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Table of content: Page

Summary--------------------------------------------- ---------- 2

Eastern Housing Limited------------------------- -----------3 s

IFRS analysis-----------------------------------------------------3

Ratio analysis---------------------------------------------------4 to 8

Delta Brac Housing Finance Corporation Limited------8

IFRS analysis ----------------------------------------------------8

Ratio analysis---------------------------------------------------9 to 13

Conclusion ------------------------------------------------------14

Reference -------------------------------------------------------15

Appendix---------------------------------------------------------15
Summary:--

The Financial statement of the project is analyzing of with emphasis on the balance sheet
liabilities and equity section for 2 companies of the same industry in Bangladesh. In this regard
which the company we has been chosen to analyze EASTERN HOUSING LIMITED and Delta Brac
Housing Finance Corporation Limited. The two companies are popular in Bangladesh and they
are tried to provide their service. The assignment which we are analysis of annual report on
these particular companies in 2 years in 2014 and 2015(June 30 the annual time). First we
identify the specific IFRS standard rules which say about the financial statement and disclosure.
Then we are comparative to analysis of the presentation of liabilities and equity section among
the chosen 2 companies. We are also analysis ratios calculation, give comment their
performance and describe about their share.

Delta Brac Housing Finance Corporation Ltd (DBH) is the pioneer, largest and special in Housing
Finance institution in the privet sector of the country. After commendable growth in creating
home ownership in Dhaka and other major cities of the country. At the same time, the company
has been playing an active role in promoting the real estate sector to the large cross section of
prospective clients who had but yet unfulfilled dream of owning a home.

Eastern Housing Limited (the “company”), was incorporated in 1964 as a Private Limited
Company under the Companies Act, 1913. In 1993 the company was registered itself with
Registrar of Joint Stock Companies& Firms (RJSC) as a Public Limited Company which is one of
the largest Real Estate Company in the private sector. The company raised its capital by way of
an overwhelmingly subscribed IPO of shares and debentures through a prospectus issued in
July, 1994. The company is the pioneer as well as the only Publicly Listed Company in the
country in Real Estate Business under the private sector. Page -2

EASTERN HOUSING LIMITED


1. Balance sheet >
The accounting standard IFRS 9 sets out the requirements for recognizing and measuring
financial assets, financial liabilities and some contracts to buy or sell non-financial items.
IFRS 9 Financial Instruments issued not yet adopted as BFRS. The standard does not change
the basic accounting model for financial statement BAS 1. And Financial Instruments
Disclosures is BFRS 7 complied. Eastern Housing Ltd mostly follows IFRS 9 standard and they
also record notes for details as BAS -18 ‘’Revenue’’ and BFRI – 15.

 Current liability and provisions: IFRS 9 doesn't change the basic accounting model for financial
liabilities under IAS 39. Financial liabilities are measured at amortized cost unless the fair value
option is applied. Liability recognized [IFRS 9, paragraph 6.3.1-6.3.3]. Eastern Housing Limited
records their all items under current liability in fair value. Company gives detail information in
notes 22, 23 and 24.*And company follows this standard till (2014-2015).
 Non-current liabilities: IFRS 9 doesn't change the basic accounting model for financial liabilities
under IAS 39. Financial liabilities are measured the fair value. [IFRS 9, paragraph 4.2.1]. Eastern
Housing Limited records long term loan and deferred tax in fair value under IFRS 9. Company
gives detail information in notes 6 and provision for income tax –note [BAS-12 ‘’Income Tax’’]. **
And company follows this standard till (2014-2015).
 Shareholder’s equity: All equity investments in scope of IFRS 9 are to be measured at fair value
in the statement of financial position. IFRS says record detail information about share capital in
balance sheet. But company gives detail in notes 33 and it records outstanding share end of the
year as per BAS-33 “Earning Per Share” Note -33.*** And company follows this standard till
(2014-2015).
- IFRS 9 doesn't change the basic accounting model for financial liabilities under IAS 39. Financial
liabilities are measured at amortized cost unless Liability recognized [IFRS 9, paragraph 6.3.1-
6.3.3]. Limited records their all items under current liability in fair value.*And company follows
this standard till (2014-2015).

