Quantitative Analysis of AGL Energy ltd. and Genesis Energy ltd

Question: Discuss about the Report for Quantitative Analysis of AGL Energy ltd. and Genesis Energy ltd. Answer: Introduction Genesis energy ltd. It is a energy company which varies the range of products that offers services to customers and provide them the energy solution in a very simple and smart way. This company was established in 1998 and started its operation on 1st April 1999.This company produce electricity with the help of number of generation assets, trade electricity and natural gas. The genesis energy ltd. is the largest retailer company of electricity and gas in the New Zealand and has the customer connection which is more than 636,676. This company belongs to the renewable energy and the operation is done in three hydro power schemes that are Tongariro, waikaremoana and Takeo. This company also belongs to the Hau Nui Wind Farm in the Wairarapa. This company also produces thermal energy and their Huntly power station has the largest capacity to produce electricity which is facilitating in New Zealand. This power station is established by the two modern gases that is fired and two coal gas and has the fired gener ating units also. They have their contribution in Kupe joint venture about 31% interest and the operation is done in Taranaki in the field of Kupe oil and gas. Kupe is the most important part of the business which generates sources for electricity and gas and provides it to the customers in a varied way. This company purchase electricity from the electricity market and sell it in that market only in New Zealand. The generators sell the electricity in the market and the retailers buy that and sell the electricity generation to the customers. The selling of the natural gas is done by the company in the North-island to the residential and commercial customers and it is also sold to the wholesale natural gas market to get the surplus. They also sale LPG which is acquired from Kupe to the customers in New Zealand. As per the customer needs and requirements they provide the smart energy for the electricity and gas. This company also offers the first class customer service as per the requi rements. This company also provides electricity to all type of business even to the rural enterprises also. They have the business team which supports the commercial customers. AGL energy ltd. This company was established in 1837 and is the oldest company of the Australia. This company adopts new things and believes in creation for the sustainable and reliable energy which is provided to the customer. They believe in change and do work for the community and for the environment. This company established the first gas street lamp in the Sydney in the year 1841 and now it has the largest solar plant in Australia which was established in 2015. It is the largest owner of the listed ASX and does operation for generating electricity in the country. This company also support and has the contribution in the organization. It is the integrated energy company which leads in Australia. This company takes the responsibility for the reduction of greenhouse gas emissions and offers the safe and secure energy to the customer which can be afford by the customer. This company has the experience of 175 years and with these experiences it offers the gas, electricity, solar PV and related product and services to the customer as per their needs and requirements in the Eastern Australia. It has the portfolio of power generation like base, peaking, intermediate generation plant which is spread among the thermal generation along with the renewable sources like hydro, wind, solar, landfill gas and biomass. Statement of profit and loss Of AGL Energy ltd for the year ended 30 June 2015 2015 2014 $m $m continuing operation Revenue 10678 10445 Expenses -9759 -9165 share of profit of associates and joint venture 27 25 profit before net financing costs, depreciation and amortization 946 1305 depreciation and amortization -379 -326 profit before net financing cost 567 979 finance income 20 24 finance cost -250 -243 net financing cost -230 -219 profit before tax 337 760 income tax expense -119 -190 profit for the year 218 570 profit attributable to: owners of AGL energy ltd. 218 570 non-controlling interest 218 570 earnings per share basic earnings per share 33.3cents 98.2cents diluted earnings per share 33.3cents 98.2cents Statement of financial position Of AGL Energy ltd. As at 30june 2015 2015 2014 $m $m current assets cash and cash equivalents 259 456 trade and other receivables 1894 1902 Inventories 396 191 other financial assets 156 114 other assets 262 318 2967 2981 assets classified as held for sale 492 430 total current assets 3459 3411 non-current assets trade and other receivables 44 46 Inventories 32 28 other financial assets 596 484 investment in associate and joint ventures 91 32 exploration and evaluation assets 130 372 oil and gas assets 544 170 property, plant and