Download IPO Prospectus - GulfBase.com
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Download IPO Prospectus - GulfBase.com
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Energising lives. Energising Oman.<br />
www.voltampoman.<strong>com</strong><br />
Underwriters<br />
PROSPECTUS<br />
Voltamp Energy SAOG<br />
(Under Transformation)<br />
Initial Public Offering of 25,000,000 ordinary shares<br />
Offer Price: RO 0.542 per share<br />
(Comprising a nominal value of Baisas 100,<br />
premium of Baisas 440 and issue expenses Baisas 2 per share)<br />
Issue Opens: 5th May, 2008<br />
Issue Closes: 3rd June, 2008<br />
Lead Issue Manager & Financial Advisor Co-Financial Advisor<br />
Collecting Banks<br />
Investment Management Group
PROSPECTUS<br />
Voltamp Energy SAOG (under transformation)<br />
www.voltampoman.<strong>com</strong><br />
Postal Address: P.O.Box 75, P.C: 124,<br />
Rusayl, Sultanate of Oman<br />
Tel: 24446501<br />
Fax: 24446502<br />
Initial Public Offering of 25,000,000 (twenty five million) Ordinary Shares<br />
Total Offer Size: RO 13.55 million<br />
Offer price: RO 0.542 per share<br />
(Comprising a nominal value of Baisas 100, premium of Baisas 440<br />
and Issue Expenses Baisas 2 per share)<br />
Lead Issue Manager & Financial Advisor<br />
Oman Arab Bank,<br />
Investment Management Group<br />
P.O. Box 2010, Postal Code: 112, Sultanate of Oman<br />
Ph: 24762399 Fax: 24762377<br />
Underwriters<br />
Oman Arab Bank SAOC Vision Investment Services Co. SAOC<br />
United Securities LLC Gulf Baader Capital Markets SAOC<br />
Co-Financial Advisor<br />
Ernst & Young<br />
PO Box: 1750, Ruwi, 112,<br />
Qurum, Muscat, Sultanate of Oman<br />
Ph: 24559599 Fax: 24566043<br />
Collecting Banks<br />
Oman Arab Bank SAOC<br />
Bank Muscat SAOG<br />
Bank Dhofar SAOG<br />
OFFERING PERIOD<br />
Opening Date: May 5, 2008<br />
Closing Date: June 3, 2008<br />
Lead Issue Manager & Financial Advisor Co-Financial Advisor<br />
Collecting Banks<br />
Investment Management Group<br />
Underwriters<br />
The Capital Market Authority (“CMA”) assumes no responsibility for the accuracy and adequacy of the statements and<br />
information contained in this <strong>Prospectus</strong> nor shall it have any liability for any damage or loss resulting from the reliance<br />
upon or use of any part of the same by any person. This <strong>Prospectus</strong> has been prepared in accordance with the<br />
requirements as prescribed by the CMA. This is an unofficial English translation of the original <strong>Prospectus</strong> prepared in<br />
Arabic and approved by the CMA in accordance with the Administrative Decision no. F/19/2008 dated 27/4/2008.<br />
1
Important Notice to Investors<br />
The aim of this <strong>Prospectus</strong> is to present material information that may assist investors to make<br />
an appropriate decision as to whether or not to invest in the securities offered.<br />
This <strong>Prospectus</strong> includes all material information and data and does not contain any misleading<br />
information or omit any material information that would have a positive or negative impact on<br />
the decision of whether or not to invest in the offered securities.<br />
The issuer entity represented by the Founders/Selling Shareholders are jointly and severally<br />
responsible for the integrity and adequacy of the information contained in this <strong>Prospectus</strong> and<br />
confirm that, according to the best of their knowledge, due diligence has been observed in<br />
the preparation of this <strong>Prospectus</strong> and further confirm that no material information has been<br />
omitted, the omission of which would render this <strong>Prospectus</strong> misleading.<br />
All investors should examine and carefully review this <strong>Prospectus</strong> in order to decide whether<br />
or not it would be appropriate to invest in the securities offered by taking into consideration all<br />
the information contained in this <strong>Prospectus</strong> in the context. Investors should not consider this<br />
<strong>Prospectus</strong> a re<strong>com</strong>mendation by the issuer entity of the offered securities to buy the offered<br />
securities. Every investor shall bear the responsibility of obtaining independent professional<br />
advice on the investment in the offered securities and conduct his/her/its own independent<br />
valuation of the information and assumption contained herein using whatsoever analysis or<br />
projections he sees fit as to whether or not to invest in the securities offered.<br />
It is to be noted that no person has been authorised to make any statements or provide<br />
information on the Company or the offered securities other than the persons whose names<br />
are indicated herein. In the event that any other person makes representations or provides<br />
any such information it should not be taken as authorised by the issuer entity or the issue<br />
manager.<br />
2
ADDITIONAL POINTS TO BE NOTED<br />
This <strong>Prospectus</strong> includes relevant information that is deemed important and does not include<br />
any misleading information nor exclude any principal information, the omission of which may<br />
materially influence any investor’s decision pertaining to the investment in Shares through this<br />
<strong>Prospectus</strong>. All summaries of documents or provisions of documents provided in this <strong>Prospectus</strong><br />
should not be relied upon as being <strong>com</strong>prehensive statements in respect of such documents<br />
and are only to be seen as being a brief summary of such documents.<br />
All equity investments carry market risks to varying degrees. The value of any security can fall as<br />
well as rise depending on the market conditions.<br />
FORWARD-LOOKING STATEMENTS<br />
This <strong>Prospectus</strong> contains forward-looking statements, including statements about the Company’s<br />
beliefs and expectations. These future statements are based on the Company’s current plans,<br />
estimates and projections as well as its expectations of external conditions and events. They<br />
have implementable plans in place and thus have realistic expectations of achieving these.<br />
Forward-looking statements involve inherent risks and uncertainties and speak only as at the<br />
date they are made. The Company cautions investors that a number of important factors could<br />
cause actual results or out<strong>com</strong>es to differ materially from those expressed in any forward-looking<br />
statements. These factors include, but are not limited to, the following:<br />
♦ level of demand for the Company’s products and services;<br />
♦ actions of the Company’s <strong>com</strong>petitors;<br />
♦ regulatory, legal and fiscal developments;<br />
♦ success of the Company’s investments and capital expenditure programs;<br />
♦ performance of the Omani economy; and<br />
♦ other factors described under "Risk Factors and Mitigants" as given in chapter 16 of this<br />
<strong>Prospectus</strong>.<br />
The Company will follow the rules and regulations of the Capital Market Authority, after it is listed<br />
in the Muscat Securities, and will <strong>com</strong>municate to its share holders periodically the progress of<br />
the new projects as mentioned in this prospectus including any changes in their plans if any. The<br />
Company will update the shareholders either directly from the Company or through the website<br />
of the Muscat Securities Market.<br />
3
TABLE OF CONTENTS<br />
4<br />
Page No<br />
IMPORTANT NOTICE TO INVESTORS ........................................................... 2<br />
CHAPTER 1 – Definitions ................................................................................ 5<br />
CHAPTER 2 – General Information on the Issue and Issuer ........................... 6<br />
CHAPTER 3 – Share Split and its Effect ........................................................ 13<br />
CHAPTER 4 – Issue Expenses .............................................................................. 15<br />
CHAPTER 5 – Underwriting Arrangements ................................................... 16<br />
CHAPTER 6 – Purpose of the Issue and Utilisation of the Proceeds ........... 17<br />
CHAPTER 7 – Objectives of the Company and Approvals ........................... 18<br />
CHAPTER 8 – Shareholding Details ............................................................... 21<br />
CHAPTER 9 – Market and Economic Overview ............................................ 26<br />
CHAPTER 10 – Description of the Company and Business Overview<br />
and Activities .................................................................................................. 34<br />
CHAPTER 11 – Summarised Historical Consolidated Financial Statements 50<br />
(For Financial Years 2005-2007)<br />
CHAPTER 12 – Summarised Prospective Consolidated Financial Statements 73<br />
(For Financial Years 2008-2014)<br />
CHAPTER 13 – Dividends Policy .................................................................... 92<br />
CHAPTER 14 – Valuation and Price Justification .......................................... 93<br />
CHAPTER 15 – Related Party Transactions .................................................. 98<br />
CHAPTER 16 – Risk Factors and Mitigants ................................................... 100<br />
CHAPTER 17 – Corporate Governance ......................................................... 105<br />
CHAPTER 18 – Rights and Liabilities of Shareholders ................................. 111<br />
CHAPTER 19 – Conditions and Procedures of the Subscription of the Shares 115<br />
CHAPTER 20 – Undertakings ......................................................................... 122
CHAPTER 1<br />
DEFINITIONS<br />
The Board : means the board of directors of the Company elected<br />
in accordance with the Articles of Association of the<br />
Company.<br />
Business Day : means any day on which <strong>com</strong>mercial banks are open for<br />
business in the Sultanate of Oman.<br />
CCL : means the Commercial Companies Law of the Sultanate of<br />
Oman issued by Royal Decree 4/74 and the amendments<br />
thereto.<br />
Company : means Voltamp Energy S.A.O.G (under transformation).<br />
LLC : means Limited Liability Company<br />
SAOC : means Closed Omani Joint Stock Company<br />
SAOG : means General Omani Joint Stock Company<br />
Employees : employees means those employees of the Company who<br />
have joined the Company on or before 29 th February 2008<br />
and continue to be in the employment of the Company at<br />
the Closing Date.<br />
5
CHAPTER 2<br />
GENERAL INFORMATION ON THE ISSUE AND THE ISSUER<br />
Name of the Issuer: Voltamp Energy SAOG (under transformation)<br />
Commercial Registration No: 1262947 dated 03/08/1987 issued by the Ministry of<br />
Commerce & Industry<br />
Principal Place of Business Postal Address : P.O.Box 75, P.C 124, Rusayl, Sultanate<br />
of Oman Tel: 24446501 Fax: 24446502<br />
Company’s Duration: Unlimited<br />
Financial Year: Commences on the first day of January and ends on the<br />
thirty first day of December of each year<br />
Type of Shares and Voting<br />
Rights:<br />
All the Equity Shares issued by the Issuer and the entire<br />
equity capital of the <strong>com</strong>pany consist of only Ordinary<br />
shares and each single share carrying the right to one<br />
vote at the Constitutive General Meeting of the Company<br />
and any General Meeting of the Company including any<br />
Extraordinary General Meeting.<br />
Ordinary Shares: Equity Shares issued by the Issuer with a nominal value<br />
of one hundred Baisas (RO 0.100) and each share<br />
carrying the right to one vote at the Constitutive General<br />
Meeting of the Company and any General Meeting of the<br />
Company including any Extraordinary General Meeting.<br />
Authorised Share Capital of the<br />
Company:<br />
Existing Ordinary Shares<br />
Before the <strong>IPO</strong>:<br />
The Authorised share capital of the Company shall be<br />
RO. 10,000,000 (Rial Omani Ten Million), divided into<br />
100,000,000 (One Hundred Million) Ordinary Shares.<br />
RO 3,500,000 (Rial Omani Three Million Five Hundred<br />
Thousand) divided into 35,000,000 (35 Million) ordinary<br />
shares.<br />
Offered Shares: Offer of 25,000,000 (Twenty Five Million) shares that<br />
consists of<br />
1. Offer of 10 Million shares to the public selling by the<br />
promoters<br />
2. Issue of 15 Million New Ordinary Shares (after the<br />
<strong>com</strong>pletion of <strong>IPO</strong>) for public subscription by the<br />
Company<br />
3. The Company will allot 5% (1,250,000) of the offered<br />
shares for the Company employees and Managers<br />
as per the details given in this <strong>Prospectus</strong><br />
6
The Issued and Paid up Caital<br />
after <strong>IPO</strong>:<br />
Par Value for the share: 100 Baisa for each share<br />
RO 5,000,000 (Rial Omani Five Million) dividend in to 50<br />
Million shares<br />
Restrictions on the shares: Restrictions imposed on the Promoters:<br />
In accordance with Article 77 of the CCL, the Promoters<br />
of the Company shall not withdraw from the Company<br />
or dispose of their Shares prior to publication of two<br />
Balance Sheets pertaining to two consecutive financial<br />
years, effective from the date of listing of the Shares on<br />
the Muscat Securities Market. An exception to this shall<br />
be the cases of assignment of the Shares amongst the<br />
Shareholders themselves and cases of inheritance.<br />
The period during which the Promoters are not<br />
permitted to withdraw or dispose off their Shares may<br />
be extended for a further one year by a decision of the<br />
Minister of Commerce & Industry, at the request of the<br />
Capital Market Authority, without prejudice to the right<br />
held by the Promoters to make second grade pledge on<br />
those Shares.<br />
If any defect has taken place in the procedures pertaining<br />
to incorporation of the Company, the party concerned<br />
may within a period of five years from the incorporation<br />
of the Company, serve notice to it for remedying such<br />
a defect as per article 71 of the CCL. However, if the<br />
Company fails to take the initiative within one month<br />
of such notice for necessary remedial measures, the<br />
person concerned may have recourse to the <strong>com</strong>petent<br />
court to pass a decision for dissolution of the Company.<br />
The Promoters, members of the Board of Directors<br />
and the first Auditors shall be held liable severally and<br />
jointly for the damages arising from the dissolution of<br />
the Company and which are attributable to their illegal<br />
acts or their negligence or omission in the incorporation<br />
of the Company.<br />
Restrictions imposed on the Employees and<br />
Managers<br />
The Employees and Managers have no right to sell or<br />
transfer shares acquired pursuant to the <strong>IPO</strong> before six<br />
months. Thereafter, the Employees and the Managers<br />
may sell or transfer such shares without any restriction.<br />
7
Promoters/Selling Shareholders: The current partners/shareholders of the Company prior<br />
to the <strong>IPO</strong> who are offering a portion of their Shares through<br />
an Offer for Sale under this <strong>Prospectus</strong> to the extent of<br />
a maximum of 10,000,000 (Ten Million) Ordinary Shares<br />
out of their <strong>com</strong>bined holding of 35,000,000 (Thirty Five<br />
Million) Ordinary Shares. Details of the number of Shares<br />
being offered by the Selling Shareholders are set out in<br />
the Chapter 7 of this <strong>Prospectus</strong>.<br />
Shares held by the Promoters<br />
after the <strong>IPO</strong>:<br />
25,000,000 (Twenty Five Million) Ordinary Shares i.e.<br />
50% of the capital after the <strong>com</strong>pletion of <strong>IPO</strong>. Details<br />
of the individual holdings are set out in the Chapter 8 of<br />
this <strong>Prospectus</strong>.<br />
Subscription Price of the Shares: Baisas 542 (Five Hundred and Forty Two) per Share<br />
consisting of Baisas 100 (One Hundred) nominal value,<br />
Baisas 440 (Four Hundred and Forty) share premium<br />
and Baisas 2 towards Issue Expenses.<br />
Ratio of Offered Shares (25 Million<br />
Shares) to post <strong>IPO</strong> issued and<br />
paid up Share Capital (50 Million<br />
Shares) :<br />
Main Purpose for which the<br />
proceeds of the Subscription<br />
would be utilised:<br />
50% of the Issued and Paid Up Share Capital of the<br />
Company.<br />
1) Proceeds from the Issue of New Ordinary Shares<br />
Issue proceeds under this category aggregating to<br />
RO 8,100,000 (Rial Omani Eight Million, One Hundred<br />
Thousand) will accrue to the Company, and will be<br />
utilised by the Company for financing the ongoing<br />
capital expenditure, for meeting its long term working<br />
capital requirements and investment in future strategic<br />
projects.<br />
2) Proceeds from the Offer for Sale of Existing<br />
Ordinary Shares<br />
Issue proceeds under this category aggregating to<br />
RO 5,400,000 (Rial Omani Five Million, Four Hundred<br />
Thousand) will accrue to the Selling Shareholders only<br />
and not to the Company.<br />
3) Issue Expenses Collected<br />
The amount of RO 50,000 (Rial Omani Fifty Thousand)<br />
being collected towards part of the Issue Expenses from<br />
the total issue will accrue to the Company.<br />
8
Persons Qualified to Subscribe<br />
for the Shares Offered:<br />
Permissible Level of Non-Omani<br />
Shareholding after Listing:<br />
Commencement Date of the<br />
Subscription:<br />
Closing Date of the<br />
Subscription:<br />
Subscription shall be open to Omanis, Non-Omanis,<br />
Individuals, Non-Indviduals, Corporate Bodies/<br />
Institutions/Investment Funds/Pension Funds.<br />
Once the Shares are listed for trading on Muscat<br />
Securities Market, it will be permissible for non Omanis<br />
to own up to 70% of the Share Capital of the Company<br />
in accordance with the Law and the Memorandum &<br />
Articles of Association.<br />
May 5, 2008<br />
June 3, 2008<br />
Listing: The Shares will be listed for trading on the Muscat<br />
Securities Market<br />
First Day of Trading: The first day the Shares are traded on the Muscat<br />
Securities Market<br />
Minimum Limit for the<br />
Subscription under One<br />
Application:<br />
Maximum Limit for the<br />
Subscription under One<br />
Application:<br />
Overall Offering Split and<br />
Allotment Procedures:<br />
Individuals including Employees & Board of Managers:<br />
1,000 (One Thousand) Shares and in multiples of 100<br />
thereafter<br />
Non-Individuals: (Corporate Bodies/Institutions/<br />
Investment Funds) 10,100 (Ten Thousand One Hundred)<br />
Shares and in multiples of 100 thereafter<br />
Individuals & Non-Individuals: (Corporate Bodies/<br />
Institutions/Investment Funds) up to or equal to 10%<br />
of the total issue size which works out up to or equal<br />
to 2,500,000 (Two Million Five Hundred Thousands)<br />
Shares;<br />
Employees: maximum eligible value of shares will be<br />
up to 19 (nineteen) times his/her basic salary as on 29th February 2008;<br />
Managers: up to 50,000 (Fifty Thousand) Shares per<br />
Manager. Total of five managers.<br />
In case of over-subscription, the Offering of 25,000,000<br />
(Twenty Five Million) Ordinary Shares shall be split among<br />
the eligible investor groups, in the following portions:<br />
9
Overall Offering Split and<br />
Allotment Procedures:<br />
(Contd.)<br />
Category I – Individuals<br />
17,500,000 (Seventeen Million Five Hundred Thousand)<br />
shares, being 70% of the Offered Shares for Retail<br />
applicants applying for a maximum of 10,000 (Ten<br />
Thousand) shares. Distribution of shares shall be on<br />
pro-rata basis. Individual Investors shall <strong>com</strong>prise of<br />
only natural persons.<br />
Category II – Non Individual Investors<br />
6,250,000 (Six Million Two Hundred Fifty Thousand)<br />
shares, being 25% of the Offered Shares for both<br />
natural and juristic persons including Individual<br />
applicants applying for more than 10,000 shares and<br />
for Corporate bodies/ Institutions / Investment Funds.<br />
Distribution of shares will be on pro-rata basis.<br />
Category III – Employees and Managers<br />
Employees: 1,000,000 (One Million) shares, being 4%<br />
of the Offered Shares for employees upto a maximum<br />
value of 19 times of their basic salary on firm allotment<br />
basis.<br />
Managers: 250,000 (Two Hundred Fifty Thousand)<br />
shares, being 1% of the Offered Shares for Managers<br />
upto maximum of 50,000 shares for each Manager of<br />
five Managers on firm allotment basis.<br />
Any undersubcription in Category I shall be added to<br />
shares allocated for Category II and vice versa. Any<br />
undersubcription in Category III shall be added to<br />
Category I.<br />
Allotment for Foreign Nationals will be limited to a<br />
maximum of 70% of the total shares offered. Foreign<br />
Corporate Body/ Institution/ Investment Fund is defined<br />
as one which is not incorporated in the Sultanate of<br />
Oman or in any of the GCC countries.<br />
The final allocation on the above basis will be decided<br />
by the Lead Issue Manager and the Company in<br />
consultation with the CMA.<br />
Underwriting Arrangements: The issue of 25 million shares aggregating issue amount<br />
of RO 13.50 million is underwritten by Gulf Baader<br />
Capital Markets S.A.O.C, Vision Investment Services<br />
Co. S.A.O.C, Oman Arab Bank S.A.O.C and United<br />
Securities L.L.C. The details are given in Chapter 5.<br />
10
Basis for Undersubscribed<br />
Shares:<br />
Prohibitions with regard to the<br />
Applications for Subscription:<br />
Lead Issue Manager & Financial<br />
Advisor<br />
In case of a shortfall in subscription, the shortfall shall<br />
be subscribed by the Underwriters.<br />
The subscribers to the shares issued as mentioned<br />
hereunder shall not be permitted to participate in the<br />
subscription:<br />
1) Sole Proprietorship Establishments. Whereas, the<br />
owner of a Sole Proprietorship Establishment would be<br />
required to subscribe in his name only if he so desires.<br />
2) Trust Accounts. Whereas, the Brokerage Companies<br />
would be required to address the Customers for the<br />
subscription in their personal names.<br />
3) Multiple Applications for the subscription. Whereas,<br />
it is prohibited for any person to submit more than one<br />
application for subscription in his personal name.<br />
4) Applications made under joint names, including the<br />
applications made in the name of legal heirs. Whereas,<br />
they or their legal attorney would be required to apply<br />
in their personal names.<br />
All such applications shall be rejected without contacting<br />
the applicant.<br />
Oman Arab Bank SAOC<br />
Investment Management Group<br />
P.O. Box 2010, PC 112, Ruwi<br />
Sultanate of Oman<br />
Email: corporatefinance@oabinvest.<strong>com</strong><br />
Co-Financial Advisor: Ernst &Young<br />
P.O. Box: 1750, Ruwi, PC 112,<br />
Ernst & Young Building,<br />
Qurum, Muscat, Sultanate of Oman<br />
www.ey.<strong>com</strong>/me<br />
Reporting Accountants: KPMG<br />
PO Box 641<br />
P.C. 112, Ruwi<br />
Sultanate of Oman<br />
11
Statutory Auditors: Statutory Auditors: (2006 & 2007)<br />
KPMG<br />
P.O. Box 641<br />
PC 112, Ruwi<br />
Sultanate of Oman<br />
For the year: 2005<br />
Mazars Chartered Accountants & Co. LLC<br />
Muscat Gold Market Building<br />
P.O. Box 1092, PC 131<br />
Sultanate of Oman<br />
Internal Auditors: BDO Jawad Habib<br />
P.O. Box 1176<br />
Ruwi, PC 112<br />
Sultanate of Oman<br />
Legal Advisor for the <strong>IPO</strong>: Al Busaidy, Mansoor Jamal & Co., Muscat International<br />
Centre, Mezzanine Floor, Central Business District, Bait<br />
Al Falaj Street, P.O. Box 686, Ruwi, PC 112, Sultanate of<br />
Oman, Email: mj-co@amjoman.<strong>com</strong><br />
Legal Advisors for the<br />
Company<br />
Collecting Banks: Bank Muscat SAOG<br />
Bank Dhofar SAOG<br />
Oman Arab Bank SAOC<br />
Hamdan Al Durey<br />
Barristers and Legal Consultants<br />
Central Business District,<br />
Building No 978, Flat No 53,<br />
P.O. Box 1633 PC 112,<br />
Ph: 24787667 Fax: 24787889, Sultanate of Oman<br />
Transfer and Registration Agent: Muscat Depository & Securities Registration Co. SAOC<br />
P.O. Box 952, PC 112, Ruwi, Sultanate of Oman<br />
Tel: 24814827, Fax: 24817491<br />
12
CHAPTER 3<br />
Introduction<br />
SHARE SPLIT AND ITS EFFECT<br />
The Company has split the nominal value of the shares from RO 1.000 to Baisas 100 resulting<br />
in splitting each share into ten shares. This chapter elaborates on the effect of this decision. It is<br />
re<strong>com</strong>mended that each subscriber read and understand it.<br />
Definition of Share Split<br />
Share Split refers to the intention of a Company to split its existing shares to number of shares<br />
by reducing the nominal value of the share and increasing the number of shares without any<br />
effect on the total value of the Company’s paid up Capital, or the total market capitalisation of<br />
the shares owned in the Company, even if the total of the number of shares will increase as a<br />
result of this division.<br />
Objectives of Share Split<br />
The Company is of the view that Share Split will achieve the following goals:<br />
• Reduce the nominal value of the share making it affordable for a larger number of retail<br />
investors.<br />
• Increase liquidity by multiplying the number of shares available for trading; and<br />
• Facilitate a larger participation by the small/individual shareholders<br />
Impact of Share Split<br />
The decision of Share Split will not have any impact on the shareholding or the extent of each<br />
shareholders’ liabilities in the Company. The only direct impact is an increase in the number of<br />
shares. The Company considers that the benefits gained from the Share Split such as increase<br />
in liquidity and the shares that will be available for trading for all investors and participants in the<br />
Muscat Securities Market, will be in the best interest of the public.<br />
The following table presents the impact of Share Split for the Company according to the financial<br />
statement for the year ended 31 December, 2007:<br />
Before Split After Split<br />
Nominal value per Share RO 1 Baisas 100<br />
Number of Issued Capital Shares 3,500,000 35,000,000<br />
Paid up Capital RO 3,500,000 RO 3,500,000<br />
Shareholders Equity RO 4,362,271 RO 4,362,271<br />
Book Value per Share RO 1.246 Baisas 124<br />
Net Annual Profit RO 2,422,215 RO 2,422,215<br />
Earning per Share Baisas 692 Baisas 69<br />
13
Effect of Share Split<br />
The decision to split shares does not have any impact on the total market capitalisation of the<br />
shares. In fact, Share Split is dividing the nominal value of the share in the same percentage.<br />
The following is an explanation:<br />
Assume,<br />
- number of shares before split: 100 shares<br />
- share price in MSM on the date of the general meeting: RO 5.420<br />
Therefore after dividing one share into 10 shares, the result will be as follows:<br />
Number of shares<br />
Share price<br />
Total nominal share value<br />
Share Split effects on dividend:<br />
Before Split<br />
100 shares<br />
RO 5.420<br />
RO 542<br />
14<br />
After Split<br />
1000 shares<br />
RO 0.542<br />
RO 542<br />
The decision of Share Split will not affect the Company’s policy regarding dividend distribution<br />
or dividend ratio. The dividend distribution system in the Sultanate of Oman is based upon<br />
accounting dividend as a percentage of nominal paid up value per share. Thus the nominal paid<br />
up value per share will be Baisas 100 after split and not RO 1.000; e.g. if the Company declared<br />
previously (before Share Split) dividend distribution of Baisas 350 per share (35% of nominal<br />
value before split), and presumably the Company decided to maintain this policy, this dividend<br />
will be after Share Split Baisas 35 per share (35% of the nominal value after split). For instance, if<br />
the shareholder holds 100 shares before Share Split, dividend distribution will be as follows:<br />
Before Share Split After Share Split<br />
Number of holding shares 100 shares 1000 shares<br />
Nominal value of the share RO 1.000 Baisas 100<br />
Dividend per share Baisas 350 Baisas 35<br />
Dividend ratio to nominal value 35% 35%<br />
Total distributed dividend RO 35 RO 35
CHAPTER 4<br />
ISSUE EXPENSES<br />
The costs of the Issue are estimated at RO 276,600 (Rial Omani Two Hundred and Seventy Six<br />
Thousand and Six Hundred Only), which equates to approximately 2.049% of the total proceeds<br />
of the Offering. The breakdown of the estimated expenses is contained in the table below:<br />
Estimated Cost and Expenses Amount (RO)<br />
Issue Managers & Financial Advisors 80,000<br />
Collecting Banks 70,000<br />
Underwriting fees 40,500<br />
CMA & MDSRC Fees 10,100<br />
Legal Advisor 20,000<br />
Reporting Accountant 6,000<br />
Marketing, Advertising and Publicity 40,000<br />
Mailing and Postage 2,500<br />
Other expenses and contingencies 7,500<br />
Total Issue Expenditure 276,600<br />
Issue Expenses collected @ 2 Baisas per share (50,000)<br />
Difference between Estimated Expenses & the<br />
collection of Issue Expenses<br />
15<br />
226,600<br />
The costs of the Issue will be partially met out of additional subscription amount of Baisas 2 per<br />
share paid by the applicants towards Share Issue Expenses.<br />
The actual costs of the Issue less Issue Expenses collected, estimated at RO 226,600 will be<br />
charged to the Shareholders’ Equity of the Company.
CHAPTER 5<br />
UNDERWRITING ARRANGEMENTS<br />
In case of a shortfall in the subscription of the Offered Shares, the shortfall shall be underwritten<br />
as under:<br />
Underwriter<br />
Gulf Baader Capital<br />
Markets SAOC<br />
Vision Investment<br />
Services Co. SAOC<br />
Number of<br />
Ordinary Shares<br />
underwritten<br />
16<br />
Percentage shares<br />
underwritten<br />
Amount<br />
Underwritten@540<br />
Baisas per share (RO)<br />
9,109,000 36.44% 4,918,860<br />
6,747,400 26.99% 3,643,596<br />
Oman Arab Bank SAOC 5,000,000 20.00% 2,700,000<br />
United Securities LLC 4,143,600 16.57% 2,237,544<br />
Total 25,000,000 100.00% 13,500,000<br />
The Company has entered into underwriting arrangements with the above entities. The<br />
underwriting fee is estimated at RO 40,500 (Rial Omani Forty Thousand Five Hundred)<br />
In the event of any devolvement, the underwriters will subscribe to the extent of the shortfall<br />
as stated above, at a price of 540 Baisas per share and the Company shall not claim the issue<br />
expense of 2 Baisas per share, from the underwriters on such devolved shares.
