Corporates ■

Corporates
Hayleys MGT Knitting Mills
Limited
Textiles/ Sri Lanka
Credit Analysis
Ratings
Security
Class
■
Current
Rating
Previous
Date
Rating
Changed
Hayleys MGT Knitting Mills Limited
Senior Unsecured
BBB+(sri) BBB+(sri)
Rating Watch...……………………………….……...None
Rating Outlook……………………………...……....Stable
Analysts
Buddhika Piyasena
+94 11 2541900
buddhika.piyasena@fitchratings.lk
Company Contact
Richard Ebell
Joint Managing Director
+94 11 2679788
Profile
Hayleys MGT Knitting Mills Limited (HMGT)
was incorporated in 1993, and is listed on the
Colombo Stock Exchange since April 2003. The
Company is the second largest knitted fabric
manufacturer in the country. Sales of HMGT are
predominantly to the local apparel manufacturers.
Its wholly-owned subsidiary, Hayleys ADC
Textiles Limited engaged in dying and finishing
of fabrics enables HMGT to provide an
integrated service. In FY04 HMGT (group)
reported sales of USD24.6m and operating profits
of USD3.1m.
Key Credit Strengths
• Growing sales to local apparel
manufacturers and direct exports
• Track record and experience of the
management
• Lower future capital expenditure possibly
resulting in a gradual reduction of longterm debt
Key Credit Concerns
• Increasing working capital requirement
• High dividend payments despite low
operating cash flows
• Thinning profit margins due to increasing
pricing pressure
• Exposure to raw material price
fluctuations
Rating Rationale
The rating reflects the position of Hayleys MGT Knitting
Mills Limited (HMGT) as the second largest knitted fabrics
manufacturer in Sri Lanka catering to mostly the large and
well-established apparel manufacturers of the country.
Further, the company has been able to increase the direct
exports, which now account for broadly 15-20% of total sales.
HMGT is the only knitted fabrics manufacturer equipped to
manufacture 100% Polyester fabrics in the country and has
seen a significant growth in sales of pure-polyester fabrics.
The recent capacity expansion enables HMGT to cater to
anticipated demand for its products in the short- to mediumterm without any significant capital expenditure. Experienced
management and equipment/ machinery of reputed makes are
amongst other positive factors.
While HMGT has achieved solid sales growth, the operating
margin has slipped due to the increased price of yarn and
intensified pricing pressure. The dismantling of the quota
system is expected to exert pressure on the entire value chain
challenging future margins. However, it is anticipated that
the local fabric manufacturers will benefit in the quota-free
environment with a much larger proportion of the fabric
requirement of the local apparel manufacturers expected to be
sourced from within the country to reduce lead-times. The
rating is constrained by the high gearing and the high working
capital intensive nature of the business. Going forward,
higher inventory requirements will expose HMGT to
variations in raw material prices in the international markets.
The relatively high dividend payout despite low/ negative
cash flows from operations is also a concern.
HMGT’s gearing measured by Debt to Equity was 147% at
end-1H05, up from 105% at FYE03 due to debt taken on to
fund the capacity expansion and the high incremental working
capital and slow equity build-up due to high earnings
distribution. Debt/ EBITDA stood at 4.0x for 1H05, but is
expected to gradually improve over the short- to mediumterm due to lower capital expenditure and improved earnings.
■
Recent Developments
HMGT increased knitted fabric manufacturing capacity by
approximately 50% during FY04 and 1H05 at a cost of
USD6.2mn. The company is expected to invest another
USD0.7mn during 2H05 to further expand knitting and
dyeing/ finishing capacity.
February 2005
www.fitchratings.lk
Corporates
■
were bought by Hayleys Limited and MAS Holdings
(Pvt) Limited. The latter is one of Sri Lanka’s
largest apparel manufacturers and a regular customer
of HMGT.
Liquidity/Debt Structure
As at end 1H05, HMGT had a total of USD16.2m in
debt (FYE04: USD13.7m), of which 86% was raised
at the parent company level. Leaving out the
overdraft and short-term loan facilities, which was
USD10.2m, 75% of HMGT’s debt is due between 25 years and 25% within a year. Net debt at end1H05 also stood at USD16.2m. Leverage measured
by gross debt/ equity increased to 147% up from
143% at FYE04. As at September 30, 2004, HMGT
had committed, undrawn credit facilities of
USD1.9mn.
