国外 financial report

IJM Corporation Berhad is one the Malaysia's Leading Construction Groups. It is listed on the main market of Bursa Malaysia Securities Berhad. The main business activities of the company is construction, property development, manufacturing and quarrying, infrastructure concessions and plantations. The headquarter of the company is located in Selangor, Malaysia. IJM Corporation Berhad has expanded through ten countries where it focused in Malaysia, India, United Arab Emirates, China and Indonesia. (IJM.COM, 2011)

IJM Corporation Berhad is came from three different companies. Each alphabet represented different companies. I stands for IGB Construction Sdn Bhd, J stands for Jurutama Sdn Bhd, and M stands for Mudajaya Construction Sdn Bhd. These companies were merged and formed in year 1983 with a new company called IJM Corporation Berhad. It purposed to challenge with other bigger competitors. (IJM.COM,2011)

After merged, the company started to develop its own construction group and promptly accepted by the market. The company also strengthen on its abilities, foreign challenging, and stronger financial to underpin a good reputation as a contractor. In addition, IJM Corporation Berhad also merged with Road Builder Group (RBH) where it is itself competitor. This merging plan enabled IJM Corporation Berhad to absorb benefits where it can create more vacancies and expand into oversea markets. To have a rapid growth with its business operation, IJM Corporation Berhad has bought over of Industrial Concrete Products Berhad in year 2004. The acquisition has succeeded diversified into China, India and Pakistan markets. (IJM.COM,2011)

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Furthermore, IJM Corporation Berhad has aimed target infrastructure investments to generate more long term profits. IJM Group has involved in foreign infrastructure. In Malaysia, the Group worked on three high ways and port confession from RBH merger. The Group also invested in plantation sector in year 1985. Now it is listed on the Main Market of Bursa Securities. IJM Plantations Berhad has helped the Group's earning over the years. (Sadec.com, 2011)

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2)Ratios Analysis Table: Year a) Sales b) Cost of sales c) Expenses d) Gross Profit e) Net Profit before Tax f) Net Profit after Tax Year g) Gross Profit Margin h) Net Profit Margin i) Expenses to Sales Ratio 2009 -12.77% -17.38% 15.18% 6.24% 9.34% 5.27% 2010 23.76 14.40 10.31 2010 -7.59% -11.96% 30.79% 7.68% 16.87% 13.28% 2011 27.59 18.80 14. 13% j) Net Operating Profit 9.38% Ratio k) Inventory Turnover l) Inventory 6.65 4.84 75.42 Turnover .87 Days Ratio m) Return on Equity 0.42 (ROE) n) Return on Capital 173.8 Employed (ROCE) o) Current Ratio 3.31 3.52 10.55 0.49 3

p) Acid Test Ratio 3.00 3.171 1.985 183.85 days q) Account Receivable Turnover Ratio 1.847 r) Account Receivable 197.63 days Turnover Ratio in Days s) Asset Turnover Ratios sales/ fixed assets sales/ total assets net profit/ fixed assets net profit/ total assets

0.577 0.407 0.083 0.0585 0.553 0.376 0.100 0.068 4

2)(i) Ratios Analysis

IJM Corporation Berhad is a business which involved in construction, property development, manufacturing and quarrying, oil palm plantations and international ventures. The statement of comprehensive income and statement of financial position of year 2009 and 2010 of the company for IJM Corporation Berhad have resulted different profits. It will be analysed by using financial ratios relating to the two enterprises' financial years results. Analysis covered the comparison and percentage of the changes from both years' results.

According to the both financial statements, the changes sales that calculated for year 2010 to 2011 is -7.59% which meant the sales is slowly getting better because the sales in year 2009 to 2010 is -12.77%. Besides that, cost of sales extracted from both year 2010 to 2011 is -11.96% and -17.38%, for year 2009 to 2010 where the cost of production is also followed decreasing. The company has organized well the resources and utilized it efficient to avoid over budget.