CHAPTER 6<br />
PURPOSE OF THE ISSUE AND UTILISATION OF THE PROCEEDS<br />
Objectives of the Issue:<br />
• Raising capital for the purposes which are already mentioned in the <strong>Prospectus</strong>.<br />
• Listing the Company’s Shares on the MSM.<br />
• Partial divestment of Shares by the Selling Shareholders.<br />
Utilisation of the Proceeds of the Issue:<br />
• The Company will receive the proceeds of public subscription, amounting to RO 8,100,000<br />
(Rial Omani Eight Million, One Hundred Thousand) relating to the issue of the new Ordinary<br />
Shares, which will be utilised for setting-up a 132 kv transformers manufacturing project in Oman<br />
in technical collaboration of Tatung Co. of Taiwan, to fund the ongoing capital expenditure for the<br />
distribution transformers project in Qatar, meeting long-term working capital requirement and<br />
to invest in the future strategic projects. The target timetable of the Company for the use of the<br />
proceeds of public subscription as follows:<br />
Type of Expenses Amount Date<br />
Capital Expenditure RO 6 Million 2008/09<br />
Working Capital RO 2.1 Million 2008<br />
Total RO 8.1 Million<br />
• The Company will receive the proceeds of public subscription, amounting to RO 5,400,000<br />
(Rial Omani Five Million, Four Hundred Thousand) relating to the offer for sale of the Existing<br />
Ordinary Shares, which will be distributed to the Selling Shareholders through this offering,<br />
which is at an offer price of RO 0.540 (Baisas Five Hundred and Forty) per share excluding<br />
Issue Expenses.<br />
• The baisas 2 per share collected towards Issue Expenses will cover a portion of the expenses<br />
incurred by the Company in relation to the <strong>IPO</strong>.<br />
17
CHAPTER 7<br />
Overview<br />
OBJECTIVES OF THE COMPANY AND APPROVALS<br />
The Company was incorporated in the Sultanate of Oman on 3 August 1987 as a Limited Liability<br />
Company (“LLC”) and is currently undergoing the due process of transformation from an LLC<br />
into a “SAOG’’ organised under the laws of the Sultanate of Oman. The Company is the flagship<br />
Company of the well established and well diversified Al Anwar Holdings SAOG in the Sultanate<br />
of Oman. The Company has manufacturing facilities in Rusayl Industrial Area, Sultanate of Oman<br />
for Transformers and LV Switchgear Panels. The Company is on the fast growth path in the field<br />
of Electrical Products enjoying international acceptance and a preferred source status for its<br />
products and services in the Utilities & Oil & Gas sector throughout the MENA region.<br />
The Company holds the following material permits and licenses:<br />
1 Ministry of Commerce and Industry: Commercial<br />
Registration<br />
2 Ministry of Commerce and Industry: Industrial<br />
License<br />
3 Oman Chamber of Commerce & Industry:<br />
Membership<br />
18<br />
Commercial Registration<br />
Number: 1262947<br />
Date of Registration:<br />
3/8/1987<br />
Expiry date: 2/8/2012<br />
Registration Number: 2547<br />
Expiry Date: 02/08/2012<br />
Registration Number: 1614<br />
Expiry Date: 31/12/2008<br />
4 Ministry of Environment & Climate Affairs : License License Number: 3674<br />
Expiry Date: 04/06/08<br />
ISO 9001:2000 Certification<br />
The Company holds an ISO 9001:2000 Certification for marketing, design, manufacturing, testing<br />
and <strong>com</strong>missioning of all its products.<br />
Company Objectives<br />
The objects for which the Company is established are:<br />
(i) to carry on all or any of the business of purchasing, importing, generating, transmitting,<br />
transforming, converting, distributing, supplying, selling, exporting and dealing in electricity<br />
and all other forms of energy and products or services associated therewith;<br />
(ii) to locate, establish, construct, equip, operate, use, manage and maintain transforming,<br />
switching, conversion transmission and distribution facilities, cables, overhead lines,<br />
substations, switching stations, tunnels, cable bridges, link boxes, tele<strong>com</strong>munications stations,<br />
masts, aerials and dishes, fibre optic circuits, satellites and satellite microwave connections,<br />
heat pumps, plant and equipment used for <strong>com</strong>bined heat and power schemes;
(iii) to acquire (whether by usufruct, lease, concession, grant, or otherwise) establish, develop,<br />
exploit, operate and maintain land, any estates in land, which may seem to the Company<br />
capable or possibly capable of affording or facilitating the purchase, transmission,<br />
transformation, conversion, supply distribution, generation, development, production<br />
or manufacture of electricity or any other forms of energy in accordance with the laws of<br />
Oman;<br />
(iv) to carry on all or any of the business of designers, developers, manufacturers, constructors,<br />
installers, operators, users, inspectors, testers, maintainers, repairers, servicers, suppliers,<br />
distributors, importers and exporters of and dealers in cables, wires, meters, pylons, tracks,<br />
rails, pipelines, and any other plant, apparatus, equipment, systems and things used in<br />
connection with the transmission, transformation, conversion, supply, distribution, control<br />
and generation of electricity or any other forms of energy;<br />
(v) to provide or procure the provision of such facilities and services as may be necessary or<br />
desirable to forecast electricity/energy demand and to satisfy such demand;<br />
vi) to appoint and enter into agreements or arrangements with any person to represent the<br />
Company or any other organisation or person at meetings of local, national and international<br />
organisations and bodies concerned with activities connected or associated with any of<br />
the businesses or activities of the Company and to provide services of all kinds to such<br />
organisations and bodies;<br />
vii) to carry on all or any of the business of and provide services associated with, engineers<br />
(including without limitation, electrical, mechanical, heating, ventilation, civil, chemical,<br />
tele<strong>com</strong>munications and gas engineers), mechanics, technicians, draftsmen, designers,<br />
surveyors, architects and builders for achievement of the Company’s abovementioned<br />
objects in <strong>com</strong>pliance with the prevailing laws;<br />
Resolutions Passed<br />
The Shareholders of the Company unanimously passed the following resolutions in their meetings<br />
held on 10 th December 2007 and 24 th February 2008.<br />
1. Approved the proposal for conversion of the Company from an LLC to an SAOG as per the<br />
provisions of the CCL.<br />
2. Approved the new Authorised Share Capital of the Company which would be RO 10,000,000<br />
(Rial Omani Ten Million) and the Issued Share Capital of RO 5,000,000 (Rial Omani Five<br />
Million) divided into 50,000,000 (Rial Omani Fifty Million) Ordinary Shares of 100 Baisas each<br />
(RO 0.100).<br />
3. Approved the transformation as a part of the process of selling/issuing the Offered Shares<br />
to the public through an <strong>IPO</strong> which would <strong>com</strong>prise of two (2) <strong>com</strong>ponents:-<br />
i) Offer for sale of 10,000,000 (ten million) Ordinary Shares of face value Baisas. 100 each<br />
at an issue price of Baisas 542 per share to the public by the existing Shareholders<br />
(Promoters).<br />
ii) Fresh issue of 15,000,000 (fifteen million) new Ordinary Shares by the Company, to the<br />
public of face value Baisas 100 each at an issue price of Baisas. 542 per share.<br />
19
iii) Out of the total 25,000,000 (twenty five million) Shares which would be offered to<br />
the public, up to 1,250,000 (one million two hundred fifty thousand) Shares would be<br />
reserved for the Managers and the Employees of the Company.<br />
4. Approved that post <strong>IPO</strong>, the current shareholders (Promoters) would hold 50% of the issued<br />
share capital of the Company and the public including the Employees and the Managers<br />
would hold the remaining 50%.<br />
5. Approved the consent of the current shareholders’ in the LLC Company to offer a portion of<br />
their Ordinary Shares to the public as part of the <strong>IPO</strong>. The number of shares to be offered by<br />
each of the Promoters is as shown hereunder.<br />
Promoter’s Name No. of shares before<br />
transformation<br />
Face value Bz 100<br />
20<br />
No. of Shares to be<br />
Offered For Sale<br />
Face value Bz 100<br />
Al Anwar Holdings SAOG 20,097,000 5,742,000<br />
SABCO LLC 7,451,500 2,129,000<br />
Mr. Mushtaq bin Abdullah bin Jaffer 3,160,500 903,000<br />
H.H. Seyyid Shihab bin Tariq Al Said 2,597,000 742,000<br />
Mr. Mohammed bin Abdul Rasool Al Jamali 1,130,500 323,000<br />
Dr. Ali bin Jaffar bin Mohammed 563,500 161,000<br />
Total 35,000,000 10,000,000<br />
6. Approved to form a constitutive <strong>com</strong>mittee consisting of the following members:<br />
i) Mr. Qais bin Mohamed Al Yousef, Chairman<br />
ii) Mr. Abdulredha bin Mustafa Sultan, Director<br />
iii) Mr. Saibal Sen, Director<br />
iv) Mr. Sebastian Manavalan, Director<br />
v) Mr. Krishna Kumar Gupta, Director<br />
The above <strong>com</strong>mittee is authorised to do all such acts and deeds required for the <strong>IPO</strong><br />
such that the <strong>IPO</strong> shall be in <strong>com</strong>pliance with statutory and regulatory requirements and<br />
approvals.<br />
7. Approved the draft Memorandum & Articles of Association of the Company as per the<br />
requirements of the CCL pertaining to SAOG Companies for the submission to the <strong>com</strong>petent<br />
authorities and their approval.<br />
8. Approved the appointment of Oman Arab Bank SAOC as Lead Issue Manager and authorised<br />
them or their representatives to <strong>com</strong>plete the due diligence and all legal, financial and<br />
accounting matters pertaining to conversion and transformation of the Company from an<br />
LLC to an SAOG Company and the preparation and finalisation of the <strong>IPO</strong> documents as<br />
required by the concerned official bodies and also to appoint a Co-Financial Advisor.<br />
9. Approved the appointment of KPMG as the reporting Accountants and Al Busaidy, Mansoor<br />
Jamal & Co. as Legal Advisors for the <strong>IPO</strong>.
CHAPTER 8<br />
SHAREHOLDING DETAILS<br />
Promoters and Selling Shareholders of the Company (before transformation):<br />
Name of Shareholder Number of shares* Percentage<br />
Al Anwar Holdings SAOG 20,097,000 57.42%<br />
SABCO LLC 7,451,500 21.29%<br />
Mr. Mushtaq bin Abdullah bin Jaffer 3,160,500 9.03%<br />
H.H. Seyyid Shihab bin Tariq Al Said 2,597,000 7.42%<br />
Mr. Mohammed bin Abdul Rasool Al Jamali 1,130,500 3.23%<br />
Dr. Ali bin Jaffar bin Mohammed 563,500 1.61%<br />
Total 35,000,000 100%<br />
* after split<br />
Pursuant to a unanimous resolution of the Shareholders, the Share Capital of the Company<br />
was increased from RO 1,500,000 (Rial Omani One Million Five Hundred Thousand) to<br />
RO 3,500,000 (Rial Omani Three Million Five Hundred Thousand) through an issue of Bonus<br />
Shares of RO 2,000,000 (Rial Omani Two Million) to the Promoters/Selling Shareholders.<br />
The Shares were issued by way of Bonus Shares.<br />
Post Offer Equity Structure:<br />
The Public shareholding and the minimum Promoters’/Selling Shareholders’ shareholding<br />
after the <strong>IPO</strong> is envisaged as under:<br />
Sl.<br />
No<br />
Promoter/Selling<br />
Shareholder and Public<br />
1. Al Anwar Holdings SAOG<br />
2. SABCO LLC<br />
3.<br />
4.<br />
5.<br />
Mr. Mushtaq bin Abdullah<br />
bin Jaffer<br />
H.H. Seyyid Shihab<br />
bin Tariq Al Said<br />
Mr. Mohammed bin<br />
Abdul Rasool Al Jamali<br />
Nationality No. of<br />
Ordinary<br />
Shares<br />
Omani<br />
Company<br />
Omani<br />
Company<br />
21<br />
Nominal<br />
Value by RO<br />
Ratio to<br />
Capital<br />
14,355,000 1,435,500 28.71%<br />
5,322,500 532,250 10.65%<br />
Omani 2,257,500 225,750 4.52%<br />
Omani 1,855,000 185,500 3.71%<br />
Omani 807,500 80,750 1.62%<br />
6. Dr. Ali bin Jaffar bin Mohammed Omani 402,500 40,250 0.81%<br />
7.<br />
Public (including Employees<br />
and Managers)<br />
Omani /<br />
Non Omani<br />
25,000,000 2,500,000 50.00%<br />
Total 50,000,000 5,000,000 100%
Promoters’ Voting Rights<br />
Pursuant to the <strong>IPO</strong> and conversion into a Public Joint Stock Omani Company, the issued and<br />
paid-up share capital of the Company will be RO 5,000,000 (Rial Omani Five Million) divided into<br />
50,000,000 (fifty million) Ordinary Shares with a nominal value of One Hundred Baizas each (RO<br />
0.100). Each single share will carry the right to one vote at the Constitutive General Meeting of the<br />
Company and any General Meeting of the Company including any Extraordinary General Meeting.<br />
The Promoters and Selling Shareholders will hold 25,000,000 (twenty five million) Ordinary Shares<br />
which will have one vote per share, the same as other Ordinary Shares issued to the public. The<br />
Promoters and the Selling Shareholders will effectively have 50% of the voting rights.<br />
Restrictions imposed on the Promoters:<br />
In accordance with Article 77 of the CCL, the Promoters of the Company shall not withdraw from<br />
the Company or dispose of their Shares prior to publication of two Balance Sheets pertaining<br />
to two consecutive financial years, effective from the date of listing of the Shares on the Muscat<br />
Securities Market. An exception to this shall be the cases of assignment of the Shares amongst<br />
the Shareholders themselves and cases of inheritance. The period during which the –Promoters<br />
are not permitted to withdraw or dispose of their Shares may be extended for a further one<br />
year by a decision of the Minister of Commerce & Industry, at the request of the Capital Market<br />
Authority, without prejudice to the right held by the Promoters to make second grade pledge on<br />
those Shares.<br />
If any defect has taken place in the procedures pertaining to incorporation of the Company, the<br />
party concerned may within a period of five years from the incorporation of the Company, serve<br />
notice to it for remedying such a defect as per article 71 of the CCL. However, if the Company<br />
fails to take the initiative within one month of such notice for necessary remedial measures, the<br />
person concerned may have recourse to the <strong>com</strong>petent court to pass a decision for dissolution<br />
of the Company. The Promoters, members of the Board of Directors and the first Auditors shall<br />
be held liable severally and jointly for the damages arising from the dissolution of the Company<br />
and which are attributable to their illegal acts or their negligence or omission in the incorporation<br />
of the Company.<br />
Brief profile of the Main Promoters:<br />
AL ANWAR HOLDINGS SAOG<br />
Al Anwar Holdings SAOG is establised in 1994 by a group of prominent institutions and business<br />
houses. Al Anwar was instrumental in pioneering industrial development in Oman in various<br />
industrial segments including Transformers and Switchgears.<br />
Al Anwar has promoted, nurtured, created and shared wealth with the investing populace of this<br />
country in the past. In its current business model with a well diversified and geographically dispersed<br />
investments in industrial and non-industrial sectors such as financial services and insurance.<br />
Al Anwar has invested in several <strong>com</strong>panies of repute. Some of Al Anwar’s current and past<br />
investments include: National Aluminum Products Co SAOG, Al Anwar Ceramic Tiles SAOG, Al<br />
Maha Ceramic Tiles SAOC, Falcon Insurance SAOC and Taageer Finance Co SAOG.<br />
22
Board of Directors:<br />
SL. No Name of the Director Independent/Non<br />
Indepedent<br />
23<br />
Position<br />
1 Brig. Masoud Humaid Al Harthy Independent Chairman<br />
2 Mr. Qais Mohammed Musa Al Yousef Independent Dy. Chairman<br />
3 Mr. Shabir Musa A. Al Yousef Independent Director<br />
4 Mr. Abdulredha Mustafa Sultan Independent Director<br />
5 Mr. Nawwaf Ghubash Ahmed Al Merri Independent Director<br />
6 Mr. Hamed Rashid Al Dhaheri Independent Director<br />
7 Mr. Mohamed A. M. Al Khonji Independent Director<br />
AL ANWAR HOLDINGS SAOG<br />
SHAREHOLDERS HOLDING 1% AND MORE AS ON 31 MARCH 08<br />
Sl. No. Name No.of shares %<br />
1 Fincorp Investment Co.LLC 22,574,290 25.49%<br />
2 Financial Services Co. Trust-Gulf 17,995,800 20.32%<br />
3 Al Khonji Investment LLC 7,000,000 7.91%<br />
4 Mohammed & Ahmed Al Khonji Co 4,457,470 5.03%<br />
5 Mohamed Hafedh Ali Dhahab 3,005,490 3.39%<br />
6 Oman Arab Bank- Asset Mgt-Trust Gulf 1,050,351 1.19%<br />
7 Oman Construction Co. LLC 889, 295 1.00%<br />
8 Others 31,577,304 35.66%<br />
Total 88,550, 000 100%<br />
The Board of Al Anwar is <strong>com</strong>prised of eminent personalities from business and industry and it<br />
has a highly professional management team.<br />
Details of its current investments, financial performance and vision can be accessed through its<br />
website, www.alanwarholdings.<strong>com</strong>. As the <strong>com</strong>pany is listed, its financial performance can also<br />
be accessed through the MSM website.<br />
SABCO LLC / SABCO Group<br />
Established during the early Renaissance years of the 70s with a capital of RO 500,000, SABCO<br />
Group has grown into an integrated investment, <strong>com</strong>mercial, industrial and service organisation<br />
to day. It is registered with the Ministry of Industry and Commerce and also the Oman Chamber<br />
of Commerce. The SABCO group has more than 100 employees today.<br />
SABCO group has made its presence in the field of services, manufacturing, real estate,<br />
contracting, distribution and oil and gas and security and defence through Direct and Associate<br />
Businesses.
SABCO Commercial Centre, Voltamp Manufacturing Company LLC (Presently Voltamp Energy<br />
SAOG (under transformation), National Mineral Water Co. SAOG and Oman Marketing and<br />
Services Company deserve special mention among the group <strong>com</strong>panies of SABCO Group.<br />
Shareholders of SABCO.<br />
a. Sayyid Badr Bin Hamad Bin Homood Al Bu Said – Secretary General - Ministry of Foreign<br />
Affairs (Rank of a minister)<br />
b. Sayyid Khalid Bin Hamd Bin Hamood Al Bu Said – Chairman of SABCO Group and Al Ahli<br />
Bank SAOG.<br />
c. Sayyid Aymen Bin Hamad Bin Hamood Al Bu Said – Vice Chairman of SABCO Group.<br />
d. Zawan Bint Hamad Suleiman Al Nabhani<br />
e. Sayyida Waffa Bint Hamad Al Nu Said.<br />
Direct Businesses<br />
Sabco LLC: A holding <strong>com</strong>pany involved in private and public sector project development<br />
and representation of world renowned <strong>com</strong>panies.<br />
Oman Perfumery LLC / Amouage Limited – The House of Amouage : Manufacturer,<br />
International distributor and retailer of luxury “Amouage” perfumes, home fragrances, skincare<br />
and accessories . The website is www.amouage.<strong>com</strong><br />
SABCO Commercial Centre: Oman’s pioneering boutique shopping mall opened in 1984.<br />
SABCO Art LLC / SABCO Press LLC: A full service <strong>com</strong>munication and entertainment<br />
solutions provider. www.sabcoart.<strong>com</strong><br />
Oman Expo LLC: A pioneer in Oman’s events industry organising diversified exhibitions,<br />
events and conferences. The website is www.omanexpo.<strong>com</strong><br />
Al Hail Investments LLC : A property development and Asset Management Company. The<br />
website is www.alhailinvestments.<strong>com</strong><br />
Sabco Media SAOC : A media <strong>com</strong>pany which owns, manages and operates Radio, TV and<br />
other media related activities.<br />
MUSHTAQ ABDULLAH JAFFER AL SALEH<br />
v Born in 1951<br />
v Master of International Politics, U.L.B. Brussels, Belgium<br />
v His Majesty The Sultan conferred upon him First Order of Al-Nouman Decoration in 1990<br />
v Languages: Fluent in Arabic, English and French<br />
Official Profile:<br />
v Joined The Ministry of Foreign Affaires in 1974. Served and promoted to several positions till<br />
appointed Ambassador Extraordinary and Plenipotentiary to Djibouti in 1977, Japan in 1980,<br />
Algeria in 1983 and China in 1987<br />
v Upon the request of GCC, The Government of Oman seconded him to serve as the very first<br />
Ambassador Extraordinary & Plenipotentiary of GCC to the European Union (1992-1996)<br />
24
v Opted for an early retirement plan in 2002<br />
v Appointed in 1998 One of the Five Representatives, representing Oman in the newly created<br />
GCC Consultative Council for a term of three years<br />
v Re-appointed for second term in 2001<br />
Business Profile:<br />
Participated and chaired several renowned <strong>com</strong>panies listed on Muscat Securities Market (1996-<br />
2005), mainly:<br />
v Chairman of Board of Directors of Oman Orix Leasing<br />
v Vice Chairman of Board of Directors of Gulf Hotels<br />
v Vice Chairman of Board of Directors of Commercial Bank<br />
v Vice Chairman of Board of Directors of Oman Carpets<br />
v Vice Chairman of Board of Directors of Hilton Salalah<br />
v Member of Board of Directors of AlKhaleej Polypropylene<br />
v Member of Board of Directors of Oman National Holdings<br />
25
CHAPTER 9<br />
MARKET AND ECONOMIC OVERVIEW<br />
With an established base in Oman and currently entering into Qatar, the Company is looking to<br />
diversify to cover other countries within the Gulf and the wider MENA region.<br />
An overview of the projected macroeconomic growth in some of the key markets in which the<br />
Company operates and/or expects to have a presence is shown below:<br />
GCC’s Nominal GDP and the Expected Growth in the GCC and MENA Region<br />
USD Billion 2008 2009 2010 2011<br />
MIDDLE EAST 1,544 1,705 1,865 2,013<br />
Growth 11% 10% 9% 8%<br />
Oman 41 43 46 49<br />
Growth 6% 6% 7% 7%<br />
Qatar 70 77 83 89<br />
Growth 14% 9% 8% 7%<br />
Saudi Arabia 400 429 460 490<br />
Growth 8% 7% 7% 7%<br />
NORTH AFRICA 513 551 588 625<br />
Growth 11% 7% 7% 6%<br />
Source: Global Insight, 2007<br />
Oman Economic Overview<br />
Total Nominal GDP<br />
Oman is currently witnessing a period of significant economic growth. The country’s economy<br />
has expanded by 10.64%, measured in Gross Domestic Product (“GDP”) terms, from 2005 to<br />
2007 <strong>com</strong>pared to 9.29% during the preceding 3 years. As a result, nominal GDP has increased<br />
from RO 7.9 billion in 2002 to RO 14.6.billion in 2007 1 . This economic growth has been primarily<br />
driven by the contribution of petroleum activities which has increased by 47.8 % to the total GDP<br />
due to rising oil prices in the world markets.<br />
In RO Million<br />
16,000<br />
14,000<br />
12,000<br />
10,000<br />
8,000<br />
6,000<br />
4,000<br />
2,000<br />
0<br />
1 Figures 8,000 for 2007 are preliminary<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
Nominal GDP, 2002-2007<br />
2002 2003 2004 2005 2006 2007<br />
Nominal GDP Grow th<br />
Source: Statistical Yearbook 2007, Ministry of National Economy; www.mone.gov.om, 2008<br />
9,000<br />
26<br />
25%<br />
20%<br />
15%<br />
10%<br />
5%<br />
0%
In RO Million<br />
16,000<br />
14,000<br />
12,000<br />
10,000<br />
8,000<br />
6,000<br />
4,000<br />
2,000<br />
0<br />
9,000<br />
8,000<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
0<br />
Oman Economic Activities<br />
Source: Statistical Yearbook October 2007, Ministry of National Economy<br />
The contribution from non-petroleum activities rose by 18% in 2006 principally on the strength<br />
of the 45% growth in manufacturing, 20% in building and construction activities and 24% in<br />
transport, storage and <strong>com</strong>munication. Oman’s non-oil exports have increased by 39% from RO<br />
1.1 billion in 2005 to RO 1.6 billion in the year 2006.<br />
Economic Drivers<br />
2002 2003 2004 2005 2006 2007<br />
2002 2003 2004 2005 2006 2007<br />
Petroleum Activ ities Non Petroleum Activ ities<br />
Oman’s long-term economic growth plans are embodied in the Vision 2020 (“Vision”) document<br />
which sets out the strategic goals to be achieved by the year 2020. The fundamental goals of<br />
the Vision are as follows:<br />
Ñ To develop and upgrade Omani human resources in order to cope with technological<br />
progress and attain international <strong>com</strong>petitiveness.<br />
Ñ To develop a private sector capable of optimum use of human and natural resources in an<br />
efficient and ecologically sound way, in close collaboration with the government.<br />
Ñ To utilise the geo-strategic location of the Sultanate, optimise the use of its natural resources<br />
and promote economic diversification.<br />
Ñ To distribute the fruits of development among all regions and all citizens.<br />
Ñ To preserve, safeguard and develop the achievements ac<strong>com</strong>plished in the past twenty- five<br />
years.<br />
From a planning perspective, the Government links developmental priorities and budgetary plans<br />
to five-year planning cycles. The current five-year plan is an important stepping-stone towards<br />
achieving the Vision through which the Government is seeking to achieve a GDP growth rate of<br />
7.4% for the period 2000-2020 2 . The Vision’s aim is that by 2020, Oman’s economy will have<br />
limited reliance on oil revenues and would have diversified into non-oil sectors such as natural<br />
gas, downstream industries and tourism.<br />
It is projected that by 2020, the share of oil revenues in Oman’s GDP would be around 9%<br />
(<strong>com</strong>pared to 48% in 2006) while natural gas revenues will contribute 10% (<strong>com</strong>pared to 3.6%<br />
in 2006) to the GDP.<br />
1 Ministry of National Economy<br />
Nominal GDP Grow th<br />
27<br />
25%<br />
20%<br />
15%<br />
10%<br />
5%<br />
0%
Economic Diversification<br />
The non-oil industrial sector’s contribution to GDP is expected to rise from the current level in<br />
2006 of 14.2% to 29% in 2020. This structural shift is expected to have a significant impact on<br />
Oman’s future economic development. To achieve these goals, the Government is focusing on<br />
the following economic drivers:<br />
Ñ Increasing Foreign Direct Investment: During the past few years, positive steps towards<br />
privatisation have been taken as part of the structural reform program. These steps are aimed<br />
at supporting the country’s development strategy and making the Omani economy more<br />
attractive to foreign and local investors. Some key steps that have been taken include the lifting<br />
of foreign direct investment-related restrictions relating to most sectors, streamlining business<br />
regulations and adopting a “one-stop” investment approach. The ratification of the Free<br />
Trade Agreement (“FTA”) with the United States in 2006 is an indication of the Government’s<br />
<strong>com</strong>mitment to economic reform and diversification. Oman’s membership in the World Trade<br />
Organisation (“WTO”) in 2000 is an effort towards the liberalisation of its markets.<br />
Ñ Industrialisation: The industrial sector is also expected to help Oman realise its Vision<br />
2020. In 1994, the industrial sector accounted for only 4.3% of GDP, while today nearly<br />
8.5% of GDP is accounted for by this sector. Oman is planning to raise the contribution of<br />
manufacturing to the GDP to 15% by 2020. Currently, Muscat, Sohar and Salalah are the<br />
key centres of the process of industrialisation. Sohar is undergoing a huge transformation<br />
with around USD 12 billion worth of developments. Five major projects have been already<br />
announced namely Sohar Refinery Project, Sohar Methanol Project, Oman-India Fertilizer<br />
project, Ferro-Chrome project and Sohar Fertilizer project. Continued activity in the industrial<br />
sector is anticipated with the Government’s <strong>com</strong>mitment to its long term target of diversifying<br />
away from the oil and gas sector. A key <strong>com</strong>ponent of this diversification includes various<br />
proposed aluminium-related downstream projects.<br />
Ñ Tourism: Vision 2020 stresses the importance of diversifying the economic base of the<br />
country and identifies tourism as one of the important economic drivers which can help<br />
realise the Vision. In order for the Government to meet its long-term targets, a tourism<br />
growth rate of 15% to 20% per annum 3 needs to be achieved. As a step in this direction,<br />
the Government is enhancing the role of the private sector in projects and activities. The<br />
Ministry of Tourism (“MoT”), established in 2004, has already signed agreements with private<br />
developers for implementing 14 projects worth more than RO 6.6 billion.<br />
Qatar Economic Overview<br />
Nominal GDP<br />
Qatar’s economy is in a high growth phase. The nominal GDP in Qatar grew significantly by<br />
24.2% in 2006 after witnessing a strong growth of 33.8% in 2005 and 34.8% in 2004. In 2006,<br />
Qatar’s GDP per capita increased by 15.5% to reach USD 57,350, and is expected to reach USD<br />
68,467 by the year 2008 4 .<br />
Qatar’s Nominal GDP<br />
QR Million 2003 2004 2005 2006<br />
Total GDP (Million Rial Qatari) 85,663 115,512 154,564 191,909<br />
% Change 21.5% 34.8% 33.8% 24.2%<br />
Source: Annual Report 2005, 2006, Qatar Central Bank<br />
3 “Vision Oman 2020”, Ministry of National Economy<br />
4 Qatar National Bank<br />
28
Contribution to GDP (QR million)<br />
140,000<br />
120,000<br />
100,000<br />
80,000<br />
60,000<br />
40,000<br />
20,000<br />
Qatar’s GDP as Oil and Non-Oil Activities<br />
Source: Qatar Economic Review 2007, Qatar National Bank<br />
Economic Activities<br />
The oil and gas sector has grown to QR 118,707 million in 2006 from QR 92,071 million in 2005<br />
which is equivalent to a growth rate of 29%. The non-oil sector has increased by 17.14% in 2006<br />
to reach QR 73,202 million. In 2006, finance, insurance and real estate represented 21.5% of<br />
the total non-oil sector and manufacturing sector represented 19.3%. Building and construction<br />
sector has increased by 17.7% in 2006 and reached QR 10,291 million <strong>com</strong>paring to QR 8,744<br />
million in 2005.<br />
The table below provides the break down of the non-oil sector in Qatar for 2005 and 2006:<br />
GDP for Non-Oil Sector<br />
QR Million 2005 Share 2006 Share Growth<br />
Agriculture & Fishing 216 0.6% 233 0.3% 7.9%<br />
Manufacturing 13,042 20.9% 14,098 19.3% 8.1%<br />
Electricity & Water 2,209 3.5% 2,424 3.3% 9.7%<br />
Building & Construction 8,744 14.0% 10,291 14.1% 17.7%<br />
Trade, Rest, & Hotels 6,869 11.0% 7,616 10.4% 10.9%<br />
Transport & Communication 5,114 8.2% 5,612 7.7% 9.7%<br />
Finance, Ins. & Real Estate 14,785 23.7% 15,760 21.5% 6.6%<br />
Other Services 11,514 18.4% 17,168 23.5% 49.1%<br />
Total 62,493 100.0% 73,202 100.0% 17.1%<br />
Source: Qatar Economic Review 2007, Qatar National Bank<br />
Economic Drivers<br />
-<br />
2003 2004 2005 2006<br />
The main drivers that contribute to Qatar’s strong economic performance are highlighted<br />
below:<br />
Ñ Qatar’s oil production averaged 800,000 bpd 5 during the first half of 2007. Qatar’s oil<br />
production increased by 31,000 bpd during the year 2006, to average 810,000 bpd,<br />
<strong>com</strong>pared to an average of 779,000 bpd produced during 2005.<br />
5 Barrel per day<br />
Oil & Gas sector Non-oil sector<br />
29
Ñ Qatar’s exports have increased by 32.2% in 2006, to reach QR 123.9 billion. The oil and<br />
gas exports reached QR 111.2 billion of which 57% is accounted for by oil exports and the<br />
balance 43% by gas exports.<br />
Ñ Qatar’s oil price averaged USD 61.1 during the first half of 2007. In 2006, oil price has<br />
increased by 21.7% to reach USD 62.9 <strong>com</strong>pared to USD 51.7 in 2005.<br />
Ñ The population in Qatar was 522,023 as per the 1997 census, and has grown in 2004 by<br />
43% to reach 744,029 according to the 2004 census.<br />
Ñ The total assets of Qatari banks have increased by 46.7% in 2006 to reach QR 167.6 billion,<br />
and their net profits increased by 28.9% to reach QR 5,523 million in the same year.<br />
Ñ Many development projects in sectors such as infrastructure, health, education and tourism<br />
have further contributed to the economic performance. Mega projects are undergoing<br />
development:<br />
- Infrastructure: the New Doha International Airport project is estimated to cost USD 2.5<br />
billion and will be <strong>com</strong>pleted in three phases (2009, 2012 and 2015). Several roads and<br />
expressways projects are under implementation. Amongst the major road projects is the<br />
Qatar-Bahrain Bridge with an estimated value of USD 2 billion.<br />
- Gas and LNG 6 : Al-Khaleej Gulf Project, the Dolphin project and Kuwait-Qatar gas supply<br />
project are expected to enhance Qatar’s gas production capabilities and increase gas sales<br />
to the domestic consumers and gas export market. RasGas LNG 3,4 and 5, RasGas LNG<br />
6 and 7 Qatargas II and III projects are aimed at enhancing the production and export of<br />
LNG.<br />
- Leisure and tourism: the Pearl of the Gulf project, estimated at USD 2.5 billion, is a manmade<br />
island which is expected to include over 7,500 dwelling units, 3 luxury hotels and<br />
entertainment centres, restaurants and parks. The project master plan focuses on the<br />
creation of new hotels and tourist attractions, and it is designed to develop a tourism base<br />
of 1.4 million by 2010. The total additional spending is expected at USD 15 billion.<br />
- Healthcare: Hamad Medical City project is estimated to cost around USD 0.4 billion and<br />
will include a 300-bed unit, a dialysis unit, medical staff ac<strong>com</strong>modation and laboratories.<br />
Hamad Southern Area Hospital estimated to cost USD 57 million will include 200-bed<br />
facility. The USD 26 million Cardiology Hospital which <strong>com</strong>prises of a 110-bed facility is<br />
being developed at Rumailah.<br />
Industry Information<br />
Power Industry in the GCC<br />
The power and utility sector in all GCC countries is witnessing significant growth. The current<br />
economic development, increasing industrial capacity and population growth is outstripping<br />
demand for electricity in the region. According to the World Energy Council, an additional 100<br />
gigawatts of power generation capacity would be needed by 2020, which is projected to cost an<br />
estimated USD 150 billion.<br />
6 Liquefied Natural Gas<br />
30
The current GCC power capacity is illustrated in the following graph:<br />
Kuw ait<br />
Qatar<br />
Saudi Arabia<br />
Bahrain<br />
Oman<br />
UAE<br />
Source: The Power of Watt, ABQ Zawya Ltd, 2007<br />
Present GCC Power Capacity<br />
- 5,000 10,000 15,000 20,000 25,000 30,000 35,000<br />
The future GCC power capacity is illustrated in the following graph:<br />
Kuw ait<br />
Qatar<br />
Saudi Arabia<br />
Bahrain<br />
Oman<br />
UAE<br />
Source: The Power of Watt, ABQ Zawya Ltd, 2007<br />
Market Demand for Transformers<br />
Future GCC Power Capacity<br />
The high demand for power has resulted in a significant increase in demand for power<br />
transformers. During 2006, the market demand for power transformers in the MENA region was<br />
32,595 MVA (Megavolt Ampere). Oman represented 8% of the total MENA demand; KSA has<br />
the biggest share of 19%, Qatar 6%, UAE 15%, Kuwait 6% and Bahrain 2%. At present, more<br />
than 90% of the transformer demand in the GCC is met by imports. This represents a significant<br />
