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Names: Student IDs:

1. Kevin Lee Hee Xian 0315192

2. Goh Jeng Jhieh 0315080

3. Chua Jia Cheng 0315160

4. Muhammad Haziq bin Hj Abd Zariful 0314131

5. Kevin Hii Ting Kui 0319223

6. Haji Muhammad Syafiq bin Haji Abd Zariful 0314702

Programme: Bachelor of Quantity Surveying (Honours), SCHOOL OF ARCHITECTURE, BUILDING & DESIGN

Email (Group Leader): kevlee3088@gmail.com Contact No (Group Leader): +60192833089

Subject code and title: QSB3413/QSB3414/FIN60203 FINANCIAL MANAGEMENT

Module Lecturer/ Tutor: Lai Chee Kin

Assignment number: Group Written Assignment Due date: 22 November 2016

Assignment topic as stated in the guidelines provided: Business and financial analyses and forecasts of a company.

Further Information: (e.g. state if extension was granted and attach evidence of approval and Revised Submission Date)

I have read and understood the Taylor’s University Regulations on cheating, plagiarism and collusion and state that this piece of work is my own and does not contain any unacknowledged work from any other sources.

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Chua Jia Cheng

Muhammad Haziq bin Hj Abd Zariful

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Haji Muhammad Syafiq bin Haji Abd Zariful

Date received from student : Received by:

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ASSIGNMENT COVER SHEET

Student Names and IDs:

Programme: Bachelor of Quantity Surveying (Honours), SCHOOL OF ARCHITECTURE, BUILDING & DESIGN

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Module code and title: QSB3413/QSB3414/FIN60203 FINANCIAL MANAGEMENT Module Lecturer/ Tutor: Lai Chee Kin

Assignment number: Group Written Assignment Due date: 22 November 2016 Word Count:

Assignment topic as stated in the guidelines provided: Business and financial analyses and forecasts of a company.

B. This section will be completed by the lecturer/tutor assessing your assignment:

CRITERIA %DISTINCTION

(7.5-10)CREDIT(6-7.4)

PASS(5-5.9)

MARGINAL FAIL(4-4.9)

FAIL(0-3.9) SCORE

Executive summary, introduction, background and principal activities, and strategic plans of the company

5 # ExcellentWell-researched, objective and clearly written.

# Good # Fair # Poor # ConfusingShows little or no research, biased or irrelevant, lacks clarity.

Industry analysis 10 # ExcellentRelevant, up-to-date and well-researched.

# Good # Fair # Poor # ErroneousIrrelevant, outdated, little evidence of research.

Financial analysis 70 # ExcellentAccurate calculations of the latest financial data over two years, comparison with industry data, well-reasoned analyses.

# Good # Fair # Poor # ErroneousMultiple errors in calculations showing lack of understanding, fails to evaluate company by comparing with relevant industry data, no reasoned analysis of financial data.

Financial forecasts 10 # ExcellentAccurate calculations and correct conclusions. Excellent evaluation of the projected cash requirements.

# Good # Fair # Poor # ErroneousMultiple errors in calculations showing lack of understanding. Forecasts without any basis or justification. Missing or invalid conclusions and analyses.

Structure and presentation, language, reference of sources

5 # ExcellentExcellent headings/sub-headings, layout, pagination. Excellent grammar, spelling. Effective/accurate use of figures and tables. Excellent references of sources.

# Good # Fair # Poor # ErroneousInappropriate or no headings, poor and confusing layout, innappropriate or no numbering. Weak grammar, many spelling mistakes, ineffective/inaccurate use of figures and tables. Poor or no references of sources.

Penalty

Total (100%)

Final score (25%)Any additional comments (if there is any):Comments:

Assessed by: Date:

Sample Moderated by (if any): Date:

Marking Criteria for Assignment

% Task detailsDISTINCTION

(75-100)CREDIT(60-74)

PASS(50-59)

MARGINAL FAIL(40-49)

FAIL(0-39)

Executive summary, introduction, background and principal activities, and strategic plans of the company

5 Remember that this should be a report and should be presented in a professional report format. Presentation should include tables/graphs to enhance understandability.

# ExcellentWell-researched, impressive choice and range of relevant information, objective and clearly written.

# GoodGood level of research, covers all the main points, objective,

# FairFair level of research, missing some important relevant information, some errors/omissions.

# PoorPoor effort in research, missing relevant information or contains wrong/outdated information.

# InadequateShows little or no research, biased or irrelevant, lacks clarity.

Industry analysis 10 You are expected to research the industry in which the company operates to give context to your financial analysis.

# ExcellentRelevant, up-to-date and well-researched, outstanding level of detail.

# GoodGood level of relevant information, current and appropriate.

# FairFair level of appropriate information, some outdated or errors, somewhat incomplete.

# PoorPoor effort in researching the industry, some irrelevant or outdated info,

# InadequateIrrelevant, outdated, little evidence of research.

Financial analysis 70 This includes accurate calculations of relevant ratios and analyses of trends in tables/graphs. Comparison should be made to competitors and/or industry averages. Analyses and evaluations should be made in the context of the current industry climate.

