Standing of “Julphar” in Global Pharmaceutical Industry ...acrpub.com/article/publishedarticles/19092015IARJEF167.pdf · Standing of “Julphar” in Global Pharmaceutical Industry

© International Academic Research

Journal of Economics and Finance

Vol No.2, Issue No. 3, Jan 2014 ISSN Number: 2227-6254

Standing of “Julphar” in Global Pharmaceutical

Industry - A Benchmarking report

AyaWadi Robin A. Carvalho MBA student, MBA student

Newyork Institute of Technology, Abudhabi Campus, UAE Newyork Institute of Technology, Abudhabi Campus, UAE

ABSTRACT

To meet stakeholder’s interest is the prime requirement of all the corporations. The

measurement tools of the firm’s financial health guide the stakeholders to understand company’s

performance and evaluate its future prospects in a better way. There are some financial monitoring

indicators that evaluate the company’s progress in context of its commitments, funding for operations,

projects in hands and future plans against its eligible cost. Financial statements and ratios assist the

investors to know better about the financial condition of the company and its overall performance. It is

particularly helpful in ascertaining the liquidity risk, credit risk, financial risk and business risk of the

firm.

This paper will focus on measuring the financial health of Julphar by conducting a

benchmarking exercise.

Key Words: Benchmarking, Financial Analysis, Ratio Analysis, Corporate valuation.

INTRODUCTION

The pharmaceutical industry is a

sector that is responsible for producing,

developing and selling licensed medical

drugs and pharmaceuticals, to be used as

medication. Pharmaceutical businesses

are permitted to deal with general and/or

brand medications as well as medical

devices. The firms in this industry are

mainly focusing on the Research and

Development of new drugs beneficial for

the human and animal lives. The

companies are obliged to follow a variety of

rules, laws and regulations in regards to

testing, assigning the medication or

medical device to the customer as well as

ensuring the efficiency and safety of the

drugs and medications in addition to ethical

practices. Some of the well-known

pharmaceutical companies are; Johnson &

Johnson, Pfizer, Abott laboratories, Roche

etc.

Healthcare market in GCC is

predominantly driven by the government.

The government’s per capita based

expenditure is much higher in GCC

countries than any developed country. The

pharmaceutical sector is one of the fastest

growing sectors in the world. The

government’s public health oriented

initiatives are boosting the growth of the

industry in local market. Also the other

factors such as demography, rising income

levels and increasing incidence of lifestyle

diseases are pushing further the growth of

the industry.

In order to analyze the company’s position

and overall financial health with respect to

the entire global pharmaceutical industry,

we have chosen a local pharmaceutical

company, Julphar(Gulf Pharmaceutical

Industries) and evaluated its financial

statements for previous three years (2009,

2010, & 2011) by collecting the financial

data from Bloomberg based on the ratio

22 AyaWadi and Robin A. Carvalho January

analysis and performing common size &

comparative statements and also trend

analysis. Subsequently, the results are

then compared topharmaceutical industry

outputs in order to determine the financial

position of Julphar in global market. Here,

for the study purpose, we have considered

the industry output as combined average

results of two renowned firms in the same

pharmaceutical industry such as Johnson

& Johnson and Pfizer Inc.

Julphar is a Ras Al Khaimahbased

pharmaceutical firm. The company was

established in 1980 under the leadership of

H.H Sheikh Saqr Bin Mohammed Al Qasimi.

Julphar’saim is to create high-quality

medicines whilst maintaining a competitive

cost. The company has achieved its goal

through a wide network of 12 world-class

manufacturing plants spread over five

regions.

Julphar has maintained a varied

product collection comprising of major

therapeutic segments including

endocrinology, anti-infective, cardiovascular

and gastroenterology, over-the-counter,

nephrology, dermatology, respiratory,

metabolic and burn & wound

management.Underlining the commitment to

diabetes management in the region, the

company iscurrently producing the raw

material required for making the insulin

through their divisions dedicated to

Diabetes.Julphar has won the Arab

Achievement Award which was organized

by Global Business in collaboration with the

Dubai Knowledge Village in 2011. As a part

of Corporate Social responsibility, the firm

provides scholarships and annual funding

for local educations, like the American

University of Ras Al Khaimah.

With over 800 products in many

quantity forms and presently in the pipeline,

Julphar is an instance of one of the UAE’s

local businesses creating a control on the

global stage.

REVIEW OF LITERATURE

Hossan F., Habib M.A.(2010),

analyzed the company’s performance

through ratio analysis of two pharmaceutical

companies in Bangladesh. The authors have

collected the data of these companies for

the year 2007–2008. In this paper, the

different financial ratios are evaluated such

market value ratios, liquidity ratios,

profitability ratios, debt management ratio,

asset management ratios, and finally

measure the best performance between two

companies. Asset management ration is

about the measuring of assets and control

them efficiently. It also quantifies seven

categories for both the selected

pharmaceutical companies considering their

account receivable turnover, fixed asset

turnover, average collection period, total

asset turnover inventory turnover, account

payable turnover in days account payable

turnover etc. Based on the financial analysis,

the paper concludes which company is

performing well financially and has better

position in the pharmaceutical market.

Bhunia A., Mukhuti S. S., Roy S. G.

(2011), study is regarding the identification

of financial strengths and weaknesses of

the Indian public sector pharmaceutical

companies by assessing the balance sheet

and profit and loss account. In this study,

the authors have selected two public sector

pharmaceutical companies. The data has

been collected for 12 years period (1997-

98 to 2008-09) from CMIE database. The

paper identifies the strong liquidity position

of both selected companies which shows

that the companies have capability to pay

short term obligations. However, these

companies rely more on external funding in

terms of long term borrowings which

creates a risk for the creditors. Further, it

mentions that the financial stability of both

the companies is drastically decreasing.

