PROSPECTUS Voltamp Energy SAOG

Transcription

PROSPECTUS
Voltamp Energy SAOG (under transformation)
Postal Address: P.O.Box 75, P.C: 124,
Rusayl, Sultanate of Oman
Tel: 24446501
Fax: 24446502
Initial Public Offering of 25,000,000(Twenty Five Million) Ordinary Shares
Total Offer Size: RO 13.55 million
Offer price: RO 0.542 per share
(Comprising a nominal value of Baisas 100, premium of Baisas 440
and Issue Expenses Baisas 2 per share)
Lead Issue Manager & Financial Advisor
Oman Arab Bank,
Investment Management Group
P.O. Box 2010, Postal Code: 112, Sultanate of Oman
Ph: 24762399 Fax: 24762377
Oman Arab Bank SAOC
United Securities LLC
Underwriters
Vision Investment Services Co. SAOC
Gulf Baader Capital Markets SAOC
Co-Financial Advisor
Ernst & Young
PO Box: 1750, Ruwi, 112,
Qurum, Muscat, Sultanate of Oman
Ph: 24559599 Fax: 24566043
Collecting Banks
Oman Arab Bank SAOC
Bank Muscat SAOG
Bank Dhofar SAOG
OFFERING PERIOD
Opening Date: May 5, 2008
Closing Date: June 3, 2008
The Capital Market Authority (“CMA”) assumes no responsibility for the accuracy and adequacy
of the statements and information contained in this Prospectus nor shall it have any liability for any
damage or loss resulting from the reliance upon or use of any part of the same by any person. This
Prospectus has been prepared in accordance with the requirements as prescribed by the CMA.
This is an unofficial English translation of the original Prospectus prepared in Arabic and approved
by the CMA in accordance with the Administrative Decision no […………] dated [ ………
].
Important Notice to Investors
The aim of this Prospectus is to present material information that may assist investors to
make an appropriate decision as to whether or not to invest in the securities offered.
This Prospectus includes all material information and data and does not contain any
misleading information or omit any material information that would have a positive or
negative impact on the decision of whether or not to invest in the offered securities.
The issuer entity represented by the Founders/Selling Shareholders are jointly and severally
responsible for the integrity and adequacy of the information contained in this Prospectus
and confirm that, according to the best of their knowledge, due diligence has been observed
in the preparation of this Prospectus and further confirm that no material information has
been omitted, the omission of which would render this Prospectus misleading.
All investors should examine and carefully review this Prospectus in order to decide
whether or not it would be appropriate to invest in the securities offered by taking into
consideration all the information contained in this Prospectus in the context. Investors
should not consider this Prospectus a recommendation by the issuer entity of the offered
securities to buy the offered securities. Every investor shall bear the responsibility of
obtaining independent professional advice on the investment in the offered securities and
conduct his/her/its own independent valuation of the information and assumption contained
herein using whatsoever analysis or projections he sees fit as to whether or not to invest in
the securities offered.
It is to be noted that no person has been authorized to make any statements or provide
information on the Company or the offered securities other than the persons whose names
are indicated herein. In the event that any other person makes representations or provides
any such information it should not be taken as authorized by the issuer entity or the issue
manager.
ADDITIONAL POINTS TO BE NOTED
This Prospectus includes relevant information that is deemed important and does not include any
misleading information nor exclude any principal information, the omission of which may
materially influence any investor's decision pertaining to the investment in Shares through this
Prospectus. All summaries of documents or provisions of documents provided in this Prospectus
should not be relied upon as being comprehensive statements in respect of such documents and are
only to be seen as being a brief summary of such documents.
All equity investments carry market risks to varying degrees. The value of any security can fall as
well as rise depending on the market conditions.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements, including statements about the Company’s
beliefs and expectations. These future statements are based on the Company’s current plans,
estimates and projections as well as its expectations of external conditions and events. They have
implementable plans in place and thus have realistic expectations of achieving these. Forwardlooking statements involve inherent risks and uncertainties and speak only as at the date they are
made. The Company cautions investors that a number of important factors could cause actual
results or outcomes to differ materially from those expressed in any forward-looking statements.
These factors include, but are not limited to, the following:
♦
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♦
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level of demand for the Company’s products and services;
actions of the Company’s competitors;
regulatory, legal and fiscal developments;
success of the Company’s investments and capital expenditure programs;
performance of the Omani economy; and
Other factors described under "Risk Factors and Mitigants." as given in chapter 17 of this
prospectus.
The Company will follow the rules and regulations of the Capital Market Authority , after it is
listed in the Muscat Securities, and will communicate to its share holders periodically the progress
of the new projects as mentioned in this prospectus including any changes in their plans if any. The
Company will update the share holders either directly from the company or through the website of
the Muscat Securities Market.
TABLE OF CONTENTS
Page No
IMPORTANT NOTICE TO INVESTORS
CHAPTER 1 – Definitions
5
CHAPTER 2 – General Information on the Issue and Issuer
6
CHAPTER 3 – Share Split and its Effect
12
CHAPTER 4 – Issue Expenses
14
CHAPTER 5 – Underwriting Arrangements
15
CHAPTER 6 – Purpose of the Issue and Utilisation of the proceeds
16
CHAPTER 7 – Objectives of the Company and Approvals
17
CHAPTER 8 – Shareholding details
20
CHAPTER 9 – Market and Economic Review
25
CHAPTER 10 – Description of the Company and Business Overview
32
and activities
CHAPTER 11 –Summary of Historical Financial Statements
(For Financial Years 2005-2007)
46
CHAPTER 12 –Summary of the Projected Financial Statements
( For Financial Years 2008-2014)
76
CHAPTER 13 – Dividends Policy
101
CHAPTER 14 – Valuation and Price justification
102
CHAPTER 15 – Related Party Transactions
107
CHAPTER 16 – Risk Factors and Mitigants
109
CHAPTER 17 – Corporate Governance
114
CHAPTER 18 – Rights and Liabilities of Shareholders
121
CHAPTER 19 –Conditions and Procedures of the Subscription
125
CHAPTER 20– Undertakings
132
CHAPTER 1
DEFINITIONS
The Board
: means the board of directors of the Company elected in
accordance with the Articles of Association of the Company.
Business Day
: means any day on which commercial banks are open for
business in the Sultanate of Oman.
CCL
: means the Commercial Companies Law of the Sultanate of
Oman issued by Royal Decree 4/74 and the amendments
thereto.
Company
: means Voltamp Energy S.A.O.G (under transformation).
LLC
: means Limited Liability Company
SAOC
: means Closed Omani Joint Stock Company
SAOG
: means General Omani Joint Stock Company
Employees
: Employees means those employees of the Company who have
joined the Company on or before 29th February 2008 and
continue to be in the employment of the Company at the
Closing Date.
Foreign Nationals
: means those persons who are neither citizens of the Sultanate
of Oman or another Gulf-Co-Operation Council (“GCC”) state.
CHAPTER 2
GENERAL INFORMATION ON THE ISSUE AND THE ISSUER
Name of the Issuer:
Commercial Registration No:
1262947 dated 03/08/1987 issued by the Ministry of
Commerce & Industry
Principal Place of Business
Postal Address : P.O.Box 75, P.C 124, Rusayl, Sultanate
of Oman
Tel: 24446501
Fax: 24446502
Company’s Duration:
Unlimited
Financial Year:
Commences on the first day of January and ends on the
thirty first day of December of each year
Type of Shares and Voting
Rights:
All the Equity Shares issued by the Issuer and the entire
equity capital of the company consist of only Ordinary
shares and each single share carrying the right to one vote
at the Constitutive General Meeting of the Company and
any General Meeting of the Company including any
Extraordinary General Meeting.
Authorized Share Capital of
the Company:
The Authorized share capital of the Company shall be RO.
10,000,000 (ten million), divided into 100,000,000 (one
hundred million) Ordinary Shares.
Existing Ordinary Shares
Before the IPO
RO 3,500,000 ( RO 3.5 million) divided into 35,000,000
(35 million) ordinary shares
Offered Shares:
Offer of 25,000,000 (Twenty Five Million) shares that
consists of
1) Offer of 10 million shares to the public, selling by
the promoters
2) Issue of 15 million New Ordinary Shares(after the
completion of IPO) for public subscription by the
Company
3) The Company will allot 5% (1,250,000) of the
offered shares for the company employees and
Managers as per the details given in this prospectus.
The Issued and Paid up
Capital after IPO
Par Value for the share
RO 5,000,000 ( Rial Omani Five Million) divided in to 50
Million shares
100 Baisa for each share
Restrictions on the shares:
Restrictions imposed on the Promoters:
In accordance with Article 77 of the CCL, the Promoters
of the Company shall not withdraw from the Company or
dispose of their Shares prior to publication of two Balance
Sheets pertaining to two consecutive financial years,
effective from the date of listing of the Shares on the
Muscat Securities Market. An exception to this shall be the
cases of assignment of the Shares amongst the
Shareholders themselves and cases of inheritance. The
period during which the –Promoters are not permitted to
withdraw or dispose of their Shares may be extended for a
further one year by a decision of the Minister of
Commerce & Industry, at the request of the Capital Market
Authority, without prejudice to the right held by the
Promoters to make second grade pledge on those Shares.
