analysis of financial statement of sngc

Sui Northern Gas pipeline Limited company Analysis of Financial Statement

A detail analysis of financial statement of SNGC to show company financial position and compared with

the previous year to identified whether company progress increases or decreases.

2014

Analysis of Financial statement of Sui Northern Gas pipeline Limited Company Page 1

Analysis of Financial Statement

Of

Sui Northern Gas Pipeline Limited Company

2012 & 2011

Presented to: Sir Aun Ali

Presented By: Maaz Haseeb-ur-Rehman

30th November 2014


S.no Particulars Page no.

1 Abstract 4

2 Company overview 4

3 Vision Statement 4

4 Mission Statement 4

5 Income Statement 5

6 Ho rizontal Analysis of Income Statement 6

7 Comments 6

8 Vertical Analysis of Income Statement 7

9 Balance Sheet 8 -9-10

1 0 Ho rizontal Analysis of Balance sheet 1 1

1 1 Vertical Analysis of Balance sheet 1 1

1 2 Ration Analysis Table 1 2

1 3 Liquidity Ratio

Current Ration

Acid test Ration

Working Capital

1 3

1 3

1 3

1 3

1 4 Profitability Ration

Gross Profit Ratio

N et Profit Ratio

Return on Assets

1 3

1 3

1 3

1 4

1 5 So lvency Ration 1 4

1 6 Efficiency Ratio

Accounts Receivable Ration

Inventory turnover Ratio

1 4

1 4

1 4


Index

1 7 Recommendation 1 5


Abstract

Theme of this report is to analysis of financial statement of Sui Northern Gas Pipeline Limited company and shows company financial position and also compared with previous year

to identified whether company progress increase or decrease in profit, sale( in %age) and other elements Income statement and Balance sheet, identified organization financial position by using some techniques such as Vertical, Horizontal analysis Ration Analysis, Liquidity ration,

Profitability ration, Efficiency ratio, Solvency ratio and Market value

To analyze the financial position data for the year ended Dec 31 2012 and Dec 31 2011

has been used.


Company Overview:

Sui Northern Gas Pipelines Limited (SNGPL) was incorporated as a private limited Company in

1963 and converted into a public limited company in January 1964 under the Companies Act

1913, now Companies Ordinance 1984, and is listed on all the three Stock Exchanges of the

Country.

The Company took over the existing Sui-Multan System (217 miles of 16 inch and 80 miles of

10 inch diameter pipelines) from Pakistan industrial Development Corporation (PIDC) and

Dhulian-Rawalpindi-Wah system (82 miles of 6 inch diameter pipeline) from Attock Oil

Company Limited. The Company's commercial operations commenced by selling an average of

47 MMCFD gas in two regions viz. Multan and Rawalpindi, serving a total number of 67

consumers.

Sui Northern Gas Pipelines Limited (SNGPL) is the largest integrated gas company serving more

than 4.5 million consumers in North Central Pakistan through an extensive network in Punjab,

Khyber Pakhtoon Khwa and Azad Jammu & Kashmir and is certified against ISO 14001:2004

& OHSAS 18001:2007 Standards. SNGPL’s 11 sites have been registered under the

"SMART2" Program by Pakistan Environmental Protection Agency (PAK-EPA).. The

Company has over 50 years of experience in operation and maintenance of high-pressure gas

transmission and distribution systems. It has also expanded its activities as Engineering,

Procurement and Construction (EPC) Contractor to undertake the planning, designing and

construction of pipelines, both for itself and other organizations.

Vision Statement:

To be the leading integrated natural gas provider in the region seeking to improve the

quality of life of our customers and achieve maximum benefit for our stakeholders by providing

an uninterrupted and environment friendly energy resource.

Mission Statement:

A commitment to deliver natural gas to all door steps in our chosen areas through

continuous expansion of our network, by optimally employing technological, human and

organizational resources, best practices and high ethical standards.


Sui Northern Pipeline Gas Company

Income Statement

As on at Dec 31 2012 (Comparative Analysis of Statement 2012 & 2011)

Particulars

2012

Vertical Analysis 2011

Vertical Analysis Difference

Horizontal Analysis

Gas sales 230,267,469 185,060,783 45,206,686 24.43%

(Less) / Add :(Gas development surcharge) / Differential margin

(13,615,152)

2,776,818

10,838,334 390.31%

Net Gas Sales 216,652,317 100% 187,837,601 100% 28,814,716 15.34% Less: Cost of gas sales 209,422,514 96.66% 184,237,173 98.08% 25,185,341 13.67%

Gross profit 7,229,803 3.34% 3,600,428 1.92% 3,629,375 100.80% Other operating income 9,104,253 4.20% 8,664,184 4.61% 440,069 5.08%