equipment 6958 5694 intangible assets 3266 3248 deferred tax assets 682 631 other assets 31 18 total non-current assets 12374 10723 total assets 15833 14134 current liabilities trade and other payable 1377 1417 Borrowings 443 45 Provisions 191 101 deferred tax liabilities 86 49 other financial liabilities 269 477 other liabilities 7 2373 2089 liabilities directly associated with assets classified as held for sale 77 total current liabilities 2373 2166 non-current liabilities borrowings 3439 3669 Provisions 456 106 deferred tax liabilities 50 other financial liabilities 387 280 other liabilities 363 275 total non-current liabilities 4645 4380 total liabilities 7081 6546 net assets 8815 7588 equity issued capital 6696 5437 reserves -65 -99 retained earnings 2175 2249 total equity attributable to owners of AGL Energy limited 8806 7587 non-controlling interests 9 1 total equity 8815 7588 Statements of Cash flow Of AGL Energy ltd. for the year ended 30june 2015 2015 2014 $m $m cash flow from operating activities receipts from customers 11587 11791 payments to suppliers and employees -10236 -10733 dividend received 32 26 finance income received 24 23 finance cost paid -216 -217 income taxes paid -147 -191 net cash provided by operating activities 1044 699 cash flow from investing activities payments for property, plant and equipments -744 -624 payments for exploration and evaluation assets -34 -28 payments for oil and gas assets -28 -46 payments for investments in associates and joint ventures -80 payments for intangible assets -25 payments for business and subsidiaries, net of cash acquired acquisition in current period -1348 -79 acquisition in prior periods -32 -33 government grant received 32 190 proceeds from sale of property, plant and equipment 6 2 loan advanced to related parties 3 -126 proceeds from repayment of related party loans 56 net cash used in investing activities 2175 -769 cash flow from financing activities proceeds from issue of shares, net of transaction costs 1210 1 proceeds from issue of shares to non-controlling interest 8 1 purchase of shares on- market for equity based remuneration -7 -6 proceeds from borrowings 2647 2075 repayments of borrowings -2580 -1547 payments for settlement of derivative financial instruments -10 dividend paid -344 -269 net cash provided by financing activities 924 255 net(decrease)/increase in cash and cash equivalents -207 185 cash and cash equivalents at the beginning of the financial year 466 281 cash and cash equivalents at the end of the financial year 259 466 Comprehensive income statement Of Genesis Energy ltd. for the year ended 30 June 2015 2015 2014 $m $m operating income electricity revenue 1730.4 1661.1 gas revenue 282.9 251.3 petroleum revenue 64.7 84.4 other revenue 19.6 8.2 2097.6 2005 operating expenses electricity purchase, transmission and distribution -953.7 -897.7 gas purchase and transmission -297.1 -249.8 petroleum production, marketing and distribution -26.1 -30.6 fuels consumed -187.4 -191.3 employee benefits -80.6 -89.2 other operating expenses -207.9 -238.6 -1752.8 -1697.2 earnings before net finance expense, income tax, depreciation, depletion, amortization, impairment, fair value changes and other gains and losses 344.8 307.8 depreciation, depletion and amortization -155.7 -156.7 impairment of non-current assets -14 -10.1 change in fair value of financial instruments 32.1 0.4 other gains(losses) -0.2 -1.6 -137.8 -168 profit before net finance expense and income tax 207 139.8 finance revenue 1.3 0.9 finance expense -68 -69.1 profit before income tax 140.3 71.6 income tax (expense) -35.5 -22.4 net profit for the year 104.8 49.2 other comprehensive income items that may be reclassified subsequently to profit or loss change in cash flow hedge reserve -20.1 5 income tax credit (expense) relating to items that may be reclassified 5.6 -1.4 total items that may be reclassified subsequently to profit or loss -14.5 3.6 total other comprehensive income (expense) for the year -14.5 3.6 total comprehensive income for the income 90.3 52.8 earnings per share from operations attributable to shareholders of the parent basic and diluted earnings per share(cents) 10.49 4.92 Balance sheet Of Genesis energy ltd. as at 30 June 2015 2015 2014 current assets $m $m cash and cash equivalents 21 23.3 receivables and prepayments 187.7 216.4 inventories 80 93.8 assets held for sale 3.1 intangible assets 4.3 3.9 tax receivables 16.2 derivatives 34.2 19.9 total current assets 346.5 357.3 non-current assets receivables and prepayments 0.9 0.9 inventories 24.4 34.1 property, plant and equipments 2682.5 2758.8 oil and gas assets 292.4 342.1 intangible assets 127.4 128.2 derivatives 53.9 8 total non-current assets 3181.5 3272.1 total assets 3528 3629.4 current liabilities payables and accruals 158.3 194.8 tax payable 3.4 borrowings 117.8 12.3 Provisions 12.3 13.6 Derivatives 21.5 22.5 total current liabilities 309.9 246.6 non-current liabilities payables and accruals 0.7 0.7 borrowings 