Case Financial Performance - PT Timah (1)

7/26/2019 Case Financial Performance - PT Timah (1)

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ASSESSMENTOFBUSINESSPERFORMANCEPT TIMAH TBKANDSUBSIDIARIES1

EDUARDUS TANDELILIN

Following the declaration of Independence in Indonesia in 1945, the tin

mining industry gradually came under Indonesian control as Dutch mining

concessions ran out. This transfer of control culminated in 196 with the passing

of !aw "o. 19 which esta#lished a $tate Tin %nterprise &oordinating 'oard and

$tate %nterprises for the three tin producing units on the islands of 'ang(a,

'elitung and $ing(ep. In 196), the four entities were #rought under one single

controlling state enterprise #y *o+ernment egulation num#er -1, coordinating

tin operations under the $tate company " Tam#ang Timah which was gi+en

control of the (nown tin deposits in Indonesia.The status of that enterprise was changed in 19/6 to T Tam#ang Timah

0ersero, a limited lia#ility corporation, with the *o+ernment of Indonesia as the

sole shareholder. The company2s main operations were historically centered

around the islands of 'ang(a, 'elitung and $ing(ep. The company operates a

large fleet of #uc(et line dredges and controls other mining acti+ities, primarily

using hydraulic mining methods.

'eginning in 1991, a ma3or restructuring program commenced which

included the closure of mining operations on $ing(ep and the relocation of the

corporate head office to 'ang(a. The restructuring also included a program of

moderniation and the reconstruction of production facilities and a concentration

on core #usiness acti+ities. The conclusion of the restructuring program of Timahwas listed on the a(arta, $ura#aya, and !ondon $toc( %changes on 19 7cto#er

1995. The name T Tam#ang Timah T#( was changed to T Timah T#( on uly

-9, 199). The go+ernment of Indonesia owned 65 percent of the company8s

shares domestic and international in+estors owned the remaining :5 percent.

BACKGROUND

T Timah T#( was the only state enterprise acti+e in tin mining. Timah2s

competiti+e edge was a result of the integration of each step in the process of

producing and mar(eting tin. The company was a cost leader. &ontrol o+er

su#stantial reser+es, ownership of the largest dredge fleet in the world and the use

of computer systems and satellite communications helped to minimie Timah

mining costs. The use of production systems ensured Timah8s smelting operations

1 This case was written by Dr. Eduardus Tandelilin of Master of Management ProgramGadjah Mada University, ogya!arta, "ndonesia. The author wishes to ac!nowledgeresearch funding from Master of Management Program, Gadjah Mada University. Thiscase is intended as a basis for class discussion rather than to illustrate either e#ectiveor ine#ective handling a $nancial matter at the $rm. %ny inter&retation of the data aswell as any errors or omission is the res&onsibility of the author. 'esearch assistancewas &rovided by " (ayan )u!a *antara and *u!as Purwoto.

+o&yright -/. %llright reserved. This &ublication is &rotected by +o&yright and

&ermission should be obtained from MM GMU./


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were highly efficient. The results claimed #y management were that Timah

customers recei+ed the highest;


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PT TIMAHINDUSTRI

Timah Industri was esta#lished in une 199). It conducts trade, re;

engineering, engineering of industry, and ser+ice. =t this time, the customers were

separated into two mar(etsE a tin mar(et and a non;tin mar(et. The tin mar(et was

the largest. ?anagement was intended to epand the non;tin mar(et incrementallyin the future. 7ne of the strategic chances was the de+elopment of a doc(yard

industry.

Timah Industri achie+ed certification of I$7 141 in 199) and I$7 91

in 1999. 'y achie+ing of these


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Timah In+estasi ?ineral e+en eperienced a decline in its financial

performance. The company did not ma(e a sale in 199) and 1999 #ut still suffered

large operational costs. This condition caused the company to lose p 16,)9

million in 199) and p 16,-) million in 1999.

The results of the financial performance of Timah and its su#sidiaries infollowing two years moti+ated management to e+aluate the company8s

achie+ement. %+aluation was intended to analye Timah8s performance and the

contri#ution of the su#sidiaries to that o+erall performance. 'esides that, this

analysis allowed management to identify an alternati+e solution that would

impro+e Timah8s performance as a corporation and also impro+e the su#sidiaries8

performance.

@nfortunately, there are so many tools for doing performance assessment.