■
Global Apparel and Textile Industry
Clothing and textile is a significant sector in the
global trade. In 2002, global exports of textile and
clothing amounted to Euro 353 billion, which was
nearly 6 % of the total global exports. Of this,
clothing accounted for around 60% with Euro 201
billion. With the abolition of the quota system in
end-2004, it is expected that the large retailers would
consolidate production in a few countries, creating a
challenging environment for the others.
Despite stronger earnings in FY04, the net cash flow
from operating (NCFO) activities deteriorated to –
USD572,614 from –USD385,058 as a result of
higher inventories increasing the working capital
requirement. The net free cash flow (NFCF) before
dividends was –USD2.1m compared to –USD1.5m
in FY03. HMGT made a dividend payment of
USD1.26m (FY03:USD0.885m).
Despite weak
operating cash flows arising from high incremental
working capital requirements, the company has been
declaring high dividends based on positive earnings.
■
Brief Industry Overview
Sri Lankan Apparel and Textile Industry
The Textile and Garment industry is the largest
manufacturing sector in Sri Lanka, accounting for
broadly 4.8% of gross domestic product, 40% of
industrial production and 50% of exports in 2003.
Hence, the country is highly dependent on the sector
for both export earnings and employment. Foreign
investors own a sizable proportion of the production
capacity of the country and account for a much
larger share of the exports. Foreign investments in
the sector are promoted through various tax and duty
concessions and an investor friendly regulatory
environment.
Background
Hayleys MGT was incorporated in 1993 as a
manufacturer of natural and synthetic quality knitted
fabrics. Operations commenced as a joint venture
between Hayleys Limited and MGT Samor Knitting
Mills of Melbourne of Australia. Whilst sales of
HMGT are predominantly to the local garment
manufacturers, broadly 15-20% of the sales are now
derived from direct exports. Hayleys ADC Textiles
Limited (HADC) incorporated in 1991, was brought
under HMGT as a subsidiary in mid-2001, enabling
HMGT to provide an integrated service to its
customers.
At present, Sri Lanka enjoys quota-free access to the
European Union (EU) along with certain duty
concessions under the General System Preference
scheme available from February 2004. Sri Lanka
has qualified for the EU’s GSP+ scheme that will
provide apparel manufacturers duty-free access to
the region. Further, it is also likely that the new
scheme will have relaxed rules of origin
requirements. In addition, the country also enjoys
duty free access to the member countries of the
South Asian Association for Regional Co-operation
(SAARC). The US is considering providing trade
preferences to some of the countries affected by the
Asian Tsunami, including Sri Lanka.
HMGT was listed on the Colombo Stock Exchange
through an introduction of shares in April 2003. As
per FYE04, Hayleys Limited remained the single
largest shareholder with 35.16% of equityownership. The effective holding of the Hayleys
group of companies is 41.2%. The Australian
promoters maintain their interest through Shantiro
Proprietary Ltd, Ocean Faith International Limited
and Mr. Oaul Edward Paradisco with 15.83%, 3.15%
and 0.70% of equity ownership respectively.
The large majority of the sector exports comprise of
garments, with all other remaining items taken in
total accounting for less than 10% of the exports.
The second largest shareholder is National
Development Bank of Sri Lanka owning 26.87% of
shares in issue. Several venture capital and fund
management companies divested their interests
subsequent to the listing of shares. These shares
Hayleys MGT Knitting Mills Limited: February 2005
2
Corporates
total knitted garment exporters, 8% account for
broadly 75% of the value of the exports.
Composition of Garment and
Textile Exports - 2003
Other made
up textile
articles
2%
Garments
92%
The industry lacks important backward linkages. As
a result, approximately 80% of the raw material
requirement is imported. The domestic textile
production was largely affected by the removal of
import duties on textile imports in 1997. Such duty
exemptions were introduced to improve the
competitiveness of the local apparel manufactures in
international markets, but resulted in the demise of
the local textile manufacturing industry. Having to
import a large portion of raw material, the local
apparel manufacturers are experiencing longer-lead
times, which is unfavourable in an increasingly
competitive environment.
