Financial Analysis Report
[pic] Bang College of Business (BCB) MBA Program Fall 2012 FN5201: Managerial Finance Draft Paper: Financial Ratio Analyses of JSC KMK Munai and ZhaiykMunai LLC Students: Kaisar Zharokov ID: 20110299 Zhanar Stambak ID: 20092628 Instructor: Mujibul Haque, Ph. D. Date of submission: November 14, 2012 Almaty 2012 Acknowledgement This report analyzes the balance sheets and income statements of ZhaiykMunai LLC and KMK Munai JSC, comparing 2009, 2010 and 2011. The data in this report represent two companies’ financial performance. Common size income statements and balance sheets are used to compare two companies’ sizes and types.
Trends for major balance sheet and income statement items and ratio analysis are used to compare and contrast companies by size and type. This report studied the financial statements of both companies, comparing 2009, 2010, and 2011, the last three years. Trends of major balance sheet and income statement items as well as financial ratios are presented for two companies’. We would like to thank the companies for the published financial statements for the last three years on the web-site of Kazakhstan Stock Exchange and made this report possible. Table of Contents I. Introduction II.
Brief description of companies III. DuPont Analyses IV. Evaluation Working Capital Policies V. Assessment of Capital Structure Policies VI. Assessment of Dividend Policies VII. Break-even and leverage analyses VIII. P/E ratios analyses IX. Summary and Recommendations X. Appendix A – Financial statements from 2009 to 2011 XI. Appendix B – DuPont Analysis & Working Capital Ratios tables 1 Introduction Objective The objective is to reveal the financial analysis techniques used to evaluate the financial performance of Zhaikmunai LLC and JSC KMK Munai, and evaluate the companies worthiness as an investment. Scope
Using financial statements from 2009, 2010, and 2011, along with standard financial ratio analysis, we have been able to develop what we believe is a clear picture of companies’ financial performance. Note that the financial analysis was done using the financial report data from publicly available financial statements for the years 2009, 2010 and 2011 from KASE. We have included these statements for your review in Appendix A. Appendix B contains other measures of Zhaikmunai and KMK Munai Companies’ financial performance, as expressed in standard financial ratio analysis techniques using figures from the financial reports in Appendix A.
Methodology Our research methodology requires gathering relevant data from the specified documents in order to analyze the material and arrive at a more complete understanding and historical changes of the selected companies. We hope to shed light on the following questions through our research: 1) A brief description and comparison of two chosen companies from the same industry, listed on KASE. 2) To perform the extended Du Pont analysis of both companies, analyze the results and make the comparison. 3) Working capital policies evaluation, classification and conclusion. ) Capital structure policy evaluation and comparison between two companies. 5) Assessing dividend policy of both companies and comparison. 6) Undertake break-even and leverage analyses, evaluation and comparison of it. 7) P/E ratios analysis and comparison. Limitations Although this research was carefully prepared, we are still aware of its limitations and shortcomings. First of all, the research was conducted based on financial statements from KASE for the last three years. Some information from financial statements might not be sufficient for a full company analysis.
Secondly, in Zhaikmunai LLC company there were no dividend payments for the last three years and fifth paragraph from methodology – Assessing dividend policy couldn’t be calculated for that company. Finally, while acquiring data for the chosen companies we were limited only with financial statements of JSC KMK Munai for the 2010 and 2011 provided in Russian language but all the presented in data was easily translated and figures were recognizable. (II) Brief description of Zhaikmunai LLP and JSC KMK Munai companies Zhaikmunai Company
Zhaikmunai LP is an Isle of Man registered limited partnership whose global depository receipts are listed on the London Stock Exchange. The Partnership indirectly holds 100% of Kazakhstan registered Zhaikmunai LLP (“Zhaikmunai”). Zhaikmunai is an independent oil and gas company developing the 274 square km Chinarevskoye field. The Chinarevskoye field is located in north-western Kazakhstan, 80 km northeast of Uralsk and about 60 km from the Russian border. Zhaikmunai’s name is derived from “Zhaik”, being the Kazakh name for the Ural River and “Munai” which means oil or hydrocarbons in Kazakh.
