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FINANCIAL STATEMENT ANALYSIS TAFI Industries Berhad & FEDERAL FURNITURE Holdings (M) Berhad
TAFI INDUSTRIES BERHAD
FEDERAL FURNITURE HOLDINGS (M) BERHAD
CONTENT 1 2 3 4
OVERVIEW OF THE COMPANIES INCOME STATEMENT BALANCE SHEET CASH FLOW STATEMENT 4.1 CASH FLOW FROM OPERATING ACTIVITIES 4.2 CASH FLOW FROM INVESTING ACTIVITIES 4.3 CASH FLOEWS USED IN FINANCING ACTIVITIES 5 ANALYSIS 5.1 CASH FLOW STATEMENT 5.2 FIXED ASSETS AND LEASING 5.3 RATIO 6 TREND ANALYSIS 7 SUMMARY
TAFI Industries Berhad TAFI Industries Berhad is a Malaysiabased company. The Company is engaged in investment holding and provision of management services. Through its subsidiaries, the Company is principally engaged in the manufacturing and marketing of furniture products predominantly in Malaysia
FEDERAL FURNITURE Holdings (M) Berhad Federal Furniture Holdings (M) Berhad is a company are manufacturing, marketing, trading and exporting furniture and renovation and interior fit-outs of offices and hotels. The Group also specialises in contract renovations, fit-outs and interior design of private, commercial and public projects.
INCOME STATEMENT TAFI Industries Berhad 2004
2005
2006
2007
2008
9,059,994
54,275,680
61,374,264
54,276,760
62,056,338
(4,658,096)
(33,611,245)
(36,765,458)
27,382,183
(34,897,007)
4,401,898
20,664,435
24,608,806
81,658,943
27,159,331
Other operating income
0
559,767
604,933
1,004,070
1,830,706
Changes in inventories
0
1,280,538
(357,264)
(1,534,971)
(108,782)
Director's remuneration
(280,747)
(680,720)
(777,360)
(825,800)
(896,380)
(1,141,422)
(6,800,316)
(7,902,088)
(7,611,769)
(9,522,476)
(238,895)
(1,432,276)
(1,046,173)
(1,221,085)
(1,637,344)
61,657
369,943
0
0
0
(1,961,382)
(8,153,279)
(8,453,559)
(9,355,500)
(10,758,622)
(3,560,789)
(14,856,343)
(17,931,511)
(19,545,055)
(21,092,898)
841,109
5,384,637
6,677,295
7,349,522
6,066,433
Finance costs
(1,650)
(11,242)
(9,067)
(1,279)
(150)
Income from other investment
59,234
423,555
0
0
0
898,693
5,796,950
6,668,228
7,348,243
6,066,283
Income tax expense
(110,524)
(855,167)
(800,491)
(1,125,699)
(968,418)
Net profit for the year
788,169
4,941,783
5,867,737
6,222,544
5,097,865
9.08
6.29
7.39
7.90
6.50
Revenue (-)Cost of sales Gross profit
Staff cost Depreciation of property,plan & equipment Accretion of reserve on consolidation Other operating expenses
Profit from operations
Profit before tax
Earning per ordinary share
INCOME STATEMENT TAFI Industries Berhad
CFI of the company shows a significant increase in investment especially in purchase of property, plant and equipment (PPE) from RM139,887 in 2004, RM 958,4827 in 2005, RM 821,174 in 2006, RM 1,692,968 in 2007 and RM 5,560,268 in 2008. CFI shows decreasing curve in order of investment by purchasing property but in the term of operating capital expenditure by CFF curve its shows the U shape from the fluctuate in 2004 to 2006 and recovered in the year of 2006 to 2008.
