Financial Management Group Presentation Slides

Financial ManagementQSB3413/QSB3414/FIN60203

Group Members:

1. Melvin Lim Wei Jien2. Jake Sia Chyi Sern3. Voon Sze Lun4. Amy Wong Li Hui5. Nobert Voo Hsien Yung

1.Financial ManagementQSB3413/QSB3414/FIN60203

ABOUT THE COMPANY Sycal Venture Berhad (Group)

Established since 1980

Public Limited Liability Company

Listed on the main board of Bursa Malaysia on the 29th March 1995

Core Businesses Construction and Infrastructure Property Development Hotels and Resorts


PRINCIPAL ACTIVITIESName of subsidiary companies Principal ActivitiesSycal Kulai Sdn Bhd Property developmentCygal Construction Sdn Bhd DormantSycal Plant & Machinery Sdn Bhd Contractor for management and operator of

plant and machinery

Cygal Industries Sdn Bhd DormantCygal Hotel Management Services Sdn Bhd

Dormant

Cygal Entertainment Sdn Bhd DormantSycal Concrete Sdn Bhd Manufacturing and trading in ready mix

concrete

Sycal Geotechniecs Sdn Bhd DormantUnited Golden Mile Aviation Ltd Leasing of aircraft parts and equipment and

provision of related services

Sycal ICC Properties Sdn Bhd Property developmentSycal Properties Management Sdn Bhd Property development, investment holding

and operator of theme park

ANALYSIS OF REVENUE CONTRIBUTIONS OF DIFFERENT SEGMENTS


REVENUE CONTRIBUTION OF DIFFERENT SEGMENTS IN 2014 & 2015

REVENUE GROUP VARIANCE2015 2014RM’000 RM’000 RM’000 %

Revenue comprises:

Contract revenue 248,351 291,859 (43,508) (15)%Consultation and project management fee

7,311 1,200 6,111 509%

Property development revenue 1,458 51,715 (50,257) (97%)

Joint venture development revenue

3,182 - 3,182 100%

Sales of goods and services 61,415 62,609 (1,194) (2%)

TOTAL 321,717 407,383 (85,666) (21%)


CURRENT STATE OF MAJOR INDUSTRY OF SYCAL BERHAD CURRENTLY FACING THE CHALLENGES OF ECONOMIC SLOWDOWN.

ECONOMIC GROWTH IS EXPECTED TO SLUGGISH FROM 4.7% TO 4.5% IN ONE YEAR PERIOD.

THE HOUSING MARKET ECONOMIST PREDICTED THE NUMBER OF SALES FOR HOUSING MARKET WILL ATTAIN BETWEEN 190,000 AND 210,000.

HOUSE PRICE INDEX- RISE IN BETWEEN 3.5% & 5.5%.

GDV- GROW BY 2% IN 2016.

OVERALL, SYCAL BERHAD IS COMPETENT TO KEEP PROFITABLE.



STRENGTHS Awarded the Bureau Veritas Certification, ISO 9001:2008

Requirements of the management system standards

Handful of Completed Projects

Segmentations of Services Services by different subsidiaries

WEAKNESSES Diversification

Into Hotels & Resorts Affects by Economic Downturn


STRATEGIC PLANS TO SEIZE OPPORTUNITIES Planned Developments in developing areas

Potential GDV of RM 1.2 billion

Expand one of their core business Hotels & Resorts segment

CHALLENGES Global financial crisis

Goods and Service Tax issue Comply with stringent regulations

Threats of increased interest rates Stringent lending policies by bank Ability to fund its projects


MAJOR CAPITALSLast three yearsYear 2013 • Purchased RM 7,245,000 of property, plant and equipment• As well as RM 63,000 in other investments

Year 2014• Purchased RM 15,371,000 of property, plant and equipment• As well as RM 63,000 in other investments

Year 2015• Purchased RM 16,882,000 of property, plant and equipment• As well as RM 63,000 in other investments