business potential for existing players to replace imported products.<br />
31<br />
MW<br />
- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000<br />
MW<br />
Installed Capacity Additional Capacity
The power transformer market demand for 2006 is illustrated in the following graph:<br />
E g ypt<br />
1,525<br />
S u dan<br />
5 20<br />
Transformer Market Size, MVA<br />
T urke y<br />
2 ,4 00<br />
S yria<br />
Source: Feasibility Study for Power Transformers, A. F. Ferguson & Co., 2007<br />
The power transformer market for the MENA region is projected to reach 75,080 MVA (Megavolt<br />
Ampere) in 2012 as per the following graph:<br />
MVA<br />
18,000<br />
16,000<br />
14,000<br />
12,000<br />
10,000<br />
8,000<br />
6,000<br />
4,000<br />
2,000<br />
-<br />
Saudi Arabia<br />
Power Transformer Demand Forecast 2012<br />
UAE<br />
Iraq<br />
Oman<br />
Source: Feasibility Study for Power Transformers, A. F. Ferguson & Co., 2007<br />
6 00<br />
Jorda n<br />
64 0<br />
Qatar<br />
Iraq<br />
3,41 5<br />
Kuwait<br />
K S A<br />
6,3 75<br />
It is this significant growth in the demand for power transformer that the Company endeavours<br />
to capture with its new projects in Oman and Qatar.<br />
32<br />
K uw ait<br />
1,965<br />
Egypt<br />
B a hrain<br />
7 55<br />
Q a ta r<br />
1,8 05<br />
Y em e n<br />
2 10<br />
Sudan<br />
Ira n<br />
4 ,86 0<br />
U A E<br />
4 ,9 15<br />
Bahrain<br />
O m a n<br />
2,610<br />
Yemen<br />
Other countries
Customer Sectors<br />
In 2006, 73% of the MENA demand for power transformers came from entities in the utility<br />
sector, 16% of demand was contributed by the oil and gas sector and 11% by heavy industry.<br />
The graph below illustrates the demand for the three main sectors in the GCC countries:<br />
Market demand<br />
120%<br />
100%<br />
80%<br />
60%<br />
40%<br />
20%<br />
0%<br />
Demand for Power Transformers by Sector<br />
Oman KSA Qatar UAE Kuw ait Bahrain Yemen<br />
Utility Oil and Gas Heav y Industry<br />
Source: Feasibility Study for Power Transformers, A. F. Ferguson & Co., 2007<br />
33
CHAPTER 10<br />
Overview:<br />
DESCRIPTION OF THE COMPANY AND<br />
BUSINESS OVERVIEW AND ACTIVITIES<br />
Established in 1987, the Voltamp Energy is the flagship <strong>com</strong>pany of the Al Anwar Group. It<br />
manufactures low voltage switchgear panels through a franchisee agreement with Schneider-<br />
France.<br />
Al Anwar Holdings<br />
SAOG<br />
0.01%<br />
Voltamp Transformers<br />
Oman LLC<br />
Current Ownership Structure<br />
57.42%<br />
SABCO LLC<br />
21.29%<br />
Voltamp Energy LLC<br />
99.99% 51%<br />
Voltamp Energy is to be converted from LLC to SAOG as part of the <strong>IPO</strong> process. The proposed<br />
ownership structure, incorporating the additional project, is expected to be as follows:<br />
Al Anwar<br />
Holdings<br />
SAOG<br />
0.01%<br />
Voltamp Transformers<br />
Oman LLC<br />
Planned Ownership Structure*<br />
SABCO LLC<br />
Voltamp Energy SAOG<br />
(under transformation)<br />
99.99% 99.99% 51%<br />
Voltamp Power Oman<br />
LLC (proposed)<br />
The 0.01% shareholding held by Al Anwar Holdings SAOG in VTO is under trust of VE. A similar<br />
structure is anticipated for the shareholding structure of VPO whereby 100 shares of VPO will be<br />
held by VTO under trust of VE.<br />
34<br />
Other<br />
Shareholders<br />
(pre-<strong>IPO</strong>)<br />
28.71% 10.65% 10.65% 50.00%<br />
0.01%<br />
Other Shareholders<br />
21.29%<br />
Voltamp Manufacturing<br />
Company Qatar (under<br />
construction)<br />
New<br />
Shareholders<br />
(post-<strong>IPO</strong>)<br />
Voltamp Manufacturing<br />
Company Qatar (under<br />
construction)
Brief Profile of Subsidiaries of the Company<br />
Voltamp Transformers Oman LLC (“VTO”)<br />
Established in 1991 in collaboration with Babcock Transformers UK, VTO is a certified ISO 9001<br />
<strong>com</strong>pany that specialises in a range of power, distribution and speciality transformers. It designs<br />
and manufactures special multi-tap transformers for the oil & gas sector.<br />
VTO has a state-of-the-art manufacturing facility located in the Rusayl Industrial Area, Sultanate<br />
of Oman where it currently manufacturers transformers with capacities ranging from 50 kVA to<br />
15 MVA, 33 kV class.<br />
In addition to manufacturing activities, VTO also offers services relating to the erection,<br />
<strong>com</strong>missioning, servicing and testing of transformers and associated equipment through its<br />
Engineering and Services Division .<br />
VTO is currently looking to expand its customer base in the wider MENA region, with a primary<br />
focus on the GCC markets, including Kingdom of Saudi Arabia, Kuwait, United Arab Emirates,<br />
and Yemen.<br />
The Projected Financials are given in the following table<br />
VOLTAMP TRANSFORMERS OMAN LLC<br />
Projected In<strong>com</strong>e statement<br />
for the year ended 31 December<br />
In<strong>com</strong>e<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
Revenue 10,700,000 13,036,000 16,426,000 17,607,825 18,938,216 20,447,628 22,173,133<br />
Cost of sales -7,334,450 -8,930,391 -11,340,572 -12,168,350 -13,076,518 -14,099,604 -15,272,261<br />
Gross profit 3,365,550 4,105,609 5,085,428 5,439,475 5,861,698 6,348,024 6,900,872<br />
Percentage of gross profit 31.45% 31.49% 30.96% 30.89% 30.95% 31.05% 31.12%<br />
Other in<strong>com</strong>e 141,904 90,000 102,000 107,400 113,205 119,445 126,154<br />
Expenses<br />
Selling, administrative<br />
and general<br />
3,507,454 4,195,609 5,187,428 5,546,875 5,974,903 6,467,469 7,027,026<br />
-810,679 -967,978 -1,193,688 -1,303,960 -1,387,531 -1,505,886 -1,616,551<br />
Profit from operations 2,696,775 3,227,631 3,993,740 4,242,915 4,587,372 4,961,583 5,410,475<br />
Finance charges -175,000 -175,000 -175,000 -175,000 -175,000 -175,000 -175,000<br />
Profit for the year before<br />
taxation<br />
2,521,775 3,052,631 3,818,740 4,067,915 4,412,372 4,786,583 5,235,475<br />
Taxation -299,013 -362,716 -454,649 -484,550 -525,885 -570,790 -624,657<br />
Net profit for the year 2,222,762.00 2,689,915.00 3,364,091.00 3,583,365.00 3,886,487.00 4,215,793.00 4,610,818.00<br />
Earnings per share for<br />
the year<br />
Voltamp Manufacturing Company Qatar<br />
2.223 2.690 3.364 3.583 3.886 4.216 4.611<br />
VMCQ was established in 2007 in Qatar with an initial capital of QR 16.2 million. VE owns 51% of<br />
VMCQ and the remainder is owned by two Qatari <strong>com</strong>panies; Al-Salam International Investment<br />
Company LLC and Al Arkan Al Arabah, own the remaining 49%.<br />
35
The manufacturing of transformers at VMCQ is expected to start in July 2008 and will focus<br />
on manufacturing transformers as well as associated switchgear. It is expected that VMCQ will<br />
initially cater to the needs of the Qatar and Bahrain markets, which are currently experiencing<br />
significant growth.<br />
VMCQ will manufacture oil filled transformers up to 10 MVA / 33 kV class, dry type transformers<br />
up to 1.6 MVA / 11kV class and LV switchgear. The specific products will include:<br />
Ñ Normal transformers for utilities applications<br />
Ñ 3 winding and 4 winding transformers for special applications<br />
Ñ Transformers for industrial applications<br />
Ñ Transformers for VSD applications<br />
Ñ Transformers with tappings on both the primary and secondary windings (tappings up to<br />
50% earthing transformers)<br />
The main reasons for establishing VMCQ are:<br />
Ñ The economic growth in Qatar and the new mega projects are still under development,<br />
which offer product demand potential<br />
Ñ There is no local transformer manufacturer in Qatar, at present, which would allow VMCQ to<br />
benefit from a first mover advantage as a local manufacturer<br />
Ñ VTO has existing customers in Qatar, such as Qatar General Electricity and Water Corporation<br />
(“KAHRAMAA”), through which it has developed a strong brand name and product presence<br />
in the local market. It should be possible to leverage the existing customers and reputation<br />
to further penetrate the market while providing improved post-sales support through the<br />
local operation<br />
Ñ Qatar’s strategic position will enable Voltamp to access customers in Bahrain, Kuwait and<br />
KSA<br />
About the Consultant:<br />
The detailed feasibility study was undertaken by Deloitte consultants relating to VMCQ’s operation<br />
and a brief about the consultants is given below:<br />
About Deloitte<br />
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and<br />
their respective subsidiaries and affiliates.Delotte Touche Tohmatsu is an organisation of member<br />
firms around the world devoted to excellence in providing professional services and advice,<br />
focused on client service through a global strategy executed locally in nearly 150 countries. With<br />
access to the deep intellectual Capital of 120,000 people worldwide, Deloitte delivers services<br />
in four professional areas-audit, tax, consulting and financial advisory services- and serves more<br />
than one-half of the world’s largest <strong>com</strong>panies, as well as large national enterprises, public<br />
institutions, locally important clients, and successful, fast-growing global growth <strong>com</strong>panies.<br />
Services are not provided by the Deloitte Touche Tohmatsu Verein,and, for regulatory and other<br />
reasons, certain member firms do not provide services in all four professional areas.<br />
36
Key Sectors of Demand for the VMCQ Project:<br />
The feasibility study conducted by Deloitte highlights the following key sectors from which<br />
demand is expected to be generated:<br />
Ñ Infrastructure<br />
Ñ Tourism<br />
Ñ Healthcare<br />
Ñ Education<br />
Ñ Utilities<br />
Ñ Heavy Industries<br />
Ñ Oil & Gas<br />
The Projected Financials for the VMCQ as per the feasibility study conducted by Deloitte<br />
Consultants is given below:<br />
VMCQ<br />
Projected In<strong>com</strong>e Statements (2008-2014)<br />
In<strong>com</strong>e<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
Revenue 2,865,242.00 9,321,458.00 10,355,604.00 11,508,142.00 12,793,144.00 14,226,425.00 15,825,770.00<br />
Cost of sales -2,486,364 -7,575,496 -8,379,508 -9,294,590 -10,326,819 -11,141,725 -12,384,526<br />
Gross profit 378,878 1,745,962 1,976,096 2,213,552 2,466,325 3,084,700 3,441,244<br />
Percentage of gross profit 13.22% 18.73% 19.08% 19.23% 19.28% 21.68% 21.74%<br />
Other in<strong>com</strong>e<br />
Expenses<br />
Selling, administrative<br />
and general<br />
378,878 1,745,962 1,976,096 2,213,552 2,466,325 3,084,700 3,441,244<br />
-569,645 -933,649 -1,014,125 -1,092,424 -1,181,059 -1,288,698 -1,407,817<br />
Profit from operations -190,767 812,313 961,971 1,121,128 1,285,266 1,796,002 2,033,427<br />
Finance charges -59,028 -47,223 -41,320 -35,417 -29,514 -23,611 -17,708<br />
Profit for the year before<br />
taxation<br />
-249,795 765,090 920,651 1,085,711 1,255,752 1,772,391 2,015,719<br />
Taxation 0 0 0 0 0 0 0<br />
Net profit for the year -249,795.00 765,090.00 920,651.00 1,085,711.00 1,255,752.00 1,772,391.00 2,015,719.00<br />
Earnings per share for<br />
the year<br />
Capacity utilisation<br />
-0.016 0.050 0.060 0.071 0.082 0.115 0.131<br />
Growth 225.33% 11.09% 11.13% 11.17% 11.20% 11.24%<br />
37
Voltamp Power Oman LLC (Under formation)<br />
As part of its growth strategy, the Company is proposing to set up a new project (VPO), which will<br />
be located in the Sohar Industrial Estate. The project aims to enhance the Company’s product<br />
range by offering power transformers up to 150 MVA/132 kV class This extension of the product<br />
portfolio will allow the Company to further enhance its brand name in the local and regional<br />
power sector.<br />
The new project will cater to local demand as well as the wider GCC and MENA region. The<br />
power transformer market is growing strongly and this project provides the Company with an<br />
opportunity to benefit from this growth while, at the same time, providing a diversification to its<br />
current product portfolio.<br />
The location in Sohar Industrial Estate provides easy access to the industrial hub being developed<br />
around Sohar Port, Sohar Refinery and the aluminium smelter. In addition, Sohar Port will facilitate<br />
the efficient import raw materials and export transformers. VPO’s location is Sohar, near to the<br />
UAE, will also enable to the <strong>com</strong>pany to easily access the large and growing UAE transformer<br />
market.<br />
An independent project feasibility study has been <strong>com</strong>pleted by M/S.A.Ferguson & Co, reputed<br />
consultants from India, whose brief is given below and the Company’s management expects to<br />
progress to a more detailed planning phase in the <strong>com</strong>ing months. At this stage, the initial cost<br />
of the project is estimated at RO 9 million and is expected to <strong>com</strong>mence production by January<br />
2010.<br />
The Company has entered into a technology collaboration agreement with Tatung Co. of Taiwan<br />
for production of power transformers up to 150 MVA/132 kV class. Tatung is a diversified<br />
international <strong>com</strong>pany involved in the design and manufacture of a wide variety of industrial<br />
products. Tatung is a leader in the power and energy business and its products include power<br />
transformers up to 345 kV (and being expanded up to 500kV), oil-filled and dry distribution<br />
transformers, switchgear, copper rods, bare copper wires, tele<strong>com</strong>munication cables, and<br />
optical fibre cables. Tatung was founded in 1918 and is headquartered in Taipei, Taiwan.<br />
Profile of A Ferguson & Co.<br />
AFF is one of the leading firms of Chartered Accountants and Management Consultants in India.<br />
They have a long history of providing high quality and specialised services in most areas of<br />
management consultancy.<br />
They provide a range of specialist management consultancy services in various functions and<br />
sectors, drawing on resources from a large domestic and international network. With consulting<br />
experience of over 30 years in India, they are a pioneer and leader in several consultancy products<br />
and services.<br />
They pride themselves in not being just another ‘consultancy’ organisation. Their business<br />
philosophy is to add value to their client’s business by providing a solution most appropriate to<br />
the business context, with specific emphasis on the implementability of their re<strong>com</strong>mendations.<br />
They believe in building long term relationships with their clients, and it is no surprise that their<br />
client retention rate is among the highest in the business. Further information about them can<br />
38
e found at http://www.afferguson.<strong>com</strong>/. The Projected Financials in the future for the Project as<br />
per the study conducted by the consultants A Ferguson & Co. are given below:<br />
Projected In<strong>com</strong>e Statement for Voltamp Power Oman LLC for the period 2008-2014<br />
(Year ending 31st December)<br />
In<strong>com</strong>e<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
Revenue 0 3,010,000 9,693,000 16,169,000 21,613,000 25,341,000<br />
Cost of sales 0 -3,044,335.00 -7,460,384.00 -11,776,825.00 -15,401,715.00 -18,028,467.00<br />
Gross profit 0 -34,335 2,232,616 4,392,175 6,211,285 7,312,533<br />
Percentage of gross profit 0.00% -1.14% 23.03% 27.16% 28.74% 28.86%<br />
Other in<strong>com</strong>e 0 0 0 0 0 0<br />
Expenses<br />
Selling, administrative and<br />
general<br />
0 -34,335 2,232,616 4,392,175 6,211,285 7,312,533<br />
-358,00 -1,348,776 -1,720,852 -2,151,532 -2,697,757 -3,182,441<br />
Profit from operations -358,000 -1,383,111 511,764 2,240,643 3,513,528 4,130,092<br />
Finance charges 0 -461,000 -451,000 -515,000 -497,000 -463,000<br />
Profit for the year befoe<br />
taxation<br />
-358,000 -1,844,111 60,764 1,725,643 3,016,528 3,667,092<br />
Taxation 0 0 0 0 0 0<br />
Net Profit for the year -358,000 -1,844,111 60,764 1,725,643 3,016,528 3,667,092<br />
Earnings per share<br />
for the year<br />
Products and Services<br />
-0.090 -0.461 0.015 0.431 0.754 0.917<br />
The following section outlines the switchgear and transformer products that the Company and<br />
VTO respectively, manufacture and market in the region. Transformers are split into Low Power,<br />
Medium Power and Power categories as described below:<br />
Transformer Categorisation<br />
Category Power Range<br />
Low power transformers (“LPT”) 3 MVA to 15 MVA, 33 kV class<br />
Medium power transformers (“MPT”) 15 MVA to 50 MVA, any voltage class<br />
Power Transformers (“PT”) Above 50 MVA, any voltage class<br />
Voltamp Energy SAOG (under transformation)<br />
The Company is engaged in the design and manufacture of low (up to 1 kV) voltage control and<br />
distribution systems which primarily involves engineering, assembly and testing of LV switchgear<br />
products. The main products include:<br />
Ñ Intelligent and conventional motor control centres<br />
Ñ Power control centres<br />
Ñ Main and sub-main distribution boards<br />
Ñ Auto mains failure and auto transfer switch panels with PLC controls<br />
7 Voltamp Energy LLC, 2007<br />
39
Ñ Auto synchronising generator control panels<br />
Ñ Capacitor banks and harmonic filter panels<br />
Ñ Custom built control panels<br />
Ñ Feeder pillars and metering panels<br />
The Company has established a strong market in Oman with major clients such as Petroleum<br />
Development Oman (“PDO”), the Ministry of Housing, Electricity and Water and Oman Refinery<br />
Company.<br />
Voltamp Transformers Oman LLC<br />
VTO is engaged in the manufacturing and supply of oil filled transformers in the following<br />
categories:<br />
Ñ Distribution transformers from 50 kVA to 3,000 kVA/ 33 kV class<br />
Ñ Low Power transformers up to 15 MVA/ 33 kV class<br />
Ñ Earthing transformers<br />
Ñ Special transformers with multi-tap construction<br />
The following graph illustrates the different types of product and their respective share based on<br />
sales in 2007:<br />
Non-Standard<br />
67%<br />
Sales by Products Type<br />
The graph highlights that almost 67% of VTO’s sales is in the non standard segment. This is a<br />
key strength as it allows VTO to operate in a niche market which offers higher margins as well as<br />
allowing it to differentiate itself from <strong>com</strong>petition.<br />
In addition to its manufacturing capability, VTO provides engineering and maintenance services<br />
as detailed below:<br />
Ñ Maintenance contracts which include examination of transformers, cleaning of brushings,<br />
annual oil sampling, transformer site testing and <strong>com</strong>plete transformer overhauls<br />
Ñ On-site assessment services for measurement of insulation and winding resistance, magnetic<br />
circuit test, winding ratio test, insulating oil test and all sorts of cable terminations checking<br />
Ñ Field supervision and testing of transformers up to 132 kV<br />
Ñ On-site repair which consists of electrical checks, oil quality analysis, cleaning, checking the<br />
function of all protection devices, overhauling the tap changer and testing the transformer<br />
40<br />
Low Power<br />
10%<br />
Standard<br />
23%
Ñ Factory services for ratings up to 20 MVA / 33 kV class<br />
Ñ Delivery of spare parts and <strong>com</strong>ponents<br />
Ñ Technical support, which includes failure analysis and oil analysis<br />
Ñ Turnkey sub-station projects including management capabilities relating to every phase of the<br />
project from supply, erection and installation through to final <strong>com</strong>missioning of substations<br />
up to 33kV voltage class<br />
VTO has an agreement of exclusivity with a laboratory in Sharjah to provide technical services for<br />
oil analysis, insulation and other testing services.<br />
Customer Segments<br />
Voltamp Energy SAOG (under transformation)<br />
The Company has a 14% 7 market share in the Omani market for low voltage switchgear based<br />
on 2007 sales. The Company caters to the utility, oil and gas, infrastructure and industry sectors<br />
as indicated in the following graph:<br />
Source: Voltamp Energy LLC<br />
Voltamp Transformers Oman LLC<br />
The Company’s Market Segments 2007<br />
Industry<br />
16%<br />
Utility<br />
25%<br />
Infrastructure<br />
6%<br />
VTO’s customer base covers three key industries and is spread across Oman and the wider<br />
MENA region:<br />
Ñ Utilities: VTO serves major clients in the power and energy sector such as the Ministry of<br />
Defence Oman, Majan Electricity Co., Mazoon Electricity Co., Rural Area Electricity Co.<br />
Ministry of Defence Muscat, KAHRAMAA, Sharjah Electricity & Water Authority, Dubai<br />
Electricity & Water Authority and PEC-Aden.<br />
Ñ Oil & Gas: some of VTO’s large clients include PDO, Occidental of Oman, Kuwait Oil<br />
Company, Joint Operations, Kuwait National Petroleum Company (“KNPC”).<br />
Ñ Heavy Industry: VTO provides products to industrial <strong>com</strong>panies such as Sohar Aluminium,<br />
Sohar Refinery, Oman Gas Co. and Oman LNG.<br />
In addition, VTO is also focusing on the tourism sector. In this sector, VTO provides a range of<br />
products to major hotels as well as large, integrated tourism projects in Oman. Customers in this<br />
segment include the Al Bustan Palace, Shangri-La’s Barr Al Jissah Resort and The Wave.<br />
41<br />
Oil & Gas<br />
53%
Source: Voltamp Transformers Oman LLC<br />
Voltamp Manufacturing Company Qatar<br />
VTO Market Segments 2007<br />
The detailed feasibility study undertaken relating to VMCQ’s operation highlights the key sectors<br />
from which demand is expected to be generated:<br />
Ñ Infrastructure<br />
Ñ Tourism<br />
Ñ Healthcare<br />
Ñ Education<br />
Ñ Utilities<br />
Ñ Heavy Industries<br />
Ñ Oil & Gas<br />
As indicated earlier, Qatar’s economy is experiencing significant growth and the sectors listed<br />
above are key beneficiaries of the growth.<br />
Major Contracts<br />
Industry<br />
24%<br />
Infrastructure<br />
7%<br />
The tables below highlight some of the recent contract wins for the Company and VTO:<br />
List of contracts for the Company:<br />
Name of the Contract Value of the Contract (RO) Expected Completion Date<br />
Oman Refinery 420,000 (3-4) qtr 2008<br />
Al Opera 152,000 (3-4) qtr 2008<br />
Galfar (Sur&Buraimi Projects) 90,000 (2-3) qtr 2008<br />
Oman Gas 92,000 (2) qtr 2008<br />
Muscat Airport 100,000 (3) qtr 2008<br />
PDO 205,000 (2-3) qtr 2008<br />
Al Anwar Ceramics 40,000 (2) qtr 2008<br />
Switches & Boards 348,000 (2-4) qtr 2008<br />
42<br />
Utility<br />
44%<br />
Oil & Gas<br />
25%
List of contracts for VTO<br />
Name of the Contract Value of the Contract (RO) Expected Completion Date<br />
Bechtel-Sohar Aluminium 116,000 (3) qtr 2008<br />
Bahwan Engineering 1,563,000 (3) qtr 2008<br />
Al Tayar Co. Qatar 3,000,000 (4) qtr 2008<br />
L&T Oman 323,000 (2) qtr 2008<br />
Mazoon Electric 254,000 (3) qtr 2008<br />
Majan Electric Company 199,000 (4) qtr 2008<br />
Trade Links 238,000 (2) qtr 2008<br />
STS Company 187,000 (3) qtr 2008<br />
Al Falahi Company 186,000 (2) qtr 2008<br />
Rural Electric Company 156,000 (2) qtr 2008<br />
Omran Company 108,000 (2) qtr 2008<br />
During the year 2005, VTO was awarded a prestigious two -year call off contract from Qatar<br />
General Electricity & Water Corporation (KAHRAMAA) to supply distribution transformers worth<br />
QR 77,409,885. The contract was won by VTO in <strong>com</strong>petition with the international manufacturers<br />
who also bided for this contract.<br />
Organisation and Management<br />
The diagram below describes the high-level organisational structure for the <strong>com</strong>bined entity of<br />
the Company and VTO.<br />
Organisational Chart<br />
Voltamp Energy<br />
43
Managers<br />
The following table shows the present <strong>com</strong>position of the Board of Managers:<br />
Board of Managers of Voltamp Energy<br />
Name Representing<br />
Mr. Qais bin Mohamed Al Yousef - Chairman Al Anwar Holdings SAOG<br />
Mr. Abdulredha bin Mustafa Sultan Al Anwar Holdings SAOG<br />
Mr. Krishna Kumar Gupta Al Anwar Holdings SAOG<br />
Mr. Saibal Sen SABCO<br />
Mr. Sebastian Manavalan H.H.Seyyid Shihab bin Tariq Al Said<br />
With respect to LLC’s, the CCL does not provide for a board of directors being responsible for the<br />
management of LLC’s. LLC’s are, in accordance with Article 151 of the CCL, to be managed by<br />
one or more managers who shall be natural persons and may be from amongst the shareholders<br />
or non-shareholders. These managers shall be appointed for a specified or unspecified term<br />
in accordance with or as required by the constitutive contract and as per the terms of the<br />
employment contracts entered into by a manager with a <strong>com</strong>pany. By contrast, the management<br />
of Omani joint stock <strong>com</strong>panies is vested in a board of directors and the number of directors and<br />
their term of office shall be specified in the Memorandum and Articles of Association.<br />
In accordance with the CCL all persons appointed to act as or hold themselves out as managers<br />
of an LLC must be registered with the MOCI as authorised signatories, to be seen to be managers<br />
in accordance with Article 151 of the CCL.<br />
Senior Management<br />
The following section highlights the key personnel in positions of senior management:<br />
Senior Management Team for the Group<br />
Name Designation<br />
Mr. Mohamed bin Jaffar M. Sulaiman Chief Executive Officer<br />
Mr. Ajitkumar Gangal General Manager-Operations<br />
Mr. Abdullah bin Ahmed Al Zadjali Deputy General Manager<br />
Mr. Basant Bhageria Finance Controller<br />
Mr. T. Satyanarayana VTO Works Manager<br />
Mr. Pronab Chakraborthy VE Works Manager<br />
Mr. Rajiv Hingorani ESD Manager<br />
Mr. Benedict Paul D’Souza Supply Chain Manager<br />
Mr. Aasit M. Naik Marketing Manager<br />
44
Mohamed bin Jaffar M. Sulaiman: Chief Executive Officer*<br />
Year of Joining 2004<br />
Education Civil and Architectural Degree - University of Miami, USA<br />
Member in the American Society of Civil Engineers<br />
Experience Eng Jaffar has 26 years of techno-<strong>com</strong>mercial experience. In his current role<br />
as CEO, Mr Jaffar is responsible for managing the operations of VE and<br />
VTO. He is also on the board of VMCQ and has been closely involved in the<br />
development of the Qatari operation and the new project.<br />
Prior to joining Voltamp, Eng. Jaffar has worked for PDO where he attended<br />
senior management courses in Europe and the Far East. He has also held the<br />
positions of Chairman of the Contracting Committee at the Omani Chamber<br />
of Commerce and Industry and board member of Majan College.<br />
Eng. Jaffar is a member of the American and Omani societies of Civil<br />
Engineers.<br />
Ajitkumar Kashinath Gangal: General Manager - Operations<br />
Year of Joining 2007<br />
Education Bachelor of Electrical Engineering<br />
Experience Mr Gangal has 28 years of experience in the transformers industry. He has<br />
experience in the area of distribution and power transformers up to 400<br />
kV class. As GM – Operations, Mr Gangal is responsible for all operational<br />
aspects of VTO. He is also a senior member of the VPO project team.<br />
Before joining Voltamp he worked with leading <strong>com</strong>panies such as Crompton<br />
Greaves Ltd, India and Virginia Transformation Corporation, USA. He was<br />
also engaged in the revival of Ganz Transformers Plant in Hungary.<br />
Abdullah bin Ahmed Al Zadjali: Deputy General Manager<br />
Year of Joining 1998<br />
Education Master of Business Administration<br />
Experience Mr Al Zadjali has over 28 years of experience in human resources and<br />
administration/finance. He is responsible for the human resources,<br />
administration and legal functions of the <strong>com</strong>pany. He is also responsible of<br />
handling government related and legal matters arising during shareholders’<br />
meetings.<br />
*(Mr Mohamed Jaffar – the CEO of Voltamp has submitted his resignation from the Company for personal reasons. The<br />
Board while accepting Mr Jaffar’s resignation, would like to place on record their thanks and appreciation for Mohamed<br />
Jaffar’s efforts at Voltamp and wish him all the best in his future endeavours. Mr Jaffar will remain in the Company till<br />
mid June 2008, as per the terms of his contract, and the Board has already started the process to identify a suitable<br />
replacement. The General Manager of the Company will assume the duties of the CEO in his absence.”)<br />
45
Basant Bhageria: Finance Controller<br />
Year of Joining 2007<br />
Education Chartered Accountant<br />
Experience Mr Bhageria has 17 years of experience in finance, accounting, taxation and<br />
<strong>com</strong>mercial affairs within industries ranging from chemicals, textiles, food<br />
products to FMCG. He is currently responsible for the finance and accounting<br />
of VE and VTO.<br />
T. Satyanarayana: Works Manager - Transformers<br />
Year of Joining 1997<br />
Education Bachelor of Electrical Engineering<br />
Experience Mr Satyanarayana is responsible for the transformer design and manufacturing<br />
functions. He also has responsibility for the quality management system (ISO<br />
9001) for his division.<br />
Pronab Chakraborty: Works Manager – Switchgears<br />
Year of Joining 2002<br />
Education Bachelor of Mechanical Engineering<br />
Experience Mr Chakraborty has 28 years of experience in the field of electrical product<br />
manufacturing. Currently he is responsible of the switchgear division and all<br />
its related functions from budgeting, procurement, designing and engineering,<br />
production and sales. He is also responsible for the quality management<br />
system (ISO 9001 standards) for his division.<br />
Rajiv Hingorani: Manager - Engineering Services Division (ESD)<br />
Year of Joining 2004<br />
Education Bachelor of Electrical Engineering<br />
Experience Mr Hingorani has over 15 years of experience in the transformer industry.<br />
He is currently responsible as Profit Centre head for the ESD division.<br />
The activities of the division include repair and maintenance services for<br />
transformers/substations and turnkey substation contracts for erection and<br />
testing and <strong>com</strong>missioning activities.<br />
Benedict Paul D’Souza: Supply Chain Manager<br />
Year of Joining 2002<br />
Education Bachelor of Electrical Engineering / Masters in Business Administration<br />
Experience Mr D’Souza has 21 years of experience in the transformers industry. He is<br />
currently responsible for all activities related to supply chain management.<br />
46
Aasit M. Naik: Marketing Manager-Transformers<br />
Year of Joining 2004<br />
Education Bachelor of Electrical Engineering / Diploma in Marketing and Management<br />
Experience Mr Naik has over 20 years of experience in marketing transformers. He has<br />
worked from several leading transformers manufacturing <strong>com</strong>panies in India<br />
such as Voltamp, India, GEC, etc. Currently he is the Marketing Head for the<br />
transformer business<br />
Rewards & Recognition<br />
Voltamp Energy and VTO are recipients of many prestigious awards and recognition from the<br />
Government of Sultanate of Oman for their excellent performance in the field of manufacturing<br />
and exporting electrical equipments.<br />
The table below shows the number of times each <strong>com</strong>pany has been the recipient of the<br />
prestigious His Majesty the Sultan’s Cup for best performing industrial <strong>com</strong>panies in Oman,<br />
awarded since 1998:<br />
List of Awards<br />
Recognition Company Issuer Date<br />
HM Cup Voltamp Energy LLC Ministry of Commerce and Industry 2003<br />
HM Cup Voltamp Transformers Oman LLC Ministry of Commerce and Industry 2003<br />
HM Cup Voltamp Energy LLC Ministry of Commerce and Industry 2002<br />
HM Cup Voltamp Transformers Oman LLC Ministry of Commerce and Industry 2002<br />
HM Cup Voltamp Transformers Oman LLC Ministry of Commerce and Industry 2000<br />
HM Cup Voltamp Transformers Oman LLC Ministry of Commerce and Industry 1998<br />
Source: VE and VTO Management, 2007<br />
ISO Certification<br />
Voltamp is ISO-certified and currently has six internal auditors in order to carry out internal<br />
audits. The internal audits occur twice a year. In addition, external audit every 9 to 12 months.<br />
The Company maintains a Quality Management System Manual and “Voltamp Procedures”, both<br />
of which are developed in line with the requirements of the ISO 9001:2000 Standard<br />
Employees<br />
As at 31 March 2008, the Company and its two subsidiaries employed 202 personnel <strong>com</strong>prising<br />
of 65 Omani Nationals (32%) and 137 expatriates (68%). The Omanisation level as at 31 st December<br />
2007 was 33% as against the requirement set by the Ministry of Manpower of 35% of the total<br />
manpower. The Company has recently recruited some of expatriate technical employees as per<br />
job requirement since the Company was not able to find suitable technically qualified people<br />
locally. The Company plans to achieve the Omanisation target by the second quarter of 2008.<br />
47
Employees<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
Details of Loans availed by the Company as of 31st December 2007<br />
Name of the Group<br />
Company<br />
Voltamp Energy<br />
SAOG (under<br />
transformation)<br />
Voltamp Transformers<br />
Oman LLC<br />
Voltamp<br />
Manufacturing<br />
Co.WLL (Qatar)<br />
Major Debt Covenants:<br />
For the Company<br />
Type of Loan Amount (RO) Remarks<br />
No loan or bank<br />
borrowings outstanding<br />
Long term loan & bank<br />
borrowings:<br />
48<br />
-<br />
Long term loan<br />
RO 145,833<br />
bank borrowings:<br />
1,249,223<br />
Total 1,359,056<br />
Three Long term loans Long term loans RO<br />
329,670<br />
• To retain a minimum of 15% of net profit each year in the Company<br />
For its subsidiaries<br />
• To retain a minimum of 15% of net profit each year in the Company<br />
No bank borrowings<br />
• Obtain prior consent of the bank to pay dividend of more than 50% of the annual profit &<br />
such consent not to be unduly delayed unless obligations to the bank are in default.<br />
• Leverage to be brought down to 3.00 by 31.12.08 by retention of profits<br />
Land Details;<br />
2008 2009 2010 2011 2012 2013 2014<br />
Employ ees Omanisation (ex cluding VMCQ)<br />
The Group does not own any freehold land. However its manufacturing facilities are set-up<br />
on the lease lands for which lease agreements were entered into between the Company and<br />
the Public Establishment for Industrial Estates.<br />
The following are the details of lands taken on lease by the <strong>com</strong>pany to carry on its<br />
manufacturing activities:<br />
50%<br />
45%<br />
40%<br />
35%<br />
30%<br />
25%<br />
20%<br />
15%<br />
10%<br />
5%<br />
0%<br />
Omanisation
1. Plot of land 1703 measuring 4410 square meters and the building thereon measuring 1250<br />
square meters located at Rusayl Industrial Estate<br />
2. Plot of land 249 measuring 4250 square meters located at Rusayl Industrial Estate<br />
3. Plot of land 92, 93, 94 measuring 5402/74 square meters located at Rusayl Industrial Estate<br />
Contingent Liabilities<br />
The contingent liabilities as per the consolidated audited accounts of the Company as on 31 st<br />
