Tax Liability			35.02795974	11.2891776	-6.3921395
Interest Bearing Loans and Borrowings			-61.16908255	-100
	26.67525109	418.4049483	26.29469217	6.78220452	-2.12194873
Current Liabilities
Trade and Other Payables	-5.122311107	16.64359313	102.4115869	59.6414537	-17.4408474
Income Tax Payable	-24.67875668	897.9521997	-79.36459824	-57.0709013	-34.9544
Interest Bearing Loans and Borrowings	-100		12.79475063	134.109225	-100
	-42.5946344	90.07740012	26.39858981	53.9633598	-21.1442118
total liability	-38.0362842	134.247142	26.36765709	39.9245558	-16.8247596
Total Equity and Liabilities	1.730991832	12.22427174	10.37399123	9.96823825	3.93363335

 

Trend Analysis

Trend Percent=Analysis Period Amount/Base Period Amount*100%

 

	2015	2016	2017	2018	2019	2020
Revenue	364,083,449	414,677,745	723,425,555	734,080,595	702,658,526	717,245,945
Cost of Sales	258,194,503	301,242,268	535,098,153	507,407,457	492,904,203	493,609,269
Gross Profit	105,888,946	113,435,477	188,327,402	226,673,138	209,754,323	223,636,676

 

 

	2015	2016	2017	2018	2019	2020
Revenue	100.00%	113.90%	198.70%	201.62%	192.99%	197.00%
Cost of Sales	100.00%	116.67%	207.25%	196.52%	190.90%	191.18%
Gross Profit	100.00%	107.13%	177.85%	214.07%	198.09%	211.20%

 

 

 

 

 

 

 

 

Vertical Analysis Of Balance sheet

Common size percent=Analysis Amount/Base Amount *100

	2015	2016	2017	2018	2019	2020
ASSETS
Non-Current Assets
Property, Plant and Equipment	56.91%	53.72%	47.36%	41.77%	39.31%	38.49%
Intangible Assets	0.04%	0.03%	0.02%	0.01%	0.01%	0.00%
Investments in Subsidiary	7.97%	7.84%	6.98%	6.33%	5.75%	5.53%
Other Non Current Financial Assets	6.51%	3.11%	0.00%	0.00%	0.00%	0.00%
Deferred Tax Assets	0.22%	0.24%	0.00%	0.00%	0.00%	0.00%
	71.64%	64.93%	54.37%	48.10%	45.07%	44.02%
Current Assets	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Inventories	7.21%	3.48%	2.64%	3.54%	6.07%	7.45%
Trade and other Receivables	12.38%	15.99%	21.29%	22.44%	22.97%	19.55%
Held to Maturity Financial Assets	8.39%	12.47%	16.91%	25.20%	25.35%	26.77%
Cash and Cash Equivalents	0.38%	3.12%	4.79%	0.72%	0.54%	2.21%
	28.36%	35.07%	45.63%	51.90%	54.93%	55.98%
	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Assets	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%
EQUITY AND LIABILITIES
Stated Capital	64.12%	63.03%	56.16%	50.88%	46.27%	44.52%
Revaluation Reserve	8.04%	7.90%	8.90%	7.47%	7.64%	7.26%
Retained Earnings	20.18%	24.40%	25.19%	30.49%	31.89%	36.86%
Total Equity	92.34%	95.33%	90.26%	88.85%	85.81%	88.64%
	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Non-Current Liabilities	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Defined Benefit Obligation	0.50%	0.63%	0.96%	1.28%	1.29%	1.30%
Deferred Tax Liability	0.00%	0.00%	1.56%	1.91%	1.93%	1.74%
Interest Bearing Loans and Borrowings	0.00%	0.00%	0.38%	0.13%	0.00%	0.00%
	0.50%	0.63%	2.90%	3.32%	3.22%	3.03%
	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Current Liabilities	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Trade and Other Payables	4.00%	3.73%	3.88%	7.11%	10.32%	8.20%
Income Tax Payable	0.42%	0.31%	2.76%	0.52%	0.20%	0.13%
Interest Bearing Loans and Borrowings	2.74%	0.00%	0.21%	0.21%	0.45%	0.00%
	7.16%	4.04%	6.84%	7.84%	10.97%	8.32%
	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
total liability	7.66%	4.67%	9.74%	11.15%	14.19%	11.36%
	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Equity and Liabilities	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%

 

Vertical analysis of income statement

	2015	2016	2017	2018	2019	2020
Revenue	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%
Cost of Sales	70.92%	72.64%	73.97%	69.12%	70.15%	68.82%
Gross Profit	29.08%	27.36%	26.03%	30.88%	29.85%	31.18%
Administrative Expenses	14.67%	9.91%	6.40%	6.39%	7.13%	8.32%
Selling and Distribution Expenses	7.84%	7.76%	6.75%	8.20%	11.85%	11.16%
Results From Operating Activities	6.57%	9.75%	13.33%	16.51%	11.02%	11.82%
Finance Income	4.89%	3.17%	2.84%	5.94%	4.77%	4.96%
Other Income	0.00%	0.06%	0.45%	0.22%	0.15%	0.12%
Finance Cost	1.15%	0.43%	0.04%	0.33%	0.28%	0.11%
Net Finance (Expense) / Income	3.74%	2.74%	2.80%	5.60%	4.49%	4.85%
Profit Before Tax	10.31%	12.49%	16.13%	22.12%	15.51%	16.67%
Income Tax (Expense) / Reversal	0.18%	-1.94%	-7.04%	-3.82%	-4.06%	-3.53%
Profit for the Year	10.50%	10.55%	9.09%	18.30%	11.45%	13.14%
	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Earnings Per Share	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Basic (Rs.)	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Diluted	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Dividend Per Share	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%