Expenses from the both recent years is 30.87% but the previous year is 15.18%. In this case, the company used 30.87% company's expenses where it has exceeded double figure of the previous years of changes of expenses. The gross profit is 7.68% for 2010 to 2011 and past year is 6.24%. Net profit before tax and after tax are 16.87% and 13.28% for year 2010 to 2011. The past year 2009 to 2010 is 9.34% and 5.27%. For the changes term of net profit after tax in year 2010 to 2011, the company has shown that they earned 13.28% where after all its expenses, depreciation and taxes have been extracted. (Investpedia.com, 2011)

The gross profit for year 2010 is lower than 2011 which are 23.76% and 27.59%.

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This ratio indicates how much each of every dollar of sales left after costs of good sold. In this case, in year 2010, they should reduce the inventory to increase the gross profit. The gross profit margin maybe affected sales volume, unit selling price and cost per unit by increasing or decreasing it. The changes in sales and cost of sales is the major drivers of gross profit. (Joshua Kennon, 2011)

For the net profit margin before tax, 2011 is higher than year 2010 with 18.80 and 14.40. Net profit margin shows that how much of revenue is left over after the firm has paid all the expenses. It is also measure the profitability on sales of the year. This is to show the efficiency of the operation in the business. A very good indicator of the business's ability to withstand falling prices, rising costs or declining sales. The reason why 2010 is lower than 2011 is because due to the changes of selling prices or cost of sales. (Findoutinfo.com, 2011)

The expenses to sales ratio for year 2010 and year 2011 are 10.31% and 14.%. In this circumstance, in the year 2011, the company should reduce the expenses and utilize the resources carefully. Other than that, net operating profit ratio is 9.38% and 13% for 2010 and 2011.

There are 6 times inventory turnover in the year 2010 and 4.84 for year 2011. In other words, in year 2010, the company has making 55 days and 76 days for year 2011 of the turnover inventory. The lower the inventory turnover indicates that the firm might be not selling the inventory fast enough or holding some obsolete stocks. The firm takes on average of 55 days and 76 days to sell an item of its inventory for the year 2010 and 2011. If the rate of inventory turnover is too high, it is risky because some of the stock may not being able to sell off. in other situation, if the rate is too low, it might be under investment

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in inventory. (Readyratios.com, 2011)

Besides that. Return on Capital Employed (ROCE) is assessing the efficient usage of the resources provided to the business. Based on the result, in the year 2010, it has used 173.8% of the resources and for year 2011, 210.55% of the resources is utilized in the business. The higher the ROCE, the better efficiency usage of the business. In year 2010, the business was not utilized the resources efficiency to produce the product effectively. This ratio is to measure if the company is gaining profits or not where the funds invested in it. It is show the investment performance.

Return on Equity (ROE) is measuring the corporation's profitability by showing how much the revenues that attain by generating with the money shareholders have invested. A higher return on equity is more better because it is meant that it has the ability of generating cash internally. The ratio analysis for ROE shows that the year has earned 42% compare to year. 2009 with 49%. Although the amount is almost the same but it is still show a decline of the ability of the company generate the cash effectively. (Investpedia.com, 2010)

The current ratio for year 2010 and 2011 are 3.31 and 3.52. Both of the current ratio shows that about the same result. It indicates the ability of a company to pay its short term creditors from the realization of its current assets. The higher the figure the better which it means that there are sufficient assets available to pay the liabilities.

Acid test ratio for year 2010 is 3.00 and 3.171 for year 2011. This ratio means that a company able to pay its debt on time. The higher result the better its indicate the company payable ability. So, both years results show that the almost same outcome where both year are liquidity after inventory excluded. The inventories were excluded because it

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takes longer period to sell and often sell at discounted prices. It may be accounts receivable before they can be turned into cash. The higher ratios indicate that the firm is in more liquid position.