INCOME STATEMENT FEDERAL FURNITURE Holdings (M) Berhad 2004
2005
2006
2007
2008
Revenue
38,419,932
48,219,076
45,069,142
52,809,869
53,665,738
(-)Cost of sales
(3,241,736)
(3,912,149)
(6,196,354)
(8,607,784)
(6,813,474)
Gross profit
35,178,196
44,306,927
38,872,788
44,202,085
46,852,264
3,166,905
1,730,104
2,016,953
31,892,008
889,658
174,458
(394,474)
1,490,197
269,496
(2,693,943)
(24,784,165)
(29,855,847)
(23,860,191)
(31,475,777)
(27,101,553)
(138,618)
(1,113,056)
(2,879,204)
(3,250,339)
(435,113)
Staff costs
(5,478,736)
(5,466,445)
(6,551,449)
(7,463,586)
(7,552,869)
Depreciation
(1,908,882)
(1,912,756)
(1,644,295)
(1,188,973)
(1,106,497)
Other operating expenses
(4,191,617)
(4,600,848)
(9,778,394)
(8,073,596)
(5,415,373)
Other operating income Changes in inventories of finished goods Contract costs Finished goods purchased
(loss)/gain on disposal of a subsidiary
-
(18,233)
-
-
-
(33,160,655)
(41,631,555)
(41,206,383)
(19,290,767)
(43,415,690)
2,017,541
2,675,372
(2,333,595)
24,911,318
3,436,574
Finance costs
(8,657,984)
(9,338,844)
(9,467,086)
(1,751,443)
(908,540)
Profit/ Loss before tax
(6,640,443)
(6,663,472)
(11,800,681)
23,159,875
2,528,034
(76,873)
1,565,781
(277,191)
(975,695)
(1,445,189)
(6,717,316)
(5,097,691)
(12,077,872)
22,184,180
1,082,845
24
18
(44)
32
1
24
1
Profit from operations
Income tax expense Profit/(loss) for the year Basic loss per share (sen) Fully diluted loss per share (sen)
N/A
N/A
N/A
BALANCE SHEET CASH FLOW STATEMENT
TAFI Industries Berhad FEDERAL FURNITURE Holdings (M) Berhad
ANALYSIS : CASH FLOW STATEMENT 1. Cash Flow From Operating Activities (CFO) CFO is a method in measuring amount of cash generated or used by the firm as a result of its production and sales goods and services. Although deficits or negative cash flows from operations are expected in some circumstances, for most firms positive CFO are essential for long run survival. Internally generated funds can be used to pay dividends or repurchase equity, repay loans, replace existing capacity or invest in acquisitions and growth.
ANALYSIS : CASH FLOW STATEMENT 2. Cash Flow From Investing (CFI) CFI is a reports the amount of cash used to acquire assets such as plant and equipment as well as investments and entire businesses. These outlays are necessary to maintain a firm’s current operating capacity and to provide capacity for future growth. CFI also includes cash received from the sale or disposal of assets or segments of the business.
ANALYSIS : CASH FLOW STATEMENT 3. Cash Flow From Financing (CFF) CFF contains the cash flow consequences of the firm’s capital structure (debt and equity) decisions. TAFI & FEDERAL presenting the cash flow statement that in Direct Method. An advantage of the direct method, which displays the individual cash flow impact of normal operating revenue and expense items, it is permits an evaluation of cash flows relating to specific line items in the income statement such as gross sales, cost of goods sold or even total operating expenses
ANALYSIS : CASH FLOW STATEMENT
The analysis will focus on performance, liquidity and financial that show by comparasion the ration. 3 ratio that we focus is : 1
Cash Flow To Sales
CFO/Sales
2
Cash Flow To Net Income
CFO/Net Income
3
Free Cash Flow (FCF)
CFO-Capital Expenditure
Tafi Industries Berhad 1.Cash flow statements highlight : Summary of Tafi Industries’s cash flow statement for 2004-2008 : Year
2004
2005
2006
2007
2008
RM’000 CFO
2,783,240
4,941,707
7,416,620
9,086,521
6,168,787
CFI
5,720,273
3,262,378
(301,129)
(863,307)
(6,740,347)
CFF
(16,668)
(2,547,433)
(2,935,935)
(2,204,674)
(1,929,651)
14,143,497
18,323,053
24,341,593
21,840,382
Net cash & cash 8,486,845 equivalent at the end of the year
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis : CFO for the company report positive sign and its shows an increasing amount (except for 2008). Higher CFO is a quality of satisfaction customer. Increasing of CFO will lead the decreasing in CFI. It’s show sales is not influence to the changes net income. Major cash inflows are cash receipt from customers that is RM898,693 in 2004, RM5,796,850 in 2005, RM6,668,228 in 2006, RM7,348,243 in 2007, RM6,066,283 in 2008. In 2008 the CFO is decrease because the company unrealised loss on foreign exchange. Average exchange rate per unit of United States Dollar in 2007 is RM8,174,812 but in 2008 the average exchange rate per unit of United States Dollar is RM6,340,047. Decreasing in CFO in 2008 will affect more negative sign in CFI.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD 1.Cash Flows Ratios (b)Cash Flow to sales Relationship between CFO and sales for 2004-2008 Year
2004
2005
2006
2007
2008
RM’000 Sales
9,059,994
54,275,680
61,374,264
54,276,760
62,056,338
CFO
2,783,240
4,941,707
7,416,620
9,086,521
6,168,787
31%
9%
12%
17%
10%
CFO/Sales
