MASTER OF PROFESSIONAL FINANCE (MPF) UNIVERSITY OF DHAKA ASSIGNMENT ON FINANCIAL STATEMENT ANALYSIS OF PROFITABILITY & GROWTH PF-603 SUBMITTED BY Debabrata Barman ID: FIN-02-16-063 Semester: Jan-June 2016 Master of Professional Finance (MPF) Program SUBMITTED TO Dr. Mahmood Osman Imam Professor Department of Finance, Business Faculty University of Dhaka
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
MASTER OF PROFESSIONAL FINANCE (MPF) UNIVERSITY OF DHAKA
ASSIGNMENT ON FINANCIAL STATEMENT ANALYSIS OF
PROFITABILITY & GROWTH
PF-603
SUBMITTED BY
Debabrata Barman ID: FIN-02-16-063 Semester: Jan-June 2016 Master of Professional Finance (MPF) Program
SUBMITTED TO
Dr. Mahmood Osman Imam Professor Department of Finance, Business Faculty University of Dhaka
Letter of Transmittal 01st July, 2016 To Dr. Mahmood Osman Imam Professor Department of Finance, Business Faculty, University of Dhaka. Subject: Submission of Financial Statement Analysis report on “Analysis of Profitability and Analysis of Growth of SPL and OPL.” Dear Sir, This is my great pleasure to submit the report of my six months long 1st Semester MPF program in the Square Pharmaceutical Ltd (SPL) and Orion Pharmaceutical Ltd (OPL), under the Finance Department. The title of the report is “Financial Statement Analysis of Profitability and Growth Analysis of SPL and OPL”. This report has been prepared to fulfill the requirement of my 1st Semester, MPF program at my assigned organization, SPL and OPL. I have put my best effort to make this report a successful one. It has been joyful & enlightening experience for me to work in the organization & prepare this report. However this has been obviously a great source of learning for me to conduct similar types of studies in the future.
I would like to express my sincere gratitude to you for your kind guidance & suggestions in preparing the report. It would be my immense pleasure if you find this report useful & informative to have an apparent perspective on the issue. I shall be happy to provide any further explanation regarding this report if required & please do not hesitate to call me if you have any query on this report or any other relevant matters.
Thanks and best regards,
Debabrata Barman ID: Fin-02-16-063
Acknowledgement This report is an accumulation of many people’s endeavor. But at the beginning I would like
to convey my sincere appreciation to the almighty GOD for giving me the strength & the
ability to finish the task within the planned time. Then I like to express my sincere gratitude
to everyone who contributed towards preparing & making this study successfully.
First of all I would like to express my Sincere & immense gratitude to our honorable MPF
program teacher, Dr. Mahmood Osman Imam, Professor, Department of Finance, University
of Dhaka. I am deeply indebted to her whole hearted supervision to me during the Period. Her
valuable suggestions & guideline helped me a lot to prepare the report in a well organized
manner.
I would also like to thank the authority of Square Pharmaceutical Limited and Orion
Pharmaceutical Limited for giving me the opportunity to access and use their website and
supplying me necessary information and published papers.
I am also grateful to the other officials of MPF program & my all MPF program friends who
helped me while preparing the report by giving their suggestions, assistance & supply of
information, which were valuable to me. Finally, I want to keep my thanks to my parent who
gave special attention to me from the very beginning and during the preparation of report &
the internship program.
Executive Summary
The financial statement analysis report is made on financial profitability and growth analysis
of Square Pharmaceutical Ltd (SPL) and Orion Pharmaceutical Ltd (OPL), the report
includes the process of reviewing and evaluating the company’s financial statements because
without this the profitability and growth analysis cannot be done. Profitability and Growth
analysis mainly calculates the statistical relationships between data. The profitability and
growth analysis helps an organization to understand that on the last fiscal year, how their
performance and it was also helps them to take decisions in future.
This topic is selected by our honorable MPF Program teacher as per Financial Statement
Analysis & Reporting course module. The beginning part of my report contains the brief
introduction of the selected company and the objectives, scope, methodology and limitations
of the study.
In the second part, I have covered the detailed background of the company such as the
history, global network, mission & strategy, the organizational structure, market position and
an overview of its products and operations.
