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The paper "The National Bank of Abu Dhabi and the Aldar Properties Pjsc" is a perfect example of a finance and accounting case study. This paper is aimed at financial analyses of two Abu Dhabi-based companies, namely: the National bank of Abu Dhabi (NBAD) and Aldar Properties PJSC. The financial structures of the two companies are naturally different…
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Analyses of Two United Arab Emirates Companies: the National Bank of Abu Dhabi and the Aldar Properties PJSC [Full Table of Contents
Contents
Table of Contents 2
Contents 2
Executive Summary 3
Introduction 3
The National Bank of Abu Dhabi (NBAD) 4
Consolidated statement of financial position as at 31 December 2012 4
Consolidated income statement for the year ended 31 December 2012 5
Consolidated statement of comprehensive income for the year ended 31 December 2012 5
Stock Market Movement for February 2014 5
Aldar Properties 6
Consolidated income statement for the year ended 31st December 2013 6
Consolidated statement of comprehensive income for the year ended 31st December 2013 7
Stock market movement for February 2014 7
Conclusion 8
Executive Summary
This paper is aimed at financial analyses of two Abu Dhabi based companies, namely: the National bank of Abu Dhabi (NBAD) and Aldar Properties PJSC. The financial structures of the two companies are naturally different. One is a bank, dealing primarily with currency and securities, while the other is a real estate company that deals with construction, purchase and sale of properties. A comparison between the two would therefore probably yield interesting findings but the analyses to be done in this paper are separate.
The merger between Aldar and Sorouh in January 2013 has since seen a significantly positive impact on Aldar’s financials. Sorouh was also a property management company also based in Abu Dhabi and the merger was almost unanimously supported by its board members as well as Aldar’s board members. Individually, both Aldar and Sorouh were real estate giants in the Middle East. Together however, they have arguably become the Largest Real estate force in the Middle East but more specifically in the Emirates.
Introduction
In financial analysis there are numerous guidelines to be followed. However, a more basic approach is following steps. The first of these steps is to acquire the company’s financial statements over several years. Next is to quickly scan the statements to identify large movements in consecutive years. Also, reviewing the notes accompanying the company’s financial statements helps to shed light on said movements. After this, you can carefully analyse the financial statements and calculate financial ratios to find the trends in ratios from year to year. Next is obtaining data for the company’s key competitors and data about the industry and reviewing this data. Finally, answer this question: “Based on everything I Know about this industry and the competitors, and the external factors that will influence the company in the future, do I think this company is worth investing in for the long term?” (Lermack, 2003)
The National Bank of Abu Dhabi (NBAD)
Consolidated statement of financial position as at 31 December 2012
2012
AED’000
2011
AED’000
Assets
Cash and balances with central banks
Investments at fair value through profit or loss
Due from banks and financial institutions
Reverse repurchase agreements
Loans and advances
Non-trading investments
Derivative financial instruments
Other assets
Investment Properties
Property and equipment
Total Assets
54,943,221
3,274,313
14,615,968
18,509,608
164,599,378
32,286,857
5,583,080
4,300,195
14 140,061
2,346,488
300,599,169
24,468,641
1,610,745
15,166,763
16,425,020
159,522,178
26,569,340
5,605,647
4,083,411
-
2,215,760
255,667,505
Liabilities
Due to banks and financial institutions
Repurchase agreements
Euro commercial paper
Customers’ deposits
Term borrowings
Derivative financial instruments
Other liabilities
Subordinate notes
Total liabilities
35,477,275
2,017,041
2,831,198
190,303,573
19,073,630
6,652,508
7,448,492
263,803,717
5,662,361
269,466,078
39,795,601
3,513,726
-
151,816,887
15,148,516
4,784,473
6,228,763
221,887,966
7,990,054
229,278,020
Equity
Share capital
Statutory and special reserves
Other reserves
Government of Abu Dhabi tier 1 capital notes
Share option scheme
Subordinated convertible notes - equity component
Retained earnings