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis : Cash flow to sales ratio measures the sales are realized in cash. This will be an indicator of the ability to generate cash flow. For Tafi Berhad it shows an decreasing percentage that i1 31% to 9% at 2005. Its start increase percentage until 2007 . Then the percentage decrease to 10% in 2008. It shows that the company ability to generate cash is moderately.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD Cash flow to net income Relationship between CFO and Net Income for 2004-2008 2004 2005 2006 2007 2008
RM’000
Net Income CFO CFO/Net Income
788,169
4,941,783
5,867,737 6,222,699 5,097,865
2,783,240
4,941,707
7,416,620 9,086,521 6,168,787
353
100
126
146
121
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis:There is an increasing of CFO parallel with the increasing of net income. At 2008 both net income and CFO are decrease. The rule is when net income is positive, CFO also should be positive. Net income for the company increased from RM 788,169 to RM 6,222,699 in 2007. CFO company also increase from RM2,783,240 in 2004 to RM6,168,787 in 2007. In 2008 the CFO and net income are decrease RM1,124,834 and RM2,917,734 respectively.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD Free cash flow (FCF) Relationship between Net Income, CFO and FCF 2004-2008 Year
2004
2005
2006
2007
2008
RM’000 Net Income
788,169
4,941,783
5,867,737
6,222,699
5,097,865
CFO
2,783,240
4,941,707
7,416,620
9,086,521
6,168,787
FCF
2,643,353
-4,643,120
6,595,446
7,393,553
608,519
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis :The company has a positive FCF in 2006 , 2007 and 2008. The FCF is decreasing in 2004 and 2008. This company has not in steady state and generating growth. This company can make drastic change in FCF where the amount increased from RM-4,643,120 to 6,595,446.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD 1.Cash flow statements highlight : Year
2004
2005
2006
2007
2008
RM’000 CFO
(5,873,411)
(41,830)
241,379
8,704,934
55,536
CFI
5,027,252
89,365
(234,338)
(212,694)
(7,557)
CFF
(52,607)
(45,446)
(17,291)
(8,496,483)
(17,292)
18,126
20,215
9,965
5,722
36,409
Net cash & cash equivalent at the end of the year
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis :From the graph, we can conclude that CFO for the company is fluctuating over the year. Even though it is fluctuate but it shows positive sign Positive CFO means the company financial health is good. Major cash inflows are cash receipts from customers that is RM35,178,196 in 2004, Rm44,306,927 in 2005, RM 38,872,788 in 2006, RM 44,202,085 in 2007 and RM46,852,264 in 2008. Whereas major outflows are contract costs that is RM24,784,165 in 2004, RM29,855,847 in 2005, RM23,860,191 in 2006, RM31,475,777 in 2007 and RM27,101,553 in 2008
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD 1.Cash Flows Ratios b)Cash Flow to sales Relationship between CFO and sales for 2004-2008 2004
2005
2006
2007
2008
RM’000 Sales
38,419,932
48,219,076
45,069,142
CFO
(5,873,411)
(41,830)
241,379
8,704,934
55,536
-15.29%
-0.09%
0.54%
16.48%
0.10%
CFO/Sales
52,809,869 53,665,738
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis:Cash flow to sales ratio measurea the sales are realized in cash. This will be an indicator of the ability to generate cash flow. For Federal Furniture Holdings (M) Berhad, both CFO and sales shows the same pattern. It is a stable position of CFO and sales. Therefore the company ability to generate cash is good. Higher percentage is a sign for healthy company.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD a)Cash flow to net income Relationship between CFO and Net Income for 2004-2008 Year
2004
2005
2006
2007
2008
RM’000 Net Income
35,419,932
48,219,076
45,069,142
52,809,869
53,665,738
CFO
-5,873,411
-41,830
241,379
8,704,934
55,536
-16.58
-0.09
0.54
16.48
0.10
CFO/Net Income
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis: The graph shows that the company is a “growth” company, its net income and CFO (2008) shows constant growth from 2004 to 2008.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD a)Free cash flow (FCF) Relationship between Net Income, CFO and FCF 2004-2008 2004
2005
2006
2007
2008
RM’000 Net Income
35,419,932
48,219,076
45,069,142
52,809,869
53,665,738
CFO
-5,873,411
-41,830
241,379
8,704,934
55,536
FCF
5,863,679
97,380
227,936
8,492,240
47,979
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis:FCF is positive in each year, a healthy sign given rapid growth. FCF patterns have to be monitored carefully for growth companies to ensure that they are not growing too fast, which can cause liquidity problems.
FIXED ASSETS AND LEASING
FEDERAL FURNITURE HOLDINGS (M) BERHAD AND TAFI INDUSTRIES BERHAD use the same method of depreciation Straight Line Method.
FIXED ASSETS AND LEASING
The straight-line depreciation method is one way of recording this reduction in value. This method calculates the annual depreciation expense by taking the cost of the fixed asset minus the scrap value of that asset then dividing by the life span (the number of years the fixed asset will be in use).
