Abu Dhabi National Hotels: Prepare a trend analysis of all financial statements in Exhibit 3 using 2007 as the base year. Interpret the analysis. What are your main observations? 2
Discussion Questions–Abu Dhabi National Hotels:
1) Prepare a trend analysis of all financial statements in Exhibit 3 using 2007 as the base year. Interpret the analysis. What are your main observations?
2) What are the strengths and weaknesses of ratio analysis? What are its inherent limitations? When is it more likely to be useful? Calculate ADNH Profitability, Efficiency, Liquidity, and Leverage Ratios (focus on the ones we discussed in class). Perform DuPont De-Composition and interpret it. Comment on time trends in ratios.
3) Why is segment analysis useful? Find a section of the Accounting Standards Codification that provides guidance for segment disclosure. Demonstrate in class how you searched for it.
4) Calculate ratios in step (2) on segment level. How does it help your conclusions about the company?
Main Financials
| EXHIBIT 3 : ADNH MAIN FINANCIALS, 2007–2012 | ||||||
| Abu Dhabi National Hotels PJSC | ADNH | |||||
| Capital & Shareholders' Equity (AED Thousand) | ||||||
| Shareholders' Equity | 7798700 | 8239684 | 8136270 | 8258422 | 8148653 | 2880843 |
| Assets, Liabilities (AED Thousand) | ||||||
| Fixed Assets | 8,821,779 | 9,116,072 | 8,335,179 | 7,485,195 | 6,966,748 | 796,107 |
| Current Assets | 745,605 | 936,873 | 812,690 | 998,498 | 1,168,896 | 1,334,435 |
| Other Assets | 223,126 | 83,688 | 262,491 | 406,316 | 623,679 | 1,268,944 |
| Total Assets | 9,790,510 | 10,136,633 | 9,410,360 | 8,890,009 | 8,759,323 | 3,399,486 |
| Current Liabilities | 773,723 | 951,505 | 668,001 | 572,965 | 553,693 | 458,402 |
| Long-Term Liabilities | 1,045,527 | 819,666 | 474,292 | 1,875 | 5,817 | 9,760 |
| Other Liabilities | 172,560 | 125,778 | 131,797 | 56,747 | 51,160 | 50,481 |
| Total Liabilities | 1,991,810 | 1,896,949 | 1,274,090 | 631,587 | 610,670 | 518,643 |
| Total Liabilities & Shareholders' Equity | 9,790,510 | 10,136,633 | 9,410,360 | 8,890,009 | 8,759,323 | 3,399,486 |
| Profitability (AED Thousand) | ||||||
| Revenues | 1,845,930 | 1,819,948 | 1,749,325 | 1,803,469 | 1,739,880 | 1,445,956 |
| Net Profit for the Year | 199,273 | 263,862 | 304,910 | 432,921 | 292,737 | 471,659 |
| Cash Dividends | 50,000 | 50,000 | 100,000 | 250,000 | 200,000 | 144,000 |
| Cash Flow (AED Thousand) | ||||||
| Cash and Cash Equivalents at the Beginning of the Year | 257,544 | 414,697 | 584,065 | 471,853 | 606,456 | 661,740 |
| Net Cash Flow From (Used In) Operating Activities | 225,579 | 291,966 | 449,406 | 571,589 | 556,431 | 383,399 |
| Net Cash Flow From (Used In) Investing Activities | (324,087) | (913,868) | (842,279) | (255,435) | -558,684 | -288,866 |
| Net Cash Flow From (Used In) Financing Activities | 90,301 | 494,749 | 223,725 | (203,942) | -132,350 | -149,817 |
| Differences in Exchange | (220) | |||||
| Cash and Cash Equivalents at the End of the Year | 249,337 | 287,544 | 414,697 | 584,065 | 471,853 | 606,456 |
Income Statement
| EXHIBIT 4 : ADHN CONSOLIDATED STATEMENT OF INCOME | |||
| Year ended 31 December | |||
| 2012 | 2011 | ||
| AED'000 | AED'000 | ||
| Operating revenues | |||
| Cost of services | |||
| Gross Profit | 1,845,930 | 1819948 | |
| Investment and other income, net | 21,945 | 13,331 | |
| General and administrative expenses | -47,287 | -25,347 | |
| Finance costs, net | -41,089 | -4,787 | |
| Pre-opening expenses | -29,678 | -24238 | |
| Profit before income tax | 201,129 | 265,410 | |
| Income tax expense | -1,856 | -1,548 | |
| Profit for the year | 199,273 | 263,862 | |
| Basic and diluted earnings per shtare (AED) | 0.20 | 0.26 | |
| Source : ADNH Annual Report 2012 | |||
| EXHIBIT 5 : ADHN CONSOLIDATED STATEMENT OF INCOME | |||
| Year ended 31 December | |||
| 2012 | 2011 | ||
| AED'000 | AED'000 | ||
| Profit for the year | 199,273 | 263,862 | |
| Other comprehensive income: | |||
| Net movement in fair value of available for sale | |||
| investments | 693 | -19,029 | |
| Director's remuneration | -5,800 | -5,550 | |
| Changes in fair value of derivatives in an effective | |||
| cash flow hedge | 2,834 | -35,970 | |
| Exchange difference arising on translation of | |||
| overseas operations | -1,402 | 101 | |
| Loss on revaluation of land | -586,582 | – | |
| Other comprehensive loss for the year, net of tax | -590,257 | -60,448 | |