Total equity
Total liabilities and equity
3,874,558
4,065,532
14,067,140
4,000,000
95,312
21,420
5,009,129
31,133,091
300,599,169
2,870,043
3,563,274
11,466,410
4,000,000
76,497
27,639
4,385,622
26,389,485
255,667,505
Consolidated income statement for the year ended 31 December 2012
2012
AED’000
2011
AED’000
Interest income
Interest expense
Net interest income
7,979,592
(2,156,628)
5,822,964
7,651,786
(2,156,538)
5,495,248
Income from Islamic financing contracts
Depositors’ share of profits
Net income from Islamic financing contracts
Net interest and Islamic financing income
316,085
(42,957)
273,128
6,096,092
362,811
(55,165)
307,646
5,802,894
Fee and commission income
Fee and commission expense
Net fee and commission income
1,905,488
(359,092)
1,546,396
1,635,945
(245,126)
1,390,819
Net gain on investments
Net foreign exchange gain
Other operating income
537,234
403,000
88,063
1,028,297
93,540
522,231
71,378
687,149
Operating income
General, administration and other operating expenses
Profit before net impairment charge and taxation
8,670,785
(2,870,053)
5,800,732
7,880,862
(2,563,724)
5,317,138
Net impairment charge
Profit before taxation
(1,336,543)
4,464,189
(1,498,555)
3,818,583
Overseas income tax expense 36
Net profit for the year
(131,961)
4,332,228
(111,036)
3,707,547
Basic earnings per share (AED) 42
Diluted earnings per share (AED) 42
1.06
1.04
0.90
0.88
Consolidated statement of comprehensive income for the year ended 31 December 2012
2012
AED’000
2011
AED’000
Net profit for the year
4,332,228
3,707,547
Other comprehensive income
Exchange difference on translation of foreign operations
Change in the fair value reserve
Directors’ remuneration
Buy back of subordinated convertible notes
(97,085)
1,598,331
(5,450)
3,999
(1,193)
(484,408)
(5,450)
8,188
Other comprehensive income / (expense) for the year
1,499,795
(482,863)
Total comprehensive income for the year 5,832,023
5,832,023
3,224,684
Stock Market Movement for February 2014
Share
National Bank of Abu Dhabi
Period
02/02/2014 - 27/02/2014
Currency
AED
Date
Open
High
Low
Close
Volume
02/02/2014
14.32
14.32
13.82
14.18
1,794,049
03/02/2014
13.82
13.95
13.68
13.68
1,205,292
04/02/2014
13.64
13.73
13.64
13.68
738,777
05/02/2014
13.73
13.77
13.64
13.64
662,380
06/02/2014
13.73
13.73
13.45
13.59
718,173
09/02/2014
13.59
13.73
13.50
13.64
1,279,511
10/02/2014
13.64
13.73
13.59
13.73
1,421,638
11/02/2014
13.73
13.77
13.50
13.55
409,593
12/02/2014
13.64
13.64
13.50
13.64
279,578
13/02/2014
13.64
13.86
13.64
13.86
2,092,552
16/02/2014
13.86
13.91
13.77
13.86
940,815
17/02/2014
13.82
13.86
13.59
13.86
432,059
18/02/2014
13.86
13.86
13.82
13.86
249,572
19/02/2014
13.77
13.91
13.77
13.91
114,292
20/02/2014
13.95
13.95
13.82
13.91
178,816
23/02/2014
13.86
13.91
13.64
13.68
867,610
24/02/2014
13.68
13.86
13.64
13.86
62,272
25/02/2014
13.77
14.05
13.77
13.95
183,040
26/02/2014
14.00
14.09
14.00
14.09
299,460
27/02/2014
13.91
14.23
13.50
13.50
730,824
Aldar Properties
Consolidated income statement for the year ended 31st December 2013
2013
AED’000
2012
AED’000
Revenue
Direct costs
Gross profit
5,379,757
(3,615,700)
1,764,057
11,403,921
(8,166,330)
3,237,591
Selling and marketing expenses
General administrative expenses:
Staff costs
Depreciation and amortisation
Provisions, impairments and write downs
Reversal of provision of receivables from investment in associates and joint ventures
Reversal of provision amounts due from a related party
Other general and administrative expenses
(12,170)
(249,818)
(309,188)
(1,135,997)
-
-
(158,051)
(11,351)
(197,875)
(434,587)
(1,187,102)
50,000
201,025
(100,544)
Share of (loss)/profit from associates and joint ventures
Gain on assets held for sale
Gain on business combination
Fair value loss on investment properties
Impairment loss on available-for-sale financial assets
Finance income
Finance costs
Other income
Profit for the year
Attributable to:
Owners of the company
Non-controlling interests
(16,475)
3,018
2,590,782
(340,544)
-
186,237
(727,020)
630, 364
2,225,195
2,246,294
(21,099)
2,225,195
121,489
-
-
(169,956)
(2,139)
222,989
(835,382)
446,490
1,340,658
1,340,658
-
1,340,658
Earnings per share
Basic and diluted
AED per share
0.34
0.30
Consolidated statement of comprehensive income for the year ended 31st December 2013
2013
AED’000
2012
AED’000
Profit for the year
Other comprehensive income/(loss)
Gain/(loss) on fair valuation of available-for-sale financial assets
Hedging (loss)/gain recognised in profit or loss.