FIXED ASSETS AND LEASING
The annual depreciation rates for TAFI INDUSTRIES are as follows: Land under long leases Over period of lease of 60 - 99 years Buildings 2% - 10% Plant and machinery 10% Motor vehicles 10% - 20% Tools, equipment and electrical installation 5% - 10% Furniture, fixtures and fittings 10%
FIXED ASSETS AND LEASING
The annual depreciation rates for FEDERAL FURNITURE HOLDINGS are as follows: Buildings Motor vehicles Furniture and fittings Plant and machinery Office equipment Renovation
2% 20% 5% - 15% 6.7% - 20% 10% - 20% 10% - 20%
FIXED ASSETS AND LEASING
For example, a fixed asset that depreciates over six years is purchased by a firm. The cost of that asset is RM35,000 and it has a scrap value of RM5000. The calculated annual depreciation expense will be RM5000
FIXED ASSETS AND LEASING
This method is used in financial accounting because it allows for the firm or organization to report a higher net income in the earlier years to the stockholders. Financially it makes the company or organization look better to current investors and future investors. But for tax purposes it might not be the company or organization’s first choice for recording depreciation.
FIXED ASSETS AND LEASING YEAR FIXED ASSETS
2004
2005
2006
2007
2008
(1,465,855)
(1,046,173)
(1,221,085)
(1,637,344)
DEPRECIATION TAFI (238,895) FEDERAL COST
TAFI
(1,908,882)
(1,912,756)
13,701,634 21,819,067
FEDERAL LEASING
OPERATING
TAFI FEDERAL
(1,644,295)
(1,188,973)
(1,106,497)
19,719,752
23,641,803
19,298,629
55,540,388
54,637,405
24,164,823
11,856,702
11,544,510
2,302,878
2,269,299
904,285
884,570
2,031,856
70,378
42,850
42,850
38,166
38,991
FIXED ASSETS AND LEASING
FRS 117 – Leases In prior years, leasehold interests in long leasehold land were classified as property, plant and equipment and were stated at cost less accumulated depreciation. With the adoption of FRS 117 on January 1, 2006, leasehold interests in long leasehold land are accounted for as being held under operating leases and are reclassified as prepaid lease payments. Such leasehold land will no longer be revalued. Where the leasehold land had been previously revalued, the Group retained the unamortised revalued amount as the surrogate carrying amount of prepaid lease payments as allowed under the transitional provisions of FRS 117.
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD
YEAR
2004
2005
2006
2007
2008
TAFI
3.51
4.54
4.5
5.15
6.11
FEDERAL
0.24
0.24
0.24
0.96
1.06
2.5
3.43
3.63
4.52
5.16
FEDERAL
0.21
0.19
0.19
0.73
0.93
ASSETS Average collection TAFI MANAGEMENT period FEDERAL RATIO
397
60
60.6
69
46
178.29
119.58
142.8
115.84
98.6
Inventory turnover TAFI ratio FEDERAL
1.08
6.5
8.25
10.48
10.37
9.47
7.32
5.88
2.26
4.05
Fixed asset TAFI turnover ratio FEDERAL
0.66
2.49
2.84
2.47
2.23
0.35
0.43
0.5
2.38
2.62
Total assets TAFI turnover ratio FEDERAL
0.21
0.97
1.02
0.84
0.94
0.27
0.33
0.36
0.98
1.12
LIQUIDITY RATIO
Current Ratio
Quick Ratio
TAFI
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD
YEAR PROFITABILITY RATIO (%)
2005
2006
2007
2008
1
9
10
11
8
(17)
(11)
(27)
42
2
TAFI
2
1.00
11
11
9
FEDERAL
1
2
(2)
46
7
TAFI
2
9
97
10
77
FEDERAL
5
3
10
41
2
TAFI
0.19
0.13
0.14
0.13
0.09
FEDERAL
0.99
1.02
1.21
0.67
0.60
509.76
478.98
736.44
5746.3
40441.89
0.99
1.02
1.21
0.67
0.6
Profit margin on TAFI sales FEDERAL Basic earning power
Return on asset
DEBT MANAGEMENT RATIO
2004
Debt ratio
Times interest earned
TAFI FEDERAL
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 1. Current Ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 1. Current Ratio
Both companies significantly have a good performance regarding to current asset. The ratio continuously increase from year to year but the performance for Tafi Industries Berhad is much better than Federal Furniture Holding (M) Berhad. Both company manage to control their current assets and current liabilities depend on situation faced.
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 2. Quick Ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 2. Quick Ratio
The quick ratio also shows the same result as current ratio. In year 2004 to 2006 quick ratio remain the same it is 0.2 this is because the increase in current assets, inventories and current liabilities.