If any defect has taken place in the procedures pertaining
to incorporation of the Company, the party concerned may
within a period of five years from the incorporation of the
Company, serve notice to it for remedying such a defect as
per article 71 of the CCL. However, if the Company fails
to take the initiative within one month of such notice for
necessary remedial measures, the person concerned may
have recourse to the competent court to pass a decision for
dissolution of the Company. The Promoters, members of
the Board of Directors and the first Auditors shall be held
liable severally and jointly for the damages arising from
the dissolution of the Company and which are attributable
to their illegal acts or their negligence or omission in the
incorporation of the Company.
Restrictions imposed on the Employees and Managers
The Employees and Managers have no right to sell or
transfer shares acquired pursuant to the IPO before six
months. Thereafter, the Employees and the Managers may
sell or transfer such shares with out any restriction
Promoters/Selling
Shareholders:
The current partners/shareholders of the Company prior to
the IPO who are offering a portion of their Shares through
an Offer for Sale under this Prospectus to the extent of a
maximum of 10,000,000(Ten Million) Ordinary Shares out
of their combined holding of 35,000,000 (Thirty Five
Million) Ordinary Shares. Details of the number of Shares
being offered by the Selling Shareholders are set out in the
Chapter 7 of this Prospectus.
Shares held by the Promoters
after the IPO:
25,000,000 (Twenty Five Million) Ordinary Shares i.e.
50% of the capital after the completion of IPO. Details of
the individual holdings are set out in Chapter 7 of this
Prospectus.
Subscription Price of the
Shares:
Baisas 542 (five hundred and forty two) per Share
consisting of Baisas 100 (Baisas one hundred) nominal
value, Baisas 440 ( Baisas four hundred and forty) share
premium and Baisas 2 towards Issue Expenses.
Ratio of Offered Shares
(25 million Shares) to post
IPO issued and paid up Share
Capital (50 million Shares) :
50% of the Issued and Paid Up Share Capital of the
Company.
Main Purpose for which the
proceeds of the Subscription
would be utilized:
1)Proceeds from the Issue of New Ordinary Shares
Issue proceeds under this category aggregating to RO
8,100,000 (Rial Omani eight million, one hundred
thousand) will accrue to the Company, and will be utilized
by the Company for financing the ongoing capital
expenditure, for meeting its long term working capital
requirements and investment in future strategic projects.
2) Proceeds from the Offer for Sale of Existing
Ordinary Shares
Issue proceeds under this category aggregating to RO
5,400,000 (Rial Omani five million, four hundred
thousand) will accrue to the Selling Shareholders only and
not to the Company.
3)Issue Expenses Collected
The amount of RO 50,000 (fifty thousand) being collected
towards part of the Issue Expenses from the total issue will
accrue to the Company.
Persons qualified to subscribe
for the Shares Offered:
Subscription shall be open to Omani, Non Omanis,
Individuals, Non Individuals, Corporate
Bodies/Institutions/Investment Funds/Pension Funds.
Permissible Level of NonOmani Shareholding after
Listing:
Once the Shares are listed for trading on Muscat Securities
Market, it will be permissible for non Omanis to own up to
70% of the Share Capital of the Company in accordance
with the Law and the Memorandum & Articles of
Association.
Commencement Date of the
Subscription:
May 5, 2008
Closing Date of the
Subscription:
June 3, 2008
Listing:
The Shares will be listed for trading on the Muscat
Securities Market
First Day of Trading:
The first day the Shares are traded on the Muscat
Securities Market
Individuals including Employees & Board of Managers:
1,000 (One Thousand) Shares and in multiples of 100
shares thereafter
Minimum Limit for the
Subscription under One
Application:
Non-Individuals (Corporate
Bodies/Institutions/Investment Funds):
10,100 (Ten
Thousand One Hundred) Shares and in multiples of 100
shares thereafter
Maximum Limit for the
Subscription under One
Application:
Individuals & Non-Individuals(Corporate
Bodies/Institutions/Investment Funds): up to or equal to
10% of the total Issue size which works out up to or
equal to 2,500,000 (Two Million Five Hundred
Thousands) Shares;
Employees: maximum eligible value of shares will be
up to 19 (nineteen) times his/her basic salary as on 29th
February 2008;
Managers: up to 50,000 (fifty thousand) Shares per
Manager. Total of five managers.
Overall Offering Split and
Allotment Procedures:
In case of over-subscription, the Offering of 25,000,000
(twenty five million) Ordinary Shares shall be split among
the eligible investor groups, in the following portions:
Category I – Individuals
17,500,000 (seventeen million five hundred thousand)
shares, being 70% of the Offered Shares for Retail
applicants applying for a maximum of 10,000 (Ten
Thousand) shares. Distribution of shares shall be on prorata basis. Individual Investors shall comprise of only
natural persons.
Category II – Non Individual Investors
6,250,000 (six million two hundred fifty thousand) shares,
being 25% of the Offered Shares for both natural and
juristic persons including Individual applicants applying
for more than 10,000 shares and for Corporate bodies/
Institutions / Investment Funds. Distribution of shares will
be on pro-rata basis.
Category III – Employees and Managers
Employees: 1,000,000 (one million) shares, being 4% of
the Offered Shares for employees upto a maximum value
of 19 times of their basic salary on firm allotment basis.
Managers: 250,000 (two hundred fifty thousand) shares,
being 1% of the Offered Shares for Managers upto
maximum of 50,000 shares each Manager of five
Managers on firm allotment basis.
Any undersubcription in Category I shall be added to
shares allocated for Category II and vice versa. Any
undersubcription in Category III shall be added to
Category I
Allotment for Foreign Nationals will be limited to a
maximum of 70% of the total Shares offered. Foreign
Corporate Body/ Institution/ Investment Fund is defined as
one which is not incorporated in the Sultanate of Oman.
The final allocation on the above basis will be decided by
the Lead Issue Manager and the Company in consultation
with the CMA.
Underwriting Arrangements:
Basis for Undersubscribed
Shares:
Prohibitions with regard to
the Applications for
Subscription:
The issue of 25 million shares aggregating issue amount
of RO 13.50 million is underwritten by Gulf Baader
Capital Markets S.A.O.C, Vision Investment Services Co.
S.A.O.C, Oman Arab Bank S.A.O.C and United Securities
L.L.C.The details are given in Chapter 5.
In case of a shortfall in subscription, the shortfall shall
be subscribed by the Underwriters.
The subscribers to the Shares issued as mentioned
hereunder shall not be permitted to participate in the
subscription:
1) Sole Proprietorship Establishments. Whereas, the owner
of a Sole Proprietorship Establishment would be required
to subscribe in his name only if he so desires.
2) Trust Accounts. Whereas, the Brokerage Companies
would be required to address the Customers for the
subscription in their personal names.
3) Multiple Applications for the subscription. Whereas, it
is prohibited for any person to submit more than one
application for subscription in his personal name.
4) Applications made under joint names, including the
applications made in the name of legal heirs. Whereas,
they or their legal attorney would be required to apply in
their personal names.
All such applications shall be rejected without contacting
the applicant.
Lead Issue Manager &
Financial Advisor
Co-Financial Advisor:
Oman Arab Bank SAOC
Investment Management Group
P.O. Box 2010, P.C. 112, Ruwi
Sultanate of Oman
Email: [email protected]
Ernst &Young
P.O. Box: 1750, Ruwi, P.C. 112,
Ernst & Young Building,
Qurum, Muscat, Sultanate of Oman
www.ey.com/me
Reporting Accountants:
Statutory Auditors:
Internal Auditors:
Legal Advisor for the IPO:
Legal Advisors for the
Company
Collecting Banks:
Transfer and
Registration Agent:
.
KPMG
P.O. Box 641
P.C. 112, Ruwi
Sultanate of Oman
Statutory Auditors: (2006 & 2007)
KPMG
P.O. Box 641
P.C. 112, Ruwi
Sultanate of Oman
For the year 2005
Mazars Chartered Accountants & Co LLC
Muscat Gold Market Building
P.O. Box 1092, P.C. 131
Sultanate of Oman
BDO Jawad Habib
P.O. Box 1176
Ruwi, P.C. 112
Sultanate of Oman
Al Busaidy , Mansoor Jamal & Co , Muscat International
Centre, Mezzanine Floor, Central Business District, Bait
Al Falaj Street, P.O. Box 686, Ruwi, P.C 112, Sultanate of
Oman, Email: [email protected]
Hamdan Al Durey
Barristers and Legal Consultants
Central Business District,
Building No 978, Flat No 53,
PO Box 1633 PC 112,
Ph: 24787667 Fax: 24787889, Sultanate of Oman
Bank Muscat SAOG
Bank Dhofar SAOG
Oman Arab Bank SAOC
Muscat Depository & Securities Registration Co. SAOC
PO Box 952, PC 112, Ruwi, Sultanate of Oman
Tel: 24814827, Fax: 24817491
CHAPTER 3
SHARE SPLIT AND ITS EFFECT
Introduction
The Company has split the nominal value of the shares from RO 1.000 to Baisas 100 resulting in
splitting each share into ten shares. This chapter elaborates on the effect of this decision. It is
recommended that each subscriber read and understand it.