December 2007 are as under:<br />
Bonds (Surety) and Guarantees RO 1,183,276<br />
Letters of Credit RO 834,550<br />
Total RO 2,017,826<br />
Forward Commodity Contracts<br />
Forward Commodity Contracts were entered into to manage exposure to fluctuations in the price<br />
of copper, a key raw material. The settlement dates on open contracts were within one year from<br />
the balance sheet date. The aggregate equivalent local currency amount was RO 1,090,331<br />
(2006: 794,856) having a fair value of RO 1,028,193<br />
Legal Proceedings<br />
The Company does not have any major/material legal proceedings pending in a Court of Law in<br />
Oman or outside, either instituted by, or against the Company.<br />
Claims enforced against the Company<br />
There are no claims enforced against the Company including by way of invoking of performance<br />
guarantees or any other guarantees/bonds/encashment of retention amounts, in the last five<br />
years.<br />
Material Contracts<br />
The following material contracts may affect the Company’s business (other than ongoing<br />
execution contracts, purchase/supply contracts, employment contracts and other general<br />
contracts of routine nature):<br />
a) Term Loan/Working capital loan with lenders (banks)<br />
b) Lease agreements<br />
c) Memorandum and Articles of Association of the Company. A copy of the Memorandum<br />
and Articles of Association is available for perusal at the office of the Company located at<br />
P.O.Box 75, P.C: 124, Rusayl, Sultanate of Oman. A copy of the Memorandum and Articles<br />
of Association is also available from the CMA. The website is www.omancma.org<br />
49
CHAPTER 11<br />
Summarised historical consolidated financial statements for 2005-2007<br />
Voltamp Energy SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised historical consolidated financial statements<br />
31 December 2005 to 2007<br />
50
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised Historical Consolidated In<strong>com</strong>e Statement<br />
for the period ended 31 December<br />
In<strong>com</strong>e<br />
52<br />
2007 2006 2005<br />
RO RO RO<br />
Revenue 10,693,597 7,992,619 5,471,762<br />
Cost of sales (7,002,719) (6,247,602) (4,281,585)<br />
Gross profit 3,690,878 1,745,017 1,190,177<br />
Other in<strong>com</strong>e 159,013 28,733 52,385<br />
Expenses<br />
3,849,891 1,773,750 1,242,562<br />
Selling, administrative and general expenses (877,602) (696,058) (579,074)<br />
Profit from operations 2,972,289 1,077,692 663,488<br />
Finance charges (201,600) (190,450) (125,714)<br />
Profit for the year before taxation 2,770,689 887,242 537,774<br />
Taxation (348,474) (100,000) (41,673)<br />
Net profit for the year 2,422,215 787,242 496,101<br />
* Earnings per share for the year 0.692 0.225 0.142<br />
The notes 1 to 21 form an integral part of these summarised historical consolidated financial<br />
statements<br />
* Before Split
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised Historical Consolidated Balance Sheet<br />
for the year ended 31 December<br />
Assets 2007 2006 2005<br />
RO RO RO<br />
Non-current assets<br />
Property, plant and equipment 521,201 565,354 596,464<br />
Investments 666,704 - -<br />
Deferred tax 15,472 11,100 12,710<br />
Total non-current assets 1,203,377 576,454 609,174<br />
Current assets<br />
Inventories 2,564,161 2,411,179 1,124,983<br />
Trade and other receivables 3,453,046 3,066,359 2,017,730<br />
Cash in hand and at banks 86,699 3,443 4,189<br />
Total current assets 6,103,906 5,480,981 3,146,902<br />
Total assets 7,307,283 6,057,435 3,756,076<br />
Equity and liabilities<br />
Equity<br />
Share capital 3,500,000 1,100,000 500,000<br />
Legal reserve 848,395 369,330 166,667<br />
General reserve - 50,000 50,000<br />
Retained earnings 13,876 420,726 636,147<br />
Dividend Payable - 200,000 -<br />
Total equity 4,362,271 2,140,056 1,352,814<br />
Liabilities<br />
Non Current Liabilities<br />
Long term loan 20,833 - -<br />
Current liabilities<br />
Trade and other payables 1,549,956 1,398,439 1,192,934<br />
Bank borrowings 1,249,223 2,518,940 1,196,992<br />
Current portion of long term loan 125,000 - 13,336<br />
Total current liabilities 2,924,179 3,917,379 2,403,262<br />
Total liabilities 2,945,012 3,917,379 2,403,262<br />
Equity and liabilities 7,307,283 6,057,435 3,756,076<br />
* Net assets per share 1.246 0.611 0.386<br />
The notes no. 1 to 21 forms an integral part of these summarised historical consolidated financial<br />
statements<br />
* Before Split<br />
53
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised historical consolidated cash flow statement<br />
For the year ended 31 December<br />
Cash flows from operating activities<br />
54<br />
2007 2006 2005<br />
RO RO RO<br />
Cash receipts from customers 10,470,558 6,964,227 5,572,702<br />
Cash paid to suppliers and employees (8,045,184) (7,934,251) (4,968,343)<br />
Cash generated from operations<br />
2,425,374 (970,024) 604,359<br />
Interest paid (201,600) (190,451) (125,714)<br />
Taxation paid (120,787) (69,840) (42,918)<br />
Net cash flows from / (used in) operating activities 2,102,987 (1,230,315) 435,727<br />
Cash flows from investing activities<br />
Purchase of property, plant and equipment (76,333) (79,043) (98,810)<br />
Proceeds from sale of assets 12,558 - -<br />
Investment (632,072) - -<br />
Net cash flows from / (used in) investing activities (695,847) (79,043) (98,810)<br />
Cash flows from financing activities<br />
Term loan received 250,000 - -<br />
Repayment of term loans (104,167) (13,336) (155,748)<br />
Dividend paid (200,000) - (175,000)<br />
Net cash flow from / (used in) financing activities (54,167) (13,336) (330,748)<br />
Increase / (decrease) in cash and cash equivalents<br />
during the year 1,352,973 (1,322,694) 6,169<br />
Cash and cash equivalents at the beginning of the year (2,515,497) (1,192,803) (1,198,972)<br />
Cash and cash equivalents at the end of the year (1,162,524) (2,515,497) (1,192,803)<br />
The notes no.1 to 21 forms an integral part of these summarised historical consolidated financial<br />
statements
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised historical consolidated statement of changes in equity<br />
for the year ended 31 December 2005 to 2007<br />
Share Legal General<br />
Dividend<br />
payable / Retained<br />
capital reserve reserve (paid) earnings Total<br />
RO RO RO RO RO<br />
1 January 2005 500,000 166,667 50,000 160,000 155,046 1,031,713<br />
Net profit for the year - - - - 496,101 496,101<br />
Dividend paid - - - (160,000) (15,000) (175,000)<br />
1 January 2006 500,000 166,667 50,000 - 636,147 1,352,814<br />
Net profit for the year - - - - 787,242 787,242<br />
Transfer to Share capital 600,000 - - (600,000) -<br />
Transfer to legal reserve - 202,663 - - (202,663) -<br />
Dividend proposed - - - 200,000 (200,000) -<br />
1 January 2007 1,100,000 369,330 50,000 200,000 420,726 2,140,056<br />
Net profit for the year - - - - 2,422,215 2,422,215<br />
Transfer to share capital 400,000 - - - (400,000)<br />
Share capital under<br />
registration<br />
2,000,000 - (50,000) - (1,950,000) -<br />
Transfer to legal reserve - 479,065 - - (479,065) -<br />
Dividend paid - - - (200,000) (200,000)<br />
31 December 2007 3,500,000 848,395 - - 13,876 4,362,271<br />
The notes no. 1 to 21 forms an integral part of these summarised historical consolidated financial<br />
statements<br />
55
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
1 Legal status and principal activities<br />
Voltamp Energy SAOG (under transformation) (“the Company”) is in the process of<br />
registration as a joint stock <strong>com</strong>pany under the Commercial Companies Law of Oman.<br />
The <strong>com</strong>pany is presently registered in the Sultanate of Oman as a Limited Liability<br />
Company. Voltamp Transformers Oman LLC (“the Subsidiary”), registered in the<br />
Sultanate of Oman, is a wholly-owned subsidiary of the Company. Voltamp Manufacturing<br />
Company, registered in Qatar, is 51% owned subsidiary of the Company.<br />
The principal activities of the Company and its Subsidiaries (“the Group”) are manufacture,<br />
sale and distribution of transformers, LV Switchgears and panels. The Ultimate Holding<br />
Company of the Group is Al Anwar Holdings SAOG (“AAH”) [formerly Al Anwar Industrial<br />
& Trading Co. SAOG (“AAITCO”)].<br />
2 Basis of preparation<br />
These summarised historical consolidated financial statements have been derived from the<br />
audited consolidated financial statements of the Company for the years ended 31 December<br />
2005 to 2007.<br />
a) Statement of <strong>com</strong>pliance<br />
The summarised historical consolidated financial statements have been prepared in<br />
accordance with International Financial Reporting Standards (“IFRS”) and the disclosure<br />
requirements of Commercial Companies Law of 1974, as amended.<br />
Adoption status of new IFRS and interpretations<br />
In the current year, the Group has adopted IFRS 7 Financial Instruments: Disclosures,<br />
which is effective for annual reporting periods beginning on or after 1 January<br />
2007, and the consequential amendments to IAS 1: Presentation of Financial<br />
Statements.<br />
The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand<br />
the disclosures provided in these financial statements regarding the Group’s financial<br />
instruments and management of capital.<br />
Four Interpretations issued by the International Financial Reporting Interpretations<br />
Committee are effective for the current period. These are: IFRIC 7 Applying the<br />
Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary<br />
Economies; IFRIC 8 Scope of IFRS 2; IFRIC 9 Reassessment of Embedded<br />
Derivatives; and IFRIC 10 Interim Financial Reporting and Impairment. The adoption<br />
of these Interpretations has not led to any changes in the Group’s accounting<br />
policies.<br />
b) Basis of measurement<br />
The consolidated financial statements have been prepared on the historical cost basis<br />
except for:<br />
• forward <strong>com</strong>modity contracts are measured at fair value<br />
• investments at fair value through profit or loss are measured at fair value.<br />
56
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
c) Functional currency<br />
These consolidated financial statements are presented in Rial Omani, which is the<br />
Group’s functional currency.<br />
d) Use of estimates and judgments<br />
The preparation of financial statements requires management to make judgments,<br />
estimates and assumptions that affect the application of accounting policies and the<br />
reported amounts of assets, liabilities, in<strong>com</strong>e and expenses. Actual results may differ<br />
from these estimates.<br />
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to<br />
accounting estimates are recognised in the period in which the estimate is revised and<br />
in any future periods affected.<br />
e) New standards and interpretation not yet effective<br />
A number of new standards, amendments to standards and interpretations are not yet<br />
effective for the year ended 31 December 2007, and have not been applied in preparing<br />
these consolidated financial statements:<br />
• IFRS 8 Operating Segments introduces the “management approach” to segment<br />
reporting. IFRS 8, which be<strong>com</strong>es mandatory for the Group’s 2009 financial statements,<br />
will require the disclosure of segment information based on the internal reports regularly<br />
reviewed by the Group’s Chief Operating Decision maker in order to assess each<br />
segment’s performance and to allocate resources to them. The Group does not prepare<br />
internal reports containing segment information and accordingly it is not expected that<br />
IFRS 8 will have any significant impact on the financial statements.<br />
• Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and<br />
requires that an entity capitalise borrowing costs directly attributable to the acquisition,<br />
construction or production of a qualifying asset as part of the cost of that asset. It<br />
is not expected that revised IAS 23 will have any significant impact on the financial<br />
statements.<br />
• IFRIC 11, IFRS 2 Company and Treasury Share Transactions requires a share-based<br />
payment arrangement in which an entity receives goods or services as consideration<br />
for its own equity instruments to be accounted for as an equity-settled share-based<br />
payment transaction, regardless of how the equity instruments are obtained. IFRIC 11<br />
is not expected to have any significant impact on the financial statements.<br />
• IFRIC 12 Service Concession Arrangements provides guidance on certain recognition<br />
and measurement issues that arise in accounting for public-to-private service concession<br />
arrangements. IFRIC 12, which be<strong>com</strong>es mandatory for the Group’s 2008 financial<br />
statements, is not expected to have any significant impact on the financial statement.<br />
• IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that<br />
operate, or otherwise participate in, customer loyalty programmes for their customers.<br />
It relates to customer loyalty programmes under which the customer can redeem credits<br />
for awards such as free or discounted goods or services. IFRIC 13, which be<strong>com</strong>es<br />
mandatory for the Group’s 2009 financial statements, is not expected to have any<br />
significant impact on the financial statements.<br />
57
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
e) New standards and interpretation not yet effective (continued)<br />
• IFRIC 14, IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements<br />
and their Interaction clarifies when refunds or reductions in future contributions in relation<br />
to defined benefit assets should be regarded as available and provides guidance on the<br />
impact of minimum funding requirements (MFR) on such assets. It also addresses when<br />
a MFR might give rise to a liability. IFRIC 14 will be<strong>com</strong>e mandatory for the Group’s 2008<br />
financial statements, is not expected to have any significant impact on the financial<br />
statements.<br />
The accounting policies set out below have been applied consistently by the Group<br />
entities and are consistent with those used in the previous year.<br />
3 Significant accounting policies<br />
a) Basis of consolidation<br />
Subsidiaries are entities controlled by the Group. Control exists when the Group has<br />
the power to govern the financial and operating policies of an entity so as to obtain<br />
benefit from its activities. In assessing control, potential voting rights that currently are<br />
exercisable are taken into account. The financial statements of the subsidiaries are<br />
included in the consolidated financial statements from the date that control <strong>com</strong>mences<br />
until the date the control ceases.<br />
Intragroup balances and transactions, and any unrealised gains and losses arising<br />
from intra-group transactions, are eliminated in preparing the consolidated financial<br />
statements.<br />
b) Foreign currencies<br />
Transactions in foreign currencies are translated to Rials Omani at the foreign exchange<br />
rate ruling at the date of the transaction. Monetary assets and liabilities denominated in<br />
foreign currencies at the balance sheet date are translated to Rials Omani at the foreign<br />
exchange rate ruling at that date. Foreign exchange differences arising on translation<br />
are recognised in the in<strong>com</strong>e statement. The foreign currency gain or loss on monetary<br />
items is the difference between amortised costs in Rials Omani at the beginning of<br />
the period, adjusted for effective interest and payments during the period and the<br />
amortised costs in foreign currency translated at the exchange rate at the end of the<br />
period. Foreign currency differences arising on the retranslation are recognised in the<br />
in<strong>com</strong>e statement.<br />
c) Property, plant and equipment<br />
(i) Recognition and measurement<br />
Items of property, plant and equipment are measured at cost less accumulated<br />
depreciation and impairment losses.<br />
Costs include expenditures that are directly attributable to the acquisition of the asset.<br />
The cost includes any other cost that directly attributable to bringing the asset to a<br />
working condition for its intended use, and the costs of dismantling and removing the<br />
items and restoring the site on which they are located.<br />
58
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
(c) Property, plant and equipment (continued)<br />
(i) Recognition and measurement (continued)<br />
When parts of an item of property, plant and equipment have different useful lives,<br />
they are accounted for as separate items (major <strong>com</strong>ponents) of property, plant and<br />
equipment.<br />
(ii) Subsequent costs<br />
The cost of replacing part of an item of property, plant and equipment is recognised in<br />
the carrying amount of an item if it is probable that future economic benefits embodied<br />
within the part will flow to the Group and its cost can be measured reliably. The costs of<br />
the day-to-day servicing of property, plant and equipment are recognised in the in<strong>com</strong>e<br />
statement as incurred.<br />
(iii) Depreciation<br />
Depreciation is recognised in the in<strong>com</strong>e statement on a straight-line basis over<br />
the estimated useful lives of each part of the property, plant and equipment. Assets<br />
under construction are not depreciated. The estimated useful lives for the current and<br />
<strong>com</strong>parative periods are as follows:<br />
Years<br />
Leasehold buildings 20<br />
Plant and equipment 4 – 10<br />
Motor vehicles 3 – 4<br />
Furniture, fixtures and office equipment 4 – 8<br />
Depreciation methods, useful lives and residual values are reassessed at the reporting<br />
date.<br />
d) Inventories<br />
Inventories are stated at the lower of cost and net realisable value. Net realisable<br />
value is the estimated selling price in the ordinary course of business, less the<br />
estimated costs of <strong>com</strong>pletion and selling expenses. The cost of inventories is<br />
based on the weighted average cost principle and includes expenditure incurred in<br />
acquiring the inventories and bringing them to their existing location and condition.<br />
In the case of work in progress, cost includes raw material cost only.<br />
e) Impairment<br />
(i) Financial assets<br />
A financial asset is considered to be impaired if objective evidence indicates that one or<br />
more events have had a negative effect on the estimated future cash flows of that asset.<br />
An impairment loss in respect of a financial asset measured at amortised cost is<br />
calculated as the difference between its carrying amount, and the present value of<br />
estimated future cash flows discounted at the original effective interest rate.<br />
Individually significant financial assets are tested for impairment on an individual basis.<br />
The remaining financial assets are assessed collectively in groups that share similar<br />
credit risks characteristics.<br />
59
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
e) Impairment (continues)<br />
(i) Financial assets (continues)<br />
All impairment losses are recognised in in<strong>com</strong>e statement.<br />
An impairment loss is reversed if the reversal can be related objectively to an event<br />
occurring after the impairment loss was recognised. For financial assets measured at<br />
amortised cost, the reversal is recognised in in<strong>com</strong>e statement.<br />
(ii) Non-financial assets<br />
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting<br />
date to determine whether there is any indication of impairment. If any such indications<br />
exist then the asset’s recoverable amount is estimated.<br />
An impairment loss is recognised if the carrying amount of an asset or cash generating<br />
unit is the greater of its value in use and its fair value less costs to sell. In assessing the<br />
value in use, the estimated future cash flows are discounted to their present value using<br />
a pre-tax discount rate that reflects current market assessments of the time value of<br />
money and the risks specified to the asset.<br />
Impairment losses recognised in prior periods are assessed at each reporting date for<br />
any indications that the loss has decreased or no longer exists. An impairment loss is<br />
reversed if there has been a change in estimates used to determine the recoverable<br />
amount. An impairment loss is reversed only to the extent that the asset’s carrying<br />
amount does not exceed the carrying amount that would have been determined, net of<br />
depreciation or amortisation, if no impairment loss had been recognised.<br />
f) Employee benefits<br />
Payment is made to Omani Government Social Security Scheme under Royal Decree<br />
number 72/91 for Omani employees. Provision is made for amounts payable under the<br />
Oman Labour Law applicable to non-Omani employees for accumulated periods of<br />
service at the balance sheet date.<br />
g) Provisions<br />
A provision is recognised if, as a result of past event, the Group has a present legal or<br />
constructive obligation that can be estimated reliably, and it is probable that an outflow<br />
of economic benefits will be required to settle the obligation. Provisions are determined<br />
by discounting the expected future cash flows at a pre-tax rate that reflects current<br />
market assessments of the time value of money and the risks specific to the liability.<br />
h) Revenue<br />
Revenue from sale of goods is recognised in the in<strong>com</strong>e statement when the significant<br />
risks and rewards of ownership have been transferred to the buyer. No revenue is<br />
recognised if there are significant uncertainties regarding recovery of the consideration<br />
due, associated costs or the possible return of goods.<br />
i) Leases<br />
Payments made under operating leases are recognised in profit or loss on a straight line<br />
basis over the term of the lease. Lease incentives received are recognised as an integral<br />
part of the total lease expense, over the term of the lease.<br />
60
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
j) In<strong>com</strong>e tax<br />
In<strong>com</strong>e Tax on the results of the year <strong>com</strong>prises current and deferred tax. In<strong>com</strong>e<br />
tax is recognised in the in<strong>com</strong>e statement except to the extent that it relates to items<br />
recognised directly in equity, in which case it is recognised in equity.<br />
Current tax is the expected tax payable on the taxable in<strong>com</strong>e of the year, using tax<br />
rates enacted or substantially enacted at the balance sheet date, and any adjustment<br />
to tax payable in respect to previous years.<br />
Deferred tax is calculated using the balance sheet liability method, providing for<br />
temporary differences between the carrying amounts of assets and liabilities for<br />
financial reporting purposes and the amount used for taxation purposes. The amount<br />
of deferred tax provided is based on the expected manner of realisation or settlement<br />
of the carrying amount of assets and liabilities, using tax rates enacted or substantially<br />
enacted at the balance sheet date.<br />
A deferred tax asset is recognised only to the extent that it is probable that future<br />
taxable profits will be available against which the unused tax losses and credits can be<br />
utilized. Deferred tax assets are reduced to the extent that it is no longer probable that<br />
the related tax benefit will be realised.<br />
k) Earnings per share<br />
The Group presents basic earning per share (EPS) data for its ordinary share. Basic EPS<br />
is calculated by dividing the profit or loss attributable to ordinary shareholders of the<br />
Company by the weighted average number of ordinary shares outstanding during the<br />
period.<br />
l) Provision for warranties<br />
A provision for warranties is recognised when the underlying products or services<br />
are sold. The provision is based on historical warranty data and a weighting of all<br />
possible out<strong>com</strong>es against their associated probabilities.<br />
m) Investments at fair value through profit or loss<br />
Investments are designated at fair value through profit or loss, if the Group manages<br />
such investments and makes purchases and sales decisions based on their fair value in<br />
accordance with the Group’s documented risk management or investment strategy.<br />
These are initially recognised at cost and subsequently measured at fair value. All related<br />
realised and unrealised gains and losses, and dividend received are included in the<br />
in<strong>com</strong>e statement.<br />
n) Dividends<br />
Dividends are recognised as a liability in the period in which they are declared.<br />
o) Determination of fair values<br />
A number of the Group’s accounting policies and disclosures require the determination<br />
of fair value, for both financial and non-financial assets and liabilities. Fair values<br />
have been determined for measurement and /or disclosure purposes based on the<br />
following methods. Where applicable, further information about the assumptions made<br />
in determining fair values is disclosed in the notes specific to the asset or liability.<br />
61
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
(i) Property, plant and equipment<br />
The market value of property is the estimated amount for which a property could be<br />
exchanged on the date of valuation between a willing buyer and a willing seller in an<br />
arm’s length transaction after proper marketing wherein the parties had each acted<br />
knowledgeably, prudently and without <strong>com</strong>pulsion. The market value of items of plant<br />
and equipments is based on the quoted market prices for similar items.<br />
(ii) Inventory<br />
The fair value of inventory is determined based on its estimated selling price in the<br />
ordinary course of the business less the estimated costs of <strong>com</strong>pletion and sale,<br />
and a reasonable profit margin based on the effort required to <strong>com</strong>plete and sell the<br />
inventory.<br />
(iii) Trade and other receivables<br />
Trade debtors are carried at amortised cost less impairment losses. An estimate is<br />
made for doubtful debts and impairment based on a review of all outstanding amounts<br />
at the year end. Bad debts are written off during the year in which they are identified.<br />
(iv) Forward <strong>com</strong>modity contracts<br />
The fair value of the forward <strong>com</strong>modity contracts is based on the listed market price.<br />
(p) Comparatives<br />
Certain <strong>com</strong>parative information has been reclassified to conform to the presentation<br />
adopted in these summarised historical consolidated financial statements.<br />
3 Property, plant and equipment<br />
Lease hold<br />
Land<br />
Factory<br />
Building<br />
Plant and<br />
equipment<br />
62<br />
Motor<br />
vehicles<br />
Furniture,<br />
fixture<br />
& office<br />
equipment Total<br />
RO RO RO RO RO RO<br />
Cost<br />
1 January 2007 47,022 441,567 899,772 82,800 288,551 1,759,715<br />
Additions 950 41,884 16,850 16,649 76,333<br />
Disposals (32,325) (28,604) (60,929)<br />
31 December 2007 47,022 442,517 941,656 67,325 276,596 1,775,116<br />
Depreciation<br />
1 January 2007 42,998 221,115 661,915 49,422 218,909 1,194,358<br />
Charge for the year 2,351 22,114 58,575 11,175 19,260 113,475<br />
Disposals - - - (30,008) (23,910) (53,918)<br />
31 December 2007 45,349 243,229 720,490 30,589 214,259 1,253,915<br />
Net book values<br />
31 December 2007 1,673 199,288 221,166 36,736 62,338 521,201<br />
31 December 2006 4,024 220,454 237,858 33,374 69,644 565,354
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
3 Property, plant and equipment (contd.)<br />
Lease hold<br />
Land<br />
Factory<br />
Building<br />
Plant and<br />
equipment<br />
63<br />
Motor<br />
vehicles<br />
Furniture,<br />
fixture<br />
& office<br />
equipment Total<br />
RO RO RO RO RO RO<br />
Cost<br />
1 January 2006 42,672 438,069 888,599 59,375 258,783 1,687,498<br />
Additions during<br />
the year<br />
4,350 3,500 11,174 40,810 29,768 89,602<br />
Disposals - - - (17,385) - (17,385)<br />
31 December 2006 47,022 441,569 899,773 82,800 288,551 1,759,715<br />
Depreciation<br />
1 January 2006 38,404 199,176 601,358 54,804 197,303 1,091,045<br />
Charge for the year 4,594 21,939 60,557 12,006 21,604 120,700<br />
Disposals - - - (17,384) - (17,384)<br />
31 December 2006 42,998 221,115 661,915 49,426 218,907 1,194,361<br />
Net book values<br />
31 December 2006 4,024 220,454 237,858 33,374 69,644 565,354<br />
31 December 2005 4,268 238,893 287,240 4,583 61,480 596,464<br />
3 Property, plant and equipment (contd.)<br />
Lease hold<br />
Land<br />
Factory<br />
Building<br />
Plant and<br />
equipment<br />
Motor<br />
vehicles<br />
Furniture,<br />
fixture<br />
& office<br />
equipment Total<br />
RO RO RO RO RO RO<br />
Cost<br />
1 January 2005 42,672 438,069 805,990 59,375 242,582 1,588,688<br />
Additions during<br />
the year<br />
- - 82,609 - 16,201 98,810<br />
31 December 2005 42,672 438,069 888,599 59,375 258,783 1,687,498<br />
Depreciation<br />
1 January 2005 34,137 177,273 550,698 47,797 178,480 988,385<br />
Charge for the year 4,267 21,904 50,661 6,994 18,823 102,649<br />
Disposals<br />
31 December 2005 38,404 199,177 601,359 54,791 197,303 1,091,034<br />
Net book values 4,268 238,892 287,240 4,584 61,480 596,464<br />
31 December 2005<br />
31 December 2004 8,535 260,796 255,292 11,578 64,102 600,303
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
4 Inventories and work in progress<br />
64<br />
2007 2006 2005<br />
RO RO RO<br />
Raw materials 2,246,255 2,071,009 907,191<br />
Work in progress 228,803 335,436 117,536<br />
Finished goods 247,149 125,360 100,256<br />
Provision for slow moving stock (158,046) (120,626) -<br />
5 Trade and other receivables<br />
2,564,161 2,411,179 1,124,983<br />
2007 2006 2005<br />
RO RO RO<br />
Trade receivables 3,330,586 3,009,730 1,949,938<br />
Less provision for doubtful debt (28,580) (43,991) (37,921)<br />
Amount due from a related party 900<br />
Advances, deposits and prepayments 150,140 100,620 105,713<br />
Movement of Provision for doubtful debts<br />
3,453,046 3,066,359 2,017,730<br />
Opening Provision for doubtful debts 43,991 37,921 32,232<br />
Add: Provided during the year 10,890 6,070 5,689<br />
Less: Written off during the year (20,224)<br />
Less: Recovery during the year (6,077)<br />
Closing Provision for doubtful debts 28,580 43,991 37,921<br />
6 Cash and cash equivalents<br />
2007 2006 2005<br />
RO RO RO<br />
Cash in hand 1,621 2,100 2,100<br />
Cash at bank :<br />
Current account 62,519 1,323 2,069<br />
Deposit account 20 20 20<br />
Call deposit (copper trading account) 22,539<br />
86,699 3,443 4,189
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
7 Selling, administrative and general expenses<br />
2007 2006 2005<br />
RO RO RO<br />
Employee costs 549,991 361,767 387,426<br />
Depreciation 54,900 58,955 30,085<br />
Communication costs 23,931 30,446 31,253<br />
Traveling expenses 59,587 16,530 22,218<br />
Legal and professional charges 37,920 40,572 28,780<br />
Vehicle running expenses 12,115 11,697 19,451<br />
Provision for doubtful debts 10,320 6,070 5,689<br />
Advertisement and promotion expenses 3,745 656 21,774<br />
Repairs and maintenance expenses 9,905 7,408 9,291<br />
Insurance expenses 6,722 5,885 4,955<br />
Printing and stationery expenses 4,927 5,037 4,961<br />
Other expenses 103,539 151,035 13,191<br />
8 Cost of sales<br />
65<br />
877,602 696,058 579,074<br />
2007 2006 2005<br />
RO RO RO<br />
Cost of raw materials 6,381,086 5,743,641 3,877,658<br />
Employee costs 379,701 304,653 247,887<br />
Depreciation 58,575 60,557 72,564<br />
Other manufacturing expenses 183,357 138,751 83,476<br />
9 Share capital<br />
7,002,719 6,247,602 4,281,585<br />
At 31 December 2007, the Company’s authorised, subscribed and paid-up share capital<br />
<strong>com</strong>prises 1,500,000 ordinary shares (2006: 1,100,000, 2005: 500,000) of RO 1 each. During<br />
May 2007, the Company issued a stock dividend of 400,000 shares of RO 1 each.<br />
At 31 December 2007, the Company has declared stock dividend of 2,000,000 shares of RO<br />
1 each. At 31 December 2007, whilst share capital has been increased to RO 3,500,000; the<br />
increase has not yet been registered with the Ministry of Commerce and Industry.<br />
Members of the Company who own 10% or more of the Company’s shares, whether in<br />
their name or through a nominee account, are as follows:<br />
Shareholder Holding Number of shares held<br />
% 2007 2006 2005<br />
Al Anwar Holdings SAOG 57.42 2,009,700 631,620 287,096<br />
SABCO LLC 21.29 745,150 234,190 106,452
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
10 Legal reserve<br />
Article 154 of the Commercial Company’s Law of 1974 requires that 10% of a <strong>com</strong>pany’s<br />
net profit be transferred to a non-distributable legal reserve until the amount of legal<br />
reserve be<strong>com</strong>es equal to one third of the <strong>com</strong>pany’s issued share capital. Hence during<br />
the years 2006 and 2007 a sum of 10% of net profit of the Company is transferred to<br />
legal reserve.<br />
11 Bank borrowings<br />
2007 2006 2005<br />
RO RO RO<br />
Bank overdraft 552,600 562,762 435,337<br />
Loans against trust receipts 696,623 1,956,178 601,187<br />
Bill discounting - - 160,468<br />
- - -<br />
Term loan 145,833<br />
Repayment due with in 12 months included<br />
in current liability<br />
(125,000)<br />
66<br />
1,249,223 2,518,940 1,196,992<br />
20,833<br />
The Company has borrowing facility in the amount of RO 850,000 (2006: RO 850,000,<br />
2005: RO 450,000) which is secured against the property, plant and equipment. The<br />
borrowing facility carries interest rate ranging from 7.0% to 7.5% p.a.<br />
The Subsidiary has borrowing facility in the amount of RO 3,820,000 (2006: RO 3,320,000,<br />
2005: RO 3,045,000) which is secured against property, plant and equipment of the<br />
Subsidiary and corporate guarantee of the Company. The borrowing facility carries<br />
interest rate ranging from 6.5% to 7.5% p.a.<br />
12 Trade and other payables<br />
2007 2006 2005<br />
RO RO RO<br />
Trade accounts payable 734,856 982,272 930,346<br />
Amount due to a related party 10,650 13,601 -<br />
Other payables-fair value loss on forward<br />
<strong>com</strong>modity contracts (refer note 19) 62,138 124,966 -<br />
Accrued expenses 406,896 177,600 192,747<br />
Other payables 3,357<br />
Provision for in<strong>com</strong>e tax<br />
322,059 100,000 69,841<br />
1,549,956 1,398,439 1,192,934<br />
The Group has provided for warranties mainly in respect of sale of transformers and electrical<br />
items, and repair jobs in the amount of RO 87,737 (2006: RO 68,125, 2005: RO 51,218) and<br />
RO 20,918 (2006: RO 12,961,2005:RO8,284) respectively. The provision included in accruals<br />
is established on estimates based on historical warranty data associated with similar products<br />
and services. The Group expects to incur the liability over the next one year.