Woven
fabrics
2%
Other
2%
Yarn
1%
Knitted/Croc
heted
fabrics
1%
Source: Company Reports
Competitiveness of Sri Lankan Apparel
Manufacturers
in
the
Quota-Free
Environment
Sri Lanka’s share of the global apparel exports is
approximately 1%. Broadly 95% of the country’s
produce is exported, in the main, to USA and EU.
With the dismantling of quotas in end-2004, China is
expected to be the “supplier of choice” for many
labels and retailers. However, as importers are
unlikely to depend on any one single country for
strategic reasons, other low-cost countries, such as
India will also benefit.
In the quota-free
environment, the main strength of Sri Lanka would
be its ability to provide high-quality garments at
competitive prices. Further, Sri Lanka is also
blessed by an industry structure capable of servicing
leading international brands and favourable labour
standards, an important factor considered by
importers in sourcing products. However, closure of
many apparel manufacturing operations is
anticipated, with some of the manufacturing capacity
and employees of such factories being absorbed by
the others. Sri Lanka will specialise in certain
product categories such as intimates, active and
sportswear etc. to become a reliable supplier of
quality garments at attractive prices in these selected
segments.
Textile & Garment Exports
Increasing Value-Addition
Value of Exports (RHS)
Unit Value Index (LHS)
Volume Index (LHS)
Index
180
160
250
140
200
120
100
150
80
100
60
40
50
20
0
1999
300
2000
2001
2002
0
2003
Source: Central Bank of Sri Lanka
In 2003, export earnings from apparel and textile
exports grew by 6.2% over the preceding year, but
fell short of expectations due to slower recovery of
the economies of importing nations and increased
competition from low-cost producer countries. The
export earnings growth stated above is also aided by
the increase in higher value exports. The value per
unit index, which rose by 4.55% in 2003, has
registered an average 8% year-on-year growth from
1999. Further, the net export earnings from the
textile and garment sector also rose with the
increased value addition in the sector.
The lack of backward linkages will result in longer
lead-times and in certain instances higher costs.
Despite shortening of lead-time over the last few
years, further improvements are required to
effectively compete in the post-2004 environment.
The government expects to setup a backward
integration zone to promote investments in this
important sector while encouraging the revival of
dormant textile and milling factories.
There are 800-900 apparel manufacturers in Sri
Lanka, dispersed across various regions of the
country. However, the output is highly concentrated
among a few large-scale producers, where the top
18% of manufacturers account for approximately
78% of the value of exports of the sector. Of the
The degree of dependency on a few large markets
viz US and EU (which accounts for broadly 95% of
apparel and textile exports) is another weakness of
the local garment industry. Further, imports to US is
concentrated in categories where other low-cost
suppliers are constrained by quota restrictions,
Hayleys MGT Knitting Mills Limited: February 2005
3
Corporates
manufacturers with the local knitted fabric mills.
Further, the mills with strong parent companies
engaged in the production/ supply of knitted fabrics
have the advantage of providing a broader product
range by sourcing the locally unavailable product
categories from their affiliated companies.
meaning stiff competition in the quota-free
environment. Lack of direct marketing abilities
(dependency on buying offices) is yet an issue for
certain apparel manufacturers. The sector in general
will be required to improve labour productivity and
invest in modern technology to effectively compete
in the future. The scale of operations, level of
integration and design capabilities are other
important areas to invest in to survive in the post2004 environment.
The abolition of the quota system in end-2004 is
likely to benefit the local textile manufactures as
apparel manufacturers would be required to cutdown on lead times, which can be partly achieved by
sourcing quality fabrics locally. Further, the apparel
makers can attend to quality related issues
immediately, while at the same time reducing the
working capital requirement.
The increasing
pressure on apparel makers to provide an integrated
service may result in future investments in the
sector, resulting in a larger proportion of the fabric
requirement/ value addition being supplied locally.
The removal of the quota system will increase the
purchasing power of buyers, exerting pressure on the
entire value chain reducing prices and in turn profit
margins. Following the global trends, manufacturers
may also settle for lower prices in exchange for
higher take-off.
■
Knitted Fabrics Market
The country’s clothing sector has seen increasing
integration with the setting up of a number of knitted
fabric manufacturing plants and several large scale
apparel manufacturers taking equity ownership in
these.
