Question No. 2
- An analyst must be cautious while performance appraisal of a firm against industry averages. Briefly explain with the help of examples.
- Prepare common size vertical analysis of the firm and comment on the significant trends found in your analysis.
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 2020 (Rupees '000) 2019 (Rupees '000) 2 EQUITY Share capital and reserves Share capital Capital reserves Revenue reserves 5,962,528 8,217,695 40,472,977 54,653,200 5,962,528 7,504,621 44,138,769 57,605,918 LIABILITIES Non-current liabilities Long term financing Deferred tax liability - net Employee benefit obligations 11,542,250 9,907,879 27,915 21,478,044 10,617,491 24,890 10,642,381 Current liabilities Trade and other payables Short-term borrowings Current portion of long term financing Current portion of long term musharaka Unclaimed dividend 7,654,365 10,710,748 272,171 8,059,754 10,835,368 3,375,360 2,249,733 213,797 24,734,012 37,967 18,675,251 Total liabilities 40,153,295 35,376,393 Total equity and liabilities 94,806,495 92,982,311 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 2020 (Rupees '000) 2019 (Rupees '000) ASSETS Non-current assets Property, plant and equipment Intangible assets and goodwill Investment property Long term investments Long term deposits 55,789,469 7,710,293 266,075 13,687,830 118,418 77,572,085 57,242,086 7,794,154 262,349 12,512,039 118,038 77,928,666 Current assets Stores, spare parts and loose tools Stock in trade Trade debts Advances Deposits and prepayments Other receivables Advance tax - net Cash and bank balances 7,010,155 2,291,473 1,727,790 175,924 24,457 841,700 4,815,220 347,691 17,234,410 5,511,210 2,689,443 2,101,856 407,771 26,862 641,090 3,212,501 462,912 15,053,645 Total assets 94,806,495 92,982,311 STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2020 2020 2019 (Rupees '000) (Rupees '000) Gross turnover Less: rebates and discounts Less: sales tax and excise duty Net turnover Cost of sales Gross profit 63,687,754 (2,243,317) (24,315,711) 37,128,726 (36,011,992) 1,116,734 79,000,314 (2,354,731) (23,044,071) 53,601,512 (37,556,552) 16,044,960 Other income Selling and distribution expenses Administrative expenses Other expenses Operating (loss) / profit 247,618 (794,213) (579,308) (16,743) (25,912) 122,211 (1,339,086) (711,411) (826,752) 13,289,922 Finance cost Share of profit of equity-accounted investees - net of tax (Loss) / profit before tax (2,151,701) 1,671,133 (506,480) (1,498,473) 1,454,101 13,245,550 Income tax credit/ (charge) Profit for the year 555,732 49,252 (3,148,265) 10,097,285 Earnings per share - basic and diluted (Rupees) 0.08 16.93 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 2020 (Rupees '000) 2019 (Rupees 000) (506,481) 13,245,550 CASH FLOWS FROM OPERATING ACTIVITIES (Loss) / profit before tax ) Adjustments for: Gain on disposal of property, plant and equipment , Depreciation Amortisation Provision for obsolete stores Reversal of provision for slow moving stock Rental income Profit on deposit accounts Provision for doubtful debt Share of profit of equity-accounted investees, net of tax Change in fair value of investment property Interest expense on land compensation Finance cost Provision for employee retirement benefits (18,605) 2,938,682 121,389 (6,482) (400) (30,110) (538) (67,218) 3,017,573 123,023 70,530 17.716) (34,073) (1,293) 5,200 (1,671,133) (3,726) 16,743 2,151,701 75,585 3,675,196 3,168,715 (1,497,666 405,686 368,866 231,848 2,405 (213,350) (521,151) (1,223,362) 1,945,353 (1,454,101) (4,693) 16,697 1,498,473 90,968 3,151,280 16,396,830 Changes in: Stores, spare parts and loose tools Stock in trade Trade debts Advances Deposits and prepayments Other receivables Trade and other payables 2,251,345 1,669,038 (316,128) 263,595 15,308 1,135,000 (1,562,452) 3,455,706 19,852,536 Cash generated from operating activities Long term deposits Finance cost paid Employee retirement benefits paid Income tax paid Net cash (used in) / generated from operating activities (380) ( (2,038,445) 19,617) (1,857,825) (1,960,914) 14438 (1.452,476) (551,555) (2,056,373) 15,806,570 (4,222,154) 198,641) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Acquisition of intangible assets Proceeds from sale of property, plant and equipment Rent received from investment property Profit received on deposit accounts Dividends received Net cash used in investing activities (1,859,712) (39,162) 309,367 34,712 1,293 1,131,326 (422,176) 49,058 30,692 538 989,670 (3,250,837) (2,700,000) ) (1,800,000) CASH FLOWS FROM FINANCING ACTIVITIES Repayments of long term financing Repayments of long term musharaka Proceeds from long term financing Dividends paid Net cash generated from / used in) financing activities (3,300,000) ) (2,200,000) 11,656,333 (3,763,844) 2,392,489 (6,458,274) (10,958,274) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 9,399 (10,372,456) 1,597,459 (11,969,915) ( (10,363,057) (10,372,456) STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 2020 (Rupees '000) 2019 (Rupees '000) 2 EQUITY Share capital and reserves Share capital Capital reserves Revenue reserves 5,962,528 8,217,695 40,472,977 54,653,200 5,962,528 7,504,621 44,138,769 57,605,918 LIABILITIES Non-current liabilities Long term financing Deferred tax liability - net Employee benefit obligations 11,542,250 9,907,879 27,915 21,478,044 10,617,491 24,890 10,642,381 Current liabilities Trade and other payables Short-term borrowings Current portion of long term financing Current portion of long term musharaka Unclaimed dividend 7,654,365 10,710,748 272,171 8,059,754 10,835,368 3,375,360 2,249,733 213,797 24,734,012 37,967 18,675,251 Total liabilities 40,153,295 35,376,393 Total equity and liabilities 94,806,495 92,982,311 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 2020 (Rupees '000) 2019 (Rupees '000) ASSETS Non-current assets Property, plant and equipment Intangible assets and goodwill Investment property Long term investments Long term deposits 55,789,469 7,710,293 266,075 13,687,830 118,418 77,572,085 57,242,086 7,794,154 262,349 12,512,039 118,038 77,928,666 Current assets Stores, spare parts and loose tools Stock in trade Trade debts Advances Deposits and prepayments Other receivables Advance tax - net Cash and bank balances 7,010,155 2,291,473 1,727,790 175,924 24,457 841,700 4,815,220 347,691 17,234,410 5,511,210 2,689,443 2,101,856 407,771 26,862 641,090 3,212,501 462,912 15,053,645 Total assets 94,806,495 92,982,311 STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2020 2020 2019 (Rupees '000) (Rupees '000) Gross turnover Less: rebates and discounts Less: sales tax and excise duty Net turnover Cost of sales Gross profit 63,687,754 (2,243,317) (24,315,711) 37,128,726 (36,011,992) 1,116,734 79,000,314 (2,354,731) (23,044,071) 53,601,512 (37,556,552) 16,044,960 Other income Selling and distribution expenses Administrative expenses Other expenses Operating (loss) / profit 247,618 (794,213) (579,308) (16,743) (25,912) 122,211 (1,339,086) (711,411) (826,752) 13,289,922 Finance cost Share of profit of equity-accounted investees - net of tax (Loss) / profit before tax (2,151,701) 1,671,133 (506,480) (1,498,473) 1,454,101 13,245,550 Income tax credit/ (charge) Profit for the year 555,732 49,252 (3,148,265) 10,097,285 Earnings per share - basic and diluted (Rupees) 0.08 16.93 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 2020 (Rupees '000) 2019 (Rupees 000) (506,481) 13,245,550 CASH FLOWS FROM OPERATING ACTIVITIES (Loss) / profit before tax ) Adjustments for: Gain on disposal of property, plant and equipment , Depreciation Amortisation Provision for obsolete stores Reversal of provision for slow moving stock Rental income Profit on deposit accounts Provision for doubtful debt Share of profit of equity-accounted investees, net of tax Change in fair value of investment property Interest expense on land compensation Finance cost Provision for employee retirement benefits (18,605) 2,938,682 121,389 (6,482) (400) (30,110) (538) (67,218) 3,017,573 123,023 70,530 17.716) (34,073) (1,293) 5,200 (1,671,133) (3,726) 16,743 2,151,701 75,585 3,675,196 3,168,715 (1,497,666 405,686 368,866 231,848 2,405 (213,350) (521,151) (1,223,362) 1,945,353 (1,454,101) (4,693) 16,697 1,498,473 90,968 3,151,280 16,396,830 Changes in: Stores, spare parts and loose tools Stock in trade Trade debts Advances Deposits and prepayments Other receivables Trade and other payables 2,251,345 1,669,038 (316,128) 263,595 15,308 1,135,000 (1,562,452) 3,455,706 19,852,536 Cash generated from operating activities Long term deposits Finance cost paid Employee retirement benefits paid Income tax paid Net cash (used in) / generated from operating activities (380) ( (2,038,445) 19,617) (1,857,825) (1,960,914) 14438 (1.452,476) (551,555) (2,056,373) 15,806,570 (4,222,154) 198,641) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Acquisition of intangible assets Proceeds from sale of property, plant and equipment Rent received from investment property Profit received on deposit accounts Dividends received Net cash used in investing activities (1,859,712) (39,162) 309,367 34,712 1,293 1,131,326 (422,176) 49,058 30,692 538 989,670 (3,250,837) (2,700,000) ) (1,800,000) CASH FLOWS FROM FINANCING ACTIVITIES Repayments of long term financing Repayments of long term musharaka Proceeds from long term financing Dividends paid Net cash generated from / used in) financing activities (3,300,000) ) (2,200,000) 11,656,333 (3,763,844) 2,392,489 (6,458,274) (10,958,274) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 9,399 (10,372,456) 1,597,459 (11,969,915) ( (10,363,057) (10,372,456)