# ExcellentAccurate calculations of the latest financial data over 5 years, comparison with industry data, well-reasoned analyses. Excellent analysis of trends.

# GoodAccurate calculation of relevant ratios for 5 years, good analyses of ratios and trends, comparison with industry data or competitors.

# FairFairly accurate calculation of relevant ratios, fair description of trends, lacking comparison with industry data or competitors. Contains some errors or omissions.

# PoorErrors in calculations showing lack of understanding, weak/limited analyses.

# InadequateMultiple errors in calculations showing lack of understanding, fails to evaluate company by comparing with relevant industry data, no reasoned analysis of financial data.

Financial forecasts

10 Accurate calculations of forecast income statement and any required external funding or surplus cash.

# ExcellentAccurate calculations and correct conclusions. Excellent evaluation of the projected cash requirements.

# GoodAccurate calculations and correct conclusions. Good evaluation of the projected cash requirements.

# FairFairly accurate calculations with conclusion that lack some clarity and analysis.

# PoorSome major errors in calculations, poor or inaccurate conclusions/analyses.

# InadequateMultiple errors in calculations showing lack of understanding. Forecasts without any basis or justification. Missing or invalid conclusions and analyses.

Structure and presentation, language, reference of sources

5 Professional writing and presentation, including good page layout, use of headers, pagination, organisation of sections, reference of sources, inclusion of relevant details in notes and appendices.

# ExcellentExcellent headings/sub-headings, layout, pagination. Excellent grammar, spelling. Effective/accurate use of figures and tables. Excellent references of sources.

# GoodGood use of headings, layout is clear, good pagination, some use of table/graphs to illustrate trends. Good reference of sources.

# FairLayout that is fairly readable with appropriate pagination, some spelling and grammatical errors, lacking logical flow in some parts, effective use tables/graphs to illustrate main points.

# PoorLacking appropriate headings/subheadings, poor paragraphing, many spelling and grammatical errors, lacking logical flow in many parts.

# InadequateInappropriate or no headings, poor and confusing layout, innappropriate or no numbering. Weak grammar, many spelling mistakes, ineffective/inaccurate use of figures and tables. Poor or no references of sources.

ASSESSMENT FOR PRESENTATION

Programme : SABD

Semester / Intake : Sem 5, August 2016 Intake Subject Code : QSB3413/QSB3414/FIN60203

Company name : Sycal Ventures Berhad Subject Title : Financial Management

Guidelines to Assessing Presentations

0.75-1 = Superior (A) 0.60-0.74 =Above Average (B) 0.50-0.59 = Average (C) 0.40-0.49 = Below Average (D) 0.00-0.39 = Weak/No Attempt (F)

Quality of Contents : Key points are clearly identified and explained, with clear conclusions. PowerPoint slides or other presentation aids contain the required subject information and are presented clearly.

Language : English Language; grammatically correct, good vocabulary, proper sentence construction.Clarity : Smooth speech, voice is clear and loud, flow in the explanation is easy to understand.Dressing : Formal and professional.Composure : Calm, composed and not fidgety. Good eye contact.

No. Name / Student ID

Contents of Presentation Oral SkillsBody Language

and Dressing Total

Section / Work Done(Identify and describe work

completed)

Qua

lity

of

Con

tent

s

Lang

uage

Cla

rity

Dre

ssin

g

Com

posu

re

(1) (1) (1) (1) (1) (5)

1. Kevin Lee Hee Xian Questions (a), (i)

2. Goh Jeng Jhieh Questions (c), (h)

3. Chua Jia Cheng Questions (d), (j)

4. Muhammad Haziq bin Hj Abd Zariful Questions (b), (g), (k)(i) & (k)(ii)

5. Kevin Hii Ting Kui Questions (e), (j)

6. Haji Muhammad Syafiq bin Haji Abd Zariful Questions (f), (j), (l)

Other Comments

Assessed by: Date:

