MDA Analyst

MacDonald, Dettwiler and Associates Ltd.
MacDonald, Dettwiler and Associates Ltd.- Financial and Strategic Analysis

Review

Reference Code: GDTC31090FSA
Page 1

MacDonald, Dettwiler and Associates Ltd. - Financial and Strategic Analysis
Review

Publication Date: 24-J ul-2014


Company Snapshot

Key Information
MacDonald, Dettwiler and Associates Ltd., Key
Information
Web Address www.mdacorporation.com
Financial year-end December
Number of Employees 4,800
TSE MDA
Source : GlobalData

Key Ratios
MacDonald, Dettwiler and Associates Ltd., Key Ratios
P/E 28.17
Return on Equity (%) 13.19
Debt/Equity (%) 0.75
Operating profit margin (%) 9.77
Dividend Yield 0.02
Note: Above ratios are based on share price as of 18-J ul-2014
Source : GlobalData

Share Data
MacDonald, Dettwiler and Associates Ltd., Share Data
Share Price (CAD) as on
18-J ul-2014
84.30
EPS (CAD) 3
Market Cap (million CAD) 3,045
Enterprise Value (million CAD) 3,663
Shares Outstanding (million) 36
Source : GlobalData

Performance Chart
MacDonald, Dettwiler and Associates Ltd., Performance
Chart (2009 - 2013)
Source : GlobalData
Company Overview

MacDonald, Dettwiler and Associates Ltd. (MDA) is a
communications and information company. It principally
engages in providing electronic solutions to a range of
commercial and government organizations. It offers an
array of surveillance, intelligence, communication, and
advanced technology solutions. The product line includes
satellites, satellite sub-systems, spacecraft subsystems,
earth observation ground systems defense information
systems and others. It also offers integrated information
solutions and space mission solutions. Geographically, the
company operates in three major regions, namely, the
Americas, Europe, and Asia-Pacific.
SWOT Analysis

MacDonald, Dettwiler and Associates Ltd., SWOT Analysis
Strengths Weaknesses

Broad Customer Base

Strong Order Backlog

Niche Service Portfolio

Reliance on Subcontractors

Debt Obligations

Opportunities Threats

Contract Development

Federal Governments
Spending

Acquisitions and New
Development Projects

Intense Competition

Rapid Technological Changes

Stringent Regulations

Source : GlobalData

Financial Performance

The company reported revenues of (Canadian Dollars)
CAD1,819 million for the fiscal year ended December
2013 (FY2013), compared to a revenue of CAD879.9
million in FY2012. In FY2013, the companys operating
margin was 9.8%, compared to an operating margin of
15.6% in FY2012. In FY2013, the company recorded a
net margin of 5.8%, compared to a net margin of 9.5%
in FY2012.
The company reported revenues of CAD492.6 million
for the first quarter ended March 2014, an increase of
3.3% over the previous quarter.


Review

Page 2

MacDonald, Dettwiler and Associates Ltd. - Key Facts
MacDonald, Dettwiler and Associates Ltd., Key Facts
Corporate Address
13800 Commerce Parkway,
Richmond, BC, V6V 2J 3, Canada
Ticker Symbol, Stock
Exchange
MDA [Toronto Stock Exchange]
Telephone
+1 604 2783411
No. of Employees
4,800
Fax
+1 604 2312768
Fiscal Year End
December
URL
www.mdacorporation.com
Revenue (in USD Million)
1766.00
Industry
Aerospace and Defense,
Technology and
Telecommunication
Revenue (in CAD Million)
1818.98
Locations
Canada, Germany, India, Ireland, United Kingdom, United States
Source : GlobalData

Review

Page 3

MacDonald, Dettwiler and Associates Ltd. - Business Description

MacDonald, Dettwiler and Associates Ltd. (MDA) is a provider of advanced electronic information solutions to government
and business organizations worldwide. The company offers an extensive portfolio of communications and information
solutions, especially focused on surveillance and intelligence sector. Geographically, the company operates in the United
States, Canada, Europe, Australia and Asia.

The company operates through two reportable segments: Communications and Surveillance and Intelligence Systems.

Under Communications, the company designs, manufactures and integrates satellites, satellite sub-systems and advanced
antennas. It caters to a range of commercial and government clientele. MDAs solutions meet diverse customer
requirements of broadband internet service to the home, mobile video and internet service. It also supports the
broadcasting feeds of television and radio distribution, phone service, direct-to-home television broadcast, satellite radio,
telecommunications backhaul and trunking. It also supports civil and defense communications, weather and environmental
monitoring and air traffic control. In addition, the company produces spacecraft subsystems and integrates government and
other add-on missions into commercial satellites. The companys advanced technologies cater to markets such as manned
and unmanned space exploration, robotic surgery and nuclear reactor maintenance.

Under Surveillance and Intelligence, MDA offers ground-based and space-based information solutions that offer operational
support for government, including military and civilian, as well as commercial customers across the world. The companys
information solutions include earth observation ground systems, transportation management systems, defense information
systems and airborne surveillance systems. It also provides geospatial services and space based platforms for earth
observation and advanced solutions for space exploration missions. In addition, the company offers different mission
sub-systems and support services. The company provides geospatial services to the US through its subsidiary, MDA
Geospatial Services Inc. Its products and services support in environmental monitoring, resource mapping, ice
reconnaissance, offshore oil and gas exploration, maritime surveillance, and disaster management.

The company also undertakes business engineering, systems engineering, program management, systems integration,
hardware and software development, and ongoing support services to meet the customers complete and demanding
operational requirements. Geographically, the company operates in three major regions, namely, the Americas, Europe,
and Asia-Pacific. It has a network of 11 offices across the United States, Canada and internationally. For the fiscal year
ended December 2012, United States accounted for 29.16% of the companys revenue, followed by Canada (25.46%),
Europe (23.07%), Australia (11.48%), Asia (7.65%) and others (3.17%).

In July 2013, the company signed a multi-million dollar contract with France-based Collecte Localisation Satellites (CLS)
providing a RADARSAT-2 ground station as well as three years of RADARSAT information. In June 2013, the company
received a $3m contract from Boeing Satellite Systems for providing an advanced technology solution. In May 2013, the
company received a CAD10.8m contract from Canadas Department of National Defense (DND) for providing five years of
operational support to a space-based surveillance solution, which offer accurate surveillance information to DND. It also
signed a contract to provide advanced technology solutions to Tesat-Spacecom GmbH and Co. KG.