Zhaikmunai was formed in March 1997 to explore, produce and sell crude oil and gas condensate in north-western Kazakhstan. In May 1997, Zhaikmunai was granted an exploration and production licence for the Chinarevskoye field, in the northern part of the oil-rich Pre-Caspian Basin. In October 1997, the Company entered into a Production Sharing Agreement (“PSA”) with the Republic of Kazakhstan. Zhaikmunai started with crude oil production in October 2000, and increased average monthly crude oil and condensate production from 2,210 boepd in 2004 to 33,552 boepd (including GTF products) in Q1 2012.
Zhaikmunai’s operational facilities are located in Chinarevskoye field in the province of Batys in north-western Kazakhstan. They include an oil processing facility capable of processing 400,000 tpa (tones per annum) of crude oil, multiple oil gathering and transportation lines, a gas powered electricity generation system, major warehouse facilities and a tank farm for the storage of crude oil, materials, machinery and chemicals used in crude oil production, and an employee field camp. As of 31 December 2011, 11 wells were producing from the Tournaisian and 8 wells from the Ardatovsky and Biski Afoninski reservoirs.
JSC KMK Munai JSC KMK Munai was established in 2004 through the merge of Kokzhide Munai LLP, Kumsai Munai LLP and Mortuk Munai LLP. Previously, the company was named as Lancaster Petroleum and then as KKM Operating Company. By the decision of new shareholders the company was renamed to JSC KMK Munai since March 2010. KMK Munai is an independent joint stock company that has subsoil contracts for Kokzhide, Mortuk and Kumsai oilfields based in Aktobe, West Kazakhstan region. The company has licenses to use the above mentioned oilfields.
It has own pipeline which is connected with TransNeft. Comparison of Zhaikmunai LLP and JSC KMK Munai: Despite Zhaikmunai LP was formed in 1997 and JSC KMK Munai was established in 2004, Zhaikmunai LLP is a much smaller company cause it’s part of Zhaikmunai LP, which is currently engaging in the exploration, production, and sale of crude oil and gas condensate in northwestern part of the Republic of Kazakhstan. If we compare Total Assets and Revenues of these two companies for 2011 year, it will be easier to see the difference in size of these companies: |Zhaikmunai LLP |JSC KMK Munai | |Total Assets |1,231,883 |23,104,453 | |Sales |300,835 |7,806,540 | As we can see the difference is significant. JSC KMK Munai has much greater amount of assets and it’s greater in size than Zhaikmunai LLP.
Generally speaking JSC KMK Munai company is much more developed company in that sphere of business. Profitability of Zhaikmunai and KMK Munai Companies 2) DuPont analysis The DuPont Analysis is important determines what is driving a company’s ROE; Profit margin shows the operating efficiency, asset turnover shows the asset use efficiency, and leverage factor shows how much leverage is being used. The method goes beyond profit margin to understand how efficiently a company’s assets generate sales or cash and how well a company uses debt to produce incremental returns.
Using these three factors, a DuPont analysis allows us to dissect a company, efficiently determine where the company is weak and strong and quickly know what areas of the business to look at (i. e. , inventory management, debt structure, margins) for more answers. The measure is still broad, however, and is not a substitute for detailed analysis. The DuPont analysis looks uses both the income statement as well as the balance sheet to perform the examination. As a result, major asset purchases, acquisitions, or other significant changes can distort the ROE calculation.
Many analysts use average assets and shareholders’ equity to mitigate this distortion, although that approach assumes the balance sheet changes occurred steadily over the course of the year, which may not be accurate either. First, let’s look at the Return on Investment (ROI) for 2009, 2010 and 2011, using the DuPont Model, which is margin times turnover. Margin is net income divided by the sales, and turnover is sales / average total assets (Marshall, 2002). Zhaikmunai Company ROI for 2009: |ROI |= |MARGIN |x |TURNOVER | | | | | | | | | |Net profit after taxes |= |Net profit after taxes |x |Sales | | | | | | | | |Input: |-15,480 |= |-15,480 |x |116,033 | |Result: |-1. 5% |= |-13. 34% |x |0. 1160 | | | | | | | | | | | | | | | Zhaikmunai Company ROI for 2010: |ROI |= |MARGIN |x |TURNOVER | | | | | | | | | |Net profit after taxes |= |Net profit after taxes |x |Sales | | | | | | | | |Input: |15,105 |= |15,105 |x |178,159 | |Result: |1. 9% |= |8. 47% |x |0. 1641 | | | | | | | | | | | | | | | Zhaikmunai Company ROI for 2011: |ROI |= |MARGIN |x |TURNOVER | | | | | | | | | |Net profit after taxes |= |Net profit after taxes |x |Sales | | | | | | | | |Input: |65,775 |= |65,775 |x |300,835 | |Result: |5. 4% |= |21. 86% |x |0. 2442 | | | | | | | | | | | | | | | | |2011 |2010 |2009 | |Net Profit Margin (Net Income ?
