Financing
function of Dialog Axiata PLC is managed and controlled by its financial
controller. Company’s financing activities can be analyzed under equity and
liabilities. When we look at the overall picture of the company it is apparent
that equity as well as its current and noncurrent liabilities plays an equal
role in financing the company activities.

Annexure
01 depicts common size financial statements in which,
common size statement of financial position provides an insight of how the
company’s financing is made. We can see that the company finances its assets
almost equally through equity and liabilities in 2014 which is approximately 49% and 51% respectively.  And in
2013 there is a slightly higher weight for liabilities which is 52% than for equity which is 48% approximately. However, if we look
at exact figures of 2012, equity financing is slightly higher than liability
financing, although the difference is not significant.

Company’s
equity comprises of Stated Capital and Reserves for which, there is a 50 – 50
formation. However if we look at past figures, stated capital of the company
had played a major role in equity. Figure
2 shows the equity structure of the company for the last financial year and
for past two years.

Figure
02 – Equity composition of Dialog Axiata PLC

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Further,
we can see that equity structure had not changed over the year. Company has exercised
ESOS (Employee Share Option Schemes) during 2013 which has increased the number
of shares from 7,985,205,943 to 8,143,778,405 hence at the end of year 2014
company has had a share capital of LKR 28,103,913,000. As a conclusion, Dialog
Axiata PLC has a healthier financing function which comprises almost equally of
equity and liabilities.

The
dividend payment of LKR2.3Bn during
year 2014 and LKR2.7Bn in year 2013
shows the credibility of the company towards their shareholders.

Out
of Non-current and current liabilities, largest proportions are held by
borrowings – 44% and Trade and other payables – 41% respectively out of total
liabilities. Company has Increased Interest bearing borrowings through last
three years gradually, which has resulted in increased non-current liabilities.
In 2014, Current and non-current liabilities has almost leveled up; Figure 2.1 shows the increase.

Figure 2.1 – Composition of
Liabilities of Dialog Axiata PLC

 

The
following graph shows the how each component of financing has changed over the
past three years.

Figure
2.2 – Trend in financing – Dialog Axiata PLC

Additionally
we can see an increase in gearing ratio clearly resulted by the increase in
borrowing throughout last three years.

 

 

Year

2014

2013

2012

Gearing  (Debt : Equity)

46%

35%

26%

Table 01 – Gearing – Dialog Axiata
PLC over last three years

However,
still company is in a very healthy position where it can easily finance any
expansion to come from this available source of finance (i.e. Debt).

Figure 3
represents the Debt – Equity composition of Dialog Axiata PLC for the last
three years.

 

Figure
3 – Debt : Equity composition of Dialog Axiata PLC over last three years

Further,
if we look at Interest coverage of the company (Table 02), it has increased significantly over last three years
showing the ability to finance even further in an event of expansion.

Year

2014

2013

2012

Interest Coverage
ratio

10.82

5.61

1.41

Table 02 – Interest
coverage times over last three years– Dialog Axiata PLC

 

 

 

 

1          
ANALYSIS OF INVESTMENT
ACTIVITIES

 

Investment
activities explain how a company has utilized the funds acquired via the
financing activities. Dialog’s balance sheet comprise of PPE, Intangible
assets, investments (namely investments in subsidiaries and associates) and
current assets.

In
our analysis we pay special attention towards the structural composition of
non-current assets firstly, since 80% approximately comprises of Non-current
assets from the asset structure in each year, simultaneously from 2014 to 2012.

The
breakdown of assets is as found below.

 

Out
of the Non-current asset composition, more than 50% of the assets comprise of
Property, plant and equipment. PPE of Dialog Axiata basically comprises of Land
and Buildings, Computer systems and Telecom equipment, Furniture fittings and
other equipment, motor vehicles and Assets in the course of construction (WIP),
out of which the highest proportion of assets are deemed by Computer systems
and Telecom equipment, since Dialog is a company operating in the
telecommunications industry.

However,
it is important to note that the asset composition has changed from 2012 to
2014. PPE has dropped down from 60% roughly to a 55% approximately; while
amounts due from other companies have increased by over a 6%. Also, the company
has additionally invested in Associates over the period from 2012 to 2014,
whereas at now, an ownership stake of 26% and 42.48% simultaneously from First
source-Dialog

Solutions
(Private) Limited and Digital Commerce Lanka (Private) Limited is observed. The
company’s fixed asset turnover ratio has reduced from 0.67 to 0.62 from 2012 to
2013, and has remained the same in 2014, even though revenue has increased by
roughly a 16%. The company also undertakes a yearly impairment test for its
cash generating units, based on DCF model using cash projections in to the
future approved by the management for a period of 10 years. However, as the
recoverable amounts exceeded the carrying value of the assets, no impairment as
such was identified for the year 2014. (As per LKAS 39)

 

Financing
function of Dialog Axiata PLC is managed and controlled by its financial
controller. Company’s financing activities can be analyzed under equity and
liabilities. When we look at the overall picture of the company it is apparent
that equity as well as its current and noncurrent liabilities plays an equal
role in financing the company activities.

