1. 1.

PRODIGE Du SUD

FINANCIAL STATEMENT ANALYSIS

PLIPDECO

Point Lisas Industrial Port Development Corporation Limited (PLIPDECO) is a public company owned 51% by the Government of Trinidad and Tobago and 49% by private shareholders including banks, insurance companies, financial institutions, company employees and the general public. Incorporated on 16th September, 1966, the Corporation celebrated its 40th Anniversary in 2006.

PLIPDECO's two core activities are:•Industrial real estate management•Port management and operations, including cargo handling services

PLIPDECO is the owner and landlord of the 860-hectare Point Lisas Industrial Estate, located on the west coast of central Trinidad. The Estate houses more than 103 tenants comprising a mix of world-class methanol, ammonia and urea plants, three steel plants, a power plant, and smaller light manufacturing and service companies.

Port Point Lisas, the second major port in Trinidad and Tobago, consists of six general cargo and container berths. The facility handles a variety of cargo including containerised, break bulk, lumber, paper, consumables dry bulk and steel.

COST CENTRES: PORT – TTD150 MMESTATE MANAGEMENT – TTD 50 MM

INDUSTRY CHARACTERISTICS

BUSINESS MODEL:LANDLORD OWNED AND MANAGED – PORT OF SPAINOWNER OPERATED – POINT LISASTERMINAL OPERATED – CHINA, SINGAPORE

FINANCIAL :CAPITAL INTENSIVE – COSTLY

BUDGETING - DIFFICULT TO PLAN / INDUSTRY TO FICKLE DUE TO SEASONAL NATURE

Strengths•Strong leadership•Proximity to South and Central American Markets • Partnership with ALJ for the MSc. Port and Maritime Management•51% Government / 49% Private•Ability to operate with least government intervention•Stable Company

Opportunities•Transforming the Corporation into being more “results driven” •To be a global player in terms of Port efficiency, services, technology and capacity.•With the completion of the Panama Canal, Plipdeco will expand its berths to accommodate larger Vessels•Establishment of Logistics Park

Threats• Reliability of Panama Canal by other users •Transshipment for illegal activity

Weaknesses•Culture •Unionized enviorment•Stagnated – Policies•High Operating Cost • Limited Size of Vessels can be accomodated at present

SWOT ANALYSISSWOT ANALYSIS PLIPDECO ECONOMIC CHARACTERISTICS

PLIPDECO’S STRATEGY TEAMWORK, TECHNOLOGY, TRANSFORMATIONTEAMWORK, TECHNOLOGY, TRANSFORMATIONA balanced approach to exponential growthA balanced approach to exponential growth

PLIPDECO’S STRATEGIC PILLARS

POSITIONPOSITION Port as the National Port and the Regional Hub EXPANDEXPAND Industrial Lines of BusinessEXPAND EXPAND The Tenanted Estate STRENGTHENSTRENGTHENHealth, Safety & Environment Capabilities BUILD BUILD “Results” Culture

Strategic Initiatives

An effective Maintenance Department An effective Maintenance Department •Established preventative maintenance programme•Systematic asset replacement strategy

(Gantry cranes maintenance completed by in-house team)

Education & Training Education & Training •Collaboration with Arthur Lok Jack School of Business with the MSc Port and Maritime Management •Collaboration with National Energy Skills Center for a comprehensive training program for maintenance team

EXPANSION & DEVELOPMENTEXPANSION & DEVELOPMENT•Port expansion project and development of Logistics Park•Panama canal expansion

(Plipdeco to position itself to capitalize on this opportunity)

HEALTH, SAFETY & ENVIRONMENTHEALTH, SAFETY & ENVIRONMENT•Strengthen HSE capabilities and HSE management systems that will define the way Plipdeco does business with its Stakeholders

QUALITY OF THE FINANCIAL QUALITY OF THE FINANCIAL STATEMENTSSTATEMENTS

Generally , the financial statements for the company during the period 2008 thru 2012 were consistent and reliable.

The statements were prepared in accordance with IFRS (International Financial Reporting Standards).

•It was observed that for 2007 to 2009 fair value gains was included in profit after tax, however the company confirmed that this treatment was rectified in subsequent years. (Evidenced in 2010)•The COGS information was not clearly expressed and was treated as an operating expense.