The study aims at guiding the investors

about their investment decisions in Indian

pharmaceutical Industry by measuring the

2014 International Academic Research Journal of Economics and Finance 23

company’s liquidity, stability, profitability,

solvency and other financial indicators and

in turn ensuring adequate returns to the

stakeholders.

Siddiqua M. J., Hpssan M. T.

(2012), This paper explains the

requirement of the preparation of cash flow

statement, which describes the changes,

occurred in the company’s cash and cash

equivalents during the financial year, for

the public companies in Bangladesh

conforming to Companies Act 1994. The

pharmaceutical companies in Bangladesh

are preparing the cash flow statement

along with the financial statements by

providing the information regarding

company’s operating, investing and

financing activities in the given financial

period. The authors have found out that

although most of the pharmaceutical

companies are abiding to the law by

producing the cash flow statements

however, no one is interested in disclosing

some more useful information voluntarily

regarding the cash flows like operating

capacity due to increase in operating

capacity, segmental cash flows or cash

flow per share etc. The paper recommends

the improvement in presentation of the

statement incorporating the above said

factors.

Kakkad R (2013), examined the

literature review on ratio analysis to assess

the health of pharmaceutical industry in

India. Indian pharmaceutical market is

growing at a CAGR of about 12% since

last 5 years. The aged population of

average age of 67 is around 67 million in

India. As per statistics, people of this age

group consume 3 to 4 times more drugs as

compared to younger population. This is an

indicator of significant growth of

pharmaceutical industry in India. Although

conducting financial performance analysis

of the company is a tedious work, it has

ample of benefits. The ratio analysis gives

a clear picture about the successfulness of

an organization in short and long run. The

paper provides the insight to the financial

health of the pharmaceutical companies in

India. By taking an example of Dr. Reddy’s

Laboratories Ltd. and Lupin Ltd. examples

the paper examines the soundness of the

industry using the tools such as ration

analysis and T test.

Majumder T.H., Rahman M. M

reviewed the case study of pharmaceutical

industry in Bangladesh. The

industrialization of the country is moving at

rapid pace and pharmaceutical sector is a

leading industry in Bangladesh that

facilitates country’s GDP growth. It is

observed that over last few years, the net

profit of this industry is diminishing. The

authors have tried to search for the

reasons behind declining growth of the

pharmaceutical industry in Bangladesh by

carrying out financial performance of this

industry to test its strengths and

weaknesses for which they have used

financial ratios, Multivariate Discriminate

Analysis (MDA) as developed by Prof.

Altman as well as some statistical tools,

coefficient of variance (CV) and T-test etc.

as measuring tools. Upon review of the

collected data from financial statements of

various pharmaceutical companies in the

country, the authors have found that most

of the companies’ financial position, their

performance, liquidity position and profit

earning capacity are not strong and sound

and most of the companies are heading

towards bankruptcy in near future. In order

to sustain in the industry, the authors

recommended immediate improvement in

the financial performance of these

companies by taking necessary measures

to overcome the issues relating to strict

government regulation, insufficiency of

financial management, absence of realistic

goals, and increased cost of materials,

labor and overhead.


Theoretical Review

Financial statement analysis:It is an

extremely powerful tool for various users of

financial statements. Different stakeholders

have different objectives in learning about

the financial position of the

company.Particularly, the business owners

and managers use specific analysis tools

to closely review the company’s financial

statements for decision-making purposes.

Following are the five tools used to analyze

the financial statements:

Ratio Analysis

In order to analyze the health,

financial position and performance of the

company, some tool are being used by

individuals is called“ratio analysis”. Ratio

analysis helps the stakeholders to conduct

a quantitative analysis of information

presented in a company's financial

statements. There are many such ratios

that are related to a company's

performance, financing activity, and

liquidity and which are computed against

the current year data of the company

referring to the financial statement and

subsequently compared to the previous

years or with other companies, industry or

economy to evaluate the performance of

the company. Some common ratios are as

follows:

Liquidity ratio: It is one of financial

metrics that is used to determine the firm’s

strength. Mostly, higher the ratio, bigger is

the margin of safety that the company

possesses to cover short-term debts.

Credit ratio: It is identified as percentage,

which results when a debtors are either

monthly payment obligation long-term

debts is divided by his/her net income or

gross monthly income.

Growth ratio: The amount of increase that

specific variables have gained within a

specific period and context. For

stockholders, this naturally represent the

compound annualize rate of growth of a

firm's returns, earnings, dividends.

Yield ratio: Yield ratio is explained as the

connection between the predictable yields

of a bond to the predictable yield of other

bonds. It is beneficial to determine whether

to invest or not in one bond or another. In

such circumstances the higher yield is

selected.

Profitability: The financial ratio that is

used to enter a business ability to create

earnings compared with its expenses and

other related costs earned through a

specific period of time. If the ratio is higher

in value than its competitors ratio or same

from previous period that means the

company is doing well.

DuPont: A method of performance that is

started by the DuPont Corporation. With

this technique, assets are measured at

their gross book value rather than at net

book value in order to produce a higher

return on equity (ROE). DuPont analysis

tells us that ROE is affected by three

things: Operating efficiency, Asset use

efficiency and Financial leverage which are

measured by profit margin, total asset

turnover and the equity multiplier.

