earnings before interest, taxes, depreciation, and amortization (EBITDA). When pressed aboutthe reason for using this number, an analyst will say, “EBITDA approximates operating cashflow.” Why don’t analysts use the real cash flow numbers? Because information from the cashflow statement is not yet ingrained in the analytical tradition—but it will be. In fact, one way toimpress others that you are a modern, well-trained, future-looking professional is to becomeproficient in preparing and analyzing cash flow statements.Page 6
Financial Accounting IVCompany’s Introduction Dutch Lady Milk Industries Berhad (doing business as Dutch Lady Malaysia) (MYX: 3026) is amanufacturer of cow milk and dairy products in Malaysia since the 1960s. It was previouslyunder Royal FrieslandFoods, a Netherlands-based multinational co-operative. Dutch LadyMalaysia is currently a subsidiary of FrieslandCampina, which was formed in December 2008 asa result of the merger between FrieslandFoods and Campina. Its current products includegrowing up milk, UHT milk, pasteurised milk, sterilised milk, family powdered milk, low fat and0% fat drinking yoghurt, and low fat yoghurt.The company started as Pacific Milk Industries (Malaya) Sdn Bhd on 28 May 1963 where it wascommissioned to produce sweetened condensed milk in its factory in Petaling Jaya, becomingFrieslandFoods’ first production facility outside the Netherlands. It was incorporated as a privatejoint-stock limited company and started with the production of only condensed milk, beforeexpanding into dairy products. Prior to the expansion, many of its products began to bedistributed to surrounding countries in Asia and Oceania.On 24 September 1968, the company became the first milk company to be listed on the countriesStock Exchanges of Kuala Lumpur and Singapore; and by 1975, changing its name to DutchBaby Milk Industries (Malaya) Berhad. Following the company modernisation, it changed itsname to Dutch Lady Milk Industries Berhad in 2000 and have been using the ultra-high-temperature processing (UHT) and packaging technology since 1970s to produce milk in thecountry.The company continued to progressively manufacture and introduce new products into theMalaysian market – sterilised milk were locally produced and sold in plastic bottles in 1983,production of chilled milk products started in 1986, and fruit yoghurt and growing up milk wereintroduced into the market in 1988. In 2011, Dutch Lady Malaysia was reported as the marketshare leader in the growing up milk segment – with the Dutch Lady brand holding 40% ofnational market share.Its financial record for first quarter of 2012 showed a 9% increase in revenue year-on-year, witha net profit of RM27.5 million (US$8.72 million). Despite a slowdown in the Malaysian dairyPage 7
Financial Accounting IVindustry, Dutch Lady Malaysia was reported to be on track to achieve its RM1 billion sales targetfor 2013.