Overall, statements met the qualitative characteristics of generally accepted Financials.

http://www.plipdeco.com/main/index.php

BALANCE SHEET

BALANCE SHEET

INCOME STATEMENT

CASH FLOW

RATIOS – LIQUIDITY

  YEARS

  2007 2008 2009 2010 2011 2012Accounts Receivable Turnover n/a 6 9 10 10 10

Accounts Receivables Turnover in days n/a 60 39 36 35 37

Avg Inv   9553 9213 10555 11067 12038

Inventory Turnover n/a 2 1 2 2 2

Working Capital $1,834 $17,226 $12,531 $14,640 $14,973 $17,719

Current Ratio 1.0 1.2 1.2 1.2 1.2 1.3

Acid-Test Ratio 0.9 1.1 1.0 1.1 1.0 1.1

Cash Ratio 0.5 0.8 0.8 0.8 0.7 0.7

0

2

4

6

8

10

12

2007 2008 2009 2010 2011 2012

AccountsReceivableTurnover NetSales/AverageGross Receivables

ACCOUNTS RECEIVABLE TURNOVER

Prior to 2009 there was an improvement in the receivables turnover, however for the period 2010 – 2102, the company was stagnant with collections from debtors up to 36 days.

Initially debtors took 60 days to pay, this improved to 36 days

ACCOUNTS RECEIVABLE TURNOVER (IN DAYS)

0

10

20

30

40

50

60

70

2007 2008 2009 2010 2011 2012

AccountsReceivablesTurnover in daysAvg GrossReceivables/(NetSales/365)

Prior to 2009 there was an improvement in the receivables turnover, however for the period 2010 – 2102, the company was stagnant with collections from debtors up to 36 days.

Initially debtors took 60 days to pay, this improved to 36 days

INVENTORY TURNOVER

Inventory for Plipdeco is Spares.

•LESS BREAK DOWN •USE OF HIGHER QUALITY SPARES

WORKING CAPITAL

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2007 2008 2009 2010 2011 2012

Working Capital CurrentAssets-Current Liabil ities

POSITIVE WORKING CAPITAL

CURRENTS ASSETS

DEBT DECREASING CURRENT PORTION OF LONG AND MEDIUM TERM LIABILITY

IN 2008 LOANS WERE REPAID

CURRENT RATIO

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2007 2008 2009 2010 2011 2012

Current RatioCurrentAssets/CurrentLiabilities

While the analysis shows that the company is relativey stable, if liabilities were to increase at a faster rate than current assets, the company will be adversly affected just the same as if the current assets decreases at a lesser rate than current liabitliies

2009/2010, Plipdeco utilised more of their short term financing. This can indicate a cash flow problem as it was utilized two years in a row.

ACID-TEST

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2007 2008 2009 2010 2011 2012

Acid-Test Ratio (CurrentAssets-Inv)/CurrentLiabil ities

•Service industry•Current ratio and asset test doesn’t differ considerably as a result of the fact that no inventory is required. The inventory figure represents inventory spares for equipment used to generate revenue

CASH RATIO

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

2007 2008 2009 2010 2011 2012

Cash Ratio (Cash Eq + MrkSec)/Current Liabilities

Cash ratio is less than 1 and this indicates that there is a cash flow issue.Cash on books is inadequate to cover all short term liabilities. An overdraft facility was accessed in 2009 and 2010.

Long Term Debt Paying Ability

  2007 2008 2009 2010 2011 2012

Times Interest Earned 0.02 -0.18 -0.36 -4.49 -5.22 0.18

Debt Ratio 0.29 0.25 0.23 0.21 0.19 0.18

Debt/Equity Ratio 0.41 0.34 0.30 0.27 0.24 0.22

Debt to Tangible Net Worth Ratio 0.41 0.34 0.30 0.27 0.24 0.22

Operating Cash Flow/Total Debt 0.04 0.20 0.09 0.11 0.13 0.00

TIMES INTEREST EARNED

Long term debt was refinanced however interest payments do not exceed returns. Payments against long term debt secured in 2007 realized negative T.I.E in subsequent years, up to 2012. The business does not reflect a profit maximization focus but a focus on economic sustainability.

DEBT RATIO

Assets> DebtFrom 2007 – 2008 there were Long term Investments in gov’t bonds and fair value gains in Investment properties.

From 2009 – 30 year leases increased

DEBT /EQUITY

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

2007 2008 2009 2010 2011 2012

Debt/EquityRatio TotalLiabilities/ShEquity

Long term debt was refinanced however interest payments do not exceed returns.