16,334,056 7.54% 12,264,612 6.53% 4,069,444 33.18%

Selling cost 4,158,903 1.92% 3,577,149 1.90% 581,754 16.26%

Administrative expenses 3,084,620 1.42% 2,912,904 1.55% 171,716 5.90% 7,243,523 3.34% 6,490,053 3.46% 753,470 11.61%

Operating profit 9,090,533 4.20% 5,774,559 3.07% 3,315,974 57.42%

Less: Finance cost 3,412,328 1.58% 3,877,833 2.06% (465,505) -12.00%

Other operating expenses

937,320 0.43% 208,983 0.11% 728,337 348.51%

4,349,648 2.01% 4,086,816 2.18% 262,832 6.43%

Profit before taxation 4,740,885 2.19% 1,687,743 0.90% 3,053,142 180.90% Taxation 35% 1,696,891 0.78% 604,089 0.32% 1,092,802 180.90%

Profit/Loss for the year 3,043,994 1.41% 1,083,654 0.58% 1,960,340 180.90%


Horizontal Analysis of Income Statement:

Above income statement shows the profit and loss account of Sui Sothern Gas pipeline

limited company, vertical analysis is conducted of recent 2 years of SNGPL audited report

approved by A.F Ferguson & co. Audited by Mr. M Yousaf Adil Saleem published on, 13

February 2013.

In above horizontal analysis shows that the, sales in 2012 was increased by 15.34% while

on the other hand Cost of gas sales was also increased by 13.67% and gross profit. Increases by

100.80%

Other operating income increased by 5.08%, but selling and administrative cost increases

by 11.61% which is not beneficial for the organization which decline the profit margin of the

organization, Operating profit increases by 57.42%,

Finance cost decrease by 12% and other operating expenses increases by 348.51%, profit and

loss account also increased by 180.90% as compared with 2011 Profit and Loss account.

Comments

hence horizontal analysis shows that in 2012 organization sales graph went increases by

15.34% but selling and administrative expense also increases by 11.61% and other operating

expenses also increases by 348.51%. Organization need to cut off their expenses incurred on

selling and administrative expense and other operating expenses.


Vertical Analysis of Income Statement:

Above income statement was also conducted through vertical analysis

In 2012 and 2011 sales is te be considered as 100%, Net profit is 1.41% of Sale in 2012

and in Net profit in 2011 0.58% of sale. Cost of gas Sold in both year is probably same, in 2012

cost of gas sold is 96.66% of sale, while on the other hand 98.08% cost of gas sold of net sale.

Gross profit is 3.34% of Net sale for 2012, while on the other side 1.92% of sale of 2011 which

shows consistent increasing as compare to 2011 income statement which shows positive attitude

in income statement. Operating income for 2012 is 7.54% of Net sale of 2012 and in 2011

Operating income is 6.53% of Sale.

Admin and Selling Expense decreases, in 2011 ration of Admin and Selling expense was

3.46% but in 2012 Admin and Selling expense decreases to 3.34% of Sale which shows positive

attitude, organization reduces their some unnecessary expenses to increases their profit. Finance

cost decreases to 1.58% in 2012 which is a significant sign of success its means that company is

pay of its liabilities or loan borrowed by different sources to decreases as compare to 2011

Finance cost was 2.06%.

In 2012 other operating expenses increases from 0.11% to 0.43% which directly impact

on the Profit and loss account. Earnings before taxes was also increases in 2012 from 0.90% to

2.19%.Net profit was increases in 2012, in 2011 Net profit ratio was 0.58% of the sale but in

2012 Net profit ration is 1.41% of sale which shows the company increases its sales to Double as

compare to 2011 and also earn profit double as compare to 2011profit ratio of the sales.


Sui Northern Pipeline Gas Company

Balance Sheet

As on at Dec 31 2012 (Comparative Analysis of Balance sheet of 2012 & 2011

Assets Non-current assets Particulars: 2012 2011 Vertical

Analysis Vertical Analysis

Difference Horizontal Analysis

2012 2011

Property, plant and equipment 92,769,426 89,498,248 53.52% 64.51% 3,271,178 4%

Intangible assets 133,591 239,427 0.08% 0.17% 105,836 44%

Long term investment 4,900 4,900 0.003% 0.00% - 0%

Long term loans 245,067 224,434 0.14% 0.16% 20,633 9%

Employee benefits 1,205,267 1,289,724 0.70% 0.93% (84,457) -7%

Long term deposits and prepayments 13,330 6,519 0.01% 0.00% 6,811 104%

Total Non-current Assets 94,371,581 91,263,252 54.45% 65.78% 3,108,329 3%

Current Assets

Stores and spare parts 1,839,194 1,620,200 1.06% 1.17% 218,994 14%

Stock-in-trade - gas in pipelines 848,671 685,757 0.49% 0.49% 162,914 24%

Trade debts 73,330,850 36,454,217 42.31% 26.28% 36,876,633 101%

Loans and advances 153,926 176,417 0.09% 0.13% (22,491) -13%

Trade deposits and short term prepayments 123,375 143,561 0.07% 0.10% (20,186) -14%