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 4. Inventory turnover ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 5. Fixed asset turnover ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 6. Total asset turnover ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 7. Profit margin on sales
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 8. Basic earning power
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 9. Return on asset
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 10. Debt ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 11. Times interest earned
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 12. Return on equity Return On Equity 200 100 0 -100
2004
2005
2006
2007
2008
Year
-200 -300
TAFI
-400
FEDERAL
-500 -600
SUMMARY
THANK YOU
TAFI INDUSTRIES BERHAD
FEDERAL FURNITURE HOLDINGS (M) BERHAD
CONTENT 1 2 3 4
OVERVIEW OF THE COMPANIES INCOME STATEMENT BALANCE SHEET CASH FLOW STATEMENT 4.1 CASH FLOW FROM OPERATING ACTIVITIES 4.2 CASH FLOW FROM INVESTING ACTIVITIES 4.3 CASH FLOEWS USED IN FINANCING ACTIVITIES 5 ANALYSIS 5.1 CASH FLOW STATEMENT 5.2 FIXED ASSETS AND LEASING 5.3 RATIO 6 TREND ANALYSIS 7 SUMMARY
TAFI Industries Berhad TAFI Industries Berhad is a Malaysiabased company. The Company is engaged in investment holding and provision of management services. Through its subsidiaries, the Company is principally engaged in the manufacturing and marketing of furniture products predominantly in Malaysia
FEDERAL FURNITURE Holdings (M) Berhad Federal Furniture Holdings (M) Berhad is a company are manufacturing, marketing, trading and exporting furniture and renovation and interior fit-outs of offices and hotels. The Group also specialises in contract renovations, fit-outs and interior design of private, commercial and public projects.
INCOME STATEMENT TAFI Industries Berhad 2004
2005
2006
2007
2008
9,059,994
54,275,680
61,374,264
54,276,760
62,056,338
(4,658,096)
(33,611,245)
(36,765,458)
27,382,183
(34,897,007)
4,401,898
20,664,435
24,608,806
81,658,943
27,159,331
Other operating income
0
559,767
604,933
1,004,070
1,830,706
Changes in inventories
0
1,280,538
(357,264)
(1,534,971)
(108,782)
Director's remuneration
(280,747)
(680,720)
(777,360)
(825,800)
(896,380)
(1,141,422)
(6,800,316)
(7,902,088)
(7,611,769)
(9,522,476)
(238,895)
(1,432,276)
(1,046,173)
(1,221,085)
(1,637,344)
61,657
369,943
0
0
0
(1,961,382)
(8,153,279)
(8,453,559)
(9,355,500)
(10,758,622)
(3,560,789)
(14,856,343)
(17,931,511)
(19,545,055)
(21,092,898)
841,109
5,384,637
6,677,295
7,349,522
6,066,433
Finance costs
(1,650)
(11,242)
(9,067)
(1,279)
(150)
Income from other investment
59,234
423,555
0
0
0
898,693
5,796,950
6,668,228
7,348,243
6,066,283
Income tax expense
(110,524)
(855,167)
(800,491)
(1,125,699)
(968,418)
Net profit for the year
788,169
4,941,783
5,867,737
6,222,544
5,097,865
9.08
6.29
7.39
7.90
6.50
Revenue (-)Cost of sales Gross profit
Staff cost Depreciation of property,plan & equipment Accretion of reserve on consolidation Other operating expenses
Profit from operations
Profit before tax
Earning per ordinary share
INCOME STATEMENT TAFI Industries Berhad
CFI of the company shows a significant increase in investment especially in purchase of property, plant and equipment (PPE) from RM139,887 in 2004, RM 958,4827 in 2005, RM 821,174 in 2006, RM 1,692,968 in 2007 and RM 5,560,268 in 2008. CFI shows decreasing curve in order of investment by purchasing property but in the term of operating capital expenditure by CFF curve its shows the U shape from the fluctuate in 2004 to 2006 and recovered in the year of 2006 to 2008.
INCOME STATEMENT FEDERAL FURNITURE Holdings (M) Berhad 2004
2005
2006
2007
2008
Revenue
38,419,932
48,219,076
45,069,142
52,809,869
53,665,738
(-)Cost of sales
(3,241,736)
(3,912,149)
(6,196,354)
(8,607,784)
(6,813,474)
Gross profit
35,178,196
44,306,927
38,872,788
44,202,085
46,852,264
3,166,905
1,730,104
2,016,953
31,892,008
889,658
174,458
(394,474)
1,490,197
269,496
(2,693,943)
(24,784,165)
(29,855,847)
(23,860,191)
(31,475,777)
(27,101,553)
(138,618)
(1,113,056)
(2,879,204)
(3,250,339)
(435,113)
Staff costs
(5,478,736)
(5,466,445)
(6,551,449)
(7,463,586)
(7,552,869)
Depreciation
(1,908,882)
(1,912,756)
(1,644,295)
(1,188,973)
(1,106,497)
Other operating expenses
(4,191,617)
(4,600,848)
(9,778,394)
(8,073,596)
(5,415,373)
Other operating income Changes in inventories of finished goods Contract costs Finished goods purchased
(loss)/gain on disposal of a subsidiary
-
(18,233)
-
-
-
(33,160,655)
(41,631,555)
(41,206,383)
(19,290,767)
(43,415,690)
2,017,541
2,675,372
(2,333,595)
24,911,318
3,436,574
Finance costs
(8,657,984)
(9,338,844)
(9,467,086)
(1,751,443)
(908,540)
Profit/ Loss before tax
(6,640,443)
(6,663,472)
(11,800,681)
23,159,875
2,528,034
(76,873)
1,565,781
(277,191)
(975,695)
(1,445,189)
(6,717,316)
(5,097,691)
(12,077,872)
22,184,180
1,082,845
24
18
(44)
32
1
24
1
Profit from operations
Income tax expense Profit/(loss) for the year Basic loss per share (sen) Fully diluted loss per share (sen)
N/A
N/A
N/A
BALANCE SHEET CASH FLOW STATEMENT
TAFI Industries Berhad FEDERAL FURNITURE Holdings (M) Berhad
ANALYSIS : CASH FLOW STATEMENT 1. Cash Flow From Operating Activities (CFO) CFO is a method in measuring amount of cash generated or used by the firm as a result of its production and sales goods and services. Although deficits or negative cash flows from operations are expected in some circumstances, for most firms positive CFO are essential for long run survival. Internally generated funds can be used to pay dividends or repurchase equity, repay loans, replace existing capacity or invest in acquisitions and growth.