Sales) |22% |8,5% |-13% | |Return on Equity (ROE) = NI/E |29% |9,15% |-6,1% | |Return on Investment (ROI) |5,34% |1,39% |-1,5% | |Return on Assets (ROA) = NI/TA |5,34% |1,4% |-1,5% |
Analysis and conclusion: First of all let’s just look what happened from 2009 to 2011 briefly, and then analyze and conclude company’s actions. As we know Net profit margin, ROE and ROA are calculated from NI, and due to world financial crisis, in 2009 Zhaikmunai LLP Company had losses of -15,480, it caused coefficients as Profit Margin, Return on Asset and Return on Equity to became negative for the 2009 year. Simply talking, there were no returns, moreover there were only losses.
Next, in 2010 we can see that Profit Margin grew, as Return on Asset and Return on Equity, from negative to positive in comparison to 2009, but rise of coefficients was not great due to the results of financial crisis. Profit margin increased to 8. 5%, which reflected company’s successful actions during crisis. ROA became 1. 4% which is representing not bad, medium growth on return on assets. And ROE grew to 9,15%, according to that we can conclude that company started to gain momentum in it’s operations, gain profit, and unwind.
One of the reasons of growth by the way of profit ratios, is the debt increase by 14% in 2010 (Capitalization Ratio increased from 60% to 74%). Despite for 2011 year Sales were increased almost twice as it were in 2010, Profit Margin in 2011 increased in about four times as it was in the previous year due to the company development and expand, it reflected good results in company activities. Return on Asset and Equity also increased which showed good progress in company work.
ROE grew to 29% from 9% which shows 20% increase in return on it’s equity for 2011 year. Now, lets evaluate company’s performance for the last years: At over 384%, the increase in ROI and ROA between 2010 and 2011 is remarkable and shows that Zhaikmunai Company increased its sales while increasing the utilization of its assets used to generate these sales. And to achieve these results, the sales, operating income and average total assets had to all increase proportionately.
In the short term, this would be a good trend, but if it continues, it could be a sign that Zhaikmunai Company is not keeping a big investment in assets, because not that as the denominator in this ROI calculation, a low asset figure can be used to help drive up the overall result. Meaning that if this trend continues, it may be an indication of increased operations rather than improvement in asset efficiency. DuPont Analysis of JSC KMK Munai: |2011 |2010 |2009 | |Net Profit Margin (Net Income ? Sales) |8,5% |4,1% |8,6% | |Total Asset Turnover (Sales ? Total Assets) |0,36 |0,41 |0,51 | |Equity Multiplier (Average Assets ?
Average Equity) |3,11 |2,26 |1,94 | |Return on Equity (ROE) = Net Profit Margin*Total Asset Turnover*Equity Multiplier |9,6% |3,8% |8,5% | |Return on Investment (ROI) |3,1% |1,7% |4,4% | |Return on Assets (ROA) = NI/TA |2,9% |1,2% |5,7% |
Analysis: From this table we can conclude that 2010 year was unsuccessful in comparison to 2009 and 2011 years for JSC KMK Munai company. Net Profit Margin had dropped mainly because of Net Income. For 2011 For 2010 For 2009 |665 836,0 |244 332,0 |505 400,0 | Net Income had dropped and that reflected on all returns coefficients such as ROE, ROI, ROA too.