TABLE OF CONTENTS

Background of the Company…………………………………………………………………………...1

Principal Activities…………………………………………………………………………………......2

Analysis of Revenue Contributions………………………………………….…………………….....3-4

Evaluation of Current Industry……………………………………………………………………….4-5

Current size of market………………………………………………………………………….4

The Prospect for future growth………………………………………………………………4-5

Challenges faced in the industry……………………………………………………………….5

Strength & Weaknesses………………………………………………………………………………5-6

Strategic Plans………………………………………………………………………………………..6-7

Summary of Opportunities…………………………………………………………………….6

Downstrend towards first half of 2016………………………………………………………6-7

Summary of Plans for Major Challenges………………………………………………………7

Capital Investments & Source of Funding……………………………………………………………8-9

Evaluation of Cash Flows…………………………………………………………………………...9-11

Free Cash Flow……………………………………………..……………………………………...11-12

Evaluation Of Company’s Performance……………………………………………………...……12-14

Liquidity………………………………………………………………………………………12

Activity……………………………………………………………………………………….12

Debt…………………………………………………………………………………………...13

Profitability…………………………………...…………………………………………...13-14

Market Performance………………………….……………………………………………….14

Forecast of Financial Year 2016………………………………………………………………...…15-17

Forecast Income statement of 2016…………………………………………………………..15

Required New funds for forecast 2016……………………………………………………15-17

Conclusion……………………………………………………………………………………….........17

i

LIST OF APPENDICES

Appendices…………………………………………………………………………..…APP/1 – APP/19

Balance Sheet…………………………………………………………………………….APP/1

Income Statement……………………………………………………………………..…APP/2

Statement of Cash Flows……………………………………………………….APP/3 – APP/5

Financial Statement Notes used………………………………………………...APP/6 – APP/8

Other Relevant Annual Report Pages Used……………………………………………...APP/9

Financial Ratio formulas & equations………………………………………...APP/10 – APP/18

Free Cash Flow Formula…………………………………………………………….….APP/18

Required New Funds Formula……………………………………………………….…APP/18

Percent-of-sales method calculations……………………………………………….…..APP/18

References………………………………………………………………………..….…APP/19-APP/20

ii

LIST OF TABLES

Table 1: List of Board of Directors members…………………………………………………..………1

Table 2: List of subsidiaries & respective principal activities…………………………..……………...2

Table 3: The Increase / (Decrease) in Revenue between the years 2014 & 2015………………………3

Table 4: Malaysia GDP…………………………………………………..……………………………..4

Table 5: Changes in Property, Plant & equipment in the Balance Sheet……………………………….8

Table 6: Additions to Non-current assets………………………………..……………………………...8

Table 7: Sources of Funding for Plant &

Equipment...............................................................................9

Table 8: Net cash inflow / (cash outflow) from 2011 to 2015………………………………………….9

Table 9: Summary of major cash flows of SVB in 2015……………………………………………...10

Table 10: Changes in net cash and cash equivalents of the company in its latest year……………….11

Table 11: Free Cash flow of Sycal Berhad from 2011 to 2015……………………………………….11

Table 12: Financial Ratios for Liquidity……………………………………..…………………….….12

Table 13: Financial Ratios for Activity……………………………………..………..…………….….12

Table 14: Financial Ratios for Debt……………………………………..………………………….…13

Table 15: Financial Ratios for Profitability…………………………………..…………………….…13

Table 16: Financial Ratios for Market Performance..………………………..………………………..13

iii

LIST OF FIGURES

Figure 1: Bar chart of the types of revenue in 2015 & 2014…………………………………………...3

Figure 2: The Down trend chart of Sycal Berhad………………………………………………………7

Figure 3: Graph showing trend of cash inflow / (cash outflow) from 2011 to 2015……………….…10

Figure 4: Forecast of Income statement 2016 by percent-of-sales method…………………………...15

iv

LIST OF ABBREVIATIONS

CAGR Compound Annual Growth Rate

CIDB Construction Industry Development Board

GDP Gross Development Profit

GDV Gross Development Value

GST Government Service Tax

MYR / RM Malaysia Ringgit

PKNP Perbadanan Kemajuan Negeri Perak

RNF Required New Funds

SVB Sycal Ventures Berhad

v

BACKGROUND OF THE COMPANY

Sycal Venture Berhad is a Malaysia based company founded in 1980 on its date of

incorporation. In 1994, the company was formerly known as Cygal Berhad and later in June 2007 the

company changed its name to SVB.

This investment holding company mainly focuses in building construction and civil

engineering works in Malaysia and Hong Kong. The company also operates its business in two other

segments as its subsidiaries, which are property development and manufacturing and trading. The

subsidiaries of the company and its 12 indirect subsidiaries are mentioned under ‘Principal Activities.’

Besides that, there are a total of seven people in the board of directors in this company.

Table 1: List of Board of Directors

The headquarters of this company is located at Kuala Lumpur and its shares are traded on the

Kuala Lumpur Stock Exchange under the stock name of SYCAL, where the total number of

shareholders from the analysis of shareholdings at 31 March 2016 was 3,581 and the total numbers of

shares are 320,249,560. As for the largest shareholder, Kenanga Nominees (Tempatan) Sdn Bhd –

Fantastic Hallmark Sdn Bhd owns a total of 53,364,048 numbers of shares in percentage of 16.66%.

1

PRINCIPAL ACTIVITIES

Table 2: List of subsidiaries & respective principal activities

The Company is principally an investment holding company and is listed on the Main Market of

Bursa Malaysia Securities Berhad.

The principal activities of its subsidiary companies are as follows:

2

Figure 1: Bar chart of the types of revenue in 2015 & 2014.

Reffering to Table 3, the total revenue has decreased from RM 407,383,000 to RM312, 717,000.