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
13 In<strong>com</strong>e tax<br />
The tax rate applicable to the Company taxable profit is 12% (2006 : 12%, 2005:12%) on<br />
taxable profit in excess of RO 30,000. The determination of taxable in<strong>com</strong>e for the year<br />
takes into account adjustments for tax purposes, which include items relating to both in<strong>com</strong>e<br />
and expense and which are based on the current understanding of the existing tax laws,<br />
regulations and practices.<br />
67<br />
2007 2006 2005<br />
Current tax 322,059 101,610 53,836<br />
Deferred tax<br />
(4,372) (1,610) (12,163)<br />
In<strong>com</strong>e tax arrears Paid 20,787<br />
348,474 100,000 41,673<br />
Deferred tax assets arises on accounting of timing difference of depreciation and the<br />
provisions for bad debts and slow moving inventory and the movement is as follows:<br />
2007 2006 2005<br />
Opening balance (11,100) (12,710) (547)<br />
Movement during the year (4,372) 1,610 (12,163)<br />
Closing balance (15,472) (11,100) (12,710)<br />
Reconciliation of effective tax rate<br />
Effective 2007 2006 2005<br />
Rate % RO RO RO<br />
Profit before tax 2,770,689 887,242 537,774<br />
In<strong>com</strong>e tax as per rates mentioned above 12 325,283<br />
Tax exempt revenue<br />
Excess (short) provision for tax<br />
(4,123)<br />
Current tax 25,539 101,610 53,836<br />
Deferred tax 1,775 (1,610) (12,163)<br />
Tax expense for the year 13 348,474 100,000 41,673<br />
In the case of the Company the assessments for the tax years ended 2004 to 2006 has<br />
not been finalised with the Secretariat General for Taxation at the Ministry of Finance. In<br />
the case of the Subsidiary, the in<strong>com</strong>e tax assessments up to the year 2002 have been<br />
finalized. The in<strong>com</strong>e tax assessment for the years 2003 to 2006 has not been finalised. The<br />
Management considers that additional tax liability, if any, in respect of open tax years would<br />
not be material to the financial position of the Group as at 31 December 2007.<br />
14 Employee costs<br />
2007 2006 2005<br />
RO RO RO<br />
Wages and salaries 662,127 548,526 508,191<br />
Other benefits 221,614 89,767 102,075<br />
Contribution to defined retirement plan 14,572 13,893 13,435<br />
Increase in liability for unfunded defined 31,379 14,234 11,612<br />
benefit retirement plan<br />
929,692 666,420 635,313
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
15 Related party transactions<br />
During the year the Group has entered into transactions with entities over which certain<br />
Directors are able to exercise significant influence. The Group also entered into transactions<br />
with the ultimate Holding Company and its associates. In the ordinary course of business,<br />
such related parties provide goods and render services to the Group. The Group also<br />
provides goods and renders services to such related parties. The Group considers that the<br />
terms of purchase, sale of goods and provision of services are <strong>com</strong>parable with those that<br />
could be obtained from third parties. The details are as follows:<br />
68<br />
2007 2006 2005<br />
RO RO RO<br />
Purchases 34,501 15,646 52,527<br />
Other In<strong>com</strong>e 77,380<br />
Revenue 211,549 - 1,390<br />
16 Basic earnings per share<br />
Basic earning per share is calculated by dividing the net profit of the Group for the year by<br />
the number of shares outstanding during at year end as follows:-.<br />
2007 2006 2005<br />
Net profit for the year (RO) 2,422,215 787,242 496,101<br />
Number of shares outstanding at the year end (Nos.) 3,500,000 3,500,000 3,500,000<br />
Basic earnings per share (RO) 0.692 0.225 0.142<br />
During the year ended 31 December 2007, the Company issued 2,400,000 bonus shares<br />
of RO 1 each (2006:600,000 bonus shares of RO1 each, 2005:Nil) to the existing Members<br />
since the bonus issue was without consideration; the issue is treated as if it has occurred<br />
prior to the beginning of 2005.<br />
17 Net assets per share<br />
Net assets per share are calculated by dividing the net assets at the balance sheet date by<br />
the number of shares outstanding as follows:<br />
2007 2006 2005<br />
Net assets (RO) 4,362,271 2,140,056 1,352,814<br />
Number of shares in issue at the year end (Nos.) 3,500,000 3,500,000 3,500,000<br />
Net assets per share (RO) 1.246 0.611 0.386<br />
During the year ended 31 December 2007, the Company issued 2,400,000 bonus shares<br />
of RO 1 each (2006:600,000 bonus shares of RO1 each, 2005:Nil) to the existing Members<br />
since the bonus issue was without consideration; the issue is treated as if it has occurred<br />
prior to the beginning of 2005.
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
18 Investments<br />
2007 2006 2006<br />
RO RO RO<br />
At Cost<br />
Voltamp Manufacturing Company, Qatar (“VMCQ”)<br />
At fair value through profit or loss<br />
432,072 - -<br />
Portfolio investment 234,632 - -<br />
69<br />
666,704 - -<br />
During the year 2007, the Company has made investment in the amount of RO 432,072(2006:<br />
Nil, 2005: Nil) in VMCQ and holds 51% of the equity. At 31 December 2007, the VMCQ did<br />
not <strong>com</strong>mence operations and has not prepared its financial statements. Accordingly the<br />
results of VMCQ have not been consolidated.<br />
19 Contingencies and Commitments<br />
2007 2006 2005<br />
RO RO RO<br />
Guarantees and Letter of credits 2,017,826 1,645,269 2,379,574<br />
- -<br />
Forward <strong>com</strong>modity contracts<br />
Forward <strong>com</strong>modity contracts were entered into to manage exposure to fluctuations<br />
in Copper price. The settlement dates on open contracts were within one year from the<br />
balance sheet date. The aggregate equivalent local currency amount was RO 1,090,331<br />
(2006: 794,856, 2005: Nil) having a fair value of RO 1,028,193 (2006: RO 669,890,<br />
2005: Nil).<br />
20 Financial instruments and financial risk management<br />
Financial instruments carried on the balance sheet <strong>com</strong>prise cash and bank balances,<br />
investments, trade and other receivables, bank borrowings and trade and other payables.<br />
The Group has exposure to the following risks from its use of financial instruments:<br />
(i) Credit risk<br />
(ii) Liquidity risk<br />
(iii) Market risk<br />
Credit risk<br />
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial<br />
instrument fails to meet its contractual obligations, and arises principally from the receivables<br />
from customers.
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
20 Financial instruments and financial risk management (continued)<br />
Credit risk (continued)<br />
The Group has a credit policy and management monitors exposure to credit risk on an ongoing<br />
basis, assesses recoverability, and makes provision for balances whose recoverability is in<br />
doubt. The maximum exposure to Credit risk on trade and other receivables and investments<br />
is limited to their carrying values at the reporting date.<br />
The maximum exposure to credit risk for trade receivables (including amount due from a<br />
related party) at the reporting date by geographic region was:<br />
Carrying amount<br />
Amount in RO<br />
2007 2006 2005<br />
RO RO RO<br />
Domestic 1,913,940 1,774,605 704,198<br />
GCC Countries 1,417,546 1,235,125 1,245,740<br />
Total 3,331,486 3,009,730 1,949,938<br />
The Group’s most significant customer accounts for RO 1,282,626 of the trade receivables<br />
carrying amount at 31 December 2007 (2006: RO 1,146,624, 2005: RO 298,566)<br />
Impairment losses<br />
The aging of trade receivables (including amount due from a related party) at the reporting<br />
date was:<br />
Amount in RO<br />
Gross Impairment Gross Impairment Gross Impairment<br />
2007 2007 2006 2006 2005 2005<br />
Not past due 2,582,250 1,450 2,092,384 - 1,286,143 -<br />
Past due 1-90 days 714,257 - 846,557 - 625,874 -<br />
Past due 91-365 days 34,979 27,130 70,789 43,991 37,921 37,921<br />
Liquidity risk<br />
3,331,486 28,580 3,009,730 43,991 1,949,938 37,921<br />
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as<br />
they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible,<br />
that it will always have sufficient liquidity to meet its liabilities when due, under both normal<br />
and stressed conditions, without incurring unacceptable losses or risking damage to the<br />
Group’s reputation.<br />
The Group uses local banks operating in the Sultanate of Oman to ensure that it has sufficient<br />
cash on demand to meet expected operational expenses and sufficient credit facilities to<br />
manage its liquidity risk. The Group has total credit facilities in the amount of totaling of<br />
RO 4.42 million from three banks. Short term loans and overdraft ranging are, on average,<br />
utilized for period of 15 to 30 days to bridge the gap between collections of receivables and<br />
settlement of product purchase bills during the middle of every month.<br />
70
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
20 Financial instruments and financial risk management (continued)<br />
Liquidity risk (continued)<br />
The maturities of Group’s undiscounted financial liabilities at reporting date is as below:<br />
31 December 2007<br />
Carrying<br />
amount<br />
RO<br />
71<br />
Contractual<br />
cash flows<br />
RO<br />
less than<br />
6 months<br />
RO<br />
6 months<br />
to 1 year<br />
RO<br />
1 year to<br />
2 years<br />
RO<br />
Non-derivative financial liabilities<br />
Term loan 145,833 152,669 66,992 64,648 21,029<br />
Bank borrowings 1,249,223 1,257,951 1,257,951 - -<br />
Trade and other payables 1,549,956 1,549,956 1,549,956 - -<br />
31 December 2006<br />
2,945,012 2,960,576 2,874,899 64,648 21,029<br />
Carrying<br />
amount<br />
RO<br />
Contractual<br />
cash flows<br />
RO<br />
less than<br />
6 months<br />
RO<br />
6 months<br />
to 1 year<br />
RO<br />
1 year to<br />
2 years<br />
RO<br />
Non-derivative financial liabilities<br />
Bank borrowings 2,518,940 2,552,310 2,552,310 - -<br />
Trade and other payables 1,398,439 1,398,439 1,398,439 - -<br />
31 December 2005<br />
3,917,379 3,950,749 3,950,749 - -<br />
Carrying<br />
amount<br />
RO<br />
Contractual<br />
cash flows<br />
RO<br />
less than<br />
6 months<br />
RO<br />
6 months<br />
to 1 year<br />
RO<br />
1 year to<br />
2 years<br />
RO<br />
Non-derivative financial liabilities<br />
Term Loan 13,366 13,366 13,366<br />
Bank borrowings 1,196,992 1,219,992 1,219,992 - -<br />
Trade and other payables 1,230,855 1,230,855 1,230,855 - -<br />
Market risk<br />
2,441,213 2,464,213 2,464,213 - -<br />
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest<br />
rates, equity prices and <strong>com</strong>modity price risk (Copper) will affect the Group’s in<strong>com</strong>e or the<br />
value of its holdings of financial instruments. The objective of market risk management is to<br />
manage and control market risk exposures within acceptable parameters, while optimising<br />
the return on risk. In respect of <strong>com</strong>modity price risk the Group manages its exposure by<br />
entering into forward contracts to mitigate such risks.<br />
Currency risk<br />
The Group is exposed to foreign exchange risk on sales, purchases, receivables and<br />
payables arising primarily from GCC currencies and US Dollar exposures which are pegged<br />
to the Omani Rial.
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Notes (forming part of the summarised historical consolidated financial statements)<br />
20 Financial instruments and financial risk management (continued)<br />
Interest rate risk<br />
The Group manages its exposure to interest rate risk on term loan and short term borrowings<br />
by ensuring that they are on fixed rate basis.<br />
Fair value estimation<br />
The fair value of portfolio investment is determined by reference to Stock Exchange quoted<br />
market prices at the close of business on the balance sheet date. The fair value of forward<br />
<strong>com</strong>modity contracts is determined using forward <strong>com</strong>modity market rates at the balance<br />
sheet date.<br />
The carrying amounts of the other financial assets and liabilities approximately equal to their<br />
fair values.<br />
Capital management<br />
The Group’s policy is to maintain an optimum capital base to maintain investor, creditor and<br />
market confidence to sustain future growth of business as well as return on capital.<br />
21 Comparatives<br />
Certain <strong>com</strong>parative information has been reclassified to conform to the presentation<br />
adopted in these financial statements.<br />
72
CHAPTER 12<br />
Prospective consolidated financial statements for 2008-2014<br />
Voltamp Energy SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Prospective consolidated financial statements<br />
31 December 2008 to 2014<br />
73
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised prospective consolidated in<strong>com</strong>e statement<br />
For the period ended 31 December<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
In<strong>com</strong>e<br />
Revenue 14,334,473 20,397,784 27,846,766 36,925,267 46,138,067 54,723,722 62,074,418<br />
Cost of sales (10,185,084) (14,716,346) (20,944,443) (27,088,773) (33,344,264) (39,021,993) (44,154,975)<br />
Gross profit 4,149,389 5,681,438 6,902,323 9,836,494 12,793,803 15,701,729 17,919,443<br />
Other in<strong>com</strong>e 160,380 95,000 107,000 112,400 118,205 124,445 131,154<br />
Expenses<br />
Selling, administrative and general expenses (1,344,785) (2,086,311) (3,372,988) (3,926,954) (4,511,410) (5,257,189) (5,951,722)<br />
76<br />
Profit from operations 2,964,984 3,690,127 3,636,335 6,021,940 8,400,598 10,568,985 12,098,875<br />
Finance charges (226,104) (220,084) (678,073) (665,062) (726,052) (705,042) (668,031)<br />
Profit for the year before taxation 2,738,879 3,470,043 2,958,262 5,356,878 7,674,546 9,863,943 11,430,844<br />
Taxation (336,753) (405,342) (512,741) (561,888) (629,817) (706,019) (801,088)<br />
Net profit for the year 2,402,126 3,064,701 2,445,521 4,794,990 7,044,729 9,157,924 10,629,756<br />
Earnings per share for the year 0.048 0.061 0.049 0.096 0.141 0.183 0.213<br />
The significant accounting policies & assumptions on note 2 to 5 form an integral part of these prospective consolidated financial statements
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised prospective consolidated balance sheet<br />
For the period ended 31 December<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
Assets<br />
Non-current assets<br />
Property, plant and equipment 2,417,987 9,469,581 9,393,303 8,313,842 7,347,372 6,194,270 5,359,457<br />
Intangible assets 781,515 586,136 390,757 195,378 - - -<br />
Investment 200,000 200,000 200,000 200,000 200,000 200,000 200,000<br />
Deferred tax 15,472 15,472 15,472 15,472 15,472 15,472 15,472<br />
Total non-current assets 3,414,974 10,271,189 9,999,532 8,724,692 7,562,844 6,409,742 5,574,929<br />
Current assets<br />
Inventories 2,931,057 3,693,706 4,837,003 6,036,387 7,159,665 8,298,925 9,333,347<br />
77<br />
Trade and other receivables 3,767,113 4,871,538 6,636,374 8,411,071 10,153,607 11,829,132 13,345,085<br />
Cash in hand and at banks 8,501,702 7,244,057 7,404,144 9,505,654 13,549,414 19,601,581 26,726,719<br />
Total current assets 15,199,872 15,809,301 18,877,521 23,953,112 30,862,686 39,729,638 49,405,151<br />
Total assets 18,614,846 26,080,490 28,877,053 32,677,804 38,425,530 46,139,380 54,980,080<br />
Equity and liabilities<br />
Equity<br />
Share capital 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000<br />
Share premium 6,400,000 6,400,000 6,400,000 6,400,000 6,400,000 6,400,000 6,400,000<br />
Legal reserve 1,059,071 1,312,350 1,604,904 1,976,866 2,424,027 2,816,072 3,285,583<br />
Retained earnings 455,326 1,516,748 1,919,715 4,592,743 9,440,311 16,456,190 24,866,435<br />
Dividend payable 1,750,000 1,750,000 1,750,000 1,750,000 1,750,000 1,750,000 1,750,000<br />
Total equity 14,664,397 15,979,098 16,674,619 19,719,609 25,014,338 32,422,262 41,302,018
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised prospective consolidated balance sheet (Contd.)<br />
For the period ended 31 December<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
Liabilities<br />
Non current liabilities<br />
Long term loan 401,392 5,859,218 5,809,044 4,607,696 3,455,522 2,303,348 1,151,174<br />
Current liabilities<br />
Trade and other payables 1,878,224 2,542,000 3,323,216 4,254,151 5,007,322 5,747,422 6,371,540<br />
Short term bank borrowings 1,650,000 1,650,000 3,020,000 2,895,000 3,746,000 4,464,000 4,953,000<br />
Current portion of long term loan 20,833 50,174 50,174 1,201,348 1,202,348 1,202,348 1,202,348<br />
Total current liabilities 3,549,057 4,242,174 6,393,390 8,350,499 9,955,670 11,413,770 12,526,888<br />
78<br />
Total liabilities 3,950,449 10,101,392 12,202,434 12,958,195 13,411,192 13,717,118 13,678,062<br />
Equity and liabilities 18,614,846 26,080,490 28,877,053 32,677,804 38,425,530 46,139,380 54,980,080<br />
Net assets per share 0.293 0.319 0.333 0.394 0.500 0.648 0.826<br />
The significant accounting policies & assumptions on note 2 to 5 form an integral part of these prospective consolidated financial statements
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised prospective consolidated cash flow statement<br />
For the year ended 31 December<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
Cash flows from operating activities<br />
Cash receipts from customers 14,180,786 19,388,359 26,188,930 35,262,970 44,513,737 53,172,643 60,689,619<br />
Cash paid to suppliers and employees (11,429,239) (16,548,404) (23,293,179) (28,723,161) (36,863,906) (43,365,565) (49,266,723)<br />
Cash generated from operations 2,751,547 2,839,955 2,895,751 6,539,808 7,649,831 9,807,078 11,422,896<br />
Interest paid (226,104) (220,084) (678,073) (665,062) (726,052) (705,042) (668,031)<br />
Taxation paid (336,753) (405,342) (512,741) (561,888) (629,817) (706,019) (801,088)<br />
79<br />
2,188,690 2,214,529 1,704,937 5,312,858 6,293,962 8,396,017 9,953,777<br />
Net cash flows from / (used in)<br />
operating activities<br />
Cash flows from investing activities<br />
Purchase of property, plant and equipment (2,793,833) (6,331,000) (1,114,676) (135,000) (199,028) (159,676) (415,465)<br />
Acquisition of intangibles assets (127,894) (849,000) - - - - -<br />
Investment 466,704 - - - - - -<br />
(2,455,023) (7,180,000) (1,114,676) (135,000) (199,028) (159,676) (415,465)<br />
Net cash flows from / (used in)<br />
investing activities
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Summarised prospective consolidated cash flow statement (Contd.)<br />
For the year ended 31 December<br />
2008 2009 2010 2011 2012 2013 2014<br />
RO RO RO RO RO RO RO<br />
Cash flows from financing activities<br />
Issue of equity under <strong>IPO</strong> 1,500,000 - - - - - -<br />
Share issue premium 6,600,000 - - - - - -<br />
Share issue collected 50,000<br />
Issue expenses incurred (250,000) - - - - - -<br />
Term loan received 401,392 5,508,000 - - - - -<br />
Repayment of term loans (20,833) (50,174) (50,174) (1,201,348) (1,152,174) (1,152,174) (1,152,174)<br />
Dividends paid - (1,750,000) (1,750,000) (1,750,000) (1,750,000) (1,750,000) (1,750,000)<br />
8,280,559 3,707,826 (1,800,174) (2,951,348) (2,902,174) (2,902,174) (2,902,174)<br />
Net cash flow from / (used in)<br />
financing activities<br />
80<br />
8,014,226 (1,257,645) (1,209,913) 2,226,510 3,192,760 5,334,167 6,636,138<br />
Increase / (decrease) in cash and cash<br />
equivalents during the year<br />
(1,162,524) 6,851,702 5,594,057 4,384,144 6,610,654 9,803,414 15,137,581<br />
Cash and cash equivalents at the beginning<br />
of the year<br />
6,851,702 5,594,057 4,384,144 6,610,654 9,803,414 15,137,581 21,773,719<br />
Cash and cash equivalents at the end of<br />
the year<br />
Cash & cash equivalents <strong>com</strong>prise:<br />
Cash at bank and in hand 8,501,702 7,244,057 7,404,144 9,505,654 13,549,414 19,601,581 26,726,719<br />
Short term bank borrowings (1,650,000) (1,650,000) (3,020,000) (2,895,000) (3,746,000) (4,464,000) (4,953,000)<br />
6,851,702 5,594,057 4,384,144 6,610,654 9,803,414 15,137,581 21,773,719<br />
The significant accounting policies & assumptions on note 2 to 5 form an integral part of these prospective consolidated financial statements.