Common Size Financial Statement

Common size financial statement of

company is that in which all items are

displayed as percentages of a common

base figure. This particular type of financial

statement helps analyzingthe company’s

health against other companies or between

time periods of the company. In this way,

the statement reduces the unfairness that

can occur when analyzing companies of

differing sizes. It also allows the

stakeholders to analyze the company over

various time periods. E.g. the percentage

of sales versus the cost of goods sold and

also gives an indication about the value

change over the time.


Comparative Statement

Comparative statement helps

comparing the financial data of a company

from different periods of time. It

distinguishes the income statement, cash

flow statement and balance sheet with its

corresponding sections from a previous

period. It can also be used to compare

financial data from different companies

over time, aiding to understand the trend in

the financials for individuals and

stakeholders benefit. It provides ready

figures for comparison in order to evaluate

manager’s performance, new product or

business line. Also it is useful to know

better about the company’s performance in

the current market conditions and how the

business reacts affecting the entire

industry.

Trend Analysis

Trend analysis is a tool that forecast

the future movement of a stock based on

historical data. Trend analysis is based on

the judgment by assessing the previous

results and financial data and accordingly

predicting what will happen in the in the

future. It is useful since investor can get

the profit investing in a company which is

performing well historically following the

trend and hence would likely be performing

well in the future.

Cash Flow Analysis

The cash flow statement gives

information to the stakeholders about the

amount of cash generated and used by a

company in a given period which is

generally arise either from financing,

operations or investing activities. Thecash

flow is used by the analyst as an indication

of a company's financial strength. The

statement analysis provides a tool to the

individual to gauge the financial

performance of the company. The

creditors, employees and other

stakeholders can get the assurance for the

timely payments if there is enough free

cash available on the company’s account,

based on the cash flow statement.

Corporate Valuation: Similarly, in order to

assess the company’s financial standing in

the current market, business valuation is

carried out based on some predefined

formulas which is called as Corporate

Valuation. It is useful for the potential

investors to understand the fair market

value of the company before investing into

it. Corporate valuation is a set of

procedures used to estimate the economic

value of a firm in terms of its assets and

liabilities. Valuation is done by financial

market participants to determine the price

they are willing to pay or receive to affect a

sale of a business. It is usually used to

ascertain the fair value of a business for

establishing partner ownership, investment

analysis, merger and acquisition

transactions, capital budgeting, financial

reporting, taxable events to determine the

proper tax liability, and also in divorce

litigation.

The corporate valuation is done

using different tools and methods as

considered by the valuators, businesses

and industries. A common approaches to

corporate valuation comprises of the tools

such as NOPAT (Net Operating Profit after

Tax), FCV(free cash flow), ROIC (Return

on Invested Capital), EVA (Economic

Value Added), and MVA (Market Value

Added) computed upon review of financial

statements, discounting cash flow models,

and similar company comparisons.

NOPAT is defined as company's potential

cash earnings. FCF is the better indicator

of the firm’s ability to generate cash. ROIC

explains how well the company’s invested

capital is giving the profitable results. EVA

is an estimate of firm’s economic profit.

MVA is an indicator for the investor to

understand the market value of his/her

investment. Higher MVA that the company

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

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


has earned significant wealth for its

shareholders

OBJECTIVE OF THE STUDY

To conduct the financial analysis of

a local pharma company, Julphar for year

2009-2011 and compare its current

position in global pharmaceutical industry.

RESEARCH METHODOLOGY

The present study is about

understanding the financial health of a

pharmaceutical company; Julphar with

respect to the global industry. The

published data, financial statements of

Julphar as well as other renowned firms

such as Johnson & Johnson, Pfizer

(combining output these companies is

assumed to be pharmaceutical industry

output), has been obtained for the period of

three years (2009-2011) from Bloomberg

database.

FINANCIAL ANALYSIS

In order to assist decision makers,

periodical financial statements provide a

structured framework to analyze

company’s performance. Financial ratio

analysis is based on the Balance Sheet

and Income Statement which gives the

unique picture of a company's financial

position. Following ratios and certain tools

are used to distinguish Julphar’s financial

standing in the global pharmaceutical

industry.

Current Ratio, which is 2.24, indicates that

the company’s current assets are higher

than its current liabilities. (Greater than 1)

Hence the company is in good health. Also

the ratio is higher than general industry

trend (2.02).

Quick Ratio(1.58) also indicates sound

position of the company in terms of its

current assets after subtracting inventories

as compared with current liabilities (> 1).

The strong position against the industry

average (1.46) indicates that the company

can still invest in extra inventories in short

term.

In terms of profitability, Return on

Common Equity(10.37) and Net Income

Margin(16.49)show above industry

average (5.62 and 5.21 respectively) which

indicates that the company is performing

better on profitability criterion.

Total Debt/Equity ratio (26.40) is less

than the industry average of 47.43 which is

not a good sign from investor’s

perspective. The Debt Ratio, Total

Debt/Total Assets, (18.89)is not much

less than the industry debt ratio (19.32)

that does mean there is no immediate debt

risk involved in the business but the firm

will have to be cautious about their future

debt based expansion plans.

DuPont Analysis

The Du Pont analysis splits the

Return on Equity into three distinct

elements; profit margin, and asset turnover

and equity multiplier. It helps the investor

to forecast their returns on the investment

and compare them with similar industries

for investment decision.