It is important to analye trends in ratios as well as their a#solute le+els, for trends

gi+e clues as to whether the financial situation is li(ely to impro+e or deteriorate.

In common sie analysis, all income statement items are di+ided #y sales, and all

#alance sheet items are di+ided #y total assets. In the percentage change analysis,growth rates are calculated for all income statement items and #alance sheet

accounts. The financial ratios are also interrelated as a system. The Du ont

method is one of the first to segregate into their components and focus on the

lin(ages to return on e


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Table 1. Summary of F!a!"al S#a#eme!# for PT Tma$ Tb%BALANCESHEETS&mllo! ru'a$(

1))* 1))+ 1)))

+urrent %ssets4 563,726 18,853 626,32-

+ash on hand and in ban!s -3,158 -55,83 -/7,635

Time de&osits 28,633 /8,653 -5,362

Trade receivables 17,-/5 17,2/ 82,335

"nventories /31,3-7 37,/33 258,122

"nvestments 55,3- /2,6- /-/,56

0i9ed %ssets:)et 271,/7/ 333,// 58-,-5

;ther %ssets /3/,2/8 /5/,2-8 -3,37

To#al A,,e#, 1-1/-1+

1-0)0-)+

1-*20-)*

+urrent *iabilities4 2-7,3/2 3/5,578 2-7,63-

E9&enses? 51,78- >273,52-? >-5,3/-?

Pro$t before Ta9es -57,55 83,27 363,311Pro$t after Ta9es /88,6/2 5/6,6-6 2/6,21

Per S$are Da#a &R'(Earnings &er =hare 252 /,2/ 72-

E@uity &er =hare /,71 -,5/2 -,87-

Dividend &er =hare /3/ 31 -38

+losing Price 5,1 5,285 3,685

=ources4 "ndonesian +a&ital Mar!et Directory -

5


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TABLE6. SUMMAR7OFFINANCIALSTATEMENTSFORSUBSIDIARIES- DECEMBER21- 1)))

&THOUSANDRUPIAH(BALANCESHEETS

PT TAMBAN8TIMAH

PT TIMAHEKSPLOMIN

PT TIMAHINDUSTRI

PT TIMAHIN9ESTASIMINERAL

+urrent %ssets4 /,-/,8,535

/2,117,271 368,117,6-6

6-1,836

+ash on hand and in ban!s 8,375,/2- /7,357 23/,573 533,16

Trade receivables 7/,/13,557 3,583,-- 8,868,253 :

"nventories -5-,2-1,32

: /5,23/,/22

:

"nvestments : : 21,35/,16- 8/,

0i9ed %ssets:)et 228,73-,-53

/8,21,5// --7,727,1--

-,-/6,878

;ther %ssets 12,831,//7 : : -5,-8/,/22

To#al A,,e#, 1-026-2)+-)1

21-2+0-++/

*-/+-*26

6+-2)/-0+

+urrent *iabilities4 7/6,626,378

-3,/8/,281 527,-26,537

381,56

Trade &ayable -/,136,31/ /,83/,61- 2,38,26 331,-35

Ta9es &ayable 1/,53,-27 625,536 3,8/-,38/ -6,/71

*ong:term *iabilities -/,8,35 -3-,-2 /,/--,673 /2,3/1,62/

Minority "nterests in =ubsidiaries : : : 8,821

To#al Labl#e, 02)-)/+-+*6

6-12-/6

2*-201-1/

12-)/*-/*+

Paid:u& ca&ital 5,,

5,, -,,

32,,

'etained earnings >accumulatedloss?

31-,31,32 /,182,386 /7,8-3,2--

>-6,5/7,32/?

To#al E5u#y ))6-)/-/2

0-)*2-*+ 610-*6-266

1-+2-0)

INCOME STATEMENTS

Ne# Sale, 1-00-+)-*2

02-0/-*1 26/-+//-+0*

/

+ost of Goods =old 1-,8-1,32

55,672,/6- 2/,32,217

Gross Pro$t 832,67,8

1

8,83-,261 /,858,38/

;&erating E9&enses /55,625,855

8,/2,582 8,--8,5-1 /,51/,/-6

Unsuccessful E9&loration : : : /3,56,/-

;&erating Pro$t >loss? 566,-3,153

726,6/7 2,5-1,13- >/7,11,-2?

;ther "ncome >E9&enses? >76,837,887?

