Emaar properties

Finance project

done by:
- Bushra alghamdi 1420690
- Shimaa Ibrahim 1708438
- Najwa
- Sara
1. brief information about the company:

A. Emaar Properties (PJSC)

Emaar Properties is a UAE-based real estate development company. A public
shareholding company listed on the Dubai Financial Market. The company operates in
many international markets and offers a full range of development and management
services. The company operates in six sectors through 60 active companies and has a
strong presence in 36 markets in the Middle East and North Africa, Asia, Europe and
North America. Emaar Properties is one of the largest real estate developers in the UAE
and known for undertaking mega projects such as Burj Khalifa, the tallest building in the
world.

B. Strategic Posture
Mission
Emaar Properties' mission has focused its presence in Saudi Arabia by developing and
delivering luxury real estate assets. Emaar based on the company's strategy of
implementing the best development projects that meet the needs of Saudi citizens, in line
with the Saudi Vision 2030.
Objectives
The key objectives of Emaar is to be an effective partner and catalyst for social and
economic development efforts within all its markets. Emaar's commitment is not only to
develop world-class real estate assets that customers are looking for but also to contribute
to supporting the growth of the local economy by providing job opportunities for Saudi
nationals and empowering promising national talent by sharing the best global practices
we adopt in developing the pilot projects.
Strategies
With good leadership and insight, Emaar emerged in a few years as one of the fastest
growing companies in the world. In addition to the remarkable development witnessed by
the company's traditional strategic sectors including construction, planning, construction
and logistics, Emaar has set an ambitious plan to make the development of the
construction and investment sector a strategic priority. The company's strategy for 2030
aims to achieve a number of things.
- The first is to transform any enterprise into a "Knowledge, Innovation and
Sustainability Platform" by enhancing urban connectivity and integration with other
economic sectors, especially the strategy.

- The second is to create an attractive investment environment by offering a range of

initiatives and incentives. In light of this promising strategy, Emaar seeks to develop
investment sector to play an active and active role in supporting and achieving the
strategic vision for 2030.

These strategies are consist ant with Emaar mission and objectives, and with the internal
and external environment.
Policies
Emaar's policy based on rigorous operational standards to ensure that we have the least
impact on the ecosystem in which we operate. We make every effort to educate and
sensitize employees, contractors, suppliers and the wider community about the impact
our business has on the environment surrounding our projects, and we focus primarily on
the responsible behavior we expect from them to reduce any possible negative affects the
natural environment. It also intends to reduce the depletion of natural resources at the
local and global levels through the optimal use of these resources and the adoption of
solutions for the recycling and reuse of materials and energy.
Emaar seeks to remove, replace, minimize and control the use and disposal of hazardous
materials and waste products in a scientific manner that ensures tangible results to reduce
pollution. It always looks forward to preserving the living resources and complexes we
develop and all that surrounds them and to minimize any negative effects that may result
from our operations.
It continues to develop, improve and maintain its best performance through compliance
with best practice and other legal requirements, and enhance these processes through
continuous communication with contractors, customers, regulators, environmental
experts and shareholders.
It is worth to mention that mission, objectives , strategies , and policies reflect Emaar's
international operations through its exceptional expertise in the real estate, shopping,
retail, hospitality and entertainment sectors, and features new lifestyle trends by focusing
on design excellence, construction quality and project delivery on time.

2. Applying the main ratios and Internal comparison:

 Liquidity ratios: it measures the company’s ability to pay off the short-term
debts using its current or quick assets.
- Current ratio= current assets/current liabilities
Current ratio= 4,306,832 / 1,170,158
= 3.68
Here we can see that the assets of the company is higher than its liabilities and the current
ratio is considered to be high, by that we can see that the company is able to pay its
obligations (debts) using only the current assets.
- Quick ratio= current assets – inventory – prepaid expense / current
liabilities
(Due to lack of information in the financial statement, this ratio is not calculated).
 Profitability Ratio:
- Profit margin:

net income 96.673

= =8.48% in 2016
sales 1.139.827

302.717
= =29.5% in 2015
1.022.957

Even though the company was able to increase their sales by 11.4%, the profit margin
in 2016 was lower than 2015, their profit from each sale was 0.0848 SR in 2016 and
 0.295 SR in 2015, because their income decreased by 68% and their expenses in
selling and marketing increased by 35.5%.

- Return on assets: = 3.5 in 2015

net income 96.673

= =0.51% in 2016
total assets 18.831 .296

302.717
= =1.67% in 2015
18.037.660

Even though the company total assets increased by 4.5%, the revenue they generates
from their assets is higher in 2015 than 2016 because their income decreased by 68%,
in 2016 they generate 0.0051 profit from each asset and 0.0167 profit from each asset
in 2015.