Note:

*Notes for current liability and provisions have under appendix page 72 and details 81 in Eastern
Housing Limited annual report in notes no. of 22, 23 and 24.

** Notes for non-current liability have under appendix page 81 in Eastern Housing Limited annual report
in notes no. of 6.

*** Notes for share capital and all other items have under appendix page 86 in Eastern Housing Limited
annual report in EPS Note- 33.

Ratios:

Formula for ratios calculation:

1. Debt to assets ratio = Total liabilities/Total assets


2. Long term debt to assets ratio = Long term debt/ Total assets
3. Debt to equity ratio = Total liabilities/Total equity
4. Financial leverage ratio =Total debt/ Shareholder’s equity
5. Return on total capital =EBIT/Total capital
6. Return on equity =Net income/ Shareholder’s equity
7. Basic Earnings per share = Net income/ Outstanding shares
8. Diluted Earnings per share= (Net income- preferred dividends)/(Outstanding shares +diluted
shares)
9. Book value per shares = Shareholder’s equity/ Outstanding shares
10. Price to earnings ratio =Market value per share/ Earnings per share
11. Dividends per shares = Total dividends/Number of shares
12. Dividend payout ratio =Total dividends/Net income
EASTERN HOUSING LIMITED
Item 2014 2015
Net income 4,445,702,037 211,091,308
Total assets 23,493,131,160 22,059,578,795
Total liability 17,632,720,964 16,109,029,872
Total debt 29,909,998 114,000,000
Long term debt 29,909,998 750,000,000
Total equity 5,860,410,196 5,950,548,923
Total capital 2,000,000,000 2,000,000,000
EBIT 346,243,610 344,141,867
Preferred stock 0 0
Preferred dividend 0 0
Total dividend 120,952,581 127,000,209
EPS 2.94 2.49
Market value per share 10 10
Outstanding per share 80,635,054 84,666,806
Diluted share 0 0
Shareholder equity 806,350,540 846,668,060

2 Ratio 2014 2015


a. Debt to assets ratio 75.05% 73.03%
b. Long term debt to assets
ratio 0.13% 3.39%
c. Debt to equity ratio 300.87% 270.71%
d. Financial leverage ratio 3.70% 13.46%

3 a. Return on total capital 17.31% 17.20%


b. Return on equity 551.33% 24.93%
4
a. Basic Earnings per share 5513.36 249.32
b. Diluted Earnings per share 5513.36% 249.32%
c. Book value per shares 10 10
d. price to earnings ratio 3.401360544 4.016064257
e. Dividends per shares 1.5 1.5
f. Dividend payout ratio 2.70% 60.16%

Comment

2.
a. Debt to assets ratio: The debt to asset ratio is a leverage ratio that indicates the
proportion of a company's assets that are being financed with debt, rather than
equity. The ratio is used to determine the financial risk of a business. The debt to
asset ratio in 2014 and 2015 is respectively 75.05% and 73.03% in the company. This
ratio is relatively low and company able to pay his debt.
b. b. Long term debt to assets ratio: Long Term Debt to Asset Ratio is the ratio that
represents the financial position of the company and the company’s ability to meet
all its financial requirements. Long Term Debt to Asset Ratio in 2014and 2015
respectively is .13% and 3.39% in company. It means that company has .13% in long
term debt for total assets in 2014 and 3.39% in long term debt for total assets in
2015.
c. Debt to equity ratio: The debt to equity ratio measures the riskiness of a company's
financial structure. Debt to equity ratio in 2014and 2015 is respectively 300.87% and
270.71%. Company debt to equity ratio is higher in both years. So this higher debt-
d. to-equity ratio is unfavorable foe company because it means that the business relies
more on external lenders thus it is at higher risk.
e. Financial leverage ratio: The financial leverage ratio is a measure of how much debt
a company holds relative to its equity. The financial leverage ratio in 2014 and 2015
is respectively 3.70% and 13.46% in company. The financial leverage ratio is not higher in company that
is good for company.