Some significant changes are shown in Figure 1, where the contract revenue is decreased from RM

291,859,000 to RM 248,251,000. Same goes to property development revenue, it had decreased from

Contract

Reven

ue

Consulta

tion & Project M

anag

emen

t Fee

Propert

y Deve

lopment R

even

ue

Joint Ven

ture Dev

elopmen

t Reve

nue

Sales

of Goods &

Servi

ces0

50000

100000

150000

200000

250000

300000

REVENUE CONTRIBUTIONS

(RM

'000

)

Table 3: The Increase / (Decrease) in Revenue between the years 2014 & 2015

ANALYSIS OF REVENUE CONTRIBUTIONS

REVENUE GROUP Increase /2015 2014 (Decrease)

Revenue comprises: RM' 000 RM' 000

Contract revenue 248,351 291,859 (43,508)Consultation and project management fee 7,311 1,200 6,111Property development revenue 1,458 51,715 (50,257)Joint venture development revenue 3,182 - 3,182Sales of goods and services 61,415 62,609 (1,194)TOTAL 321,717 407,383 (85,666)

3

RM 51,715,000 to RM 1,458,000. These 2 revenues are the main factors leading to the overall

decrease of total revenue in 2015.

EVALUATION OF CURRENT INDUSTRY

Current size of the market

A report prepared by the Department of Statistics Malaysia shows the 2016 GDP from construction

in Malaysia has declined to 11,899 MYR million in the second quarter from 12,558 MYR million in

the first quarter. However, the 12,558 MYR million GDP is the highest peak the construction industry

has reached in the last 6 years, with the GDP averaging at 9,439 MYR million from 2010 to 2016,

which shows that the industry is on the rise.

Table 4: Malaysia GDP (obtained from http://www.tradingeconomics.com/malaysia/gdp-from-

construction )

The Prospect for future growth

Chief executive of CIDB, Dr Judin Abdul Karim mentioned that although the country is

experiencing a change in its economic climate, the construction industry would remain healthy.

4

Furthermore, the government has just announced a new plan that will see plenty of big projects being

undertaken in Kuala Lumpur in the next five years.

The 10th Malaysia Plan ended in 2015 with the construction sector charting a firm CAGR of

11% in the five-year period. Moving forward to the RM260 billions of development outflow under the

11th Malaysia Plan (2016-2020) represents a 16% increase from the previous plan, which promises

for the growth of the construction industry.

Challenges facing the industry

IJM Corp Sdn Bhd chief executive officer/managing director Datuk Teh Kean Ming said that

with the dejected oil price and slower GDP growth forecast, this year’s construction growth might

slow down. Eversendai Corp Bhd executive chairman and group managing director Tan Sri AK

Nathan said the sudden plunge in global oil prices had brought about many uncertainties for the

overall economic situation. He also mentions that a substantial reduction in buying power will

result in a challenging environment for Malaysia in 2015. 

Payment issues in the construction industry are considered a factor of major concern to all

the parties in the industry. A survey of the payment performance has shown that construction industry,

in particular, is prone to late-payment culture (Johnston, 1999).

STRENGTH & WEAKNESSES

Strength

One of the obvious strengths the company boasts is the wide array of trades that it operates

through three segments, construction, property development & manufacturing and trading. The

RM181.67m revenue is a massive sum the company should be proud of, whereas the 169 numbers of

employees reflects greatly on workforce availability. The company moreover has competitive

advantage over other companies for having a lot of projects that would span 5 to 10 years. Looking at

the ‘Ratio Analyses’ section, the current ratio and quick ratio for the last 5 financial year shows the

strong liquidity of the company, as the ratios are above industry average.

Weakness

According to Appendices – Statement of Cash Flow, the drop in net cash flow by RM5.66m

between financial years 2014 & 2015 proves to be a troubling concern for the company. Additionally,

the company used more cash to support its operation that what it has earned, producing a cash flow

5

loss of RM426k. The declining inventory turnover from the past 5 years could ascertain to be a

harrowing weakness for the company, showing the escalating difficulty in selling off properties &

products. The ratio analysis also expresses that the company takes a long time to pay accounts

payable, which could affect banks’/lenders’ trust on the company when lending future loans.

STRATEGIC PLANS

Summary of Opportunities:

- Repayment of RM 69m from 2014 to 2016, boosting company cash position, and also putting

up chances for a dividend for shareholder.

- Cygal Development Sdn Bhd had a 12 year contract with Pullman Hotel until 2022, which

puts up opportunity for Sycal for more jobs in the coming days when Pullman Hotel starts to

expand for their next spot.

- Looking to see it's properties development activities to snap up significant portion of profit

contribution in the next 5 to 10 years with on going projects from Cheras, Sitiawan, Taiping

and Ipoh

- Progress billing on existing construction book order of RM 500 million, as well as potential

RM 1.2 billion GDV in future township development with PKNP.

Downtrend towards the first half of the year 2016

In Appendix – Balance Sheet indicates that the Group obtains new borrowings and tried to sell off

their assets to reduce it. Essentially however, the company was unable to cover up the total amount of

borrowings.

6

Sycal had broken away from the down trend chart recently after a strong rebound on the floor

price at the range of RM 0.31. This indicates a new trend in the making.

Figure 2: The Down trend chart of SVB.

Source: http://www.sharetisfy.com/2016/07/sycal-9717-sycal-point-of-perak.html

Even when Sycal had significant debts, it’s positive cash flow and careful management overcomes the

amount of debts.