Though the local knitted fabrics
manufacturers now provide approx. 35-40% of the
requirement of the local apparel manufacturers, the
majority is still imported from internationally
competitive suppliers.
■
Business Overview
HMGT is in the manufacturing of knitted fabrics,
chiefly catering to the local apparel manufacturers.
Its fully-owned subsidiary Hayleys ADC Textiles
Limited (HADC) provides dyeing and finishing
services almost-exclusively to HMGT. FY04 was
particularly a good year for the company which
witnessed a 44% growth in sales. Both sales to local
apparel manufacturers and direct exports contributed
to this substantial improvement in the top-line,
registering 29% and 206% growth respectively over
FY03. The proportion of directs sales was 18% in
FY04 compared to 8.4% in the preceding financial
year. Volume of fabric sold (kgs) increased by 36%
while the value per unit also increased by 5% over
FY03, partially aided by the relatively high-value
direct exports.
The largest manufacturer of knitted fabrics in Sri
Lanka is Ocean Lanka (Pvt) Limited, a joint venture
between Fountain Set (Holdings) Limited – one of
the worlds leading manufacturers and suppliers of
knitted fabrics and several large scale local apparel
manufacturers. Other players include (in order of
size/ capacity) HMGT, Textured Jersey (a joint
venture between Textured Jersey of U.K., Mast
Industries of USA and several large scale local
apparel manufacturers). Singapore’s South Asia
Textiles was the latest entrant, which acquired
Pugoda Textile Mills (renamed South Asia Textiles
Lanka Limited). During FY04, all players expanded
production capacity to gear up for increasing
demand for knitted fabrics.
Sales Growth
Direct Exports
Sales to Germent Exporters
USD '000
30,000
18%
25,000
Factors that contribute to sourcing knitted fabrics
from overseas include the unavailability of certain
types of products/ local value addition, cost
advantages due to large scale production and in
certain instances the relationships with ultimate
buyers of finished merchandise. The backward
integration provided by investing in fabric mills
places those apparel manufacturers at an advantage
in canvassing for large orders. Apart from share
ownership, cost, lead-times, production capacity and
historical business relationships are the key factors
that determine the orders placed by the apparel
20,000
6%
6%
3%
8%
94%
94%
97%
92%
82%
FY00
FY01
FY02
FY03
FY04
15,000
10,000
5,000
0
Hayleys MGT Knitting Mills Limited: February 2005
4
Corporates
The operating profitability of HMGT slipped to 13%
(from 15% in FY03) chiefly as a result of increased
price of yarn. However, the pressure on profitability
was partially mitigated by higher margins enjoyed
on certain direct exports.
fabrics and hence the only local manufacturer of
Polar Fleece. The company has been heavily
investing in machinery to produce Polar Fleece
fabrics to increase the production capacity. In
1HFY05 sale of Polar Fleece fabrics accounted for
broadly 30% of overall sales.
Sales Growth
HMGT has 26 Flat-knitting machines and 165
Circular-Knitting machines of reputed makes. The
recent expansion increased the production capacity
by broadly 50%. Presently, on average 65% of the
capacity is being utilised, while 90% utilisation is
experienced at HADC requiring an expansion of the
dyeing and finishing facilities to cope up with higher
production levels at HMGT. The company expects
to reach 75% utilisation at HMGT in the short- to
medium-term.
Net Profit
Operating Profit Margin
USD '000
3,000
16%
14%
2,500
12%
2,000
10%
1,500
8%
6%
1,000
4%
500
2%
0
Installed Capacity and Utilization
0%
FY00
FY01
FY02
FY03
FYE04
FY04
30,000
65%
Planned
Additions
– FY05
2,000
22,000
90%
-
Source: Company Reports
Knitting (kg/day)
Dyeing and
Finishing (kg/day)
Production
HMGT presently manufactures Single Jersey,
Interlock, Rib, Fleece, Polar Fleece and Pique
varieties utilising Weft knitting method and employs
both Circular and Flat technologies. The company
produces 100% cotton, 100% polyester and polycotton blends. In addition, it is also capable of
producing other value-added products including
Lycra-based fabrics.