Then starts the main analysis part of my report where I have analyzed horizontal and vertical
financial statements analysis and ratios of consecutive five years. Here I have presented the
result and according the result, I have interpreted the financial condition of SPL and OPL.
In the next part, Profitability and Growth analysis is the most important where I have
discussed my findings about the financial performance of SPL and OPL and based on the
findings I have given some recommendations that will help SPL and OPL to strengthen their
financial base more.
Lastly I have come with a brief conclusion and then presented appendix and necessary
references.
TABLE OF CONTENT
Executive Summary
Chapter One: Introduction
1.1: Introduction……………………………………………………………………..1-2
1.2: Objective of the Study…………………………………………………………..2
1.3: Scope…………………………………………………………………………… 2
1.4: Methodology ……………………………………………………………………2
1.5: Limitations……………………………………………………………………....2-3
Chapter Two: Organizational Over View
2.1: Square Pharmaceutical Ltd. at a Glance...............................................................3-4
2.2: Orion Pharmaceutical Ltd. at a Glance.................................................................4-6
SQUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player.
SQUARE Pharmaceuticals Limited is the largest pharmaceutical company in Bangladesh and it has been continuously in the 1st position among all national and multinational companies since 1985. It was established in 1958, converted into a public limited company in 1991 and listed with stock exchanges in 1995. The turnover of Square Pharma was Taka 30.28 Billion (US$ 385.22 million) with about 18.64% market share having a growth rate of about 25.36% (April 2014– March 2015).
SQUARE Pharmaceuticals Limited has extended its range of services towards the highway of global market. It pioneered exports of medicines from Bangladesh in 1987 and has been exporting antibiotics and other pharmaceutical products. Present export market covers 36 countries. This extension in business and services has manifested the credibility of Square Pharmaceuticals Limited.
Orion Pharmaceutical Ltd.
Orion Pharma a member of Orion Group was founded as a pharmaceutical manufacturing company in 1965. With the mission to serve the ailing humanity around the globe Orion pharma started its operation nearly four decades ago, and after a great run of success the company today has proliferated out into one of the leading pharmaceutical companies in Bangladesh. It has already established itself to the doctor's community, other health care professionals, chemists and patients as a provider of quality medicines and health care services through 50 brands and 51 presentations of various formulations.
With the mission to serve the ailing humanity around the globe, Orion Pharma has proliferated into one of the leading pharmaceutical companies in Bangladesh manufacturing and marketing general drugs. It has already established itself to the doctor's community, other healthcare professionals, chemists and patients as a provider of quality medicines and healthcare services through 115 brands and 250 presentations of various formulations complying Good Manufacturing Practices (GMP) and the guidelines of ISO-9001: 2008 Quality Management System. Orion Pharma manufactures and markets a wide array of dosage forms including tablet, capsule, syrup, suspension, injection, dry powder for syrup/suspension, cream/ointments in
Page 2 of 37
different therapeutic groups like anticancer, antibiotics, anti diabetics, anxiolytics, diuretics, cardiovascular drugs etc.
The global landscape of pharmaceutical market is changing continuously with the rapid pace of innovation in terms of pharmaceutical technology, regulatory requirements and treatment options. To cope up with these changes, Orion Pharma Ltd. is currently implementing one of the finest facilities for pharmaceutical finished products in south-east Asia. The facilities will follow the 'Current Good Manufacturing Practices' standards of international regulatory authorities like USFDA, UK MHRA, Health Canada, and Australian TGA etc. This new facility is going to be the biggest in the pharmaceutical sector of Bangladesh in terms of investment, covered area, number of varieties of dosage forms to be produced as well as superb in terms of pharmaceutical technology, waste management, monitoring system and eco-friendliness.
1.2 Objective of the Study Primary objective of the study entails the Profitability and Growth Analysis of Square Pharmaceutical Limited and Orion Pharmaceutical Limited in order to assess the performance and financial condition of the company. Secondary objective is to fulfill my internship requirement. 1.3 Scope of the Study Defining the scope of the study is a broad aspect to be described. Definitely Finance department of Master of Professional Finance (MPF) Program helped me a lot to prepare the report but still there were some limitations as confidentiality is strictly maintained in Square Pharmaceutical Ltd. and Orion Pharmaceutical Ltd. 1.4 Methodology of the Study
In order to complete the study, two types of data have been used-
Data Collection
Primary Data
Secondary Data
Primary Data was collected through our course teacher of the MPF program of Finance Department, University of Dhaka.
