Evaluation of DP World

Evaluation of DP World 1
EVALUATION OF DP WORLD
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Evaluation of DP World 2
Evaluation of DP World
Part A: Critically Analysis of DP World Capital Structure
Capital structure is mainly a mixture of debt and equity finances used by an organization in
financing its total operations. Some firms could be all-equity funded with no debt while others
could have significantly high debts and low equity. Thus, decision on what mixtures of debt and
equity capital to have is referred to financing decision. In the year 2018, DP World implemented
multi-tranche bonds transactions as well as liabilities management practice and raised around
$33 billion of the fresh long-term capitals at an eye-catching rate. This lead to net debt
snowballing to around $10,553 million in comparison to $7.739 million in 2017, the net debt for
the financial year 2018 was approximate $7.938 billion in comparison to approximate $6.255
billion reported in the year 2017 while the total cash on organization’s balance sheet remained at
around $2,615 million as a result of fund raising (DP World 2018). The amount of cash from the
company operating activities stood strong at approximate $2,161 million.
It financial leverage or the net debt to the adjusted EBITDA was stable and stood within the
range of it guidelines at around 2.8 times in the year 2018 in comparison to 2.5 times reported in
2017. On overall, DP World balance sheet was strong with consistent and robust cash generation.
Generally, the company upgraded its rating to Baa1 from Baa2 as well as maintained stable
financial outlook in reflecting its resilience and stable track records in maintaining significantly
strong financial metrics (DP World Plc 2018). This is supported by the company diversified
global operation, positive projected long-run development in the global container circulation,
solid liquidity and profitability outline as well as its projected adherence to the financial leverage

Evaluation of DP World 3
targets. It mainly focuses on the destination and origin of the ports that are less subtle to the
repeated slumps against transshipment ports. Its financial metric is healthy with total adjusted
funds from the operations interest coverage of around 5.3 times and its adjusted funds from the
operation debts of around 19%.
Additionally, the company has significantly high debt finances in comparison to the equity
finances. This has posed a major uncertainty in its mergers and acquisitions operations due to
increased gearing level. In fact, with its high debt to equity finance, the company net financial
leverage over the year has increased from the 0.99 times to 1.21 times in 2018. To be more
specific, DP World total debt increased from $11,489 million in the year 2917 to around $14,514
million in 2018 while total equity increased from $11,625 million in 2018 to around $11,999
million in 2018 (DP World Plc 2018). This denotes that the net debt commitment for the firm in
2017 was significantly below its net equity whilst in 2018, the net debt for the company was
quite greater than its equity; meaning that the company relied on debt financing than equity
finances unlike in the year 2017.
DP World capital structure is in line with its strategic goals. For instance, its increased debt
aimed at increasing its mergers and acquisitions would help the company offer clear guideline on
how it aims to be the leading firm in future of the world trade. Furthermore, this would help the
company accomplish its aims of maximizing shareholders’ value by leveraging its portfolio of
the world-class infrastructure assets, solidification of the international supply chains as well as
creating a bearable economic development (DP World Plc 2018).
In fact, through increased debt finance in 2018 to finance its acquisitions activities, the company
would achieve its strategic goal of changing the trade landscape and enable it evolve as the

Evaluation of DP World 4
leading firm and tailoring itself to its client’s needs. Besides, the company capital structure that
is signified by increased or relatively high debt finances would help the company achieve its
strategic goals of meeting all needs of the dynamic global supply chain, developing and
operating trade-enabling, state of art and strategically located services and infrastructure (DP
World 2018).
Furthermore, the company capital structure enables the firm to runs development and training
programs worldwide for its workers and industry experts across supply chain. In fact, the
structure has enabled the firm further embed the culture that nourishes innovation and diversity
and therefore, enabling the company meet its commitment to zero damage to individuals and
producing safety culture (DP World Plc 2018). Additionally, the structure has enabled the
company make significant long-run investment through its future or world programme of
fostering innovation and driving the best practices in sustainability across the globe. This would
enable the firm achieve its action plans and commitments in protecting its environment and
taking relevant steps in building resilient, secure and vibrant society.
In essence, DP World capital structure has enabled the company in adopting one of the highest
ethical and professionalism standards. Hence, as a global firm, the company is now compatible
with the international best practices and its technique to managing, measuring and understanding
risks and returns from its investments has helped it maintain its status as the industry leader.
Moreover, the structure is aligned with the company strategic goals since it helps the firm
investment heavily in innovation and technology to offer its client best experience, optimize its
operations and build differentiated capacities (DP World 2018).