FINANCIAL RATIOS

For
RICS APC

BY

DHANUSHKA SAMPATH
BSc(Hons)QS, Adv.Dip. in Civil Eng., ACMA, CGMA
Ratio Calculation

Ratios application for Gulf Engineering and Contracting SAOG and Subsidiaries
Type of
Ratio Formulae Application - 2015 Application - 2014 Uses/Description
Ratio
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 19,179 21,506
= = 0.06 or 6% Indicates the percentage of sales riyals available
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 = = 0.06 𝑜𝑟 6%
325,970 350,977 for expenses and profit after the cost of
Gross Profit Margin merchandise is deducted from sales. The gross
margin varies between industries and often varies
between companies within the same industry.
Profitability 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 Tells you the profit per sales riyals after all
−22,537 11,149
Ratios
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
= = −0.07 𝑜𝑟 7% = = 0.03 or 3% expenses are deducted from sales. This margin will
Net Profit Margin 325,970 350,977
vary between industries as well as between
companies in the same industry.
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 + 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 325,970 + 8,555 (350,977 + 9,775) Indicates how profitable a company is relative to
= = 0.75 = = 0.78 its total assets. ROA gives an idea as to how
Return on Assets 𝐴𝑠𝑠𝑒𝑡𝑠 447,416 463,137
efficient management is at using its assets to
generate earnings
= 308,833 - 271,324 = 37,509 = 325,972 - 258,471 = 67,501 An indicator of whether the company will be able
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
to meet its current obligations (pay its bills, meet
its payroll, make a loan payment, etc.) If a
Working Capital company has current assets exactly equal to
current liabilities, it has no working capital. The
greater the amount of working capital the more
likely it will be able to make its payments on time
Liquidity 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 308,833 325,972 This tells you the relationship of current assets to
Ratios 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = = 1.14 = = 1.26
Current Ratio 271,324 258,471 current liabilities. A ratio of 3:1 is better than 2:1.
And 1:1 ratio means there is no working capital

(𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦) (308,833 −13,353) (325,972 − 21,131) This ratio is similar to the current ratio except that
= = 1.09 = = 1.18
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 271,324 258,471 Inventory, Supplies, and Prepaid Expenses are
Quick Ratio excluded. This indicates the relationship between
the amount of assets that can quickly be turned
into cash versus the amount of current liabilities

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑 310,213 335,465 The number of times per year that Inventory turns
= = 23.23 = = 15.88
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 13,353 21,131 over. Keep in mind that the result is an average,
since sales and inventory levels are likely to
Inventory Ratio fluctuate during the year. Since inventory is at cost
(not sales value), it is important to use the Cost of
Goods Sold. Also be sure to use the average
Efficiency
balance of inventory during the year
Ratios
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 195,944 213,162 The average number of days that it took to collect
× 365 = × 365 = 219.41 = × 365 = 221.68
Receivable Days 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 325,970 350,977 the average amount of accounts receivable during
the year.
𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠 78,101 77,507 The average number of days that it took to pay the
Payable Days × 365 = × 365 = 91.89 = × 365 = 84.33 average amount of accounts payable during the
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑 310,213 335,465
year.

DHANUSHKA SAMPATH BSc(Hons)QS, Adv.Dip. in Civl Eng, ACMA, CGMA

Ratio Calculation

Ratios application for Gulf Engineering and Contracting SAOG and Subsidiaries
Type of
Ratio Formulae Application - 2015 Application - 2014 Uses/Description
Ratio
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 372,712 359,924 The proportion of a company's assets supplied by
= = 3.68 = = 3.55 the company's creditors versus the amount
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 101,388 101,453
supplied the owner or stockholders. In this
Debt to Equity Ratio
example the creditors have supplied OMR 3.68 for
each OMR 1.00 supplied by the stockholders in
2015
Capital 𝑃𝑟𝑜𝑓𝑖𝑡 𝐵𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥 −22,537 11,149
= = −2.63 = = 1.14 Indicates a company's ability to meet the interest
Structure 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 9,555
8,555 payments on its debt. In the example the company
Ratios Interest Coverage Ratio
is earning 1.14 times (in 2014) the amount it is
required to pay its lenders for interest

𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥 −28,509 1,209 states the number of times an organization is
= 0
= N/A = = 0.32
Dividend Coverage Ratio 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝐷𝑒𝑐𝑙𝑎𝑟𝑒𝑑 3,775 capable of paying dividends to shareholders from
the profits earned during an accounting period

(𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑆ℎ𝑎𝑟𝑒 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑)

Expresses the corporation's net income after taxes
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 on a per share of common stock basis. The
computation requires the deduction of preferred
Investor
Earnings Per Share (EPS) dividends from the net income if a corporation has
Ratios
preferred stock. Also requires the weighted
average number of shares of common stock during
the period of the net income.

