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Analysis of Financial

Statement

Submitted By:
Haseeb Ahmed (58214)
Khizer Bin Saeed (58578)
Muhammad Sohail (58893)
Engro Foods Ltd
Introduction
o Engro Foods Limited was formed as awholly owned
subsidiary of Engro Corporation in 2005.
o It start its operation in 2006 and become major player in Food
industry.
o It launched multipleproducts:
• Ice Cream
• Flavored Milk
• Fruit Juices
• Milk Powders
Engro Foods Ltd
Vision Statement
Aim at transforming the company within the five years into first national food
industry giant, then into regional force and finally into a global player.

Mission Statement
Build branded food business to improve quality of life by offering tasty,
affordable and high nutritional products to our consumers while maximizing
stakeholder’s value.

Core values
• Ethics and integrity
• Health, safety and environment
• Innovation and risk-taking
• Our people
• Community and society
• Consumer Centric
Accounting Policies
Revenue recognition
The revenue can be measured reliably, on the following basis:
- sales are recorded on dispatch of goods to the customers
- return on deposits / bank balances is recognized on accrual basis.

Liquidity Management
Engro Foods Limited finances its operations through a combination of equity,
internal cash generation, and by means of cost effective short-term & long-
term borrowings.

Credit Rating
Engro Foods’ Sukkuk issue has been assigned a medium to long term credit
rating of ‘A+’ (Single A Plus) by JCR-VIS
Cash Flow Statement 2013 2012 2011 2010 2009
Cash Flows from Operating Activities
Cash received from customers 38,069 39,849 29,963 20,984 14,812
Cash paid for goods and services -34,104 -35,249 -27,563 -20,053 -14,324
Finance costs paid -854 -982 -938 -567 -531
Taxes paid -680 -333 -314 -193 -50
Retirement benefits paid -74 -71 -69 -16 -21
Net cash generated from operating activities 2,356 3,214 1,080 156 -113

Cash Flows from Investing Activities


Purchases of:
property, plant and equipment -5,246 -2,549 -3,403 -2,055 -1,784
intangible assets -20 -74 -33 -44 -11
biological asse -6 -4 - -129 -17
Proceeds from disposal of:
property, plant and equipment 231 73 16 20 31
biological assets 58 37 20 63 13
Advance against purchase of shares of:
Engro Foods Netherlands B.V. -237 -863 - - -
Investment in Engro Eximp AgriProducts - - -350 -827 -153
Proceeds from disposal of investment in:
Engro Eximp AgriProducts (Private) Ltd. - - 1,408 - -
Net cash utilized in investing activities -5,221 -3,379 -2,341 -2,972 -1,921

Cash Flows from Financing Activities


Proceeds from issue of share capital 105 186 1,264 - -
Advance received against issue of share capital -1 1 - 1,577 1,073
Share issuance costs - - -37 - -
Proceeds from long term finances 2,378 2,099 1,450 1,500 700
Proceeds from tax lossed to ECPL
the Holding Company - - - - 450
Repayments of:
long term finances -1,933 -465 -200 -117 -58
obligations under finance lease -3 -3 -3 -5 -10
Net cash generated from financing activities 547 1,819 2,474 2,955 2,155

Net increase in cash and cash equivalents -2,318 1,653 1,212 140 121
Cash & cash equivalents at beginning of the year 3,045 1,392 180 41 -80
Cash & cash equivalents at end of the year 727 3,045 1,392 180 41
Horizontal and Vertical analysis Profit and Loss Account

Horizontal Analysis (Rs in Million) 2013 13 vs 12 2012 12 vs 11 2011 11 vs 10 2010 10 vs 09 2009

Sales 37891 -5.7 40169 34.5 29859 42.6 20945 42.8 14665
Cost of Sales 29718 -0.4 29848 28.5 23230 40.3 16552 38.5 11949
Gross profit 8173 -20.8 10321 55.7 6629 50.9 4393 61.7 2716
Distribution and marketing expenses 5017 7.8 4654 25.2 3716 27.6 2913 10.3 2640
Administrative expenses 966 21.4 796 57.6 505 6.8 473 36.3 347
Other Operating expenses 340 -20.9 430 105.7 209 58.3 132 187 46
Other income 324 -15.1 382 79.3 213 287.7 55 -68.8 176
Operating profit/(loss) 2174 -54.9 4823 100 2412 159.4 930 -760.6 -141
Other expenses 881 100
Finance cost 785 -13 903 -14 1049 59 660 28 515
Net profit before taxation 508 -87.1 3921 187.6 1363 404.1 270 -141.2 -656
Provision for taxation -297 -77.6 -1326 180.9 -472 399.6 -94 -142.4 223
Net profit after taxation 211 91.9 2595 191.2 891 406.5 176 -140.6 -433