116,563 -,551,85- 76,727

Pro$t >loss? before Ta9es 5/1,-86,/86

/,728,3 7,61,713 >/7,2,513?

Pro$t >loss? after Ta9es 252,137,-1

68,/57 1-/,86/ >/7,2,513?

A33#o!al !forma#o!:7


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+a&ital stoc! in shares 5, 5, -, 32,

=ources4/. PT Tambang Timah, 0inancial =tatement, December 2/, /111.-. PT Timah E!s&lomin, 0inancial =tatement, December 2/, /111.2. PT Timah "ndustri, 0inancial =tatement, December 2/, /111.

3. PT Timah "nvestasi Mineral and =ubsidiary, +onsolidated 0inancial =tatement,December 2/, /111.

Table 2. F!a!"al Ra#o, of Me#al a!3 M!eral M!!; Com'a!e, o!#$e 9? -.3 2.33 -.11 -.-3 -.5/ -.11Total %ssets Turnover >9? .-6 .5- .37 ./7 ./- ./7

';" >B? 3.23 /5./3 /.6/ -.-7 .5 /.7-';E >B? 7./1 -/.85 /5.2/ 2.1- .11 2.-6

=ource4 "ndonesian +a&ital Mar!et Directory -.

8


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F;ure 1.Modi$ed Du Pont +hart for Timah Tb! and "ts =ubsidiaries

>ue,#o!,: 6

'eturn onE@uity

Re#ur! o!A,,e#,

E5u#y mul#'ler4%ssetsCE@uity

Multi&lied by

Pro?# Mar;!4)et incomeC=ales

To#al A,,e#,Tur!o@er:

Multi&lied by

Sale, Ne#Divided

into

To#alCo,#,

Sale,=ubtracte

d from

Sale, To#alDivided

by

Fe3A,,e#,

Curre!#A,,e#,

%ddedto

Ca,$ o!

$a!3 a!3! ba!%,

Tme

3e'o,#,

Tra3ere"e@abl

I!@e!#ore,

Tae,

Co,#, of

;oo3

O'era#!; "o,#,

O#$ere'e!,e,


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/. +alculate some $nancial ratios for Timah Tb! for the last three years.

>"nclude the ratios of li@uidity, asset management, leverage,

&ro$tability, and mar!et value.?

-. Evaluate the $nancial condition of Timah Tb! using trend analysis.2. Evaluate the $nancial condition of Timah Tb! using benchmar! analysis

>%ntam Tb!., PGas Tb!.?.

3. +onstruct a Du Pont system for Timah Tb! to show how some !ey

variables interact to determine the rate of return on e@uity. More

im&ortant, use your Du Pont system to analye ways of im&roving the

$rms &erformance. Fow does Du Pont di#er from the &revious ratio

analysis

5. Give suggestions to im&rove the subsidiaries &erformance and the

&erformance of the overall com&any.

1


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/


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Pro$tability *i@uidity =olvability (eightedAalue

Aery Fealthy H/-B H/5B H-B H/BFealthy H6B : /-B H/B :

/5BH/5B :-B

H76B I/B

*ess Fealthy H5 I 6B H85B :/B

H/B :/5B

H33B I76B

Poor JK 5B JK 85B JK /B JK 33B

(eight 85B /-.5B /-.5B

+onversion Aalue /-B /5B -BMa9imum Aalue : 2B -B)otes4 Pro$tability is calculated as &ro$t before ta9es divided by total assets.

*i@uidity is calculated as current assets divided by current liabilities.

=olvability is calculated as total assets divided by total liabilities.

The sti&ulation is also for =;+s subsidiary.

A''e!3 6. Performa!"e A,,e,,me!# for BUMNA""or3!; #o F!a!"al M!,#er De"ree No. 1)+ %m%./10 1))+

%. Fealth *evel of =;+sFealthy4

%%% 4 total score >T=? H 15

%% 4 6 J T= JK 15

% 4 75 J T= JK 6

*ess Fealthy4


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+. 0inancial "ndicators and "ts (eight

"ndicators(eight

"nfrastructure )on:infrastructure

/. 'eturn on e@uity >';E? /5 -

-. 'eturn on investment >';"? / /52. +ash ratio 2 53. +urrent ratio 3 55. +ollection &eriods 3 57. "nventory turnover 3 58. Total assets turnover 3 56. +ommon e@uity to total assets 7 /