DHANUSHKA SAMPATH BSc(Hons)QS, Adv.Dip. in Civl Eng, ACMA, CGMA

 FINANCIAL STATEMENTS

GULFAR ENGINEERING AND CONTRACTING

Financial Statements for the year 2015

(Extracted from : https://www.msm.gov.om/)

Galfar Engineering & Contracting SAOG & Subsidiaries

Consolidated Statement of Comprehensive Income DRAFT

For the year ended 31 December 2015 Amount in RO '000s
Parent Company Consolidated
Notes 2015 2014 2015 2014

Contract income 322,558 350,977 325,692 357,282

Sales and services income 25 3,412 2,982 19,542 15,228

Total revenue 325,970 353,959 345,234 372,510

Other income 26 3,422 3,012 3,422 3,039

Contract and other direct costs 27 (310,213) (335,465) (326,708) (350,070)

Gross Profit 19,179 21,506 21,948 25,479

General and administrative expenses 28 (9,799) (10,357) (11,275) (12,159)

Profit from operations before provision for

impairment of receivables
9,380 11,149 10,673 13,320

Provision for impairment of receivables 9,10 (31,917) - (31,408) (660)

(Loss) / profit from operations after provision

for impairment of receivables
(22,537) 11,149 (20,735) 12,660

Financing costs, net 30 (8,555) (9,755) (9,402) (10,371)

Share in loss of associates 6 - - (758) (1,366)
Fair value loss on forex forward contracts 23 (1,229) - (1,229) -
(Loss) / profit before tax (32,321) 1,394 (32,124) 923
Taxation 24 3,812 (185) 3,265 (726)
(Loss) / profit for the year (28,509) 1,209 (28,859) 197

Other comprehensive income / (loss)

Item that may be subsequently reclassified to
profit or loss:
Foreign currency translation difference - - (801) (71)

Total comprehensive (loss)/income for the year (28,509) 1,209 (29,660) 126

(Loss)/profit attributable to:

Equity shareholders of parent company (28,509) 1,209 (28,882) 169

Non-controlling interests - - 23 28

(28,509) 1,209 (28,859) 197

Basic earnings per share 31 (0.069) 0.003 (0.070) 0.001

The attached notes 1 to 39 are an intergral part of these consolidated financial statements.
Galfar Engineering & Contracting SAOG & Subsidiaries

Consolidated Statement of Financial Position

As at 31 December 2015 Amount in RO '000s
Parent Company Consolidated
Notes 2015 2014 2015 2014
ASSETS
Non-current Assets
Property, plant and equipment 3 88,282 91,891 101,411 104,685
Intangible assets 4 760 1,131 29,307 19,225
Investment in subsidiaries 5 10,203 4,496 - -
Investment in associates 6 8,706 8,706 3,899 4,861
Investment available for sale 125 125 145 145
Retentions receivables 9 30,507 30,816 30,539 30,896
138,583 137,165 165,301 159,812
Current Assets
Inventories 7 13,353 21,131 15,055 22,379
Due from customers on contracts 8 59,547 67,557 59,985 68,743
Contract and trade receivables 9 195,944 213,162 207,828 225,927
Advances, prepayments and other receivables 10 23,936 22,094 28,839 21,532
Deposits with banks 11 1,258 1,293 1,263 1,324
Cash and cash equivalents 12 14,795 735 18,035 2,568
308,833 325,972 331,005 342,473
Total Assets 447,416 463,137 496,306 502,285
EQUITY AND LIABILITIES
Equity
Share capital 13 41,522 37,747 41,522 37,747
Share premium 14 18,337 23,370 18,337 23,370
Statutory reserve 15 13,840 12,582 14,093 12,835
Foreign currency translation reserve 16 - - (2,660) (1,859)
Retained earnings 1,005 29,514 539 29,421
74,704 103,213 71,831 101,514
Non controlling interest - - 975 980
Total Equity 74,704 103,213 72,806 102,494
Non-current Liabilities
Term loans 18 60,658 68,202 74,947 73,588
Employees' end of service benefits 22 12,181 11,066 12,396 11,253
Advance payables 23 27,224 16,146 27,224 17,744
Deferred tax liability 24 1,325 6,039 1,924 6,638
101,388 101,453 116,491 109,223
Current Liabilities
Term loans -current portion 18 38,912 32,380 39,523 32,982
Short term loans 19 32,750 28,000 37,547 33,027
Bank borrowings 20 39,521 62,691 40,193 63,503
Trade payables 21 78,101 77,507 88,772 87,044
Other payables and provisions 23 81,108 56,720 96,867 70,159
Provision for taxation 24 932 1,173 4,107 3,853
271,324 258,471 307,009 290,568
Total Liabilities 372,712 359,924 423,500 399,791
Total Equity and Liabilities 447,416 463,137 496,306 502,285
Net Assets per share (RO) 32 0.180 0.273 0.173 0.269

The consolidated financial statements were approved by board of directors on 9 March, 2016 and were signed on their behalf by:

____________________ ____________________
Chairman Chief Finance Officer

The attached notes 1 to 39 are an intergral part of these consolidated financial statements.
Galfar Engineering & Contracting SAOG & Subsidiaries