Vertical Analysis (Rs in Million) 2013 2012 2011 2010 2009


RS % RS % RS % RS % RS %
Sales 37891 100 40169 100 29859 100 20945 100 14665 100
Cost of Sales 29718 78.4 29848 74.3 23230 77.8 16552 79 11949 81.5
Gross profit 8173 21.6 10321 25.7 6629 22.2 4393 21 2716 18.5
Distribution and marketing expenses 5017 13.2 4654 11.6 3716 12.4 2913 13.9 2640 18
Administrative expenses 966 2.5 796 2 505 1.7 473 2.3 347 2.4
Other Operating expenses 340 0.9 430 1.1 209 0.7 132 0.6 46 0.3
Other income 324 0.9 382 1 213 0.7 55 0.3 176 1.2
Operating profit/(loss) 2174 5.7 4823 12 2412 8.1 930 4.4 -141 -1
Other expenses 881 2.3 - - - - - - - -
Finance cost 785 2.1 903 2.2 1049 3.5 660 3.1 515 3.5
Net profit before taxation 508 1.3 3921 9.8 1363 4.6 270 1.3 -656 -4.5
Provision for taxation -297 -0.8 -1326 -3.3 -472 -1.6 -94 -0.5 223 1.5
Net profit after taxation 211 0.56 2595 6.5 891 3 176 0.8 -433 3
Horizontal analysis Balance Sheet

Horizontal Analysis (Rs in Million) 2013 13 vs 12 2012 12 vs 11 2011 11 vs 10 2010 10 vs 09 2009


ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 14,505 31.6 11,023 14.6 9,615 34.5 7,148 23.1 5,809
Long term investments - - - - - -100 980 540.5 153
Biological assets 716 7.3 668 34.4 497 16 428 -2.2 438
Intangible assets 123 17 105 -21.6 134 -5.9 142 408.7 28
Long term advances, deposits and prepayments 93 13.6 82 241.7 24 3.8 23 194.7 8
Deffered employee share compensation
expense 169 100 - - - - - - -
Investments in Engro Foods Netherlands B. V. - 100.0) 863 100 - - - - -
Investments in subsidiary 427 100 - - - - - - -
16,033 25.8 12,741 24.1 10,270 17.7 8,722 35.5 6,436
CURRENT ASSETS
Store, spares and loose tools 740 21.1 611 6.8 572 29.4 442 52.4 290
Stock-in-trade 3,084 -11.8 3,495 32.5 2,638 26.3 2,089 79.5 1,164
Trade debts 154 3.1 149 71.3 87 67.3 52 108 25
Advances, deposits and prepayments 181 -30.9 262 -1.5 266 9 244 -28 339
Other receivables 2,354 63.5 1,440 24.1 1,160 60.9 721 26 572
Deffered employee share compensation
expense 136 100 - - - - - - -
Taxes recoverable 637 83.4 347 33.7 10 11.1 9 -71 31
Derivative financial instruments - 100 26 100 - -100 1 100 -
Short term investments 170 -93.7 2,708 109.3 1,294 - - - -
Cash and bank balances 557 32.1 422 20.2 351 95 180 21.6 148
8,013 -15.3 9,460 48.3 6,378 70.6 3,738 45.5 2,569
TOTAL ASSETS 24,046 8.3 22,201 33.4 16,648 33.6 12,460 38.4 9,005
Horizontal analysis Balance Sheet

EQUITY AND LIABILITIES 2013 13 vs 12 2012 12 vs 11 2011 11 vs 10 2010 10 vs 09 2009