In April 2013, the company signed contracts worth of CAD3.2m with the Government of Canadas Department of National
Defense (DND) for providing operations for the east and west coast RADARSAT-2 ground systems, which support the
deliverables under the Polar Epsilon project. It also signed a contract of $1.7m with the U.S. National Fish and Wildlife
Foundation (NFWF) for detecting illegal discharges of oil from vessels operating in the U.S. Exclusive Economic Zone
(EEZ). In March 2013, the company signed a contract with the Canadian Space Agency for providing sustaining
engineering and operational support for its robotic elements on the International Space Station (ISS). MDA also signed a
multi-million dollar contract with Accent Micro Technologies Inc. (AMTI) for providing digital elevation products using
RADARSAT-2 information to the University of the Philippines. In February 2013, the company signed two contracts with
DigitalGlobe Inc. It also a signed a $4.3m contract with OGSystems (OGS) for developing a prototype surveillance solution
for the U.S. Army Corps of Engineers, Army Geospatial Center (AGC). In January 2013, MDA received CAD2.6m contract
from NASAs Johnson Space Center for the extension of support to Robotic Work Station on the International Space
Station. It also signed a contract amendment with the Commonwealth of Australia for providing support for Australian
Defense Force. The company also signed a $706m contract with the Canadian Space Agency for building and launching
initial operations for the RADARSAT Constellation Mission (RCM).

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Page 4

MacDonald, Dettwiler and Associates Ltd. - Major Products and Services
MDA is engaged in providing advanced information solutions. The company's key products and services include the
following:

MacDonald, Dettwiler and Associates Ltd., Major Products and Services
Products:
Communications:
Satellites
Satellite Sub-Systems
Advanced Antennas
Spacecraft Subsystems
Surveillance and Intelligence Systems:
Earth Observation Ground Systems
Defense Information Systems
Airborne Surveillance Systems
Transportation Management Systems
Advanced Robotic Systems
Nuclear Automation Systems
Actuators
Electronic Filing Systems
Services:
Geospatial Solutions
Integrated Information Solutions
Space Missions Solutions
Information Management
Source : GlobalData


Review

Page 5

MacDonald, Dettwiler and Associates Ltd. - History

MacDonald, Dettwiler and Associates Ltd., History
2012 Acquisitions/Mergers/Takeovers In November, the company completed the acquisition of Space Systems/Loral,
Inc. (SS/L).

2012 Contracts/Agreements In April, the company signed a contract with Sierra Nevada Corporation for
providing an engineering concept for a communications solution of NASAs
Commercial Crew Development program.

2012 Contracts/Agreements In April, the company signed a contract worth of CAD12.5m for providing
multiple advanced technology solutions for a telecommunications satellite.

2012 Contracts/Agreements In April, the company signed a three year contract for providing RADARSAT-2
information to the Netherlands Space Office (NSO).

2012 Contracts/Agreements In December, the company signed a contract worth of CAD100m with Israel
Aerospace Industries Ltd. for supplying the communications payload solution
for the AMOS-6 satellite to be launched in 2015.

2012 Contracts/Agreements In February, the company signed a Master Research Collaboration Agreement
with the Childrens National Medical Center (Childrens National) in
Washington, D.C. for developing advanced medical robotics and smart tools
to improve the quality of patient outcomes for childrens surgeries.

2012 Contracts/Agreements In J anuary, the company received a contract of CAD5m for providing five
advanced technology solutions to EADS Astrium.

2012 Contracts/Agreements In January, the company signed a $7.6m contract with the U.S. Federal
Aviation Administration (FAA) for upgrading the FAAs Instrument Procedure
Development System (IPDS) and for providing operational support to the
currently fielded version of the system.

2012 Contracts/Agreements In J anuary, the company signed a CAD3m agreement with EarthView Image
Inc., for expanding RADARSAT distribution in China.

2012 Contracts/Agreements In July, the company signed a contract amendment of CAD11.9m for increasing
its provision of RADARSAT-2 satellite imagery to Europes Global Monitoring
for Environment and Security (GMES) program.

2012 Contracts/Agreements In J uly, the company signed a contract with United Kingdom-based Avanti
Communications Group plc for providing a Ka-band broadband
communications payload solution for their HYLAS 3 satellite.

2012 Contracts/Agreements In J une, the company signed a contract for providing training support to the
British Army in using Unmanned Aircraft Systems' information.

2012 Contracts/Agreements In J une, the company signed an agreement to acquire 100% of Space
Systems/Loral, Inc. (SS/L).

2012 Contracts/Agreements In March, the company signed a contract amendment worth CAD14.7m with
the Canadian Space Agency (CSA) for providing logistics and sustaining
engineering requirements to the Mobile Servicing System.

2012 Contracts/Agreements In March, the company signed the Memorandum of Understanding (MOU) with
the Canadian Space Agency (CSA) and the J apan Aerospace Exploration
Agency (J AXA) for pursuing cooperation in the area of space.

2012 Contracts/Agreements In May, the company signed a contract with SNC-Lavalin Defence Programs

Review

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Inc. for extending operational services for up to eight years to the Canadian
Department of National Defences twelve Kingston-class Maritime Coastal
Defence Vessels.

2012 Contracts/Agreements In October, the company received a follow-on contract of $9.8m for mapping
soil characterization and terrain globally.

2012 Contracts/Agreements In October, the company signed a multi-million dollar contract from
DigitalGlobe, Inc. for developing a solution that allows two of the U.S. Air
Forces (USAF) mobile ground systems to receive and process imagery from
WorldView-1 and WorldView-2 satellites.

2012 Contracts/Agreements In September, the company signed a contract of CAD12.7m for providing
multiple advanced technology solutions for a telecommunications satellite.

2012 Contracts/Agreements In September, the company signed a multi-million dollar sole source delivery
order under its Indefinite Delivery/Indefinite Quantity contract with the National
Geospatial-Intelligence Agency.

2012 Contracts/Agreements In September, the company signed two contract amendments with the
Commonwealth of Australia.

2011 Contracts/Agreements In April, the company received a contract from the U.S. Federal Aviation
Administration (FAA) to upgrade the FAAs Instrument Procedure Development
System for $6m. MDA received a contract from Boeing Space and Intelligence
Systems to provide advanced technology solutions for 702HP communications
satellites.

2011 Contracts/Agreements In August, the company signed a contract with the Centre for Surgical Invention
and Innovation (CSii) to develop an advanced technology solution for use in
early detection and treatment of breast cancer for CAD5.6m.MDA also received
a contract worth CAD40m, to provide advanced technology solutions to support
satellite communications and information service.

2011 Contracts/Agreements In December, the company signed an agreement with Lockheed Martin Space
Systems Company to deliver advanced technology solutions to NASA Goddard
Space Flight Centre (NASA).

2011 Contracts/Agreements In March, the company received a contract from Canadas Department of
National Defence (DND) to operate and maintain the Sapphire System for
CAD11.7m. It also signed a contract worth CAD4.7m, with The Hospital for Sick
Children (SickKids) in Toronto, for the design and development of an advanced
technology solution for paediatric surgery.

2011 Contracts/Agreements In September, the company and IMRIS Inc. entered into an agreement for the
final phases of collaborative development of IMRIS's MR guided surgical robot.

2011 Contracts/Agreements In September, the company received a contract from an undisclosed customer
in the U.S. to continue production of the Global Land Cover product.

2010 Asset Disposal The company sold of its Property Information business, located in the U.S. and
Europe to TPG Capital for $850m.