ANALYSIS : CASH FLOW STATEMENT 2. Cash Flow From Investing (CFI) CFI is a reports the amount of cash used to acquire assets such as plant and equipment as well as investments and entire businesses. These outlays are necessary to maintain a firm’s current operating capacity and to provide capacity for future growth. CFI also includes cash received from the sale or disposal of assets or segments of the business.
ANALYSIS : CASH FLOW STATEMENT 3. Cash Flow From Financing (CFF) CFF contains the cash flow consequences of the firm’s capital structure (debt and equity) decisions. TAFI & FEDERAL presenting the cash flow statement that in Direct Method. An advantage of the direct method, which displays the individual cash flow impact of normal operating revenue and expense items, it is permits an evaluation of cash flows relating to specific line items in the income statement such as gross sales, cost of goods sold or even total operating expenses
ANALYSIS : CASH FLOW STATEMENT
The analysis will focus on performance, liquidity and financial that show by comparasion the ration. 3 ratio that we focus is : 1
Cash Flow To Sales
CFO/Sales
2
Cash Flow To Net Income
CFO/Net Income
3
Free Cash Flow (FCF)
CFO-Capital Expenditure
Tafi Industries Berhad 1.Cash flow statements highlight : Summary of Tafi Industries’s cash flow statement for 2004-2008 : Year
2004
2005
2006
2007
2008
RM’000 CFO
2,783,240
4,941,707
7,416,620
9,086,521
6,168,787
CFI
5,720,273
3,262,378
(301,129)
(863,307)
(6,740,347)
CFF
(16,668)
(2,547,433)
(2,935,935)
(2,204,674)
(1,929,651)
14,143,497
18,323,053
24,341,593
21,840,382
Net cash & cash 8,486,845 equivalent at the end of the year
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis : CFO for the company report positive sign and its shows an increasing amount (except for 2008). Higher CFO is a quality of satisfaction customer. Increasing of CFO will lead the decreasing in CFI. It’s show sales is not influence to the changes net income. Major cash inflows are cash receipt from customers that is RM898,693 in 2004, RM5,796,850 in 2005, RM6,668,228 in 2006, RM7,348,243 in 2007, RM6,066,283 in 2008. In 2008 the CFO is decrease because the company unrealised loss on foreign exchange. Average exchange rate per unit of United States Dollar in 2007 is RM8,174,812 but in 2008 the average exchange rate per unit of United States Dollar is RM6,340,047. Decreasing in CFO in 2008 will affect more negative sign in CFI.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD 1.Cash Flows Ratios (b)Cash Flow to sales Relationship between CFO and sales for 2004-2008 Year
2004
2005
2006
2007
2008
RM’000 Sales
9,059,994
54,275,680
61,374,264
54,276,760
62,056,338
CFO
2,783,240
4,941,707
7,416,620
9,086,521
6,168,787
31%
9%
12%
17%
10%
CFO/Sales
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis : Cash flow to sales ratio measures the sales are realized in cash. This will be an indicator of the ability to generate cash flow. For Tafi Berhad it shows an decreasing percentage that i1 31% to 9% at 2005. Its start increase percentage until 2007 . Then the percentage decrease to 10% in 2008. It shows that the company ability to generate cash is moderately.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD Cash flow to net income Relationship between CFO and Net Income for 2004-2008 2004 2005 2006 2007 2008
RM’000
Net Income CFO CFO/Net Income
788,169
4,941,783
5,867,737 6,222,699 5,097,865
2,783,240
4,941,707
7,416,620 9,086,521 6,168,787
353
100
126
146
121
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis:There is an increasing of CFO parallel with the increasing of net income. At 2008 both net income and CFO are decrease. The rule is when net income is positive, CFO also should be positive. Net income for the company increased from RM 788,169 to RM 6,222,699 in 2007. CFO company also increase from RM2,783,240 in 2004 to RM6,168,787 in 2007. In 2008 the CFO and net income are decrease RM1,124,834 and RM2,917,734 respectively.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD Free cash flow (FCF) Relationship between Net Income, CFO and FCF 2004-2008 Year
