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S TRATEGIC F INANCE

CRITICAL ANALYSIS OF THE FINANCIAL


PERFORMANCE OF SALALAH PORT COMPANY

EXECUTIVE SUMMARY

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The main purpose of this report is to come out with a critical analysis of the financial
performance of a Salalah Port Services Company S.A.O.G during financial years of 2005 to
2006 compared with similar business company, such as Port Services Corporation
S.A.O.G.( Port of Sultan Qaboos). Also, the importance of this financial analysis to arrive at
specific recommendations and make a decision based on qualitative and quantitative
techniques.

This report is divided in to three parts; the first part of the report is the general business
overview of the Salalah Port Service Company, the second part is the ratios analysis of the
Salalah Port Service Company and the final part is the comparison of Salalah Port Service
Company with its competitor the Sultan Qaboos Port Company.

There is a third Port in Oman (Port of Sohar) which is a joint venture between the
government of Oman and Rotterdam Port (50/50). It started its first operation December
2006. The financial information is not available because the company is not registered as a
public shareholders company in Muscat Securities Market. Therefore, the comparison will
be restricted between Port of Salalah and Port of Sultan Qaboos.

The financial analysis of the both mentioned companies were made based on the
published Balance Sheet, Cash Flow Statement and Income Statement for 2005 and 2006.
Furthermore, the Chairman’s report and Directors report of both the companies were read
and discussed for a better analysis. The financial reports 2007 of both companies were not
published at the time of writing this report.

Ratios are highly important profit tools in financial analysis that help financial analysts
implement plans that improve profitability, liquidity, financial structure, reordering, leverage,
and interest coverage. Although ratios report mostly on past performances, they can be
predictive too, and provide lead indications of potential problem areas as we are trying to
do here between these two years (2005 -2006). The followings ratios have been used in
this report: Profitability, Efficiency, Liquidity, Financial Gearing and Investment.

Salalah Port Overview

• Expansion of non-current assets; this has increased by 21% (from R.O 42,150 m to R.O
50,903 m). Sales revenue, expanded slightly more by 4% from R.O 26,737 m to R.O 27,918
which is less expansion than non-current assets.
• Expansion in the element of working capital: inventories slight increased by about 6 %,
trade receivable has not changed. There is no major expansion in the working capital due
to the period of high inflection.
• Increase in cash balance: the cash balance increased from R.O 1691 m to R.O 5486 m by
224 % more between 2005 and 2006. This leaves the company in comfortable situation
from the Bank.
• Apparent dept capacity: comparing the non-current assets with the long term borrowings
implies that the business has very high capacity on security on further borrowing. This is
because of potential lenders usually look at the value of assets that can be offered as
security when assessing from requests.
• High operation profit: though sales revenue expanded by 4% only between 2005 and 2006,
both direct operating cost and operating expenses rose by 10% and 13% with increase in
both profit and operating profit by 11%.

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TABLE OF CONTENTS
EXECUTIVE SUMMARY...............................................................................1
1.INTRODUCTION.........................................................................................4
1.1 Port of Salalah..........................................................................................4
1.2 Port of Sultan Qaboos (PSQ)...................................................................4
2. RATIO ANALYSIS FOR SALALAH PORT COMPANY FOR THE YEARS
2005 & 2006....................................................................................................5
2.1. PROFITABILITY......................................................................................5
2.1.1. GROSS PROFIT MARGIN...................................................................5
2.1.2. OPERATING PROFIT MARGIN...........................................................5
2.1.3. RETURN ON ORDINARY SHAREHOLDERS FUNDS (ROSF) .........6
2.1.4. RETURN ON CAPITAL EMPLOYED (ROCE).....................................6
2.1.5. CONCLUSION......................................................................................6
2.2. EFFICIENCY ...........................................................................................7
2.2.1. AVERAGE SETTLEMENT PERIOD FOR TRADE RECEIVABLES....7
2.2.2. SALES REVENUE TO CAPITAL EMPLOYED RATIO........................8
2.2.3. CONCLUSION......................................................................................8
2.3. LIQUIDITY...............................................................................................8
2.3.1 CURRENT RATIO ................................................................................8
2.3.2 ACID TEST RATIO ...............................................................................9
2.3.3. OPERATING CASH FLOWS TO MATURING OBLIGATIONS ..........9
2.3.4. CONCLUSION......................................................................................9
2.4. FINANCIAL GEARING..........................................................................10
2.4.1 GEARING RATIO ...............................................................................10
2.5. INVESTMENT .......................................................................................10
2.5.1 DIVIDEND PAYOUT RATIO ...............................................................10
2.5.2 DIVIDEND YIELD RATIO ...................................................................11
2.5.3. EARNINGS PER SHARE.................................................................11
2.5.4. PRICE/EARNINGS (P/E) RATIO........................................................11
3.RATIO ANALYSIS - COMPARISON WITH SULTAN QABOOS PORT
COMPANY (COMPETITOR) .......................................................................12
3.1. PROFITABILITY....................................................................................12
3.2. EFFICIENCY.........................................................................................13
3.3. LIQUIDITY.............................................................................................14
3.4. FINANCIAL GEARING..........................................................................14
3.5. INVESTMENT........................................................................................14
4.CONCLUSION ..........................................................................................15
5. REFERENCES.........................................................................................16
6.APPENDIX A.............................................................................................17
7.APPENDIX B.............................................................................................23