3.
f. Return on total capital: Return on total capital is a profitability ratio that measures
profit earned by a company using both its debt and equity capital. A higher return
on total capital ratio is better. Return on total capital in 2014 is 17.31%. It means
company earns 17.31% of debt and equity. Return on total capital in 2015 is 17.20%.
It means company earns 17.20% of debt and equity.
g. Return on equity: Return on equity measures how efficiently a firm can use the
money from shareholders to generate profits and grow the company. Return on
equity in 2014 and 2015 is respectively 551.33% and 24.93%. Company return on
equity is lower that is good because investors must look ROE in company.

4.
h. Basic earnings per share: Basic Earnings per share measures the amount of net
income earned per share of stock outstanding. Higher earnings per share are always
better than a lower ratio because this means the company is more profitable and
the company has more profits to distribute to its shareholders. Company basic
earnings per share in 2014 and 2015 are respectively Taka 5513.36 and Taka 249.32.
In 2014 company EPS is negative amount that is not profitable but company
improves EPS in 2015.
i. Diluted earnings per share: Diluted price and share information is not available in
company. But it has as same as Basic earnings per share.
j. Book value per share: Book value per share compares the amount of stockholders'
equity to the number of shares outstanding. If the market value per share is lower
than the book value per share, then the stock price may be undervalued. Company
book value per share in 2014 and 2015 is respectively TK10 and TK10 which are
undervalued. Page -7

k. Price to earnings ratio: the price earnings ratio shows what the market is willing to
pay for a stock based on its current earnings. Company price to earnings ratios in
2014 and 2015 is respectively 3.401360544 times and 4.016064257 times.
l. Dividends per share: in 2014 company paid 1.5 and 2015 company paid 1.5 any
dividend.
m. Dividend payout ratio: The dividend payout ratio measures the percentage of net
income that is distributed to shareholders in the form of dividends during the year.
Consistent maintain is more important than a high or low ratio. Company paid
dividend only 2014 2.70% and 2015 60.16%

5. Explanation about share :


From Eastern Housing Limited annual report we see that the owners, employees, and
shareholders have not received any employee stock options. And company has not given any
information about the stock option in their notes.
But company has given total 22,610,006 bonus and further bonus shares of TK 10 each in
their shareholders. Company has also given ordinary share 200,000,000 again ordinary share
60,000,000 and debenture 2,056,800 shares. And company gives details information in their
notes no. of EPS - 33. Company records bonus, future bonus and right share amount in the
fair value.

6. Conclude about company :


In analysis of the liabilities and equity section of the balance sheet we see that company
mostly follows IFRS 9. Company some items were needed to describe details in balance
sheet but company gives details in notes. Without ordinary shares Company also issue bonus
and right shares but there are no information in stock option.

Page-8

Delta Brac Housing Financial corporation Limited

1. Balance sheet:-

The accounting standard IFRS 9 sets out the requirements for recognizing and measuring
financial analysis .The presentation of the financial statement BAS no 1 with BAR and BFRS
,as per BAS 10 “Events after the balance sheet’’ for adjusted in Note 38.3. The Financial of
recognition and measurement BAS no 39.
 Current liability and provisions: IFRS 9 doesn't change the basic accounting model for financial
liabilities under IAS 39. Financial liabilities are measured at amortized cost unless the fair value
option is applied. Liability recognized [IFRS 9, paragraph 3.3.1]. DBH records their all items under
current liability in fair value. Company gives detail information in notes 22, 23 and 24.*And
company follows this standard till (2014-2015).
 Non-current liabilities: IFRS 9 doesn't change the basic accounting model for financial liabilities
under IAS 39. Financial liabilities are measured the fair value. [IFRS 9, paragraph 4.2.1]. Eastern
Housing Limited records long term loan and deferred tax in fair value under IFRS 9. Company is
borrowing costs 23(BAS no) and provision for income tax –note [BAS-12 ‘’Income Tax’’]. ** And
company follows this standard till (2014-2015).
 Shareholder’s equity: All equity investments in scope of IFRS 9 are to be measured at fair value
in the statement of financial position. IFRS says record detail information about share capital in
balance sheet. But company gives detail in notes 33 and it records outstanding share end of the
year as per BAS-33 “Earning Per Share” Note -33.*** And company follows this standard till
(2014-2015). Share Base Payment BFRS no 2(N/A) ,non marketable share security (Note - 6.1)
and marketable share security (Note- 6.2)
- IFRS 9 doesn't change the basic accounting model for financial liabilities under IAS 39. Financial
liabilities are measured at amortized cost unless Liability recognized [IFRS 9, paragraph 6.3.1-
6.3.3]. Limited records their all items under current liability in fair value.*And company follows
this standard till (2014-2015).