Consolidated Statement of Cash Flows

For the year ended 31 December 2015 Amount in RO '000s
Parent Company Consolidated
2015 2014 2015 2014
Operating Activities
(Loss)/profit before taxation (32,321) 1,394 (32,124) 923
Adjustments for:
Depreciation on property, plant and equipment's 20,772 21,794 22,835 23,571
Amortisation of intangible assets 398 400 408 409
Finance cost 8,555 9,755 9,402 10,371
Share of loss of associates - - 758 1,366
Employees' end of service benefits 1,115 147 1,143 186
Gain on disposal of plant and equipment's (2,014) (1,549) (2,011) (1,555)
Working capital movements:
Inventories 7,778 14,438 7,324 14,109
Trade and other receivables 23,386 (27,914) 19,550 (35,330)
Trade and other payables 24,982 (12,784) 28,436 1,713
Retention receivables 309 1,430 357 1,350
Advance payables 11,078 6,696 9,480 8,294
Income tax paid (1,143) (1,049) (1,195) (331)
Net cash generated from operating activities 62,895 12,758 64,363 25,076
Investing Activities
Purchases of property, plant and equipment's (18,632) (5,025) (21,298) (9,708)
Purchases of intangible assets (27) (15) (10,468) (18,099)
Disposal of property, plant and equipment's 3,483 3,291 3,726 3,352
Investment in associates and subsidiaries (5,707) (2,556) (597) 146
Bank deposits 35 10,258 61 10,267
Interest income 85 98 85 110
Net cash (used in) / generated from investing activities (20,763) 6,051 (28,491) (13,932)
Financing Activities
Term loans (1,012) 23,807 7,900 28,740
Short term loans 4,750 (7,400) 4,520 (2,373)
Bank borrowings (23,170) (25,022) (23,310) (26,745)
Interest expenses (8,640) (9,853) (9,487) (10,481)
Dividend paid - (3,775) (28) (3,809)

Net cash used in financing activities (28,072) (22,243) (20,405) (14,668)

Net increase/(decrease) in cash and cash equivalents 14,060 (3,434) 15,467 (3,524)

Cash and cash equivalents at beginning of the year 735 4,169 2,568 6,092
Cash and cash equivalents at end of the period 14,795 735 18,035 2,568

The attached notes 1 to 39 are an intergral part of these consolidated financial statements.
Galfar Engineering & Contracting SAOG & Subsidiaries

Statement of Changes in Equity -Parent Company

For the year ended 31 December 2015 Amount in RO '000s
Attributable to equity holders of the parent company
Share Statutory Retained
Share Capital Total
Premium Reserve Earnings

Balance as at 1 January 2014 37,747 23,370 12,582 32,080 105,779

Comprehensive income:

Profit and total comprehensive income for the year - - - 1,209 1,209

Transcations with shareholders

Dividend paid - 2013 - - - (3,775) (3,775)

Balance as at 1 January 2015 37,747 23,370 12,582 29,514 103,213

Comprehensive loss:
-
Loss and total comprehensive loss for the year - - (28,509) (28,509)

Transcations with shareholders

Transfer to statutory reserve (note 15) - (1,258) 1,258 - -

Stock dividend - 2014 (note 17) 3,775 (3,775) - - -

Total transactions with shareholders 3,775 (5,033) 1,258 - -

Balance as at 31 December 2015 41,522 18,337 13,840 1,005 74,704

The attached notes 1 to 39 are an intergral part of these consolidated financial statements.
Galfar Engineering & Contracting SAOG & Subsidiaries
Statement of Changes in Equity -Consolidated
For the year ended 31 December 2015 Amount in RO '000s
Attributable to equity holders of the parent company
Foreign Non
Share Share Statutory Retained controlling Grand
Currency Total
Capital Premium Reserve Earnings interest Total
Translation
Balance at 1 January 2014 37,747 23,370 12,888 (1,788) 32,978 105,195 986 106,181
Comprehensive income:
Profit for the year - - - - 169 169 28 197
Other comprehensive income:
Foreign currency translation reserve - - (71) - (71) - (71)
Total comprehensive income for the year - - - (71) 169 98 28 126
Transactions with shareholders
Adjustment of earlier year in subsidiary companies - - (115) - 111 (4) - (4)
Transfer of statutory reserve - - 62 - (62) - - -
Dividend paid - 2013 - - - - (3,775) (3,775) (34) (3,809)
Total transactions with shareholders - - (53) - (3,726) (3,779) (34) (3,813)
Balance as at 1 January 2015 37,747 23,370 12,835 (1,859) 29,421 101,514 980 102,494
Comprehensive loss:
Loss for the year - - - - (28,882) (28,882) 23 (28,859)
Other comprehensive income:
Foreign currency translation reserve - - - (801) - (801) - (801)
Total comprehensive loss for the year - - - (801) (28,882) (29,683) 23 (29,660)
Transactions with shareholders
Transfer to statutory reserve (note 17) - (1,258) 1,258 - - - - -
Stock dividend - 2014 (note 15) 3,775 (3,775) - - - - - -
Dividend paid - 2014 (note 15) - - - - - - (28) (28)
Total transactions with shareholders 3,775 (5,033) 1,258 - - - (28) (28)
Balance as at 31 December 2015 41,522 18,337 14,093 (2,660) 539 71,831 975 72,806

The attached notes 1 to 39 are an intergral part of these consolidated financial statements.