SOURCE OF FUNDINGS Bank borrowings of RM 62,578,000 and RM 60,345,000 in the

year 2014 and 2015 respectively

EVALUATING THE COMPANY’S CASH FLOW


Company’s Cash Flow Statement Year

2011 2012 2013 2014 2015

Total of Cash and Cash Equivalents (RM)

611,000 485,000 2,270,000 8,340,000 (4,260,000)

Differences (RM) - (126,000) 1,785,000 6,070,000 (12,600,000)

THE COMPANY’S MAJOR CASH FLOW


THE COMPANY’S MAJOR CASH FLOW (CONT’D)


Net cash decrease by RM 4,260,000 in 2015 while in 2014 the net cash increase is RM 8,340,000which is higher than net cash in 2015

THE COMPANY’S CASH AND CASH EQUIVALENT


THE COMPANY’S FREE CASH FLOW

WHAT IS FCF (FREE CASH FLOW)? A MEASUREMENT OF FINANCE PERFORMANCE

HOW TO CALCULATES FCF? USING THE COMPANY’S OCF – CAPEX = FCF

Financial ManagementQSB3413/QSB3414/FIN60203 13.

Year 2011

RM

Net Operating

Activities

1,436,000

Total

Investment

(908,000)

Total FCF

528,000

Year 2012

RM

Net Operating

Activities

21,420,000

Total Investment

(40,000)

Total FCF

21,380,000

Year 2013

RM

Net Operating

Activities

(14,148,000)

Total Investment

(407,000)

Total FCF

(14,555,000)

Year 2014

RM

Net Operating Activities

(41,770,000)

Total Investment

(1,401,000)

Total FCF

(43,171,000)

Year 2015

RM

Net Operating Activities

(426,000)

Total Investment

(1,473,000)

Total FCF

(1,473,000)



Year of Company’s Free Cash Flow (FCF)

Total in RM

31st of March 2011

528,000

31st of March 2012

21,380,000

31st of March 2013

(14,555,000)

31st of March 2014

(43,171,000)

31st of March 2015

(1,473,000)

Total Free Cash Flow in 5 Years

(34,291)



15.

COMPANY’S FINANCIAL PERFORMANCE


2015 2014 2013 2012 2011a. Current Ratiocurrent assetscurrent liabilities

434,729,000225,848,000= 1.92

443,676,000224,002,000= 1.98

328,261,000211,296,000= 1.55

192,754,000132,343,000= 1.46

190,409,000113,703,000= 1.67

b. Quick Ratiocash+accounts receivablecurrent liabilities

5,205,000+173,076,000225,848,000= 0.79

9,720,000+172,333,000224,002,000= 0.81

3,529,000+160,551,000211,296,000= 0.78

2,425,000+36,812,000132,343,000= 0.30

1,199,000+51,329,000113,703,000= 0.46

i. Liquidity

16.


