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KEY

 FINANCIAL  RISKS  
Sekar  Pu)h  Djarot  
Irvin  Ni)he  Zebua  
Aris  Suseno  
Bayu  Agasthya  
Hendry  Sulivian  
Hobby  Rajiman  
Xiao  Benyi  
CASH FLOW
DRIVER(S)
External Drivers!   Internal Drivers!
§  Buying Power! §  Sales Forecasting!
§  Consumer Dispensable Income! §  Inventory Management!
§  Disposable Income! §  Inventory Turnover, GMROI!
§  The Growth of Mid Class §  Gross Profit Margin and Net
Population! Profit Margin!
§  Interest Rate (BI Rate) ! §  Branding & Discounting
§  Rupiah Exchange Rate! Promotion!
§  VAT Subsidize and Import Tax! §  CAPEX for New Outlets!
§  Tariff! §  Same Store Growth Rate
(SSG)!
FINANCIAL
4500
PERFORMANCE
 
4000

3500

3000

2500

2000

1500

1000

500

0
2007 2008 2009 3Q2010

! Sales COGS Gross Profit

•  Incline trend of Sales with sales growth in average is at 20% ; !


•  Meanwhile average COGS growth in 25%. !
•  Resulting in a declining trend of Gross Profit !
FINANCIAL PERFORMANCE  

Profitability Ratios!
• Net revenue in the first nine months of 2010 was Rp 3.4 trillion ($377 million), up 12 percent compared
to the same period in 2009.!
•  Nevertheless, Gross Profit Margin shown a declining trend since Sales growth in average is only 20%
while average COGS growth in average is higher by 5%. !
•  Operating margin illustrates consistent high operating expenses with an average of only 8.5%OPM !
•  Stop acquiring new brands & focus on rollng out existing brands. Tremendous scale advantage &
operational leverage should expect to improve margin in years to come.!
•  ROE is expected to lower with an increase of approximately 10% of share holder s equity from 1288 in
2009 to 1415 in 3Q2010.!
• ROA is slightly lower due to higher total assets !
FINANCIAL PERFORMANCE
2.50
 

2.00

1.50

1.00

0.50

-
2007 2008 2009 3Q2010
Current Ratio Quick Ratio Inventory to net working capital Cash Ratio

Liquidity Ratios!
•  Company s relatively lack of liquidity. Current ratio significantly drop from 2.15x (2007) to an
average of only 1.42x on the following years; 1.40x(2008), 1.45x(2009) & 1.42x(3Q2010)!
•  The quick ratio also shown low liquidity trend to cover immediate liabilities with an average of
0.68x; 1.11x(2007), 0.58x(2008), 0.55x (2009) & 0.51 (3Q2010)!
•  Concerning cash ratio to cover liabilities due within 1 year with an average of only 0.23x; 0.48x
(2007), 0.20x(2008), 0.15x(2009) & 0.09x(0q2010)!
•  Inventory to net working capital ratio shown an inclining trend with most of company s asset
comes seats in inventory. 0.90x(2007), 2.03x(2008), 2.01x(2009) & 2.16x(3Q2010). !
!
FINANCIAL PERFORMANCE
8.00  
7.00

6.00

5.00

4.00

3.00

2.00

1.00

-
2007 2008 2009 3Q2010
D/E ratio Interest Coverage (x)

Debt service capability / Solvency Ratio!


•  Company has reduced exposure to yen loan from 18.3bn Yen in 2009 to 4.8bn Yen on 2010.
This will reduce volatility in earnings due to changes in fair value. !
• Lower balance sheet risk: 3Q2010 debt level has been significantly lower àD/E ratio down from
1.45x in 2009 to 1.08x in 2010!
•  Gearing improved from 18% (2009) to 14% (2010) due to loan repayment à less vulnerable to
economic downturn to continue servicing its debt. A greater proportion of equity provides a
cushion and perceived as a measure of improving financial strength!
•  Interest coverage is expected to improved by end of year with EBITDA is 12% higher by Q3
compared to same period in 2009. !
!
FINANCIAL PERFORMANCE Inventory Turnover (days)
 
