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Financial Management Financial Management

Siam Makro

Second Presentation

Siam university

Instructor By

Dr. Sahanon Tungbenchasirikul

SIAM MAKRO PCL

Company Makro

BySocheat Soeun

Company Makro

Contents

Financial Statement Projection Assumption 2012 - 2014

Proposed the company future investment Plan 2013-2014

11

99

33

77

88

44 Profit/loses Statement projections 2012 - 2013

Balance Sheet Projections 2012- 2013

Balance Sheet Projections 2012 - 2013

Future Capital Statement 2013– 2014 (i.e LEP)

Repayment/Remuneration

55

66

Summaries the Company Investment Plan 2010--2012

1212

22

1010

1111

Future Capital Statement ( DSC)

Debt instrument sources of funds

Equity instrument sources of funds

Cash Flow Statement Projections 2012 - 2013

Summaries the company invest-ment plan 2010 - 20122010 20122011

Investment in Logistics innovatin systems Key project Investments Three financial Statements Technology information development Business Support Requirements Financial Analysis Sale/demand forecasts ( revenue increased

10 per year).R&D Logistics support system investments

Investment in Logistics innovatin systems Key project Investments Three financial Statements Technology information development Business Support Requirements Financial Analysis Sale/demand forecasts ( revenue increased

10 per year).R&D Logistics support system investments

Siam Makro Company

InvestmentInvestmentInvestmentInvestment InvestmentInvestment

Original Style Store

Original Style Store

Medium-Sized Horeca Store

Small-Sized Horeca Store

Small-Sized Horeca Store

Gov

ernm

ent

Gov

ernm

ent

Summaries the Company Investment Plan 2010--2012

InvestmentInvestment InvestmentInvestment InvestmentInvestment Operates the membership

based Cash & Carry wholesaler (trade centres).

Operates the membership based Cash & Carry wholesaler (trade centres).

Operates the membership based Cash & Carry wholesaler (trade centres).

20102010 2011 2012

The Company is well aware that obstacles and uncontrollable factors are major challenges

Siam Food Services Limited 99.99%

and Vina Siam Food Services 100%

To determine the Company's strategy and business plans of each business including investment, human resources, performance appraisals and remuneration.

To prepare budgets and investment projects of each business and submit to the Board of Directors for approval.

To follow and monitor the operating performance and the progress of investment projects in each business together with performance report, problems and obstacles encountered and possible solutions to the Board of Directors.

To follow and monitor developments in management and risk management system of each business.

To follow and monitor human resource development, management promotion and rotation in each business according to the Company's plans.

Proposed the company future in-vestment Plan 2013-2014

20142013 Investment Investment

The management believes that Makro’s brand, IP, IT system and management’s expertise can be leveraged throughout neighbouring countries such as Myanmar, Vietnam, Laos, and Cambodia to reach a total of 19 international branches by 2023 5% per year in 2013

The management believes that the ASEAN Economic Community (“AEC”) will play an important role in promoting and liberalizing trading among the ASEAN countries.

Revenue per Store 7% per year in 2014

Why do companies invest?Importance of remembering investment as the purchase of productive capacity NOT buying stocks and shares or investing in a bank!

Buy equipment/machinery or build new plant to: Increase capacity (amount that can be produced) which means: Demand can be met and this generates sales revenue Increased efficiency and productivity

Company Logo

Financial Statement Projection Assumption 2012 - 2013

Lecture Assumptions given: Investment Projects in 2013-2014 (NPV>0 and good IRR) Common-Size Analysis assumption 10% constant revenue growth for year 2013-

2014. In Balance Sheet, inventory, and account receivable increase 10%.

Our additional Assumptions: Profit & Loss Statement• Selling and services increased by 10%.• Share of losses (profits) of investments increased by 10%.• Retained Earning increased by 10%• Common Stock increased by 10%

Balance Sheet Statement• Account receivable, Inventory, Account Payable are increased by 10 %• Long-term Investment in Fixed Assets increased by 10%

Cash Flow Statement• Cash flow from operation increased by 10 %• Investing Cash Flow increased by 10%• Financial Cash Flow increase by 10%

Investment Projects in 2013 -2014

Company siam makro

Expected After –tax Net Cash Flow

Our Group is interested in two investment projects in 2 years (2013-2014). We hire a financial advisor to reckon net cash flow (CF) (i.e. total cash inflow–total cost) and NPV and good IRR of both investment projects. Assumed that discounted rate or cost of capital of project 1 and project 2 equals 10%.