However if we will analyze ROA, not only NI influenced on it. For 2011 For 2010 For 2009 |Assets |23 104 453,0 |20 007 643,0 |8 798 664,0 | Assets were increased almost in 2. 28 times from 2009 to 2010 year. It’s a huge number and a great step for that company to success. So, we can conclude that JSC KMK Munai is developing very fast, it’s really easy to see how the company is expanding on the market.
After growth in 2010, sales in 2011 increased by 31% which brought more NI and increased returns: ROI, ROA and ROE. Comparison of DU Pont analysis between Zhaikmunai LLP and JSC KMK Munai: As we know JSC KMK Munai is much greater company than Zhaikmunai, and despite it’s ROE for 2011 is lesser than Zhaikmunai 9,6% and 29%, KMK Munai has much greater profits. The smaller the company, it’s much easier to increase such profit ratios than for a bigger company with great amount of assets, cause more assets company have, lesser return will be reflected in such ratios like ROE, ROA, ROI.
Also JSC KMK Munai is much more stable company in that business. For 2009 year KMK Munai has positive healthy ratio’s coefficients, however Zhaikmunai LLP has only losses and all it’s profit ratios and return ratios are negative. 3) Working Capital Policies Evaluation Zhaikmunai Company’s Working Capital Ratios: |Ratios |2011 |2010 |2009 | |CA/TA |0. 082 |0. 103 |0. 177 | |CA/Sales |0. 36 |0. 628 |1. 522 | |CL/TA |0. 087 |0. 072 |0. 069 | |Current Ratio |0. 941 |1. 426 |2. 551 | |Acid Quick Ratio |0. 806 |1. 355 |2. 501 | |Inventory days |74. 84 |38. 214 |28. 82 | |Trade Receivable days |15. 336 |3. 35 |43. 655 | |Inventory turnover |4. 77 |9. 551 |12. 665 | Analysis of Working Capital ratios: At 2011 year according to Current Ratio and CA/TA, also Quick ratio, Zhaikmunai chosen Aggressive working capital policy and working capital finance policy, because Current ratio 1;0. 941 and CA/TA=0. 082 which seems too small. Also we can see how the company is going from Conservative-Moderate to more Aggressive working capital policy with each year (CR for 2009=2. 551, for 2010=1. 426, then for 2011 its 0. 941).
Usually with aggressive policy company is trying to get high returns with a high risk, the Aggressive working capital policy sees the company keep a really low amount of current assets. “The idea of it is to collect payment on time, leaving no debtors and invest that amount in the business. And pay the creditors as late as possible. It is a high risk arrangement though, because, should your creditor come asking for money, and for some reason, you don’t have enough money to pay them off, you might end up having to sell a costly asset to pay off your debt to them. A current ratio of 2 and an acid test of 1. 0 are considered adequate liquidity (Marshall, 2002). Zhaikmunai Company’s Acid Test numbers for 2010 and 2011 were 1. 355 and 0. 806, and its Current Ratio numbers for 2010 and 2011 were 1. 426 and 0. 941. Each sets of these ratio figures indicate that Sample Company could possibility have some difficulties in meeting its financial obligations, so these numbers will be important to watch closely in the future.
Working Capital Ratios of JSC KMK Munai |Ratios |2011 |2010 |2009 | |CA/TA |0,12 |0,20 |0,34 | |CA/Sales |0,37 |0,68 |0,51 | |CL/TA |0,42 |0,45 |0,22 |Inventory-number of days |37,20 |21,89 |20,62 | |Acid test (Quick) ratio |0,22 |0,41 |1,40 | |Current ratio |0,30 |0,45 |1,58 | |Inventory Turnover |9,81 |16,67 |17,70 | |Asset Turnover |0,36 |0,41 |0,67 | |Receivable Turnover |50691,82 |1,61 |12,22 | |Receivable Turnover in Days (RTD) |0,01 |226,14 |29,86 | Analysis: At 2011 year according to Current Ratio and CA/TA, also Quick ratio, JSC KMK Munai chosen Aggressive working capital policy and working capital finance policy, because Current ratio 1;0. 3 and CA/TA=0. 12. Also we can see how the company is going from Conservative-Moderate to more Aggressive working capital policy with each year (CR for 2009=1. 58, for 2010=0. 45, then for 2011 its 0. 3).