2010 Contracts/Agreements The company signed a contract with the U.S. Air Force (USAF) Eagle Vision
Program to upgrade its mobile ground system software.

2010 Contracts/Agreements The company emtered into a Partnership With UK Land Registry to provide
advanced information solution for commercial developments.

2010 Contracts/Agreements The company received a CAD6.4m (CAD) contract extension from NASA.


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2010 Contracts/Agreements The company received a contract to provide EADS Astrium with four advanced
technology solutions to be integrated into the Astra satellites $13m.

2010 Contracts/Agreements The company received a contract from Orbital Sciences Corporation to provide
to provide Cygnus cargo delivery spacecraft to the International Space Station
(ISS) for $2.4m.

2010 Contracts/Agreements The company received a contracts from the U.S. Federal Aviation
Administration (FAA) to provide additional upgrades to the Instrument
Procedure Development System for $6.8m.

2010 Contracts/Agreements The company received a service contract to provide geographic information to
the Kingdom of Saudi worth for $8m.

2010 Contracts/Agreements The company signed a contract with an international customer for the use
RADARSAT-2 data to produce advanced derived information to support the
customer's requirements for CAD7m.

2010 Contracts/Agreements The company signed a contract with Boeing Satellite and Intelligence Systems,
Inc. (Boeing) to provide advanced technology solutions for network and media
services.

2010 Contracts/Agreements The company signed a contract with the Russian Radio Research and
Development Institute (NIIR) to provide key sub-systems for the Express AM5
and Express AM6 satellites for $45m.

2010 Contracts/Agreements The company signed a contract with the US National Geospatial-Intelligence
Agency (NGA) for $3.8m.

2010 Contracts/Agreements The company signed a contract worth with the Canadian Space Agency (CSA)
to provide advanced technology solutions for CSA's Exploration Surface
Mobility program for CAD6m.

2010 Contracts/Agreements The subsidiary of the company, Marshall & Swift / Boeckh (MSB), entered into
a partnership agreement with Vertafore, to provide software and information to
insurance distribution channels.

2010 New Products/Services the company launched a new geospatial product, the National Urban Change
Indicator.

2009 Contracts/Agreements The company booked contract for further support of the Mobile Servicing
System for the International Space Station.

2009 Contracts/Agreements The company got a contract from major surveillance service.

2009 Contracts/Agreements The company received follow-on contracts from the Federal Aviation
Administration to continue modernization of flight route design solution.

2009 Contracts/Agreements The company signed a contract amendment for Canada's CP140 program.

2009 Contracts/Agreements The company signed a contract from a major U.S. Insurance Carrier.

2009 Contracts/Agreements The company signed a contract to deliver the national communications satellite
system of Ukraine.

2009 Contracts/Agreements The company won $200m contract in Russian market.

2009 New Products/Services The company launched new value added services for legal professionals in
England & Wales.


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1969 Incorporation/Establishment MacDonald Dettwiler and Associates Ltd. (MDA) was established.

Source : GlobalData

Review

Page 9

MacDonald, Dettwiler and Associates Ltd. - SWOT Analysis

SWOT Analysis - Overview
MDA is a provider of system- and product-based advanced information solutions to government and business organizations
worldwide. Broad range of niche services and broad customer base of the company offers it with competitive advantage
over its peers. However, dependence on subcontractors and debt obligations are the areas for concern for MDA. Its growth
could be limited due to the high competition and rapid technological changes. Nevertheless, new contracts and federal
spending provides growth opportunities to the company.

MacDonald, Dettwiler and Associates Ltd. - Strengths
Strength - Broad Customer Base
MDA has a broad customer base, which ensures strong top line performance. The companys information products
segment includes customers from various sectors such as, surveillance, intelligence and communication sector. MDA
serves its customers through 11 offices located throughout, US, Canada and others. Customers for the its information
systems solutions include the Canadian Space Agency; Canadian Department of National Defense; NASA; U.S. Air Force;
U.S. FAA; various government departments in Canada, the US; the European Space Agency; Russian Radio Research
and Development Institute; and blue-chip aerospace contractors such as the Boeing Company, Thales Alenia Space,
EADS Astrium, GeoEye Inc., and DigitalGlobe, Inc. Accordingly, it also continually monitors industry trends and the status
of its customers to offer them the latest products and to safeguard its investment. It focuses on diverse customer groups,
and works closely with them, as a part of its strategy to minimize the risks from changes in economic and customer
preferences.

Strength - Strong Order Backlog
The company has a strong order backlog, which ensures a steady revenue stream for the company, going forward. The
companys consolidated order backlog stood at CAD2.2 billion in 2012, as compared to CAD805m in 2011. MDA's strong
backlog strengthens its revenue stream under the current economic downturn. Order backlog does not include the
substantial build phase of the RADARSAT Constellation Mission, which is continuously funded by the Canadian
government. It also excludes unexercised contract options and potential orders under indefinite delivery/indefinite quantity
contracts with the U.S. National Geospatial Intelligence Agency to provide additional information derived from
RADARSAT-2 for the safety of maritime navigation.

Strength - Niche Service Portfolio
MDA offers ground-based and space-based information solutions that support the operational needs of government, both
military and civilian, and commercial customers worldwide. Its business encompasses Earth observation ground systems,
defense information systems, airborne surveillance systems, transportation management systems, geospatial services,
Earth observation missions and space exploration missions. MDAs ground-based information solutions are used by
government and commercial customers worldwide for a broad range of applications in the surveillance and intelligence
sector such as land use planning, resource management, environmental monitoring, and defence-related surveillance. It
assists defense departments, national security authorities and public safety agencies by providing information solutions that
help manage the deployment of mobile assets such as unmanned aerial vehicles, maritime vessels, and airplanes. MDA
also develops advanced, reconfigurable trainers that enable personnel training via computer-simulated environments. Its
space-based information solutions business includes radar and small satellite information missions, satellite systems and
sub-systems, advanced space robotic solutions, and space related engineering services. The satellite solutions include
large scale projects for Earth observation, including Canadas RADARSAT-1 and RADARSAT-2 satellites. MDA also offers
turn-key small satellite solutions which are driven by business case or end user requirements, and span applications for
Earth observation, surveillance of space, information delivery and scientific research. MDA is also a supplier of commercial
satellite payloads, systems and subsystems for communication satellites.

MacDonald, Dettwiler and Associates Ltd. - Weaknesses
Weakness - Reliance on Subcontractors
MDA depends upon subcontractors for completion of contracts for which the company is the prime contractor. The
company outsources numerous components of its Information Products business to third parties located in the UK. MDA
appoints subcontractors on the basis of a bid or negotiated process, as per the requirements. If one or more of its
subcontractors increase price in subcontracts with variable pricing or are not able to deliver the products in time or the
quality of product is not as per the requirements, such a situation could lead to loss of contract and monetary loss.
Furthermore, if the company is not able to replace subcontractors in time and if the pricing is not according to the
companys terms, it could have a material adverse effect on its business, results of operations and financial condition.