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1. INTRODUCTION

1.1 Port of Salalah

Port Of Salalah, earlier known as (Mina Raysut),


handled its first container vessel operation in November
1998; this was a new era for the region and the country.
The advantages this port has are ( multi-use, break-
bulk and containers, superior location not far from the
trade lines, stable and high productive), which are why
major shipping lines such as CMA-AGM, APL,MOL,
Safmarine and Maersk Line use this port. The project is
a joint venture between the Government, Privet funds,
local share holders, Sea Land, and Maersk Line (later became Maersk Sea land).

This port is designed and equipped with the latest technology in terminal operation
equipment such as, Pan Panamax Cranes designed for the second generation vessels,
and the biggest cranes in the world were first ordered by Port of Salalah. Salalah is located
in the middle of the growing markets at the Indian Ocean Rim with about 2 billion
consumers. Its strategic location directly at the main shipping lane between Europe and the
Far East (East-West trading roots) this will provide easy access to the main markets. Next
to the port the Government of Oman declared a Free Zone company to be formed (Salalah
Free Zone Company), and currently the Free Zone Company is functioning and there are
several factories already operational.

1.2 Port of Sultan Qaboos (PSQ)

Port of Sultan Qaboos was the first international Port in Oman, It is operated and managed
by Port Services Corporation, the port was mainly focusing on conventional cargo from
1976-1981, then the port has developed its current berths to sustain container vessels by
1983-1984, first operational system to handle containers was 1985, early 1990 there was
further enhanced for another two berths to handle multi purpose vessels.
Port of Sultan Qaboos is an ideal transshipment hub for the upper Gulf and Red Sea ports
trade flows. Oman's premier maritime gateway enjoys a prime location in the politically
stable Sultanate of Oman. This port is situated in a natural harbor 250 Kilometers south of
the Strait of Hormuz on the Indian Ocean coast of the Arabian Peninsula.

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2. RATIO ANALYSIS FOR SALALAH PORT COMPANY FOR THE
YEARS 2005 & 2006

Financial ratios can be used to indicate and examine the performance of the company; they
help in implementing plans to improve profitability, expansion and growth.
Although ratios report mostly on past performances, they can be predictive too, and provide
lead indications of potential problem areas as we are trying to do here for the years (2005
-2006).

2.1. PROFITABILITY

We will analyze the profitability effects on the company performance and progress based
on the following topics as in the table 1(Refer to Appendix B):
 Gross Profit Margin.
 Operating Profit Margin
 Return on Ordinary Shareholders Funds (ROSF).
 Return on Capital Employed (ROCE).

2005 (%) 2006 (%)


Gross Profit Margin 48.03 45.03
Operating Profit Margin 20.35 19.78
ROSF 15.13 14.12
ROCE 12.21 9.94
Table 1

2.1.1. GROSS PROFIT MARGIN

Gross profit margin ratio shows the percentage of the gross profit (which is the difference
between sales revenue and the cost of sales) over the sales revenue generated by the
company for the same period. The higher the revenue the better is the ratio. Though, the
company has a growth in the revenue due to the increase in volumes of containers during
2006, but resulting in lower gross profit margin about 45.03 % in 2006 comparing to 48.03
% in 2005. It is noticed that there is an increase in the direct operating cost from
13,896,000 OMR in 2005 to 15,348,000 OMR in 2006. The company should take good
efforts to decrease its direct operating cost in order to improve its gross profit margin.