Accrued interest 15,814 9,555 0.01% 0.01% 6,259 66%

Other receivables 82,424 5,865,926 0.05% 4.23% (5,783,502) -99%

Taxation-net 1,434,647 557,671 0.83% 0.40% 876,976 157%

Cash and bank balances 1,125,264 1,954,060 0.65% 1.41% (828,796) -42%

Total Current Assets 78,954,165 47,467,364 45.55% 34.22% 31,486,801 66% Total Assets

173,325,746

138,730,616

100%

100%

34,595,130

25%


Liability & Equity Liability

Non-current Liabilities (Long term Financing) Vertical Analysis

2012 2011 2012 2011 Difference Horizontal Analysis

Secured 7,500,000

9,500,000 4.33% 6.85%

(2,000,000) -21%

Unsecured 1,086,313

1,324,177 0.63% 0.95%

(237,864) -18%

Security deposits 20,227,669

16,477,801 11.67% 11.88%

3,749,868 23%

Deferred credit 33,315,790

32,768,270 19.22% 23.62%

547,520 2%

Deferred taxation 9,066,835

8,369,991 5.23% 6.03%

696,844 8%

Employee benefits 1,009,794

1,130,074 0.58% 0.81%

(120,280) -11%

Totalnon-current Liabilities 72,206,401

69,570,313 41.66% 50.15%

2,636,088 4%

Current Liabilities

Trade and other payables 65,288,560

41,138,261 37.67% 29.65%

24,150,299 59%

Sales tax payable 1,070,339

65,234 0.62% 0.05%

1,005,105 1541%

Interest / mark-up accrued on loans and other payables

9,683,085

7,995,268 5.59% 5.76%

1,687,817 21%

Short term borrowing - secured

1,000,000

1,000,000 0.58% 0.72%

- 0%

Current portion of long term financing

2,853,581

232,651 1.65% 0.17%

2,620,930 1127%

0.00%

Total Current Liabilities

79,895,565

50,431,414 46.10% 36.35%

29,464,151 58%

Total Liabilities

152,101,966

120,001,727 87.75% 86.50%

32,100,239 27%


Equity

2012 2011 Vertical Analysis Difference Horizontal Analysis

Share capital and reserves 2012 2011

Authorised share capital 1,500,000,000 (2011: 1,500,000,000)

ordinary shares of Rs 10 each 15,000,000 15,000,000 8.65% 10.81% - 0.00%

Issued, subscribed and paid up share capital 5,765,606 5,491,053 3.33% 3.96% 274,553 5% Revenue reserves 15,458,174 13,237,836 8.92% 9.54% 2,220,338 17%

Total Shareholders’ equity 21,223,780 18,728,889 12.25% 13.50% 2,494,891 13%

Total Liabilities and Share

Holders Equity 173,325,746 138,730,616 100% 100% 34,595,130 25%


Horizontal Analysis of Balance Sheet:

Above analysis shows Increase in total assets in 2012 and 2011 by 25% respectively. The

increase in total assets was represented by Increase in property plant and equipment by 4%,

intangible assets by 44%, and no impact on long term investments. Although the current assets is

increased by around 25% in 2012, respectively, but it does offsets increase in property, plant and

equipment which increased by around 4% in 2012, respectively, and goodwill (intangible assets)

which is increased by 44% in 2012, respectively, but there is no changes in long term investment

in both comparative years. The increases in debts for 2012 were around 101% as compared to

2011. Above analysis shows that company doesn’t used any means of financing in 2012 as

compared to 2011.. The equity side of balance sheet show same balance in both year, which

means that there is no changes seems in equity portion on both year organization doesn’t offers

its shares to general public. Although long term financing activity increases by 4% in 2012 as

compared to 2011, while on the other hand of the balance sheets negative impact , in 2012

company Current liabilities increases to 58% which shows a very negative impact on the current

liability portion

.

Vertical analysis of Balance sheet:

The above analysis shows reduction in noncurrent assets, in 2012 as compared to 2011.

