Business Finance & Quantitative Analysis

Qantas Airways Ausenco Ltd

Report by Babur Farrukh Fredrick Saad Zafar

Company Profile
Founded in 1920 2nd oldest airline industry in the world Notable for its outstanding record for safety Placed 2nd best in that respect in 2006 Covers 182 destinations in 44 countries Currently employees 32,500 people

Business and Investment

Primary Business is transportation of passengers Divided into three groups. Commercial group:- Includes sales and distribution, commercial planning and alliances Customer and Marketing:- Includes customer experience, cabin crew, in-flight services and marketing Operations Group:- Comprises of engineering, airports, catering, flight operations, operations planning and control and Qantas Aviation Services.

Flight route Operating around 5,600 flights a week to 59 cities and regional destinations in all states and mainland territories Fleets Operates a fleet of 288 aircraft, comprising of Boeing 747s, 767s, 737s and 717s, Airbus A380s, A330s and A320s, Bombardier Dash 8s and Bombardier Q400s; Qantas Link, Jetstar Airways

Strategies
5 year strategic plan. Changes are expected to strip tens of millions of dollars of operating costs These include Cutting :1000 jobs from its 36000 workforce Shifting its base closer to Asia Changing its fleet plan by buying lots of the fuel efficient Airbus Seeking more strategic alliances

SWOT Analysis

Strengths Covers all the continents like Africa, Oceania, Asia, Europe and the Americas Far ahead in experience, operational accountability, technology and services. Entertainment for Economy class as well! Cost effective Environment friendly!!! (Green planet plan) Show of goodwill at times of emergencies

SWOT Analysis
Weaknesses The children travelling unaccompanied issue. Flight inefficiency in technicality due to high percentage of air accidents. Regular delays on long route direct flights due to environment constraints.

SWOT Analysis
Opportunity Special care for regular flyers. Surprise Gifts and Incentives; Silver, Gold and Platinum Leases on new planes to cater for more passengers and to further expand their reach to other countries. New club with priority check-in for Executives. Business related and Personal Activities.

SWOT Analysis
Threat Strong Response to Global price increase (Price of ticket increased by 50% for 10% increase in fuel). Scandals!!!! (Extortion..) Accused of price fixing in 2006.

Company Overview
Australian based company
Started operations in 1991 Head office in Perth

Major Business
Product and services
Engineering services

Project Management Services

Brand Idea
Clients,Communities,Environment
Famous Brands I. Ausenco PSI, II. Ausenco Sandwell III. Ausenco Vector.

Major strategies
Innovation
Acquisition Diversification One brand name

SWOT Analysis
Strengths
Diversification business operations

Strong brand position

Acquisition of Papua New Guinea based engineering company(PNG Kramar group) Expanding market share in sector

Strong Liquidity.

SWOT Analysis cont

Weaknesses
Declining operating margin Low return on equity

Legal proceedings.

SWOT Analysis cont

Opportunities
Geographical spread Energy efficiency initiatives

Expansion of service offerings

SWOT Analysis cont

Threats
Foreign currency Risk Stringent regulations Intense competition

IPO Analysis
Qantas Airways were issued IPO on 31 July 1995 Ausenco Ltd were issued IPO on 15 June 2006

IPO Requirements
Regulatory Background Listing Criteria Overseas Companies Shareholder Requirements Listing Procedure and Timetable Documentation Requirements Financial Information Parties Involved Listing Costs Corporate Governance Requirements Continuing Obligations

Reason for IPO

For Additional Working Capital to help the company in funding Ausencos Growth Strategy Allow some of the existing shareholders to realize part of their investment in Ausenco 25.9 million Shares in Ausenco. Each share worth $1.00 Expected to raise $26 Million

Details of the offer

Prospectus date Offer opens Employee Priority Offer closes Offer closes Anticipated date of allotment Shareholding statements expected to be dispatched Anticipated commencement of ASX trading 5 May 2006 9am on 19 May 2006 5pm on 31 May 2006 5pm on 7 June 2006 9 June 2006 13 June 2006 15 June 2006

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Profitability ratios
Return on Total Assets: Return on Total Assets is a ratio that measures how well a company is using its assets to generate profits. Gross Profit Margin: The gross profit margin provides an indication of how well a company is setting its product's prices and controlling its production costs. Net Profit Margin: The Net Profit Margin ratio shows a company's after tax profit per dollar of sales.