Definition of Share split
Share split refers to the intention of a Company to split its existing shares to number of shares by
reducing the nominal value of the share and increasing the number of shares without any effect on
the total value of the Company’s paid up Capital, or the total market capitalization of the shares
owned in the Company, even if the total of the number of shares will increase as a result of this
division.
Objectives of Share split
The Company is of the view that share split will achieve the following goals:
•
Reduce the nominal value of the share making it affordable for a larger number of retail
investors.
•
Increase liquidity by multiplying the number of shares available for trading; and
•
Facilitate a larger participation by the small/individual shareholders
Impact of share split
The decision of share split will not have any impact on the shareholding or the extent of each
shareholders’ liabilities in the Company. The only direct impact is an increase in the number of
shares. The Company considers that the benefits gained from the share split such as increase in
liquidity and the shares that will be available for trading for all investors and participants in the
Muscat Securities Market, will be in the best interests of the public.
The following table presents the impact of share split for the Company according to the financial
statement for the year ended 31st December, 2007:
Nominal value per share
Number of Issued capital
share
Paid up Capital
Share holders' Equity
Book Value per share
Net Annual Profit
Earning per share
Before Split
RO 1
3,500,000
After Split
Baisas 100
35,000,000
RO 3,500,000
RO 4,362,271
RO 1.246
RO 2,422,215
Baisas 692
RO 3,500,000
RO 4,362,271
Baisas 124
RO 2,422,215
Baisas 69
Effect of share split
The decision to split shares does not have any impact on the total market capitalization of the
shares. In fact, share split is dividing the nominal value of the share in the same percentage.
The following is an explanation:
Assume,
- number of shares before split: 100 shares
- share price in MSM on the date of the general meeting: RO 5.420
Therefore after dividing one share into 10 shares, the result will be as follows:
Before Split
After Split
Number of shares
100 shares
1000 shares
Share price
RO 5.420
RO 0.542
Total nominal shares value
RO 542
RO 542
Share split effects on dividend:
The decision of share split will not affect the Company’s policy regarding dividend distribution or
dividend ratio. The dividend distribution system in the Sultanate of Oman is based upon accounting
dividend as a percentage of nominal paid up value per share. Thus the nominal paid up value per
share will be Baisas 100 after split and not RO 1.000; e.g. if the Company declared previously
(before share split) dividend distribution of Baisas 350 per share (35% of nominal value before
split), and presumably the Company decided to maintain this policy, this dividend will be after
share split Baisas 35 per share (35% of the nominal value after split). For instance, if the
shareholder holds 100 shares before share split, dividend distribution will be as follows:
Number of holding shares
Nominal value of the share
Dividend per share
Dividend ratio to nominal value
Total distributed dividend
Before Split
100 shares
RO 1.000
Baisas 350
50%
RO 35
After Split
1000 shares
Baisas 100
Baisas 35
50%
RO 35
CHAPTER 4
ISSUE EXPENSES
The costs of the Issue are estimated at RO 276,600 (Rial Omani Two Hundred and Seventy Six
Thousand and Six Hundred Only), which equates to approximately 2.049% of the total proceeds of
the Offering. The breakdown of the estimated expenses is contained in the table below:
Estimated Cost and Expenses
Issue Managers & Financial Advisors
Collecting Banks
Underwriting fees
CMA & MDSRC Fees
Legal Advisor
Reporting Accountant
Marketing, Advertising and Publicity
Mailing and Postage
Other expenses and contingencies
Total Issue Expenditure
Issue Expenses collected @ 2 Baisas per share
Difference between estimated expenses & the collection of
issue expenses
Amount (RO)
80,000
70,000
40,500
10100
20,000
6,000
40,000
2,500
7,500
276,600
(50,000)
226,600
The costs of the Issue will be partially met out of additional subscription amount of Baisas 2 per
share paid by the applicants towards Share Issue Expenses.
The actual costs of the Issue less Issue expenses collected, estimated at RO 226,600 will be
charged to the Shareholders' Equity of the Company.
CHAPTER 5
UNDERWRITING ARRANGEMENTS
In case of a shortfall in the subscription of the offered Shares, the shortfall shall be underwritten as
under:
Underwriter
Number of Ordinary
shares underwritten
Percentage shares
underwritten
Gulf Baader Capital
Markets SAOC
Vision Investment
Services Co. SAOC
Oman Arab Bank
SAOC
Total
9,109,,000
36.44
Amount
Underwritten@540
Baisas per share (RO)
4,918,860
6.747,400
26.99
3,643, 596
5,500,000
22.00
2,970,000
3,643,600
25,000,000
14.57
100.00
1,967,544
13,500,000
The Company has entered into underwriting arrangements with the above entities. The
underwriting fee is estimated at RO 40500
In the event of any devolvement, the underwriters will subscribe to the extent of the shortfall as
stated above, at a price of 540 Baisas per share and the Company shall not claim the issue expense
of 2 Baisas per share, from the underwriters on such devolved shares.
CHAPTER 6
PURPOSE OF THE ISSUE AND UTILISATION OF THE PROCEEDS
Objectives of the issue:
•
•
•
Raising capital for the purposes which are already mentioned in the Prospectus.
Listing the Company’s Shares on the MSM.
Partial divestment of Shares by the Selling Shareholders
Utilisation of the proceeds of the Issue:
•
The Company will receive the proceeds of public subscription, amounting to RO 8,100,000
(eight million, one hundred thousand) relating to the issue of the New Ordinary Shares,
which will be utilized for setting-up a 132 kv transformers manufacturing project in Oman
in technical collaboration of Tatung Co. of Taiwan, to fund the ongoing capital expenditure
for the distribution transformers project in Qatar, meeting long-term working capital
requirement and to invest in the future strategic projects. The target timetable of the
Company for the use of the proceeds of public subscription as follows:
Type of Expenses
Capital Expenditure
Working Capital
Total
Amount
RO 6 M
RO 2.1 M
RO 8.1 M
Date
2008/09
2008
•
The Company will receive the proceeds of public subscription, amounting to RO 5,400,000
(five million, four hundred thousand) relating to the offer for sale of the Existing Ordinary
Shares, which will be distributed to the Selling Shareholders through this offering, which is
at an offer price of RO 0.540 (baisas five hundred and forty) per share excluding issue
expenses.
•
The baisas 2 per share collected towards Issue expenses will cover a portion of the expenses
incurred by the Company in relation to the IPO
CHAPTER 7
OBJECTIVES OF THE COMPANY AND APPROVALS
Overview
The Company was incorporated in the Sultanate of Oman on 3 August 1987 as a limited liability
company (“LLC”) and is currently undergoing the due process of transformation from an LLC into
a ''SAOG'' organised under the laws of the Sultanate of Oman. The Company is the flagship
company of the well established and well diversified Al Anwar Holdings SAOG in the Sultanate of
Oman. The Company has manufacturing facilities in Rusayl Industrial Area, Sultanate of Oman
for Transformers and LV Switchgear Panels. The Company is on the fast growth path in the field
of Electrical products enjoying international acceptance and a preferred source status for its
products and services in the Utilities & Oil & Gas sector throughout the MENA region.
The Company holds the following material permits and licenses:
1 Ministry of Commerce and Industry:
Commercial Registration
Commercial Registration
Number: 1262947
Date of Registration:
3/8/1987
Expiry date: 2/8/2012
2 Ministry of Commerce and Industry:
Industrial License
Registration Number:
2547
Expiry Date: 02/08/2012
3 Oman Chamber of Commerce & Industry:
Membership
Registration Number:
1614
4 Ministry of Environment & Climate Affairs License
License Number: 3674
ISO 9001:2000 certification
The Company holds an ISO 9001:2000 certification for marketing, design, manufacturing, testing
and commissioning of all its products.