Secondary Data was collected mainly through the website of Square Pharmaceutical Limited and Orion Pharmaceutical Limited. Besides these, I also studied some published reports and organizational documents. 1.5 Limitations of the Study
Page 3 of 37
Their security concern about revealing the information was one of the biggest challenges for me. For ensuring confidentiality SPL and OPL authority was unwilling to share some information which was really needed to prepare the report. Their official website also contains a limited amount of information required for making a report; I mainly covered the information from annual reports and through the primary sources of data. Then the time duration for preparing the report was not enough. Lastly, due to the work load I also got limited time to prepare the report. As the PMF Program was first practical experience for me, so it was possible for me to understand the whole and actual financial performance of SPL and OPL. Based on the annual reports’ data I have used my understanding about finance to find out the Profitability and Growth analysis and interpret the situation. So, the statements, recommendations and conclusions are made according to my knowledge and level of understanding.
In spite of having much difficulties and limitations, I have given my best effort to accomplish the report successfully. CHAPTER TWO
Organizational Over View: 2.1 Square Pharmaceutical Ltd. at a Glance
SQUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player.
Page 4 of 37
Year of Establishment (Initially as a Partnership) : 1958 Incorporated as a Private Limited Company : 1964 Technical Collaboration Agreement with Janssen Pharmaceuticals of Belgium (A subsidiary of Johnson & Johnson International Ltd.)
: 1974
Technical Collaboration Agreement with F. Hoffman-La Roche & Co. Ltd. : 1982 Converted into Public Limited Company : 1991 Initially Public Offering (IPO) of shares of SQUARE Pharmaceuticals Ltd. : 1994 Stock Exchange Listing (Dhaka & Chittagong) : 1995 Agreement with M/s. Bovis Tanvec Ltd. of UK for implementation of Dhaka Plant : 1996 Awarded ISO-9001 Certificate : 1998 SQUARE Pharmaceuticals Ltd., Dhaka Unit gets the UK MHRA approval : 2007 Awarded TGA Certificate : 2012 Awarded “AA+” rating in the long term and ”ST-1” rating in short term by CRISL : 2013 PAI (Pre Approval Inspection) by US FDA was successful for Dhaka Site’s solid dosage unit and WHO approved Square’s GMP
: 2015
Business Lines : Manufacturing and Marketing of Pharmaceutical Finished Products, Basic Chemicals, Agro Vet Products and Pesticide Products
Authorized Capital : Tk. 10,000 Million Paid-up Capital : Tk. 6,235 million
Number of Employees : 6,710 Subsidiary Company: Square Formulations Ltd. Associate Company : Square Textiles Ltd. Square Fashions Ltd. Square Hospitals Ltd.
2.2 Orion Pharmaceutical Ltd. at a Glance:
Orion Pharma Limited is one of the Premier Pharmaceutical Companies of Bangladesh which has been contributing to improving the human health care of the Country by providing quality branded-generic pharmaceuticals. We, at Orion Pharma Limited, always believe in 'Quality Never ends' and refuse to settle for anything until it exceeds the existing standard. Consequently, Orion Pharma Limited has been superseding the market growth consistently by wide margin in last few years. The company has been awarded with the ISO-9001: 2000 Certificate in January 2003 for serving its valued customers with products of excellent quality. Having four decades of vast experience imbibed with technical and professional expertise, Orion Pharma Limited now levers a wide array of therapeutic areas including life saving anti-cancer drugs and injectables having more than 110 generics and 220 presentations of Capsule, PFS, ampoule, cephalosporin injectables, and cream and ointment products of different therapeutic group.
The global landscape of pharmaceutical market is changing continuously with the rapid pace of innovation in terms of pharmaceutical technology, regulatory requirements and treatment options. To cope up with these changes Orion Pharma, is going to build one of the finest
Page 5 of 37
facilities for pharmaceutical finished products in South-East Asia. The facilities will be created in accordance with the "Current Good Manufacturing Practices" and standards of international regulatory authorities like USFDA, UK MHRA, Australian TGA etc.