- Return on equity:

net income 96.673

' = =1.12% in 2016
stockholde r s equity 8.610.773

302.717
= =3.55% in 2015
8.516 .695

The stockholder's equity increased by 1.10% and the income decreased by 68% , the
ROE decreased in 2016 that means the company generates lower profits from the
money stockholder's have invested.
= 3.5 in 2015
 Asset utilization:
sales ( credit ) 1.139.827
- receivable turnover = =
receivable 470.019 =2.425 In 2016

1.022.957
=
291.736

The receivable increased by 61% from 291,736 in 2015 to 470,019 in 2016 and the sales
increased by 11.4% from 1,022,957 in 2015 to 1,139,827 in 2016, so receivable turnover
in 2016 more than receivable turnover in 2015 that's mean the company make less
receivable in 2015 and more receivable in 2016.
The company was use its receivable to generate more sales.

account receivable
- average collection period =
average daily credit sales

470.019
= = 148 day in 2016
3166

291.736
= = 102 day in 2015
2841.5

credit sales 1.139.827

= = 3166.1 in 2016
360 360

1.022.957
= = 2841.5 in 2015
360

the company shows how many days collect its receivable, the collection period increased
in 2016 more than the collection period in 2015(from 102 day to 148 day) which means
the company was able to collect it receivable in 2015 faster than 2016.

However, the result is lower the normal which mean there is no loyal customers and it is
bad indication.

- Inventory turnover = sales/inventory

(Due to lack of information in the financial statement, this ratio is not calculated).

sales 1.139.827
- fixed asset turnover = = = 0.26 in 2016
¿ assets 4.306 .832

1.022.957
= = 0.21 in 2015
4.848 .119

The fixed assets decreased by 11% and the sales increased by 11.4%

The higher is better which mean the company use its asset very well, so the company was
able to generate more sales in 2016 although the fixed assets is less.
 sales 1.139 .827
- total asset turnover = = = 0.06 in 2016 ,
total assets 18.851.296

1.022.957
= = 0.05 in 2015
18.037.660

Total assets increased by 4.5% and the sales increased by 11.4% so the total assets
turnover increased from 0.05 to 0.06 in 2016, because the company turnover its total
assets more to make sales. The higher is better because the company operate its assets
effectively to generate more sales.

 Debt Utilization Ratio:

- Debt to total assets:

total debt 10.240.523

= = 54.3% in 2016
total assets 18.851.296

9.520 .965
= = 52.7% in 2015
18.037.660

Total debt increased by 7.5% and total assets increased by 4.5%, in 2016 debt to total
assets increased from 52.7% to 54.3%, which means in 2016 54.3% of Emaar assets was
financed through debt in a result there was more risk associated with Emaar operations.

- Times interest earned:

income before zakat∧non−controlling interest 114.078

= = 5.70 in 2016
zakat 20.000

329.886
= = 11.5 in 2015
28.584

The zakat decreased by 30% and the income decreased by 65%, In 2016 Emaar generated
enough cash from its operations that enable them to cover the zakat obligations 5.70
times, but the times they can cover the zakat decreased from 11.5 to 5.70 in 2016 as a
result from decreasing in the income.

- Fixed charge coverage:

 income before ¿ charges∧taxes ¿
¿ charges

(Due to lack of information in financial statements, this ratio is not calculated).

3. Would I invest in Emar company or not?

I would not like to invest in this company because the receivable decreased in 2016
more than the previous year. How many days can the company collect its receivable
is lower than normal and it is bad sign. In addition, the company has a lack of assets
in 2016. Total debt increased in 2016 result there was more risk associated with
Emaar operations. The company cannot pay the zakat because the lack of its income.
Even though the company was able to increase their sales by 11.4%, the profit margin
in 2016 was lower than 2015. In addition, the expenses increased in selling and
marketing. The income decreased in 2016 and they generate higher revenue from
their assets in 2015. The company generate lower profit from stockholder's which
mean the ROE decreased.

4. Analysts’ recommendations, news or announcements from the company:

 Emaar Economic City (EFS obtains SAR 13m facility management deal from
KAEC):

Emaar the Economic City is the developer of KAEC.

King Abdullah Economic City (KAEC) has awarded EFS Facilities Services

Group (EFS) a SAR 13 million ($3.47 million) agreement to establish a full-fledged
facility management joint venture (JV) in the city. EFS will provide integrated
facilities management services in KAEC that include transport, catering, and the
value-added services. The value-added services entail the integration of smart
technology and Computer Aided Facility Management (CAFM). The deal will last for
three years.

“King Abdullah Economic City is a major social and economic growth driver for
the Kingdom of Saudi Arabia. As the city grows in complexity so too does its need
for state-of-the-art integrated facilities management,” EFS Facilities Services’
CEO, Tariq Chauhan said.

“The complexity of operating a development on the scale of KAEC demands the very
highest levels of specialist expertise across multiple business verticals,” Ayman
Mansithe acting CEO of KAEC’s Industrial Valley and Senior Director of New
Business Ventures stated.

KAEC is a Saudi large new city for development internationally and it is a giant
residential real estate firm in terms of sales, and operates a number of retail, leisure,
and commercial outlets.

EFS is a leader in delivering integrated facilities management services

across Africa, South Asia, and the MENA.