Ausenco
Profitability Year/ Ratio 2004 2005 2007 2008

Return on total assets

Gross profit margin Net profit Margin

30.2%
10.5% 10.1%

32.1%
3.15% 15.4%

23.35%
14.66% 11.73%

13.10%
14.26% 9.57%

Qantas Airways
Profitability
Year/ Ratio Return on total assets Gross profit margin 9.64% 12.29% 1994 2.62% 1995 3.75% 4.11% 12.34% 4.00% 12.60% 1.52% 11.13% 1.76% 10.97% 2.28% 11.39% 1996 1997 2009 2010 2011

Net profit Margin

3.16%

2.51%

3.25%

3.46%

0.98%

1.24%

1.76%

Liquidity Ratios
Current Ratio: Current ratio is the number of times current assets cover currents liabilities. It is a measure of the companys solvency or its ability to meet current liabilities as they fall due. Quick Ratio: The current ratio may be refined by removing inventories, which is the least liquid current assets, from current assets before dividing by current liabilities

Ausenco
Liquidity Year/ Ratio Current Ratio Acid Test Ratio 2004 1.61 1.60 2005 1.67 1.66 2007 1.35 1.25 2008 1.13 0.93

Qantas Airways
Liquidity Year/ Ratio Current Ratio 1994 0.71325 1995 0.74896 1996 0.74456 1997 0.66358 2009 0.88859 2010 0.93447 2011 0.90473

Acid Test Ratio

0.65257

0.69965

0.64856

0.62356

0.85136

0.88335

0.84507

Gearing Ratio
Debt Equity Ratios: The debt-equity ratio is another leverage ratio that compares a company's total liabilities to its total shareholders' equity. This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. Interest Cover ratio: The interest coverage ratio is a measure of how well a company can meet its interest-payment obligations

Ausenco
Gearing

2004
Debt Equity Ratio Interest Cover Ratio 1.19% ---

2005
1.67% ---

2007 2.34% -18.14

2008 62.06% 41.66

Qantas Airways
Gearing 1994 Debt Equity Ratios 140.02% 1995 134.01% 1996 127.79% 1997 121.22% 2009 95.46% 2010 95.60% 2011 98.05%

Interest Cover Ratio

7.5495

2.9312

4.5365

5.3707

10.409

4.16

3.9646

Efficiency Ratio
Asset Turnover: - Commonly, the higher a firms total asset turnover, the more efficient its assets have been utilized. Inventory Turnover: - This ratio shows how many times a company sells and replaces its inventory over a period Debtors Turnover: - It is a component of current assets and as such has direct influence on working capital position (liquidity) of the business

Ausenco
Efficiency Year/ Ratio Asset turnover Inventory Turnover 0.12% 2004 2005 0.00% 0.00% 2007 197.75% 2893.69% 2008 130.42% 1605.80%

Qantas Airways
Efficiency Year/ Ratio Asset turnover Inventory Turnover Debtors turnover 1994 79.40% 6227.7% 11.12% 1995 80.23% 6207% 11.52% 1996 82.18% 5736.8% 11.48% 1997 78.71% 5351.2% 11.14% 2009 72.58% 5820.8% 5.66% 2010 69.17% 4317.2% 5.93% 2011 71.41% 4003.7% 5.63%

Investment Ratio
Earning per share: is used for calculation of company's profit allocated to each outstanding share of common stock. EPS measure of profitability and it allows shareholders to compare one year's earnings with that of another year Price/Book value (P/B): is the ratio of market price of a company's shares (share price) over its book value of equity. The book value of equity, in turn, is the value of a company's assets expressed on the balance sheet.

Ausenco
Investment 2004 2005 2007 Earnings per share Price/Book value ----0 0 187.1% 22.44 2008 23.4% 1.1

Qantas Airways
Investment 1994 Earnings per share Price/Book value 0 0 1995 0 0 1996 14.54 0.91 1997 14.85 1.29 2009 2.60 0.79 2010 10.60 0.83 2011 1.90 0.68

Qantas Stock Prices

Year

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Stock Price

4.28

16.45

2.91

4.46

3.18

3.44

3.52

3.65

5.14

3.71

1.85

2.85

2.09

Ausenco Ltd Stock Prices

Year

2006

2007

2008

2009

2010

2011

Stock Price

1.64

8.70

15.04

4.24

2.21

2.90

Conclusion
Qantas Airways
Employees Revenue Aircrafts

Ausenco Ltd
Construction machineries Employees Outsourcing of Machineries Providing Engineering consultancy

Thank you for attention!