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Weakness - Debt Obligations
For the fiscal year 2012, MDA recorded total debt of CAD847.66m, as compared to CAD105.68m in 2011. Its total
long-term debt was nearly CAD799.45m. The companys debt to equity ratio was 318.59% in 2012 as compared to 44.51%
in 2011. This could impair its ability to obtain financing for working capital, capital expenditure or general corporate
purposes, especially if the ratings assigned to its debt securities by rating organizations were revised downward. It could
restrict the flexibility of the company in responding to changing market conditions and make it more vulnerable during times
of slowdown. Another major consequence of the debt is that the company would need to allocate a substantial portion of
the cash flow from operations to pay the principal and interest on debt, thereby reducing funds, which could be used for
expansion through acquisitions, expansion of product offerings and for marketing.

MacDonald, Dettwiler and Associates Ltd. - Opportunities
Opportunity - Contract Development
The company continues to sign new agreements and contracts, which could provide it constant growth opportunities. In
July 2013, the company signed a multi-million dollar contract with France-based Collecte Localisation Satellites (CLS)
providing a RADARSAT-2 ground station as well as three years of RADARSAT information. It also received a $3m contract
from Boeing Satellite Systems for providing an advanced technology solution. In May 2013, the company received a
CAD10.8m contract from Canadas Department of National Defense (DND) for providing five years of operational support to
a space-based surveillance solution, which offer accurate surveillance information to DND. In April 2013, the company
signed contracts worth of CAD3.2m with the Government of Canadas Department of National Defense (DND) for providing
operations for the east and west coast RADARSAT-2 ground systems, which support the deliverables under the Polar
Epsilon project. In January 2013, MDA company also signed a $706m contract with the Canadian Space Agency for
building and launching initial operations for the RADARSAT Constellation Mission (RCM). In December 2012, the company
signed a contract worth of CAD100m with Israel Aerospace Industries Ltd. for supplying the communications payload
solution for the AMOS-6 satellite to be launched in 2015. In October 2012, the company was selected as a key participant
to support the U.S. Defense Advanced Research Projects Agency (DARPA) Phoenix Program. These contracts will help
the company to maintain a steady revenue stream in future.

Opportunity - Federal Governments Spending
MDA mainly caters to US federal government and allied agencies. It is the largest consumer of services and solutions in the
US. The federal governments spending is expected to remain robust over the next several years, driven principally by
national and homeland security programs and the need for sophisticated intelligence gathering and information sharing
activities in world. The federal government spending on information technology forecasted to reach $91 billion in fiscal year
2016. The Department of Defense is the largest purchaser of services and solutions in the federal government. For federal
fiscal year 2013, the US administration submitted a defense budget request of $525 billion, excluding $88 billion for
Overseas Contingency Operations (OCO). For federal fiscal year 2012, the US administration submitted a defense budget
of $671 billion, including $118 billion for OCO. The intelligence community is another significant source of the company's
revenue base. The establishment of US Cyber Command would also result in accelerated execution and spending. Such
increase spending of US federal government would allow the company obtains more number of contracts.

Opportunity - Acquisitions and New Development Projects
Strategic acquisitions and new projects initiatives undertaken by the company helps it to provide additional new services to
its customers besides enhancing its market presence. In November 2012, MDA acquired 100% interest in Space
Systems/Loral, Inc. for $774m from Loral Space & Communications Inc. SS/L is the global market leader in providing
commercial communications satellites. It is headquartered in Palo Alto, California. The acquisition is expected to transform
MDA into a major player in commercial communications besides increasing operational base in the US market. The
Committee on Foreign Investment in the United States (CFIUS) has cleared the deal in September 2012, for any
unresolved national security concerns with respect to the transaction. Such strategic acquisitions contribute to the overall
growth of the company.

MacDonald, Dettwiler and Associates Ltd. - Threats
Threat - Intense Competition
MDA operates in a high competitive and niche market environment. The company faces competition from both domestic
and international markets. Competition in the information solutions market is highly diverse and includes aerospace and
defense contractors such as General Dynamics, Raytheon Corp., Orbital Sciences Corp., Loral Space & Communications,
Lockheed Martin Corp., and others in the US, and European companies such as Alcatel-Lucent, Thales Alenia Space, and
EADS Astrium. Its Geospatial Services operations faces stiff competition from other data and information providers such as
Spot Image, DigitalGlobe Inc., and GeoEye Inc. MDA's radar products compete with products offered by Infoterra GmbHs
Terrasar-X satellite and Telespazios COSMO-SkyMed satellite data. Inability to compete successfully may hamper
company's growth plans, thus losing market share to peers.

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Threat - Rapid Technological Changes
The company's systems and solutions are largely based on evolving technologies, which are characterized by rapid
changes, thereby affecting its business operations. To compete effectively with its peers, MDA should continually introduce
new communications systems based on new platforms that meet and exceed the customers requirements. It also needs to
be in-line with the market expectations related to surveillance and intelligence systems for defense and space programs.
The introduction of products using new technologies or the adoption of new industry standards by competitors can make
companys existing products, or products under development, obsolete or unmarketable. Inability to study the evolving
technological landscape may impact its competitive position. Failure of the company to develop and introduce new products
and services could have material negative impact on its business.

Threat - Stringent Regulations
MDAs business is regulated by numerous domestic and international laws. The company provides services to Canadian
and United States Federal government as well as allied federal and state agencies. Its business is being regulated by
various laws that include United States Defense and intelligence laws, cyber security policies and Information technology
acts. MDA business is also regulated by various laws and regulations, including regulations related to patents, and Corrupt
Practices Act. In case of non compliance with laws and regulations, the company could face fines, penalties, debarment, or
suspension from receiving additional contracts.

NOTE:
* Sector average represents top companies within the specified sector
The above strategic analysis is based on in-house research and reflects the publishers opinion only

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MacDonald, Dettwiler and Associates Ltd. - Key Competitors

MacDonald, Dettwiler and Associates Ltd., Key Competitors
Name Headquarters
Alcatel-Lucent France
ANSYS, Inc. United States
DigitalGlobe Inc. United States
General Dynamics Canada Ltd. Canada
GeoEye Inc. United States
Intergraph Corporation United States
Lockheed Martin Corporation United States
Loral Space & Communications Inc. United States
Orbital Sciences Corporation United States
Telespazio SpA Italy
GlobalData

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Page 13

MacDonald, Dettwiler and Associates Ltd. - Key Employees

MacDonald, Dettwiler and Associates Ltd., Key Employees
Name Job Title Board Level Since Age
Daniel E. Friedmann
Chief Executive Officer, Director,
President
Executive Board

1999 56
Alan W. J ebson Director Non Executive Board 2006 61
Brian C. Bentz Director Non Executive Board 2006 69
Dennis H. Chookaszian Director Non Executive Board 2005 68
Fares F. Salloum Director Non Executive Board 2003 63
Brian G. Kenning Director Non Executive Board 2006
Robert L. Phillips Chairman Non Executive Board 2005 62
Thomas S. Chambers Director Non Executive Board 2005 67
Anil Wirasekara
Chief Financial Officer,
Executive Vice President
Senior Management

1996
Source : GlobalData


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MacDonald, Dettwiler and Associates Ltd. - Key Employee Biographies

MacDonald, Dettwiler and Associates Ltd., Key Employee Biographies

Daniel E. Friedmann
J ob Title: Chief Executive Officer, Director, President
Board Level: Executive Board
Since: 1999
Age: 56

Mr. Friedmann has been the president, the chief executive officer and a director
of the company since 1999. He held various positions in the company, including
engineering operations, sales and marketing and as the chief operating officer.