Usually with aggressive policy company is trying to get high returns with a high risk, the Aggressive working capital policy sees the company keep a really low amount of current assets. “The idea of it is to collect payment on time, leaving no debtors and invest that amount in the business. And pay the creditors as late as possible. It is a high risk arrangement though, because, should your creditor come asking for money, and for some reason, you don’t have enough money to pay them off, you might end up having to sell a costly asset to pay off your debt to them. ” A current ratio of 2 and an acid test of 1. 0 are considered adequate liquidity (Marshall, 2002). JSC KMK Munai Company’s Acid Test numbers for 2010 and 2011 were 0. 41 and 0. 22, and its Current Ratio numbers for 2010 and 2011 were 0. 45 and 0. 3.
Each sets of these ratio figures indicate that Sample Company could possibility have some difficulties in meeting its financial obligations, so these numbers will be important to watch closely in the future. Comparison: Both companies are using aggressive working capital policy in 2011 and aggressive working capital finance policy. Also both of them were using moderate/conservative working capital policy in 2009 year. However Zhaikmunai has much lesser risk to have some difficulties with meeting its financial obligations, cause it’s Current ratio for 2011 is 0,941 which is very near to 1, where JSC KMK Munai has 0,30 Current Ratio and risk in the short term is much higher. 4) Assessment of Capital Structure: Zhaiykmunai LLP: Capital Structure (in thousands of us dollars): |2011 |2010 |2009 | |Cash & Cash Equivalents |47,537 |84,697 |132,344 | |Total Long term Debt |746,590 |739,103 |591,407 | |Preferred Stock |0 |0 |0 | |Minority interest |0 |0 |0 | |Total Stockholder’s equity |225,849 |165,094 |252,846 | |Total Capitalization |1,019,976 |988,894 |976,597 | Capitalization Ratio for 2009: Long term Debt/TC=60,5%; Capitalization Ratio for 2010: Long term Debt/TC=74,7%; Capitalization Ratio for 2011: Long term Debt/TC=746,590/1,019,976=0. 732=73. 2%; Analysis:
From the 2009 year Capitalization Ratio has increased from 60,5% to 73,2%, which indicates that Long term debt has increased in greater proportion than total capitalization including Stockholders equity, which represents risk to the company cause it has too much debts, however the company is not large in this sphere of business, and in order to develop more faster it needs to borrow. Also in 2009 year that company had some losses and in order to change the situation it made borrowings in 2010. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion. It assumes that management can earn more on borrowed funds than it pays interest expense and fees on these funds. However successful this formula may seem, it does require a company to maintain a solid record of complying with its various borrowing commitments.
A long term debt to capitalization ratio for 2011 year which is 73,2% indicates that the business has 73,2% debts from total capitalization. We can conclude that Zhaikmunai LLP is a developing small company, and it had some major problems in 2009 when it had losses and it tries to solve the situation and expand in the market in a much faster way by borrowing funds. Also we can say that 73,2% of capitalization ratio is a great coefficient, and it can lead to some financial debt problems in the future. High long term debt to capitalization ratio would indicate the financial weakness of the firm and the debt would most likely increase the risk of the company. JSC KMK Munai: Capital Structure (in thousands of us dollars): |2011 |2010 |2009 | |Cash & Equivalents |866,111 |1,694,115 |1,122,935 | |Total Debt |4,854,022 |4,538,304 |1,261,919 | |Preferred Stock |0 |0 |0 | |Minority interest |0 |0 |0 | |Total Stockholder’s equity |7,272,732 |6,998,413 |6,144,477 | |Total Capitalization |12,992,865 |13,230,832 |8,529,331 | Capitalization Ratio for 2009: Long term Debt/TC=1,261,919/8,529,331=0. 148=14. 8%; Capitalization Ratio for 2010: Long term Debt/TC=4,538,304/13,230,832=0. 343=34. 3%; Capitalization Ratio for 2011: Long term Debt/TC=4,854,022/12,992,865=0. 374=37. 4%; Analysis:
The high Capitalization ratio means that the finance of the company mainly comes from the debt which can be quite risky and is sometimes a reason for bankruptcy. The higher ratio percentage shows how weak the company is financially. Similarly, a decrease in the long term debt to capitalization ratio would mean that there is an increase in the stock holder’s equity. Through the period from 2009 to 2011 we see how Capitalization Ratio was increasing from 14. 8% to 37. 4%. It means that the risk of financial debt problems is rising. However long term debt to capitalization ratio for 2011 year is much smaller than 1. 0 (0,374) which indicates that the business has less debts than capital which is a good thing for a business as it can’t lead to lots of financial problems.
