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Ranking Methodology.

Summary: AIWA's Best Performing Companies Survey 2014 was conducted by Gulf Baader Capital Markets (GBCM) and the results were validated by KPMG

Based on the market capitalisation as at end of 2013, the listed companies in Muscat Securities Market (MSM) have been classified into three categories namely large-cap, mid-cap and small-cap companies. The large-cap companies are the ones with market capitalisation of more than RO75mn, while mid-cap companies have market capitalization between RO25-75mn and small-cap companies with market capitalization between RO10-2 mn. On the other hand, we have excluded the smaller companies which have market capitalization of less than RO10mn in our ranking. We have excluded investment holding and broking companies in our ranking model. The newly listed Islamic banks namely Bank Nizwa and Alizz Islamic Bank have been excluded due to non availability of historical data. Our research sample size for 2013 ranking process includes 64 listed companies in the MSM. The research survey and analysis were done by Gulf Baader Capital Markets (GBCM) and the rankings are validated by KPMG.

The purpose of the ranking model is to evaluate the top performing companies for 2013 in each segment based on the performance during the last fiscal year. We have calculated the top five rankings on each category taking into account of the defined set of broad parameters which includes growth factors, return ratios, productivity and the profitability ratios measuring the growth and efficiency of the sample companies.

The key financial inputs were taken from the reported financial statements of the listed companies published in the MSM. The ranking based on growth parameter is done by calculating the year-on-year (YoY) growth of revenue, operating profit (earnings before interest and tax - EBIT) and net profit for 2013. Efficiency is ranked based on the return on average assets (RoAA), return on average equity (RoAE), operating profit margin (EBIT) and the net profit margin (NPM) of the companies.

Return of average assets (RoAA) is calculated by taking net profit and dividing by average total assets for 2013. The average assets were calculated by taking the sum of total assets at the beginning and end of the period (2013), divided by two. Return on average equity (RoAE) is calculated by taking net profit and dividing by average equity for 2013. The average equity is calculated by taking the sum of total equity at the beginning and end of the period (2013), divided by two.

The productivity ratio (EBIT margin) is calculated as operating profit (EBIT) dividend by total revenue. The profitability ratio (net profit margin) is calculated as net income divided by total revenue. In our ranking model, we have used the net income after minority interest for the calculation of net profit margin.


e-The closing prices of all the MSM listed companies have been taken from official MSM annual bulletin for 2013.

e-For the banks and leasing companies, we have excluded impairment charges in our operating income calculations and not shown as part of operating expenses. We have also taken the net operating income after deduction of interest expenses.

e-For the utilities sector companies, we have excluded hedging deficit in total shareholders' equity.

e-For insurance companies, we have taken the net underwriting results and investment income for the calculation of total revenue.

e-Net income (profit after tax) is taken post minority interest and also net-worth figures are taken excluding minority interest.

e-The companies with different fiscal year end have been separately worked to arrive at the financial performance for the calendar year 2013.



Revenue growth Year-on-year growth (FY 2013)

Operating profit (EBIT) growth Year-on-year growth (FY 2013)

Net Profit Growth Year-on-year growth (FY 2013)


Return on average assets (RoAA) Return calculated on average assets (FY 2013)

Return on average equity (RoAE) Return calculated on average equity (FY 2013)

Operating profit margin (EBIT) Productivity ratio (FY 2013)

Net profit margin (NPM) Profitability ratio (FY 2013)

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Publication:Oman Economic Review (OER)
Date:Aug 17, 2014
Previous Article:The Best Performers.

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