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Prospective consolidated statement of changes in equity<br />
for the year ended 31 December<br />
Total<br />
Retained<br />
earnings<br />
Proposed<br />
Dividend<br />
Legal<br />
Reserve<br />
Share<br />
Premium<br />
Share<br />
Capital<br />
1 January 2008 3,500,000 - 848,395 - 13,876 4,362,271<br />
Increase in share capital - <strong>IPO</strong> proceeds 1,500,000 1,500,000<br />
Increase in share premium - <strong>IPO</strong> proceeds 6,600,000 6,600,000<br />
Shortfall in issue expenses (200,000) (200,000)<br />
Profit for the year 2,402,126 2,402,126<br />
Transfer to legal reserve 210,676 (210,676) -<br />
Proposed dividend 1,750,000 (1,750,000) -<br />
31 December 2008 5,000,000 6,400,000 1,059,071 1,750,000 455,326 14,664,397<br />
1 January 2009 5,000,000 6,400,000 1,059,071 1,750,000 455,326 14,664,397<br />
Dividend paid (1,750,000) (1,750,000)<br />
81<br />
Profit for the year 3,064,701 3,064,701<br />
Transfer to legal reserve 253,279 (253,279) -<br />
Proposed dividend 1,750,000 (1,750,000) -<br />
31 December 2009 5,000,000 6,400,000 1,312,350 1,750,000 1,516,748 15,979,098<br />
1 January 2010 5,000,000 6,400,000 1,312,350 1,750,000 1,516,748 15,979,098<br />
Dividend paid (1,750,000) (1,750,000)<br />
Profit for the year 2,445,521 2,445,521<br />
Transfer to legal reserve 292,554 (292,554) -<br />
Proposed Dividend 1,750,000 (1,750,000) -<br />
31 December 2010 5,000,000 6,400,000 1,604,904 1,750,000 1,919,715 16,674,619
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Prospective consolidated statement of changes in equity (Contd.)<br />
for the year ended 31 December<br />
Share Share Legal Reserve Proposed Retained<br />
Total<br />
Capital Premium<br />
Dividend earnings<br />
1 January 2011 5,000,000 6,400,000 1,604,904 1,750,000 1,919,715 16,674,619<br />
Dividend paid (1,750,000) (1,750,000)<br />
Profit for the year 4,794,990 4,794,990<br />
Transfer to legal reserve 371,962 (371,962) -<br />
Proposed dividend 1,750,000 (1,750,000) -<br />
31 December 2011 5,000,000 6,400,000 1,976,866 1,750,000 4,592,743 19,719,609<br />
1 January 2012 5,000,000 6,400,000 1,976,866 1,750,000 4,592,743 19,719,609<br />
Dividend paid (1,750,000) (1,750,000)<br />
Profit for the year 7,044,729 7,044,729<br />
Transfer to legal reserve 447,161 (447,161) -<br />
Proposed Dividend 1,750,000 (1,750,000) -<br />
31 December 2012 5,000,000 6,400,000 2,424,027 1,750,000 9,440,311 25,014,338<br />
1 January 2013 5,000,000 6,400,000 2,424,027 1,750,000 9,440,311 25,014,338<br />
Dividend paid (1,750,000) (1,750,000)<br />
Profit for the year 9,157,924 9,157,924<br />
Transfer to legal reserve 392,045 (392,045) -<br />
Proposed dividend 1,750,000 (1,750,000) -<br />
82<br />
31 December 2013 5,000,000 6,400,000 2,816,072 1,750,000 16,456,190 32,422,262<br />
1 January 2014 5,000,000 6,400,000 2,816,072 1,750,000 16,456,190 32,422,262<br />
Dividend paid (1,750,000) (1,750,000)<br />
Profit for the year 10,629,756 10,629,756<br />
Transfer to legal reserve 469,511 (469,511) -<br />
Proposed dividend 1,750,000 (1,750,000) -<br />
31 December 2014 5,000,000 6,400,000 3,285,583 1,750,000 24,866,435 41,302,018<br />
The significant accounting policies & assumptions on note 2 to 5 form an integral part of these prospective consolidated financial statements
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Significant accounting policies and assumptions<br />
(forming part of the prospective consolidated financial statements)<br />
1 Legal status and principal activities<br />
Voltamp Energy SAOG (under transformation) (“the Company”) is in the process of<br />
registration as a joint stock <strong>com</strong>pany under the Commercial Companies Law of Oman. The<br />
<strong>com</strong>pany is presently registered in the Sultanate of Oman as a limited liability <strong>com</strong>pany.<br />
• Voltamp Transformers Oman LLC (“the Subsidiary”), registered in the Sultanate of<br />
Oman, is a wholly-owned subsidiary of the Company.<br />
• Voltamp Manufacturing Company, registered in Qatar, is 51% owned subsidiary of<br />
the Company.<br />
• Voltamp Power Oman LLC (the proposed wholly owned Subsidiary), is part of this<br />
projections, which is yet to be formed.<br />
The principal activities of the Company and its Subsidiaries (“the Group”) are manufacture,<br />
sale and distribution of transformers, LV Switchgears and panels. The ultimate holding<br />
<strong>com</strong>pany of the Group is Al Anwar Holdings SAOG (“AAH”) [formerly Al Anwar Industrial<br />
& Trading Co. SAOG (“AAITCO”)].<br />
2 Basis of preparation of the prospective consolidated financial statements for the<br />
Company for the year ending 31 December 2008 to 2014 (“the Projections”)<br />
These Projections have been prepared by the Management in accordance with the<br />
following accounting policies and assumptions. Since the Projections relate to the<br />
future, actual results are likely to be different from the projected results because events<br />
and circumstances do not occur as expected and differences may be material.<br />
(a) Basis of preparation<br />
These prospective consolidated financial statements have been prepared under the historical<br />
cost basis, except that investments available for sale are stated at their fair values.<br />
(b) Statement of <strong>com</strong>pliance<br />
The Projections have been prepared in accordance with International Standards on<br />
Assurance Engagements (“ISAE”) promulgated by the International Auditing and<br />
Assurance Standards Board (“IAASB”).<br />
c) Functional currency<br />
These prospective consolidated financial statements are presented in Rial Omani, which<br />
is the Group’s functional currency.<br />
d) Use of estimates and judgments<br />
The preparation of prospective consolidated financial statements requires management<br />
to make judgments, estimates and assumptions that affect the application of accounting<br />
policies and the reported amounts of assets, liabilities, in<strong>com</strong>e and expenses. Actual<br />
results may differ from these estimates.<br />
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to<br />
accounting estimates are recognised in the period in which the estimate is revised and<br />
in any future periods affected.<br />
83
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Significant accounting policies and assumptions<br />
(forming part of the prospective consolidated financial statements)<br />
3 Hypothetical assumptions<br />
(a) Economic conditions<br />
There will be no adverse changes to the prevailing economic climate in Oman during<br />
the years ending 31 December 2008 to 2014, which may have a material impact<br />
upon the Projections.<br />
(b) Laws and regulations<br />
The existing laws and regulations of Oman, including those of taxation, will not<br />
change during the years ending 31 December 2008 to 2014 in a manner which may<br />
have a material impact upon the Projections.<br />
(c) Inflation<br />
Inflation will not have a significant impact on the Projections.<br />
(d) Foreign currencies<br />
It has been assumed that there will be no material foreign exchange gains<br />
and losses during the years ending 31 December 2008 to 2014.<br />
(e) Markets and market share<br />
It has been assumed that the Company will market its products in North Africa,<br />
GCC countries and countries in Middle East region. The shares in the different<br />
markets are available with the Company.<br />
(f) Payroll costs<br />
Salaries represent approximately 60% of selling, administration and general expenses<br />
of the projected period. It is anticipated that the Group’s workforce will increase from<br />
approximately 180 at the end of 2007 and over 550 by the end of 2014.<br />
(g) Term loans and working capital loans<br />
Debts consist of the long term loans (at 6%) raised in order to fund primarily a proposed<br />
subsidiary <strong>com</strong>pany and as well as working capital loans (at 7%) together amounting to<br />
approximately RO 7.3 million by 2014.<br />
The Group Management is in process of identifying and finalising the source of<br />
financing.<br />
(h) Dividend<br />
The dividend payout for the projected period has been considered at 35% of the<br />
capital.<br />
4 Significant accounting policies<br />
The significant accounting policies, except stated below on intangibles and amortization,<br />
followed by the Company are in accordance as set out in the Note 3 on significant accounting<br />
policies of Chapter 11 Summarised Consolidated Financial Statements of the prospectus<br />
document.<br />
84
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Significant accounting policies and assumptions<br />
(forming part of the prospective consolidated financial statements)<br />
Other Intangibles<br />
Other intangibles assets that are acquired by the Group, which have finite useful lives, are<br />
measured at cost less accumulated amortisation and accumulated impairment losses.<br />
Amortisation<br />
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful<br />
lives of intangibles assets, other than goodwill, from the date that they are available for use.<br />
5 Best estimate assumptions<br />
(a) Property, plant and equipment (PPE)<br />
The additions or deletions to property, plant and equipment have been assumed by<br />
Group during the years ending 31 December 2008 to 2014.<br />
PPE 2008 2009 2010 2011 2012 2013 2014<br />
Additions (2,793,833) (6,331,000) (1,114,676) (135,000) (199,028) (159,676) (415,465)<br />
Deletions - - - - - - -<br />
(b) Intangibles assets and amortisation<br />
Technology transfer cost to acquire technology is recognised as intangible<br />
assets in prospective consolidated financial statements and is amortised in<br />
over the 5 years period.<br />
(c) Investments<br />
Investments made listed securities and valued at cost.<br />
(d) Inventories<br />
The closing stock of inventories (consists of raw material, work in progress and<br />
finished goods) has been considered on the number of days of cost of sales for<br />
the years 2008 to 2014 respectively (135 days for 2007). No provisions have been<br />
considered during above period.<br />
Inventory 2008 2009 2010 2011 2012 2013 2014<br />
Number of days 105 92 84 81 78 78 77<br />
(e) Average receivables, advances and prepayments<br />
The receivables have been stated at gross, no provision for doubt debts has been<br />
considered. The Company has projected sales receivables as between 96 days to 78<br />
days over the projected period which is lower than the past trends of 110 days<br />
Receivables 2008 2009 2010 2011 2012 2013 2014<br />
Number of days 96 87 87 83 80 79 78<br />
85
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Significant accounting policies and assumptions<br />
(forming part of the prospective consolidated financial statements)<br />
(f) Average trade and other payables<br />
The average trade payables for projected period are 67 days to 53 days of cost of sales<br />
which is <strong>com</strong>pared to the past average of 80 days.<br />
Receivables 2008 2009 2010 2011 2012 2013 2014<br />
Number of days 67 63 58 57 55 54 53<br />
(g) Cash at bank and in hand<br />
Cash and bank balances represent the cash and cash equivalents <strong>com</strong>prising<br />
of cash at bank and in hand and short term bank borrowings<br />
(h) Short term borrowings<br />
The Group uses local banks operating in the Sultanate of Oman to ensure that it has<br />
sufficient cash on demand to meet expected operational expenses and sufficient credit<br />
facilities to manage its liquidity risk.<br />
The existing and planned borrowings facilities of the Group are in range of<br />
6.50 % to 8.00%.<br />
(i) Long term loan<br />
Term loan of RO 5,508,000 have been assumed by the Company for Voltamp Power<br />
LLC (subsidiary <strong>com</strong>pany to be incorporated).<br />
(j) Equity<br />
Authorised share capital<br />
The authorised share capital of the Voltamp Energy SAOG (under transformation) shall<br />
be RO. 10,000,000 (ten million), divided into 100,000,000 (one hundred million) ordinary<br />
shares.<br />
Issued and paid up share capital of the Company (post <strong>IPO</strong>):<br />
The issued and paid up share capital of the Company shall be RO. 5,000,000 (five<br />
million) divided into 50,000,000 (fifty million) ordinary shares.<br />
Share capital of the Company prior to the <strong>IPO</strong><br />
The issued and paid up share capital of the Company is RO 3,500,000 (three million, five<br />
hundred thousand) divided into 35,000,000 (thirty five million) ordinary shares.<br />
Shares offered<br />
Existing promoters / stock selling shareholders and the Company have agreed to offer<br />
10,000,000 (ten million) and 15,000,000 (Fifteen Million) new ordinary shares through<br />
the Initial Public Offer respectively.<br />
86
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Significant accounting policies and assumptions<br />
(forming part of the prospective consolidated financial statements)<br />
(j) Equity (continued)<br />
Promoter’s name<br />
87<br />
Number of shares<br />
before transformation<br />
face value Baisa 100<br />
Number of shares to<br />
beoffered for sale<br />
face value Baisa 100<br />
Al Anwar Holdings SAOG 20,097,000 5,742,000<br />
SABCO LLC 7,451,500 2,129,000<br />
Mr. Mushtaq bin Abdullah bin Jaffer 3,160,500 903,000<br />
H.H. Seyyid Shihab bin Tariq Al Said 2,597,000 742,000<br />
Mr. Mohammed bin Abdul Rasool Al Jamali 1,130,500 323,000<br />
Dr. Ali bin Jaffar bin Mohammed 563,500 161,000<br />
Total 35,000,000 10,000,000<br />
The offer <strong>com</strong>prises of two <strong>com</strong>ponents:<br />
3. Issue of the new ordinary shares for public subscription by the Company each with a<br />
nominal value of Baisas 100 at an offer price of Baisas 542 (five hundred and forty two)<br />
including issue expenses of Baisas 2 per share, out of which, up to 1,250,000 (one<br />
million two hundred and fifty thousand) shares shall be set aside for subscription by the<br />
employees and managers as follows:<br />
a) up to 1,000,000 (one million) shares shall be offered to the employees; and<br />
b) up to 250,000 (two hundred and fifty thousand) shares shall be offered to the<br />
managers.<br />
The new ordinary shares will rank pari-passu with the existing ordinary shares.<br />
4. Offer for sale to the public of the existing ordinary shares by the selling shareholders<br />
each with a nominal value of Baisas 100 at an offer price of Baisas 542 (five hundred<br />
and forty two) which includes Baisas 440 (four hundred and forty) as share premium and<br />
issue expenses of Baisas 2 per share.<br />
Purpose for which the proceeds of the subscription would be utilised<br />
Proceeds from the issue of new ordinary shares<br />
Issue proceeds under this category aggregating to RO 8,100,000 (eight million, one<br />
hundred thousand) will accrue to the Company, and will be utilised by the Company<br />
for financing the ongoing capital expenditure, for meeting its long term working<br />
capital requirements and investment in future strategic projects in other subsidiary<br />
<strong>com</strong>panies.<br />
Proceeds from the offer for sale of existing ordinary shares<br />
Issue proceeds under this category aggregating to RO 5,400,000 (five million, four hundred<br />
thousand) will accrue to the selling shareholders only and not to the Company.<br />
Issue expenses<br />
The amount of RO 50,000 (fifty thousand) being collected towards part of the Issue<br />
Expenses from the total issue will accrue to the Company.
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Significant accounting policies and assumptions<br />
(forming part of the prospective consolidated financial statements)<br />
Legal reserve<br />
Article 106 of the Commercial Companies Law of 1974, requires that 10% of the<br />
Company’s net profit to be transferred to a non-distributable legal reserve until the<br />
amount of the legal reserve equals one-third of the Company’s issued share capital.<br />
Proposed dividend<br />
The dividend payout for the projected period has been considered at 35% of the<br />
capital.<br />
(k) Capacity utilisation to total capacity<br />
Year<br />
Voltamp Energy<br />
SAOG (under<br />
transformation)<br />
Voltamp<br />
Transformers<br />
Oman LLC<br />
88<br />
Voltamp<br />
Manufacturing<br />
Company Qatar<br />
Voltamp<br />
Power LLC<br />
2007 90% - 40% -<br />
2008 90% 56% 90% -<br />
2009 90% 69% 90% -<br />
2010 90% 82% 90% 12%<br />
2011 90% 100% 90% 39%<br />
2012 90% 100% 90% 65%<br />
2013 90% 100% 90% 87%<br />
2014 90% 100% 90% 100%<br />
A subsidiary of the Company (Voltamp Transformer Oman LLC) has a production capacity<br />
of 2100 MVA with two full-fledged working shifts of 12 hours. Company produced 1200<br />
MVA during 2007 and projecting increased utilisation by 20% from 2008 to 2010 when<br />
<strong>com</strong>pany reaches the maximum capacity.<br />
The Company has projected a capital investment of over RO 600,000 till 2014 to increase<br />
the facility of Voltamp Energy Company LLC. The capacity of Voltamp Energy Company<br />
LLC can be increased with addition to factory building and manpower without much of<br />
investment on plant & machinery.
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Significant accounting policies and assumptions<br />
(forming part of the prospective consolidated financial statements)<br />
(l) Operating information<br />
The group’s performance based on projections prepared by management, growth in<br />
operating parameters in <strong>com</strong>parison to the previous years is below in table:<br />
Year 2008 2009 2010 2011 2012 2013 2014<br />
Growth in <strong>com</strong>parison to PY in<br />
Revenue 34% 42% 37% 33% 25% 19% 13%<br />
Cost of sales 45% 44% 42% 29% 23% 17% 13%<br />
Gross profit 12% 37% 21% 43% 30% 23% 14%<br />
Other in<strong>com</strong>e 1% -41% 13% 5% 5% 5% 5%<br />
Selling, administrative & general<br />
expenses<br />
53% 55% 62% 16% 15% 17% 13%<br />
Finance charges 12% -3% 208% -2% 9% -3% -5%<br />
Net profit before tax -1% 27% -15% 81% 43% 29% 16%<br />
(m) In<strong>com</strong>e tax<br />
It may be noted that while preparing this the projections of the group, the deferred tax<br />
asset / liability arising out of on timing differences/losses has not been recognized.<br />
Year<br />
2008 2009 2010 2011 2012 2013 2014<br />
Tax liability (336,753) (405,342) (512,741) (561,888) (629,817) (706,019) (801,088)<br />
89
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Un audited Financial Statements for the Period ended 31 st March 2008<br />
VOLTAMP ENERGY LLC<br />
(INCLUDING SUBSIDIARY)<br />
Consolidated In<strong>com</strong>e Statement for the Quarter ended MARCH 2008<br />
Particulars Amount In RO<br />
Actual Previous Yr.<br />
up to March 2008 Up to March 2007<br />
In<strong>com</strong>e<br />
Sales 3,223,571 2,162,469<br />
Cost of Sales (2,132,563) (1,502,986)<br />
Gross Profit 1,091,008 659,483<br />
Other In<strong>com</strong>e 18,453 8,364<br />
Selling, Administrative and General Exp (339,550) (164,958)<br />
Profit from operations 769,911 502,889<br />
Finance Charges (35,632) (60,401)<br />
Profit for the year before taxation 734,279 442,488<br />
Taxation (85,714) (42,277)<br />
Net profit for the period 648,565 400,211<br />
Earnings per share (Annualised) 0.074 0.046<br />
90
VOLTAMP ENERGY SAOG (under transformation)<br />
(Formerly known as Voltamp Manufacturing Company LLC)<br />
Consolidated Balance Sheet<br />
VOLTAMP ENERGY LLC<br />
(INCLUDING SUBSIDIARY)<br />
Particulars VEC (Incl. Subsidiary)<br />
Assets<br />
91<br />
AUDITED As at UN AUDITED As at<br />
12/31/2007 3/31/2008<br />
R.O. R.O.<br />
Non-current assets<br />
Property Plant and equipment 521,201 496,510<br />
Investments 666,704 666,704<br />
Deffered tax asset 15,472 15,472<br />
Total non-current asstes 1,203,377 1,178,686<br />
Current assets<br />
Inventories 2,564,161 3,255,259<br />
Trade and other receivables 3,453,046 4,041,892<br />
cash in hand and at banks 86,699 18,301<br />
Total current assets 6,103,906 7,315,452<br />
Total assets 7,307,283 8,494,138<br />
Equity and liabilities<br />
Equity<br />
Share capital 3,500,000 3,500,000<br />
Legal reserve 848,395 855,693<br />
Retained Earnings 13,876 655,144<br />
Total Equity 4,362,271 5,010,837<br />
Liabilities<br />
Non Current Liabilities<br />
Long term Loan 20,833 20,833<br />
Total Non current liabilities 20,833 20,833<br />
Current liabilities<br />
Trade and other payables 1,549,956 1,314,196<br />
Bank borrowings 1,249,223 2,054,522<br />
Current portion of long term loan 125,000 93,750<br />
Total current liabilities 2,924,179 3,462,468<br />
Total liabilities 2,945,012 3,483,301<br />
Equity and liabilities 7,307,283 8,494,138<br />
Net Assets per share (RO) 0.124 0.143
CHAPTER 13<br />
Dividends<br />
DIVIDENDS POLICY<br />
The Offered Shares will rank equally with all other Ordinary Shares of the Company for any rights<br />
to dividends that may be declared and paid in respect of the financial year ending 31 December<br />
2008 and in subsequent years. Following the offering, the shareholders’ register of the Company<br />
shall be amended to allow new shareholders to receive any declared dividends in future years.<br />
In accordance with the CCL, 10% of the profits of every corporation incorporated in Oman must<br />
be transferred to a legal reserve until the reserve amounts to at least one third of the corporation’s<br />
share capital. Accordingly, the Company will be required to maintain such legal reserve.<br />
The Company’s Cash Dividend Policy<br />
The Company proposes to follow a reasonable dividend payout policy, subject to debt<br />
repayments, working capital and capital expenditure requirements. The amount of annual<br />
dividends and the determination of whether to pay dividends in any year may be affected by a<br />
number of other factors including the Company’s business prospects, financial performance,<br />
free cash availability, and the outlook for the power sector. The Company’s management will take<br />
into account dividend payout ratios within its industry/sector as well as dividend yields of other<br />
leading stocks on the MSM at the time of re<strong>com</strong>mending dividends.<br />
Proposed Dividend as per the Financial Projections 2008-2010<br />
YEAR<br />
PAID UP CAPITAL<br />
92<br />
DIVIDEND<br />
AMOUNT*<br />
In RO In RO<br />
% ON<br />
CAPITAL<br />
Value per<br />
share<br />
2008 5,000,000 1,750,000 35% 35 Baisas<br />
2009 5,000,000 1,750,000 35% 35 Baisas<br />
2010 5,000,000 1,750,000 35% 35 Baisas<br />
* Subject to Shareholders’ approval in the Annual General Meeting and / or any other appropriate<br />
authorities.<br />
Past Dividend Record of the Company (2005-2007)<br />
Year Cash Dividend Stock Dividend Close Equity<br />
2005 Nil Nil RO 500,000<br />
2006 RO 200,000 RO 600,000 RO 1,100,000<br />
2007 Nil RO 2,400,000 RO 3,500,000
CHAPTER 14<br />
Overview<br />
VALUATION AND PRICE JUSTIFICATION<br />
The Lead Issue Manager and the Financial Advisor, Oman Arab Bank (“OAB”), has a strong and<br />
successful presence in Oman through a number of lead advisory and project financing mandates<br />
in Oman. They also have significant experience in <strong>IPO</strong> advisory work, for both new <strong>IPO</strong>s and<br />
as well as rights issues of existing public <strong>com</strong>panies. Their most recent mandate included the<br />
recent Bank Sohar <strong>IPO</strong> & Galfar <strong>IPO</strong> and are on track to bring some more <strong>com</strong>panies to a public<br />
listing on the Muscat Securities Market soon.<br />
About Ernst & Young:<br />
Ernst &Young has carried out the valuation for the Company. Ernst & Young is a global leader<br />
in assurance, tax, transaction and advisory services. The Muscat office of Ernst & Young first<br />
opened its doors in 1974, although the firm had been serving clients in Oman since the 1950’s.<br />
Much of Muscat has been developed only in the past 30 to 35 years, with Ernst & Young firmly<br />
establishing itself during this period.<br />
In recent years the office has experienced significant growth. In the last ten years, the number<br />
of clients and people has trebled. It also serves a large number of clients in the oil & gas,<br />
manufacturing, retail and construction industries.<br />
Executives of Ernst & Young Oman serve on a number of public advisory groups including<br />
<strong>com</strong>mittees led by the Capital Markets Authority and the Oman Centre for Investment Promotion<br />
and Export Development (OCIPED).<br />
Offer Price<br />
OAB has considered a number of qualitative and quantitative factors in determining the price<br />
offer for Voltamp shares. Some of the key factors in the analysis included :<br />
a) Cash flow analysis based on the financial results of the Company for 2007, and future<br />
financial projections provided by Company management from 2008 to 2014;<br />
b) The Lead Issue Manager, Oman Arab Bank has also had an independent valuation performed<br />
by a leading accounting firm, Ernst & Young, as required by the Capital Market Authority;<br />
A brief about Ernst & Young is given above:<br />
c) Analysis of current multiples on the MSM;<br />
d) Comparative analysis of selected peer <strong>com</strong>panies listed on regional stock exchanges.<br />
Based on an exhaustive analysis, the Lead Issue Manager has re<strong>com</strong>mended an offer price of<br />
Baisas 540 per share.<br />
The detailed cashflow analysis considered the following <strong>com</strong>panies separately:<br />
v Voltamp Energy LLC (“VE”)<br />
v Voltamp Transformers Oman LLC (“VTO”)<br />
v Voltamp Transformers Company Qatar (“VMCQ”)<br />
v Voltamp Power LLC (“VPO”)<br />
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The underlying reason is that there are a number of differences :<br />
v The <strong>com</strong>panies valued are different in size and sales volume.<br />
v Two <strong>com</strong>panies are existing, profit making <strong>com</strong>panies (VE and VTO), while two <strong>com</strong>panies<br />
are new:<br />
o VMCQ has started construction but has not yet started operations and will be operating<br />
in a different geography<br />
o VPO has not yet been formed<br />
Cash Flow Analysis<br />
The discounted cash flow (“DCF”) analysis has been the principal method used to value the<br />
Company. The DCF seeks to determine the net present value of projected free cash flows<br />
generated by the <strong>com</strong>pany for all providers of capital using the weighted average cost of capital<br />
(“WACC”) as the discount rate to reflect the time value of money and the predictability of the<br />
future cash flows streams. The average WACC applied to the 4 individual <strong>com</strong>panies ranges<br />
between 12.2% and 14.2%. The total free cash flows which <strong>com</strong>prise the annually forecasted<br />
free cash flows and the terminal value of the Company at the end of the forecast period are<br />
discounted back to the present using the WACC to obtain the enterprise value (i.e. the value of<br />
all cash flows generated by the <strong>com</strong>pany) and then, by deduction of net debt, the value of shares<br />
in the <strong>com</strong>pany (the “Equity Value”).<br />
DCF Advantages<br />
• The most theoretically sound valuation method;<br />
• Forward-looking analysis, based on future cash flow (less affected by accounting rules);<br />
allows expected operating strategy to be incorporated into the model;<br />
• Less influenced by volatility of markets and other market conditions;<br />
• Allows a valuation of the different <strong>com</strong>ponents of a business separately from the business.<br />
DCF Disadvantages<br />
• Valuation is highly sensitive to underlying assumptions for cash flows, terminal value<br />
calculation and discount rate.<br />
The key financial results and projections of the Company are given in the following table:<br />
The Company’s financial projections are based on realistic and achievable assumptions, with the<br />
following highlights:<br />
RO ʻ000<br />
Historic Projected<br />
Year ended December 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014<br />
In<strong>com</strong>e 5,472 7,993 10,694 14,334 20,398 27,847 36,925 46,138 54,724 62,074<br />
Gross Profit 1,190 1,745 3,691 4,149 5,681 6,902 9,836 12,794 15,702 17,919<br />
Net Profit 496 787 2,422 2,402 3,065 2,446 4,795 7,045 9,158 10,630<br />
Share Capital 500 1,100 3,500 5,000 5,000 5,000 5,000 5,000 5,000 5,000<br />
Shareholders' Funds 1,353 2,140 4,362 14,664 15,979 16,675 19,720 25,014 32,422 41,302<br />
Net Assets 1,353 2,140 4,362 14,664 15,979 16,675 19,720 25,014 32,422 41,302<br />
Key Ratios<br />
In<strong>com</strong>e Growth 20.02% 46.07% 33.79% 34.04% 42.31% 36.52% 32.60% 24.95% 18.61% 13.43%<br />
Gross Profit Margins 21.75% 21.83% 34.51% 28.95% 27.85% 24.79% 26.64% 27.73% 28.69% 28.87%<br />
Net Margins 9.06% 9.85% 22.65% 16.76% 15.03% 8.78% 12.99% 15.27% 16.73% 17.12%<br />
Nominal value of each share - Bzs 100<br />
Earnings per Share 99 72 69 48 61 49 96 141 183 213<br />
Book Value per Share 271 195 125 293 320 334 394 500 648 826<br />
94
Voltamp’s financial projections are based on the following key assumptions:<br />
Assumptions:<br />
• Sales are projected to increase from RO 14 million in 2008 to RO 62 million in 2014,<br />
representing a CAGR of 28% for the period. A key <strong>com</strong>ponent of this growth is attributable<br />
to the addition of Voltamp Manufacturing Co., Qatar (VMCQ) and Voltamp Power, Sohar<br />
(VPO). VMCQ is expected to generate revenue in 2008. VPO is expected to <strong>com</strong>mence<br />
generating revenue in 2010. By 2014, it is projected that VPO would contribute the largest<br />
share to Voltamp’s total revenue, with the contribution being around 41%.<br />
• Gross profit margins over the projection period are expected to stay broadly constant at<br />
between 27% and 29%. Gross profit margin for 2010 are projected to drop, essentially due<br />
to the <strong>com</strong>mencement of operations of VPO It is anticipated that gross profit margin would<br />
improve steadily as the manufacturing process be<strong>com</strong>es more efficient and as a result,<br />
the Company’s projected gross margin level by 2014 would be in line with the Company’s<br />
normalised level. A similar explanation is applicable to the trend in projected net profit<br />
margin.<br />
• While the gross profit margins in the projected financial statements are lower than that of<br />
2007 (35%), they are a strong improvement on overall historical trends (2004-2006: 19%-<br />
22%). Management is confident that they can achieve the projected gross margins and even<br />
better the projections.<br />
• Salaries represent approximately 60% of selling, administration and general expenses. It is<br />
anticipated that the Voltamp workforce will increase from approximately 180 at the end of<br />
2007 to over 550 by the end of 2014. The major increase will be as a result of VPO which is<br />
expected to require approximately 200 people. Omanisation in 2008 is expected to be more<br />
than 35% and projected to increase to 41% by 2014.<br />
Price Multiples<br />
The Offer price of Baisas 540 per Share (excluding Baisas 2 of Issue Expenses) results in the<br />
following price multiples:<br />
Ratios 2007 2008<br />
PER 7.83 11.25<br />
PBV 4.33 1.84<br />
PER: Price Earnings Ratio<br />
PBV: Price to Book Value Ratio<br />
Market Multiples<br />
Prices as of March 13, 2008 PER Multiples PBV Multiplies<br />
Banking & Investments Sector Index 19.48 3.45<br />
Industry Sector Index 15.50 3.82<br />
Service & Insurance Index 13.28 3.90<br />
MSM 30 General Index 16.59 3.63<br />
95
The Offer price of the Company’s Shares <strong>com</strong>pares favorably with the prevailing aggregate PE<br />
multiples of the MSM. While PBV appears to be high <strong>com</strong>pared to the market and sector PBV<br />
for 2007, however it should be noted that the share capital increased in 2007 due to the issue<br />
of new capital. The PBV drops thereafter to 1.84 in 2008, which should <strong>com</strong>pare favorably with<br />
the Market.<br />
Comparative Analysis<br />
The Company is a diversified multi-disciplinary <strong>com</strong>pany specialised in the manufacture of<br />
transformers and low voltage switchgear panels. In the absence of directly <strong>com</strong>parable <strong>com</strong>panies<br />
listed on the regional stock exchanges, the advisors have selected closely <strong>com</strong>parable <strong>com</strong>panies<br />
operating in the power sector in the region. A <strong>com</strong>parative analysis has been conducted for<br />
benchmarking the Offer pricing of the Company against its regional peer group.<br />
Name of the Company<br />
Oman<br />
Cables<br />
(Oman)<br />
2007<br />
El Nasr<br />
Transformers<br />
(Egypt)<br />
2007<br />
96<br />
Middle East<br />
Specialised<br />
Cables (KSA)<br />
2007<br />
Voltamp Energy<br />
SAOG (under<br />
transformation)<br />
2007<br />
Year 2007 2007 2007 2007<br />
Net Profit Margin % 6.96 9.00 16.13 23.00<br />
Operating margin % 11.49 10.12 19.12 35.00<br />
Return on Assets % 14.86 11.16 14.36 33.00<br />
Return on Equity % 72.58 24.49 34.55 56.00<br />
Share capital Mn. 8.970 2.795 32.8 3.500<br />
No of shares out standing Mn. 89.700 39.876 32.000 3.500<br />
Shareholders’ Equity Mn. 27.914 0.9576 44.537 4.362<br />
Net Profit Mn. 15.134 2.243 15.344 2.422<br />
EPS 0.169 0.0562 0.468 0.692<br />
Price as on 13-3-08 3.640 1.630 8.61 *5.40<br />
PE x 21.54 28.985 17.90 7.83<br />
PBV x 11.70 7.09 6.186 4.33<br />
Dividend Yield % 1.09 0.250 1.488 ---<br />
For the purpose of <strong>com</strong>parision, the financial figures are restated in Rial Omani. The following<br />
conversion rates have been used for the purpose.<br />
1 Kuwaiti Dinar = 1.41957 RO<br />
1 Saudi Riyal = 0.1025 RO<br />
1 Qatari Riyal = 0.1056 RO<br />
1 Egyptian Pound = 0.0701 RO<br />
* In 2007 the face value of the share was RO 1.000. Hence we have used the price of RO 5.4<br />
(equivalent to RO 0.540 after the change in face value to RO 0.100) for calculating the valuation<br />
ratios.