Printed fabrics are also
provided on request for which the company obtains
the services of a commission printer. The company
recently invested in a Polyester fabric printing
facility enabling the company to carry out a sizeable
proportion of printing in-house.
Source: Company Reports
Yarn is mainly imported from Indonesia and India.
Raw material accounts for broadly 75% of the costs.
The entire yarn requirement is imported. The
company was able to reduce energy related costs in
FY04 due to the introduction of more energy
efficient machinery. Over 75% of the costs are
incurred in USD, which has minimised the impact on
profitability from foreign exchange rate fluctuations.
Sales and Marketing
The company’s marketing strategy comprise of a
local marketing team that promotes its products
among the local apparel manufacturers and also
canvasses direct export orders. Cloverbrooke (UK)
since FY04 has been directing new business to
HMGT such as the Umbro’s England Away order.
The Umbro order is expected to strengthen the
prospects of HMGT to obtain further sales to
internationally recognised sportswear manufacturers.
The company has already received new orders from
Umbro for the England-Home range and for a
number of other Football clubs and from Nike.
Revenue Break-up: FY04
Collars &
Bands
2%
Single
Jersey
39%
Fleece
14%
Interlock
14%
Pique
8%
Rib
15%
Source: Company Reports
%
Utilisation
Locally, the company’s exposure to any single
buyers is not high, the largest being approximately
15%. In FY04, broadly 90% of the fabrics supplied
to the local apparel manufacturers were for the
manufacture of garments to the EU (quota free since
2001 for Sri Lanka and Several other LCDs), while
the remainder were for non-quota categories for the
Polar Fleece
8%
Presently HMGT is the only local knitted fabrics
manufacture geared to produce 100% Polyester
Hayleys MGT Knitting Mills Limited: February 2005
5
Corporates
FYE11 and FYE12 respectively. Historically, the
company has distributed broadly 50% of its annual
net income as dividends. It is expected that a high
payout would be maintained in the future as the
dividends are exempt of taxation in the hands of
shareholders under the BOI agreement, resulting in
low free-cash flows.
US market.
HMGT’s local customers largely
comprise of reputed and well-established large-scale
apparel manufacturers. In addition, the company
enjoys accreditation form several leading retailers
including Marks & Spencer, British Home Stores,
Mother Care, NEXT, Tesco and Sainsbury. Of the
direct export clients, a sizeable proportion places
orders with HMGT on a regular basis.
■
1HFY05
HMGT’s figures for the first-half of FY05 show an
improvement over the corresponding period of the
preceding year.
However, high yarn prices
continued to pressure margins, due to which
operating profitability slipped further. The cotton
yarn prices are expected to fall, easing pressure on
profitability. The management expects the top-line
to be USD34mn for the full financial year.
Financial Analysis
Accounting Issues
The consolidated financial statements of the HMGT
group have been prepared in accordance with the Sri
Lankan Accounting Standards. In April 2002, the
group adopted USD as the measurement and
reporting currency in order to give a fairer
representation of operations.
1HFY05 Performance vs. 1HFY04
Earnings
Sales improved in FY04 by 44% over FY03
reflecting the substantial sales volume increases in
both direct and indirect exports. However, Net
Income increase was less at 36% over the preceding
financial year due to lower operating profitability,
which slipped from 14.9% to 12.6% in FY04 chiefly
due to increased yarn prices. The increase in raw
material prices could not be fully translated into
selling prices due to stiff competition from suppliers
and the local apparel manufacturers being pressured
to minimise costs in order to be more competitive.
(USD ‘000)
Revenue
Operating Profit
Oper. Profit Margin (%)
PBT
EBITDA
EBITDA Margin (%)
FY04
24,585
43.8
3,574
14.5
3,080
12.5
12.2
FY03
17,099
5.7
2,952
17.3
2,564
15.0
9.7
1HFY05
1HFY04
15,631
1,686
10.8
1,486
2,024
12.9
10,277
1,290
12.5
871
1,490
14.5
Source: Company Reports
Cash Flow and Coverage
Despite a substantial growth in operating profits, the
cash flow generated from operating activities
reduced further due to a significant increase in the
working capital. While receivables increased in line
with the growth in sales, year-end inventories almost
doubled in order to gear up for the planned increased
in production in FY05.