Robert L. Phillips
J ob Title: Chairman
Board Level: Non Executive Board
Since: 2005
Age: 62

Mr. Phillips has been the chairman of the company since 2005. Prior to this, he
served as the president and the chief executive officer at BCR Group till 2004.
Prior to joining BCR, he served as the executive vice president, business
development and strategy for MacMillan Bloedel Ltd. and held several positions
at PTI Group and Dreco Energy Services Ltd. Currently Mr. Phillips is a director
of several corporations, including Canadian Western Bank, Epcor Utilities Inc.,
Precision Drilling Corporation, Axia NetMedia Corporation, and West Fraser
Timber Co. Ltd.

Anil Wirasekara
J ob Title: Chief Financial Officer, Executive Vice
President
Board Level: Senior Management
Since: 1996

Mr. Anil Wirasekara has been the chief financial officer and the executive vice
president of Macdonald, Dettwiler & Associates Ltd. since 1996. He joined the
company in 1992. Prior to joining the company, Mr. Wirasekara held a variety of
financial management positions with a multi-national organization and served
with the Sri Lanka office of Ernst & Young.
Source : GlobalData

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Page 15

MacDonald, Dettwiler and Associates Ltd. - Company Statement

A statement from Management's Discussion and Analysis is given below. The statement has been taken from the company's 2012
annual report.

MDA is a global communications and information company providing operational solutions to commercial and government organizations
worldwide. MDA's business is focused on markets and customers with strong repeat business potential, principally in the
Communications sector and the Surveillance and Intelligence sector. In addition, the Company conducts a significant amount of
advanced technology development.

The Companys comprehensive capabilities in business and program management, systems engineering, systems integration, testing,
and support services address complex customer requirements through the full solutions life cycle. Customers that procure MDAs
infrastructure and sustaining engineering services represent some of the worlds leading commercial and government enterprises. MDA
employs more than 4,500 employees and serves its worldwide customer base from 11 locations in the United States, Canada, and
internationally. MDA has a strong presence in the U.S. with the personnel and facilities to undertake more U.S. work. The Company's
common shares trade on the Toronto Stock exchange under the symbol "MDA".

Order backlog

Order backlog, representing the estimated dollar value of firm funded contracts for which work has not been performed, was $2.2 billion
at December 31, 2012 compared to $805 million at the end of last year. The increase was primarily attributed to the inclusion of backlog
for SSL. Order backlog at December 31, 2012 did not include the contract signed with the Canadian Space Agency in January 2013
and valued at $706 million to build, launch and provide initial operations for the RADARSAT Constellation Mission (RCM). Order
backlog also does not include unexercised contract options and potential orders under indefinite delivery/indefinite quantity contracts.
Refer to section Results by Segment for further discussion.

Operational highlights

The Company reached a number of important operational milestones in the Surveillance and Intelligence segment during 2012.
Amongst other items, the Company completed construction of the Sapphire satellite and associated ground infrastructure for Canadas
Department of National Defence. Sapphire is a space-based electro-optical sensor designed to track man-made space objects at high
orbital altitudes and provide accurate, timely data to the Department of National Defence as part of Canadas continued support of
Space Situational Awareness. The Sapphire satellite was successfully launched in February 2013.

The Company reached a partnership agreement with the U.S. Defense Advanced Research Projects Agency (DARPA) to support the
Phoenix Program, which is a significant opportunity for MDA to demonstrate its space robotics and on-orbit manipulation capabilities. In
additional, the Company signed contract amendments to extend surveillance services for the Australian Defence Force at Kandahar
Airfield for an additional two years. The Company established a proxy agreement for its U.S. geospatial services operations, which
previously operated under a Special Security Agreement granted by the U.S. government. The proxy agreement places operational
control of the Companys U.S. geospatial services operations in a proxy board composed of U.S. citizens with security clearances. The
proxy agreement provides access to a higher level of U.S. government contracts.

Investing Activities

Net cash used in investing activities in 2012 totalled $925 million compared to net cash provided by investing activities of $726 million in
2011. The primary use of cash this year related to the acquisition of SSL, including payments for purchase price consideration, lockbox
completion arrangement and settlement of certain pre-existing intercompany liabilities between SSL and Loral. In 2011, the primary
source of cash from investing activities was the net proceeds from the sale of the Property Information business. Gross capital additions
for 2012 were $25 million compared to $28 million for last year. Capital additions have generally related to investments in infrastructure
and technology to support the growth of the Company.

In 2012, the Company received government grants of $7.2 million under a non-refundable contribution agreement with Investissement
Quebec relating to the expansion of its satellite systems facility in Montreal, which was completed in 2011. The government grants can
become conditionally repayable if certain average employment targets to December 31, 2016 are not met. The Company sold
short-term investments in 2012 and received proceeds of $19 million (2011 - $1.5 million), which was used to fund the acquisition of
SSL. The Company also received proceeds of $15 million from the sale of the net assets of the operations based in Los Alamitos,
California.

Review

Page 16

MacDonald, Dettwiler and Associates Ltd. - Locations And Subsidiaries

Head Office
13800 Commerce Parkway
Richmond
BC
ZIP: V6V 2J 3
Canada
Tel: +1 604 2783411
Fax: +1 604 2312768

Other Locations & Subsidiaries

MacDonald, Dettwiler and Associates Ltd., Other Locations
3825 Fabian Way
Palo Alto
California
Zip: 94303-4604
United States

Source : GlobalData

MacDonald, Dettwiler and Associates Ltd., Subsidiaries
Orbital Optics Limited
Rutherford Appleton Laboratory
Space Science and Technology Department
Didcot
California
Zip: OX11 0QX
United Kingdom
Tel: +44 1235 445700
Url: www.orbitaloptics.co.uk

MDA Insurance Services Inc.
3657 Okemos Road
Suite 100
Okemos
MI
Zip: 48864
United States
Tel: +1 800 8602272
Fax: +1 517 4845460

MDA Federal Inc
United States

Millar & Bryce Limited
5 Logie Mill, Beaverbank Office Park
Edinburgh,
United Kingdom
Tel: +44 013 1556 1313
Fax: +44 013 1557 5960

