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Company Background:

Summit Power Limited (SPL), sponsored by Summit Group, is the first Bangladeshi Independent
Power Producer (IPP) in Bangladesh and until now the only local company in private electricity
generation and supply business providing power to national grid. SPL is also the first power
generating company to be listed in the local stock exchanges. SPL was incorporated in
Bangladesh on March 30, 1997 as a Private Limited Company. On June 7, 2004 the Company
was converted to Public Limited Company under the Companies Act 1994.

Summit Power Limited has successfully established in the year 2001 three power plants each
with 11 MW capacity for sale of electricity to Rural Electrification Board (REB) under Build,
Own and Operate basis at Savar, Narsingdi and Comilla. Capacity of these plants had been
expanded to 105 MW during 2006 and 2007. In 2009 Summit Power Limited has commissioned
another 4 new power plants increasing its cumulative production capacity to 215 MW in 7 power
plants. In establishing these four new power plants SPL has formed two 99% owned subsidiary
companies namely Summit Purbanchol Power Company Limited (SPPCL) and Summit
Uttranchol Power Company Limited (SUPCL).

Considering the immense opportunities, the company is striving to establish more power plants
around the country. The fast-growing company has set a mission to expand the company with a
power generation capacity to the tune of 1000 MW, which is a modest 20% of the electricity
requirement in Bangladesh.

The company objectives include - Generate and provide uninterrupted reasonably priced
electricity to our customers, efficient utilization of capital, machines, material and human
resources and continuous improvement of customer satisfaction and resource management

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 Summit Power
Balance Sheet
  2005 2006 2007 2008 2009
Assets
Property, Plant and 2,308,036,10 3,618,814,25 4,092,694,19
Equipment 811,572,357 1 4 8 3,969,783,370
capital work in
progress 390,872,521 220,753,275 -
Investments - 198,000 960,480,200 960,480,200
Intangible Assets 153,600 113,400 84,400 10,030,350 10,766,076
Investment in FDR 11,854,249 12,925,020
Total non-current 1,202,598,47 2,528,902,77 3,619,096,65 5,075,058,99
assets 8 6 4 7 4,953,954,666
Inventories 45,491,139 111,724,006 169,620,386 172,149,488 170,578,020
stock in transit 3,714,213
Other receivables 19,394,459 1,244,924 28,383,838
Inter company
receivables 27,990,349 100,000,000
Accounts Receivable 48,035,424 73,111,666 188,555,114 202,238,917 139,249,642
advances, deposits
and prepayments 6,438,065 22,210,038 21,544,037 20,103,785 36,266,955
Cash and bank
balances 281,955,597 27,352,148 69,637,556 96,078,438 262,510,911
Total currents
assets 385,634,438 253,792,317 478,592,366 590,570,628 636,989,366
1,588,232,91 2,782,695,09 4,097,689,02 5,665,629,62
total assets 6 3 0 5 5,590,944,032

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Liabilities
project loan - 1,792,800,41 1,342,237,57
long term portion 334,247,536 979,717,696 5 7 905,245,038
obligation under 1,188,775 - 1,232,436 569,084 10,260,928
finance lease -
long term portion
deferred liability
for gratuity 2,928,374 4,097,434 5,241,587 7,062,794 7,105,218
total non-
current 1,799,274,43 1,349,869,45
liabilities 338,364,685 983,815,130 8 5 922,611,184
Short term loan 49,211,134 263,156,798 221,186,387 65,844,879
trade creditors 16,255,205 22,244,235 43,739,062 36,886,623 40,557,129
other creditors
and accruals 10,771,448 64,374,835 70,633,752 49,344,145 13,060,867
inter company
payable 1,601,920 893,796 3,710,294 116,614,378 167,379,208
project loan -
short term
portion 175,793,377 515,077,745 475,322,943 417,033,851 431,426,270
obligation under
finance lease -
short term
portion 1,062,172 1,188,775 568,633 663,351 3,639,067
Liability for
spare parts - 27,560,615
dividend payable 1,858,759 1,595,571 2,161,401 3,804,948
total current
liabilities 205,484,122 654,849,279 886,287,668 843,890,136 725,712,368
1,638,664,40 2,685,562,10 2,193,759,59 1,648,323,55
total liabilities 543,848,807 9 6 1 2
total equity and 1,588,232,91 2,782,695,09 4,097,689,02 5,665,629,62 5,590,944,03
liabilities 6 3 0 5 2