Note:

*Notes for current liability and provisions have under appendix page 87and details 98-99 in DBH limited
annual report in notes no. of 22, 23 and 24.

** Notes for non-current liability have under appendix page 88 in DBH Limited annual report in notes no.
of 6.

*** Notes for share capital and all other items have under appendix page 103 in DBH Limited annual
report in EPS Note- 33.
Ratios:

Formula for ratios calculation:

1. Debt to assets ratio = Total liabilities/Total assets


2. Long term debt to assets ratio = Long term debt/ Total assets
3. Debt to equity ratio = Total liabilities/Total equity
4. Financial leverage ratio =Total debt/ Shareholder’s equity
5. Return on total capital =EBIT/Total capital
6. Return on equity =Net income/ Shareholder’s equity
7. Basic Earnings per share = Net income/ Outstanding shares
8. Diluted Earnings per share= (Net income- preferred dividends)/(Outstanding shares +diluted
shares)
9. Book value per shares = Shareholder’s equity/ Outstanding shares
10. Price to earnings ratio =Market value per share/ Earnings per share
11. Dividends per shares = Total dividends/Number of shares
12. Dividend payout ratio =Total dividends/Net income

Delta Brac Housing Finance Corporation Limited


1
Item 2014 2015
Net income 607,343,562 685,253,724
Total assets 33,944,932,776 35,686,078,511
Total liability 31,169,146,646 32,515,162,095
Total debt 31,169,146,646 32,515,162,095
Long term debt 7,052,079,138 5,380,507,195
Total equity 3,170,916,416 2,775,786,130
Total capital 2,984,436,165 3,379,174,516
EBIT 1,199,193,239 1,259,392,010
Preferred stock 0 0
Preferred dividend 10,000,000 0
EPS 5 6
Market value per share 10 10
Outstanding per share 116,049,375 116,049,375
Diluted per share 0 0
Shareholder equity 1,160,493,750 1,160,493,750
Total dividend 160,000,000 173,500,000

2 Ratio 2014 2015


a. Debt to assets ratio 91.82% 91.11%
b.Long term debt to assets ratio 20.77% 15.07%
c.Debt to equity ratio 982.96% 1171.38%
d.Financial leverage ratio 6077.08% 4636.39%
Page -11
3
a. Return on total capital 40.18% 37.26%
b.Return on equity 52.33% 59.04%
4
a. Basic Earnings per share 523.34% 590.48%
b. Diluted Earnings per share 514.73 590.48
c.Book value per shares 10 10
d. price to earnings ratio 1.94 1.69
e.Dividends per shares 80.01% 86.76%
f.Dividend payout ratio 26.34% 25.31%

Comment

2.
a. Debt to assets ratio: The debt to asset ratio is a leverage ratio that indicates the
proportion of a company's assets that are being financed with debt, rather than
equity. The ratio is used to determine the financial risk of a business. The debt to
asset ratio in 2014 and 2015 is respectively 91.82% and 91.11% in the company. This
ratio is relatively low and company able to pay his debt.
b. b. Long term debt to assets ratio: Long Term Debt to Asset Ratio is the ratio that
represents the financial position of the company and the company’s ability to meet
all its financial requirements. Long Term Debt to Asset Ratio in 2014and 2015
respectively is 20.77% and 15.07% in company. It means that company has 20.77% in
long term debt for total assets in 2014 and 15.07% in long term debt for total
assets in 2015.
c. Debt to equity ratio: The debt to equity ratio measures the riskiness of a company's
financial structure. Debt to equity ratio in 2014 and 2015 is respectively 982.96%
and 1171.38%. Company debt to equity ratio is higher in both years. So this higher
d. debt-to-equity ratio is unfavorable foe company because it means that the business
relies more on external lenders thus it high and probably higher risk.
Page-12
e. Financial leverage ratio: The financial leverage ratio is a measure of how much debt
a company holds relative to its equity. The financial leverage ratio in 2014 and 2015
is respectively 6077.08% and 4636.39% in company. The financial leverage ratio is
higher in company that is good for company.