Summary of Plans for Major Challenges:

- Maintain flow of strong volume in the trend chart after being hit in the range of RM 0.31.

- Sycal next resistant should sit at RM 0.40.

- Going through the current local currency, effect of GST and strict lending policies.

7

CAPITAL INVESTMENTS & SOURCE OF FUNDING

By referring to the Appendices - Balance sheet, the significant changes or additions that can be seen

from the non-current assets that would be considered as major capital investments are the Property,

Plant & equipment assets.

2015RM ‘000

2014RM ‘000

2013RM ‘000

Property, Plant & equipment

16,882 15,371 7,245

Difference with base year (2013)

9,637(+1,511)

8,126 0

Table 5: Changes in Property, Plant & equipment in Balance Sheet

Between 2013 & 2014, there is a major increase in the non-current asset, with an increase by

RM8,126,000. Between 2014 & 2015, it increases again by RM1,511,000. According to Note 4 of the

Notes for Financial Statements, under Property, Plant & equipment, the breakdown of the additions of

Property, Plant & equipment made by the company is seen as below.

2015RM ‘000

2014RM ‘000

2013RM ‘000

Freehold office lots and buildings

- - -

Plant and machinery 582 7,784 1,900

Motor vehicles 3,895 1,923 1,547

Office equipment,

furniture and fittings

173 222 52

Theme Park - - -

TOTAL 4650 9929 3499

Table 6: Additions to Non current assets

Three out of the five categories were invested upon for the three financial years of 2013, 2014 &

2015. The additions breakdown shows that Plant & machinery contributes the largest amount for

capital investments for the financial years of 2013 & 2014. However, in 2015, Motor vehicles were

invested the most as compared to other categories in the breakdown.

8

As for the major sources of funding for these investments, Note 31 of the Notes for Financial

Statements clearly states these sources as seen below on Table 7, with the total sum of these payments

equalling the total additions made in the financial year, the latter seen hereinbefore in Table 6.

2015RM ‘000

2014RM ‘000

2013RM ‘000

- Hire purchase 3,517 3,081 3,092

- Term loan 86 5,447 -

- Cash payments 1,047 1,401 407

TOTAL 4,650 9,929 3,499

Table 7: Sources of Funding for Plant & Equipment

The cash payment made in each year is also seen in Appendix 3 under Cash Flow Statement -

Purchase of Plant & equipment. As seen in the table, the company relies more on Bank borrowings for

major capital investments over the last three years compared to cash payments.

EVALUATION OF CASH FLOWS

Table 8: Net cash inflow / (cash outflow) from 2011 to 2015.

9

Figure 3: Graph showing trend of cash inflow / (cash outflow) from 2011 to 2015.

Table 9: Summary of major cash flows of SVB in 2015.

2011 2012 2013 2014 2015

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

Cash Flow (RM'000)

10

According to Figure 3, the trend of cash flow decreased slightly from 2011 to 2012 due to more

financing activities incurred. The cash flow started to increase in a significant rate from 2012 to 2014.

However, the cash flow in 2014 declined rapidly and as a result the company does not have any free

cash flow in 2015. In Table 9, the company’s cash equivalents in its latest year had decreased by RM

4,260,000. As stated in statement of cash flow, SVB’s major cash flow of each activity in 2015 from

operating activities are increase in receivables, increase / decrease in amount due by / to contract

customers and decrease in amount due by related parties. Meanwhile, major cash flow from investing

activities consists of purchase of plant and equipment. Lastly, major cash flow from financing

activities are repayment of hire purchase, net (repayment of) / proceeds from term loans and proceed

from revolving credits.

Table 10: Changes in net cash and cash equivalents of the company in its latest year.

FREE CASH FLOW

2015 2014 2013 2012 2011RM'000 RM'000 RM'000 RM'000 RM'000

Net cash from operating activities = (426) (41,770) (14,148) 21,420 1,436

Cash payments planned for investments in long-term assets

= (1,407) (1,401) (407) (40) (908)

Dividends = 0 0 0 0 0

Total free cash flow =

(1,833)

(43,171)

(14,555)

21,380

528

Table 11: Free cash flow from 2011 to 2015

In year 2011 and 2012, SVB had a positive free cash flow. This means the company is able to make

investments and it is good for the company.

CASH AND CASH EQUIVALENTS AT CASH AND CASH EQUIVALENTS

ATEND OF FINANCIAL YEAR 2015

CHANGESBEGINNING OF FINANCIAL YEAR

2015

RM11,758,000 RM6,096,000 (RM5,662,000)

11

Other than that, in year 2013, 2014 and 2015, SVB had a negative free cash flow. This means the

company will not have enough cash in the end of the year for investments. This will cause SVB to be

in a difficult position and at risk.

EVALUATION OF COMPANY’S FINANCIAL RATIOS

(i) Liquidity

2015 2014 2013 2012 2011 Averag

e

Current Ratio (times) 1.92 1.98 1.55 1.46 1.67 1.72

Quick Ratio (times) 1.80 1.84 1.51 1.37 1.57 1.62

Average Collection

Period (days)

360 291 340 298 503 358

Average Payment Period

(days)

257 200 246 230 263 239

Table 12: Ratios for liquidity

The table shows that the liquidity of the firm in the current 5 years. As shown, the company

achieved maximum liquidity in year 2014. The Quick ratios display a small different with the

current ratio, which shows that the even without inventory, the company has a strong liquidity.