Richards Gray Holdings Limited
Interserve House
Ruscombe Business Park
Ruscombe

United Kingdom

Macdonald, Dettwiler And Associates, Inc.
9445 Airport Road
Brampton
ON
Zip: L6S 4J 3
Canada
Tel: +1 905 7902800
Fax: +1 905 7904400

MDA Geospatial Services International
Richmond
MDA Information Systems, Inc.
820 West Diamond Ave.
Suite 300

Review

Page 17

ON
Zip: V6V 2J 3
Canada
Tel: +1 604 2440400
Fax: +1 604 2314938

Gaithersburg
MD
Zip: 20878
United States
Tel: +1 240 8338200
Fax: +1 240 8338201

MDA Lending Solutions
5300 Brandywine Parkway,
Suite 100
Wilmington
United States
Tel: +1 888 299 8787
Fax: +1 302 433 8087

MDA Information Products Limited
Richmond House
Langley Business Centre,
Langley
Berkshire
United Kingdom
Tel: +44 0170845 130 7731

MDA DataQuick
9620 Towne Centre Drive
San Diego
United States
Tel: +1 858 5973100

DataQuick Information Systems, Inc.
United States

Rochford Brady Group
62/64 Francis Street

Ireland
Tel: +353 1 453 2222

MDA Searchflow Limited
United Kingdom

MDA Systems Inc.
United Kingdom

MDA Hub Limited
1st Floor, 42 Kings Hill Avenue
Kings Hill
West Malling
Kent
United Kingdom
Tel: +44 01732 523 900
Fax: +44 01732 523 903

Cascade Data Services Inc.
Richmond
Kent
Zip: V6V 2J 3
Canada
Tel: +1 604 2312469
Fax: +1 604 2312763

Wertweiser GmbH
Theatinerstrasse 8
Fuenf Hoefe
Bayern
Germany
Tel: +49 089 929 29619
Fax: +49 089 929 91994

MDA Access BC Ltd.
4000 Seymour Place, Suite 400A
Victoria
Canada
Tel: +1 250 9538250
Fax: +1 250 9538222

MDA MindBox
300 Drake's Landing, Suite 155
Greenbrae
United States

Marshall & Swift/Boeckh, LLC
350 S. Grand Avenue
34th floor
Los Angeles


Review

Page 18

Zip: 90071
United States
Url: www.marshallswift.com

Source : GlobalData

Review

Page 19

MacDonald, Dettwiler and Associates Ltd. - Financial Ratios

Financial Ratios - Capital Market Ratios
MacDonald, Dettwiler and Associates Ltd., Ratios based on current share price
Key Ratios 18-Jul-2014
P/E (Price/Earnings) Ratio 28.17
EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 17.83
Enterprise Value/Sales 2.01
Enterprise Value/Operating Profit 20.62
Enterprise Value/Total Assets 1.42
Dividend Yield 0.02
Note: Above ratios are based on share price as of 18-J ul-2014, the above ratios are absolute numbers
Source : GlobalData

Financial Ratios - Annual Ratios
MacDonald, Dettwiler and Associates Ltd., Annual Ratios
Key Ratios Unit/Currency 2009 2010 2011 2012 2013
Equity Ratios
EPS (Earnings per Share) CAD 1.72 1.45 3.31 2.63 3.00
Dividend per Share CAD 1.00 1.30 1.30
Dividend Cover Absolute 3.31 2.03.00 2.30
Book Value per Share CAD 13.15 14.68 7.46 8.37 22.08
Cash Value per Share CAD 0.12 4.18 7.49 0.78 1.40
Profitability Ratios
Gross Margin % 20.86 23.01 23.81 22.80 17.24
Operating Margin % 15.45 15.56 23.50 15.64 9.77
Net Profit Margin % 20.91 19.00 20.99.00 9.53 5.77
Profit Markup % 26.37 29.89 31.25 29.53 20.84
PBT Margin (Profit Before Tax) % 19.2 16.16 23.60 14.72 7.07
Return on Equity % 20.32 21.70 67.30 31.43 13.19
Return on Capital Employed % 7.97 12.05 43.39 9.49 11.39
Return on Assets % 8.31 8.69 20.32 3.55 4.06
Return on Fixed Assets % 8 43.88 71.76 7.97.00 9.55
Return on Working Capital % 1869.65 16.60 109.78
Growth Ratios
Sales Growth % -55.64 32.73 10.62 15.61 106.72
Operating Income Growth % -40.47 33.70 67.05 -23.07 29.09
EBITDA Growth % 15.56 7.08 54.35 -19.68 34.02.00
Net Income Growth % 123.52 20.63 22.20 -47.50 25.25
EPS Growth % 2.45 -8.81 127.72 -9.91 4.03.00
Working Capital Growth % -60.16 14,954.38 -74.73 -269.88 8.62
Cost Ratios
Operating Costs (% of Sales) % 84.55 84.44 76.50 84.36 90.23
Administration Costs (% of Sales) % 3.73 4.48 -0.52 3.33 4.41
Liquidity Ratios
Current Ratio Absolute 1.01 2.05 1.44 0.70 0.71
Quick Ratio Absolute 0.95 2.04 1.43 0.61 0.59
Cash Ratio Absolute 0.07 0.37 0.79 0.03 0.06

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Leverage Ratios
Debt to Equity Ratio % 0.64 0.37 0.59 3.18 0.75
Net Debt to Equity Absolute 0.63 0.11 -0.35 3.08 0.69
Debt to Capital Ratio % 0.34 0.25 0.34 0.58 0.38
Efficiency Ratios
Asset Turnover Absolute 0.4 0.46 0.97.00 0.37 0.70
Fixed Asset Turnover Absolute 19.11 25.31 18.01.00 2.62 4.98.00
Inventory Turnover Absolute 20.97 173.11 221.25 8.26 13.06
Current Asset Turnover Absolute 1.71 0.55 1.42 1.38 2.51
Capital Employed Turnover Absolute 0.97 1.14 3.21 3.30 2.28
Working Capital Turnover Absolute 121.03 1.07 4.67
Revenue per Employee CAD 378,955
Net Income per Employee CAD 21,884
Capex to Sales % 1.64 1.13 3.72 2.84 3.48
Source : GlobalData

Financial Ratios - Interim Ratios
MacDonald, Dettwiler and Associates Ltd., Interim Ratios
Key Ratios Unit/Currency Mar-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014
Interim EPS (Earnings per Share) CAD 0.07 0.86 1.29 0.70 0.69
Dividend per Share CAD 0.65 0.65 0.65
Book Value per Share CAD 15.04 16.58 17.09 22.08 23.14
Gross Margin % 18.77 16.96 15.96 18.04 16.80
Operating Margin % 5.80 11.31 12.01 10.33 9.30
Net Profit Margin % 0.52 6.92 10.03 5.28 5.07
Profit Markup % 23.10 20.42 18.98 22.01 20.19
PBIT Margin (Profit Before Interest &
Tax)
% 23.88 28.93 27.49
PBT Margin (Profit Before Tax) % 2.01 9.36 10.41 6.21 7.11
Operating Costs (% of Sales) % 94.20 88.69 87.99 89.67 90.70
Administration Costs (% of Sales) % 7.11 1.41 6.28 3.00 3.10
Interest Costs (% of Sales) % 1.01 0.78 1.76
Current Ratio Absolute 0.85 0.92 0.80 0.71 0.70
Quick Ratio Absolute 0.73 0.80 0.68 0.59 0.58
Debt to Equity Ratio % 1.41 1.39 1.08 0.75 0.74
Net Debt to Equity Absolute 1.36 1.37 1.08 0.69 0.74
Debt to Capital Ratio % 0.48 0.49 0.42 0.38 0.38
Interest Coverage Ratio Absolute 2,370.91 3,707.84 1,565.17
Source : GlobalData