COMPANY’S FINANCIAL PERFORMANCEii. Activity

2015 2014 2013 2012 2011a. Inventory turnoverCost of goods soldInventory

280,540,000 19,932,000=14.07x

363,933,000 19,811,000=18.37x

260,573,000 6,589,000=39.55x

148,907,0008,161,000=18.25x

83,241,0007,789,000=10.69x

b. Average collection periodAccounts receivablesDaily credit sales

189,939,000 297,652,000 x 365=233.6 days

176,130,000 384,514,000 x 365=167.4 days

112,942,000 272,125,000 x 365=151.5 days

51,522,000 157,327,000 x 365=119.5 days

48,676,000 89,006,000 x 365=199.6 days

c. Total asset turnoverSalesTotal assets

321,717,000434,729,000=0.74x

407,383,000443,676,000=0.92x

292,327,000328,261,000=0.89x

169,406,000192,754,000=0.88x

100,131,000190,409,000=0.53x

COMPANY’S FINANCIAL PERFORMANCEiii. Debt


2015 2014 2013 2012 2011a. Debt RatioTotal liabilitiesTotal assets

286,193,000528,225,000 =0.54

286,580,000511,862,000=0.56

215,311,000405,161,000=0.53

142,879,000315,140,000=0.45

128,539,000291,673,000=0.44

b. Debt to EquityTotal liabilitiesCommon stock equity

286,193,000242,032,000=1.18

286,580,000225,282,000=1.27

215,311,000189,850,000=1.13

142,879,000172,261,000=0.83

128,539,000163,134,000=0.79

c. Interest cover ratioOperating profitsInterest expense

24,603,0001,593,000=15.44

29,195,0001,480,000=19.73

20,427,000228,000=89.59

12,748,000917,000=13.90

6,927,0001,876,000=3.69

COMPANY’S FINANCIAL PERFORMANCEiv. Profitability


2015 2014 2013 2012 2011a. Gross Profit MarginGross profitRevenue

41,177,000321,717,000=0.13

43,450,000407,383,000=0.11

31,754,000292,327,000=0.11

20,499,000169,406,000=0.12

16,890,00087,322,000=0.19

b. Return on AssetsNet income Total assets x 100%

18,452,000528,225,000 x 100%=3.49%

35,804,000511,862,000 x 100%=6.99%

17,977,000405,161,000 x 100%4.44%

8,936,000315,140,000 x 100%=2.84%

5,200,000291,673,000 x 100%=1.78%

c. Return on EquityNet incomeShareholders’ equity x 100%

18,452,000238,203,000 x 100%=7.75%

35,804,000222,312,000 x 100%=16.11%

17,977,000187,685,000 x 100%9.58%

8,936,000170,641,000 x 100%=5.24%

5,200,000161,543,000 x 100%=3.22%

COMPANY’S FINANCIAL PERFORMANCEv. Market Performance


2015 2014 2013 2012 2011a. Earnings per ShareNet incomeTotal outstanding common shares

17,293,000320,250,000 =0.05

34,999,000320,250,000 =0.11

17,432,000320,250,000 =0.06

8,907,000288,256,000 =0.03

5,056,000251,959,000 =0.02

b. Price / EarningsMarket value per shareEarnings per share

0.410.05 =8.20

0.330.11 =3.00

0.280.06 =4.67

0.180.03 =6.00

0.200.02 =10.00

c. Price / Book RatioMarket value per shareEquity book value / share

0.410.74 =0.55

0.330.69 =0.48

0.280.59 =0.47

0.180.59 =0.31

0.200.64 =0.31


FORECAST REVENUE GROWTH2015 2016

RM'000% of

Revenue RM'000Revenue 321,717 100.0% 341,020 Cost of Sales (280,540) -87.2% (297,372)Gross Profit 41,177 12.8% 43,648 Other Operation Income 6,426 2.0% 6,812

47,603 14.8% 50,459 Administration Expenses (10,854) -3.4% (11,505)Other Operating Expenses (13,211) -4.1% (14,004)

Profit/(Loss) From Operations 23,538 7.3% 24,950

Finance Costs (1,727) -0.5% (1,831)

Profit/(Loss) Before Taxation 21,811 6.8% 23,120

Taxation (3,359) -1.0% (3,561)Profit/(Loss) For the Year 18,452 5.7% 19,559

Other Comprehensive Income (1,402) -0.4% (1,486)

Total Comprehensive Income/(Loss) for the Year

17,050 5.3% 18,073

21.


REQUIRED NEW FUNDS

)1()()( 211

DPSSSLS

SARNF

- This shows that the company does not require any new funds to achieve this sales growth

A/S = Percentage relationship of variable assets to sales S = Change in salesL/S = Percentage relationship of variables liabilities to salesP = Profit marginS2 = New sales levelD = Dividend payout ratio

22.

CONCLUSIONS & RECOMMENDATIONS


Worsening performance in the year ended 2015

Attributed to the downturn in economy

Diversify its revenue streams or investments

Utilisation of assets


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Financial Management Group Presentation Slides