2.1.2. OPERATING PROFIT MARGIN

The operating profit margin shows the percentage of the net profit of a business over the
sales revenue for the same period. The operating profit margin for the company has
decreased from 20.35 % to 19.78% by 0.57 %. Apparently, this is due to the high direct
operating cost conducted in 2006 which mainly was focused in additional recruitment
during 2006 to fulfil the requirement. This heavily impacted the consumption of fuel and
required additional repair and maintenance. However, the overall operating profits has
increased and as well as the revenue by 27,918,000 OMR.

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2.1.3. RETURN ON ORDINARY SHAREHOLDERS FUNDS (ROSF)

The ROSF ratio compares the net profit available to the owners with the shareholders stake
in the company for the same year. Though, the company has slightly succeeded in
increasing its net profits from 4,095 in 2005 to 4,154 during 2006. The company has a
decline in ROSF by 1.01 % due to an increase in the legal reserve and retained Earnings,
whereas the share capital remained the same amount. Usually, 10% of net profit is held as
a cumulative reserve. Also, the market share value of the company has increased which
resulted in this increase of the retained earring during 2006.

2.1.4. RETURN ON CAPITAL EMPLOYED (ROCE)

The ROCE ratio compares the net profit (before interest and taxation) generated by
company to the long term capital invested in the company during the same period. There is
a decline in the ROCE of the company by 2.27 % in 2006. The company has paid
2,262,000 OMR as deferred tax in year 2006. This is was due to an earlier agreement with
the government of an exemption of tax paid for utilizing the general cargo terminal and
2005 was the first year the payment is due that cause the reduction in ROCE during 2006.
In addition, the company has paid a higher amount for the non-current loans which are
purchase of new cranes, artg’s(rubber, tired, gantry) & prime movers for the additional
berths 5& 6 about 23,339,000 OMR by comparing with 15,344,000 OMR in 2005. This is
part of the master plan for the expansion of the Salalah Port for the next 20 years as a long
term investment.

2.1.5. CONCLUSION

It can be observed from the above discussion that the company performance has declined
although not significantly. However, this does not reflect the actual picture of the indicated
increase in volume which requires placement of additional equipment which impacted the
current year as in the Figure 1. Usually, the pay off of such investment comes within the
coming years. The master plan of this terminal is going to be one of the biggest
transhipment hubs in the Middle East with not less than 50 gantry cranes at the moment
they have only 6 berths and 80 cranes. (www. portofsalalah.com)

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PROFITABILITY

60

50 48.02
45.03

40
%

30

20.35 19.78
20
15.13 14.12
12.21
9.94
10
Figure-1

2.2. EFFICIENCY
0

Since the Efficiency ROSF ROCE


ratio is one of the essential Net
scale for any Profit performance,
company Margin Gross Profit
we
are going to elaborate more by using available data for Salalah Port Company about only Margin
two following ratios (as illustrated in table 2) because the company is considered a service
company and we are limited in using other efficiency ratios:
• Average settlement period for trade receivables.
• Sales revenue to capital employed ratio.

2005 (%) 2006 (%)


Average settlement period for 51.780 49.577
trade receivables.

Sales revenue to capital 0.717 0.603


employed ratio.

Table 2

2.2.1. AVERAGE SETTLEMENT PERIOD FOR TRADE


RECEIVABLES

The company has improved its figure in average period for trade receivables for the years
of 2005 and 2006 which; it has been reduced from 51.78 to 49.58 days. The collection of
debtors has improved which is a good sign of debt management.

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2.2.2. SALES REVENUE TO CAPITAL EMPLOYED RATIO

The sales revenue to capital employed ratio examines how effectively the total assets of
the company (share capital plus reserve plus non current liabilities) are being used to
generate sales revenue. The ratio has decreased for the year 2006. This is mainly due to
expansion plans as the company is still in continue growth stage. Also, it is normal to see
that heavy investment is injected in this stage.