JSC KMK Munai has good and healthy Capitalization Ratio, which reflects that risk of debt payments is not substantial, and also we can conclude that this is a large company, because it usually appears that an indicator on either side of 35% is fairly typical for larger companies. Comparison: The examples of Zhaikmunai LLP and JSC KMK Munai will illustrate this important perspective for investors. As of FY 2011, Zhaikmunai had a capitalization ratio of 73,2%, and JSC KMK had 37,4%. It is difficult to generalize on what a proper capitalization ratio should be, but, on average, it appears that an indicator on either side of 35% is fairly typical for larger companies. Obviously, JSC KMK Munai low leverage is a significant balance sheet strength considering its ongoing struggle with product liability claims.
Also Zhaikmunai LLP has very risky and not desirable Capitalization Ratio for investors of 73,2%, which shows that the risk of this company to bankruptcy is more significant than JSC KMK Munai for investors, because Zhaikmunai’s operations are created mostly on long term debts. 5) Assessment of Dividend Policies Zhaiykmunai LLC: There were no dividend payments through 2009-2011 years. Dividend payout ratio=0; KMK Munai Company: Dividends of 1,199, 971 thousand tenge were declared on April 30, 2008. Shareholders agreed to offset a portion of dividends payable net of withholding tax against related party receivables. No such offset occurred in 2009, 2010 and 2011. So, the dividend payout ratio of KMK Munai is also equal to 0. 6) Break-even point for 2011:
We are taking COGS as total variable costs and General and Adminstrative expenses as total fixed costs in order to evaluate Break even point of these two companies: |Zhaiykmunai LLC |JSC KMK Munai | |(In US dollars) |(In tenge) | |Sales = 300,835 (S) |Sales = 7,806,540 (S) | |COGS=70,805 (VC) |COGS=1,915,342 (VC) | |General and Administrative expenses=18,874 (FC) |General and Administrative expenses=1,421,214 (FC) | |Break-Even Point = FC/(1-VC/S) | |VC/S=70,805/300,835=0. 35 |VC/S=1,915,342/7,806,540=0. 245 | |1-0. 235=0. 765 |1-0. 245=0. 755 | |BEP=18,874/0. 765=24,672 |BEP=1,421,214/0. 755=1,882,403 | |300,835/24,672=1219% of break even during the period; |7,806,540/1,882,403=414. 7% of break even during the period; | Break-even point for 2010: Zhaiykmunai LLC |JSC KMK Munai | |(In US dollars) |(In tenge) | |Sales = 178,159 (S) |Sales = 5,960,293 (S) | |COGS=53,861 (VC) |COGS=1,425,377 (VC) | |General and Administrative expenses=15,481 (FC) |General and Administrative expenses=1,900,539 (FC) | |Break-Even Point = FC/(1-VC/S) | |VC/S=53,861/178,159=0. 02 |VC/S=1,425,377/5,960,293=0. 239 | |1-0. 302=0. 698 |1-0. 239=0. 761 | |BEP=15,481/0. 698=22,179 |BEP=1,900,539/0. 761=2,497,423 | |178,159/22,179=803% of break even during the period; |5,960,293/2,497,423=238. 7% of break even during the period; | Break-even point for 2009: Zhaiykmunai LLC |JSC KMK Munai | |(In US dollars) |(In tenge) | |Sales = 116,033 (S) |Sales = 5,865,138 (S) | |COGS=44,035 (VC) |COGS=2,207,135 (VC) | |General and Administrative expenses=16,182 (FC) |General and Administrative expenses=938,303 (FC) | |Break-Even Point = FC/(1-VC/S) | |VC/S=44,035/116,033=0. 379 |VC/S=0. 376 | |1-0. 379=0. 1 |1-0. 376=0. 624 | |BEP=16,182/0. 61=26,528 |BEP=938,303/0. 624=1,503,691 | |116,033/26,528=437% of break even during the period; |5,865,138/1,503,691=390% of break even during the period; | Break-even point of 24,672 in 2011 year of Zhaikmunai company is telling us that if sales will be lower than 24,672 the company may have some losses. In other cases it’s the same.