Company Objectives
The objects for which the Company is established are:
(i)
(ii)
to carry on all or any of the business of purchasing, importing, generating, transmitting,
transforming, converting, distributing, supplying, selling, exporting and dealing in
electricity and all other forms of energy and products or services associated therewith.
to locate, establish, construct, equip, operate, use, manage and maintain transforming,
switching, conversion transmission and distribution facilities, cables, overhead lines,
substations, switching stations, tunnels, cable bridges, link boxes, telecommunications
stations, masts, aerials and dishes, fibre optic circuits, satellites and satellite microwave
connections, heat pumps, plant and equipment used for combined heat and power schemes;
(iii)
to acquire (whether by usufruct, lease, concession, grant, or otherwise) establish, develop,
exploit, operate and maintain land, any estates in land, which may seem to the Company
capable or possibly capable of affording or facilitating the purchase, transmission,
transformation, conversion, supply distribution, generation, development, production or
manufacture of electricity or any other forms of energy in accordance with the laws of
Oman;
(iv)
to carry on all or any of the business of designers, developers, manufacturers, constructors,
installers, operators, users, inspectors, testers, maintainers, repairers, servicers, suppliers,
distributors, importers and exporters of and dealers in cables, wires, meters, pylons, tracks,
rails, pipelines, and any other plant, apparatus, equipment, systems and things used in
connection with the transmission, transformation, conversion, supply, distribution, control
and generation of electricity or any other forms of energy;
(v)
to provide or procure the provision of such facilities and services as may be necessary or
desirable to forecast electricity/energy demand and to satisfy such demand;
vi)
to appoint and enter into agreements or arrangements with any person to represent the
Company or any other organisation or person at meetings of local, national and international
organisations and bodies concerned with activities connected or associated with any of the
businesses or activities of the Company and to provide services of all kinds to such organisations
and bodies;
vii)
to carry on all or any of the business of and provide services associated with, engineers
(including without limitation, electrical, mechanical, heating, ventilation, civil, chemical,
telecommunications and gas engineers), mechanics, technicians, draftsmen, designers, surveyors,
architects and builders for achievement of the Company’s abovementioned objects in compliance
with the prevailing laws;
Resolutions Passed
The Shareholders of the Company unanimously passed the following resolutions in their meetings
held on 10th December 2007 and 24th February 2008.
1. Approved the proposal for conversion of the Company from an LLC to an SAOG as per the
provisions of the CCL.
2. Approved the new authorized share capital of the Company which would be RO
10,000,000 (ten million) and the issued share capital of RO 5,000,000 (five million)
divided into 50,000,000 (fifty million) Ordinary Shares of 100 Baisas each (RO 0.100).
3. Approved the transformation as a part of the process of selling/issuing the Offered Shares
to the public through an IPO which would comprise of two (2) components:i)
Offer for sale of 10,000,000 (ten million) Ordinary Shares of face value Baisas. 100
each at an issue price of Baisas. 542 per share to the public by the existing
Shareholders (Promoters).
ii) Fresh issue of 15,000,000 (fifteen million) new Ordinary Shares by the Company, to
the public of face value Baisas. 100 each at an issue price of Baisas. 542 per share.
iii) Out of the total 25,000,000 (twenty five million) Shares which would be offered to the
public, up to 1,250,000 (one million two hundred fifty thousand) Shares would be
reserved for the Managers and the Employees of the Company.
4. Approved that post IPO, the current shareholders (Promoters) would hold 50% of the
issued share capital of the Company and the public including the Employees and the
Managers would hold the remaining 50%.
5. Approved the consent of the current shareholders’ in the LLC Company to offer a portion of
their ordinary shares to the public as part of the IPO. The number of shares to be offered by
each of the Promoters is as shown hereunder.
Promoter’s Name
Al Anwar Holdings SAOG
SABCO LLC
Mr. Mushtaq bin Abdullah bin Jaffer
H.H. Seyyid Shihab bin Tariq Al Said
Mr. Mohammed bin Abdul Rasool Al Jamali
Dr. Ali bin Jaffar bin Mohammed
Total
Number
of
shares No. of Shares to be
before transformation
Offered For Sale
Face value Bz 100
Face value Bz 100
20,097,000
5,742,000
7,451,500
2,129,000
3,160,500
903,000
2,597,000
742,000
1,130,500
323,000
563,500
161,000
35,000,000
10,000,000
6. Approved to form a constitutive committee consisting of the following members:
i)
ii)
iii)
iv)
v)
Mr. Qais bin Mohamed Al Yousef, Chairman
Mr. Abdulredha bin Mustafa Sultan, Director
Mr. Saibal Sen, Director
Mr. Sebastian Manavalan, Director
Mr. Krishna Kumar Gupta, Director
The above committee is authorized to do all such acts and deeds required for the IPO such
that the IPO shall be in compliance with statutory and regulatory requirements and approvals.
7. Approved the draft Memorandum & Articles of Association of the Company as per the
requirements of the CCL pertaining to SAOG companies for the submission to the competent
authorities and their approval.
8. Approved the appointment of Oman Arab Bank SAOC as Lead Issue Manager and
authorized them or their representatives to complete the due diligence and all legal,
financial and accounting matters pertaining to conversion and transformation of the
Company from an LLC to an SAOG Company and the preparation and finalization of the
IPO documents as required by the concerned official bodies and also to appoint a CoFinancial Advisor
9. Approved the appointment of KPMG as the reporting Accountants and Al Busaidy, Mansoor
Jamal & Co. as Legal Advisors for the IPO
CHAPTER 8
SHAREHOLDING DETAILS
Promoters and Selling Shareholders of the company (before transformation):
Name of Shareholder
SABCO LLC
H.H. Seyyid Shihab bin Tariq Al Said
Mr. Mohammed bin Abdul Rasool Al Jamali
Total
Number of shares*
20,097,000
7,451,500
3,160,500
2,597,000
1,130,500
563,500
35,000,000
Percentage
57.42%
21.29%
9.03%
7.42%
3.23%
1.61%
100%
* after split
Pursuant to a unanimous resolution of the Shareholders, the share capital of the Company
was increased from RO 1,500,000 (one million five hundred thousand) to RO 3,500,000
(three million five hundred thousand) through an issue of Bonus Shares of RO 2,000,000
(two million shares) to the Promoters/Selling Shareholders. The Shares were issued by way
of bonus shares.
Post Offer Equity Structure:
The Public shareholding and the minimum Promoters’/Selling Shareholders’ shareholding
after the IPO is envisaged as under:
Sl.No
1.
Promoter/Selling
Shareholder and Public
2.
SABCO LLC
3.
4.
5.
6.
7.
Mr. Mushtaq bin Abdullah
bin Jaffer
H.H. Seyyid Shihab bin
Tariq Al Said
Mr. Mohammed bin Abdul
Rasool Al Jamali
Dr. Ali bin Jaffar bin
Mohammed
Public (including
Employees and Managers)
Total
Nationality
Omani
Company
Omani
Company
No.
Ordinary
Shares
of
Nominal Value
by RO
Ratio to
Capital
14,355,000
1,435,500
28.71%
5,322,500
532,250
10.65%
2,257,500
225,750
4.52%
1,855,000
185,500
3.71%
807,500
80,750
1.62%
402,500
40,250
0.81%
25,000,000
2,500,000
50.00%
Omani
Omani
Omani
Omani
Omani / Non
Omani
50,000,000
5,000,000
100%
Promoters’ Voting Rights
Pursuant to the IPO and conversion into a Public Joint Stock Omani Company, the issued and paidup share capital of the Company will be RO 5,000,000 (five million) divided into 50,000,000 (fifty
million) Ordinary Shares with a nominal value of One Hundred Baizas each (RO 0.100). Each single
share will carry the right to one vote at the Constitutive General Meeting of the Company and any General Meeting of
the Company including any Extraordinary General Meeting.
The Promoters and Selling Shareholders will hold 25,000,000 (twenty five million) Ordinary
Shares which will have one vote per share, the same as other Ordinary Shares issued to the public.
The Promoters and the Selling Shareholders will effectively have 50% of the voting rights.
Restrictions imposed on the Promoters:
In accordance with Article 77 of the CCL, the Promoters of the Company shall not withdraw from
the Company or dispose of their Shares prior to publication of two Balance Sheets pertaining to
two consecutive financial years, effective from the date of listing of the Shares on the Muscat
Securities Market. An exception to this shall be the cases of assignment of the Shares amongst the
Shareholders themselves and cases of inheritance. The period during which the –Promoters are not
permitted to withdraw or dispose of their Shares may be extended for a further one year by a
decision of the Minister of Commerce & Industry, at the request of the Capital Market Authority,
without prejudice to the right held by the Promoters to make second grade pledge on those Shares.
If any defect has taken place in the procedures pertaining to incorporation of the Company, the
party concerned may within a period of five years from the incorporation of the Company, serve
notice to it for remedying such a defect as per article 71 of the CCL. However, if the Company fails
to take the initiative within one month of such notice for necessary remedial measures, the person
concerned may have recourse to the competent court to pass a decision for dissolution of the
Company. The Promoters, members of the Board of Directors and the first Auditors shall be held
liable severally and jointly for the damages arising from the dissolution of the Company and which
are attributable to their illegal acts or their negligence or omission in the incorporation of the
Company.
Brief profile of the Main Promoters:
I. AL ANWAR HOLDINGS SAOG
Al Anwar Holdings SAOG is establised in 1994 by a group of prominent institutions and business
houses. Al Anwar was instrumental in pioneering industrial development in Oman in various
industrial segments including Transformers and Switchgears.
Al Anwar has promoted, nurtured, created and shared wealth with the investing populace of this
country in the past. In its current business model with a well diversified and geographically
dispersed investments in industrial and non-industrial sectors such as financial services and
insurance.