/-


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D. Methods and =cores of %ssessment

/. ';E K >Earning after ta9 C +ommon e@uity? 9 /B

';E >B?=core

"nfrastructure )on:infrastructure

/5 J ';E /5 -/2 J ';E JK /5 /2.5 /6// J ';E JK/2 /- /7/ J ';E JK // /.5 /38.1 J ';E JK 1 1 /-7.7 J ';E JK 8.1 8.5 /5.2 J ';E JK 7.7 7 6.5

3 J ';E JK 5.2 5 8-.5 J ';E JK 3 3 5.5

/ J ';E JK -.5 2 3 J ';E JK / /.5 -

';E JK /

-. ';" K >>EB?=core"nfrastructure )on:infrastructure

/6 J ';" / /5

/5 J ';" JK /6 1 /2.5/2 J ';" JK/5 6 /-

/- J ';" JK /2 8 /.5/.5 J ';" JK /- 7 1

1 J ';" JK /.5 5 8.58 J ';" JK 1 3 75 J ';" JK 8 2.5 5

2 J ';" JK 5 2 3/ J ';" JK 2 -.5 2 J ';" JK / - -';" JK / Total assets are an a&&ro9imately of ca&ital em&loyed.

2. +ash ratio K >>+ash L B?=core"nfrastructure )on:infrastructure

N HK 25 2 5-5 JK N J 25 -.5 3/5 JK N J -5 - 2

/ JK N J /5 /.5 -5 JK N J / / /

JK N J 5

/2


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3. +urrent ratio K >+urrent assets C +urrent liabilities? 9 /B

+urrent ratio K N >B?=core"nfrastructure )on:infrastructure

/-5 JK N 2 5

// JK N J /-5 -.5 3/ JK N J // - 215 JK N J / /.5 -1 JK N J 15 / /N J 1

5. +ollection &eriods K >'eceivables C =ales? 9 275

+ollection&eriods K N>days?

"m&rovement K N>days?

=core"nfrastructure )on:

infrastructureN JK 7 N H 25 3 57 J N JK 1 2 J N JK 25 2.5 3.5

1 J N JK /- -5 J N JK 2 2 3/- J N JK /5 - J N JK -5 -.5 2.5/5 J N JK /6 /5 J N JK - - 2

/6 J N JK -/ / J N JK /5 /.7 -.3-/ J N JK -3 7 J N JK / /.- /.6

-3 J N JK -8 2 J N JK 7 .6 /.--8 J N JK 2 / J N JK 2 .3 .7

2 J N J N JK /

7. "nventory turnover K >"nventories C =ales? 9 275

"nventory

turnover K N>days?

"m&rovement K

N >days?

=core

"nfrastructure )on:infrastructureN JK 7 25 J N 3 57 J N JK 1 2 J N JK 25 2.5 3.51 J N JK /- -5 J N JK 2 2 3/- J N JK /5 - J N JK -5 -.5 2.5/5 J N JK /6 /5 J N JK - - 2/6 J N JK -/ / J N JK /5 /.7 -.3-/ J N JK -3 7 J N JK / /.- /.6

-3 J N JK -8 2 J N JK 7 .6 /.--8 J N JK 2 / J N JK 2 .3 .7

2 J N J N JK /

8. Total assets turnover K >=ales C Total assets? 9 /B

Total assetsturnover K N >B?

"m&rovement KN >B?

=core"nfrastructure )on:

infrastructure

/- J N - J N 3 5/5 J N JK /- /5 J N JK - 2.5 3.5

1 J N JK /5 / J N JK /5 2 385 J N JK 1 5 J N JK / -.5 2.57 J N JK 85 J N JK 5 - 23 J N JK 7 N JK /.5 -.5- J N JK 3 N K / 2N JK - N J .5 /.5

/3


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6. +ommon e@uity to total assets K >+ommon e@uity C Total assets? 9 /B+ommon e@uity to Totalassets >B? K N

=core"nfrastructure )on:infrastructure

N J

JK N J / - 3

/ JK N J - 2 7- JK N J 2 3 8.-52 JK N J 3 7 /3 JK N J 5 5.5 15 JK N J 7 5 6.57 JK N J 8 3.5 68 JK N J 6 3.-5 8.56 JK N J 1 3 81 JK N J / 2.5 7.5

/5


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Case Financial Performance - PT Timah (1)

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