 

Ratio Analysis

1. Liquidity and efficiency ratios

I. Working capitals = Current assets – Current liabilities,

working capital measuring the money required to day today performances in company

II. Current Ratio = Current Assets/Current liabilities

measuring the long-term debt paying ability, more than one indicates good performance in the company

III. Acid-test ratio = Quick assets/ Current liabilities

IV. Acc receivable turnover = sales on account/ average account receivable

V. Total assets turnover = Revenue/ average total assets

VI. Day” sales in inventory = Ending inventory/ cost of sales *365,

measuring the liquidity of the inventory.

VII. Day” sales uncollected = Acc receivable/ net sales * 365,

 measuring the liquidity of the receivable.

VIII. Merchandise turnover = Cost of sales/ Average inventory

 

liquidity and efficiency ratios
Ratio	2015	2016	2017	2018	2019	2020
working capital	199,818,323	297,569,983	417,497,034	523,396,109	574,279,611	647,002,913
current Ratio	3.961019778	8.681439803	6.669913361	6.623559432	5.007622604	6.725798742
Acid Test Ratio	2.9544	7.8192	6.2843	6.1716	4.4545	5.8303
Accounts receivable turnover		3.0704	3.7824	2.9619	2.4803	2.5368
Total Assets Turnover		0.4361	0.7109	0.6484	0.5634	0.5384
Day "sales in inventory	96.02637301	40.47301787	19.36518379	30.25776686	58.69158617	74.82090259
Day " sales uncollected	117.0369413	134.9966918	115.619776	132.5176827	155.8735417	135.0499747
Merchandise Turnover		5.9457	17.319	14.4041	8.1255	5.471

 

2. Solvency ratios

I. Dept ratio = Total liabilities/ Total assets*100%

II. Equity ratio = Total equity/ total assets*100%

III. Time interest earn= EBIT/ financial cost

 

Solvency Ratio
Ratio	2015	2016	2017	2018	2019	2020
Dept Ratio	7.66	4.6674	9.7424	11.1541	14.1925	11.3579
Equity Ratio	92.3371	95.3326	90.2576	88.8459	85.8075	88.6421
Time Interest Earn(Times)	9.9752	30.0494	400.6586	67.7084	55.8972	150.3989

Profitability ratios

I. Profit margin = Net income/ net sales*100%

II. Gross margin= Gross profit/ net sales*100%

operating expenses and profit after considering cost of sale

III. Return on total assets= net income/ average total assets

IV. Return on common shareholders’ equity= (Net income- preferred dividends)/ Average shareholders’ equity

V. Book value per common share= shareholders equity applicable to common shares/ number of common shares outstanding

Profitability Ratio
Ratio	2015	2016	2017	2018	2019	2020
Profit margin (%)	10.50%	10.55%	9.09%	18.30%	11.45%	13.14%
Gross margin (%)	29.08%	27.36%	26.03%	30.88%	29.85%	31.18%
Return on total assets(%)		4.60%	6.46%	11.86%	6.45%	7.08%
Return on common shareholder's equity(%)		4.90%	6.97%	11.27%	6.45%	7.08%
Book value per common share	3.084	3.240	3.442	3.740	3.972	4.264
Earnings per share (EPS)	0.135	0.155	0.233	0.476	0.285	0.334

 

Market ratios

I. Price earning ratio= market price per share/EPS

II. Dividend yield = Annual dividend per share/ market price per share*100%.

Market Ratio
Ratio	2015	2016	2017	2018	2019	2020
Price earnings ratio	22.66666667	19.375	11.30434783	6.458333333	8.620689655	9.090909091
Dividend Yield	2.941%	0.000%	3.846%	4.839%	4.000%	1.667%

 

DISCUSSION

According to vertical analysis of Raigam Saltern , it figure out the non current assets of the company decreasing through recent 5 years from 70% to 44% and current assets of the company increasing from 28% to 55%. It keeps total equity around 90% and total liability around 10% .
When analyzing the trend of the company if figure out company revenue has increased through 5 years and gross profit has significantly increased. It is a good trend of the company.
When analyzing the company performance usind ratio analysis, current ratio suddenly increased in 2016 with significant amount and after 2016 it has decreased. According to accounts receivable turnover of the company about 2.5-4 times company convert its receivables in to cash in each year. Time interest earn has suddenly increased in 2017 due to deceasing finance cost.
According to days sales inventory, liquidity of the inventory is about 3 months . According to days sales uncollected it is about 3-4 months .
According to profit margin there is about 10% ability to earn a net income from sales. Profit margin has significantly increased in 2018. Returning of assets figure out the 10% of profitability of the company.