Earnings
(USD ‘000)
Revenue
% Growth in Revenue
EBITDA
EBITDA (%)
EBIT
EBIT (%)
Capex/ Revenue (%)
Change
(%)
52.1
30.7
(14.1)
70.6
35.8
(10.7)
FY02
16,175
1.4
1,736
10.7
1,540
9.5
15.0
Cash Flow and Coverages
(USD ‘000)
WC Change
Net Cash Flow Generated
by Operations
Net Finance Charges
Dividends
Capex
Free Cash Flow (FCF)*
Source: Company Reports
With the dismantling of the quota system in end2004, it is expected that pressure on the entire valuechain will result in lower raw material prices, which
include both HMGT’s raw material inputs and also
its manufactured products. Margins could however
slip going forward, where bottom-line growth has to
be achieved purely on volume growth. HMGT
targets to maintain direct exports at around 15% of
the total sales.
Capex/ Depreciation
FY04
(3,722)
FY03
(2,689)
FY02
(1,279)
(573)
(385)
107
(551)
(1,267)
(2,996)
(4,835)
(710)
(886)
(1,660)
(2,931)
(427)
(667)
(665)
(1,225)
3.2
2.0
1.1
Note: * FCF=Operating Cash Flows less Capex and Dividends
Source: Company Reports
The capacity expansion at HMGT also resulted in a
heavy out flow of funds on capital expenditure.
Dividends will continue to be a significant
proportion of the cash flows generated from
operations.
Both HMGT and HADC being BOI (Board of
Investment of Sri Lanka) registered companies, their
operational incomes are exempt from taxation till
Hayleys MGT Knitting Mills Limited: February 2005
6
Corporates
1HFY05
Inventories reduced in the 1HFY05 easing pressure
on cash flow from operations.
However, a
substantial fall in creditors increased the working
capital requirement by USD1.3mn. During the
period, capital expenditure amounted to USD3.2mn,
which was entirely debt financed. Production of
more Polyester-based fabrics will exert pressure on
the working capital cycle of HMGT due to little or
no credit being available for Polyester yarn
purchases.
Capital expenditure on HMGT and HADC in 2H05
is estimated at USD 705k. These would be entirely
financed by debt. The group’s short-term debt will
continue to increase in line with the increasing
working capital requirement. However, given the
relatively low planned future capital expenditure, the
long-term debt of the group is expected to gradually
reduce.
Outlook
The profitability and the cash flow generation
ability of the company are largely dependent on
its competitiveness, long-term prospects of the
apparel manufacturing industry of the country
and raw material price movements. Though the
dismantling of the quotas in end-2004 is not
likely to have a significant negative impact on
sales, it will result in a more competitive
environment resulting in thinner margins. The
working capital cycle is likely to increase having
to maintain a higher inventory level to shorten
lead-times. Production of more polyester-based
fabrics would also exert pressure on the working
capital requirement, with low or no credit
available on polyester yarn purchases. Higher
capacity utilization and the possible increase in
direct exports could positively affect creditor
protection measures.
Debt
As at end 1H05, HMGT had a total of USD16.2mn
debt (FYE03: USD8.8mn), of which USD13.9mn
(86%) was raised at the parent company level. The
group has committed, undrawn credit facilities of
USD1.9mn at September 30, 2004.
Debt Maturity Profile : 1H05
Finance Leases
Long-term Loans
Overdrafts/ S-T Loans
USD '000
14,000
12,000
10,000
8,000
6,000
4,000
Positive Triggers
2,000
Fitch does not anticipate an upgrade in the shortterm. However, a decrease in leverage through
repayment of debt and/ or equity infusions
coupled with improved net free cash flow
generation capability could positively affect the
current rating.
0
Less than 1
Year
1-2 Years
2-5 Years
More than 5
Years
The group’s debt consists of finance leases (1H15:
USD0.2mn), long-term loans (1H05: USD5.8mn)
and overdrafts/ Short-term credit facilities (1H005:
USD10.3mn). Approximately two-thirds of the
group’s debt is denominated in USD.
Negative Triggers
A persistent deterioration of the net cash flow
generation capacity worsening HMGT’s debt
repayment ability and possibly requiring further
leveraging and/or a substantial increase in debt to
finance new investments and working capital,
deteriorating the overall creditor protection
measures.