Al Anwar has invested in several companies of repute. Some of Al Anwar’s current and past
investments include: National Aluminum Products Co SAOG, Al Anwar Ceramic Tiles SAOG, Al
Maha Ceramic Tiles SAOC, Falcon Insurance SAOC and Taageer Finance Co SAOG.
Board of Directors:
SL.
No
1
2
3
4
5
6
7
Name of the Director
Brig. Masoud Humaid Al
Harthy
Mr. Qais Mohammed Musa
Al Yousef
Mr. Shabir Musa A. Al
Yousef
Mr. Abdulredha Mustafa
Sultan
Mr. Nawwaf Ghubash Ahmed
Al Merri
Mr. Hamed Rashid Al
Dhaheri
Mr. Mohamed A. M. Al
Khonji
Independent/Non
Indepedent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Position
Chairman
Dy. Chairman
Director
Director
Director
Director
Director
The Board of Al Anwar is comprised of eminent personalities from business and industry and it has
a highly professional management team.
AL ANWAR HOLDINGS SAOG
SHAREHOLDERS HOLDING 1% AND MORE AS ON 31 MARCH 08
Sl. No.
1
2
3
4
5
6
7
8
Name
Fincorp
Investment
Co.LLC
Financial
Services Co.
Trust Gulf
Al Khonji
Investment
LLC
Mohammed
&Ahmed Al
Khonji Co
Mohamed
Hafedh Ali
Dhahab
Oman Arab
Bank- Asset
Mgt-Trust Gulf
Oman
Construction
Co. LLC
Others
Total
No.of shares
22,574,290
%
25.49
17,995,800
20.32
7,000,000
7.91
4,457,470
5.03
3,005,490
3.39
1,050,351
1.19
889, 295
1.00
31,577,304
88,550, 000
35.66
100
Details of its current investments, financial performance and vision can be accessed through its
website, www.alanwarholdings.com. As the company is listed , its financial performance can also be
accessed through the MSM website.
II. SABCO LLC / SABCO Group
Established during the early Renaissances years of the 70s with a capital of RO 5000, SABCO
Group has grown into an integrated investment, commercial, industrial and service organization to
day. It is registered with the Ministry of Industry and Commerce and also the Oman Chamber of
Commerce
SABCO group has made its presence in the field of Services, manufacturing, real estate,
contracting, distribution and oil and gas and security and defence through Direct and Associate
Businesses.
SABCO Commercial Centre, Voltamp Manufacturing Company LLC (Presently Voltamp Energy
SAOG (under transformation), National Mineral Water Co. SAOG and Oman Marketing and
Services Company deserve special mention among the group companies of SABCO Group.
Shareholders of SABCO.
a.
Sayyid Badr Bin Hamad Bin Homood Al Bu Said – Secretary General - Ministry of
Foreign Affairs (Rank of a minister)
b.
Sayyid Khalid Bin Hamd Bin Hamood Al Bu Said – Chairman of SABCO Group and
Al Ahli Bank SAOG.
c.
Sayyid Aymen Bin Hamad Bin Hamood Al Bu Said – Vice Chairman of SABCO
Group.
d.
Zawan Bint Hamad Suleiman Al Nabhani
e.
Sayyida Waffa Bint Hamad Al Nu Said.
Direct Businesses of SABCO
Sabco LLC: A holding company involved in private and public sector project development and
representation of world renowned companies.
Oman Perfumery LLC / Amouage Limited – The House of Amouage : Manufacturer,
International distributor and retailer of luxury “Amouage” perfumes, home fragrances, skincare
and accessories . The website is www.amouage.com
SABCO Commercial Centre: Oman’s pioneering boutique shopping mall opened in 1984.
SABCO Art LLC / SABCO Press LLC: A full service communication and entertainment
solutions provider. www.sabcoart.com
Oman Expo LLC: A pioneer in Oman’s events industry organizing diversified exhibitions,
events and conferences. The website is www.omanexpo.com
Al Hail Investments LLC : A property development and Asset Management Company. The
website is www.alhailinvestments.com
Sabco Media SAOC : A media company which owns, manages and operates Radio, TV and
other media related activities.
Associate Businesses
Associate businesses which come under SABCO are;
National Mineral Water Co. SAOG (Tanuf)
Oman Marketing & Services Company (OMASCO)
Oman Abrasives LLC
III
Curriculum Vitae of:
Ambassador Mushtaq Abdullah Jaffer Al Saleh

Born in 1951
Master of International Politics, U.L.B. Brussels, Belgium
His Majesty The Sultan conferred upon him First Order of Al-Nouman Decoration in 1990
Languages: Fluent in Arabic, English and French
Official Profile:
Joined The Ministry of Foreign Affaires in 1974. Served and promoted to several positions
till appointed Ambassador Extraordinary and Plenipotentiary to Djibouti in 1977, Japan in
1980, Algeria in 1983 and China in 1987
Upon the request of GCC, The Government of Oman Seconded him to serve as the very
first Ambassador Extraordinary & Plenipotentiary of GCC to the European Union (19921996)
Opted for an early retirement plan in 2002
Appointed in 1998 One of the Five Representatives, representing Oman in the newly
created GCC Consultative Council for a term of three years
Re-appointed for second term in 2001
Business Profile:
Participated and chaired several renowned companies listed on Muscat Securities Market (19962005), mainly:
Chairman of Board of Directors of Oman Orix Leasing
Vice Chairman of Board of Directors of Gulf Hotels
Vice Chairman of Board of Directors of Commercial Bank
Vice Chairman of Board of Directors of Oman Carpets
Vice Chairman of Board of Directors of Hilton Salalah
Member of Board of Directors of AlKhaleej Polypropylene
Member of Board of Directors of Oman National Holdings
CHAPTER 9
MARKET AND ECONOMIC OVERVIEW
With an established base in Oman and currently entering in to Qatar, the Company is looking to
diversify to cover other countries within the Gulf and the wider MENA region.
An overview of the projected macroeconomic growth in some of the key markets in which the
Company operates and/or expects to have a presence is shown below:
GCC’s Nominal GDP and the Expected Growth in the GCC and MENA Region
USD Billion
2008
2009
2010
MIDDLE EAST
1,544
1,705
1,865
Growth
11%
10%
9%
Oman
41
43
46
Growth
6%
6%
7%
Qatar
70
77
83
Growth
14%
9%
8%
Saudi Arabia
400
429
460
Growth
8%
7%
7%
NORTH AFRICA
513
551
588
Growth
11%
7%
7%
Source: Global Insight, 2007
2011
2,013
8%
49
7%
89
7%
490
7%
625
6%
Oman Economic Overview
Total Nominal GDP
Oman is currently witnessing a period of significant economic growth. The country’s economy has
expanded by 10.64%, measured in Gross Domestic Product (“GDP”) terms, from 2005 to 2007
compared to 9.29% during the preceding 3 years. As a result, nominal GDP has increased from RO
7.9 billion in 2002 to RO 14.6.billion in 20071. This economic growth has been primarily driven by
the contribution of petroleum activities which has increased by 47.8 % to the total GDP due to
rising oil prices in the world markets.
Nominal GDP, 2002-2007
16,000
25%
14,000
20%
In R O M illion
12,000
10,000
15%
8,000
10%
6,000
4,000
5%
2,000
0
0%
2002
2003
2004
Nominal GDP
2005
2006
Grow th
Source: Statistical Yearbook 2007, Ministry of National Economy; mone.gov.om, 2008
1
Figures for 2007 are preliminary
2007
Oman Economic Activities
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2002
2003
2004
2005
Petroleum Activ ities
Non Petroleum Activ ities
2006
2007
Source: Statistical Yearbook October 2007, Ministry of National Economy
The contribution from non-petroleum activities rose by 18% in 2006 principally on the strength of
the 45% growth in manufacturing, 20% in building and construction activities and 24% in
transport, storage and communication. Oman’s non-oil exports have increased by 39% in the year
2006 from RO 1.1 billion in 2005 to RO 1.6 billion in the year 2006.
Economic Drivers
Oman’s long-term economic growth plans are embodied in the Vision 2020 (“Vision”) document
which sets out the strategic goals to be achieved by the year 2020. The fundamental goals of the
Vision are as follows:
f To develop and upgrade Omani human resources in order to cope with technological progress
and attain international competitiveness.
f To develop a private sector capable of optimum use of human and natural resources in an
efficient and ecologically sound way, in close collaboration with the government.
f To utilise the geo-strategic location of the Sultanate, optimise the use of its natural resources and
promote economic diversification.
f To distribute the fruits of development among all regions and all citizens.
f To preserve, safeguard and develop the achievements accomplished in the past twenty- five
years.
From a planning perspective, the Government links developmental priorities and budgetary plans to
five-year planning cycles. The current five-year plan is an important stepping-stone towards
achieving the Vision through which the Government is seeking to achieve a GDP growth rate of
7.4% for the period 2000-20202. The Vision’s aim is that by 2020, Oman’s economy will have
limited reliance on oil revenues and would have diversified into non-oil sectors such as natural gas,
downstream industries and tourism.