The Offer price of the Company’s shares results in a lower PE multiple as <strong>com</strong>pared to the<br />
average PE multiple of its peer group <strong>com</strong>panies. Even performance indicators like ROE and ROA<br />
<strong>com</strong>pare favourably with the sector peers. However, the investors should note that the difference<br />
may be due to certain industry specific factors, or particular financial status and prospects of<br />
the peer group <strong>com</strong>panies. Due to the difference in the nature of operations of the different<br />
<strong>com</strong>panies, there is no direct like-to-like <strong>com</strong>parision between the <strong>com</strong>panies mentioned above.<br />
The above data is indicative only and should be used accordingly. Please note that the data for<br />
Voltamp is corresponding to the data for consolidated accounts for Voltamp Group and for the<br />
year 2007 prior to the capital restructuring.<br />
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CHAPTER 15<br />
RELATED PARTY TRANSACTIONS<br />
Related Party Transactions (including Group/Associates)<br />
For the financial year ended 31 st December 2007 the following are classified as Related Party<br />
Transactions and brief details are given below:<br />
During the year the Group has entered into transactions with entities over which certain managers<br />
are able to exercise significant influence. The Group also entered into transactions with AAH and<br />
its associates. In the ordinary course of business, such related parties provide goods and render<br />
services to the Group. The Group also provides goods and renders services to such related<br />
parties. The Group considers that the terms of purchase, sale of goods and provision of services<br />
are <strong>com</strong>parable with those that could be obtained from third parties. The details are as follows:<br />
Related Party transaction for the year 2007<br />
For the financial year ended 31stDecember 2007<br />
the followingare classified as Related Party<br />
Transactions and brief details are given below<br />
Voltamp Transformers Oman LLC<br />
Name of the Party<br />
AL Maha Ceramics<br />
Premier Logistics<br />
Nature of<br />
Relationship Details of Transaction Amount(RO)<br />
98<br />
Common<br />
Director Sale of goods 53,300<br />
Common<br />
Director Purchase of goods/services 26,500<br />
Mustafa Sultan Science & Ind<br />
Common<br />
Director Purchase of goods/services 387<br />
Voltamp Manufacturing <strong>com</strong>pany Qatar Subsidary Technology transfer fees 61,904<br />
Voltamp ManufacturingCompany LLC<br />
Name of the Party<br />
AL Maha Ceramics<br />
AL Anwar Blanks<br />
Nature of<br />
Relationship Details of Transaction Amount(RO)<br />
Common<br />
Director Sale of goods 155,900<br />
Common<br />
Director Sale of goods 2,349<br />
Premier Logistics<br />
Common<br />
Director Purchase of goods/services 7,614<br />
Voltamp Manufacturing <strong>com</strong>pany Qatar Subsidary Technology transfer fees 15,476<br />
Voltamp ManufacturingCompany LLC<br />
(Consolidated)<br />
Name of the Party<br />
AL Maha Ceramics<br />
AL Anwar Blanks<br />
Premier Logistics<br />
Nature of<br />
Relationship Details of Transaction Amount(RO)<br />
Common<br />
Director Sale of goods 209,200<br />
Common<br />
Director Sale of goods 2,349<br />
Common<br />
Director Purchase of goods/services 34,114<br />
Mustafa Sultan Science & Ind<br />
Common<br />
Director Purchase of goods/services 387<br />
Voltamp Manufacturing <strong>com</strong>pany Qatar Subsidary Technology transfer fees 77,380
Related Party Transactions for the year 2007<br />
1 Revenue by sale<br />
of goods to<br />
2 Purchases of<br />
goods and<br />
services from<br />
RO 211,549 Almaha ceramics<br />
(RO 209,200)<br />
Al Anwar Blanks (RO 2349)<br />
RO 34,501 Premier logistics (RO 34,114)<br />
and Mustafa Sultan Science<br />
&Ind (RO 387)<br />
Related party transactions mentioned above are carried out in the ordinary course of business<br />
on arm’s length <strong>com</strong>mercial terms.<br />
99
CHAPTER 16<br />
RISK FACTORS AND MITIGANTS<br />
Prospective investors should carefully consider the risks described below in addition<br />
to all other information presented in this <strong>Prospectus</strong> before deciding to purchase<br />
any of the Offered Shares. Investors may note that the risks and mitigating factors<br />
mentioned below are the Founders’ and the Company’s management opinion based on<br />
their current knowledge and the information available with them. The actual risks and<br />
the impact of such risks could be materially different from that mentioned herein.<br />
1) Growth of Gulf Economy and Power Sector<br />
The Company’s business and revenue is derived from products & services it provides in<br />
the Sultanate of Oman, Qatar, other GCC countries and therefore the performance of the<br />
Company is linked to the economic environment of GCC countries and in particular Oman<br />
and Qatar. Any downtrend in the economy of GCC countries could impact the growth of the<br />
Company.<br />
2) Oil Price Risk and Geo Political Risk<br />
The GCC regional economies are heavily reliant on oil and accordingly, the future oil price<br />
scenario will determine to a large extent the economic conditions in the region. While oil<br />
prices are currently at historic highs and GCC economies have witnessed rapid growth<br />
on the back of high oil prices, any downturn in oil prices may have a dampening affect<br />
on regional growth and thereby on the growth of business. As the Company’s business<br />
emanates from the oil & gas and the Power & infrastructure sector, such a fall in oil prices<br />
may impact the Company’s business and growth.<br />
The political and international relationships/events in the region also significantly affect the<br />
regional economies and any increase in the political risks would affect the economic growth<br />
of the region in general.<br />
The Risks<br />
Demand risk<br />
The performance of the Company is dependent on the demand for distribution & power<br />
transformers, switchgear panels & related products. A fall in demand due to economic<br />
downtrend or any other factor could affect performance of the Company.<br />
Mitigant:<br />
In the short to medium term it is expected that the oil prices will move within the prevailing<br />
price band and development of infrastructure will continue to drive Oman’s economic<br />
growth. Given its track record and credentials, the Company believes it will continue to<br />
benefit from the economic growth of GCC region.<br />
Industry/sector concentration<br />
Sale of Transformers & switchgears constitute a substantial portion of the Company’s<br />
business. Thus, any downturn in the Power sector within GCC countries would affect the<br />
Company’s business adversely.<br />
100
Mitigant:<br />
Over the years, the power sector industry within GCC has been expanding steadily.<br />
Corresponding to Oman economy’s robust growth in excess of 6% per annum, the Company<br />
anticipates the power sector to continue growing in the foreseeable future.<br />
Failure to win Bids/Tenders<br />
The majority of the Company’s business <strong>com</strong>es from participation in and winning of tenders<br />
to supply transformers and switchgears. However, there is an inherent risk that the Company<br />
may not be able to win sufficient number of tenders due to <strong>com</strong>petition from either other<br />
Omani <strong>com</strong>panies or international transformer/switchgears manufacturing Companies.<br />
Mitigant:<br />
Based on a review of an excellent track record and proven expertise in its business, the<br />
Company is well placed for up<strong>com</strong>ing Transformer & LV Switchgear business in Oman and<br />
other GCC countries. The Company will continue bidding at <strong>com</strong>petitive levels that are<br />
economically viable for its business. Despite high cumulative rate of growth in the past, the<br />
Company has projected a fairly modest level of growth in the financial projections and is<br />
confident of achieving these levels.<br />
Cancellation of Projects/ Contracts<br />
Notwithstanding a robust order book on the basis of which the financial projections of<br />
the Company are drawn, any cancellation of such contracts would affect the Company<br />
adversely.<br />
Mitigant:<br />
The Company does not envisage any major cancellation of its ongoing orders as its clients<br />
are mainly Government organisations and reputed private organisations in Oman and other<br />
GCC countries.<br />
Competition Risk, including entry of new <strong>com</strong>petitors/international <strong>com</strong>petitors<br />
The Company faces <strong>com</strong>petition from existing as well as new entrants into the sector.<br />
Increased <strong>com</strong>petition could potentially lead to pressures on the growth of business and<br />
revenue, which would affect profitability of the Company.<br />
Mitigant:<br />
The Company believes that it is well placed to face <strong>com</strong>petition. The proven and enviable<br />
track record of supplying quality products in time has allowed the Company to build an<br />
excellent reputation. It is well regarded by the clients and has developed substantial expertise<br />
in manufacturing transformers and switchgears.<br />
Performance Risk<br />
While the Company has a robust order book of ongoing projects/contracts under execution,<br />
the success and profitability of the Company primarily depends on its ability to successfully<br />
execute these contracts. Any shortfall in supply will adversely impact the Company’s financial<br />
performance, reputation and future prospects. Failure to <strong>com</strong>plete contractual work within<br />
101
the designated time schedule could potentially lead to monetary penalties or <strong>com</strong>pensation<br />
to the client. Such failure may be on account of various factors including those on which the<br />
Company does not have any control, such as fluctuations in raw material prices especially<br />
copper, CRGO and transformer oil.<br />
Mitigant:<br />
The Company has a credible track record of timely delivery of transformers & switchgear, and<br />
at the same time maintaining quality and best practices relating to its products & services.<br />
It has focused on maintaining and developing its expertise, resources and technical skills to<br />
ensure that it is fully equipped to meet all its future <strong>com</strong>mitments. The Company’s production<br />
teams have extensive experience and use state of the art technology in manufacturing<br />
standard as well as special transformers / switchgears. Dedicated units ensure efficient<br />
mobilisation of manpower and technical resources, and the top management of the Company<br />
is closely involved in execution & monitoring. External factors that may lead to delays are<br />
considered at the initial planning stage, including contingencies for unforeseen situations.<br />
The Company has set-up hedging mechanism through which it covers price fluctuation risk<br />
on its key raw materials.<br />
Profitability Risk<br />
The Company’s profitability is directly linked to its input costs of material, labour, fuel, and<br />
any unexpected increase in these costs could potentially impact the Company’s profitability.<br />
Further, as a significant portion of the Company’s supply of products is based on fixed price<br />
contracts, any increase in input cost will adversely affect profitability.<br />
Mitigant:<br />
The Company factors such contingencies, while preparing its bids/tenders and normally<br />
enters into contracts with suppliers of the key inputs relating to the project. Moreover, in<br />
the event of cost increases on account of regulatory changes, the Company may negotiate<br />
with the client to suitably pass on such escalations. The Company also covers its risk of raw<br />
material price fluctuation through hedging mechanism.<br />
Raw Material Price fluctuation Risks<br />
The fluctuation of raw material costs such as copper and CRGO steel has a direct impact<br />
on products pricing.<br />
Mitigant:<br />
The Company is taking several measures to absorb fluctuation of raw material cost which<br />
includes restricting the time for which a quotation is valid and by using hedging mechanism<br />
to minimise the impact of raw material price fluctuations.<br />
Resources Risk<br />
The current boom in the power sector in the region has led to a scarcity of materials and<br />
skilled labour. Any constraint in the availability of raw materials and manpower could<br />
potentially result in delays in <strong>com</strong>pletion of contracts.<br />
Mitigant:<br />
The Company has entered into long term supply contracts for supply of key raw materials.<br />
102
Also, the Company over a period of time developed reliable vendor base who assure timely<br />
delivery of quality products. The Company also takes sufficient care to recruit required<br />
number of skilled and non-skilled labour well in advance. The Company’s employees friendly<br />
HR policy ensure that its’ employees continue with the Company for long time.<br />
Physical Hazard Risks<br />
The Company executes various <strong>com</strong>plex projects that expose its personnel and equipment<br />
to physical hazards. These may lead to loss of life and property through accidents in the<br />
workplace.<br />
Mitigant:<br />
The Company places extreme importance to the safety of its personnel and puts in place<br />
a number of safety measures in while manufacturing the goods or in the project execution.<br />
Further, there is on-going training of the personnel in various safety programmes. The Company<br />
also has a separate workshop that handles the maintenance required for the equipment so as<br />
to keep these in proper condition. Suitable insurance cover is also maintained.<br />
Receivables Risk<br />
Delays in realisation of receivables may lead to liquidity constraint that would increase the<br />
Company’s financial expenses and also hinder its ability to pay its suppliers, which in turn<br />
would affect its project implementation and performance.<br />
Mitigant:<br />
The Company monitors its receivables position closely and effectively follows up the recovery<br />
of its dues. Further, the Company’s financial position provides it the ability to withstand any<br />
temporary liquidity needs and the infusion of long term funding through this Issue will further<br />
strengthen the Company’s financial position.<br />
Delays in obtaining work visas<br />
Expatriate Manpower constitutes almost 65% of the Company’s work force, and their<br />
number is envisaged to increase further due to up<strong>com</strong>ing 132 kV project to manufacture<br />
power transformers at Sohar.<br />
The Company has to obtain work visas for these expatriate workers in a timely manner, and any<br />
delay in obtaining or refusal of work visas would severely hamper the Company’s growth.<br />
Mitigant:<br />
The Company effectively liaises with the Government authorities with the aim of facilitating<br />
its workforce requirements. Moreover, the Company is aiming through training programmes<br />
to induct additional Omani employees for meeting its Omanisation targets and reducing its<br />
need for expatriate personnel. The Government has always been supportive of <strong>com</strong>panies’<br />
growth requirements in Oman.<br />
Brand Risk;<br />
The <strong>com</strong>pany is sharing the brand name Voltamp with several group <strong>com</strong>panies which<br />
could affect its Business in the long term.<br />
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Mitigant:<br />
The <strong>com</strong>pany feels it is a remote possibility and that it will not affect their operations.<br />
Share Price Risk<br />
The Company’s Shares are to be listed for the first time on the Muscat Securities Market<br />
and accordingly there is no prior trading in the Company’s Shares that may provide a price<br />
history or trend. Further, the Company’s Shares are priced at a premium to its nominal<br />
value.<br />
Mitigant:<br />
The Promoters/Selling Shareholders, advisors and the Lead Issue Manager, based on the<br />
information provided by the Company, believe that the Company’s Shares are fairly priced<br />
in relation to the MSM and peer <strong>com</strong>panies share trading multiples. The rationale underlying<br />
the pricing of the Shares is set out in the Chapter on Valuation and Price Justification which<br />
demonstrates the validity of the proposed pricing.<br />
Liquidity Risk<br />
The Company’s Shares may not have adequate liquidity in the stock market after listing,<br />
and investors may not be able to sell their Shares easily post listing.<br />
All equity investments carry market risks to varying degrees. The value of any security can<br />
fall as well as rise depending on market conditions.<br />
Mitigant:<br />
The management of the Company believes that the pricing of the Shares in relation to the<br />
Company’s prospects has significant upside potential, which should lead to an adequate<br />
level of demand for its Shares post listing. Moreover, the public holding of 50% of the<br />
Company’s post-Issue share capital should also result in sufficient liquidity in the Shares in<br />
secondary market<br />
Government Authorisations, Permits and Approvals<br />
A number of authorisations, permits and approvals from various Government authorities are<br />
required to enable the Company to conduct its business in the Sultanate of Oman. There<br />
is no guarantee or assurance that these will be given or, if given, upon what terms and<br />
conditions.<br />
Mitigant:<br />
The management of the Company believes that it has all the requisite authorisations, permits<br />
and approvals to conduct its business in the Sultanate of Oman and has no reason to believe<br />
that any of the same will be withdrawn or not renewed within the next 12 months. The<br />
Government has always been supportive of <strong>com</strong>panies’ growth requirements in Oman.<br />
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CHAPTER 17<br />
Corporate Governance<br />
CORPORATE GOVERNANCE<br />
This section summarises the Company’s corporate structure effective as at the date of this<br />
<strong>Prospectus</strong> and the proposed Memorandum and Articles of Association. The description<br />
provided hereafter is only a summary and does not purport to give a <strong>com</strong>plete overview of the<br />
Memorandum and Articles of Association, nor of relevant provisions of Omani law or the CMA<br />
circulars, neither should it be considered as legal advice regarding these matters. A copy of the<br />
Memorandum and Articles of Association is available from the registered office of the Company<br />
or the CMA.<br />
Management<br />
Overview<br />
The respective roles and responsibilities of the management bodies of the Company are in large<br />
part governed by the previsions of the CCL, the Memorandum and Articles of Association and,<br />
after listing on the MSM, by the Code and circulars issued by the CMA in respect thereof.<br />
The management of strategic issues of the Company will be entrusted to the Board. The Board<br />
may perform all acts necessary or useful for achieving the objects of the Company, with the<br />
exception of those acts that are by law or the Memorandum and Articles of Association explicitly<br />
reserved for the shareholders general meeting.<br />
Board<br />
The Board shall consist of seven directors one of whom will be elected as the Chairman of<br />
the Board. The following are the main provisions set out in the Memorandum and Articles of<br />
Association, concerning the Board.<br />
The management of the Company shall be entrusted to a Board of Directors <strong>com</strong>prising of 7<br />
members from amongst the Shareholders or non-Shareholders provided that the nominated<br />
Shareholder holds 40,000 Shares which he may not dispose off throughout the term of his office<br />
to the extent that he no longer retains the status of a Shareholder in the Company. The term<br />
of office of a Director shall be for a maximum period of 3 years, subject to re-elected more<br />
than once. The period stipulated for election to the Board shall be calculated from the date<br />
of the Annual General Meeting in which the Director is elected to the date of the third Annual<br />
General Meeting following it. Where the date of such meeting exceeds the term of three years,<br />
the membership shall be extended by Law to the date on which the meeting was convened, save<br />
it shall not exceed the period stipulated in Article (120) of the Commercial Companies Law.<br />
Subject to the provisions of Article (95) of the Commercial Companies Law and without prejudice<br />
to the provisions of the Company’s Articles of Association, a person to be elected to the Board<br />
shall:<br />
i) be of a good reputation;<br />
ii) be at least 25 years old;<br />
ii) not be unable to discharge his debts to the Company to the Board of which he intends to be<br />
elected as a member;<br />
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iv) not have been declared insolvent or bankrupt unless his insolvency or bankruptcy has been<br />
terminated in accordance with the Law;<br />
v) not have been convicted of felony or an offence of dishonourment, unless he has been<br />
rehabilitated;<br />
vi) not be a member or a representative of a juristic person in four joint stock <strong>com</strong>panies whose<br />
head offices are in the Sultanate of Oman;<br />
vi) in case he is representing a juristic person, be authorised by such juristic person to stand for<br />
election;<br />
viii) not be a member of a board of directors in a public or closed joint stock <strong>com</strong>pany, the head<br />
office of which is the Sultanate of Oman, conducting business similar to the objectives of the<br />
Company; and<br />
ix) submit a declaration stating the number of his Shares if he is a Shareholder and undertaking<br />
not to dispose of such Shares, during the term of his office as a Director, in any manner<br />
which may cause him to cease being a Shareholder in the Company.<br />
Without any prejudice to the regulations of the Commercial Companies Law mentioned above,<br />
the following conditions will be fulfilled while forming the Board of Directors of the Company.<br />
1. The Board shall be <strong>com</strong>prised of a majority of non-executive directors. A non-executive<br />
director means “the member of the board who is not a whole time director (employee<br />
director) and/or does not draw any fixed monthly or annual salary from the Company”.<br />
2. A minimum of 1/3rd of the total strength of the Board (subject to a minimum of two) shall<br />
<strong>com</strong>prise of independent directors.<br />
3. He does not represent more than one legal person in the Board<br />
4. The roles of CEO/General Manager and Chairman shall not be <strong>com</strong>bined.<br />
The Members of the Board of Directors will be elected through a secret ballot by the Shareholders<br />
and each Shareholder will have the number of votes equivalent to the number of shares he owns<br />
and he will have the right to utilise it all for one candidate or divide it amongst the candidates<br />
of his choice by a vote card, the total number of votes should be equivalent to the number of<br />
shares he owns.<br />
The Membership which is done in violation of the above regulations will be null and void from<br />
the date of election and the Board of Directors of the Company will call a general body meeting<br />
to elect another Member within a maximum of one month from the date cancellation and the<br />
Company shall have the right to demand the <strong>com</strong>pensation for the losses from the Member and<br />
everyone who facilitated his entry into the elections.<br />
If the Member of the Board of Directors loses any of the conditions necessary for the Membership,<br />
he must inform the board about the same and his place will be considered vacant from the date<br />
of information, otherwise, his Membership will cease to exist from the date it was found out by<br />
the Company, without prejudice to his liability in accordance with law. And his place will be filled<br />
up in accordance with the regulations of the Article (98) of Commercial Companies Law.<br />
The Board of Directors will elect Chairman and Vice Chairman from its Members. The Vice<br />
Chairman will officiate the Chairman when the latter is absent.<br />
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The Chairman of the Board of Directors shall implement the resolution of the Board of<br />
Directors and shall conduct the regular business of the Company under the supervision<br />
and control of the Board of Directors as per the authority specified in the Company’s<br />
Article of Association and internal regulation.<br />
If the office of a director be<strong>com</strong>es vacant, the Board of Directors will appoint a temporary Member<br />
who is fulfilling all the conditions of Membership stipulated in the previous Articles. In other case,<br />
regulations of Article (98) of Commercial Companies Law no.4/74 with regard to vacant seats<br />
will be applied.<br />
The Board of Directors, in the cases other than approving the distribution of dividends, approving<br />
the balance sheet, profit and loss account, and reports of Board, the Auditing Committee and<br />
Auditors may pass resolutions without the need to convene a meeting of the Board of Directors<br />
if five members out of seven members of the Board approve same in writing.<br />
The General Meeting shall specify the annual remuneration and sitting fees of the Board<br />
and sub-<strong>com</strong>mittees at not more than 5% of the net profits of the year, after deducting the<br />
legal and optional reserves in accordance with Article (101) of the Commercial Companies<br />
Law and notionally calculating or distributing the dividends to Shareholders at not less<br />
than 5% of the capital. The maximum total over-all limit of entire remuneration paid by the<br />
Company shall be RO 200,000 (two hundred thousand), with a sub-ceiling of RO 10,000 (ten<br />
thousand) as sitting fee for each Director.<br />
Where the Company makes loss or less profits to the extent that notionally calculating or<br />
distributing dividends to Shareholders is not possible, remuneration and sitting fees shall<br />
be determined in accordance with the rules issued by the Capital Market Authority.<br />
If the capital of the Company has eroded, the Company may pay sitting fees to the members<br />
of the Board for the meetings held during the year or years following the erosion of capital in<br />
accordance with the limits prescribed by the concerned authority.<br />
Any Director, who, by request, performs special services, travels or resides abroad for any<br />
purpose of the Company may be paid an extra remuneration.<br />
The remuneration for the Board shall be divided amongst the Directors in such proportions and<br />
manner as they, by agreement, may determine, failing which the remuneration will be divided<br />
equally amongst the Board.<br />
The Board shall have full authority to perform all acts required for the management of the<br />
Company pursuant to its objects. Such authority shall not be limited or restricted except as<br />
provided by Law or by the Articles of Association of the Company, or the resolution of the<br />
General Meeting.<br />
The Board shall be responsible for the following:<br />
A. To approve the Company’s <strong>com</strong>mercial and financial policies together with its estimated<br />
budget with a view to achieving the objects of the Company and to maintain and promote<br />
the rights of its Shareholders;<br />
B. To develop, review and update necessary plans including strategic plans from time to time<br />
in order to put into operation the <strong>com</strong>pany’s objectives and carry out its activities in the light<br />
of the purpose underlying its establishment;<br />
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C. To adopt the Company’s disclosure measures and to follow up the implementation thereof<br />
in accordance with the disclosure rules and guidelines issued by the Capital Market<br />
Authority;<br />
D. To supervise the performance of the executive management and to ensure that the work<br />
proceeds in a manner which achieves the <strong>com</strong>pany’s objectives in the light of the purpose<br />
underlying its establishment;<br />
E. To provide accurate information to the Shareholders on the dates specified by the Capital<br />
Market Authority in the disclosure rules and guidelines;<br />
F. To appoint the Chief Executive Officer and/or the General Manager and/or the Deputy<br />
General Managers provided that neither of them shall be the Chairman of the Board.<br />
G. To appraise the performance of the employees mentioned in the previous item and to assess<br />
the work carried out by the <strong>com</strong>mittees formed by the board pursuant to Article (102) of the<br />
Commercial Companies law;<br />
H. To approve the financial statements related to the Company’s business and work results as<br />
submitted to the executive management to the board quarterly in away which reflects the<br />
exact financial position of the Company;<br />
I. To include in the annual report presented to the general meeting the reasons which justify<br />
the ability of the <strong>com</strong>pany to pursue its specified activities and the achievement of its<br />
objectives;<br />
J. To include in the financial statements a full statement of all amounts which a Director might<br />
have received during the course of each year including money paid to directors in their<br />
capacity as employees of the Company<br />
The Board shall introduce internal regulations for the regulation of the Company’s management,<br />
the business of the Company and the affairs of its employees within one year from the date<br />
of registration of the Company in the Commercial Register, in accordance with the rules<br />
issued by the Capital Market Authority.<br />
The Board shall not perform the following acts except if authorised to do so by the resolution<br />
of a General Meeting:<br />
a) Make gifts, except business gifts in small and customary amounts.<br />
b) Sell all or a substantial part of the Company’s assets.<br />
c) Mortgage or pledge the assets of the Company, except to secure debts of the Company<br />
incurred in the ordinary course of the Company’s business.<br />
d) Guarantee debts of third parties, except guarantees made in the ordinary course of<br />
business pursuant to the Company’s objects.<br />
The Board of Directors may appoint the Managing Director from the executive Members provided<br />
he is free for the Company’s works.<br />
The Company shall be bound by all acts performed by its board of directors, its chairman,<br />
managing director and all other executives, if any as long as they act in the name of the Company<br />
and within the scope of their powers.<br />
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It is not permitted for any of the Directors or main Company employees to utilise the information<br />
that reaches them in the capacity of their positions or jobs, for achieving any benefit for them or<br />
their minor children or for any of their relatives till the 4th degree, as a result of transaction in the<br />
Company shares. It is also not permitted for any of them who have direct or indirect interest with<br />
any authority who is involved in activities which aimed at influencing the prices of shares issued<br />
by the Company and the regulations of Article 109 and 110 of Company law will be applied in<br />
case of violation.<br />
A member of the board of directors or other related parties of the Company shall not have any<br />
direct or indirect interest in the transactions or contracts concluded by the Company for its<br />
account, except those concluded with them in accordance with the disclosure requirements of<br />
the CMA.<br />
The Members of the Board of Directors shall be liable to the Company, the shareholders and<br />
third parties for the damages caused by their acts in violation of the law and their acts which fall<br />
beyond the scope of their powers or by any fraud or negligence in the performance of their duties<br />
or by their failure to act as prudent men under certain circumstances.<br />
Any provisions or stipulations limiting the liability of the members of the Board of Directors shall<br />
be null and void, and the Company shall reimburse any director the costs and sums adjudged<br />
in any civil or criminal case brought against him as a result of his activities as a member of the<br />
Board of Directors of the Company in the event that final judgment in such case shall absolve<br />
the director of liability.<br />
The Company may institute an action against any director of the Company it deems liable for<br />
damages that have <strong>com</strong>e upon it. The board of directors or the ordinary general meeting shall<br />
take a decision appointing a person to pursue the case on behalf of the Company and authorizing<br />
him to pay costs of the case from the funds of the <strong>com</strong>pany. Any shareholder may propose suing<br />
the members of the Board of Directors, and if the ordinary general meeting does not adopt his<br />
proposal, he may himself file the case on behalf of the Company. And the case is successful,<br />
such shareholder shall be reimbursed the costs and expenses of the case out of the sums<br />
adjudged and the balance shall be paid to the Company.<br />
It is not permitted to file a lawsuit on the Members of the Board of Directors or their heirs regarding<br />
the works they have done while discharging their duties, except in the case when the case is<br />
filed within 5 years from the date of holding the general body, wherein the Board of Directors<br />
submitted the accounts of the Company for the period including the act or the short<strong>com</strong>ing<br />
which is the reason for the <strong>com</strong>plaint. This period shall not apply to suit filed by the CMA.<br />
First Board of Directors<br />
A constitutive General Meeting of the Company is to be held after finalisation of the allotment<br />
of Shares and Shareholders attending the meeting may vote and elect the new Board of<br />
Directors.<br />
Announcement of the date and location for such shareholders general meeting shall be made in<br />
the major newspapers in Oman.<br />
Internal Regulations<br />
In accordance with the provisions set out in Article (68) of the CCL, the Company is required to<br />
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lay down Internal Regulations for regulating the management of the Company, its business and<br />
personnel affairs through its Board of Directors, within one year from the date of transformation of<br />
the Company with the Commercial Registrar. These regulations shall cover at least the following<br />
apart form the rules laid down by the Capital Market Authority:<br />
1) Organisational Structure of the Company stating therein the responsibilities related to the<br />
various posts of the Company and the reporting structure/ procedures.<br />
2) Specifying the extent of the authority vested with each post with regard to approval of the<br />
financial expenditure.<br />
3) Fixing the allowance for the meetings, remuneration and other privileges as prescribed in<br />
respect of the members of the Board of Directors and Committees constituted under its<br />
auspices and the basis for their calculation.<br />
4) The policies related to the Purchases and Service Contracts.<br />
5) The minimum level of information required to be submitted to the Board of Directors.<br />
6) The authorities, duties and responsibilities relevant to the executive management and<br />
sub<strong>com</strong>mittees constituted under the auspices of the Board of Directors of the Company.<br />
7) The policies related to Human Resources including the salaries, appointment, development,<br />
training, promotions and termination of the services etc., covering other relevant aspects.<br />
8) Investment Policies of the Company.<br />
9) Policies for Related Parties Transactions.<br />
10) Policies and measures for submission of material information in a transparent manner, to<br />
the Capital Market Authority and the Muscat Securities Market within the specified time<br />
including a definition of “material information”.<br />
11) Any other regulations that the Board of Directors of the Company may deem necessary to<br />
add for achieving adequate level of Corporate Governance.<br />
It may be mentioned that the Company has already put in place a number of these policies. The<br />
Company shall appropriately review the same in the light of its transformation into an SAOG<br />
Company and also formulate such additional policies and procedures that may be required in<br />
this context within the stipulated time period.<br />
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CHAPTER 18<br />
RIGHTS AND LIABILITIES OF SHAREHOLDERS<br />
I. Shareholder’s Liabilities:<br />
The liability of a Shareholder shall be limited to the payment of the value of the Shares he<br />