2.2.3. CONCLUSION Efficiency ratios


It can be seen form the above discussion that the
company has performed well for the years 2005
% 2006 regarding the services achieved and 53
gaining good revenue rather than the cash being 0.72
52
tied up with the customers. Figure-2 shows the
related figures for 2005 and 2006 for average 51
period for trade receivables and sales revenue to
capital ratio. The company is still in growing 0.6 51.78
50
stage and not yet reached the maturity level.
Based on that, a huge investment will be involved 49 49.78
simultaneously the management is working on
efficiency of the work force to maximize its 48
productivity. 2006 2005
Figure-2
Sales revenue to capital employed ratio
2.3. LIQUIDITY
Average sattelment period for trade recievable
The Liquidity is one of the essential measurement tools for any firms in order to maintain
the required short term financial obligations. The following tools are the main indicators for
company liquidity taken in this paper as shown in table 3:
 Current Ratio
 Acid test ratio
 Operating cash flows to maturing obligations

2005 2006
Current Ratio 1.63 1.92
Acid test ratio 1.46 1.73
Operating cash flows to maturing obligations 1.02 0.99
Table 3

2.3.1 CURRENT RATIO


The current ratio compares current asset (which represents cash and other assets held that
are easily converted to cash) with the current liabilities of the company. The current ratio
has increased from 1.6 times to 1.9 times in 2006 which indicates a good liquidity
management and that was mainly due to increase in current assets and decrease of
current liabilities. Since the company is a service provider and there is a minimum
inventories amount is required, this ratio is expected to be low. However, the company has
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improved its portion of cash and cash equivalent which made it liquid enough to meet its
short term obligations. Also, under the terms of the debt finance agreement the company is
required to maintain a debt service deposit equal to its next six month debt repayment and
this was reflected in the increase amount of company term deposit during 2006. In addition,
the company has succeeded in decreasing their trade and other payables.

2.3.2 ACID TEST RATIO


The acid test ratio is similar to current ratio but it is excluding the stock from the current
assets. The ratio has increased slightly from 1.46 times in 2005 to 1.73 times in 2006. This
indicates that the company is in a comfortable position to cover its short term obligations
(current liabilities). Also, this was good as normally “the minimum level of this ratio is often
stated as 1.0 times (or 1:1; that is, current asset (excluding inventories) equals current
liabilities)” (Mclaney. E, 2008, p.241). As known, this is a unique service industry where the
inventory does not easily convert to cash.

2.3.3. OPERATING CASH FLOWS TO MATURING OBLIGATIONS

The operating cash flows to maturing obligation ratio compares cash generated from
operating activities (which is taken from cash flow statement ) to the company current
liabilities. The ratio has declined to 0.99 from 1.02; this indicates that the current operating
cash flow is not sufficient to cover the current liabilities for the company.

2.3.4. CONCLUSION

It can be observed from the above ratios indications; the company does have a suitable
liquidity margin to meet its short term obligations. This was mainly illustrated in improving
the company current asset and reducing its current liabilities from 2005 to 2006 see
Figure-3. However, the decline in the operating cash flow need to be a concern for the
company and further strategic improvement must be applied such as improving the
efficiency of the operation staff by maximizing their output which will be positively reflecting
in the cash flow generated from operating activities.

LIQUIDITY

1.92
2
1.73
1.8 1.63
1.46
1.6
1.4
1.2 1.02 0.99
% 1
0.8
0.6
0.4
0.2
Figure-3
0
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Current Ratio Acid test ratio Operating cash
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flows to maturing
obligations
2.4. FINANCIAL GEARING

Any organization needs for the financial gearing because of two possible reasons: first,
there are insufficient funds from the owners or the company willing to increase the returns
for the company. By using available information of the Salalah Port Company, we will cover
the gearing ratio calculation only.

2.4.1 GEARING RATIO


Gearing ratio measures the long term liabilities of the company to its long term capital
structure. The company has increased its funds beside its share capital and legal reserve
from 49.94 % in 2005 to 56.43% in 2006 by approximately 5 % by taking loans almost
23,339,000 OMR. In this particular sector of company’s plan of expansions and future
development based on forecast from the customers and indication of expected volume
increase or decrease based on the trade seasons in the world (Christmas, Chinese New
Year, New development Projects, Religious Dates, and Wars (God Forbids) terminals take
time to attract new volumes and takes time to divert a service from one port to another,
sometimes it takes up to 6 months to change company service, and book windows in
terminals.