It is projected that by 2020, the share of oil revenues in Oman’s GDP would be around 9%
(compared to 48% in 2006) while natural gas revenues will contribute 10% (compared to 3.6% in
2006) to the GDP.
Economic Diversification
The non-oil industrial sector’s contribution to GDP is expected to rise from the current level in
2006 of 14.2% to 29% in 2020. This structural shift is expected to have a significant impact on
2
Ministry of National Economy
Oman’s future economic development. To achieve these goals, the Government is focusing on the
following economic drivers:
f Increasing Foreign Direct Investment: During the past few years, positive steps towards
privatisation have been taken as part of the structural reform program. These steps are aimed at
supporting the country’s development strategy and making the Omani economy more attractive
to foreign and local investors. Some key steps that have been taken include the lifting of foreign
direct investment-related restrictions relating to most sectors, streamlining business regulations
and adopting a “one-stop” investment approach. The ratification of the Free Trade Agreement
(“FTA”) with the United States in 2006 is an indication of the Government’s commitment to
economic reform and diversification. Oman’s membership in the World Trade Organisation
(“WTO”) in 2000 is an effort towards the liberalisation of its markets.
f Industrialisation: The industrial sector is also expected to help Oman realise its Vision 2020. In
1994, the industrial sector accounted for only 4.3% of GDP, while today nearly 8.5% of GDP is
accounted for by this sector. Oman is planning to raise the contribution of manufacturing to the
GDP to 15% by 2020. Currently, Muscat, Sohar and Salalah are the key centres of the process of
industrialisation. Sohar is undergoing a huge transformation with around USD 12 billion worth
of developments. Five major projects have been already announced namely Sohar Refinery
Project, Sohar Methanol Project, Oman-India Fertilizer project, Ferro-Chrome project and Sohar
Fertilizer project. Continued activity in the industrial sector is anticipated with the
Government’s commitment to its long term target of diversifying away from the oil and gas
sector. A key component of this diversification includes various proposed aluminium-related
downstream projects.
f Tourism: Vision 2020 stresses the importance of diversifying the economic base of the country
and identifies tourism as one of the important economic drivers which can help realise the
Vision. In order for the Government to meet its long-term targets, a tourism growth rate of 15%
to 20% per annum3 needs to be achieved. As a step in this direction, the Government is
enhancing the role of the private sector in projects and activities. The Ministry of Tourism
(“MoT”), established in 2004, has already signed agreements with private developers for
implementing 14 projects worth more than RO 6.6 billion.
Qatar Economic Overview
Nominal GDP
Qatar’s economy is in a high growth phase. The nominal GDP in Qatar grew significantly by
24.2% in 2006 after witnessing a strong growth of 33.8% in 2005 and 34.8% in 2004. In 2006,
Qatar’s GDP per capita increased by 15.5% to reach USD 57,350, and is expected to reach USD
68,467 by the year 20084.
Qatar’s Nominal GDP
QR Million
Total GDP (Million Rial Qatari)
% Change
2003
85,663
21.5%
Source: Annual Report 2005, 2006, Qatar Central Bank
3
4
“Vision Oman 2020”, Ministry of National Economy
Qatar National Bank
2004
115,512
34.8%
2005
154,564
33.8%
2006
191,909
24.2%
Qatar’s GDP as Oil and Non-Oil Activities
Contribution to GDP (QR million)
140,000
120,000
100,000
80,000
60,000
40,000
20,000
2003
2004
2005
Oil & Gas sector
2006
Non-oil sector
Source: Qatar Economic Review 2007, Qatar National Bank
Economic Activities
The oil and gas sector has grown to QR 118,707 million in 2006 from QR 92,071 million in 2005
which is equivalent to a growth rate of 29%. The non-oil sector has increased by 17.14% in 2006 to
reach QR 73,202 million. In 2006, finance, insurance and real estate represented 21.5% of the total
non-oil sector and manufacturing sector represented 19.3%. Building and construction sector has
increased by 17.7% in 2006 and reached QR 10,291 million comparing to QR 8,744 million in
2005.
The table below provides the break down of the non-oil sector in Qatar for 2005 and 2006:
GDP for Non-Oil Sector
QR Million
2005
Share
Agriculture & Fishing
216
0.6%
Manufacturing
13,042
20.9%
Electricity & Water
2,209
3.5%
Building & Construction
8,744
14.0%
Trade, Rest, & Hotels
6,869
11.0%
Transport & Communication
5,114
8.2%
Finance, Ins. & Real Estate
14,785
23.7%
Other Services
11,514
18.4%
Total
62,493
100.0%
Source: Qatar Economic Review 2007, Qatar National Bank
2006
233
14,098
2,424
10,291
7,616
5,612
15,760
17,168
73,202
Share
0.3%
19.3%
3.3%
14.1%
10.4%
7.7%
21.5%
23.5%
100.0%
Growth
7.9%
8.1%
9.7%
17.7%
10.9%
9.7%
6.6%
49.1%
17.1%
Economic Drivers
The main drivers that contribute to Qatar’s strong economic performance are highlighted below:
f Qatar’s oil production averaged 800,000 bpd5 during the first half of 2007. Qatar’s oil
production increased by 31,000 bpd during the year 2006, to average 810,000 bpd, compared to
an average of 779,000 bpd produced during 2005.
f Qatar’s exports have increased by 32.2% in 2006, to reach QR 123.9 billion. The oil and gas
exports reached QR 111.2 million of which 57% is accounted for by oil exports and the balance
43% by gas exports.
f Qatar’s oil price averaged USD 61.1 during the first half of 2007. In 2006, oil price has
increased by 21.7% to reach USD 62.9 compared to USD 51.7 in 2005.
f The population in Qatar was 522,023 as per the 1997 census, and has grown in 2004 by 43% to
reach 744,029 according to the 2004 census.
5
Barrel per day
f The total assets of Qatari banks have increased by 46.7% in 2006 to reach QR 167.6 billion, and
their net profits increased by 28.9% to reach QR 5,523 million in the same year.
f Many development projects in sectors such as infrastructure, health, education and tourism have
further contributed to the economic performance. Mega projects are undergoing development:
-
Infrastructure: the New Doha International Airport project is estimated to cost USD 2.5
billion and will be completed in three phases (2009, 2012 and 2015). Several roads and
expressways projects are under implementation. Amongst the major road projects is the
Qatar-Bahrain Bridge with an estimated value of USD 2 billion.
-
Gas and LNG6: Al-Khaleej Gulf Project, the Dolphin project and Kuwait-Qatar gas supply
project are expected to enhance Qatar’s gas production capabilities and increase gas sales
to the domestic consumers and gas export market. RasGas LNG 3,4 and 5, RasGas LNG 6
and 7 Qatargas II and III projects are aimed at enhancing the production and export of
LNG.
-
Leisure and tourism: the Pearl of the Gulf project, estimated at USD 2.5 billion, is a manmade island which is expected to include over 7,500 dwelling units, 3 luxury hotels and
entertainment centres, restaurants and parks. The project master plan focuses on the
creation of new hotels and tourist attractions, and it is designed to develop a tourism base
of 1.4 million by 2010. The total additional spending is expected at USD 15 billion.
-
Healthcare: Hamad Medical City project is estimated to cost around USD 0.4 billion and
will include a 300-bed unit, a dialysis unit, medical staff accommodation and laboratories.
Hamad Southern Area Hospital estimated to cost USD 57 million will include 200-bed
facility. The USD 26 million Cardiology Hospital which comprises of a 110-bed facility is
being developed at Rumailah.
Industry Information
Power Industry in the GCC
The power and utility sector in all GCC countries is witnessing significant growth. The current
economic development, increasing industrial capacity and population growth is outstripping
demand for electricity in the region. According to the World Energy Council, an additional 100
gigawatts of power generation capacity would be needed by 2020, which is projected to cost an
estimated USD 150 billion.
The current GCC power capacity is illustrated in the following graph:
Present GCC Power Capacity
Kuw ait
Qatar
Saudi Arabia
Bahrain
Oman
UAE
-
5,000
10,000
15,000
20,000
MW
6 Liquefied Natural Gas
25,000
30,000
35,000
Source: The Power of Watt, ABQ Zawya Ltd, 2007
The future GCC power capacity is illustrated in the following graph:
Future GCC Power Capacity
Kuw ait
Qatar
Saudi Arabia
Bahrain
Oman
UAE
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
MW
Installed Capacity
Additional Capacity
Source: The Power of Watt, ABQ Zawya Ltd, 2007
Market Demand for Transformers
The high demand for power has resulted in a significant increase in demand for power
transformers. During 2006, the market demand for power transformers in the MENA region was
32,595 MVA(Megavolt Ampere). Oman represented 8% of the total MENA demand; KSA has the
biggest share of 19%, Qatar 6%, UAE 15%, Kuwait 6% and Bahrain 2%. At present, more than
90% of the transformer demand in the GCC is met by imports. This represents a significant
business potential for existing players to replace imported products.