(ii) Activities

2015 2014 2013 2012 2011 Averag

e

Inventory Turnover

(times)

14.07 18.37 39.55 18.25 10.69 20.19

Total Asset Turnover

(times)

0.61 0.80 0.72 0.54 0.34 0.60

Operating Profit Margin

(%)

7.32 9.54 6.5 8.77 10.24 8.47

Table 13: Ratios for activities

12

As shown, the company’s peak operating profit margin is in the year 2011, but has since slowly

decreased until 2014. This is due to the dawdling market of the construction industry, which has

also caused the low asset and inventory turnover in 2015.

(iii) Debt

2015 2014 2013 2012 2011 Average

Debt Ratio (%) 54.18 55.99 53.14 45.34 44.07 50.53

Times Interest Earned

(times)

13.63 26.09 72.23 16.21 4.76 26.58

Fixed Payment Coverage

Ratio (times)

2.22 5.94 3.43 1.68 2.91 3.24

Table 14: Ratios for debt

As indicated, the company’s debt ratio has increased since 2011 until the year 2014. This is due to

the increase in current liabilities and long-term debt, which overcomes the total amount of equity

in the year 2013. Though, the company was able to pay of some of its debts in the year 2015

because of the strong change in times interest earned from the year 2014 to 2015.

(iv) Profitability

2015 2014 2013 2012 2011 Average

Inventory Turnover

(times)

14.07 18.37 39.55 18.25 10.69 20.19

Average Payment Period

(days)

257 200 246 230 263 239

Total Asset Turnover

(times)

0.61 0.80 0.72 0.54 0.34 0.60

Times Interest Earned

(times)

13.63 26.09 72.23 16.21 4.76 26.58

Gross Profit Margin (%) 12.80 10.67 10.86 12.10 19.34 13.15

Operating Profit Margin

(%)

7.32 9.54 6.5 8.77 10.24 8.47

Net Profit Margin (%) 5.38 8.59 5.96 5.26 5.79 6.20

13

Return on Total Assets

(%)

11.27 17.70 16.28 24.60 11.65 16.3

Table 15: Ratios for Profitability

The company achieved maximum efficiency in generating sales using its assets in 2014 and thus

will give positive outcome in years later. According to the inventory turnover, the company sells

its inventory at most in the year 2013 and it has dropped ever since then.

(i) Market Performance

2015 2014 2013 2012 2011 Average

Return on total assets (%)

3.49 6.99 4.44 2.84 1.78 3.91

Return on common equity (%)

7.75 16.11 9.58 5.24 3.22 8.38

Earning per share (RM) 0.05 0.11 0.05 0.03 0.02 0.05

Price/earnings (times) 7.59 2.93 5.14 6.45 9.97 6.41

Price/book ratio (times) 0.55 0.48 0.46 0.34 0.31 0.43

Table 16: Ratios for Market Performance

The investment attractiveness of its common stock appears to have gradually increased from year

2011 to 2014 and decrease during the year 2015. Overall, the firm’s market performance is doing

well because the earning power of investment has gradually increased from year 2011 to year

2014 and slightly decreases in 2015.

14

FORECAST OF FINANCIAL YEAR 2016

Forecast Income statement of 2016

Figure 4: Forecast of Financial Year 2016 by percent-of-sales method

Required New funds for forecast 2016

*Assuming that all the current assets and current liabilities are variables to the projected sales.

*Dividends paid is RM0 (as seen in Page 24, annual report 2015) & hence the Dividends payout is 0.

Based on the calculation from Apendices – RNF:

15

A/S : Variable AssetsSales

= 434,729321,717

= 135.13%

ΔS : 2016 sales − 2015 sales= 341,020 − 321,717= 19,303

L/S : Variable Liab.Sales

= 225,848321,717

= 70.20%

P : Net profitRevenue

= 17,293321,717

= 5.38%

S2 : 2016 sales= 341,020

D : DividendsNet Income

= 017,050

= 0 %

16

With the RNF showing a negative number, this would indicate that with the projected sales growth,

the company does not require any additional external funding from its assets and liabilities. As it is,

the projected current assets and current liabilities, as a percent-of-sales, would be enough to fund the

projected sales.

RequiredNew Funds (RNF) = 135.13%

(19,303) − 70.20% (19,303) − 5.38% (341,020) (1-0%)

= 26,083.71 − 13,550.87 − 18,346.8

8

= (RM 5,814.04)

CONCLUSION

Sycal Ventures remains to be one of the leading companies, especially in construction and also

property development segments. The company has a good reputation and is majorly involved in the

upcoming development in Perak with PKNP. A 12-year contract with Pullman Hotel that lasts until

2022 indicates that they have great competitive advantages over companies where the firm has on-

going projects from Cheras, Sitiawan, Taiping and Ipoh, which would see them snap up a significant

portion of profit in the next 5 – 10 years. Although the firm is currently facing a major drop in cash

flow, which is a troubling concern for the company, where the firm takes a long time to pay accounts

payable. Despite the on-goin difficulties, the companu now has to maintain a strong positive cash flow

after having to bounce back from the down trend chart recently (increased from RM0.31 – around

RM0.38) where they would aim to overcome the amount of debts in the next few years.