ROE = (Profit margin)*(Asset

turnover)*(Equity multiplier) = (Net

profit/Sales)*(Sales/Assets)*(Assets/Equity

) = (Net Profit/Equity)

Asset Turnover- Revenue/Avg. Assets

ratio -(0.46) is less than the industry

average of 0.64. However, Adjusted

Return on Equity(10.37) is much above

than the average of 6.86 which indicates

that the business the potential to attract the

investors.

Account Receivable (18.04) is higher than

the industry average of 10.21 that implies

the company has better cash in hand from

its growth perspective than other

companies in the same industry.

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

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

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

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

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

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

http://en.wikipedia.org/wiki/Shareholders%27_equity

http://en.wikipedia.org/wiki/Shareholders%27_equity


Book Value per Share (6.97) of Julpharis

less than other pharmaceutical companies

in the industry which has ratio of 13.26.

Free Cash Flow: The Company is running

in negative in terms of FCF (-25.38)

against the quite higher industry ratioof

(13, 919.17) which indicates that the

company’s operating profit is too less than

its investment in the operating capital.

Similarly, Julphar’s Cash from

Operations(162.34)is also less than the

industry figure of 15,922.50.

Cash & Near Cash Items: The average of

cash and near cash items (4.70) is less

than the global industry figures (10.18)

which describes that Julphar is having less

cash in hand for its immediate operation

and expansion as compared to the industry

requirements.

From assets perspective, Inventories that

shows 12.70, are too less than the industry

benchmark figure of 21.75.

Total Long Term Liabilities are (6.46)

much less than the average industry TLT

Liabilities (20.74) which is a good

indication for the company.

Total Equityas well as Retained Earnings

and Other Equities is much higher than

the average industry numbers which is a

good sign for the investors.

Operating Expenses(41.89) is less than

the global industry figure of 48.16 which

shows that the company’s operating

expenses are below the industry expenses.

Net income (16.49)is much better than the

industry income of 5.21 which explains that

the company is doing well as compared to

the other companies in the pharmaceutical

business.

Inventories ratio (11.17) is higher than

industry ratio of 8.94 which is a good sign

for the company. Having more inventories

in the store is a good indication in the

pharmaceutical industry.

Total Current Assets(9.62) are less than

the industry average of 12.63 which is not

a favorable sign.

Total Current Liabilities(36.78)are higher

than the industry average of 10.19 which is

not a good indicator of the business.

Total Equity(6.51) shows relatively lower

than the industry average of 7.95.

Cost of Sales (9.13) is much higher than

the industry average of 2.39 which shows

that the company spends much on its

marketing and sales as compared to the

other firms in the industry.

Operating Expenses(3.46) are less than

industry average of 9.51 which is a good

indicator.

Net Fixed Assets(38.27) are higher than

the other firms in the industry (8.62) which

is a positive sign for the growth.

Total Long-Term Assets(23.37)are higher

than industry average (14.60) which shows

sound health of the company.

Total Current Liabilities (52.76) are

higher than the industry average of 13.23

which is a bad indication.

Total Equity (10.29) is much higher than

the other firms in the industry (1.86) which

is a good sign.

The trend analysis of Income Statement

shows Gross Profit of 28.59 whereas the

industry data shows the loss (-2.42).

Similarly, Operating profit (loss)figure

(21.37) gives a relief to the company when

compared with the industry losses (-79.03).

CONCLUSION

When any investor plans for

investing in a firm, it is most important to

know about the product, its market and the

industry in which it operates. The

Pharmaceutical sector is one of the leading

industries since it has a widespread market

in global population. In this benchmarking


project, we have analyzed the financial

statements of a local drug company

julpharInc. for the years 2009-2011.

According to the analysis ofbalance sheet

and income statement that give varied views

about the performance of the company for

the given financial periods, the paper

provides some clues to the stakeholders

how the company is performing in the

current market and whether it has capability

to compete with the global firms in the

future.

From liquidity perspective, the

respective current and quick ratios, which

are higher than the industry ratios, show the

sound health of the firm. Moreover, the firm

provides excellent profitability ratios such as

Return on Common Equity and Net Income

Margin. However, when it comes to Asset

Management and Financial Leverage ratios,

the company’s performance gives

disappointing results. Similarly, the company

is lagging behind on Free Cash Flow as well

as Cash from Operation as compared to the

firms in the industry.

The Common Size Statement and

Comparative Statement give mixed views on

the financial position of Julphar. The firm is

performing unsatisfactory on Cash,

Inventory, Operating Expenses and Total

Long Term Liabilities. Nevertheless, it does

well on Total Equity and Retained Earnings.

On the other hand, the Trend Statement

demonstrates better performance of the firm

on several criteria as compared to the

industry. The company’s Net Fixed Assets,

Total Long term Assets, Total Equity, Gross

and Operating Profit are much higher.

Based on the study and analysis of

balance sheets, income statements and

ratios such as liquidity, profitability,

creditability and associated analysis like

DuPont, growth and yield analysis, finally we

have reached to the conclusion that the

overall health of the Company, in

comparison to the overall pharmaceutical

industry, is not so sound however, its

liquidity and profitability ratios give some

relief to the stakeholders. Considering its

government immunity the firm, Julphar, will

sustain in the market in the near future but

needs to take corrective measures in order

to compete in the global industry.