The power transformer market demand for 2006 is illustrated in the following graph:
Transformer Market Size, MVA
Turkey
2,400
Syria
600
Jordan
640
Egypt
1,525
Iraq
3,415
Kuwait
1,965
KSA
6,375
Sudan
520
Iran
4,860
Bahrain
755
Qatar
1,805 UAE
4,915
Oman
2,610
Yemen
210
Source: Feasibility Study for Power Transformers, A. F. Ferguson & Co., 2007
The power transformer market for the MENA region is projected to reach 75,080 MVA(Megavolt
Ampere) in 2012 as per the following graph:
Ye
m
Ot
en
he
rc
ou
ntr
ies
Ba
hr
ain
Su
da
n
Eg
yp
t
Qa
ta
r
Ku
wa
it
an
Om
I ra
q
UA
E
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
Sa
ud
iA
ra
bia
MVA
Power Transformer Demand Forecast 2012
It is this significant growth in the demand for power transformer that the Company endeavours to
capture with its new projects in Oman and Qatar.
Customer Sectors
In 2006, 73% of the MENA demand for power transformers came from entities in the utility sector,
16% of demand was contributed by the oil and gas sector and 11% by heavy industry. The graph
below illustrates the demand for the three main sectors in the GCC countries:
Demand for Power Transformers by Sector
120%
M arket d em an d
100%
80%
60%
40%
20%
0%
Oman
KSA
Qatar
UAE
Utility
Oil and Gas
Kuwait
Bahrain
Heav y Industry
Yemen
CHAPTER 10
DESCRIPTION OF THE COMPANY AND BUSINESS OVERVIEW
Overview:
Established in 1987, the Voltamp Energy is the flagship company of the Al Anwar Group. It
manufactures low voltage switchgear panels through a franchisee agreement with SchneiderFrance.
Current Ownership Structure
Al Anwar Holdings
SAOG
Other Shareholders
SABCO LLC
21.29%
21.29%
57.42%
0.01%
Voltamp Energy LLC
51%
99.99%
Voltamp Manufacturing
Company Qatar (under
construction)
Voltamp Transformers
Oman LLC
Voltamp Energy is to be converted from LLC to SAOG as part of the IPO process. The proposed
ownership structure, incorporating the additional project, is expected to be as follows:
Planned Ownership Structure*
Al Anwar
Holdings
SAOG
SABCO LLC
28.71%
10.65%
0.01%
Other
Shareholders
(pre-IPO)
10.65%
New
Shareholders
(post-IPO)
50.00%
Voltamp Energy SAOG
(under transformation)
99.99%
99.99%
Voltamp Transformers
Oman LLC
0.01%
Voltamp Power Oman
LLC (proposed)
51%
Voltamp Manufacturing
Company Qatar (under
construction)
The 0.01% shareholding held by Al Anwar Holdings SAOG in VTO is under trust of VE. A
similar structure is anticipated for the shareholding structure of VPO whereby 100 shares of VPO
will be held by VTO under trust of VE.
Brief Profile of subsidiaries of the Company
1)Voltamp Transformers Oman LLC ('' VTO")
Established in 1991 in collaboration with Babcock Transformers UK, VTO is a certified ISO 9001
company that specialises in a range of power, distribution and speciality transformers. It designs
and manufactures special multi-tap transformers for the oil & gas sector.
VTO has a state of the art manufacturing facility located in the Rusayl Industrial Area, Sultanate of
Oman where it currently manufacturers transformers with capacities ranging from 50 kVA to 15
MVA, 33 kV class.
In addition to manufacturing activities, VTO also offers services relating to the erection,
commissioning, servicing and testing of transformers and associated equipment through its
Engineering and Services Division .
VTO is currently looking to expand its customer base in the wider MENA region, with a primary
focus on the GCC markets, including Kingdom of Saudi Arabia, Kuwait, United Arab Emirates,
and Yemen.
The Projected Financials are given in the following table
VOLTAMP TRANSFORMERS OMAN LLC
Income statement
for the year ended 31 December
Notes
2,008
RO
2009
RO
2010
RO
2011
RO
2012
RO
2013
RO
2014
RO
10,700,000
13,036,000
16,426,000
17,607,825
18,938,216
20,447,628
22,173,133
-7,334,450
-8,930,391
-11,340,572
-12,168,350
-13,076,518
-14,099,604
-15,272,261
6,900,872
Income
Revenue
Cost of sales
8
Gross profit
3,365,550
4,105,609
5,085,428
5,439,475
5,861,698
6,348,024
Percenta ge of gross profit
31.45%
31.49%
30.96%
30.89%
30.95%
31.05%
31.12%
Other income
141,904
90,000
102,000
107,400
113,205
119,445
126,154
3,507,454
4,195,609
5,187,428
5,546,875
5,974,903
6,467,469
7,027,026
-810,679
-967,978
-1,193,688
-1,303,960
-1,387,531
-1,505,886
-1,616,551
2,696,775
3,227,631
3,993,740
4,242,915
4,587,372
4,961,583
5,410,475
-175,000
-175,000
-175,000
-175,000
-175,000
-175,000
-175,000
2,521,775
3,052,631
3,818,740
4,067,915
4,412,372
4,786,583
5,235,475
-299,013
-362,716
-454,649
-484,550
-525,885
-570,790
-624,657
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
2.223
2.690
3.886
4.216
4.611
Expenses
Selling, administrative and general
7
Profit from operations
Finance charges
Profit for the year before taxation
Taxation
13
Net profit for the year
Earnings pe r share for the year
16
3.364
3.583
2)Voltamp Manufacturing Company Qatar
VMCQ was established in 2007 in Qatar with an initial capital of QR 16.2 million. VE owns 51%
of VMCQ and the remainder is owned by two Qatari companies; Al-Salam International
Investment Company LLC and Al Arkan Al Arabah, own the remaining 49%.
The manufacturing of transformers at VMCQ is expected to start in July 2008 and will focus on
manufacturing transformers as well as associated switchgear. It is expected that VMCQ will
initially cater to the needs of the Qatar and Bahrain markets, which are currently experiencing
significant growth.
VMCQ will manufacture oil filled transformers up to 10 MVA / 33 kV class, dry type transformers
up to 1.6 MVA / 11kV class and LV switchgear. The specific products will include:
f Normal transformers for utilities applications
f 3 winding and 4 winding transformers for special applications
f Transformers for industrial applications
f Transformers for VSD applications
f Transformers with tappings on both the primary and secondary windings (tappings up to 50%
earthing transformers)
The main reasons for establishing VMCQ are:
f The economic growth in Qatar and the new mega projects are still under development, which
offer product demand potential
f There is no local transformer manufacturer in Qatar, at present, which would allow VMCQ to
benefit from a first mover advantage as a local manufacturer
f VTO has existing customers in Qatar, such as Qatar General Electricity and Water Corporation
(“KAHRAMAA”), through which it has developed a strong brand name and product presence in
the local market. It should be possible to leverage the existing customers and reputation to
further penetrate the market while providing improved post-sales support through the local
operation
f Qatar’s strategic position will enable Voltamp to access customers in Bahrain, Kuwait and KSA
About the Consultant:
The detailed feasibility study was undertaken by Deloitte consultants relating to VMCQ's operation
and a brief about the consultants is given below:
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and
their respective subsidiaries and affiliates.Delotte Touche Tohmatsu is an organisation of member
firms around the world devoted to excellence in providing professional services and advice,
focused on client service through a global strategy executed locally in nearly 150 countries. With
access to the deep intellectual Capital of 120,000 people worldwide, Deloitte delivers services in
four professional areas-audit, tax, consulting and financial advisory services- and serves more than
one-half of the world’s largest companies, as well as large national enterprises, public institutions,
locally important clients, and successful, fast-growing global growth companies. Services are not
provided by the Deloitte Touche Tohmatsu Verein,and, for regulatory and other reasons, certain
member firms do not provide services in all four professional areas.
As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms
has any liability for each other’s acts or omissions. Each of the member firms is a separate and
independent legal entity operating under the names ‘Delotte’, “Deloitte&Touche”, “ Deloitte
Touche Tohmatsu”, or other related names
Key Sectors of Demand for the VMCQ Project:
The feasibility study conducted by Deloitte highlights the following key sectors from which
demand is expected to be generated:
f Infrastructure
f Tourism
f Healthcare
f Education
f Utilities
f Heavy Industries
f Oil & Gas
The Projected Financials for the VMCQ as per the feasibility study conducted by Deloitte
Consultants is given below:
VMCQ
Projected Income statements(2008-2014)
Note
s
Income
Revenue
2,008
RO
2009
RO
2010
RO
2011
RO
2012
RO
2013
RO
2014
RO
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
-2,486,364
-7,575,496
-8,379,508
-9,294,590
-10,326,819
-11,141,725
-12,384,526
378,878
13.22%
1,745,962
18.73%
1,976,096
19.08%
2,213,552
19.23%
2,466,325
19.28%
3,084,700
21.68%
3,441,244
21.74%
378,878
1,745,962
1,976,096
2,213,552
2,466,325
3,084,700
3,441,244
Selling, administrative and general
-569,645
-933,649
-1,014,125
-1,092,424
-1,181,059
-1,288,698
-1,407,817
-190,767
812,313
961,971
1,121,128
1,285,266
1,796,002
2,033,427
-59,028
-47,223
-41,320
-35,417
-29,514
-23,611
-17,708
-249,795
765,090
920,651
1,085,711
1,255,752
1,772,391
2,015,719
0
0
0
0
0
0
0
-249,795.00
765,090.00
-0.016
0.050
0.060
0.071
0.082
0.115
0.131
225.33%
11.09%
11.13%
11.17%
11.20%
11.24%
Cost of sales
Gross profit
Percentage of gross profit
Other income
Expenses
Finance charges
Taxation
Earnings per share for the year
Capacity utilisation
Growth
920,651.00 1,085,711.00 1,255,752.00 1,772,391.00 2,015,719.00
Voltamp Power Oman LLC (Under formation)
As part of its growth strategy, the Company is proposing to set up a new project (VPO), which will
be located in the Sohar Industrial Estate. The project aims to enhance the Company's product range
by offering power transformers up to 150 MVA/132 kV class This extension of the product
portfolio will allow the Company to further enhance its brand name in the local and regional power
sector.