2.5. INVESTMENT

From an investment point of view, the following are the most essential and common ratios
to help and guide the investors in his/ her decision (table 3) and Figure 4:

2005 2006
Dividend payout ratio 43.69 43.07
Dividend cover ratio 2.27 2.31
Dividend yield 1.96 1.90
Earnings per share 22.8 23.1
Cash gen from ops per share 0.51 0.48
P/E ratio 22.37 22.94
Table 3

2.5.1 DIVIDEND PAYOUT RATIO


The dividend payout ratio measures the portion of the company earrings paid in the form of
dividends to the shareholders. During year 2005 the board of directors of Salalah Port has
approved a dividend distribution of 10% on paid up equity share capital which is equivalent
to 0.100 Baiza per share where in 2006 it was announced a distribution of dividends of 12%
paid up equity share capital which is equivalent to 0.120 Baiza per share. Despite the
increase in the dividends paid during 2006 as result of an increase in the net profit, the
dividend payout ratio has slightly declined. However, the earning available for dividends
covers the actual dividends by 2.3 times during 2006.

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2.5.2 DIVIDEND YIELD RATIO
Dividend yield ratio calculates the dividend per share over the company current market
value per share. The above ratio has considerably decreased to 1.89 from 1.96 which will
not encourage the new investors. This is due to the higher value of the share in 2006 was
5.299 OMR compare with 5.1 OMR in 2005.

2.5.3. EARNINGS PER SHARE


Earnings per share measure the share performance but it is not related to the profit of the
share as well. There is a minor increase for EPS for the company from 22.77 OMR in 2005
to 23.10 OMR in 2006. It means there is a potential investment on the business shares.

2.5.4. PRICE/EARNINGS (P/E) RATIO

The price/ earring ratio relates the market value per share to the earring per share. The
company has a slight increase in P\E ratio from 22.37 OMR in 2005 to 22.94 OMR in 2006.
This is the investor indicator regarding studying the overall market performance in the same
sector. Investor would definitely compare this with peer group and other business sectors
before investing.

Investment

45

40

35

30

25
Ratios

2005
20
2006
15

10

0
Dividend Dividend cover Dividend yield Earnings per Cash gen from P/E ratio
payout ratio ratio share ops per share
Figure- 4

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3. RATIO ANALYSIS - COMPARISON WITH SULTAN QABOOS PORT
COMPANY (COMPETITOR)

In order to demonstrate the actual performance of the Salalah Port Company during 2005
and 2006, we need to benchmark it with another company that having same sort of service
which is Sultan Qaboos Port Company as a competitor. The below Table 4 shows all the
essential ratios which have been calculated based on the companies annual performance
report. The percentage values of the below table have been derived in the ratio table as
seen in Appendix B.

Ratios SALALAH PORT SULTAN QABOOS


PORT
Year 2006 2005 2006 2005
ROSF 14.12 15.13 18.81 17.21
ROCE 9.94 12.21 15.58 10.69
Net Profit Margin 19.78 20.35 24.93 19.38
Gross Profit Margin 45.03 48.03 90.52 88.51
Avg Settlement period for receivables 49.58 51.78 35.65 19.87
Sales revenue to capital employed ratio 0.60 0.72 0.90 0.73
Current Ratio 1.92 1.63 1.97 2.30
Acid test ratio 1.73 1.46 1.89 2.19
Cash gen from ops to maturing obligations 0.99 1.02 1.23 1.38
Gearing ratio 56.43 46.94 8.09 8.10
Dividend payout ratio 43.07 43.69 49.32 75.50
Earnings per share 23.10 22.77 63.36 52.98
Cash gen from ops per share 0.48 0.51 0.66 0.51
P/E ratio 22.94 22.37 9.23 8.93
Table 4

From the above table, the following observations could be obtained:

3.1. PROFITABILITY

 Sultan Qaboos Port has achieved an excellent year by scoring high revenues by 3
million OMR more, whereas the Salalah Port had only almost 1.2 million OMR
which is already reflected in the gross profit margin see Figure-5.