DEBT TO TANGIBLE NET WORTH

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

2007 2008 2009 2010 2011 2012

Debt to Tangible NetWorth Ratio TotalLiabilities/(Sh Eq-Intangible Assets)

Long term debt was refinanced however interest payments do not exceed returns.

OPERATING CASH FLOW

0.00

0.05

0.10

0.15

0.20

0.25

2007 2008 2009 2010 2011 2012

Operating CashFlow/Total DebtOperating CashFlow/Total Debt

Long term debt was refinanced however interest payments do not exceed returns.

RATIOS –PROFITABILITY

PROFITABILITY

  YEARS

  2007 2008 2009 2010 2011 2012

Return on Capital Employed0.03% 0.22% 0.41% 3.16% 2.86% 2.46%

Return on Total Equity = Net Inc/Sh Eq 3.26% 9.82% 2.33% 4.09% 3.00% 1.95%

Gross Profit Margin 65.37% 65.55% 67.90% 69.71% 69.70% 68.92%

Net Profit Margin 17.50% 55.13% 16.76% 29.17% 20.53% 12.70%

Total Asset Turnover n/a 0.13 0.13 0.11 0.11 0.12

0.00%

2.00%

4.00%

6.00%

8.00%

2007 2008 2009 2010 2011 2012

Return on Assets=Net Income/TotalAssets Net Incomebefore NonControll ing Int &Non Recurring

RETURN ON ASSETS

Return on Assets represents how profitable a company is relative to its total assets.

It illustrates how well management is employing the company’s total asset base to make a profit.

In a highly capital-intensive organisation like PLIPDECO, where investment in fixed asset is extremely high, averaging over $540m compared with the net income, the result is a low ROA.

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

10.00%

2007 2008 2009 2010 2011 2012

Return on TotalEquity = Net Inc/ShEq Net Income/Shareholders' Equity

RETURN ON TOTAL EQUITY

Return on Total Equity indicates how profitable a company is by comparing its net income to its average shareholders' equity.

The return on equity ratio (ROE) measures how much the shareholders earned for their investment in the company. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors.

PLIPDECO however, has averaged 4% ROE which implies a less than ideal return rate. This may be attributable to its wide shareholder base, which includes ESOP and modest income inflows relative to equity

RETURN ON CAPITAL EMPLOYEDReturn on Capital Employed (R.O.C.E) measures a firm’s efficiency and the manner in which its capital is employed. It measures how successful a firm is at turning its capital into profits.

Over the last six years Plipdeco has seen a fluctuation with its return with the highest R.O.C.E being realized in 2010 (3.16%). Investors may be worried that this return has not generated lucrative rewards, but it gives them an indication of the company’s performance with regards to its debt and liabilities. Plipdeco’s low R.O.C.E indicates that it is not employing its capital effectively and is not generating shareholder value.

TOTAL ASSET TURNOVER

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

2007 2008 2009 2010 2011 2012

Total AssetTurnover Netsales/AverageTotal Assets

Total Asset Turnover is the measurement of how efficient a company is in using its assets to generate revenue.

It measures how much dollars a company’s assets contributes towards revenue.

Within the period 2007 to 2012, Plipdeco’s Total Asset Turnover has not exceeded 0.13 (2008, 2009), but has reached a low of 0.11 (2010, 2011). This indicates that there may be issues with the productive capacity of its assets. Plipdeco has indicated that their manpower needs to be improved with respect to their experience in operating the firm’s machinery and this problem added to depreciation in a highly capital intensive organisation can explain its low ratio

63.00%

64.00%

65.00%

66.00%

67.00%

68.00%

69.00%

70.00%

2007 2008 2009 2010 2011 2012

Gross ProfitMargin GrossProfit/ Sales

GROSS PROFIT MARGIN

Gross Profit Margin is used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold.

Gross profit margin serves as the source for paying additional expenses and future savings. Without an adequate gross margin, a company will be unable to pay its operating and other expenses and to expand and grow in the future.

PLIPDECO has an average Gross Profit margin of 67%. This results from a substantial value of turnover that it enjoys, relative to the cost of sales. It increased steadily with the exception of 2010, which shows increasing profitability before commitments

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

2007 2008 2009 2010 2011 2012

Net Profit MarginNet Profit/Sales

NET PROFIT MARGIN

Net Profit Margin is the percentage of revenue that remains after all interest, expenses, preferred stock dividends and taxes have been deducted from a firm’s total revenue. It measures how much out of every dollar of sales a company keeps in earnings.