2004
2005
2006
2007
2008
RM’000 Net Income
788,169
4,941,783
5,867,737
6,222,699
5,097,865
CFO
2,783,240
4,941,707
7,416,620
9,086,521
6,168,787
FCF
2,643,353
-4,643,120
6,595,446
7,393,553
608,519
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 TAFI INDUSTRIES BERHAD
Analysis :The company has a positive FCF in 2006 , 2007 and 2008. The FCF is decreasing in 2004 and 2008. This company has not in steady state and generating growth. This company can make drastic change in FCF where the amount increased from RM-4,643,120 to 6,595,446.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD 1.Cash flow statements highlight : Year
2004
2005
2006
2007
2008
RM’000 CFO
(5,873,411)
(41,830)
241,379
8,704,934
55,536
CFI
5,027,252
89,365
(234,338)
(212,694)
(7,557)
CFF
(52,607)
(45,446)
(17,291)
(8,496,483)
(17,292)
18,126
20,215
9,965
5,722
36,409
Net cash & cash equivalent at the end of the year
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis :From the graph, we can conclude that CFO for the company is fluctuating over the year. Even though it is fluctuate but it shows positive sign Positive CFO means the company financial health is good. Major cash inflows are cash receipts from customers that is RM35,178,196 in 2004, Rm44,306,927 in 2005, RM 38,872,788 in 2006, RM 44,202,085 in 2007 and RM46,852,264 in 2008. Whereas major outflows are contract costs that is RM24,784,165 in 2004, RM29,855,847 in 2005, RM23,860,191 in 2006, RM31,475,777 in 2007 and RM27,101,553 in 2008
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD 1.Cash Flows Ratios b)Cash Flow to sales Relationship between CFO and sales for 2004-2008 2004
2005
2006
2007
2008
RM’000 Sales
38,419,932
48,219,076
45,069,142
CFO
(5,873,411)
(41,830)
241,379
8,704,934
55,536
-15.29%
-0.09%
0.54%
16.48%
0.10%
CFO/Sales
52,809,869 53,665,738
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis:Cash flow to sales ratio measurea the sales are realized in cash. This will be an indicator of the ability to generate cash flow. For Federal Furniture Holdings (M) Berhad, both CFO and sales shows the same pattern. It is a stable position of CFO and sales. Therefore the company ability to generate cash is good. Higher percentage is a sign for healthy company.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD a)Cash flow to net income Relationship between CFO and Net Income for 2004-2008 Year
2004
2005
2006
2007
2008
RM’000 Net Income
35,419,932
48,219,076
45,069,142
52,809,869
53,665,738
CFO
-5,873,411
-41,830
241,379
8,704,934
55,536
-16.58
-0.09
0.54
16.48
0.10
CFO/Net Income
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis: The graph shows that the company is a “growth” company, its net income and CFO (2008) shows constant growth from 2004 to 2008.
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD a)Free cash flow (FCF) Relationship between Net Income, CFO and FCF 2004-2008 2004
2005
2006
2007
2008
RM’000 Net Income
35,419,932
48,219,076
45,069,142
52,809,869
53,665,738
CFO
-5,873,411
-41,830
241,379
8,704,934
55,536
FCF
5,863,679
97,380
227,936
8,492,240
47,979
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
ANALYSIS OF CFO, CFI AND CFF 2004 - 2008 FEDERAL FURNITURE HOLDINGS BERHAD
Analysis:FCF is positive in each year, a healthy sign given rapid growth. FCF patterns have to be monitored carefully for growth companies to ensure that they are not growing too fast, which can cause liquidity problems.
FIXED ASSETS AND LEASING
FEDERAL FURNITURE HOLDINGS (M) BERHAD AND TAFI INDUSTRIES BERHAD use the same method of depreciation Straight Line Method.
FIXED ASSETS AND LEASING
The straight-line depreciation method is one way of recording this reduction in value. This method calculates the annual depreciation expense by taking the cost of the fixed asset minus the scrap value of that asset then dividing by the life span (the number of years the fixed asset will be in use).