Review

Page 21

Financial Ratios - Ratio Charts

MacDonald, Dettwiler and Associates Ltd., Ratio Charts
EPS Operating Margin
Return on Equity Return on Assets
Debt to Equity Ratio Current Ratio
Source : GlobalData

Review

Page 22

Recent Developments

Jun 10, 2013 : MDA To Assist Bruce Power With Inspection Of Nuclear Reactor

MacDonald, Dettwiler and Associates Ltd. (MDA) signed a CAD2.2m contract with Bruce Power L.P. to help develop
inspection and maintenance technologies as part of the design phase of the Bruce reactor inspection and maintenance
system (BRIMS). The objective behind BRIMS is to significantly reduce the durations of nuclear reactor outages by
improving the inspection and maintenance technologies used in these difficult environments, which can only be accessed
by use of robotics.

Don Osborne, who heads up MDAs robotics business in Brampton, said, We have been selected to help improve
inspection technologies, based on the sound engineering and safety disciplines we have honed through many years of
working on space robotics solutions.

Review

Page 23

Appendix
The data and analysis within this report is driven by GlobalData.
GlobalData gives you key information to drive sales, investment and deal making activity in your business.
The key industries include Alternative Energy, Construction, Oil & Gas, Clean Technology, Technology and
Telecommunication, Healthcare, Power, Financial Services, Retail & Consumer Packaged Goods and Transport.

Methodology
GlobalData company reports are based on a core set of research techniques which ensure the best possible level of quality
and accuracy of data. The key sources used include:
Company Websites
Company Annual Reports
SEC Filings
Press Releases
Proprietary Databases

Currency Codes
Currency Code Currency
CAD Canadian Dollars
GlobalData

Ratio Definitions

Capital Market Ratios
Capital Market Ratios measure investor response to owning a company's stock and also the cost of issuing
stock.
Price/Earnings
Ratio (P/E)

Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual
income earned per share. It is a financial ratio used for valuation: a higher P/E ratio
means that investors are paying more for each unit of income, so the stock is more
expensive compared to one with lower P/E ratio. A high P/E suggests that investors are
expecting higher earnings growth in the future compared to companies with a lower P/E.
Price per share is as of previous business close, and EPS is from latest annual report.
Calculation: Price per Share / Earnings per Share
Enterprise
Value/Earnings
before Interest, Tax,
Depreciation &
Amortization
(EV/EBITDA)

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in
parallel with, or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA
over the PE ratio is that it is unaffected by a company's capital structure. It compares the
value of a business, free of debt, to earnings before interest. Price per share is as of
previous business close, and shares outstanding last reported. Other items are from
latest annual report.
Calculation: (Market Cap +Debt +Preferred Stock - Cash & Cash Equivalents) / (Net Income +
Interest +Tax +Depreciation +Amortization)
Enterprise
Value/Sales

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to
buy the company's sales. EV/Sales is seen as more accurate than Price/Sales because
market capitalization does not take into account the amount of debt a company has,
which needs to be paid back at some point. Price per share is as of previous business
close, and shares outstanding last reported. Other items are from latest annual report.
Calculation: (Market Cap +Debt +Preferred Stock - Cash & Cash Equivalents) / Sales
Enterprise
Value/Operating
Profit

Enterprise Value/Operating Profit measures the company's enterprise value to the
operating profit. Price per share is as of previous business close, and shares outstanding
last reported. Other items are from latest annual report.
Calculation: (Market Cap +Debt +Preferred Stock - Cash & Cash Equivalents) / Operating Income
Enterprise
Value/Total Assets

Enterprise Value/Total Assets measures the company's enterprise value to the total
assets. Price per share is as of previous business close, and shares outstanding last
reported. Other items are from latest annual report.
Calculation: (Market Cap +Debt +Preferred Stock - Cash & Cash Equivalents) / Total Assets
Dividend Yield

Dividend Yield shows how much a company pays out in dividends each year relative to
its share price. In the absence of any capital gains, the dividend yield is the return on
investment for a stock.
Calculation: Annual Dividend per Share / Price per Share
GlobalData

Review

Page 24

Equity Ratios
These ratios are based on per share value.
Earnings per
Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each
outstanding share of common stock. EPS serves as an indicator of a company's
profitability.
Calculation: Net Income / Weighted Average Shares
Dividend per
Share

Dividend is the distribution of a portion of a company's earnings, decided by the board of directors,
to a class of its shareholders.
Dividend Cover

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to
shareholders.
Calculation: Earnings per share / Dividend per share
Book Value per
Share

Book Value per Share measure used by owners of common shares in a firm to determine
the level of safety associated with each individual share after all debts are paid
accordingly.
Calculation: (Shareholders Equity - Preferred Equity) / Outstanding Shares
Cash Value per
Share

Cash Value per Share is a measure of a company's cash (cash & equivalents on the
balance sheet) that is determined by dividing cash & equivalents by the total shares
outstanding.
Calculation: Cash & equivalents / Outstanding Shares
GlobalData

Profitability Ratios
Profitability Ratios are used to assess a company's ability to generate earnings, based on revenues generated
or resources used. For most of these ratios, having a higher value relative to a competitor's ratio or the same
ratio from a previous period is indicative that the company is doing well.
Gross Margin

Gross margin is the amount of contribution to the business enterprise, after paying for
direct-fixed and direct-variable unit costs.
Calculation: {(Revenue-Cost of revenue) / Revenue}*100
Operating
Margin

Operating Margin is a ratio used to measure a company's pricing strategy and operating
efficiency.
Calculation: (Operating Income / Revenues) *100
Net Profit
Margin

Net Profit Margin is the ratio of net profits to revenues for a company or business
segment - that shows how much of each dollar earned by the company is translated into
profits.
Calculation: (Net Profit / Revenues) *100
Profit Markup

Profit Markup measures the company's gross profitability, as compared to the cost of
revenue.
Calculation: Gross Income / Cost of Revenue
PBIT Margin
(Profit Before
Interest & Tax)

Profit Before Interest & Tax Margin shows the profitability of the company before interest
expense & taxation.
Calculation: {(Net Profit+Interest+Tax) / Revenue}*100
PBT Margin
(Profit Before
Tax)