Actually according to DOL – degree of leverage that will be described more precisely in the next part, we can tell that the higher the sales of these two companies the higher the profit will be, cause it has coefficient higher than 1 for 2009-2011 years for Zhaikmunai LLP as well as for JSC KMK Munai companies. Appendix A – Financial Statements from 2009 to 2011 [pic] [pic] [pic] [pic] |Translated Financial Statements of JSC KMK Munai for 2010 and 2011 | | | | | | |JSC KMK Munai | | | | |Statement of Financial Position | | | |As at December 31, 2010 and 2011 | | | | |In thousands of Tenge |2011 |2010 |2009 | |ASSETS | | | | |Non – current assets | | | | |Intagible assets |994584 |830444 |69282 | |Property, plant, and equipment |17664781 |13538143 |5380736 | |Cash, limited in its use |123089 | | | |Other non-current assets |1264169 |1491592 |322658 | |Deferred tax assets |161057 |104821 |33881 | |Total non-current assets |20207680 |15965000 |5806557 | |Current assets | | | | |Inventories |795640 |357440 |331374 | |Trade receivables |154 |643150 |479881 | |Due from related parties | | | | |Advances paid |187817 |136938 |135941 | |Prepayment for corporate income tax |375143 |6275 |49 | |Excess profit tax recoverable | |3900 |541071 | Other current assets |458468 |1125388 |380371 | |Bank deposits |200000 |61997 |485 | |Cash and cash equivalents |866111 |1694115 |1122935 | |Total current assets |2883333 |4029203 |2992107 | |Assets of disposal group classified as held for sale |13440 |13440 | | |TOTAL ASSETS |23104453 |20007643 |8798664 | |Equity | | | | |Charter capital |1500000 |1500000 |1500000 | |Treasury shares |-195437 |-195437 |-195437 | |Retained earnings |5968169 |5693850 |4839914 | |Total equity |7272732 |6998413 |6144477 | |Liabilities | | | | |Non-current lialibilities | | | | |Provisions |1504083 |1079826 | | |Abandonment and site restoration liabilities | | |756355 | |Interest-bearing loans |4708305 |2955108 | | |Total non-current liabilities |6212388 |4034934 |756355 | |Current liabilities | | | |Short-term financial obigations |4854022 |4538304 |1261919 | |Trade payables |4137233 |3692778 |130377 | |Corporate Income tax payable | | |32811 | |Other taxes payables |514856 |562029 |371449 | |other provisions |54930 |103565 | | |Other current liabilities |58292 |77620 |101276 | |Total current liabilities |9619333 |8974296 |1897832 | |Total liabilities |15831721 |13009230 |2654187 | |TOTAL SHAREHOLDER’S EQUITY AND LIABILITIES |23104453 |20007643 |8798664 | |JSC KMK Munai | | | |Statements of Comprehensive Income | | | |For the year ended December 31, 2010 & 2011 | | | |In thousands of Tenge |2011 |2010 | |Revenue from sale of crude oil |7806540 |5960293 | |Cost of sales |-1915342 |-1425377 | |Gross profit |5891198 |4534916 | | | | | |Dry hole expense | | | Geological and geophysical expenses |-80784 |-60674 | |General and administrative expenses |-1421214 |-1513145 | |Selling expenses |-2739129 |-1659149 | |Loss on disposal of property, plant and equipment |-16180 |-6262 | |Gain on disposal of North Karpovskiy | | | |Other operating (income)/loss |2588 |-5574 | |Profit from operating activities |1636479 |1290112 | | | | | |Finance income | | | |Finance cost |-486661 |-188540 | |Foreign exchange loss |-95303 |-34343 | |Profit before income tax |1054515 |1067229 | | | | | |Income tax expense |-388679 |-431380 | |Excess profit tax benefit/(expenses) | | | |Profit for the year from continuing operations |665836 |635849 | | | | | |Loss from discontinued operations, net of tax | | | |Net profit for the year |665836 |635849 | |Other comprehensive income | | |Total comprehensive income for the year |665836 |635849 | |Earnings per share | | | |Basic and diluted earnings per share (thousands of Tenge per share) |510 |487 | |Earnings per share for continuing operations | | | |Basic and diluted earnings per share (thousands of Tenge per share) | |487 | [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] Appendix B – DuPont Analysis & Working Capital Ratios DuPont Analysis of JSC KMK Munai | | | |Financial Statement Data (in thousands of tenge) |2011 |2010 |2009 | |Sales |7 806 540,0 |5 960 293,0 |5 865 138,0 | |EBIT |1 054 515,0 |675 712,0 |383 532,0 | |Interest Expense (Non-0perating) 0,0 |0,0 |0,0 | |Tax Expense |388 679,0 |431 380,0 |198 660,0 | |Net Income (Income for Primary EPS) |665 836,0 |244 332,0 |505 400,0 | |Assets |23 104 453,0 |20 007 643,0 |8 798 664,0 | |Equity |7 272 732,0 |6 998 413,0 |6 144 477,0 | | | | | | |Three-Step DuPont Model: | | | | | | | | | |Net Profit Margin (Net Income ? Sales) |8,5% |4,1% |8,6% | |Total Asset Turnover (Sales ? Total Assets) |0,36 |0,41 |0,51 | |Equity Multiplier (Average Assets ?
Average Equity) |3,02 |2,19 |1,94 | |Return on Equity (ROE) |9,3% |3,7% |8,5% | |Return on Investment (ROI) |3,1% |1,7% |4,4% | |Return on Assets (ROA) |2,9% |1,2% |5,7% | | | | | | |Five-Step DuPont Model: | | | | | | | | | |Pre-Interest Pretax Margin (EBIT ? Sales) |13,5% |11,3% |6,5% | |Asset Turnover (Sales ? Average Assets) |0,36 |0,41 |0,51 | |Interest Burden [(EBIT – Interest Expense) ? EBIT] |100,0% |100,0% |100,0% | |Tax Efficiency [1 – (Tax Expense ? EBIT – Interest Expense))] |63,1% |36,2% |48,2% | |Equity Multiplier (Average Assets ? Average Equity) |3,02 |2,19 |1,94 | |Return on Equity |9,3% |3,7% |3,1% | | | | | | |Source: Financial Statements of JSC KMK Munai for 2009, 2010 and 2011 from KASE | | Working Capital Ratios: JSC KMK Munai | | | | | | | | | |Financial Statement Data (in thousands of tenge) |2011 |2010 |2009 | |Sales |7 806 540,0 |5 960 293,0 |5 865 138,0 | |Total Assets |23 104 453,0 |20 007 643,0 |8 798 664,0 | |Total Liabilities |15 831 721,0 |13 009 230,0 |2 654 187,0 | |Current Assets |2 883 333,0 |4 029 203,0 |2 992 107,0 | |Current Liabilities |9 619 333,0 |8 974 296,0 |1 897 832,0 | |Inventory |795 640,0 |357 440,0 |331 374,0 | |Trade Receivables |154,0 |3 692 778,0 479 881,0 | | | | | | |Working Capital Policies Evaluation of JSC KMK Munai | | | | | | | | |CA/TA |0,12 |0,20 |0,34 | |CA/Sales |0,37 |0,68 |0,51 | |CL/TA |0,42 |0,45 |0,22 | |Inventory-number of days |37,20 |21,89 |20,62 | |Acid test (Quick) ratio |0,22 |0,41 |1,40 | |Current ratio |0,30 |0,45 |1,58 | |Inventory Turnover |9,81 |16,67 |17,70 | |Asset Turnover |0,36 |0,41 |0,67 | |Receivable Turnover |50691,82 |1,61 |12,22 | |Receivale Turnover in Days (RTD) |0,01 |226,14 |29,86 | | | | | | |Source: Financial Statements of JSC KMK Munai for 2009, 2010 and 2011 from KASE | References 1) Course Power Point slides 2) http://www. billslater. com/uop/Course_work/ACC_529_Ratio_Analysis_Assignment—William_Slater. htm 3)