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Summit Power
Income Statement for 5 years
  2005 2006 2007 2008 2009
1,148,766,29 1,737,787,80 1,698,858,94
Revenue 521,042,084 584,345,654 1 5 5
(237,149,906 (274,189,903 (562,149,648 (791,926,625
Cost of sales ) ) ) ) (828,093,888)

Gross profit 283,892,178 310,155,751 586,616,643 945,861,180 870,765,057

General and
administrative (117,745,448 (134,796,007 (152,628,564
expense (73,764,382) ) ) ) (170,217,837)

other income 4,417,986 1,237,846 1,768,652 2,973,226 2,684,105

exchange gain 779,034 130,381 (40,574) - -

Result from
operating
activities 215,324,816 193,778,530 453,548,714 796,205,842 703,231,325

Finance Income 6,932,724 13,170,411 3,938,143 12,001,050 4,719,041

(189,390,627 (325,945,011
Finance Expenses (48,050,700) (46,760,130) ) ) (237,199,920)
(185,452,484 (313,943,961
Net Financial Cost (41,117,976) (33,589,719) ) ) (232,480,879)

Profit for the year 174,206,840 160,188,811 268,096,230 482,261,881 470,750,446

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2(a) Vertical Balance sheet expressed as a % of Total
Assets
2005 2006 2007 2008 2009
Assets
Property, Plant and
Equipment 51.10% 82.94% 88.31% 72.24% 71.00%
capital work in progress 24.61% 7.93% 0.00% 0.00%
Investments 0.00% 16.95% 17.18%
Intangible Assets 0.01% 0.00% 0.00% 0.18% 0.19%
Investment in FDR 0.21% 0.23%
Total non-current assets 75.72% 90.88% 88.32% 89.58% 88.61%
Inventories 2.86% 4.01% 4.14% 3.04% 3.05%
stock in transit 0.23% 0.00% 0.00%
Other receivables 0.70% 0.03% 0.00% 0.51%
Inter company receivables 0.68% 1.77%
Accounts Receivable 3.02% 2.63% 4.60% 3.57% 2.49%
advances, deposits and
prepayments 0.41% 0.80% 0.53% 0.35% 0.65%
Cash and bank balances 17.75% 0.98% 1.70% 1.70% 4.70%
Total currents assets 24.28% 9.12% 11.68% 10.42% 11.39%
100.00 100.00 100.00 100.00 100.00
total assets % % % % %

Equity
40.93 25.69 20.94 32.71 39.78
share capital % % % % %
share premium 5.04% 2.87% 1.95% 6.86% 6.96%
Share money deposit 0.16% 0.11% 0.00% 0.00%
proposed cash dividend 4.09% 0.00%
proposed stock dividend 4.09% 5.14% 0.00%
11.61 11.46 11.35 10.49
retained earnings % 7.24% % % %
10.35 13.29 9
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revaluation reserve % %
Total equity attributable to
equity holders of the 65.76 41.11 34.46 61.28 70.52
company % % % % %
 Liabilities
project loan - long term
portion 21.05% 35.21% 43.75% 23.69% 16.19%
obligation under finance
lease - long term portion 0.07% 0.00% 0.03% 0.01% 0.18%
deferred liability for
gratuity 0.18% 0.15% 0.13% 0.12% 0.13%
total non-current
liabilities 21.30% 35.35% 43.91% 23.83% 16.50%
Short term loan 1.77% 6.42% 3.90% 1.18%
trade creditors 1.02% 0.80% 1.07% 0.65% 0.73%
other creditors and
accruals 0.68% 2.31% 1.72% 0.87% 0.23%
inter company payable 0.10% 0.03% 0.09% 2.06% 2.99%
project loan - short term
portion 11.07% 18.51% 11.60% 7.36% 7.72%
obligation under finance
lease - short term portion 0.07% 0.04% 0.01% 0.01% 0.07%
Liability for spare parts 0.00% 0.67%
dividend payable 0.00% 0.07% 0.04% 0.04% 0.07%
total current liabilities 12.94% 23.53% 21.63% 14.89% 12.98%
total liabilities 34.24% 58.89% 65.54% 38.72% 29.48%
total equity and 100.00 100.00 100.00 100.00 100.00
liabilities % % % % %