Furthermore, account receivable turnover ratio is to measure the effect of the collection of accounts receivable on sales. The receivable turnover for both year 2010 and 2011 are 1.85 and 1.99. Both results are about the same. The higher the value of receivable turnover the more efficient is the management of debtors or more liquid the debtors are, the better the company is in collecting their accounts receivables. But in some circumstances, high ratio shows that the company;s credit lending policies are too stringent, preventing prime borrowing candidates from becoming customers. The days that occurred for the company for them to receive their debts for year 2010 and 2011 are 198 days and 184 days. (Readyratios.com,2011)

Lastly is asset turnover ratio where it consists of fixed assets turnover and total asset turnover ratios. The fixed assets turnover for year 2010 and 2011 are 0.577 and 0.553. Total asset turnover for year 2010 and 2011 are 0.407 and 0.376. Every dollar of fixed asset generates RM 0.577 sales where every dollar of total asset generate RM 0.407 sales. (Educ.jmu.edu, 2011)

This ratio is to know the efficiency with which year uses its net fixed assets to generate sales. The fixed asset turnover ratio measures the efficiency where the company makes sales with its plant and equipment. In IJM Financial Statement shows that the figure of year 2011 is lesser than figure in year 2011. To increase the fixed asset turnover ratios, the company has to operate at capacity and fully utilizing its plant and equipments in its operations. In year 2011, the company did not using its fixed assets to capacity. In

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other reason meant that a declining rate in fixed asset turnover may mean that the company is over investing in the property, plant and equipment. The value for total asset turnover ratio of year 2011 is lower than 2010. The ratio is too low where means the company did not fully utilized its assets efficiently and effectively to generate target sales. (Rosemary Peavler, 2011)

Although higher asset turnover ratio is preferable, but it is not useful enough to compare with other different industries. Different industries have different requirements regarding its own assets. It is not advisable to compare an ecommerce store which requires little assets to a producing business which needs big producing facilities, plant and equipment.

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3) Group Financial Analysis

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3(i)Group Financial Analysis Report

The financial report of year 2010 shows that the group has attained sales of RM4013 million. The Group operating profit before tax has increased to RM578 million from RM528 the previous year 2009,and year 2011, operating profit before tax also has increased to RM676 million. Moreover, the net profit for financial year increased to RM423 million. These increase was contributed by Property, Plantation and Infrastructure Divisions. (IJM.COM, 2011)

The other sector which is Construction Division has decreased because of the take longer time of the billing progress in year 2010. Construction Division is also continued suffer with the loss due to material prices raised, higher fixed overheads, unsystematic ordering and following debtor balance build up. These factors had caused serious decline and effect to the foreign construction plan. To prevent the revenue and profit before tax continue declining, the construction progress management should be revamped and should reorganize the order book replenishment. (IJM.COM, 2011)

Furthermore, The Group's Property Division has upgrade its own performance where the revenue has increase to RM1175 million from RM985 million compare to the past year 2009. The profit before tax also showing big increasing. In 2011, the sales increased to RM1178 million. The reason is because the plane of release of completed Bumiputra units in the past year caused the profit before tax increased. So, this division has to maintain its good performance with a strong market and sizable unrecognized turnover. (IJM.COM, 2011)

The Industry Division shows that revenue started declining because the market demand has lower compared to the six past years in Malaysia and India. But, the profit

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before tax increased from RM170 to RM174 due to a better product mix. During 2011, the Industry Division has dropped where it was affected by the construction case. The revenue and profit before tax are dropped seriously on the year. This happened because of the pricing competition from competing products. The Industry Division will increased if Construction Division expected grow by next year. (IJM.COM, 2011)

For other division such as Plantation Division resulted has declined in revenue and profit before tax in the year 2010. But the revenue and the profit before tax have increased to RM196 million from RM111 million in year 2010. It will raised if only when Crude Palm Oil price increased. (IJM.COM, 2011)

The Group Infrastructure Division continued improving higher profits from existing toll and port operations and the commencement of three highway concessions and power plant operation in India. The revenue of the year was RM 538 million from RM349 the past year. The profit before tax registered an increased to RM95.88 million from RM26 million. The revenue of the Infrastructure Division increased to RM620 million as well as the profit tax increased to RM127. The increasing from this division will be continued when they boost up the bottom line of the Group moving forward. (IJM.COM, 2011)

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4) Corporate Social Responsibility of IJM

