Executive Summary:

In this article we will be studying the financial statements of a major construction company
present in the United Arab Emirates. The company that we are studying is Union Properties.
While studying the financial statements of a company, it is necessary to set a benchmark in order
to compare progress and make estimates. For this reason, we have selected Deyaar which is also
a construction company present in the United Arab Emirates. The first part of this article will
consist of an introduction which will briefly describe the history of the company. The vision,
mission statement and objectives of the company will be described. Strengths and weaknesses of
the company will be presented along with the opportunities that are present in the market and
also the potential threats that they are facing. Analysis table of the financial statements will be
present after it followed by the trend analysis.

Introduction:

Union Properties is a construction company that is based in UAE. It is a leading local and
regional developer of real estate. In the beginning it was the property management unit of Dubai
Islamic Bank, but later it separated and established its own branch. It was founded in 1987 with
its headquarters present in United Arab Emirates. Since its formation the company has grown
significantly. It has become a complete real estate solutions provider which includes property
development, facilities management, property management and owner’s association
management.

The board of directors consists of the following members:

Mr. Khalid Bin Kalban- Chariman

Mr.Saeed Mohammead Al Sharid- Vice Chairman

Mr.Abdul Aziz Al Serkal- Director

Mr.Ali Al Fardan- Director

H.E. Hammad Buamim- Director

Mr. Saeed Bin Drai- Director

H.E. Abdulrahman Almutaiwee-Director

Objectives:
At Union Properties, we are committed to building on our 30-year reputation for excellence to
create the best communities in the most exciting neighborhoods. We are guided by our core
principles of quality, service, creativity, attention, integrity and diversity to delivery for the
people who buy units in our developments, who live in our communities, and who invest in our
company.

Vision:
To be known as a trusted, integrated real-estate Partner, creating value for stakeholders, society
and the economy.

Mission:
To create an urban environment that meets the high standards set by the nation’s leaders, with a
diverse portfolio of quality real estate developments and differentiated services, a return on
investment for stakeholders and value for customers, whilst providing the tools to our employees
to realize their potential.

Core Values:

Ethical and transparent; Enterprising and agile, Trustworthy and reliable, Quality and Value
conscious and committed to the transformation of the UAE under our leadership.
SWOT Analysis:

Strengths

The board members have a good reputation and powerful links, for example two members are a
part of UAE’s federal government. In their products and services, they have built a reputation of
delivering high quality infrastructure in proper time. Union Properties has formed relationships
with Master developers present in the United Arab Emirates which shows why the company is
extremely favored by its customers. Large number of projects are carried out by the company
from time to time due to which it has remained update with the changing client tastes and trends.
Another important feature of this company is that it is compliant with the laws of sharia due to
which it is attractive for Muslim investors.

Weaknesses

Union Properties is trying to expand into next markets such as Kazakhstan, Saudi Arabia, India
and Qatar, but one problem they will face is that they don’t have any staff that is experienced
with construction contracts in these countries. Also these countries are not aware of the
reputation of Union Properties and it will take considerable time before it establishes itself in the
market. Another major drawback that this company is facing is the lack of investment portfolio,
but some projects are underway which are focused at lease income generation.

Opportunities

There is considerable scope for construction contracts across the region, specifically in the Asian
Sub-continent. Union Properties could attempt to test the markets of these countries. There is a
probability of large scale construction boom in Abu Dhabi Market, providing a chance for the
company to establish itself in the region. It also has opportunity to develop investment property
portfolio of attractive quality.

Threats

If the government applies new policies for correction of Dubai’s property market, then this could
potentially hamper the potential of new projects and scare away investors. Constant increase in
construction material prices is making it difficult to make estimates and keep projects in
profitable range. If there is armed conflict between USA and Iran, then this would affect the
whole area economically especially Iran which is a major trading center. Degradation of political
condition in Lebanon can greatly affect the company’s international property portfolio.
Income Statement:

Horizontal Analysis
Horizontal Analysis

Balance Sheet
Increase or
      (Decrease)

Percentag
  2015 2016 Amount e

(AED) (AED) (AED)  

Assets        
Non-current Assets        
Intangible Assets 295 295 0 0.00%
Property, plant and equipment 86,572 145,778 59,206 68.39%
6,070,09 6,098,85
Investment property 5 2 28,757 0.47%
Development Properties 42,608 40,084 (2,524) -5.92%
Investments in joint ventures 582,061 510,177 (71,884) -12.35%
Noncurrent receivables 383,319 409,842 26,523 6.92%
7,164,95 7,205,02
Total noncurrent assets 0 8 40,078 0.56%
         