Vertical Income Statement expressed as a % of Sales

2005 2006 2007 2008 2009
100.00 100.00 100.00 100.00 100.00
Revenue % % % % %
- - - - -
Cost of sales 45.51% 46.92% 48.94% 45.57% 48.74% 10
Gross profit 54.49% 53.08% 51.06% 54.43% 51.26%
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General and administrative - - - -

expense 14.16% 20.15% 11.73% -8.78% 10.02%
other income 0.85% 0.21% 0.15% 0.17% 0.16%
exchange gain 0.15% 0.02% 0.00% 41.39%
Result from operating activities 41.33% 33.16% 39.48% 45.82%
0.00% 0.00%
Finance Income 1.33% 2.25% 0.34% 0.69% 0.28%
Finance Expenses -9.22% -8.00% - - -
 16.49% 18.76% 13.96%
- - -
Net Financial Cost -7.89% -5.75% 16.14% 18.07% 13.68%
Profit for the year 33.43% 27.41% 23.34% 27.75% 27.71%

2(b) Horizontal Balance sheet as a percentage

of base year 2005
2005 2006 2007 2008 2009
Assets
Property, Plant and Equipment 100.00% 284.39% 445.90% 504.29% 489.15%
capital work in progress 100.00% 56.48% 0.00% 0.00% 0.00%
Investments
Intangible Assets 100.00% 73.83% 54.95% 6530.18% 7009.16%
Investment in FDR
Total non-current assets 100.00% 210.29% 300.94% 422.01% 411.94%
Inventories 100.00% 245.60% 372.86% 378.42% 374.97%
stock in transit 100.00% 0.00%
Other receivables
Inter company receivables
Accounts Receivable 100.00% 152.20% 392.53% 421.02% 289.89%
advances, deposits and prepayments 100.00% 344.98% 334.64% 312.26% 563.32%
Cash and bank balances 100.00% 9.70% 24.70% 34.08% 93.10%
Total currents assets 100.00% 65.81% 124.11% 153.14% 165.18%
total assets 100.00% 175.21% 258.00% 356.73% 352.02%

Equity 11
share capital 100.00% 110.00% 132.00% 285.12% 342.14%
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share premium 100.00% 100.00% 100.00% 486.10% 486.10%

Share money deposit
proposed cash dividend
proposed stock dividend 100.00% 220.00%
retained earnings 100.00% 109.32% 0.00% 318.17% 318.17%
revaluation reserve
Total equity attributable to equity
holders of the company 100.00% 109.54% 135.21% 332.43% 377.51%
Liabilities
project loan - long term portion 100.00% 293.11% 536.37% 401.57% 270.83%
obligation under finance lease - long
term portion 100.00% 0.00% 103.67% 47.87% 863.15%
deferred liability for gratuity 100.00% 139.92% 178.99% 241.18% 242.63%
total non-current liabilities 100.00% 290.76% 531.76% 398.94% 272.67%
Short term loan
trade creditors 100.00% 136.84% 269.08% 226.92% 249.50%
other creditors and accruals 100.00% 597.64% 655.75% 458.10% 121.25%
inter company payable 100.00% 55.80% 231.62% 7279.66% 10448.66%
project loan - short term portion 100.00% 293.00% 270.39% 237.23% 245.42%
obligation under finance lease - short
term portion 100.00% 111.92% 53.53% 62.45% 342.61%
Liability for spare parts
dividend payable
total current liabilities 100.00% 318.69% 431.32% 410.68% 353.17%
total liabilities 100.00% 301.31% 493.81% 403.38% 303.08%
total equity and liabilities 100.00% 175.21% 258.00% 356.73% 352.02%