3.
f. Return on total capital: Return on total capital is a profitability ratio that measures
profit earned by a company using both its debt and equity capital. A higher return
on total capital ratio is better. Return on total capital in 2014 is 40.18%. It means
company earns 40.18% of debt and equity. Return on total capital in 2015 is 37.26%.
It means company earns 37.26% of debt and equity.
g. Return on equity: Return on equity measures how efficiently a firm can use the
money from shareholders to generate profits and grow the company. Return on
equity in 2014 and 2015 is respectively 52.33% and 59.04%. Company return on
equity is higher that is not good because investors must look ROE in company.

4.
h. Basic earnings per share: Basic Earnings per share measures the amount of net
income earned per share of stock outstanding. Higher earnings per share are always
better than a lower ratio because this means the company is more profitable and
the company has more profits to distribute to its shareholders. Company basic
earnings per share in 2014 and 2015 are respectively Taka 514.73 and Taka 590.48.
In 2014 company EPS is negative amount that is not profitable but company
improves EPS in 2015.
i. Diluted earnings per share: Diluted price and share information is not available in
company. But it has as same as Basic earnings per share.
j. Book value per share: Book value per share compares the amount of stockholders'
equity to the number of shares outstanding. If the market value per share is lower
than the book value per share, then the stock price may be undervalued. Company
book value per share in 2014 and 2015 is respectively TK10 and TK10 which are
undervalued.

J. Price to earnings ratio: The price earnings ratio shows what the market is willing to
pay for a stock based on its current earnings. Company price to earnings ratios in 2014
and 2015 is respectively 1.94 times and 1.69times.
k. Dividends per share: in 2014 company paid 80.01 and 2015 company paid 86.76 any
dividend.
L. Dividend payout ratio: The dividend payout ratio measures the percentage of net income that is
distributed to shareholders in the form of dividends during the year. Consistent maintain is more
important than a high or low ratio. Company paid dividend only 2014 26.34% and 2015 25.31%

7. Explanation about share :


From DBH Limited annual report we see that the owners, employees, and shareholders have
not received any employee stock options. And company has not given any information about
the stock option in their notes.
But company has given total 2,000,000,000 taka and further bonus shares of TK 10 each in
their shareholders. Company has also given ordinary share 200,000,000 again ordinary share
199,950,000 and issued 1,160,493,750 shares. And company gives details information in
their notes no. of EPS - 33. Company records bonus, future bonus and right share amount in
the fair value.

8. Conclude about company :


In analysis of the liabilities and equity section of the balance sheet we see that company
mostly follows IFRS 9. Company some items were needed to describe details in balance
sheet but company gives details in notes. Without ordinary shares Company also issue bonus
and right shares but there are no information in stock option.
Conclusion:
Finally we see that 2 companies mostly try to maintain IFRS standard. IASB reissued IFRS 9, incorporating
new requirements on accounting for financial liabilities and equity. We see that companies did not
shown details about share capital in Equity section. But they give notes in details about liabilities and
equity items. So we can’t say that companies fully follow IFRS 9 standard.

In ratios analysis we see that companies have negative net income that is effect their ROE ratio.

Companies have negative EPS but they try improving their performance.

Reference:-

 http://www.iasplus.com/en/standards/ifrs/ifrs9
 http://www.easternhousing.com/Investore/Reports/EHL_Annual_
%20Report_2015.pdf
 http://www.deltabrac.com/annual_report/dbh_annual_report_2014_2015.
pdf

Appendix—

Now we are attachment the Eastern Housing Limited balance sheet and annual report.

Appendix—

Now we are attachment the Delta Brac Housing Financial Corporation Limited balance sheet and annual
report.s
Page -15