140
129
120 119

100 102
95

80

60

40

20

-
2007 2008 2009 3Q2010

Inventory Turnover (days)

Activity Ratio!
Poor inventory is a concern at 111days(avg) vs Ramayana at 50days (avg) & Aces Hardware at
60days (avg). !
Improvement in working capital should improve cash flow & support margin expansion !
Total Asset turnover is still relatively low with an average of 1.01x but with an increasing trend;!
KEY FINANCIAL RISKS
•  Financial Risks on Liquidity Aspects!
"A company's ability to turn short-term assets into cash to cover
debts when creditors or suppliers are seeking payment. !
•  MAP condition on Liquidity Aspects!
–  Has maintain in the same level current ratio; Firm try to
maintain their coverage ability.!
–  Slight shift on cash ratio; decline on cash is parallel towards
inventory level increase.!
–  Firm tries to anticipates year-end shopping season by
reaching the inventory level that is needed & at the same time
maintain their liquidity risk which is shown on their coverage
ability.!
–  Firm need to notice bond interest payments & suppliers
payment terms.!
KEY FINANCIAL RISKS
•  Financial Risk on Activity Aspects!
"A company's ability to convert different accounts within their
balance sheets into cash or sales.!
•  MAP conditions on Activity Aspects!
–  Inventory turnover decreases; Firm has accumulate an higher
inventory level at year end.!
–  Asset turnover lags behind; expenditures on acquiring new
floor space.!
–  Firm rely on new outlets for their cash creation & face a
market risk of competing on new grounds.!
–  Firm need to notice the payback on the new outlets; feasibility
study is highly emphasized. !
KEY FINANCIAL RISKS
•  Financial Risk on Profitability Aspects!
"A company's ability to generate earnings as compared to its
expenses and other relevant costs incurred during a specific
period of time.!
•  MAP conditions on Profitability Aspects!
–  Gross Profit levels hasn't pick up the pace; Sales growth not
enough to keep pace on COGS.!
–  Has maintain the same level of Operating Margin; firm has
almost reach the same operating income of last year-end
levels.!
–  Firm will assume to generate a considerable returns if their
strategy to unload inventory at year end works; Sales
forecast, Product & Market line decisions has an affect on
mitigating market risk.!
KEY FINANCIAL RISKS
•  Financial Risk on Leverage Aspects!
"A company s ability to manage the methods of financing its
activities and company s mix of operating costs.!
•  MAP conditions on Leverage Aspects!
–  Debt to Equity Ratio shows a decrease; equity raise from
previous corporate actions.!
–  Gearing Ratio shows parallel to Debt to Equity; firm try to shift
their source of debt from banks to bonds.!
–  Firm try to anticipate increase on interest rate risk; fixed
interest from bond issuance give firm a better calculation of
future cost.!
!
!
HOW IS
RETAIL
MAP
FEUD
HANDLING THE COMPETITION?
1.  Always identify & manage their risk, such political & social
risk , terrorist and separatist movements, labor activism &
unrest, economic downturn, changes in interest & exchange
rate, re-negotiated or nullification of existing concessions
and contract, Changes in taxation policies.!
2.  Keep focused on developing existing brand portfolio to
maximize revenue.!
3.  Always controls expenses and pursue operation efficiencies
in all area to optimize margins.!
4.  Fully committed to investing in human resources by giving
opportunities and training to optimize their fullest potential.!
HOW ISMAPHANDLING
THE COMPETITION?

5.  Always participate in many Corporate Social


Responsibility initiatives.!
6.  Keep innovative to maintain as well as enhance its
market share. Market research is an important also to
catch up customers awareness of brands, trends and
life style. !
7.  Reducing Long Term Liabilities, especially in foreign
currency by using internal cash or loan in rupiah. By
using Foreign Long Term Liabilities, it will reduce
expense in hedging currency.!