EQUITY
Share capital 7,666 0.7 7,616 1.3 7,518 7.4 7,000 29.1 5,423
Share premium 865 6.8 810 12.2 722 100 - - -
Advance against issue of shares - -100 1 100 - - - - -
Employee compensation reserve 407 100 - - - - - - -
Hedging reserve -10 -156.4 17 -194.4 -18 100 - - -
Remeasurement of post employment benefits -
Actuarial loss -35 51.8 -23 29.5 -18 100 - - -
Unappropriate profit / (Accumulated loss) 1,821 13.1 1,610 -263.5 -985 -47.5 -1,876 -8.6 -2,052
10,715 6.8 10,031 38.9 7,219 40.9 5,124 52 3,371
NON-CURRENT LIABILITIES
Long term finances 7,127 18.3 6,023 7.4 5,610 21.3 4,625 39.1 3,325
Obligation under finance lease - - - -100 3 -50 5 -37.5 8
Deferred taxation 1,539 -6.9 1,653 436.7 308 70.2 181 -39.9 301
Deferred liabilities - - - -100 2 -33.3 3 - 3
Deferred income 10 -41.2 17 100 - - - - -
8,676 12.8 7,693 29.9 5,923 23 4,814 32.4 3,637
CURRENT LIABILITIES
Current portion of
long term finances 1,032 -38.8 1,686 262.6 465 132.5 200 70.9 117
Obligation under finance lease - -100 3 - 3 -37.5 4 -20 5
Trade and other payables 3,369 40.7 2,394 1 2,371 16.2 2,041 29 1,582
Derivative financial instruments 15 100 - -100 28 100 - - -
Accrued interest / mark up on
Long term finances 229 -24.1 302 -17.9 368 33.8 275 50.3 183
Short term finances 10 47.7 7 -65 20 900 2 - 2
Short term finances - -100 85 -66.3 252 - - -100 108
4,655 4 4,477 27.7 3,506 39 2,522 26.3 1,997
TOTAL EQUITY AND LIABILITIES 24,046 8.3 22,201 33.4 16,648 33.6 12,460 38.4 9,005
Vertical analysis Balance Sheet

Vertical Analysis (Rs in Million) 2013 13 vs 12 2012 12 vs 11 2011 11 vs 10 2010 10 vs 09 2009


ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 14,505 60.3 11,023 49.7 9,615 57.8 7,148 57.4 5,809
Long term investments - - - - - - 980 7.9 153
Biological assets 716 3 668 3 497 3 428 3.4 438
Intangible assets 123 0.5 105 0.5 134 0.8 142 1.1 28
Long term advances, deposits and prepayments 93 0.4 82 0.4 24 0.1 23 0.2 8
Deffered employee share compensation expense 169 0.7 - - - - - - -
Investments in Engro Foods Netherlands B. V. -Net - - 863 3.9 - - - - -
Investments in subsidiary 427 1.8 - - - - - - -
16,033 66.7 12,741 57.4 10,270 61.7 8,722 70 6,436
CURRENT ASSETS
Store, spares and loose tools 740 3.1 611 2.8 572 3.4 442 3.5 290
Stock-in-trade 3,084 12.8 3,495 15.7 2,638 15.8 2,089 16.8 1,164
Trade debts 154 0.6 149 0.7 87 0.5 52 0.4 25
Advances, deposits and prepayments 181 0.8 262 1.2 266 1.6 244 2 339
Other receivables 2,354 9.8 1,440 6.5 1,160 7 721 5.8 572
Deffered employee share compensation expense 136 0.6 - - - - - - -
Taxes recoverable 637 2.6 347 1.6 10 0.1 9 0.1 31
Derivative financial instruments - - 26 0.1 - - 1 - -
Short term investments 170 0.7 2,708 12.2 1,294 7.8 - - -
Cash and bank balances 557 2.3 422 1.9 351 2.1 180 1.4 148
8,013 33.3 9,460 42.6 6,378 38.3 3,738 30 2,569
TOTAL ASSETS 24,046 100 22,201 100 16,648 100 12,460 100 9,005
Vertical analysis Balance Sheet
EQUITY AND LIABILITIES 2013 13 vs 12 2012 12 vs 11 2011 11 vs 10 2010 10 vs 09 2009
EQUITY
Share capital 7,666 31.9 7,616 34.3 7,518 45.2 7,000 56.2 5,423
Share premium 865 3.6 810 3.6 722 4.3 - - -
Advance against issue of shares - - 1 - - - - - -
Employee compensation reserve 407 1.7 - - - - - - -
Hedging reserve -10 0 17 0.1 -18 -0.1 - - -
Remeasurement of post employment benefits -
Actuarial loss -35 -0.1 -23 -0.1 -18 -0.1 - - -
Unappropriate profit / (Accumulated loss) 1,821 7.6 1,610 7.3 -985 -5.9 -1,876 -15.1 -2,052
10,715 44.6 10,031 45.2 7,219 43.4 5,124 41.1 3,371
NON-CURRENT LIABILITIES
Long term finances 7,127 29.6 6,023 27.1 5,610 33.7 4,625 37.1 3,325
Obligation under finance lease - - - - 3 0 5 0 8
Deferred taxation 1,539 6.4 1,653 7.4 308 1.9 181 1.5 301
Deferred liabilities - - - - 2 0 3 0 3
Deferred income 10 0 17 0.1 - - - - -
8,676 36.1 7,693 34.7 5,923 35.6 4,814 38.6 3,637
CURRENT LIABILITIES
Current portion of
long term finances 1,032 4.3 1,686 7.6 465 2.8 200 1.6 117
Obligation under finance lease - - 3 0 3 0 4 0 5
Trade and other payables 3,369 14 2,394 10.8 2,371 14.2 2,041 16.4 1,582
Derivative financial instruments 15 0.1 - - 28 0.2 - - -
Accrued interest / mark up on
Long term finances 229 1 302 1.4 368 2.2 275 2.2 183
Short term finances 10 0 7 0 20 0.1 2 0 2
Short term finances - - 85 0.4 252 1.5 - - 108
4,655 19.4 4,477 20.2 3,506 21.1 2,522 20.2 1,997
TOTAL EQUITY AND LIABILITIES 24,046 100 22,201 100 16,648 100 12,460 100 9,005
Ratios
Ratios 2013 2012 2011 2010 2009
Profitability Ratios
Gross Profit ratio 21.6% 25.7% 22.2% 21.0% 18.5%
Net Profit to Sales 0.6% 6.5% 3.0% 0.8% -3.0%
EBITDA Margin to Sales 7.7% 15.1% 11.3% 7.9% 2.5%
Return on Equity 2.0% 25.9% 12.3% 3.4% -12.9%
Return on Capital employed 1.2% 18.0% 7.9% 2.1% -7.1%