/ she / it subscribes. He / She / It shall not be liable for the debts of the Company except<br />
within the limit of the nominal value of the Shares subscribed for.<br />
Any person whose shareholding, along with his minor children’s shareholding, reaches 10%<br />
or more of the Company’s share capital, must inform the CMA about the same through<br />
a written <strong>com</strong>munication. Further he shall inform the CMA regarding any transaction or<br />
dealing which leads to the increase of this percentage immediately after it happens.<br />
No single person or related persons up to second degree shall hold 25% or more of the<br />
shares of a Joint Stock Company whose shares are offered for public subscription, save in<br />
accordance with the holding rules set out by the CMA.<br />
All the shares of the Company shall have the same nominal value, and a share shall neither<br />
be divided nor shall it be owned by more than one person except when such ownership is<br />
by inheritance provided that the heirs are represented by the person whose name <strong>com</strong>es first<br />
in the register and the owners of the share shall be responsible severally and jointly for the<br />
liabilities arising from such ownership. However, the transfer of the share requires endorsement<br />
by all joint owners.<br />
The shares allotted to the Employees and the Managers shall be subject to the Lock-in Period.<br />
II. Shareholder’s Rights<br />
All Shares of a Joint Stock Company shall enjoy equal and inherent rights vested in their<br />
ownership. which, in accordance with the CCL are:<br />
1. The right to receive dividends declared by the general meeting.<br />
2. Preference rights to subscribe for new shares.<br />
3. The right to share in the distribution of the assets of the Company in the event of<br />
liquidation.<br />
4. The right to assign shares in accordance with the Law.<br />
5. The right to inspect the Balance Sheet, Profit & Loss Statement, and Shareholders’<br />
Register of the Company.<br />
6. The right to receive notice of and to participate and vote in all general meetings either<br />
personally or by proxy (one vote for each Ordinary Share).<br />
7. The right to apply for the annulment of any resolution adopted by the general meeting<br />
or the Board if such resolution(s) are contrary to the prevailing laws, the Memorandum<br />
and Articles of Association or other internal regulations of the Company.<br />
8. The right to institute legal actions on behalf of the Company and its Shareholders against<br />
the Board or auditors thereof, pursuant to the CCL.<br />
9. The CMA may, upon material reasons being raised by Shareholders who own at least<br />
5% of the Shares of the Company, suspend resolutions passed by the general meeting<br />
of the Company which are passed in favour or against holders of any category of<br />
Shareholders or in the interests of the members of the Board or others.<br />
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III. Reports & Statements:<br />
- The Board shall prepare un-audited Quarterly Financial Statements for the first, second and<br />
third quarter of each financial year. It shall also prepare an Annual Report within two months<br />
from the end of the financial year <strong>com</strong>prising of the audited Balance Sheet, Report of the<br />
Board, Report on the discussions held by the Board and their analysis and Report on the<br />
Organization & Management of the Company.<br />
- The un-audited Quarterly Financial Statements shall be forwarded to the Information Centre<br />
of Muscat Securities Market within thirty days from the end of each quarter or any other legal<br />
period prescribed by the disclosure rules and conditions issued by CMA through Electronic<br />
Transmission System of the Centre. The said Centre shall also be provided with two copies<br />
duly endorsed by the Board. The Company shall also have it published within the said<br />
period. Whereas, the audited Balance Sheet shall be forwarded, submitted and published<br />
two weeks in advance of convening of the Annual Ordinary General Meeting.<br />
- The Board shall extend invitation to the Shareholders for the Annual Ordinary General<br />
Meeting within three months from date of ending of the financial year. The agenda for the<br />
Annual General Meeting shall include the following:<br />
1. To study and approve of the Report of the Board.<br />
2. To study and approve of the Report on the Management and Organization.<br />
3. To study and approve of the Auditors Report on the Balance Sheet, Profit & Loss<br />
Account.<br />
4. To review the report on declaration of dividend. However, such dividend shall be<br />
distributed only from the net Profit generated or from the Special Reserves Accounts<br />
subject always to the provisions set out in Article 106 of the CCL.<br />
5. To review the report on the sitting allowance for the meetings of the members of Board<br />
and <strong>com</strong>mittees constituted under it for the forth<strong>com</strong>ing financial year and approve the<br />
same.<br />
6. To review the annual remuneration (if any) of the members of the Board for the forth<strong>com</strong>ing<br />
financial year.<br />
7. To look into the transparency of any transactions held with the related parties during the<br />
previous financial year (if any).<br />
8. To make a note of any expected transactions with the related parties during the next<br />
financial year (if any).<br />
9. To appoint Auditors for the next financial year and fix their fees, taking into consideration<br />
the provisions laid down in the Law.<br />
The Board may convene the general meeting at any time and such meeting shall be<br />
convened whenever required by the law or the Memorandum and Articles of Association, or<br />
upon request of one or more shareholders who represent at least 25% of the capital of the<br />
Company.<br />
The Board shall establish the agenda of the general meeting. If the meeting is convened<br />
by the auditors, the agenda shall then be established by them. The Board, or the Auditors<br />
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if necessary, shall include in the agenda any proposal put forward by shareholders who<br />
represent more than 10% of the capital of the <strong>com</strong>pany provided that such proposal is<br />
submitted for inclusion in the agenda at least one month before the date of the meeting.<br />
The resolutions of the ordinary meeting shall be void unless the meeting is attended by<br />
shareholders or their proxies who represent at least half the capital of the <strong>com</strong>pany. If such<br />
a quorum is not formed, a second meeting shall be called to discuss the same agenda. The<br />
second ordinary meeting shall be notified to the shareholders in the same manner as the<br />
first meeting, at least one week prior to the date set for the second meeting. The resolution<br />
of the meeting shall be valid regardless of the number of shares represented, provided that<br />
such meeting is held within one month from the date of the first meeting. The resolution of<br />
the ordinary general meeting shall be adopted by relative majority of the vote.<br />
An Extraordinary General Meeting shall be convened to Consider and decide all matters<br />
which such meeting is specifically authorised to settle in accordance with the law or the<br />
Company’s Articles of Association.<br />
Any amendments to the Memorandum and Articles of Association shall not be valid unless<br />
approved by the Director General of Commerce and registered with the Commercial<br />
Registrar, Ministry of Commerce & Industry.<br />
The resolution of the extraordinary general meeting shall not be valid unless the meeting is<br />
attended by shareholders and proxies representing at least three-quarters of the Company’s<br />
capital. Failing such a quorum, a second meeting shall be convened to discuss the same<br />
agenda. The shareholders shall be notified of the second extraordinary general meeting in<br />
the same manner as the first extraordinary general meeting, at least two weeks prior to the<br />
date set for the second meeting. The resolutions of the second meeting shall be valid if the<br />
meeting is attended by shareholders or proxies representing more than half of the Company’s<br />
capital, provided such meeting is held within six weeks of the date of the first meeting.<br />
The resolutions of the extraordinary general meeting shall be adopted by a majority of threequarter<br />
of the votes cast in respect of a certain resolution, provided such resolution shall<br />
always receive votes representing more than fifty percent of the Company’s capital.<br />
Any Shareholder or any interested party may refer to the Commercial Court (the <strong>com</strong>petent<br />
department) within five years from the date on which the meeting was held, to decide on<br />
nullification of any resolution if adopted during the meeting in violation of the law or the<br />
provisions of the Company’s Articles of Association or its regulations, if any, or if adopted by<br />
fraud or abuse of authority by any person.<br />
IV. Transfer of ownership of the Shares:<br />
The transfer of ownership of the Shares shall take place through disposition in accordance<br />
with the instructions laid down by Muscat Securities Market. The transfer of ownership shall<br />
also be entered in the Shareholders’ register in the Company and which shall include the<br />
Shareholder’s name, his nationality, domicile and the number of Shares he holds and their<br />
numbers.<br />
The shareholding of each individual shall not exceed the maximum limit prescribed and<br />
provided for in the CCL and Capital Market Law respectively, unless the necessary approvals<br />
are secured.<br />
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V. Constitutive General Meeting:<br />
- The calling of the Constitutive General Meeting of the Subscribers shall be treated as one<br />
of the requirements for the incorporation of a Joint Stock Company. This General Meeting<br />
shall look into all the measures that have been taken for incorporation of the Company<br />
under convening of the meeting. The Promoters shall, within thirty days from expiry of the<br />
Subscription invite the Subscribers to this meeting. The invitation and calling of this meeting<br />
shall be in accordance with the provisions set out in the CCL and the Company’s Articles of<br />
Association governing Extra Ordinary General Meetings.<br />
- The Promoters shall submit to the Constitutive General Meeting a report, together with<br />
supporting documents, including sufficient information on all the actions taken, the expenses<br />
incurred for incorporation of the Company, and on all the obligations <strong>com</strong>mitted by the<br />
Promoters on behalf of the Company that is under formation, together with the supporting<br />
documents.<br />
The Constitutive General Meeting shall have the authority to look into and pass resolution in<br />
respect of the following matters:<br />
1. To ratify the Report submitted by the Promoters with regard to the process of<br />
incorporation of the Company and expenses incurred by them. The Promoters shall be<br />
liable severally and jointly for the expenses incurred and <strong>com</strong>mitments made on behalf<br />
of the Company under transformation which have not been ratified by the Constitutive<br />
General Meeting.<br />
2. To verify and confirm whether the necessary conditions governing the incorporation of<br />
the Company have been <strong>com</strong>plied with.<br />
3. To approve the Memorandum & Articles of Association of the Company. The Meeting<br />
may amend the Memorandum & Articles of Association of the Company, however, such<br />
amendment(s) shall not be<strong>com</strong>e valid and operative until approved by the Director<br />
General of Commerce.<br />
4. To elect the members of the first Board of Directors. This Board shall be responsible<br />
for the registration of the Company with the Commercial Registrar within one month<br />
from the date of the Constitutive General Meeting. The members of the Board shall<br />
be liable severally and jointly for the damages arising from the failure to carry out this<br />
registration.<br />
5. To appoint the first External Auditors of the Company and fix their fees.<br />
The Expected Date of the Constitutive General Meeting (CGM): The CGM will be with<br />
in 30 days after the end of <strong>IPO</strong> and after finalising the share allotment. The share holders in<br />
the CGM will elect the first Board for the Company. The date for the Constitutive General<br />
Meeting will be announced in the Omani Newspapers.<br />
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CHAPTER 19<br />
CONDITIONS AND PROCEDURES FOR THE SUBSCRIPTION OF THE SHARES<br />
I. The subscription for the Offered Shares shall be open to Omanis, Non Omanis, Individuals,<br />
Non Individuals and Corporate Bodies/Institutions/Investment Funds/Pension Funds.<br />
Likewise, it shall be open to Omani as well as non-Omani corporates, institutions,<br />
investment funds, and pension funds which have their accounts with Muscat Depository<br />
& Securities Registration Co., as on the date and / or during the subscription period. It is<br />
pertinent to mention here that it would be permissible for Foreign Nationals/Corporates to<br />
own shares of the Company once listed with Muscat Depository & Securities Registration<br />
Co., to an extent of 70% of the Share Capital, in accordance with the Articles of Association<br />
of the Company.<br />
II. Prohibitions with regard to the Applications for subscription:<br />
The subscribers to the Shares issued as mentioned hereunder shall not be permitted to<br />
participate in the subscription:<br />
1) Sole Proprietorship Establishments. Whereas, the owner of a Sole Proprietorship<br />
Establishment would be required to subscribe in his name only if he so desires.<br />
2) Trust Accounts. Whereas, the Brokerage Companies would be required to address the<br />
Customers for the subscription in their personal names.<br />
3) Multiple Applications for the subscription. Whereas, it is prohibited for any person to<br />
submit more than one application for subscription in his personal name.<br />
4) Applications made under joint names, including the applications made in the name<br />
of legal heirs. Whereas, they or their legal attorney would be required to apply in their<br />
personal names.<br />
All such applications shall be rejected without contacting the applicant.<br />
III. Subscription on behalf of Minor Children:<br />
1) For the purpose of this Issue, any person born after (01/05/1990) shall be treated as<br />
Minor.<br />
2) Only a father may subscribe on behalf of his Minor children.<br />
3) If the subscription is made on behalf of a Minor by any person other than the father,<br />
he shall be required to attach a valid Sharia (Legal) Power of Attorney issued by the<br />
<strong>com</strong>petent authorities authorising him to deal in the funds of the Minor through sale,<br />
purchase and investment.<br />
IV. Shareholder’s (investor’s) Number with Muscat Depository & Securities Registration<br />
Co. (SAOC) (“MDSRC”)<br />
1) Any person who desires to subscribe to the Offered Shares has to have an account with<br />
the MDSRC as per its working form, which may be obtained from its Head Office or its<br />
site on the World Wide Web or from brokerage <strong>com</strong>panies. Each subscriber may open<br />
an account through the following outlets:<br />
- Head Office of the MDSRC based on the ground floor of the building of the CMA, Commercial<br />
Business District.<br />
- Branch of Muscat Securities Market based in Salalah.<br />
115
- Office of the Brokerage Companies that are licensed by Muscat Securities Market.<br />
- By fax no. 24817491.<br />
2) With regard to the investors who presently hold accounts with the MDSRC, they shall<br />
be required, before the subscription, to confirm whether their accounts contain all their<br />
basic particulars, those being the name in full, postal address, Civil Status No., (as<br />
mentioned in the Personal Card (Civil) or Civil No., furnished in the Passport or Civil No.,<br />
or as provided for in the new Birth Certificate) and details of the Bank Account. Every<br />
shareholder may update his particulars through the outlets mentioned above.<br />
3) All correspondence, including allocation notices and dividend cheques, shall be sent to<br />
the subscriber at the address recorded at the MDSRC. Therefore, all subscribers shall<br />
verify the correctness of such addresses.<br />
4) Each subscriber shall be required, after opening the account or updating his particulars,<br />
to secure from the MDRSC, the right number so as to have it registered in the Application<br />
for the subscription. The investor himself shall be responsible for verification of the<br />
number furnished in the Application for the subscription. The applications not bearing<br />
the correct Account Numbers shall be rejected without contacting the subscriber.<br />
For more information on these Procedures, you are requested to contact:<br />
Muscat Depository & Securities Registration Co., SAOC<br />
Tel. 24814827 - Fax. 24817491<br />
http: // www.csdoman.co.om/<br />
Subscription Period:<br />
The subscription shall <strong>com</strong>mence on May 5, 2008, and end on June 3, 2008 with the end of the<br />
official working hours of the Banks.<br />
Minimum Limit of Public subscription:<br />
The number of shares subscribed by each Person shall not be less than 1000 Shares and in<br />
multiples of 100 thereafter. For juristic persons, corporates, investment funds, and pension funds,<br />
Shares subscribed to shall not be less than 10,100 shares and in multiples of 100 thereafter.<br />
Maximum Limit of Public subscription:<br />
It shall not be permissible for any person, himself and his Minor children, and for any juristic<br />
person to subscribe for more than 10% of the total issue size. In other words, the maximum limit<br />
for one subscriber and his Minor children shall not exceed 2,500,000 (two million, five hundred<br />
thousand) Shares.<br />
For the purpose of calculation of this percentage the application for the subscription of the father<br />
(or guardian) shall be merged with the applications of the Minor children. If the volume of the<br />
shares subscribed exceeds the said percentage, the shares registered under each application<br />
shall be reduced proportionately before making the allotment.<br />
Particulars of the Bank Account:<br />
1) Each applicant shall be required to furnish the particulars of his bank account. The applicant<br />
116
shall not use the bank account number of any other person except in case of Minor<br />
children.<br />
2) If the bank account is different from the Bank receiving the subscription, the applicant shall<br />
be required to submit a document in evidence of correctness of the bank account particulars<br />
as provided for in the application. This can be done by submitting any document from the<br />
applicant’s bank which shows the account name and number Such document may be a<br />
bank statement or a letter or any document issued by the said bank containing the said<br />
information. The applicant shall ensure that the evidence submitted is clearly legible and<br />
contains the full name and number of the account holder. For the sake of clarification, no<br />
proof of the bank account is required if the bank account is with the bank through which the<br />
subscription is submitted.<br />
3) In accordance with the instructions issued by the CMA, the particulars of the bank account<br />
referred to above shall be recorded in the Registers of the MDSRC. This shall be used in<br />
the event of a transfer of any excess funds of the subscriptionor the crediting of a future<br />
dividends . An applicant who already has his bank account registered with the Registers of<br />
the MDSRC, the bank account number provided for in the application for the subscription<br />
will be used only for the purpose of a transfer of any excess sums.<br />
4) The application for subscription containing the bank account number of a person other than<br />
the applicant shall be rejected, with the exception of applications made on behalf of Minor<br />
children that contain bank account particulars of their fathers.<br />
Documentation Required:<br />
1) Proof of Bank Account: In case the bank account is different from the bank to which the<br />
application is submitted, the proof of such account should be attached to the subscription<br />
form.<br />
2) Authorised Signatory: In the case a person is signing the application form on behalf of<br />
any other person in his capacity as the authorised signatory (with the exception of the<br />
subscription made by a father on behalf of his Minor children), a copy of adequate legal<br />
documentation should be submitted; Such documentation should not have expired and<br />
should be registered with a <strong>com</strong>petent legal authority.<br />
Mode of subscription:<br />
1) The subscriber shall be responsible for satisfying all the particulars and the validity of the<br />
information in the application. Banks receiving the subscription have been instructed to<br />
accept the applications for subscription satisfying all the requirements of the application<br />
forms and the <strong>Prospectus</strong>.<br />
2) The subscriber, before filling the application form, shall read the <strong>Prospectus</strong> and the<br />
subscription terms and conditions.<br />
3) The subscriber shall fill in the application form including the subscriber number with the<br />
MDRSC, Civil Number/Passport Number, and Date of Birth in the case of Minor children.<br />
4) The subscriber shall submit the application form to one of the banks receiving the subscription<br />
referred to in the <strong>Prospectus</strong> and pay the value of the shares as specified in the <strong>Prospectus</strong><br />
and attaching the identification documents.<br />
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5) Where the value of the shares is paid by cheque or remittance, it shall be in the name of<br />
“Voltamp Energy SAOG (under transformation) (public subscription)”.<br />
Banks receiving the subscription:<br />
The applications for subscription shall be accepted by one of the following <strong>com</strong>mercial banks<br />
during the official working hours only:<br />
1. Bank Muscat SAOG<br />
2. Oman Arab Bank SAOC<br />
3. Bank Dhofar SAOG<br />
The bank receiving the subscription shall accept the application for subscription after confirmation<br />
of <strong>com</strong>pliance of the procedure and subject matter in line with the requirements as provided for<br />
in the <strong>Prospectus</strong>. The bank must instruct the subscribers to <strong>com</strong>ply and fulfill any requirement<br />
that may appear in the application submitted.<br />
The subscriber shall be responsible for submission of his application for subscription to one of<br />
the banks receiving the subscription before closing of the period for subscription. In this regard,<br />
the bank shall have the right not to accept any application for subscription that reaches it after<br />
the official working hours on the closing date of the period for subscription.<br />
Acceptance of the Applications for subscription:<br />
The banks receiving the subscription shall not accept applications for subscription under the<br />
following circumstances:<br />
1) If the application is not signed by the applicant.<br />
2) If the subscription price for the Offered Shares applied for is not paid pursuant to the<br />
conditions provided for in the <strong>Prospectus</strong>.<br />
3) If the cheque through which payment was made is returned dishonored.<br />
4) If the application does not have the number registered with the MDRSC.<br />
5) If the application is submitted under the joint names.<br />
6) If the subscriber is a sole proprietorship establishment or trust account.<br />
7) If the shareholder number is incorrect.<br />
8) If the subscriber submits more than one application in the same name, all of them shall be<br />
rejected.<br />
9) If the supporting documents referred to in the <strong>Prospectus</strong> are not enclosed with the<br />
application.<br />
10) If the application does not contain the bank account of the subscriber.<br />
11) If the bank account details of the subscriber in the application are incorrect.<br />
12) If the bank account details are not relevant to the subscriber, with the exception of applications<br />
submitted in the name of Minor children, who are allowed to make use of the bank account<br />
details held by their fathers.<br />
13) If any legal or regulatory requirements are not met.<br />
118
If the bank observes, after receipt of the application and before expiry of the time schedule<br />
prescribed for handing over of the applications to the Lead Issue Manager, that the application<br />
has not <strong>com</strong>plied with the legal requirements as provided for in the <strong>Prospectus</strong>, due effort shall<br />
be taken to contact the subscriber so as to correct the mistake detected. In the case of failure to<br />
have the mistake corrected within the period referred to, the bank receiving the subscription shall<br />
return the application for the subscription together with the subscription value before expiry of<br />
the period specified for handing over of the applications to the Lead Issue Manager.<br />
Refusal of subscription Applications:<br />
The Lead Issue Manager may reject any applications under any of the conditions referred to above,<br />
after securing the approval of the CMA. The Lead Issue Manager shall submit a <strong>com</strong>prehensive<br />
report to the CMA indicating the reasons behind such rejection.<br />
Enquiry & Complaints:<br />
The subscribers who intend to seek clarification or file <strong>com</strong>plaints with regard to the issues related<br />
to the allotment or rejected applications or refund of the funds in excess of the subscription may<br />
contact the branch of the bank where the subscription was made. In case from the enquiry is not<br />
resolved by the branch, the subscriber should contact the person concerned as hereunder:<br />
Bank Person in Charge Postal Address Phone No. Fax No. Email<br />
Bank<br />
Muscat<br />
SAOG<br />
Oman<br />
Arab<br />
Bank<br />
SAOC<br />
Bank<br />
Dhofar<br />
SAOG<br />
Talal Abdul Hamid<br />
Al Zadjali<br />
(Wholesale Banking<br />
back office)<br />
PO Box 134,<br />
Ruwi, PC112,<br />
Sultanate of<br />
Oman<br />
Osama Qinna PO Box 2010,<br />
Ruwi 112,<br />
Muscat, Oman<br />
Mr. Adil Abdullah<br />
A. Razaq Al Hindi<br />
PO Box<br />
1507, Ruwi,<br />
Postal Code<br />
112,Sultanate<br />
of Oman<br />
119<br />
24768213/14 24788864 tlzadjali@<br />
bankmuscat.<br />
<strong>com</strong><br />
24762324 24793953 o.qinna@<br />
oabinvest.<strong>com</strong><br />
24795517 24791131 AARazaq@<br />
bankdhofar.<strong>com</strong><br />
If the bank receiving the subscription fails to resolve the enquiry/<strong>com</strong>plaint, it shall refer the<br />
subject matter to the Lead Issue Manager and inform subscriber of the results. The subscriber<br />
should remain in contact only with the Bank receiving the subscription .<br />
Overall Offering Split and Allotment Procedures:<br />
In case of over-subscription, the offering of 25,000,000 Ordinary Shares shall be split among the<br />
eligible investor groups, in the following portions:<br />
Category I – Individuals<br />
17,500,000 (seventeen million five hundred thousand) shares, being 70% of the Offered Shares<br />
for Individual applicants applying for a maximum of 10,000 (Ten Thousand) shares. Distribution<br />
of shares shall be on pro-rata basis. Individual Investors shall <strong>com</strong>prise of only natural persons.
Category II – Non Individual Investors<br />
6,250,000 (six million two hundred fifty thousand) shares, being 25% of the Offered Shares for<br />
both natural and juristic persons including Individual applicants applying for more than 10,000<br />
shares and for Corporate bodies/ Institutions / Investment Funds. Distribution of shares will be<br />
on pro-rata basis.<br />
Category III – Employees and Managers<br />
1,000,000 (one million) shares, being 4% of the Offered Shares for employees up to a maximum<br />
value equivalent to 19 times of their basic salary on firm allotment basis.<br />
250,000 (two hundred fifty thousand) shares, being 1% of the Offered Shares for Managers upto<br />
maximum of 50,000 shares each Manager of five Managers on firm allotment basis.<br />
Any undersubcription in Category I shall be added to shares allocated for Category II and vice<br />
versa. Any undersubcription in Category III shall be added to Category I (Retail Investors).<br />
Allotment for Foreign Nationals will be limited to a maximum of 70% of the total Shares offered.<br />
Foreign Corporate Body/ Institution/ Investment Fund is defined as one which is not incorporated<br />
in the Sultanate of Oman.<br />
The final allocation on the above basis will be decided by the Lead Issue Manager and the<br />
Company in consultation with the CMA.<br />
Basis for Undersubscribed Shares:<br />
In case of a shortfall in subscription the shortfall will be subscribed by the Underwriters.<br />
The following table shows expected time schedule for <strong>com</strong>pletion of the subscription<br />
procedures:<br />
Procedure Date<br />
Commencement of subscription 5/5/2008<br />
Closing of subscription 3/6/2008<br />
Due Date for the Issue Manager to receive the subscription Applications and 13/6/2008<br />
Final Registers of the subscribers from the Banks receiving the subscription as<br />
per the understanding arrived at<br />
Notifying the Capital Market Authority of the out<strong>com</strong>e of the subscription and 18/6/2008<br />
Proposal with regard to the allotment<br />
Approval of the Capital Market Authority with regard to the proposal for the<br />
allotment<br />
120<br />
21/6/2008<br />
Commencement of refund and dispatch of the notices regarding allotment and<br />
Constitutive General Meeting Invitation<br />
22/6/2008<br />
Constitutive General Meeting 3/7/2008<br />
Registering the <strong>com</strong>pany at the Commercial Registrar 13/7/2008<br />
Listing of the shares with Muscat Securities Market 16/7/2008
Listing & Trading of the shares of the Company:<br />
The Offered Shares shall be listed on the Muscat Securities Market in accordance with the listing<br />
rules and regulations currently in force.<br />
The expected date of listing in the above table is subject to the <strong>com</strong>pletion of legal quorum of<br />
the Constitutive General Meeting for the first time.<br />
Responsibilities & Obligations:<br />
The Lead Issue Manager, Banks receiving the subscription and MDRSC shall abide by the<br />
responsibilities and functions specified pursuant to the instructions and regulations laid down by<br />
the CMA. The said bodies shall also abide by any other responsibilities that are provided for in<br />
the agreements entered into between them and the Company.<br />
The Parties concerned shall be required to take remedial measures with regard to the damages<br />
arising from any negligence <strong>com</strong>mitted in the performance of the functions and responsibilities<br />
assigned to them. The Lead Issue Manager shall be the body responsible before the surveillance<br />
authorities in taking suitable steps and measures for repairing such damages.<br />
Allotment Letters and Refund of Money;<br />
The Lead Issue Manager will arrange to allot the shares to the applicants with in 15 days after the<br />
end of <strong>IPO</strong> and the excess money will be refunded to the eligible applicants. The Issue Manager<br />
will send allotment letters to the applicants who have been allotted shares as per the addresses<br />
registered with the MDSRC<br />
121
CHAPTER 20<br />
I. Company issuing the Securities:<br />
UNDERTAKINGS<br />
The Promoters/Selling Shareholders jointly and severally offer undertaking that:<br />
1) the information provided in this <strong>Prospectus</strong> is true and <strong>com</strong>plete<br />
2) due diligence has been taken to ensure that no material information has been omitted, the<br />
omission of which would render this <strong>Prospectus</strong> misleading.<br />
2) all the provisions set out in the Capital Market Law, the CCL, and the rules and regulations<br />
issued pursuant to them have been <strong>com</strong>plied with.<br />
For the Promoters/Selling Shareholders: (Authorised Signatories)<br />
Sr. Name Signature<br />
1 Mr. Qais bin Mohamed Al Yousef Sd/-<br />
2 Mr. Saibal Sen (on behalf of SABCO LLC) Sd/-<br />
II. Lead Issue Manager:<br />
In accordance with the responsibilities prescribed by Article 3 of the Executive Regulations<br />
of the Capital Market Law issued under Ministerial Decision No. 4/2001, and instructions<br />
issued by the CMA, we have reviewed all the relevant documents and other material required<br />
for the preparation of the <strong>Prospectus</strong> pertaining to the issue of shares of the Company.<br />
The Promoters/Selling Shareholders are responsible for the authenticity of the information<br />
contained in the <strong>Prospectus</strong>, and they have confirmed that no material information has been<br />
omitted, the omission of which would render this <strong>Prospectus</strong> misleading.<br />
We confirm that we have taken all necessary due care as required by the profession with<br />
regard to the <strong>Prospectus</strong> that has been prepared under our supervision, on the basis of the<br />
audit works referred to above and discussions held with the Company, its management<br />
and other officials and on the basis of the auditing carried out by us with the concerned<br />
authorities with regard to the subject matter of the Issue, profit projections, criteria and<br />
justifications for the pricing, and contents of the documents submitted to us.<br />
We further confirm as hereunder;<br />
1) We have taken all necessary and reasonable care in ensuring that the information furnished<br />
to us by the Company, and contained in the <strong>Prospectus</strong>, is consistent with the facts available<br />
in the documents, material and other documents pertaining to the Issue.<br />
2) On the basis of our perusal and information made available to us by the Company, the<br />
Company has neither concealed any fundamental information nor omitted any material<br />
information, the omission of which would have made the <strong>Prospectus</strong> misleading.<br />
3) The <strong>Prospectus</strong> and Issue relevant to it are consistent with all the rules and conditions<br />
governing transparency as provided for in the Capital Market Law and its amendments<br />
thereof, the Executive Regulations of the Capital Market Law and its amendments thereof,<br />
the applicable specimen <strong>Prospectus</strong> available with the CMA and the CCL.<br />
122
4) The data and information which have been presented in the <strong>Prospectus</strong> in Arabic (with its<br />
unofficial translation in English) are correct, reasonable and adequate as per our perusal so<br />
as to assist the investor in taking an appropriate decision whether or not to participate in the<br />
offer of the securities the subject matter of this <strong>Prospectus</strong>.<br />
Full Name: Oman Arab Bank SAOC<br />
123<br />
Investment Management Group<br />
Signature and Seal Sd/-<br />
III. Legal Advisor<br />
The Legal Advisor, whose name appears below, confirms that all the procedures undertaken<br />
with regard to offering of the Securities and the subject matter of the <strong>Prospectus</strong>, are in<br />
line with the laws and legislations related to the Company’s business, the CCL, the Capital<br />
Market Law and the regulation and directives issued pursuant to them, the requirement<br />
and rules for the issue of shares issued by the CMA, the applicable Specimen <strong>Prospectus</strong><br />
available with the CMA, the Memorandum and Articles of Association and the resolutions of<br />
the general meeting and the board of directors of the Company. The Company has obtained<br />
all the consents and approvals of the official authorities are required to carry out the activities<br />
the subject matter of the <strong>Prospectus</strong>.<br />
Full Name: Al Busaidy, Mansoor Jamal & Co.<br />
Signature and Seal Sd/-<br />
IV. Underwriters<br />
The underwriters, whose names appear below, confirm that we have reviewed all studies<br />
regarding the transformation of the Company from a limited liability <strong>com</strong>pany to a joint stock<br />
<strong>com</strong>pany as per the <strong>Prospectus</strong>, and we have agreed to underwrite the issue out of our<br />
conviction of its feasibility in light of the information provided in the studies and the financial<br />
projections after transformation.<br />
Oman Arab Bank SAOC<br />
Sd/-<br />
United Securities LLC<br />
Sd/-<br />
Vision Investment Services Co. SAOC<br />
Sd/-<br />
Gulf Baader Capital Markets SAOC<br />
Sd/-
www.voltampoman.<strong>com</strong><br />
Energising lives<br />
Energising Oman