 The decline in both ROSF and ROCE in 2006 for Salalah port was due to the
higher value for the non-current loans. In the other hand, Sultan Qaboos Port has a
significant increase in both and this is may due to high operating profits by 1.5 M
OMR more in 2006 and there are no long term loans.

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Profitability Ratios-2006

Gross Profit Margin


45.03

24.93
Net Profit Margin
19.78

15.58
ROCE
9.94

18.81
ROSF
14.12
Figure-5

3.2. EFFICIENCY 0 10 20 30 40 50 60 70

 There is a good reduction in the settlement period for tradePORT


SALALAH receivables from 51.8
SULTAN QABOOS PORT
to 49.6 days which indicates an improvement for Salalah Port. Thus, some more
funds have been released from the trade receivables and to be used for other
profitable purposes. On the other hand, trade receivables for Sultan Qaboos Port
has declined and delayed from 19.8 days in 2005 to 35.6 days in 2006. The
difference in the settlement period is due that Port of Sultan Qaboos is mainly
dealing with local import and export where Port of Salalalh is mainly
transshipments hub.

 The Sultan Qaboos Port has processed its assets very effectively and productively
by 0.9 times in 2006 which indicates an increase from previous year, whereas the
Salalah Port has lower ratio about 0.6 in 2006 times and declined from previous
year as can be seen in Figure 6. This is due to the fact that the equipment in Port
Of Sultan Qaboos are old and their efficiency is at the maximum, where Port of
Salalah equipment are still new and they are still working on maximizing the
efficiency, as well as purchasing new equipment and staffing for them, while the
volumes have yet to increase, Port of Salalah is implementing lean and six sigma
methods to improve their efficiency.

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Efficiency Ratios- 2006

49.58
50
45
40 35.65

35
30
25
20
15
10
0.6
Figure-6 0.9
5
3.3. LIQUIDITY
0
SALALAH PORT SULTAN QABOOS PORT
 The total assets of Port of Salalah are almost twice the total assets of Port Sultan
Qaboos. Although, Port of Sultan Qaboos is the main port for the country and it
Avgsince
was built Settlement
1970s. period for receivables Sales revenue to capital employed r
 Current ratio and Acid test ratio are nearly same for both in 2006, but it is
noticeable that Sultan Qaboos Port has sharp reduction for both ratios in 2005 to
2006.
 The cash generated from operations to maturing obligations, both ports have
declined comparing their results with 2005 and Port of Sultan Qaboos decline was
higher than Port of Salalah. But overall the cash generated from operation is Port of
Sultan Qaboos is still 0.25 higher than Port of Salalah.

3.4. FINANCIAL GEARING

• Salalah Port relies directly to the banking funds and their gearing ratio was 56% in
2006 since it is developing and expanding, with building new berths and equipment
company whereas, -as expected- Sultan Qaboos Port having very low banking
funds since it is established long back.

3.5. INVESTMENT

• EPS has increased from 2005 to 2006 for both companies.


• P/E for both companies has increased from previous year.
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• Salalah Port has paid roughly the same dividend during both years, whereas Sultan
Qaboos Port has sharp reduction in paid dividend from 75.5 to 49.3 this could be
due to reduction in volumes and the space availability.

4. CONCLUSION

Profitability, efficiency, liquidity, and investment ratios indicated that Sultan Qaboos Port is
performing better in terms of short term investment, this port has reached its maturity level
and geographically has no more limits for expansion, most of its equipment has zero
depreciation and therefore their reliant on external finance is low.

Where it is a totally different game in Port of Salalah since it is in the growing phase and all
its equipment are new, all the berths are from reclaimed land and their master plan to be
the leading terminal in the Middle East where their distance to the world trade lines (East-
west) is so close, For such reason they are heavily relaying on external funds.

At the moment Port of Salalah is the second biggest terminal in the Middle East, and the
only terminal in the area equipped to handle the new generation container vessels (415
meters long).Showing that it is in the growing stages and paying almost 10% return on
shares this is an encouraging indication.

Historically, the cash flow performance of the Salalah Port’s business has been strong.
Also, it has been able to cover its financial charges and debt service from operating cash
flows during the period. However, the business may still want to examine the magnitude of
cash impact from changes in some key financial factors known as “cash flow drives”.

