When noted that company has obtained loans in the

When
analyzing revenue based on segment wise it is noted that company’s main revenue
is generated from mobile operations which is of 85% of the total revenue. Only
8% of revenue is generated fixed telephone and broadband operations.
But the important we shall emphasize here is that mobile operations has
increased by 1.3 billion rupees whereas income from fixed telephone and
broadband operation has increased by only 317 million. This is a positive sign
of company that it is strengthening its mobile operations further.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1          
 CASH FLOW ANALYSIS

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As shown in the pie
chart in the investment activities, Dialog Axiata PLC has used cash mainly for
its investing activities such as acquisition of property plant and equipment.
Secondly, the company has used the cash for repayment of borrowings and also to
pay dividends to the shareholders. The company has also spent approximately 30%
of the cash on purchasing intangible assets in the years of 2013 and 2014.

The main source of cash
inflow towards Dialog is through the operating cash flow of the company. It
should be noted that company has obtained loans in the years of 2012 and 2013,
specifically in 2013, where the contribution itself has led to a cash inflow
from financing activities.

Sources
of cash

 

Uses
of cash

 

The second pie chart depicts how the cash has been out
flowed from the company. Other expenses include Loans and advances to
Associates and Purchase for available for sale financial assets.

 

 

2012

2013

2014

Operating Activities

19,940,461.00

20,276,673.00

22,740,493

Investing Activities

-16,384,460.00

-26,764,138.00

-14,944,648

Financing Activities

-2,360,921.00

645,751.00

-345,790

 

1,195,080.00

-5,841,714.00

7,450,055.00

 

 

The summary indicates that
company has major cash outlays for;

 

1.
Investing activities

2. Financing activities

 

Over the period of 03
years cash outlay for both investing and financing activities have been
behaving in a non-uniform manner. The investing activities’ outflows have been
increased by roughly a 10mn and have been reduced by over 12mn. The financing
activities depict the most unusual behavior. The negative outflow observed in
2012 has been converted in to a positive outflow by the year 2013, mainly due
to the proceeds obtained from borrowing. 2018. Though Company had cash increase
in year 2012, and 2014, cash balance shaves drawn down to fund investing and
financing activities. But for overall 03 years’ operating cash flows are
sufficient to fund investing and financing activities and still leave excess
cash of 7mn.

Free
cash flow Analysis

 

2012

2013

2014

Cash flow from operations

        19,940,461.00

       20,276,673.00

       22,740,493.00

Net Capital Expenditure

     (12,356,597.00)

    (19,812,918.00)

    (10,179,200.00)

Dividends Paid for ordinary shares

        (2,035,945.00)

       (2,687,446.00)

       (2,361,696.00)

Free Cash flow

          5,549,931.00

       (2,221,678.00)

       10,201,611.00

 

What are meant by Free
Cash flows are the cash reserves available for business activities after the
deduction of cash flows for financing and investing requirements. Dialog Axiata
PLC indicates positive cash flows for the years of 2012 and 2014. This reflects
that company has enough cash which can be utilized for its growth purposes.

Note – Capital expenditure includes investment for
both physical and intangible assets assuming that those re to maintain the
productive capacity at current levels since no information about business
expansions. Cash flow ratios

 

 

Specialized
Cash flow ratios

                                                Specialized Cash flows

 

 

 

 

 

 

 

 

Cash
Flow Adequacy Ratio

 

This ratio
measures Dialog’s ability to generate sufficient cash from operations to cover
up capital expenditures, inventories and cash dividends. Since Dialog’s cash
adequacy ratio is approximately 1, it indicates that the company has an
adequacy of cash for other activities.

 

Cash
Reinvestment Ratio

 

This ratio
measures the percentage of investment in assets representing operating cash
retained and reinvested in the company for both replacing assets and growth in
operations.

 

In this case, it is
observed that compared to 2012, there is a decrease in cash reinvestment ratio
but an increase after 2013. This can be elaborated as a good sign of cash
reinvestment. Company may invest them in PPE as well as on intangible assets,
since there is a continuous increase in both the categories over time.

 

 

 

 

 

 

 

 

 

2          
ROIC
AND PROFITABILITY ANALYSIS

 

Description

2014

2013

2012

2011

2010

Return On Net Assets – RONA

15.98%

19.29%

19.74%

15.65%

15.55%

Return on Capital Employed

10.24%

11.80%

11.43%

11.34%

10.85%

ROIC

5.65%

5.02%

7.10%

7.08%

10.47%

Return On Equity

12.46%

12.17%

13.34%

13.80%

16.52%

Sustainability Growth Rate

10.6%

7.5%

7.7%

9.1%

12.5%

Equity Growth Rate

12.05%

7.38%

9.94%

6.39%

14.45%

Return
on Net Assets has increased in year 2010 to 2012, but again has declined from
2013 to 2014. The disaggregation of ROCE it provides good evidence for this.

NOPAT/
Sales indicates the operating profitability where as “Sales/ Average NOA”
indicates the efficiency in generating sales from operating assets. In the
disaggregation both of these components have shown a declining trend. This may
have caused the decreasing pattern of the RNOA of the company.

Through
the analysis we can note that Net Operating assets have increased over the
time. But Operating profit over the period has declined. This is the main
reason for decline of the RNOA of the company.

ROCE
has seemed to follow the same trend as RNOA. It has shown an increase in 2012
but again declined after that year gradually. In the disaggregation it is obvious
that decline in RNOA has a great impact on decline in ROCE as well. It is true
that company’s common equity has increased over time but net income decreased
over its life in the recent past.

By
in line with the aforesaid ratios, the return on long term debt and equity
ratio also has declined over the period.

 

 

 

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