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ISSN 2222-1905 (Paper) ISSN 2222-2839

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Financial Ratios:

1. Liquidity:

Julphar

Industry

Average

FY 2011 FY 2010 FY 2009 Average

Cash Ratio 0.12 0.24 0.39 0.25

1.02

Current Ratio 1.71 2.39 2.63 2.24

2.02

Quick Ratio 1.20 1.66 1.87 1.58

1.46

CFO/Avg. Current Liability 0.40 0.32 0.48 0.40

0.62

Common Equity/Total

Assets 68.04 72.22 75.82 72.03

48.26

Long-Term Debt/Equity 6.39 10.11 6.76 7.75

31.45

Long-Term Debt/Capital 4.86 8.02 5.55 6.14

21.81

Long-Term Debt/Total

Assets 4.35 7.30 5.12 5.59

14.59

Total Debt/Equity 31.55 26.01 21.64 26.40

40.60

Total Debt/Capital 23.98 20.64 17.79 20.80

28.51

Total Debt/Total Assets 21.46 18.78 16.41 18.89

19.18

CFO/Total Liabilities 27.44 20.86 37.54 28.61

23.62

CFO/CapEx 0.87 0.61 1.22 0.90

8.73

2. Profitability:

Julphar

Industry

Average


Return on Common Equity 11.15 10.78 9.19 10.37

5.62

Return on Assets 7.81 7.97 7.00 7.59

3.45

Gross Margin 61.29 58.91 59.68 59.96

61.42

EBITDA Margin 22.65 22.12 24.28 23.02

14.62

Operating Margin 18.17 17.35 18.69 18.07

13.27

Incremental Operating

Margin 25.39 10.91 39.61 25.30

624.75

Income before XO Margin 16.62 16.79 16.08 16.49

5.21

Net Income Margin 16.62 16.79 16.08 16.49

5.21

Net Income to Common

Margin 16.62 16.79 16.08 16.49

5.21

Dvd Payout Ratio 41.92 46.18 44.79 44.30

25.10

Sustainable Growth Rate 6.48 5.80 5.07 5.78

5.86


3. Creditability:

Julphar

Industry

Average


Total debt 495.21 385.65 299.53 393.46

8815.06

Short-Term Debt 394.85 235.80 206.03 278.89

3690.15

Long Term Debt 100.36 149.85 93.49 114.57

5124.91

Total Debt/T12M EBITDA 2.13 1.89 1.62 1.88

3.79

Net Debt/EBITDA 1.81 1.43 0.91 1.39

3.67

Total Debt/EBIT 2.66 2.41 2.10 2.39

0.91

Net Debt/EBIT 2.26 1.82 1.19 1.76

0.09

EBITDA to Interest Expense 11.55 14.92 15.57 14.02

19.87

EBITDA-CapEx/Interest

Expense -0.09 0.70 4.17 1.60

14.38

EBIT to Interest Expense 9.27 11.71 11.99 10.99

17.03

Interest Expense 20.08 13.64 11.88 15.20

309.35

Common Equity/Total Assets 68.04 72.22 75.82 72.03

43.81

Long-Term Debt/Equity 6.39 10.11 6.76 7.75

15.83

Long-Term Debt/Capital 4.86 8.02 5.55 6.14

11.03

Long-Term Debt/Total Assets 4.35 7.30 5.12 5.59

7.18

Total Debt/Equity 31.55 26.01 21.64 26.40

47.43

Total Debt/Capital 23.98 20.64 17.79 20.80

31.24

Total Debt/Total Assets 21.46 18.78 16.41 18.89

19.32

Net Debt/Equity 26.80 19.61 12.23 19.55

21.54

Net Debt/Capital 20.37 15.56 10.05 15.33

11.77

EBITDA 231.98 203.56 184.99 206.85

9705.16

EBITDA-CapEx -1.77 9.58 49.59 19.13

8397.96

EBIT 186.06 159.70 142.44 162.73

8245.96

Julphar Industry

Average


Normlzd Net Inc/Net Inc to Cmn 1.00 1.00 1.00 1.00

0.74

EBIT/Revenue % 18.17 17.35 18.69 18.07

13.27

Revenue/Avg Assets 0.47 0.47 0.44 0.46

0.64

Avg Assets/Avg Equity 1.43 1.35 1.31 1.36

2.29

Adjusted Return on Equity 11.15 10.78 9.19 10.37

6.86

5 Year Average Adj ROE 10.37 9.75 10.70 10.27

12.68


4. Growth:

Julphar

Industry

Average


Revenue 0.00 20.76 0.00 6.92

6.19

EBITDA 0.00 10.04 0.00 3.35

6.17

Operating Income 0.00 12.12 61.36 24.49

3.93

Net Income to Common 10.18 26.07 -8.52 9.24

-0.11

EPS Diluted 9.09 27.11 -8.29 9.31

-2.02

EPS Diluted before

Abnormal 9.09 27.11 45.33 27.18

0.46

Dividend per Share 0.00 30.00 0.00 10.00

-2.15

Accounts Receivable 16.21 16.36 21.56 18.04

10.21

Inventory 11.12 12.31 3.43 8.95

25.49

Fixed Assets 23.85 23.53 16.99 21.46

6.89

Total Assets 12.37 12.48 9.10 11.32

18.37

Modified Working Capital 20.33 13.66 15.76 16.58

18.57

Working Capital -22.24 3.55 37.41 6.24