Horizontal Income statement as a percentage

of base year 2005
2005 2006 2007 2008 2009
Revenue 100.00% 112.15% 220.47% 333.52% 326.05%
Cost of sales 100.00% 115.62% 237.04% 333.94% 349.19%
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Gross profit 100.00% 109.25% 206.63% 333.18% 306.72%

General and administrative
expense 100.00% 159.62% 182.74% 206.91% 230.76%
other income 100.00% 28.02% 40.03% 67.30% 60.75%
exchange gain 100.00% 16.74% -5.21% 0.00% 0.00%
Result from operating activities 100.00% 89.99% 210.63% 369.77% 326.59%

Finance Income 100.00% 189.97% 56.81% 173.11% 68.07%

Finance Expenses 100.00% 97.31% 394.15% 678.34% 493.65%
 Net Financial Cost 100.00% 81.69% 451.03% 763.52% 565.40%
Profit for the year 100.00% 91.95% 153.90% 276.83% 270.23%

3) Ratio Analysis

2005 2006 2007 2008 2009

Liquidity ratio
Current ratio 1.88 0.39 0.54 0.70 0.88
Quick ratio 1.66 0.22 0.35 0.50 0.64
(401056962.00 (253319508.00
working capital ratio 180150316.00 ) (407695302.00) ) (88723002.00)
Asset Management Ratio
Inventory turnover ratio 5.21 3.49 4.00 4.63 4.83
Inventory turnover ratio (in days) 70.02 104.64 91.34 78.76 75.53
Total asset turnover ratio 0.33 0.21 0.28 0.31 0.30
10.847 7.99251 6.09247 8.59275 12.2001
Accounts receivable turnover
Average collection period 33.65 45.67 59.91 42.48 29.92
103.67 150.31 151.25 121.24 105.45
Operating cycle
Debt Management Ratio
debt ratio 34.24% 58.89% 65.54% 38.72% 29.48%
Debt to Equity ratio 52.07% 143.24% 190.18% 63.19% 41.81%
Times Interest earned ratio 4.68 4.53 2.45 2.47 3.05
Profitability Ratio

Gross Profit Margin 54.49% 53.08% 51.06% 54.43% 51.26%

Net Profit Margin 33.43% 27.41% 23.34% 27.75% 27.71%
Return on Asset 10.97% 5.76% 6.54% 8.51% 8.42%
Return On Equity 16.68% 14.00% 18.99% 13.89% 13
11.94%
Stock Market Ratio
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Earnings per share 26.80 22.40 31.25 26.02 21.17

161 160 165 187 177
Book value per share
Price to Earnings Ratio 14.30 21.41 31.81 48.04 51.87
0.41933 0.33363 0.16557 0.14985 0.16146
Dividend yield
5.99532 7.14305 5.26667 7.19971 8.37417
Dividend payout
 (1) Liquidity ratio:-
(i) Current ratio:-

YEAR
2005 2006 2007 2008 2009
Current
Ratio
1.88 0.39 0.54 0.70 0.88

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Sample Calculation of Current ratio of 2009:
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If we analyze the current ratio of five years, we can see it declined from 1.88 to .39 in
2005 to 2006 due to the political instability aroused in our country. But again in last
 three years it is increasing comparing to other companies Yet,the current ratio of the
company is very depressive.

(ii) Quick ratio:-

Sample Calculation of Quick ratio for 2009 :

In 2009 the current assets excluding inventories are 0.64 times higher than current
liabilities. The quick ratio of five years explains it has declined from 2005 to 2006. But it
is also increasing from the last three years.