FIXED ASSETS AND LEASING
The annual depreciation rates for TAFI INDUSTRIES are as follows: Land under long leases Over period of lease of 60 - 99 years Buildings 2% - 10% Plant and machinery 10% Motor vehicles 10% - 20% Tools, equipment and electrical installation 5% - 10% Furniture, fixtures and fittings 10%
FIXED ASSETS AND LEASING
The annual depreciation rates for FEDERAL FURNITURE HOLDINGS are as follows: Buildings Motor vehicles Furniture and fittings Plant and machinery Office equipment Renovation
2% 20% 5% - 15% 6.7% - 20% 10% - 20% 10% - 20%
FIXED ASSETS AND LEASING
For example, a fixed asset that depreciates over six years is purchased by a firm. The cost of that asset is RM35,000 and it has a scrap value of RM5000. The calculated annual depreciation expense will be RM5000
FIXED ASSETS AND LEASING
This method is used in financial accounting because it allows for the firm or organization to report a higher net income in the earlier years to the stockholders. Financially it makes the company or organization look better to current investors and future investors. But for tax purposes it might not be the company or organization’s first choice for recording depreciation.
FIXED ASSETS AND LEASING YEAR FIXED ASSETS
2004
2005
2006
2007
2008
(1,465,855)
(1,046,173)
(1,221,085)
(1,637,344)
DEPRECIATION TAFI (238,895) FEDERAL COST
TAFI
(1,908,882)
(1,912,756)
13,701,634 21,819,067
FEDERAL LEASING
OPERATING
TAFI FEDERAL
(1,644,295)
(1,188,973)
(1,106,497)
19,719,752
23,641,803
19,298,629
55,540,388
54,637,405
24,164,823
11,856,702
11,544,510
2,302,878
2,269,299
904,285
884,570
2,031,856
70,378
42,850
42,850
38,166
38,991
FIXED ASSETS AND LEASING
FRS 117 – Leases In prior years, leasehold interests in long leasehold land were classified as property, plant and equipment and were stated at cost less accumulated depreciation. With the adoption of FRS 117 on January 1, 2006, leasehold interests in long leasehold land are accounted for as being held under operating leases and are reclassified as prepaid lease payments. Such leasehold land will no longer be revalued. Where the leasehold land had been previously revalued, the Group retained the unamortised revalued amount as the surrogate carrying amount of prepaid lease payments as allowed under the transitional provisions of FRS 117.
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD
YEAR
2004
2005
2006
2007
2008
TAFI
3.51
4.54
4.5
5.15
6.11
FEDERAL
0.24
0.24
0.24
0.96
1.06
2.5
3.43
3.63
4.52
5.16
FEDERAL
0.21
0.19
0.19
0.73
0.93
ASSETS Average collection TAFI MANAGEMENT period FEDERAL RATIO
397
60
60.6
69
46
178.29
119.58
142.8
115.84
98.6
Inventory turnover TAFI ratio FEDERAL
1.08
6.5
8.25
10.48
10.37
9.47
7.32
5.88
2.26
4.05
Fixed asset TAFI turnover ratio FEDERAL
0.66
2.49
2.84
2.47
2.23
0.35
0.43
0.5
2.38
2.62
Total assets TAFI turnover ratio FEDERAL
0.21
0.97
1.02
0.84
0.94
0.27
0.33
0.36
0.98
1.12
LIQUIDITY RATIO
Current Ratio
Quick Ratio
TAFI
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD
YEAR PROFITABILITY RATIO (%)
2005
2006
2007
2008
1
9
10
11
8
(17)
(11)
(27)
42
2
TAFI
2
1.00
11
11
9
FEDERAL
1
2
(2)
46
7
TAFI
2
9
97
10
77
FEDERAL
5
3
10
41
2
TAFI
0.19
0.13
0.14
0.13
0.09
FEDERAL
0.99
1.02
1.21
0.67
0.60
509.76
478.98
736.44
5746.3
40441.89
0.99
1.02
1.21
0.67
0.6
Profit margin on TAFI sales FEDERAL Basic earning power
Return on asset
DEBT MANAGEMENT RATIO
2004
Debt ratio
Times interest earned
TAFI FEDERAL
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 1. Current Ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 1. Current Ratio
Both companies significantly have a good performance regarding to current asset. The ratio continuously increase from year to year but the performance for Tafi Industries Berhad is much better than Federal Furniture Holding (M) Berhad. Both company manage to control their current assets and current liabilities depend on situation faced.
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 2. Quick Ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 2. Quick Ratio
The quick ratio also shows the same result as current ratio. In year 2004 to 2006 quick ratio remain the same it is 0.2 this is because the increase in current assets, inventories and current liabilities.
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 4. Inventory turnover ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 5. Fixed asset turnover ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 6. Total asset turnover ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 7. Profit margin on sales
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 8. Basic earning power
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 9. Return on asset
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 10. Debt ratio
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 11. Times interest earned
RATIO ANALYSIS FOR TAFI INDUSTRIES BERHAD & FEDERAL FURNITURE (M) BERHAD COMPARISON FOR BOTH COMPANIES 12. Return on equity Return On Equity 200 100 0 -100
2004
2005
2006
2007
2008
Year
-200 -300
TAFI
-400
FEDERAL
-500 -600
SUMMARY
THANK YOU
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