30.15

Accounts Payable 0.00 52.59 -0.62 17.32

18.37

Short-Term Debt 67.45 14.45 -10.58 23.77

1.68

Total Debt 28.41 28.75 17.17 24.78

35.92

Total Equity 5.87 7.14 7.88 6.97

13.26

Capital 10.52 10.99 9.43 10.31

18.24

Book Value per Share 5.87 7.14 7.88 6.97

10.27

Cash From Operations 70.03 -28.20 169.58 70.47

5.59

Capital Expenditures 20.50 43.27 -26.97 12.27

0.90


5. Yield Analysis:

Julphar

Industry

Average

FY

2011 FY 2010

FY

2009 Average

Cash From Operations 202.30 118.98 165.72 162.34

15922.50

Capital Expenditures -233.75 -193.99 -135.40 -187.71

-2003.33

Free Cash Flow -31.45 -75.00 30.32 -25.38

13919.17

Market Capitalization 1590.77 1333.97 1255.22 1393.32

162737.9

Free Cash Flow Yield -1.98 -5.62 2.42 -1.73

8.78

Dividends Paid -79.59 -46.14 -35.90 -53.87

-5859.50

Net ST Debt Repayments 109.56 86.12 43.89 79.86

-517.83

Net LT Debt Repayments 0.00 0.00 0.00 0.00

3565.67

Other Financing Activities -20.08 -13.64 -11.88 -15.20

42.00

T12 Cash to Suppliers of

Capital -9.89 -26.34 0.00 -12.08

5119.33


162737.9

T12 Shareholder Yield -0.62 -1.97 0.00 -0.87

3.06

Dividends Paid -79.59 -46.14 -35.90 -53.87

-5859.50

T12 Cash to Shareholders 79.59 46.14 0.00 41.91

8209.17


162737.9

T12 Shareholder Yield, Ex Debt 5.00 3.46 0.00 2.82

5.06

Cash From Operations 202.30 118.98 165.72 162.34

15922.50

Capital Expenditures -233.75 -193.99 -135.40 -187.71

-2003.33

Enterprise Value 2011.48 1624.70 1424.46 1686.88

166780.2

Dividends Paid -79.59 -46.14 -35.90 -53.87

-5859.50

Net ST Debt Repayments 109.56 86.12 43.89 79.86

-517.83

Other Financing Activities -20.08 -13.64 -11.88 -15.20

42.00


Capital -9.89 -26.34 0.00 -12.08

5119.33

Enterprise Value 2011.48 1624.70 1424.46 1686.88

166780.2


o Common Size Statement (Balance Sheet):

Julphar

Industry

Average

Assets FY 2011 FY 2010 FY 2009 Average

Cash & Near Cash Items 2.9756 4.31807 6.79263 4.70

10.18

Accounts & Notes Receivable 28.8252 27.8743 26.946 27.88

22.90

Inventories 12.6024 12.7451 12.7646 12.70

21.75

Other Current Assets 0.89182 1.68971 1.06535 1.22

6.61

Total Current Assets 45.5483 46.932 47.9141 46.80

64.54

Net Fixed Assets 42.2712 38.3537 34.9222 38.52

13.52

Gross Fixed Assets 60.9607 57.1633 53.7024 57.28

22.80

Total Long-Term Assets 54.4517 53.068 52.0859 53.20

35.46

Total Assets 100 100 100 100.00

100.00

Liabilities & Shareholders'

Equity FY 2011 FY 2010 FY 2009 Average

Accounts Payable 0 1.93036 1.42293 1.12

6.50

Short-Term Borrowings 17.1137 11.4849 11.2876 13.30

12.15

Other Short-Term Liabilities 9.53968 6.21141 5.54216 7.10

16.80

Total Current Liabilities 26.6534 19.6267 18.2527 21.51

35.45

Long-Term Borrowings 4.34991 7.29838 5.12201 5.59

7.18

Other Long-Term Liabilities 0.95683 0.85557 0.8078 0.87

13.56

Total Long-Term Liabilities 5.30675 8.15395 5.92982 6.46

20.74

Total Liabilities 31.9601 27.7806 24.1825 27.97

56.19

Retained Earnings & Other

Equity 37.1213 37.4749 38.2397 37.61

26.96

Total Equity 68.0399 72.2194 75.8175 72.03

43.81

Total Liabilities & Equity 100 100 100 100.00

100.00

o Common Size Income Statement:

Julphar

Industry

Average


Revenue 100.00 100.00 100.00 100.00

100.00

Cost of Revenue 38.71 41.09 40.32 40.04

38.58

Gross Profit 61.29 58.91 59.68 59.96

61.42

Operating Expenses 43.12 41.55 40.99 41.89

48.16

Operating Income 18.17 17.35 18.69 18.07

13.28

Interest Expense 1.96 1.48 1.56 1.67

3.74

Net Non-Operating Losses

(Gains) -0.41 -0.91 1.05 -0.09

0.48

Income Before XO Items 16.62 16.79 16.08 16.49

5.21

Net Income 16.62 16.79 16.08 16.49

5.21


o Comparative Statement (Balance Sheet):

