Financial Statements Review
By Shi Ji
SIA Financial Performance Analysis
Consolidated Profit and Loss Account
Balance Sheet As at 31 March 2006
Consolidated Cash Flow Statements
Company performance and situation review
SIA Financial Statements Reflects of FRS102 Applications
Description of FRS102
Reflects of FRS102 in SIA Financial Statements
Appendix B: Copy of the SIA financial statements
It is to select Singapore Airlines (The Company) to review and evaluate its financial performance and make special reference on a selected accounting policy - FRS102 (Share-based Payment) for a UOB Financial & Management Accounting Assignment.
This article is separated into 2 parts:
Part One: SIA Financial Performance Analysis
Part Two: SIA Financial Statements Reflects of FRS102 Applications
Singapore Airline (SIA) was setup in 1972 in the “red dot” country and now it is a world-class brand transport service provider. It consists of in-flight and ground service subsidiaries, including SilkAir, Singapore Airlines, Tradewinds Tour and Travel as well as the SIA Engineering, SIA Cargo and SATS. As a very well international respected firm, SIA now expand its network by almost 90 destinations covering almost 40 countries.
SIA Financial Performance Analysis
This analysis is based on the “AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2006” (As in Appendix B) with a yearly comparison between 2005-6 and 2004-5. It will analysis P/L account, balance sheet, cash flow and its financial ratios.
1 Consolidated Profit and Loss Account
Comparing year 2005-6 to year 2004-5, SIA has managed to gain revenue from 12,013M(million) to 13,341M (+11%). Meanwhile its fuel cost was increased from 2,693M to 4,240M, almost 57% higher comparing to last year. Fuel cost is a major operating cost, about 35% of its total 12,128M expenditure. It results an increased expenditure and reduced profits. Even the company made efforts by reducing Aircraft maintenance and overhaul cost from 598M to 319M (-47%), but it still can’t balance the significant increment of fuel cost. The operating profit reduced from 1,317M to 1,213M, (-8%). Profit attributable to equity holders also reduced from 1352M to 1241M (-8%).
2 Balance Sheet As at 31 March 2006
Due to the main reason of share capital transferred from reserves, the share capital increased from 609M to 1,203M, almost doubled. Also by FRS 39 (Financial Instruments: Recognition and Measurement) requirements, SIA adopted of 183M in the Fair value reserve item. Profit contributed 746M. So the Total Equity increased from 12,645M to 13,867M (+9.7%). Meanwhile the long-term liabilities reduced from 2,333M to 1,824M (-21.8).
The company remains a stable fixed asset with 15,525M. Current assets increased by Trade debtors and Investments, 20% higher than last year reaching 5,938M. Current Liabilities are also increased by higher Sales in advance of carriage, current tax payable, and trade creditors and Finance lease commitments-repayable within one year. As a result it hit 4843M (+24%).
As both current assets and current liabilities are increased, the net current asset remains stable, with result of 1,095M (+5%).
3 Consolidated Cash Flow Statements
Net cash provided by operating activities dropped from 2,787M to 2,310M (-17%), due to the higher operating cost trigged by high fuel price.
About Cash flow from investing activities, the capital expenditure is about the same, changed from 2,095M to 2,059M (-1.7%). Proceeds from disposal of aircraft and other fixed assets dropped...
References: Martin Fridson & Fernando Alvarez, “Financial Statement analysis – A Practitioner’s Guide” (Third edition), 2002
Pauline Weetman, “Financial & management Accounting – AN INTRODUCTION” (Third Edition), 2003
Finance Reporting Standards: Share-based Payment, FRS 102, http://www.ccdg.gov.sg
Deloitte: A Guide to FRS 102 Share-based Payment, http://www.deloitte.com, Jan 2005.
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