This new facility will be one of the biggest in the pharmaceutical sector of Bangladesh in terms of investment, covered area, number of varieties of dosage forms to be produced as well as superb in terms of pharmaceutical technology, waste management, monitoring system and eco-friendliness. It will be built in approximately 27 Acres of land at Siddhirganj, Narayanganj. The production facilities will include Oncology, Hormone, Ophthalmic and General Formulation. The construction of this facility is going on in full swing and will be completed very soon.
Incorporated as a Private Limited Company (earlier known as Orion Laboratories Limited)
21st June, 1965
Date of Commercial Operation 25th November, 1966 Converted into Public Limited Company 24th June, 2010 Name changed into Orion Pharma Limited 15th October, 2010 Initial Public Offering (IPO) of shares of Orion Pharma Limited 2012
Listing with both Dhaka & Chittagong Stock Exchanges 2013
Business Lines
Manufacturing and Marketing of Pharmaceutical Finished Products, branded-generic primary and chronic care medicines, maintaining strict compliance of WHO & CGMP standards.
Authorized Capital Tk. 5,000 Million
Page 6 of 37
Paid-up Capital Tk. 2,340 Million Number of Employees 2,063
Subsidiary Company Orion Power Meghnaghat Limited Dutch Bangla Power & Associates Limited
Associate Company Orion Infusion Limited Orion Infrastructure Limited
2.3 Share Holding Status Square Pharmaceutical Ltd.
Share holdings structure (in %) for the year ended 31 March 2015:
Page 7 of 37
Orion Pharmaceutical Ltd.
Page 8 of 37
CHAPTER THREE
Financial Analysis
3.1 Horizontal analysis:
Exhibit-1: Horizontal Analysis (Trend/Index) for last four years:
Comment: In 2014, Square Pharma has 1.99 times quick assets over current liabilities and in 2013, has 1.18 times quick assets over current liabilities. The trend leads to an increasing position in comparison to the last year. It represents the liquidity position is getting higher day by day. Company is able to pay liabilities out of its Quick Asset. In case of Orion Pharma it has 2.02 (2014) and 0.70 (2013) also
Page 14 of 37
increasing position in comparison to the last year. It means Company is able to pay liabilities out of its quick assets. 4.3 Activity/Efficiency Ratio
COGS 4.3.1 Inventory Turnover ratio =
Avg Inventory
Calculation: (Amount in Million BDT.) Year COGS Avg. Inventory Ratio Square Pharma Ltd.
2013 11405 3135 3.64 2014 12961 2914 4.45
Orion Pharma Ltd.
2013 715 456 1.57 2014 728 449 1.62
Comment: It measures the company’s ability to convert the inventory into sale. In 2013, Square Pharma can sale its inventory 3.64 times in a year and in 2014 it is 4.45 times. In 2014, Square Pharma is in a better position in terms of sales of inventory in a year. In case of Orion Pharma it has 1.62 (2014) and 1.57 (2013).
Net Sales 4.3.2 Total Asset Turnover ratio =
Avg. Total Assets Calculation: (Amount in Million BDT.) Year Net Sale Avg. Total Assets Ratio Square Pharma Ltd.
2013 20202 25817 0.78 2014 23268 29152 0.80
Orion Pharma Ltd.
2013 11012 25542 0.43 2014 10707 25923 0.41
Comment: In 2013, Square Pharma generates sales of BDT 0.78 by using assets of BDT 1.00 and in 2014, generates sales of BDT 0.80 by using assets of BDT 1.00. That means, productivity of assets/asset utilization is more in 2014 than 2013 where as in Orion Pharma is more 2013 (0.43) than 2014 (0.41).
Page 15 of 37
4.4 Solvency ratio/leverage ratio:
Total Liability/Debt 4.4.1 Debt - Equity Ratio =
Total Equity
Calculation: (Amount in Million BDT) Year Total Liability Total Equity Ratio Square Pharma Ltd.
2013 4878 22378 0.22 2014 4298 26749 0.16
Orion Pharma Ltd.
2013 9879 15875 0.62 2014 9540 16552 0.58
Comment:
In 2013, Square Pharma has liability of BDT 0.22 against equity of BDT 1.00 and in
2014, has liability of BDT 0.16 against equity of BDT 1.00 million. In terms of debt
management, the company is in good position in 2014. On the other hand Orion Pharma has
BDT 0.62 (2013) and BDT 0.58 (2014) against equity of BDT 1.00 million.