(iii) Working capital ratio:-

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YEAR 2005 2006 2007 2008 2009

(401056962.00 (253319508.00
Working capital ratio 180150316.00 ) (407695302.00) ) (88723002.00)
 Sample Calculation of working captial ratio for 2009

=
.
The working capital ratio has declined drastically from 2005 to 2006 because of the
political and economical consequences but presently from the historical data we can
say that it has been increasing but still the results are unsatisfactory because the net
working capital still on 2009 has a negative figure.

(2) Asset Ultilization Ratio:-

(i) Inventory Turnover ratio:-

YEAR 2005 2006 2007 2008 16

2009
Inventory turnover ratio 5.21 times 3.49 times 4.00 times 4.63 times 4.83 times
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Sample calculation for 2009 :

 The inventory turnover ratio of the company was 5.21 in 2005 which was higher
than 2006. But from 2007 has an increasing trend. So they are sold out and
restocking more and more every year after 2007.

(ii)Inventory Turnover Ratio (in days):-

YEAR 2005 2006 2007 2008 2009

Inventory turnover ratio (in
days) 70.02 104.64 91.34 78.76 75.53

Sample calculation for 2009 :

The company has taken 75.5 days to sale and restocks their inventories in 2009. Which is
much lower than 2006, 2007, 2008 but it is higher than 2005. The more the period is the 17
more it shows potential greater risk of obsolescence.
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 (iii) Total Asset Turnover Ratio:-

YEAR 2005 2006 2007 2008 2009

Total asset turnover ratio 0.33 0.21 0.28 0.31 0.30

Sample calulation of 2009:

The company has generated BDT 0.30 in very BDT 1 worth of Asset. It is lower than 2005 and
2008, but higher than 2006 and 2007. It happens because of the variation of sales and asset in
different years. That means the management is not using their asset effectively.

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 (iv) Accounts Receivable Turnover:

Accounts recievable turnover (in

times)
14
12
10
8
6 Accounts recievable
turnover (in times)
4
2
0
2005 2006 2007 2008 2009

Year 2005 2006 2007 2008 2009

Accounts receivable turnover (in
times ) 10.847 7.99251 6.09247 8.59275 12.2001

Sample Calculation of 2009

Accounts Receivable Turnover = Net Credit Sales = 1698858945 / 139249642

Average Accounts receivables = 12.2001 times

The accounts receivable turnover ratio dropped from 10.84 (2005) to 7.99 (2006) and 6.09 (2007) but
gradually started to increase in 2008 and 2009. The less the value will be the more the threat it is for the
company as it indicates a serious problem in collecting from customers. 19 Page

(V) Average collection period :

Year 2005 2006 2007 2008 2009
average collection period 33.65 45.67 59.91 42.48 29.92

Sample Calculation of 2009:

If we analyze the previous date we can say, the average collection period is decreasing.
This is good for the company because they are collecting their receivables earlier which
might help them to clear out the payments on maturity.

(vi) Operating Cycle Ratio:

Operating Cylce
160.00
140.00
120.00
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100.00
80.00
days
60.00
40.00
20.00
0.00
2005 2006 2007 2008 2009
Year 2005 2006 2007 2008 2009
103.67 150.31 151.25 121.24 105.45

Operating Cycle (in days)

Sample Calculation of 2009:

Operating cycle = Average collection period + Average age of Inventory

= 75.53 + 29.92

= 105.45 days

The operating cycle of a business is the number of days it takes to convert inventory and
receivables to cash. The more, short the operating cycle is the more it is desirable. From the data
we can see that the duration has increased drastically in the years 2006 and 2007 but gradually
fitting closer to the average by 2009.

(3)Leverage Ratio:-
(I) Debt Ratio:-

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YEAR 2005 2006 2007 2008 2009

Debt ratio 34.24% 58.89% 65.54% 38.72% 29.48%
Sample Calculation of 2009:
 In 2009 the company has 29.48% of debt of its total asset. This is neared but higher in
2005 and 2008. But it is comparatively much lower than 2006 and 2007 than means the
company is discouraging depts.

(ii) Dept to Equity ratio:

YEAR 2005 2006 2007 2008 2009

Debt to Equity ratio 52.07% 143.24% 190.18% 63.19% 41.81%

Sample Calculation of 2009:

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The company’s total capital structure in 2006 is 57% of debt & 43% of equity.