With the significant opportunities that they have, the company should focus more on the major

challenges that they are facing which is to be more consistent in selling off its inventories and

maintain a positive cash flow.

Word Count (from ‘Introduction’ to ‘Conclusion’): 2912 words

17

APPENDICES

Balance Sheet

APP/ 1

Income Statement

APP/ 2

Statement of Cash Flow

APP/ 3

APP/ 4

APP/ 5

Financial Statement Notes Used

APP/ 6

APP/ 7

Other Relevant Annual Report Pages Used

APP/ 8

Financial Ratios Formulas & Equations

1) Current Ratio ¿ Current AssetsCurrent Liabilities

¿ 434729000225848000

= 1.92 times (2015)

APP/ 9

¿ 443676000224002000

= 1.98 times (2014)

¿ 328261000211296000

= 1.55 times (2013)

¿ 192754000132343000

= 1.46 times (2012)

¿ 190409000113703000

= 1.67 times (2011)

2) Quick Ratio

¿ Cash+Cash Equivalents+Short TermInvestment+Current ReceivablesCurrent Liabilities

¿ 173076000+8921000+70557000+105361000+3689000+35458000+4467000+5205000225848000

= 1.80 times (2015)

¿ 172333000+9235000+64210000+109550000+21872000+20668000+5525000+9720000224002000

= 1.84 times (2014)

¿ 160551000+25651000+16990000+71707000+33024000+7491000+761000+3529000211296000

= 1.51 times (2013)

¿ 36812000+27663000+11276000+70116000+25414000+5770000+1204000+2425000132343000

= 1.37 times (2012)

APP/ 10

¿ 51329000+27701000+8490000+76589000+7353000+2268000+2643000+959000+1199000113703000

= 1.57 times (2011)

3) Inventory Turnover ¿ Cost of Goods SoldInventory

¿ 28054000019932000

= 14.07 times (2015)

¿ 36393300019811000

= 18.37 times (2014)

¿ 2605730006589000

= 39.55 times (2013)

¿ 1489070008161000

= 18.25 times (2012)

¿ 832410007789000

= 10.69 times (2011)

4) Average Collection Period ¿ Accounts ReceivableAnnualSales

x365

¿ 173076000+105361000+3689000+35458000321717000

x365

= 360 days (2015)

¿ 172333000+109550000+21872000+20668000407383000

x365

= 291 days (2014)

¿ 160551000+71707000+33024000+7419000292327000

x365

= 340 days (2013)

¿ 36812000+70116000+25414000+5770000169406000

x365

APP/ 11

= 298 days (2012)

¿ 51329000+76589000+7353000+2643000100131000

x365

= 503 days (2011)

5) Average Payment Period ¿ Accounts PayableCost of Goods Sold

x365

¿ 65628000+112413000+452000+21616000284540000

x365

= 257 days (2015)

¿ 75649000+102256000+433000+21134000363933000

x365

= 200 days (2014)

¿ 76961000+95228000+428000+23301000+9550002923270000

x

365

= 246 days (2013)

¿ 42029000+41761000+279000+22205000+326000169406000

x

365

= 230 days (2012)

¿ 30593000+31326000+178000+9810000+190000100131000

x

365

= 263 days (2011)

6) Total Asset Turnover ¿ Annual SalesTotal Assets

¿ 32171700093496000+434729000

= 0.61 times (2015)

¿ 40738300068186000+443676000

= 0.8 times (2014)

¿ 29232700076900000+328261000

= 0.72 times (2013)

APP/ 12

¿ 169406000122386000+192754000

= 0.54 times (2012)

¿ 100131000101264000+190409000

= 0.34 times (2011)

APP/ 13

7) Debt Ratio ¿ Total DebtTotal Assets

¿ 286,193,000528,225,000

= 54.18% (2015)

¿ 286,580,000511,862,000

= 55.99% (2014)

¿ 215,311,000495,161,000

= 53.14% (2013)

¿ 142,879,000315,140,000

= 45.34% (2012)

¿ 128,539,000291,673,000

= 44.07% (2011)

8) Times Interest Earned ¿ Operating ProfitInterest Expense

¿ 23,538,0001,727,000

= 13.63 times (2015)

¿ 38,873,0001,490,000

= 26.09 times (2014)

¿ 18,996,000263,000

= 72.23 times (2013)

¿ 14,862,000917,000

= 16.21 times (2012)

¿ 8,939,0001,876,000

= 4.76 times (2011)

APP/ 14

9) Fixed Payment coverage ratio

¿ Operating Profit+Lease Payments

Interest+ Lease Payments+{ (Principal payments+Preferred stock dividends ) x [ 11−T ]}