Total Liability
4.4.2 Debt - Total Asset Ratio = Total Asset
Calculation: (Amount in Million BDT.) Year Total Liability Total Assets Ratio Square Pharma Ltd.
2013 4878 27257 0.18 2014 4298 31046 0.14
Orion Pharma Ltd.
2013 9879 25754 0.38 2014 9540 26092 0.37
Comment: In 2014, Square Pharma 14.00% of assets are financed by debt and in 2013, 18.00% of assets are financed by debt. The higher the ratio, the more leveraged of the company represents the greater financial risk. In terms of financial risk, the company is in better position in 2014. Whereas Orion Pharma 37.00% (2014) and 38.00% (2013) but lower position than Square Pharma.
Page 16 of 37
CHAPTER FIVE Analysis of profitability: 5.1 Square Pharmaceutical Limited (Last Five Years)
Square Pharmaceuticals Limited (SPL)
Analysis of Profitability
(All figures are in million BDT) 2011 2012 2013 2014 2015
CI Net Income after Tax to Common Shareholders
2831 3125 3553 4251 5186
CSE Equity 15970 19127 22378 26749 31092 OI Total Operating Income (After Tax) 3063 3459 3814 4378 5305 NOA Net Operating Assets 16348 18914 22392 24209 26100
NFE/(NFI) Net Financial Expenses after tax 233 334 261 127 118 OA Total Operating Assets 18741 20939 24322 26730 29283 OL Total Operating Liabilities 2393 2026 1930 2521 3183 STBR Short Term Borrowing Rate After Tax 5% 5% 5% 5% 5%
NFE/(NFI) Net Financial Expenses after tax -439 -1141 -1206 -975 OA Total Operating Assets 18770 22006 21887 25174 OL Total Operating Liabilities 8789 8528 5654 7134 STBR Short Term Borrowing Rate After Tax 5% 5% 5% 5%
5.3.6 Net Financial Expense – NFE / (Net Financial Income – NFI)
Comments:
SPL is increasing Net Operating Assets growth rate is 8.11% (2014) where as OPL is 11.13% (2014).
Comments:
In SPL Net Financial Assets shows in year 2012 & 2014 that means SPL is Cash Cow Company (Cash Generating). In OPL NFA shows in year 2011 but in year 2014 it shows net financial obligation (NFO).
Comments:
In SPL shows Net Financial Expense (NFE) year 2011 to 2014. In OPL shows Net Financial Income (NFI) from year 2011 to 2014.
Page 20 of 37
5.3.7 Total Operating Asset (OA)
5.3.8 Total Operating Liability (OL)
5.3.9 Return on Net Operating Assets (RNOA)
Comments:
SPL is increasing Operating Assets growth rate is 9.90% (2014) where as OPL is 15.02% (2014).
Comments:
In SPL properly manage its assets so its operating liability is lower 9.43% (2014) of OA. In OPL is indicate higher OL, means asset manage not proper way 9.90% (2014) where as OPL is 15.02% (2014).
Comments:
In SPL Return on Net Operating Assets 17.0% (2013) and 18.1% (2014) where as OPL decrease RNOA 13.5% (2013) and 11.2% (2014)
Page 21 of 37
5.3.10 Financial Leverage (FINLEV)
5.3.11 Net Borrowing Cost (NBC)
5.3.12 Spread
Comments:
In SPL Financial Leverage is 0.001% (2013) and -0.095% (2014) where as OPL decrease RNOA 0.023% (2013) and 0.090% (2014)
Comments:
In SPL Return on Net Operating Assets 17.0% (2013) and 18.1% (2014) where as OPL decrease RNOA 13.5% (2013) and 11.2% (2014)
Comments:
In SPL Net Borrowing Cost (NBC) is highest 1841.56% (2013) and -5.01% (2014) where as OPL 337.4% (2013) and 65.5% (2014)
Comments:
In SPL Spread -1824.5% (2013) and 23.1% (2014) where as OPL -323.9% (2013) and -54.3% (2014)
Page 22 of 37
5.3.13 FINLEV*Spread
5.3.14 Return on Equity (ROCE)
5.3.15 Return on Operating Assets (ROOA)
Comments:
In SPL FINLEV*Spread -1.16% (2013) and -2.19% (2014) where as OPL –7.29% (2013) and -4.88% (2014)
Comments:
In SPL, ROCE is 15.88 % (2013) and 15.89% (2014) where as OPL 6.2% (2013) and 6.3% (2014). SPL is highest ROCE than OPL.