Noncurrent assets are 54.54% of total asset in 2012 and 65.78% in 2012, analysis shows that

non-current assets decreases around 11.34% which shows negative impact on the non-current

side of the balance sheet. Its store spear parts and loose items also decrease to 0.11% in 2012,

respectively. Company’s total equity remains same in both the years no changes mention in

2012. Total asset is increase in 2012 by 25% respectively, where as non-current liability also

increases by 4% respectively in 2012, and Current liability also increases by 58% in 2012

respectively.


Ratio Analysis of Sui Northern Gas pipeline Limited Company

1) Liquidity Ratio:

Current Ration 2012 2011 Current Ration = Current Assets/Current Liabilities 0.98 0.92

Quick Ration

Quick Ration = Current Asset/Current Liabilities 0.95 0.89

Working Capital

Working Capital = Current Assets- Current Liability (941,400) (2,964,050)

2) Profitability Ratio:

Gross Profit Margin:

Gross Profit Margin = Gross Profit/ Net Sales 3% 5%

Net Profit Margin:

Net Profit Margin = Net Income/ Net Sales 1.41% 0.58%

Return on Asset:

Return on Assets = Net Income/ Total Assets 0.03 0.05

3) Solvency Ratio:

Solvency ration = After tax net profit + Depreciation / Total Liabilities 2% 1%

Net profit margin = Net profit / net Sales 1.41% 0.58%

4) Efficiency Ratio:

Accounts receivable turnover:

A/R turnover in days = Net Sales/Average Accounts receivable 2 5

Inventory turnover: Inventory turn= Cost of goods sold/ Average inventory 56 80


1) Liquidity Ratio:

Current Ratio:

In 2012 and 2011 the current ratio is 0.98 and 0.92 respectively which indicates liquidity ratio

weak of this company as it is less than 1, company require to increase their current assets to pay

off its liabilities.

Acid Test Ratio:

The acid test ratio of 2012 and 2011 is 0.95 and 0.89 respectively it shows that company has it

shows that company cannot pay it current liability although acid test ratio increased in 2013 still

it is less than 1 and should be looked at with extreme caution

Working Capital:

The working capital ratio of 2012 and 2011 is also in negative figure which is alarming moment

for the company; company requires increasing their current assets to meet unexpected liabilities

paying off in the future

2) Profitability Ration:

Gross Profit Ratio:

The gross profit ration in 2012 and 2011 of sale is 3% and 5% respectively, gross profit

ration in 2011 is 5% but 2012 gross profit decreases to 3%.

Net Profit Margin:

The net profit margin on net sale in 2012 and 2011 is 1.41% and 0.58% respectively. The

net profit margin in 2011 is 0.58% but in 2012 the net profit margin in 2012 increases to 1.14%

which shows that company increases probably double of their sales as compare to gas sales in

2011.


Return on Assets:

Return on assets ratio in 2012 and 2011 is 2% & 1% respectively, return on

assets (ROA) indicates percentage how profitable a company's assets are in generating revenue.

Return on Assets of 2011 is 1% but in 2012 the return on Assets increases to 2% of the average

total assets of the company, ROA indicates that company increases its assets as compare to

previous year as well as company profit margin also increases to 2% in 2012

3) Solvency Ration:

The solvency ratio in 2012 and 2011 are as 2% and 1% respectively which that solvency

ratio in 2012 increases to 2% as parallel to 2011 solvency ratio of the company, company paying

power is increases in 2012 and now be able to pay off its unexpected liabilities in 2012

4) Efficiency Ratio:

Account Receivable turnover:

This ratio shows stability. In 2012 and 2011 account receivable turnover is 2 and 5

respectively.

Inventory turnover:

This ratio shows stability. In 2012 and 2011 inventory turnover is 56 and 80 respectively

http://en.wikipedia.org/wiki/Profit_(accounting)

http://en.wikipedia.org/wiki/Asset

http://en.wikipedia.org/wiki/Revenue


Recommendation:

Its been observed while analyzing of Financial statement of Sui Northern Gas pipeline

Limited company that, company loses their stability in 2011, company financial position was

very weak but in 2012 company starts progress, its Current assets ratio in 2011 is 0.92 and now

in 2012 its 0.98 its slightly better than 2011 company can pay off its debts at the time of need,. In

both year working capital shows negative balance which is alarming moment for the company,

company requires to increase their current assets to pay off its debts at the time of need, in

2011net working capital shows a negative balance of (2,964,050), but in 2012 working capital

also show negative balance of (941,400), as compare to both year 2012 and 2011, In 2012

company increases their current assets of meet unexpected liability to paying off it. Net profit

margin also increases by almost 1%, in 2011 net profit margin on net sale is 0.58% but in 2012

its probably double of 2012 which is 1.41%.

Organization need to reduction in their wastage of resources and cut down their

unnecessary expenses to increase their profit percentage because profit is directly releated to the

net assets Acid test ratio is less than 1.

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