Annexure
01 depicts common size financial statements in which,
common size statement of financial position provides an insight of how the
company’s financing is made. We can see that the company finances its assets
almost equally through equity and liabilities in 2014 which is approximately 49% and 51% respectively.  And in
2013 there is a slightly higher weight for liabilities which is 52% than for equity which is 48% approximately. However, if we look
at exact figures of 2012, equity financing is slightly higher than liability
financing, although the difference is not significant.

Company’s
equity comprises of Stated Capital and Reserves for which, there is a 50 – 50
formation. However if we look at past figures, stated capital of the company
had played a major role in equity. Figure
2 shows the equity structure of the company for the last financial year and
for past two years.

Figure
02 – Equity composition of Dialog Axiata PLC

 

Further,
we can see that equity structure had not changed over the year. Company has exercised
ESOS (Employee Share Option Schemes) during 2013 which has increased the number
of shares from 7,985,205,943 to 8,143,778,405 hence at the end of year 2014
company has had a share capital of LKR 28,103,913,000. As a conclusion, Dialog
Axiata PLC has a healthier financing function which comprises almost equally of
equity and liabilities.

The
dividend payment of LKR2.3Bn during
year 2014 and LKR2.7Bn in year 2013
shows the credibility of the company towards their shareholders.

Out
of Non-current and current liabilities, largest proportions are held by
borrowings – 44% and Trade and other payables – 41% respectively out of total
liabilities. Company has Increased Interest bearing borrowings through last
three years gradually, which has resulted in increased non-current liabilities.
In 2014, Current and non-current liabilities has almost leveled up; Figure 2.1 shows the increase.

Figure 2.1 – Composition of
Liabilities of Dialog Axiata PLC

 

The
following graph shows the how each component of financing has changed over the
past three years.

Figure
2.2 – Trend in financing – Dialog Axiata PLC

Additionally
we can see an increase in gearing ratio clearly resulted by the increase in
borrowing throughout last three years.

 

 

Year

2014

2013

2012

Gearing  (Debt : Equity)

46%

35%

26%

Table 01 – Gearing – Dialog Axiata
PLC over last three years

However,
still company is in a very healthy position where it can easily finance any
expansion to come from this available source of finance (i.e. Debt).

Figure 3
represents the Debt – Equity composition of Dialog Axiata PLC for the last
three years.

 

Figure
3 – Debt : Equity composition of Dialog Axiata PLC over last three years

Further,
if we look at Interest coverage of the company (Table 02), it has increased significantly over last three years
showing the ability to finance even further in an event of expansion.

Year

2014

2013

2012

Interest Coverage
ratio

10.82

5.61

1.41

Table 02 – Interest
coverage times over last three years– Dialog Axiata PLC

 

 

 

 

1          
ANALYSIS OF INVESTMENT
ACTIVITIES

 

Investment
activities explain how a company has utilized the funds acquired via the
financing activities. Dialog’s balance sheet comprise of PPE, Intangible
assets, investments (namely investments in subsidiaries and associates) and
current assets.

In
our analysis we pay special attention towards the structural composition of
non-current assets firstly, since 80% approximately comprises of Non-current
assets from the asset structure in each year, simultaneously from 2014 to 2012.

The
breakdown of assets is as found below.

 

Out
of the Non-current asset composition, more than 50% of the assets comprise of
Property, plant and equipment. PPE of Dialog Axiata basically comprises of Land
and Buildings, Computer systems and Telecom equipment, Furniture fittings and
other equipment, motor vehicles and Assets in the course of construction (WIP),
out of which the highest proportion of assets are deemed by Computer systems
and Telecom equipment, since Dialog is a company operating in the
telecommunications industry.

However,
it is important to note that the asset composition has changed from 2012 to
2014. PPE has dropped down from 60% roughly to a 55% approximately; while
amounts due from other companies have increased by over a 6%. Also, the company
has additionally invested in Associates over the period from 2012 to 2014,
whereas at now, an ownership stake of 26% and 42.48% simultaneously from First
source-Dialog

Solutions
(Private) Limited and Digital Commerce Lanka (Private) Limited is observed. The
company’s fixed asset turnover ratio has reduced from 0.67 to 0.62 from 2012 to
2013, and has remained the same in 2014, even though revenue has increased by
roughly a 16%. The company also undertakes a yearly impairment test for its
cash generating units, based on DCF model using cash projections in to the
future approved by the management for a period of 10 years. However, as the
recoverable amounts exceeded the carrying value of the assets, no impairment as
such was identified for the year 2014. (As per LKAS 39)

 

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