Expected After-Tax Net Cash Flow

Year Project 1 Project 2

0 -1000 -1000

1 500 600

2 600 500

Assumption of Investment Projects in 2013-2014

Project 1 Years0 1 2

Expected Net Cash Flow -1000 500 600Discount Factor (10%) 1.00 1.10 1.21Discount Net Cash Flow -1,000 454.5 495.9Net Present Value(NPV 49.6

Internal rate of return 6%

6.499.4955.4541000

)1.01(

200

)1.01(

1001000

0IRR)(1

CFNPV

(1)0IRR)(1

CF....

IRR)(1

CF

IRR)(1

CF

)(1

CFNPV

21

n

0tt

t

nn

22

11

00

NPV

NPV

IRR

Assumption of Investment Projects in 2013-2014

Project 2 Years0 1 2

Expected Net Cash Flow -1000 600 500Discount Factor (10%) 1.00 1.10 1.21Discount Net Cash Flow -1000 545 413Net Present Value(NPV 41.3

7%

3.414135.5451000

)1.01(

500

)1.01(

6001000

0IRR)(1

CFNPV

(1)0IRR)(1

CF....

IRR)(1

CF

IRR)(1

CF

)(1

CFNPV

21

n

0tt

t

nn

22

11

00

NPV

NPV

IRR

Profit/Loss Statement Projections 2012 - 2013

2011 2012 2013Total Revenue 97,154 112,140 126,171Cost of goods sold -89,402 -102,760 -115,081Gross Profit 7,751 9,380 11,090Selling & Admin Exp. -6,076 -7,419 -8,632Earning before interest tax(EBIT) 4,191 4,777 5,599Interest Expenses -63 -85 -82Other income/exp. 2,516 2,816 3,142Earning before tax (EBT) 4,128 4,692 5,517Corporate tax -1,332 -1,136 -1,196After-tax net profit (loss) 2,796 3,556 4,321Minority interest 0 0 0Equity earning from affiliates 0 0 0Extra items -192 0 0Net profit (loss) 2,604 3,556 4,321

Not

e: R

even

ue

and

Cog

s in

crea

se 1

0% i

n 2

012

& 2

013

c

omp

ared

to

2011

(MB) (MB) (MB)

Balance Sheet Projections 2012 -2013 (5)

2011 2012 2013

ASSETS

Current Assets

Cash and cash equivalents 4,060,060 4,099,110 6,055,829Trade accounts receivable, net 19,733 183,421 234,940Amounts due from related parties and

short-term loans to related parties 37,423 40 -Inventories, net 7,585,264 7,884,890 7,275,508

Purchase discounts receivable 459,317 459,317 652,563

Current portion of leasehold right 34,127 34,127 32,916Other current assets, net 529,407 537,322 435,787Total Current Assets 12,725,331 13,198,227 14,687,543

(MB) (MB) (MB)

Balance Sheet Projections 2012 -2013 (5)

2011 2012 2013Non-Current Assets

Investments in subsidiaries 10 299,771 - -Property, plant and equipment, net 10 17,487,145 17,502,005 16,499,150Investment property, net 112,866 112,866 112,866Leasehold right, net 551,082 551,082 529,432Goodwill, net - 167,384 167,384Other intangible assets, net 10 269,568 281,522 69,529Deferred tax assets 197,396 203,350 206,007Other non-current assets 13,938 16,693 18,658Total Non-Current Assets 18,931,766 18,834,902 17,603,026

Total Assets 31,657,097 32,033,129 32,290,569

Not

e: T

otal

Ass

ets

in 2

012

& 2

013

incr

ease

by

10%

com

par

ed t

o 20

11(MB) (MB) (MB)

Balance Sheet Projections 2012- 2013 (6)

2011 2012 2013

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent LiabilitiesShort-term loans from financial institutions 2,000,000 2,126,945 2,099,787Trade accounts payableThird parties 14,247,082 14,314,366 15,728,455Related parties 10 261,074 248,163 -Total trade accounts payable 14,508,156 14,562,529 15,728,455Amounts due to related parties 10 45,914 45,936 88,191Other current liabilitiesOther accounts payable 726,365 737,359 907,922Income tax payable 238,284 241,634 521,676Accrued expenses 1,378,009 1,394,411 1,339,631Current portion of liabilities under financial lease, net 10 29,742 29,742 23,989Others 261,409 262,430 291,584Total Current Liabilities 19,187,879 19,400,986 21,001,235