Julphar

Industry

Average

Assets 2010-2011 2009-2010 Average

Cash & Near Cash Items -22.56 -28.50 -25.53

-22.35

Accounts & Notes Receivable 16.21 16.36 16.28

5.90

Inventories 11.12 12.31 11.71

8.94

Other Current Assets -40.69 78.40 18.86

23.00

Total Current Assets 9.06 10.18 9.62

12.63

Net Fixed Assets 23.85 23.53 23.69

-3.51

Gross Fixed Assets 19.84 19.73 19.78

-26.89

Total Long-Term Assets 15.30 14.60 14.95

2.16

Total Assets 12.37 12.48 12.43

8.17

Liabilities & Shareholders' Equity 2010-2011 2009-2010 Average

Accounts Payable -100.00 52.59 -23.70

-3.49

Short-Term Borrowings 67.45 14.45 40.95

31.97

Other Short-Term Liabilities 72.59 26.06 49.33

3.49

Total Current Liabilities 52.61 20.95 36.78

10.19

Long-Term Borrowings -33.02 60.28 13.63

-8.37

Other Long-Term Liabilities 25.67 19.13 22.40

5.00

Total Long-Term Liabilities -26.86 54.67 13.90

0.46

Total Liabilities 29.28 29.22 29.25

9.47

Retained Earnings & Other Equity 11.31 10.23 10.77

-101.33

Total Equity 5.87 7.14 6.51

7.95

Total Liabilities & Equity 12.37 12.48 12.43

8.17

o Comparative Income Statement

Julphar

Industry

Average

2010-2011 2009-2010 Average

Turnover (Revenue) -11.28 20.76 4.74

0.86

Cost of sales -4.83 23.09 9.13

2.39

Gross Profit -15.78 19.19 1.70

-2.06

Operating Expenses -15.48 22.41 3.46

9.51

Operating profit (loss) -16.51 12.12 -2.19

168.31

Interest Expense -47.19 14.83 -16.18

9.32


(Gains) 49.95 -204.55 -77.30

-57.21

Income Before XO Items -10.18 26.07 7.95

60.80

Net profit (loss) -10.18 26.07 7.95

60.80


o Trend Statement (Balance Sheet):

Julphar

Industry

Average

Assets

FY

2011

FY

2010

FY

2009 Average

Cash & Near Cash Items -44.63 -28.50 100 -36.56

142.31

Accounts & Notes Receivable 35.21 16.36 100 25.79

18.77

Inventories 24.79 12.31 100 18.55

1.58

Other Current Assets 5.81 78.40 100 42.11

-36.09

Total Current Assets 20.16 10.18 100 15.17

12.93

Net Fixed Assets 53.00 23.53 100 38.27

8.62

Gross Fixed Assets 43.48 19.73 100 31.61

-16.96

Total Long-Term Assets 32.14 14.60 100 23.37

14.60

Total Assets 26.40 12.48 100 19.44

7.78

Liabilities & Shareholders'

Equity

FY

2011

FY

2010

FY

2009 Average

Accounts Payable -100.00 52.59 100 -23.70

27.17

Short-Term Borrowings 91.64 14.45 100 53.04

-5.41

Other Short-Term Liabilities 117.57 26.06 100 71.82

34.85

Total Current Liabilities 84.57 20.95 100 52.76

13.23

Long-Term Borrowings 7.35 60.28 100 33.81

-1.99

Other Long-Term Liabilities 49.72 19.13 100 34.43

2.85

Total Long-Term Liabilities 13.12 54.67 100 33.89

1.53

Total Liabilities 67.05 29.22 100 48.14

11.84

Retained Earnings & Other Equity 22.70 10.23 100 16.47

-113.71

Total Equity 13.43 7.14 100 10.29

1.86

Total Liabilities & Equity 26.40 12.48 100 19.44

7.78


o Trend (Income) Statement:

Julphar

Industry

Average

FY

2011

FY

2010

FY

2009 Average

Turnover (Revenue) 34.39 20.76 100 27.57

1.87

Cost of sales 29.04 23.09 100 26.06

8.34

Gross Profit 38.00 19.19 100 28.59

-2.42

Operating Expenses 41.\36 22.41 100 31.88

-12.57

Operating profit (loss) 30.63 12.12 100 21.37

-79.03

Interest Expense 69.02 14.83 100 41.93

3.76


(Gains) -152.33 -204.55 100 -178.44

-56.37

Income Before XO Items 38.91 26.07 100 32.49

-52.39

Net profit (loss) 38.91 26.07 100 32.49

-52.39

Balance Sheet

Common Size

Statement

Comparative

Statement Trend Statement

Julphar Industry Julphar Industry Julphar Industry

Assets

Cash & Near Cash Items 4.70 10.18 -25.53 -22.35 -36.56 142.31

Accounts & Notes

Receivable 27.88 22.90 16.28 5.90 25.79 18.77

Inventories 12.70 21.75 11.71 8.94 18.55 1.58

Other Current Assets 1.22 6.61 18.86 23.00 42.11 -36.09

Total Current Assets 46.80 64.54 9.62 12.63 15.17 12.93

Net Fixed Assets 38.52 13.52 23.69 -3.51 38.27 8.62

Gross Fixed Assets 57.28 22.80 19.78 -26.89 31.61 -16.96


Balance Sheet

Common Size

Statement

Comparative



Total Long-Term Assets 53.20 35.46 14.95 2.16 23.37 14.60

Total Assets 100.00 100.00 12.43 8.17 19.44 7.78

Liabilities &

Shareholders' Equity

Accounts Payable 1.12 6.50 -23.70 -3.49 -23.70 27.17

Short-Term Borrowings 13.30 12.15 40.95 31.97 53.04 -5.41

Other Short-Term

Liabilities 7.10 16.80 49.33 3.49 71.82 34.85

Total Current Liabilities 21.51 35.45 36.78 10.19 52.76 13.23

Long-Term Borrowings 5.59 7.18 13.63 -8.37 33.81 -1.99

Other Long-Term Liabilities 0.87 13.56 22.40 5.00 34.43 2.85

Total Long-Term Liabilities 6.46 20.74 13.90 0.46 33.89 1.53

Total Liabilities 27.97 56.19 29.25 9.47 48.14 11.84

Retained Earnings & Other

Equity 37.61 26.96 10.77 -101.33 16.47 -113.71

Total Equity 72.03 43.81 6.51 7.95 10.29 1.86

Total Liabilities & Equity 100.00 100.00 12.43 8.17 19.44 7.78

Income Statement

Common Size

Statement

Comparative



Revenue 100.00 100.00 4.74 0.86 27.57 1.87

Cost of Revenue 40.04 38.58 9.13 2.39 26.06 8.34

Gross Profit 59.96 61.42 1.70 -2.06 28.59 -2.42

Operating Expenses 41.89 48.16 3.46 9.51 31.88 -12.57

Operating Income 18.07 13.28 -2.19 168.31 21.37 -79.03

Interest Expense 1.67 3.74 -16.18 9.32 41.93 3.76


(Gains) -0.09 0.48 -77.30 -57.21 -178.44 -56.37

Income Before XO Items 16.49 5.21 7.95 60.80 32.49 -52.39

Net Income 16.49 5.21 7.95 60.80 32.49 -52.39


Liquidity

Creditability

Julphar Industry

Julphar Industry

Cash Ratio 0.25 1.02

Total debt 393.46 8815.06

Current Ratio 2.24 2.02

Short-Term Debt 278.89 3690.15

Quick Ratio 1.58 1.46

Long Term Debt 114.57 5124.91

CFO/Avg Current Liab 0.40 0.62

Total Debt/T12M

EBITDA 1.88 3.79

Common Equity/Total

Assets 72.03 48.26

Net Debt/EBITDA

1.39 3.67

Long-Term Debt/Equity 7.75 31.45

Total Debt/EBIT 2.39 0.91

Long-Term Debt/Capital 6.14 21.81

Net Debt/EBIT 1.76 0.09


Assets 5.59 14.59

EBITDA to Interest

Expense 14.02 19.87

Total Debt/Equity 26.40 40.60

EBITDA-CapEx/Interest

Expense 1.60 14.38

Total Debt/Capital 20.80 28.51

EBIT to Interest Expense 10.99 17.03

Total Debt/Total Assets 18.89 19.18

Interest Expense 15.20 309.35

CFO/Total Liabilities 28.61 23.62

Common Equity/Total

Assets 72.03 43.81

CFO/CapEx 0.90 8.73

Long-Term Debt/Equity 7.75 15.83

Long-Term Debt/Capital 6.14 11.03

Profitability


Assets 5.59 7.18

Julphar Industry

Total Debt/Equity 26.40 47.43

Return on Common

Equity 10.37 5.62

Total Debt/Capital

20.80 31.24

Return on Assets 7.59 3.45

Total Debt/Total Assets 18.89 19.32

Gross Margin 59.96 61.42

Net Debt/Equity 19.55 21.54

EBITDA Margin 23.02 14.62

Net Debt/Capital 15.33 11.77

Operating Margin 18.07 13.27

EBITDA 206.85 9705.16

Incremental Operating

Margin 25.30 624.75

EBITDA-CapEx

19.13 8397.96

Income before XO

Margin 16.49 5.21

EBIT

162.73 8245.96

Net Income Margin 16.49 5.21

Net Income to Common

Margin 16.49 5.21

Dvd Payout Ratio 44.30 25.10

Sustainable Growth Rate 5.78 5.86


Growth Ratio

Yield Ratio

Julphar Industry

Julphar Industry

Revenue 6.92 6.19

Cash From Operations 162.34 15922.50

EBITDA 3.35 6.17

Capital Expenditures -187.71 -2003.33

Operating Income 24.49 3.93

Free Cash Flow -25.38 13919.17

Net Income to Common 9.24 -0.11

Market Capitalization 1393.32 162737.90

EPS Diluted 9.31 -2.02

Free Cash Flow Yield -1.73 8.78

EPS Diluted before

Abnormal 27.18 0.46

Dividends Paid -53.87 -5859.50

Dividend per Share 10.00 -2.15

Net ST Debt Repayments 79.86 -517.83

Accounts Receivable 18.04 10.21

Net LT Debt Repayments 0.00 3565.67

Inventory 8.95 25.49

Other Financing

Activities -15.20 42.00

Fixed Assets 21.46 6.89


Capital -12.08 5119.33

Total Assets 11.32 18.37


Modified Working

Capital 16.58 18.57

T12 Shareholder Yield -0.87 3.06

Working Capital 6.24 30.15


Accounts Payable 17.32 18.37

T12 Cash to Shareholders 41.91 8209.17

Short-Term Debt 23.77 1.68


Total Debt 24.78 35.92

T12 Shareholder Yield,

Ex Debt 2.82 5.06

Total Equity 6.97 13.26


Capital 10.31 18.24

Capital Expenditures -187.71 -2003.33

Book Value per Share 6.97 10.27

Enterprise Value 1686.88 166780.24



Capital Expenditures 12.27 0.90

Net ST Debt Repayments 79.86 -517.83

Other Financing

Activities -15.20 42.00

DuPont Ratio


Capital -12.08 5119.33

Julphar Industry

Enterprise Value 1686.88 166780.24

Normlzd Net Inc/Net Inc

to Cmn 1.00 0.74

EBIT/Revenue % 18.07 13.27

Revenue/Avg Assets 0.46 0.64

Avg Assets/Avg Equity 1.36 2.29

Adjusted Return on

Equity 10.37 6.86

5 Year Average Adj ROE 10.27 12.68

Documents

Standing of “Julphar” in Global Pharmaceutical Industry ...acrpub.com/article/publishedarticles/19092015IARJEF167.pdf · Standing of “Julphar” in Global Pharmaceutical Industry