Comments:
In SPL, ROOA is 16.08 % (2013) and 16.85% (2014) where as OPL 11.3% (2013) and 9.5% (2014). SPL is highest ROOA than OPL.
Page 23 of 37
5.3.16 OPLLEV
5.3.17 OPSpread
5.3.18 OPLLEV*OPSpread
Comments:
In SPL, OPLLEV is 0.086 % (2013) and 0.104% (2014) where as OPL 0.348% (2013) and 0.395% (2014).
Comments:
In SPL, OPSpread is 11.08 % (2013) and 11.85% (2014) where as OPL 6.3% (2013) and 4.5% (2014).
Comments:
In SPL, OPLLEV*OPSpread is 0.95 % (2013) and 1.23% (2014) where as OPL 2.19% (2013) and 1.76% (2014).
Page 24 of 37
5.3.19 Profit Margin (PM)
5.3.20 Assets Turnover (ATO)
0.0000.2000.4000.6000.8001.0001.200
2011 2012 2013 2014SPL 1.038 1.047 0.902 0.961
OPL 0.704 0.708 0.678 0.593
Assets Turnover (ATO) (Times)
SPL OPL
Comments:
In SPL, profit margin (PM) is 18.9 % (2013) and 18.8% (2014) where as OPL 19.9% (2013) and 18.9% (2014).
Comments:
In SPL, Assets Turnover (ATO) is 0.90 times (2013) and 0.96 times (2014) where as OPL 0.67 times (2013) and 0.59 times (2014).
Page 25 of 37
CHAPTER SIX
Analysis of Growth: 6.1 Analysis of growth of Square Pharmaceutical Ltd. (Last Five Years) Square Pharmaceutical Ltd (SPL) Analysis of Growth (All figures are in million BDT) 2011 2012 2013 2014 2015
Square Pharmaceutical Ltd. is to maintain the increasing Residual Earning growth of the year 2011 to 2015. Sales continue to growth from the year 2011 to 2015 and the positive or high sales growth translated to higher earnings. Significantly ROCE constant on higher growing equity investment, leading to positive Residual Earnings and positive Abnormal Earnings Growth. The growth company from year 2011 to 2015.
Calculation of Required Rate of Return: (Using CAPM Model)
Risk-free rate
5.29%
Square Pharmaceutical Ltd. 0.569815225
Risk Premium
5.56%
Cost of Equity 0.084578516
Required Rate of Return 8.46%
6.2 Analysis of growth of Orion Pharmaceutical Ltd. (Last Four Years)
Orion Pharmaceutical Ltd (OPL) Analysis of Growth
(All figures are in million BDT) 2011 2012 2013 2014 2015
Up to 2014, Orion Pharmaceutical Ltd maintained a high growth in sales but shows lower earnings in the year 2011 & 2013. After 2013, the company came back to higher earning and shows a high growth in earning in the following year. Significantly ROCE was declined in 2013 and later on it was increased in 2014 followed by the increased earnings. But the Residual Earnings of the company become negative whereas the Abnormal Earning growth shows negative declining from year 2012 to 2014. Thus the company is a no growth company.
Calculation of Required Rate of Return: (Using CAPM Model)
Risk-free rate
5.29%
Orion Pharmaceutical Ltd. 1.415529077
Risk Premium
5.56%
Cost of Equity 0.131595441
Required Rate of Return 13.16%
6.3 Graphically Growth Analysis of SPL and OPL:
Page 27 of 37
CHAPTER SEVEN
Conclusion Profitability analysis and Growth analysis is a part of financial statement analysis and through these we can have knowledge about the company’s past and present performance. Most importantly it gives us an idea that what can be the company’s performance in the future. Profitability analysis and Growth analysis involves the calculation of statistical relationship between data and it is a very popular technique of financial statement analysis. Throughout my analysis, I came to know about the financial strength, operational efficacy and management efficacy of Square Pharmaceutical Limited (SPL) and Orion Pharmaceutical Limited (OPL). I have realized that SPL and OPL is performing well, it is financially solvents but there some threats which are increasing recently. If the risks or threats can be handled properly then definitely SPL and OPL can survive successfully as like the previous years.