The debt equity ratio is a significant measure of solvency since a high degree of debt in the
capital structure may make it difficult for the company to meet interest charges and principal
payments at maturity. A desirable debt equity ratio depends on many variables including the
ratios of other companies in the industry, the access for further debt financing and the stability of
earnings.
 (iii) Times Interest earned ratio:

YEAR 2005 2006 2007 2008 2009

Times Interest Earned ratio 4.68 4.53 2.45 2.47 3.05

Sample Calculation of 2009:

In 2009, the company has covered its interest expense 3.05 times, which is higher than
previous two years 2008, &2007, but lower than 2005 and 2006.

(4) Profitability Ratio :

(i) Gross Profit Margin

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YEAR 2005 2006 2007 2008 2009

Gross Profit Margin 54.49% 53.08% 51.06% 54.43% 51.26%

Sample Calculation of 2009 :

In 2009 the company earned BDT 54.43 in every BDT 100 sales. This remained close
in the last five years. This is very much favorable for the company

(ii) Net Profit Margin:

YEAR 2005 2006 2007 2008 2009

Net Profit Margin 33.43% 27.41% 23.34% 27.75% 27.71%

Sample Calculation of 2009 :

In 2009 the net profit margin was 27.75% that means, the company has generated $27.75 net
profit in very BDT100 sales. This is very stable in last five years.

Return on Asset

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YEAR 2005 2006 2007 2008 2009
Return on Asset 10.97% 5.76% 6.54% 8.51% 8.42%

Sample Calculation of 2009 :

In 2009 the company’s BDT 100 worth of total asset generating BDT 8.11 of net income
which has increased than 2006 and 2007 closer to 2008 but lower than 2005.

(iii) Return On Equity

YEAR 2005 2006 2007 2008 2009

Return on equity 16.68% 14.00% 18.99% 13.89% 11.94%

Sample Calculation of 2009 :

25 Page

Return on equity is getting lower every year. This is not favorable.

(5) Stock Market Ratio:

(i) Earnings per share
YEAR 2005 2006 2007 2008 2009
Earnings per share 26.80 22.40 31.25 26.02 21.17

Sample Calculation of 2009 :

From 2005 to 2006 it dropped to 22.40 but started to increase in 2007. But again for the
subsequent two years 2008,2009 it dropped quite significantly. In 2009, the stock
holders have earns BDT21.17 for the holding per share. It is lower than previous five
years.

(ii) Book Value ratio:

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YEAR 2005 2006 2007 2008 2009
161 160 165 187 177
Book value per share

Sample Calculation of 2009 :

(iii) Price to Earnings Ratio

27 Page

YEAR 2005 2006 2007 2008 2009

Price to Earnings Ratio 14.30 21.41 31.81 48.04 51.87

Sample Calculation of 2009 :

 In 2009; the shareholders of the company were willing to pay BDT 51.87 for each Taka of
reported earnings. It has got an increasing trend in every year from 2005 to 2009.

(iv) Dividend Yield :

Dividend Yield
0.45
0.4
0.35
0.3
0.25
0.2 Dividend Yield
0.15
0.1
0.05
0
2005 2006 2007 2008 2009

YEAR 2005 2006 2007 2008 2009

0.41933 0.33363 0.16557 0.14985 0.16146
Dividend Yield

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Sample Calculation of 2009 : =
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Dividend yield = Dividends per share = 177 / 1098 = tk 0.16146

Market price per share

 (v) Dividend Payout =

Dividend Payout Ratio

9
8
7
6
5
4 Dividend Payout Ratio
3
2
1
0
2005 2006 2007 2008 2009

YEAR 2005 2006 2007 2008 2009

5.99532 7.14305 5.26667 7.19971 8.37417
Dividend Payout

Sample Calculation of 2009:

Dividend Payout Ratio = Dividend per share

Earnings per share

= 177 / 21.17

= tk 8.37417

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