IJM Corporate Berhad also highlight on Corporate Social Responsibility (CSR) that giving a good impact on society. Corporate Social Responsibility is important to all businesses nowadays. The reason is because it has a wide range of environmental- friendly and operational best management practises to attain certain goals where it can benefits to all stakeholders at the same time. To approach the society, the Group has organized some social welfare, education and sports development such as Seminar Enhancing Protection, Chinese New Year Celebration to the orphanage houses and Malaysia Property Exhibition. (IJM.com, 2011)

During the year 2010, the Plantation Division has a good environment practise and involved in the Roundtable on Sustainable Palm Oil (RSPO). The purposed of the involving is to promote sustainable production and use of palm oil. In addition, the group has emphasized to ensure the values and ethical that practised in the company. They also provide good workplace and trainings, safety, environmentally responsible for the employees. (IJM.com, 2011)

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5) FUTURE PROJECTS

Based on the article, IJM Corporation Berhad has a plan to start up in year 2012. The plan is to be other competitors' rivals. The group expected that there will be more jobs from Sarawak road plans where it is infrastructure projects and other private sector building jobs. IJM Plantation also will expand its grow in Indonesia with estimation RM500 million. This will financed by new borrowings and internally get funds from Crude Price Oil prices. The research firm also predicted that some of the revenues come from Indonesia in year 2013. (TheBorneoPost.com, 2011)

IJM Land Property launched that next year 2012 the strategic position of the properties and a low land cost will raise up the company's margins. The projects are Sebana Cove in Johor, Canal City and Light Commercial phase in Penang. As consequence by launching Sebana Cove, it can get benefits from the investments. Each plan will create benefits to the public in order to generate more profits. In addition, these plans can upgraded the reputation and recognition of IJM. (TheBorneoPost.com, 2011)

Recently, IJM Land Berhad is proposed to establish digital lifestyle in Penang and other countries with the development of The Light Waterfront Penang. It provides to all investors with ideal lifestyle where perfect home services and rapid speed of broadband connection. IJM Land is into the diversified Penang where take the improvement of other countries into our country. (HomeGuru, 2011)

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6) Conclusion

As a conclusion, according to the research analysis, it shows that IJM Corporate Berhad has a strong potential to attract more investors where investors feel calm to inject their funds into IJM's plans. As it stated on the ratio analysis, the gross profit margin has increased but the other ratios that shown decreasing could be improved by reorganizing the operations and control the resources so the goods and services are produced effectively and efficiently.

The future projects that will set up by IJM Corporation Berhad in future, as investors, they should believe the capable and financial power of the company. Although the revenue of Construction Division and Industry Division are continuously declined in year 2010 and year 2011, but IJM expected that all will recovered when actions are taken to solve the problems. Furthermore, other divisions' performance are getting better where the investors can invest into property and infrastructure division as investments and stable income. The reason is because the demand of these divisions are getting higher year by year. In order to attain higher returns, maintenance and expansion to broader areas are required to meet the demand of the markets.

Investors are also suggested to join into IJM Corporation Berhad because they not only focusing on the development industries and businesses. They also pay attention on the social responsibility where they often organized activities to approach with the society. In addition, they tried to balance the ecosystem with their projects so human being can get a balance and enjoyable life.

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7) Appendix

TABLE OF ANALYSIS RATIOS YEAR a) Sales b) Cost of sales 2009-2010 (4013530-4601294)/4601294 x 100% = -12.77% (3060100-3703848)/3703848 x 100% = -17.38% c) Expenses 2010-2011 (3720717-4013530)/4013530 x100% = -7.59% (2694040-3060100) / 3060100 x 100% = -11.96% (413665-359155)/359155 x (1046 - 413665) / 413665 100% = 15.18% x 100% = 30.79% d) Gross Profit (953430-7446)/7446 x (1026677 - 953430) / 100% = 6.24% 953430 x 100% = 7.68% e) Net Profit before Tax (578024-528670)/528670 x (675567 - 578024 ) / 100% = 9.34% 578024 x 100% = 16.87% f) Net Profit after Tax (4231-401967) / 401967 (479373-4231) / 4231 x 100% = 13.28% Operating Income x (1 - Tax x 100% = 5.27% Rate) YEAR 2010 2011 16