Profit Before Tax Margin measures the pre-tax income over revenues.
Calculation: {Income Before Tax / Revenues}*100
Return on
Equity
Return on Equity measures the rate of return on the ownership interest (shareholders'
equity) of the common stock owners.
Calculation: (Net Income / Shareholders Equity)*100
Return on
Capital
Employed

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a
company's capital investments. ROCE should always be higher than the rate at which the
company borrows; otherwise any increase in borrowing will reduce shareholders'
earnings.
Calculation: EBIT / (Total Assets Current Liabilities)*100
Return on Assets is an indicator of how profitable a company is relative to its total assets,

Review

Page 25

Return on
Assets

the ratio measures how efficient management is at using its assets to generate earnings.
Calculation: (Net Income / Total Assets)*100
Return on Fixed
Assets

Return on Fixed Assets measures the company's profitability to its fixed assets (property,
plant & equipment).
Calculation: (Net Income / Fixed Assets) *100
Return on
Working Capital

Return on Working Capital measures the company's profitability to its working capital.
Calculation: (Net Income / Working Capital) *100
GlobalData

Review

Page 26

Cost Ratios
Cost ratios help to understand the costs the company is incurring as a percentage of sales.
Operating costs
(% of Sales)

Operating costs as percentage of total revenues measures the operating costs that a
company incurs compared to the revenues.
Calculation: (Operating Expenses / Revenues) *100
Administration
costs (% of
Sales)

Administration costs as percentage of total revenue measures the selling, general and
administrative expenses that a company incurs compared to the revenues.
Calculation: (Administrative Expenses / Revenues) *100
Interest costs (%
of Sales)

Interest costs as percentage of total revenues measures the interest expense that a
company incurs compared to the revenues.
Calculation: (Interest Expenses / Revenues) *100
GlobalData

Liquidity Ratios
Liquidity ratios are used to determine a company's ability to pay off its short-terms debts obligations. Generally,
the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term
debts. A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when
creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios
to determine whether a company will be able to continue as a going concern.
Current Ratio

Current Ratio measures a company's ability to pay its short-term obligations. The ratio
gives an idea of the company's ability to pay back its short-term liabilities (debt and
payables) with its short-term assets (cash, inventory, receivables). The higher the current
ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests
that the company would be unable to pay off its obligations if they came due at that point.
Calculation: Current Assets / Current Liabilities
Quick Ratio

Quick ratio measures a company's ability to meet its short-term obligations with its most
liquid assets.
Calculation: (Current Assets - Inventories) / Current Liabilities
Cash Ratio

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It
only looks at the most liquid short-term assets of the company, which are those that can
be most easily used to pay off current obligations. It also ignores inventory and
receivables, as there are no assurances that these two accounts can be converted to
cash in a timely matter to meet current liabilities.
Calculation: {(Cash & Bank Balance +Marketable Securities) / Current Liabilities)}
GlobalData

Leverage Ratios
Leverage ratios are used to calculate the financial leverage of a company to get an idea of the company's
methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but
the main factors looked at include debt, equity, assets and interest expenses.
Debt to Equity
Ratio

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio
also depends on the industry in which the company operates. For example,
capital-intensive industries tend to have a higher debt-equity ratio.
Calculation: Total Liabilities / Shareholders Equity
Debt to Capital
Ratio

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing
its operations, along with some insight into its financial strength. The higher the
debt-to-capital ratio, the more debt the company has compared to its equity. This
indicates to investors whether a company is more prone to using debt financing or equity
financing. A company with high debt-to-capital ratios, compared to a general or industry
average, may show weak financial strength because the cost of these debts may weigh
on the company and increase its default risk.
Calculation: {Total Debt / (Total assets - Current Liabilities)}
Interest
Coverage Ratio

Interest Coverage Ratio is used to determine how easily a company can pay interest on
outstanding debt, calculated as earnings before interest & tax by interest expense.
Calculation: EBIT / Interest Expense

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Page 27

GlobalData

Review

Page 28

Efficiency Ratios
Efficiency ratios measure a company's effectiveness in various areas of its operations, essentially looking at
maximizing its use of resources.
Fixed Asset
Turnover

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to
generate sales. A higher ratio indicates the business has less money tied up in fixed
assets for each currency unit of sales revenue. A declining ratio may indicate that the
business is over-invested in plant, equipment, or other fixed assets.
Calculation: Net Sales / Fixed Assets
Asset Turnover

Asset turnover ratio measures the efficiency of a company's use of its assets in
generating sales revenue to the company. A higher asset turnover ratio shows that the
company has been more effective in using its assets to generate revenues.
Calculation: Net Sales / Total Assets
Current Asset
Turnover

Current Asset Turnover indicates how efficiently the business uses its current assets to
generate sales.
Calculation: Net Sales / Current Assets
Inventory
Turnover

Inventory Turnover ratio shows how many times a company's inventory is sold and
replaced over a period. A low turnover implies poor sales and, therefore, excess
inventory. A high ratio implies either strong sales or ineffective buying.
Calculation: Cost of Goods Sold / Inventory
Working Capital
Turnover

Working Capital Turnover is a measurement to compare the depletion of working capital
to the generation of sales. This provides some useful information as to how effectively a
company is using its working capital to generate sales.
Calculation: Net Sales / Working Capital
Capital
Employed
Turnover

Capital employed turnover ratio measures the efficiency of a company's use of its equity
in generating sales revenue to the company.
Calculation: Net Sales / Shareholders Equity
Capex to sales

Capex to Sales ratio measures the company's expenditure (investments) on fixed and
related assets' effectiveness when compared to the sales generated.
Calculation: (Capital Expenditure / Sales) *100
Net income per
Employee

Net income per Employee looks at a company's net income in relation to the number of
employees they have. Ideally, a company wants a higher profit per employee possible, as
it denotes higher productivity.
Calculation: Net Income / No. of Employees
Revenue per
Employee

Revenue per Employee measures the average revenue generated per employee of a
company. This ratio is most useful when compared against other companies in the same
industry. Generally, a company seeks the highest revenue per employee.
Calculation: Revenue / No. of Employees
Efficiency Ratio

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company
is losing a larger percentage of its income to expenses. If the efficiency ratio is getting
lower, it is good for the bank and its shareholders.
Calculation: Non-interest expense / Total Interest Income
GlobalData

Notes
The financial and operational data reported for the company is as per the industry defined standards
Revenue converted to USD at average annual conversion rate as of fiscal year end

About GlobalData
GlobalData is a premium business information brand specializing in industry and company analysis.

Disclaimer
All Rights Reserved
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData.
The data and analysis within this report is driven by GlobalData from its own primary and secondary research of public and

Review

Page 29

proprietary sources and does not necessarily represent the views of the company profiled.
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the
findings, conclusions and recommendations that GlobalData delivers will be based on information gathered in good faith
from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such
GlobalData can accept no liability whatsoever for actions taken based on any information that may subsequently prove to
be incorrect.

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MacDonald, Dettwiler and Associates Ltd.- Financial and Strategic Analysis

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