Changes in fair value of cash flow hedges
Director’s remuneration
Total comprehensive income for the year
2,225,195
1,213
(1,525)
13,125
-
12,813
2,238,008
1,340,658
(27,542)
1,023
(7,951)
(16,000)
(50,470)
1,290,188
Total comprehensive income attributable to:
Owners of the company
Non-controlling interest
2,259,107
(21,099)
2,238,008
1,290,188
-
1,290,188
Stock market movement for February 2014
Share
Period
02/02/2014 - 27/02/2014
Currency
AED
Date
Open
High
Low
Close
Volume
02/02/2014
3.45
3.45
3.33
3.33
87,624,080
03/02/2014
3.33
3.34
3.23
3.31
66,063,836
04/02/2014
3.22
3.35
3.22
3.34
83,986,328
05/02/2014
3.40
3.43
3.37
3.41
94,650,576
06/02/2014
3.45
3.47
3.39
3.40
83,423,040
09/02/2014
3.45
3.58
3.44
3.53
187,051,632
10/02/2014
3.58
3.59
3.54
3.57
73,149,704
11/02/2014
3.59
3.61
3.46
3.55
114,246,832
12/02/2014
3.50
3.53
3.38
3.40
166,541,584
13/02/2014
3.38
3.40
3.35
3.35
52,110,440
16/02/2014
3.37
3.40
3.34
3.34
42,328,604
17/02/2014
3.36
3.39
3.31
3.35
53,307,532
18/02/2014
3.36
3.38
3.26
3.30
44,966,332
19/02/2014
3.28
3.29
3.20
3.27
34,841,184
20/02/2014
3.26
3.34
3.26
3.31
31,008,100
23/02/2014
3.31
3.31
3.22
3.22
22,526,856
24/02/2014
3.21
3.23
3.14
3.20
41,601,620
25/02/2014
3.24
3.42
3.20
3.40
62,434,648
26/02/2014
3.42
3.44
3.36
3.36
32,482,974
27/02/2014
3.36
3.37
3.31
3.32
30,852,896
Conclusion
Both companies’ analyses lead to a similar conclusion, i.e., that both companies are worth investing in for the long term. This is in response to the question asked at the end of the introduction.
References
References
Aldar, Sorouh Shareholder Circular Detailing Merger Plans Now Available. (2013, January 28). CPI Financial, 203, 17.
Annual Bank Benchmarking Index Topped by Abu Dhabi Islamic Bank. (2012, October 2). CPI Financial, 12, 21.
Bellini, O. E., & Daglio, L. (2008). New frontiers in architecture: Dubai between vision and reality. Vercelli, Italy: White Star.
Pederson, J. P. (2014). International directory of company histories. Detroit, Mich.: St. James Press.
Lermack B. H. (May 23rd 2003) Steps to a Basic Company Financial Analysis. Retrieved from http://faculty.philau.edu/lermackh/financial_analysis.htm
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