Liquidity Ratios
Current ratio 1.7 2.1 1.8 1.5 1.3
Quick / Acid test ratio 0.9 1.2 0.9 0.5 0.6
Cash to Current Liabilities 0.1 0.1 0.1 0.1 0.1
Cash flow from Operations to Sales 0.1 0.1 0 0 0
Ratios
Ratios 2013 2012 2011 2010 2009
Activity / Turnover Ratios
No. of Days Inventory 40.4 37.5 37.1 35.9 36.7
No. of Days Receivables 1.5 1.1 0.8 0.7 0.4
No. of Days Payables 44.1 32.9 39.4 44.1 47
Operating cycle -2.2 5.6 -1.4 -7.5 -9.9
Inventory turnover 9 9.7 9.8 10.2 9.9
Debtors turnover 250.4 340.1 429.6 547.1 881.9
Creditors turnover 8.3 11.1 9.3 8.3 7.8
Total Assets turnover ratio / Fixed Assets
turnover ratio 1.6 1.8 1.8 1.7 1.6

Investment / Market Ratios


Earnings per Share (EPS) and diluted EPS 0.3 3.4 1.2 0.3 -1
Price Earnings ratio 373 28.6 18.5 0 0

Capital Structure Ratios


Long-term Debt to Equity 39.9% 37.5% 43.7% 47.5% 49.7%
Graphs

Gross Profit Ratio


30.00%
25.00%
20.00%
15.00%
Gross Profit Ratio
10.00%
5.00%
0.00%
2009 2010 2011 2012 2013

Net Profit to Sales


8.00%

6.00%

4.00%

2.00% Net Profit to Sales

0.00%
2009 2010 2011 2012 2013
-2.00%

-4.00%
Graphs
Current ratio
2.5

1.5

1 Current ratio

0.5

0
2009 2010 2011 2012 2013

Quick ratio
1.4
1.2
1
0.8
0.6 Quick ratio
0.4
0.2
0
2009 2010 2011 2012 2013
Graphs
Inventory turnover
10.5

10

9.5

9 Inventory turnover

8.5

8
2009 2010 2011 2012 2013

Long-term Debt to Equity


60.0%

50.0%

40.0%

30.0% Long-term Debt to


Equity
20.0%

10.0%

0.0%
2009 2010 2011 2012 2013