| Total comprehensive (loss) / income for the year | -390,984 | 203,414 | |
| Source : ADNH Annual Report 2012 | |||
Balance Sheet
| EXHIBIT 6 : ADHN CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |||
| Year ended 31 December | |||
| 2012 | 2011 | ||
| ` | AED'000 | AED'000 | |
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 8,821,779 | 9,116,072 | |
| Investment in an associate | 12,845 | 13,785 | |
| Available for slae investments | 205,003 | 31,179 | |
| Goodwill | 5,278 | 5,278 | |
| 9,044,905 | 9,166,314 | ||
| Current assets | |||
| Inventories | 49,659 | 45,286 | |
| Accounts receivable and prepayments | 394,257 | 406,513 | |
| Available for sale investments | 5,823 | 178,954 | |
| Investments carried at fair value through | |||
| profit and loss | 21,529 | 18,576 | |
| Cash and short term deposits | 274,337 | 287,544 | |
| 745,605 | 936,873 | ||
| Total assets | 9,790,510 | 10,103,187 | |
| EQUITY | |||
| Share capital | 1,000,000 | 1,000,000 | |
| Legal and statutory reserves | 811,576 | 771,722 | |
| Asset revaluation reserve | 4,976,462 | 5,563,044 | |
| Foreign currency translation reserve | 654 | 2,056 | |
| Retained earnings | 917,854 | 814,235 | |
| Cumulative changes in fair values | |||
| of available for sale investments | 148,627 | 147,934 | |
| Cumulative changes in the fair value of derivatives | -106,473 | -109,307 | |
| Proposed dividends | 50,000 | 50,000 | |
| Total equity | 7,798,700 | 8,239,684 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Term loans | 1,045,527 | 792,235 | |
| Derivatives is an effective cash flow hedge | 63,079 | 64,119 | |
| Accounts payable and accruals | 41,404 | 80,114 | |
| Provision for employees' end of service benefits | 68,077 | 61,659 | |
| 1,218,087 | 998,127 | ||
| Source : ADNH Annual Report 2012 |
Cash Flow Statement
| EXHIBIT 7 : CASH FLOW STATEMENT | ||
| Year ended 31 December | 2012 | 2011 |
| Cash flows from operating activities | AED'000 | AED'000 |
| Profit before income tax | 201,129 | 265,410 |
| Adjustments for: | ||
| Depreciation of property, plant and equipment | 155,773 | 129,431 |
| Provision for employees' end of service benefits | 18,824 | 18,668 |
| Provision for impairment of accounts receivables | 9,423 | 4,689 |
| Reversal of provision of impairment of accunts receivable | -5,783 | -22,697 |
| Interest expense | 43,578 | 7,452 |
| Interest income | -2,489 | -2,665 |
| Dividend income from quoted investments and share | 4,520 | 3,952 |
| (Gain)/loss on investments carried at fair value through profit or loss | -2,953 | -3,910 |
| Gain on sale of property, plant and equipment | -13,495 | -12,670 |
| Gain on sale of available for sale investments | – | -2,247 |
| Inventories | -4,373 | 4,979 |
| Accounts receiveable and prepayments | 8,616 | -10,890 |
| Accounts payable and accruals | -158,339 | -141,386 |
| Cash from operations | 245,391 | 238,032 |
| Payment of employees' end of service benefits | -12,406 | -15,469 |
| Tax paid | -1,856 | -1,548 |
| Directors' remuneration paid | -5,550 | -5,800 |
| Net cash generated from operating activities | 225,579 | 215,215 |
| Cash flows from investing activities | ||
| Additions to property, plant and equipment | -370,060 | -870,151 |
| Proceeds from sale of property, plant and equipment | 28,008 | 21,808 |
| Advances to contractors for assets under construction | 6,418 | 45,497 |
| Short term deposits | 5,000 | – |
| Dividend income received | 4,058 | 3,517 |
| Interest received | 2,489 | 2,665 |
| Proceeds from sale of available for sale investments | – | 17,049 |
| Net cash used in investing activities | -324,087 | -779,615 |
| Cash flows from financing activities | ||
| Divideneds paid | -50,000 | -100,000 |
| Loans obtained during the year | 516,270 | 600,000 |
| Loans repaid during the year | -249,000 | 748 |
| Interest paid | -126,969 | -63,501 |
| Net cash provided by financing activities | 90,301 | 437,247 |
| Net decrease in cash and cash equivalents | -8,207 | -127,153 |
| Cash and cash equivalents at beginning of the year | 257,544 | 384,697 |
| Cash and cash equivalents at end of the year | 249,337 | 257,544 |
Operating Segments Results
| EXHIBIT 8 : ADNH OPERATING SEGMENT RESULTS 2012 & 2011 | ||||||
| Hotels | Retail Services | Catering Services | Transport Services | Holding | Total | |
| AED'000 | AED'000 | AED'000 | AED&apos
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