Capital Structure
(USD ‘000)
Overdraft/Short-term Debt
Long-term Debt
Gross Debt
Cash & Cash
Equivalents
Net Debt
Debt/ EBITDA
Debt/ CFFOBI
Equity
Debt/ Equity
1H05
10,259
5,988
16,247
FYE04
10,325
3,342
13,667
FYE03
6,847
1,925
8,771
20
130
35
16,227
4.0
9.2
11,063
1.47
13,538
3.8
(621.2)
9,577
1.43
8,736
3.0
27.0
8,315
1.05
.
Note: * Annualised
Source: Company Reports
Hayleys MGT Knitting Mills Limited: February 2005
7
Corporates
Financial Summary – Hayleys MGT Knitting Mills Limited
(USD ‘000)
31 Mar 2000
31 Mar 2001
31 Mar 2002
31 Mar 2003
31 Mar 2004
Income Statement
Revenues
17,885
15,949
16,175
17,099
EBITDA
971
957
1,736
2,952
24,585
3,574
EBIT
787
769
1,540
2,564
3,080
(22)
CFFOBI*
n/a
n/a
534
325
Interest Expense
485
359
472
710
551
Pretax Income
302
410
1,068
1,854
2,529
Net Income
302
410
1,068
1,854
2,529
Dividend Payment
263
309
667
886
1,267
Balance Sheet
Cash & Equivalents
1
1
149
35
130
Net Fixed Assets
3,454
3,598
11,133
11,976
14,045
Total Assets
8,344
7,794
16,991
19,983
27,788
Total Debt
4,003
1,892
5,985
8,771
13,667
Net Debt
4,002
1,891
5,836
8,736
13,538
Total Equity
3,904
3,933
7,346
8,315
9,577
1,736
2,952
3,574
427
710
551
0
0
0
2,163
3,662
4,125
Cash Flow
EBITDA
-Cash Interest Paid
-Cash Taxes Paid
After-tax Cash Flow
-Capital Expenditures
Not Available
(665)
(1,660)
(2,996)
(1,279)
(2,689)
(3,722)
Net Free Cash Flow before dividends
219
(688)
(2,593)
Cash Dividends
667
886
1,267
-Changes in Working Capital
Profitability Ratios
EBITDA/Revenues (%)
5.4%
6.0%
10.7%
17.3%
14.5%
Net Income/Revenues (%)
1.7%
2.6%
6.6%
10.8%
10.3%
Return on Equity (%)
7.7%
10.4%
14.5%
22.3%
26.4%
EBITDA/Gross Interest Expense (x)
2.0
2.7
3.7
4.2
6.5
EBITDA/Net Interest Expense (x)
2.0
2.7
3.7
4.2
6.5
Short-term Activity Ratios (days)
Average Inventory
64
79
114
125
Average Receivables Outstanding
40
42
41
38
Average Payables Outstanding
24
42
34
38
Average Cash Cycle
81
79
121
125
Leverage Ratios
Total Debt/EBITDA (x)
4.1
2.0
3.4
3.0
3.8
Total Debt/CFFOBI* (x)
n/a
n/a
11.2
27.0
(619.1)
Total Debt/(CFFOBI - Dividend) (x)
n/a
n/a
(45.1)
(15.6)
(10.6)
102.5%
48.1%
81.5%
105.5%
142.7%
Total Debt/ Equity
* CFFOBI - Cash Flow From Operations Before Interest
Copyright © 2005 by Fitch Ratings Lanka Ltd. #15-04 East Tower, World Trade Centre Colombo 01
Telephone: + 94 11 2541900. Fax: + 94 11 2541903. Fitch Ratings Lanka Ltd has used due care in the preparation of this document. Our information has been obtained from sources we
consider to be reliable but its accuracy or completeness is not guaranteed. Fitch Ratings Lanka Ltd shall owe no liability whatsoever to any person for any loss or damage caused by or
resulting from any error in such information. None of the information in this document may be copied or otherwise reproduced, stored or disseminated in whole or in part in any form or
by any means whatsoever by any persons without Fitch Ratings Lanka Ltd’s prior written consent. Our reports and ratings constitute opinions, not recommendations to buy or to sell.
Hayleys MGT Knitting Mills Limited: February 2005
8