¿ 30,187,00013,621,333.33

= 2.22x (2015)

¿ 38,930,0006,548,594.67

= 5.94x (2014)

¿ 22,168,0006,461,666.67

= 3.43x (2013)

¿ 15,616,0009,283,000

= 1.68x (2012)

¿ 9,667,0003,321,333.33

= 2.91x (2011)

10) Gross Profit Margin ¿ Gross ProfitSales

¿ 41,177,000321,717,000

= 12.80% (2015)

¿ 43,450,000407,383,000

= 10.67% (2014)

¿ 31,754,000292,327,000

= 10.86% (2013)

¿ 20,499,000169,406,000

= 12.10% (2012)

¿ 16,890,00087,322,000

= 19.34% (2011)

APP/ 15

APP/ 16

11) Operating Profit Margin ¿ Operating ProfitSales

¿ 23,538,000321,717,000

= 7.32% (2015)

¿ 38,873,000407,383,000

= 9.54% (2014)

¿ 18,996,000292,327,000

= 6.50% (2013)

¿ 14,862,000169,406,000

= 8.77% (2012)

¿ 8,939,00087,322,000

= 10.24% (2011)

12) Net Profit Margin ¿ Net ProfitSales

¿ 17,293,000321,717,000

= 5.38% (2015)

¿ 34,999,000407,383,000

= 8.59% (2014)

¿ 17,432,000292,327,000

= 5.96% (2013)

¿ 8,907,000169,406,000

= 5.26% (2012)

¿ 5,056,00087,322,000

= 5.79% (2011)

APP/ 17

APP/ 18

13) Return on total Assets ¿ Net profitTotalassets

¿ 18452000528225000

= 3.49% (2015)

¿ 35804000511862000

= 6.99% (2014)

¿ 17977000405161000

= 4.44% (2013)

¿ 8936000315140000

= 2.84% (2012)

¿ 5200000291673000

= 1.78% (2011)

14) Return on common equity ¿ Net incomeTotalcommonequity

¿18452000238203000

= 7.75% (2015)

¿35804000222312000

= 16.11% (2014)

¿17977000

187685000

= 9.58% (2013)

¿8936000

170641000

= 5.24% (2012)

¿5200000

161543000

APP/ 19

= 3.22% (2011)

15) Earnings per share (EPS) ¿ Net incomeAverge outstanding shares

¿17293000

320250000

= 0.05 (2015)

¿34999000

320250000

= 0.11 (2014)

¿ 17432000320250000

= 0.05(2013)

¿8907000

320250000

= 0.03 (2012)

¿5056000

251959000

= 0.02 (2011)

16) Price/Earnings (P/E) ¿Market value per shares

Earning per shares

¿ 0.410.05

= 7.59 (2015)

¿ 0.320.11

= 2.93 (2014)

¿ 0.280.05

= 5.14 (2013)

APP/ 20

¿ 0.180.03

= 6.47 (2012)

¿ 0.200.02

= 9.97 (2011)

17) Price/Book ratio (P/B) ¿ M arket price per sharesEquity book value per shares

¿ 0.410.74

= 0.55(2015)

¿ 0.330.69

= 0.48 (2014)

¿ 0.270.59

= 0.46 (2013)

¿ 0.180.53

= 0.34 (2012)

¿ 0.200.64

= 0.31 (2011)

APP/ 21

Free Cash Fow Formula

Free cash flow = Operating cash flow – Cash payments planned for investment in long-term assets - Dividends

RNF Formula

Required New Funds (RNF) = A (ΔS) − L (ΔS) − PS2 (1−D)S S

A/S = Percentage of relationship of variable assets to sales

ΔS = Change in sales

L/S = Percentage of relationship of variable liabilities to sales

P = Profit margin

S2 = New sales level

D = Dividend payout ratio

Percent-of-sales method calculationsCALCULATIONS (QUESTION k)

Revenue in 2016, forecast growth of 6% 321,717 x (1+0.06) = 341,020

Cost of Sales as percent-of-sales : (280,540) / 321,717 = -87.20%

Administration Expenses as percent-of-sales : (10,854) / 321,717 = -3.37%

Other Operating Expenses as percent-of-sales : (13,211) / 321,717 = -4.11%

Finance Costs as percent-of-sales : (1,727) / 321,717 = -0.54%

Taxation as percent-of-sales : (3,359) / 321,717 = -1.04%

2016 pro forma

Cost of Sales : -87.20% x 341,020 = (297,372)

Administration Expenses : -3.37% x 341,020 = (11,505)

Other Operating Expenses : -4.11% x 341,020 = (14,004)

Finance Costs : -0.54% x 341,020 = (1,831)

Taxation : -1.04% x 341,020 = (3,561)

APP/ 22

REFERENCES

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APP/ 23

Sycal Berhad, (2016). Sycal Ventures Berhad - Construction & Infrastructure. [online] Sycalberhad.com. Available at: http://www.sycalberhad.com/sycal-ventures-berhad---construction---infrastructure.html [Accessed 22 Nov. 2016].

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APP/ 24