g) Gross Profit Margin Gross profit/ sales x 100% h) Net Profit Margin 953430/4013530 x 100 = 23.76 578024/4013530 x 100 1026677/3720717 x 100 = 27.59 675567/3720717 x 100 = 18.80 Net profit before tax/sales x = 14.40 100% i) Expenses to Sales Ratio Expenses/sales x 100% 413665/4013530 x 100 = 10.31 1046/3720717 x 100 =14. (676567-193738)/3720717 x 100% = 13% j) Net Operating Profit (578024-201421)/4013530 Ratio Operating Profit / Sales x 100 k) Inventory Turnover 3060100/[(529320+390726x 100% = 9.38% 2694040/[(529320+584071)/2] = 4.84 Cost of Good Sold/Average 0/2] Inventory =6.65 17

l) Inventory Turnover [(529320+3907260/2]/3060100 x 365 [(529320+584071)/2]/2694040 x 365 = 75.42 Days Ratio Average Inventory/ COGS x = .87 365 days 578024/(1327216+[36395-5676567/(1351115+[35974-88709+78745) = 0.49 m) Return on Equity 8416+75258) = 0.42 (ROE) Net Income / Capital 675567 / 321327 x 100 = 210.55 n) Return on Capital 578024 / 332580 x100 Employed (ROCE) Net Profit before Interest / equity o) Current Ratio 5598766/16300 = 173.8 5848682/1660175 = 3.52 Current Assets / Account = 3.31 Payable p) Acid Test Ratio (598766-529320) / 16300 ( 5848682 - 584071) / 18

(Current Assets - Inventory) = 3.00 / Account Payable 1660175 = 3.171 3720717 / 1874107 = 1.985 q) Account Receivable 4013520 / 2173187 Turnover Ratio Credit receivable sales/ trade = 1.847 1874107 / 3720717 x 365 = 183.85 r) Account Receivable 2173187 / 4013520 x 365 Turnover Ratio in Days Trade receivable/ Credit sales x 365 days s) Asset Turnover Ratios sales/ fixed assets 2010 4013530/6959529 = 0.577 sales/ total assets 4013530/ 9873070 = 0.407 net profit/ fixed assets 578024 / 6959529 = 0.083 = 197.63 2011 3720717/6731176 = 0.553 3720717/94235 = 0.376 676567/6731176 = 0.100 19

net profit/ total assets 578024 /9873070 = 0.0585 676567/94235 = 0.068 20

IJM FINANCIAL STATEMENT 2010

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IJM FINANCIAL STATEMENT 2011

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8) REFERENCE

1) IJM.COM, 9th August 2011, About IJM - Corporate Profile, viewed 27th September 2011,

2) IJM.COM, 9th August 2011, About IJM- FAQ, viewed 27th September, 2011,

3) SADEC.COM,

IJM,

view

28th

September

2011,

4) Investpedia.com,

Net

Income

After

Tax,

viewed

1st

October

2011,

Kennon,

Net

Profit

Margin,

viewed

1st

October

2011,

6) Findoutinfo.com,

Financial

Ratios,

viewed

1st

October

2011,

7) Readyratios,

Inventory

Turnover,

viewed

1st

October

2011,

8) Investpedia.com,

RETURN

ON

EQUITY,

viewed

2nd

October

2011,

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9) Educ.jmu.edu,

FINANCIAL

RATIOS,

viewed

2nd

October

2011,

10) Readyratios.com, RECEIVABLE TURNOVER RATIO, 2nd October, 2011,

11) Rosemary Peavler, Use Assets Management Ratios in Financial Ratios Analysis,

viewed

27th

September, 2011,

12) IJM.com, Annual Report for the year ended 31st March 2010, viewed 20th September

2011,

13) IJM.com, Annual Report for the year ended 31st March 2010, viewed 20th September 2011,

14) TheBorneoPost.com 29th July 2011, IJM Continues To Be All Around Contender, viewed

3rd

October

2011,

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15) Home Guru, 5th October, 2011, IJM Land to Bring Digital Lifestyle to Penang, viewed

7th

October,

2011,

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