The Salalah Port has to work hard on the coming years to maintain its ROSF and ROCE
because we have seen a decline in the performance during 2006 on the mentioned factors.
In additional, the company’s non-current liabilities have declined due to paying of the long
term loans. However, the decline in the operating cash flow needed to be a concern for the
company for its further strategic improvement. ( as per http://www.salalahport.com/)

Currently the percentage of the market share of the ports are as follow: Port of Sultan
Qaboos is 96% of the import and export , Port of Salalah is less than 3% and Port of Sohar
is 1%, this is based on reports from ministry of commerce and industry. This percentage is
gradually changing with the free zone coming in Salalah and the industrial area developing
in Sohar, it is expected that both Port of Salalah and Sohar are gradually increasing their
market share to exceed 60% of the market share between them. The country is planning to
divert most of the trade to these two ports and limit the Port of Sultan Qaboos to Crouse
vessels a current break-bulk cargo, limited container vessels.

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5. REFERENCES

• Alnajjar, F and Belkaoui, A. (1999). “Multinationality, Profitability and firm value”.


Managerial Finance. 25 (12). 31-41.
• Business Knowledge Center.www.netmba.com,[April 6, 2008].

• Dawkins, P, Feeny, S and Harris, M. (2007). “Benchmarking Firm Performance”.


Benchmarking, An International Journal. 14(6). 693-710.
• Horngren, C, Datar, S and Foster , G. (12th ed) (2007). “Cost Accounting: A
Managerial Emphasis. Prentice Hall, USA.
• Ittelson, T. (1998). (1st ed). “Financial Statements: A Step-By-Step Guide to
Understanding and Creating Financial Reports”. Career Press, USA.
• Leopold Bernstein, John Wild, (2000). “ Analysis of Financial Statements” .McGraw
Hill, USA.
• McLaney, E and Atrill, P. (4th ed) (2008). “Accounting, an Introduction”. Pearson
Education Limited, England.
• Muscat Securities Market, http://www.msm.gov.om , [March 15, 2008].

• Port Service Cooperation, http://www.pscoman.com/marketing/about1.htm#1,


[March 28, 2008]
• Romney, M and Steinbart, P. (10th ed) (2005). “Accounting Information Systems”.
Prentice Hall, USA.
• Salalah Port Company, http://www.salalahport.com/, [March 28, 2008].

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6. APPENDIX A

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7. APPENDIX B

Ratio Companies
Port of Salalah Sultane Qaboos Port

2006 2005 2006 2005


Average settlement period for trade receivable= trade receivable 49.577 51.780 35.647 19.870
credit sales revenue * 365
Sales revenue to capital employed ratio= sales revenue 0.603 0.717 0.903 0.734
share capital+ reserve+noncurrent liabilities
Gross profit margin = Gross profit * 100 45.025 48.027 90.522 88.512
Sale revenue
ROSF = profit for the year (net profit ) less any preference dividend * 100
ordinary share capital + reserves 14.120 15.131 18.807 17.211
ROCE = operating profit
sahare capital +reserves + non-current liabilities *100 9.936 12.209 15.575 10.693
Operating Profit Margin = operating profit *100
Sales revenue 19.776 20.346 24.925 19.382
Current ratios = Current assets 1.917 1.629 1.968 2.303
Current liabilities
Acid test ratio = Current assets (excluding stock) 1.730 1.457 1.888 2.193
Current liabilities
Cash generated from Ops to maturing obligation = Cash generated from Ops 0.989 1.016 1.230 1.384
Current liabilities
Gearing ratio = Long term ( non current ) liabilities * 100 56.427 46.941 8.089 8.101
Share capital + Reserves + long term (non current) liabilities
Dividend payout ratio = Dividends announced for the year * 100
Earning for the year available for the dividends 43.067 43.687 49.324 75.499
Dividend cover ratio = Earning for the year available for the dividend * 100
Dividends announced for the year 2.310 2.278 1.810 1.325
Dividend yield = Dividend per share/ ( 1-t) * 100
Market value per share 1.887 1.960 5.128 7.400
Earning per share = Earnings available to ordinary shareholders * 100 23.098 22.770 63.356 52.981
Number of ordinary shares in issue

Cash generated from ops per share = Cash generated from ops less preference 0.483 0.506 0.664 0.511
dividend
Number of ordinary shares in issue

P/E = Market value per share 22.939 22.368 9.227 8.925


Earnings per share

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