Question

Assignment 2:

Choose TWO public listed companies of Bursa Malaysia and access their financial statements for the year ended 2019.

1. Write the introduction of the selected companies.

2. Discuss the disclosure of the capital structure of both companies in their financial statements.

3. Analyse how the capital structure affects the performance of both companies.

4. Write a summary of the assignment.

Answer 1

Answer :

Choose TWO public listed companies of Bursa Malaysia and access their financial statements for the year ended 2019.

1.      Write the introduction of the selected companies.

Tenaga Nasional Berhad -

• As the largest electricity utility in Malaysia, we are a key contributor to Nation building.
• In recent years, we have also embarked on our sustainability agenda through efforts such as renewable energy and other environmental as well as social initiatives as we seek to add value to all our stakeholders.
• We believe these activities will not only take Tenaga Nasional Berhad (TNB) into the future, but also continue to grow our business in the long term as we transform ourselves into to be one of the world's top 10 global utility by 2025

Axiata Group Berhad

• As one of the leading regional telecommunications groups, Axiata is driven by our purpose of Advancing Asia through digital innovation and technology. In order to capitalise on opportunities from the global digital revolution, Axiata has evolved from a holding entity with a portfolio of pure-play mobile assets.
• Today Operating Companies (OpCos) across our footprint provide digital telco services to mobile, home and enterprise customers; digital businesses offer digital financial services, digital advertising and digital platform; and our towerco provides infrastructure solutions and services.
• With more than 12,9761 employees from diverse nationalities and cultures forming our dynamic talent base, we are guided by our Uncompromising Integrity, Exceptional Performance (UI.EP) values in all that we do.
• We are committed to creating value-driven outcomes for our stakeholders in line with our 4P Goals.

2.      Discuss the disclosure of the capital structure of both companies in their financial statements.

• Capital structure is as below
• 3.      Analyse how the capital structure affects the performance of both companies.
• As seen above, Tenaga Nasional Berhad has 43.38% of capital from Debt and has a relatively lower borrowings rate than equity return. It therefore impacts the company positively by leveraging the funds
• Axiata Group Berhad has lower debt as a % of capital since it has very high borrowing cost. This impacts the ROE negatively

• 4.      What is the summary of the assignment?

  Tenaga Nasional Berhad - The company is having ROE of 7.64% and Borrowings cost of 7.45%. It is therefore leveraging borrowings to multiply its earnings

  Axiata Group Berhad - The company is having ROE of 8.17 % and Borrowings cost of 18.91 %. It can therefore delevarage its borrowings to multiply its earnings