Page 28 of 37
CHAPTER EIGHT
Appendix
8.1 Financial Statement:
8.1.1 Balance Sheet of SPL (Last Five Years)
SQUARE PHARMACEUTICALS LTD. BALANCE SHEET
As at 31 March 2011, 2012, 2013, 2014, 2015 (All figures are in million BDT)
PROFIT FROM OPERATIONS 3817 4616 5089 6145 7208 Other Operating Income 454 420 378 245 294 Financial Expenses -310 -465 -357 -177 -159 NET PROFIT BEFORE WPPF 3961 4571 5110 6213 7343 Allocation for WPPF -191 -220 -247 -300 -380 NET PROFIT BEFORE TAX 3770 4350 4863 5912 6964 Provision for Income Tax -862 -1103 -1238 -1519 -1680 Provision for Deferred Income Tax -77 -122 -72 -143 -172 Deferred Tax Assets 0 0 0 0 75
Tax -939 -1225 -1310 -1662 -1777 NET PROFIT AFTER TAX 2831 3125 3553 4251 5186 Profit/(Loss) From Associates Undertaking 428 495 576 696 795
PROFIT FOR THE YEAR 3259 3620 4129 4946 5982 Other Comphrehensive Income: Gain/(Loss) on Marketable Securities (Unrealized) 127 126 -107 136 -184 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3387 3746 4022 5082 5798 Earnings Per Share (EPS) 12.30 9.76 11.13 8.92 10.80 Number of Shares used to compute EPS 265 371 371 554 554 Divided by 1000000 1000000 1000000 1000000 1000000 Effective Tax Rate 24.9% 28.2% 26.9% 28.1% 25.5%
8.1.4 Income Statement of OPL (Last Four Years)
ORION PHARMACEUTICALS LTD. INCOME STATEMENT
For the Year Ended 31 December 2011, 2012, 2013, 2014 (All figures are in million BDT)
Particulars 2011 2012 2013 2014 Net Sales Revenue 7026 9546 11012 10707 Cost of Goods Sold -4941 -6500 -8116 -7992 GROSS PROFIT 2086 3046 2896 2714 Operating Expenses: -619 -665 -660 -673 Administrative Expenses -185 -193 -230 -255 Selling, Marketing and Distribution Expenses -434 -472 -430 -418 PROFIT FROM OPERATIONS 1467 2382 2236 2041 Other Income 444 308 177 193 Finance cost -583 -1374 -1320 -1066 NET PROFIT BEFORE WPPF 1328 1316 1093 1169 Contribution to Workers' Profit Participation/ Welfare Funds -43 -28 -20 -21 NET PROFIT BEFORE TAX 1285 1288 1073 1147
Page 32 of 37
Income Tax Expense -318 -219 -93 -98 Current Tax -312 -220 -97 -97 Deferred Tax Income/(Expense) -6 1 4 0 NET PROFIT AFTER TAX 967 1069 981 1050 Share of Profit from Associate 8 18 75 92 Net Profit 975 1087 1056 1142 Less: Non Controlling Interest (Share of operating profit) -55 -154 -147 -148 Less: Pre Acquisition Profit -57 0 0 Net Profit After Tax Attributable to Ordinary Share Holder
863 933 909 994
Add: Other Comprehensive Income 2279 -98 92 -2 Total Comprehensive Income Attributable to Ordinary Share Holder
Total Operating Liabilities 2392.9 2025.9 1930.0 2521.0 3183.2
Net Operating Assets 16347.7 18913.5 22392.1 24209.2 26099.7
Financial Obligations
FO1 Long Term Loans - Secured 725.6 508.8 1106.3 1183.6 659.1 FO2 Short Term Bank Loans 2914.1 2237.5 1302.0 131.1 0.0 FO3 Long Term Loans - Current Portion 518.2 477.1 540.4 461.4 257.2
Total Financial Obligations 4158.0 3223.4 2948.8 1776.2 916.3
Financial Assets FA1 Investment - Long Term (at Cost) 229.3 167.7 157.7 147.7 251.6