Plipdeco’s Net profit ratio has fluctuated between the years 2007 to 2009 but has been in constant decline since 2010; its peak being 55.3% in 2008 with its lowest occurring in 2009 (16.76%). In 2008 there was a notable injection of unrealised fair value gains on the retirement benefit plan which accounted for the return of 55.3%. Even though there has been a steady increase in sales from 2010 onwards, there has also been an increase in expenses over the years resulting in diminishing net profit margins

INVESTOR ANALYSIS

  2007 2008 2009 2010 2011 2012

Degree of Financial Leverage n/a 636.90% 299.76% 114.97% 106.05% 107.55%

Earnings Per Share 1.05 3.48 0.85 1.34 51.49 1.01

Percentage of Earnings Retained 14.32% 3.45% n/a 7.09% 5.99% 12.89%

  2012 2013  Non-current Assets      Property, plant and equipment 485,212 437,072  Investment properties 1302,574 1388,608  Retirement benefit asset      Other non-current assets 279 134  Long-term investments 38,580 48,390  Deferred tax 9,808 14,039  TOTAL NON CURRENT ASSETS 1836,453 1888,243  Current Assets      Inventory 12,384 13,893  Receivables and prepayments 23,913 22,219  Taxation recoverable 17 0  Cash and cash equivalents 50,107 38,684  

TOTAL CURRENT ASSETS 86,421 74,796  

Total Assets 1922,874 1963,039  

BALANCE SHEET

Non-current Liabilities    Floating rate bonds 2012 - 2016 55,195 55,195 Long and medium-term liabilities 64,189 32,205 Retirement benefit obligation 27,522 24,000 Deferred tax 68,699 69,246 Deferred lease rental income 64,510 62,344

TOTAL NON CURRENT LIABILITIES 280,115 242,990 Current Liabilities    Bank overdraft -  Current portion of long and medium-term liabilities 26,014 25,652 Deferred lease rental income 3,591 3,518 Payables and accruals 39,097 48,730 Provision for taxation   0

TOTAL CURRENT LIABILITIES 68,702 77,900

Total Liabilities 348,817 320,891

Total Equity and Liabilities 1922,874 1963,039

BALANCE SHEET

2012 2013 $’000

Turnover 242,000.00 259,568.04

Direct costs/COGS (75,211.00) (82,731.66)

Gross Profit 166,789.00 176,836.38

Unrealised fair value gains 27,545.00 22,747.03

Administrative expenses (79,992.00) (88,814.37)

Other operating expenses (65,382.00) (67,845.45)

Operating Profit 48,960.00 42,924.00

Investment income 5,293.00 3,430.37

Finance costs (8,729.00) (6,722.73)

Profit/(loss) on disposal of interest in Joint Venture operations

Profit/(Loss) Before Taxation 45,524.00 39,631.64

Taxation (5,523.00) -5031.92

Profit For The Year 40,001.00 34,599.72

Unrealised fair value gainsLosses on retirement benefit plan (9,257.00)

Profit After Taxation 30,744.00 34,599.72

INCOME STATEMENT

2012 2013$’000 $’000

Operating Activities

Cash generated from operating activities 52,655 51,756 Interest paid (8,887) (5,250)Interest received 3,812 2,974

47,580 49,480 Net taxation paid (503) (599)

Net Cash Generated from Operating Activities 47,077 48,881 Investing ActivitiesNet additions to property, plantand equipment (4,398) (2,984)Proceeds from disposal of Joint 81 Venture OperationsProceeds on disposal of property, plantand equipmentIncrease in investments (3,812) (4,728)Net Cash Used in Investing Activities (8,129) (7,712)Financing ActivitiesIncrease/(decrease) in longand medium-term liabilities (41,072) (45,787)Dividends paid (3,963) (8,088)Net Cash Generated from/(Used in)Financing Activities (45,035) (52,592)Decrease in Cash and Cash Equivalents (6,087) (11,423)Cash and Cash Equivalents,Beginning of Year 56,375.00 50,288 Cash and Cash Equivalents,

End of Year 50,288.00 38,865

CASH FLOW

VALUATION OF PLIPDECO