840.4 977.1 Provisions 123.7 126.9 deferred tax liability 397.2 384.2 Derivatives 30.7 13.2 total non-current liabilities 1392.7 1502.1 total liabilities 1702.6 1748.7 shareholders equity share capital 539.7 539.7 Reserves 1285.7 1341 total equity 1825.4 1880.7 total equity and liabilities 3528 3629.4 Cash flow statement Of Genesis energy ltd. For the year ended 30 June 2015 2015 2014 $m $m cash flow from operating activities cash was provided from : receipts from customers 2122 2055.1 interest received 1.3 0.9 2123.3 2056 cash was applied to : payments to suppliers and related parties 1687.6 1649.7 payments to employees 81 89.1 tax paid 36.2 13.3 1804.8 1752.1 net cash inflows from operating activities 318.5 303.9 cash flow from investing activities cash was provided from: proceeds from disposal of property, plant and equipments 1.3 0.4 proceeds from disposal of oil and gas assets 0.1 1.3 0.5 cash was applied to: purchase of property, plant and equipment 35.5 66.5 purchase of oil and gas assets 4.1 1.2 purchase of intangible(excluding emission units ) 10.3 15.7 49.9 83.4 net cash (outflow) from investing activities -48.6 -82.9 cash flow from financing activities cash was provided from: proceeds from borrowings 193 167.1 193 167.1 cash was applied to : repayments of borrowings 256.1 195 interest paid and other finance charges 61.6 66.6 repayment of principal on finance lease liabilities 1.6 4 dividends 145.9 121 acquisition of treasury shares 0.9 465.2 387.5 net cash(outflow)from financing activities -272.2 -220.4 net increase(decrease) in cash and cash equivalents -2.3 0.6 cash and cash equivalents at 1 July 23.3 22.7 cash and cash equivalents at 30 June 21 23.3 Ratio analysis of both companies Genesis Energy ltd 2015 2014 ROA 5.87% 3.85% ROE 5.74% 0.02616047 N/P Margin 5.00% 1.36% G/P margin 9.87% 6.97% cash flow to sales revenue 15.18% 15.16% current ratio 1.118103 1.44890511 quick ratio 346.2419 356.919627 interest coverage ratio -2.06324 -1.0361795 debt to equity ratio 48.26% 48.18% equity ratio 51.74% 51.82% debt ratio 48.26% 48.18% EPS 10.49 4.92 assets T/O ratio 0.594558 0.55243291 days inventory 13.92067 17.0758105 days debtor 32.66137 39.3945137 times inventory T/O 26.22 21.3752665 times debtor T/O 11.17528 9.26524954 debt coverage ratio 4.372684 4.94274432. Return on assets is more in 2015 as compare to 2014 because income of the year and the total assets is high in 2015 as compared to 2014. Net profit ratio is also increased in 2015 as compared to 2014 because company earns a good profit and generates revenue. Current ratio has been decreased in 2015 to 2014. Quick ratio is low in 2015 as compared to 2014. Debt equity ratio is high in 2015 as compared to 2014. Equity ratio is low in 2015 as compared to 2014.Earnings per share is high in 2015 as compared to 2014. AGL Energy ltd. 2015 2014 ROA 2.13% 5.38% Net profit ratio 2.04% 5.46% quick ratio 3458.833 3410.912 current ratio 1.457649 1.574792 debt to equity ratio 80.33% 86.27% equity ratio 55.67% 53.69% EPS 33.3 98.2 ROE 2.48% 7.51% G/P Margin 5.31% 9.37% cash flow to sales ratio 9.78% 6.69% assets T/O ratio 0.674414 0.738998 days inventory ratio 1.093838 0.978459 days debtor ratio 64.74152 66.46529 times inventory T/O 26.96465 54.68586 times debtor T/O 5.637804 5.491588 debt ratio 44.72% 46.31% interest coverage ratio -1.46522 -3.47032 debt coverage ratio 4.449234 6.266094 The return on assets ratio, net profit ratio, current ratio, debt to equity ratio and earnings per share is low in 2015 as compared to 2014 and the quick ratio and the equity ratio is high in 2015 as compared to 2014. Conclusion The genesis energy ltd. is financially good as compared to AGL energy limited. As the ratio analysis has been done which shows the position of both the companies and according to that analysis, the conclusion has been made. Both the companies is performing well but after comparison Genesis energy limited is quite good against AGL energy limited. Recommendation The investor should invest in Genesis energy limited as this company earning more profit in 2015 as compared to 2014. The AGL Energy limited is also performing well, thus the investor can also invest in that also. Both the companies are financially good and have the good reputation in market and achieve many targets and the oldest company of the Australia. References Genesis energy (2015), Genesis energy annual report 2015, retrieved on 22 august 2016 from https://www.asx.com.au/asxpdf/20150904/pdf/4313hvljxkcz9m.pdf ASX Release (2015), AGL annual report 2015, retrieved on 22 august 2016 from https://www.asx.com.au/asxpdf/20150826/pdf/430t27pwhhbmr3.pdf Chand, S (2015), Ratio analysis: meaning, classification and limitation of ratio analysis AGL energy in action, our company, retrieved on 22 august 2016 from https://www.agl.com.au/about-agl/who-we-are/our-company Genesis energy (2016), about us-company information, retrieved on 22 august 2016 from https://www.genesisenergy.co.nz/company-information