Current assets        
Other investments 109,826 173,399 63,573 57.89%
Inventories 48,064 61,547 13,483 28.05%
Contract work in progress 226,839 230,049 3,210 1.42%
Trade and other receivables 363,822 522,282 158,460 43.55%
Due from related parties 9,549 12,676 3,127 32.75%
(144,342
Cash and bank balances 368,968 224,626 ) -39.12%

Total Current asset 1,127,06 1,224,57 97,511 8.65%

 8 9
         
8,292,01 8,429,60
Total Assets 8 7 137,589 1.66%

         
Equity and liabilities        
3,711,95 3,971,79
Share capital 9 6 259,837 7.00%
Treasury Shares (4,998) -    
statutory reserve 305,505 326,647 21,142 6.92%
General Reserves 313,697 313,697 0 0.00%
Retained Earnings 995,870 926,313 (69,557) -6.98%
         
5,322,03 5,538,45
Total Equity 3 3 216,420 4.07%
         
Liabilities Noncurrent Liabilities        
1,304,34 1,268,78
Long term loans 0 4 (35,556) -2.73%
Advances from sale of properties 52,923 51,249 (1,674) -3.16%
noncurrent payables 1,000 - - -
Provision for staff terminal benefits 60,571 54,676 (5,895) -9.73%

1,418,83 1,374,70
Total noncurrent liabilities 4 9 (44,125) -3.11%
         
Current liabilities        
1,096,06 1,106,42
trade and other payables 8 2 10,354 0.94%
Advances and Deposits 134,127 115,583 (18,544) -13.83%
Due to related parties 5,311 4,386 (925) -17.42%
Short term bank borrowings 183,070 194,740 11,670 6.37%
Current portion of long term bank loans 132,575 95,314 (37,261) -28.11%
 1,551,15 1,516,44
Total current liabilities 1 5 (34,706) -2.24%
         

2,969,98 2,891,15
Total Liabilities 5 4 (78,831) -2.65%

8,292,01 8,429,60
Total equity and liabilities 8 7 137,589 1.66%

         

Horizontal Analysis
Income Statement

      Increase or (Decrease)

  2015 2016 Amount Percentage

  (AED) (AED) (AED)  

Property management and sales revenue 79,837 76,394 (3,443) -4.51%
Contracting and other operating activities 533,362 624,494 91,132 14.59%
Gain on sale of investment properties 66,747 47,665 (19,082) -40.03%
Share in profit of joint ventures 55,362 49,280 (6,082) -12.34%
Gain on valuation of properties 669,463 172,766 (496,697) -287.50%
Finance income 22,460 19,440 (3,020) -15.53%
Other income 37,845 144,774 106,929 73.86%
         
Total income 1,465,076 1,134,813 (330,263) -29.10%
         
Direct costs (793,452) (714,728) 78,724 -11.01%
Administrative and general expenses (124,350) (124,770) (420) 0.34%
Finance expense (112,665) (83,893) 28,772 -34.30%

Profit for the year attributable to the

shareholders of the company 434,609 211,422 (223,187) -105.56%

         
 Basic and diluted earnings per share 0.11 0.05 (0.06) -120.00%

         

The total non-current assets of the company increased by 40078 showing a change of 0.56%
change.
The total current assets increased by 97511 showing a change of 8.65%
The total assets increase by 137589 showing an increase of 1.66%
Total equity increased by 216420 showing a change of 4.07%
The total noncurrent liabilities decreased by 44125showing a decrease of -3.11%.
The total liabilities decreased by showing 78831 a decrease of -2.65%.
The total liabilities and equities increase 137589 by showing an increase of 1.66%.
The total income decreased by 330263 showing a decrease of 29.10%
Profit for shareholders decreased by 223187 showing a decrease of 105.56%

Balance Sheet:
The chart of net cash shows that there was a decrease from 1500000 to 4000000 in 2013 than it
gradually increased to 100000 in 2015 then again slightly decreased.
Cash from investing activities reach zero in 2013 but gradually increase up to 300000 till 2015.
In 2016 again there was a decrease and Net cash reached 10000.

Net cash used in financing activities fell to -2000000 in 2013 and then reached zero in 2014. It
showed some increment in 2015 and again decreased in 2016.
 Total noncurrent assets
8000000

7000000

6000000

5000000

4000000

3000000

2000000

1000000

0
2012 2013 2014 2015 2016

Total Current asset

3000000

2500000

2000000

1500000

1000000

500000

0
2012 2013 2014 2015 2016
 Total Assets
10000000
9000000
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
2012 2013 2014 2015 2016

Total income
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2013 2014 2015 2016
 Profit for the year attributable to the share-
holders of the company
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2013 2014 2015 2016