Shareholders’ Equity

(MB) (MB) (MB)

2011 2012 2013Shareholders’ EquityShare capitalAuthorised share capitalOrdinary shares, 240,000,000 shares of par Baht 10 each 2,400,000 2,400,000 2,400,000

Issued and paid-up share capitalOrdinary shares, 240,000,000 shares of paid-up Baht 10 each 2,400,000 2,400,000 2,400,000Premium on share capital 3,290,152 3,290,152 3,290,152Retained earningsAppropriatedLegal reserve 240,000 240,000 240,000Unappropriated 4,932,300 6,031,831 6,185,431Other components of equity 141 - 1,562Total Shareholders’ Equity 10,862,593 11,961,983 12,117,145

Total Liabilities and Shareholders’ Equity 10,862,593 11,961,983 12,117,145

Balance Sheet Projections 2012- 2013 (6)N

ote:

Tot

al l

iab

iliti

es a

nd

Tot

al E

qu

ity

in 2

012

& 2

013

incr

ease

10%

co

mp

ared

to

2011

(MB) (MB) (MB)

Cash Flow Statement Projections 2012 - 2013

2011 2012 2013Operating Cash Flow 186,200 2,090,956 2,140,539Investing Cash Flow (2,342,471) 12,305,846 (1,945,095)Financing Cash Flow (1,768,987) (1,741,829) (2,078,885)

Net decrease in cash and cash equivalents (1,970,919) (1,956,719) (3,837,780)Cash and cash equivalents, opening balance 6,030,979 6,055,829 6,288,326Cash and cash equivalents, closing balance 4,060,060 4,099,110 2,450,546

Not

e:

O

per

atin

g,

Inve

stin

g an

d

Fin

anci

ng

Cas

h F

low

in 2

012

& 2

013

of e

ach

in

crea

se 1

0%

com

par

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o 20

11

Future Capital Statement 2013 – 2014(i.e LEP)

Text 2 Text 3 Text 4

2013 2014Liabilities Profile 173 173Equity Profile 180 180Total 100% 100%

Future Capital Structure 2012 -2013 (Debt Service Capital)

2013P 2014P

D/E RATIO 0.2 : 1 0.2 : 1

DSCR(Debt-Service Coverage Ratio)

0.67 : 1 0.67 : 1

= 0.2

(Current Portion of Long-Term Debt + Long-Term Debt) / Total Equity= .xx (2,156.70+169.1)/12,632.10 = 0.2

2013P (MB)

2014 P(MB)

Debt Short Term 2.13 2.16

Debt Long Term (loan from financial institutions ) 2,099,787 2,599,787

Note: Debt Long Term Loan for 2013 & 2014i increased by 10% compared to 2012

Debt Instruments Source of Fund 2013-2014

Note Long-Term Debt is the debt due more than 12 months in the future. The debt can be owed to banks or bondholders. Some companies issue bonds to investors and pay interest on the bonds.The interest paid on companies debt is reflected in the income statement as interest �expense. If a company has too much debt and it cannot serve the interest payment on the debt or repay the matured debt, the company risks bankruptcy. Peter Lynch famously said: A company that does not have debt cannot go bankrupt.� �A company's long term debt may have different dates of maturity and interest rates, depending on the terms.

Equity instrument sources of funds 2013- 2014

2013P(MB)

2014P(MB)

Equity 12,117.4 12,632.1

Common Stock 2400 4800 Preferred Stock

0.000 00.000

Retained Earning 6,425.4 7,525.5

Note: Common stock is listed on the Balance Sheet at the par value of the total shares outstanding of a company. The par value of common stocks is meaningless. It is usually set at an absurdly low number.

Repayments/Remunerations for 2013-2014

Detail 2013(MB)

2014(MB)

1. Debt Repayment -225 -202

2. Interest Payment -77 -85

3. Dividend Payment -2,838 -3,122

Note: Repayments for 2013 & 2014 increase by 10% compared to 2012

Group Makro