The new project will cater to local demand as well as the wider GCC and MENA region. The
power transformer market is growing strongly and this project provides the Company with an
opportunity to benefit from this growth while, at the same time, providing a diversification to its
current product portfolio.
The location in Sohar Industrial Estate provides easy access to the industrial hub being developed
around Sohar Port, Sohar Refinery and the aluminium smelter. In addition, Sohar Port will
facilitate the efficient import raw materials and export transformers. VPO’s location is Sohar, near
to the UAE, will also enable to the company to easily access the large and growing UAE
transformer market.
An independent project feasibility study has been completed by M/S.A.Ferguson & Co, reputed
consultants from India, whose brief is given below and the Company’s management expects to
progress to a more detailed planning phase in the coming months. At this stage, the initial cost of
the project is estimated at RO 9 million and is expected to commence production by January 2010.
The Company has entered into a technology collaboration agreement with Tatung Co. of Taiwan
for production of power transformers up to 150 MVA/132 kV class. Tatung is a diversified
international company involved in the design and manufacture of a wide variety of industrial
products. Tatung is a leader in the power and energy business and its products include power
transformers up to 345 kV (and being expanded up to 500kV), oil-filled and dry distribution
transformers, switchgear, copper rods, bare copper wires, telecommunication cables, and optical
fibre cables. Tatung was founded in 1918 and is headquartered in Taipei, Taiwan.
Profile of A Ferguson & Co.
AFF is one of the leading firms of Chartered Accountants and Management Consultants in India.
They have a long history of providing high quality and specialized services in most areas of
management consultancy.
They provide a range of specialist management consultancy services in various functions and sectors,
drawing on resources from a large domestic and international network. With consulting experience
of over 30 years in India, they are a pioneer and leader in several consultancy products and
services.
They pride themselves in not being just another 'consultancy' organisation. Their business
philosophy is to add value to their client's business by providing a solution most appropriate to the
business context, with specific emphasis on the implementability of their recommendations. They
believe in building long term relationships with their clients, and it is no surprise that their client
retention rate is among the highest in the business. Further information about them can be found at
http://www.afferguson.com/. The Projected Financials in the future for the Project as per the study
conducted by the consultants A Ferguson & Co. are given below:
Products and Services
The following section outlines the switchgear and transformer products that the Company and VTO
respectively, manufacture and market in the region. Transformers are split into Low Power,
Medium Power and Power categories as described below:
Transformer Categorisation
Category
Power Range
Low power transformers (“LPT”)
Medium power transformers (“MPT”)
Power Transformers (“PT”)
3 MVA to 15 MVA, 33 kV class
15 MVA to 50 MVA, any voltage class
Above 50 MVA, any voltage class
The Company is engaged in the design and manufacture of low (up to 1 kV) voltage control and
distribution systems which primarily involves engineering, assembly and testing of LV switchgear
products. The main products include:
f Intelligent and conventional motor control centres
f Power control centres
f Main and sub-main distribution boards
f Auto mains failure and auto transfer switch panels with PLC controls
f Auto synchronising generator control panels
f Capacitor banks and harmonic filter panels
f Custom built control panels
f Feeder pillars and metering panels
The Company has established a strong market in Oman with major clients such as Petroleum
Development Oman (“PDO”), the Ministry of Housing, Electricity and Water and Oman Refinery
Company.
Voltamp Transformers Oman LLC
VTO is engaged in the manufacturing and supply of oil filled transformers in the following
categories:
f Distribution transformers from 50 kVA to 3,000 kVA/ 33 kV class
f Low Power Transformers up to 15 MVA/ 33 kV class
f Earthing transformers
f Special transformers with multi-tap construction
The following graph illustrates the different types of product and their respective share based on
sales in 2007:
Sales by Products Type
Low Power
10%
Standard
23%
Non-Standard
67%
The graph highlights that almost 67% of VTO's sales is in the non standard segment. This is a key
strength as it allows VTO to operate in a niche market which offers higher margins as well as
allowing it to differentiate itself from competition.
In addition to its manufacturing capability, VTO provides engineering and maintenance services as
detailed below:
f Maintenance contracts which include examination of transformers, cleaning of brushings,
annual oil sampling, transformer site testing and complete transformer overhauls
f On-site assessment services for measurement of insulation and winding resistance, magnetic
circuit test, winding ratio test, insulating oil test and all sorts of cable terminations checking
f Field supervision and testing of transformers up to 132 kV
f On-site repair which consists of electrical checks, oil quality analysis, cleaning, checking the
function of all protection devices, overhauling the tap changer and testing the transformer
f Factory services for ratings up to 20 MVA / 33 kV class
f Delivery of spare parts and components
f Technical support, which includes failure analysis and oil analysis
f Turnkey sub-station projects including management capabilities relating to every phase of the
project from supply, erection and installation through to final commissioning of substations up
to 33kV voltage class
VTO has an agreement of exclusivity with a laboratory in Sharjah to provide technical services for
oil analysis, insulation and other testing services.
Customer Segments
The Company has a 14%7 market share in the Omani market for low voltage switchgear based on
2007 sales. The Company caters to the utility, oil and gas, infrastructure and industry sectors as
indicated in the following graph:
The Company's Market Segments 2007
Infrastructure
6%
Industry
16%
Oil & Gas
53%
Utility
25%
Source: Voltamp Energy LLC
VTO’s customer base covers three key industries and is spread across Oman and the wider MENA
region:
f Utilities: VTO serves major clients in the power and energy sector such as the Ministry of
Defence Oman, Majan Electricity Co., Mazoon Electricity Co., Rural Area Electricity Co.
Ministry of Defence Muscat, KAHRAMAA, Sharjah Electricity & Water Authority, Dubai
Electricity & Water Authority and PEC-Aden.
7
Voltamp Energy LLC, 2007
f Oil & Gas: some of VTO's large clients include PDO, Occidental of Oman, Kuwait Oil
Company, Joint Operations, Kuwait National Petroleum Company (“KNPC”).
f Heavy Industry: VTO provides products to industrial companies such as Sohar Aluminium,
Sohar Refinery, Oman Gas Co. and Oman LNG.
In addition, VTO is also focusing on the tourism sector. In this sector, VTO provides a range of
products to major hotels as well as large, integrated tourism projects in Oman. Customers in this
segment include the Al Bustan Palace, Shangri-La’s Barr Al Jissah Resort and The Wave.
VTO Market Segments 2007
Infrastructure
7%
Oil & Gas
25%
Industry
24%
Utility
44%
Source: Voltamp Transformers Oman LLC
Voltamp Manufacturing Company Qatar
The detailed feasibility study undertaken relating to VMCQ's operation highlights the key sectors
from which demand is expected to be generated:
f Infrastructure
f Tourism
f Healthcare
f Education
f Utilities
f Heavy Industries
f Oil & Gas
As indicated earlier, Qatar’s economy is experiencing significant growth and the sectors listed
above are key beneficiaries of the growth.
Major Contracts
The tables below highlight some of the recent contract wins for the Company and VTO:
List of contracts for the Company:
Name of the Contract
Value of the Contract (RO)
Expected Completion Date
Oman Refinery
420,000
(3-4) qtr 2008
Al Opera
152,000
(3-4) qtr 2008
Galfar (Sur&Buraimi Projects) 90,000
(2-3) qtr 2008
Oman Gas
92,000
(2) qtr 2008
Muscat Airport
100,000
(3) qtr 2008
PDO
205,000
(2-3)qtr 2008
Al Anwar Ceramics
40,000
(2) qtr
2008
Switches& Boards
348000
(2-4) qtr 2008
Name of the Contract
Value of the Contract (RO)
Expected Completion Date
Bechtel-Sohar Aluminium
116,000
(3)qtr 2008
Bahwan Engineering
1563000
(3) qtr 2008
Al Tayar Co. Qatar
3,000,000
(4) qtr 2008
L&T Oman
323000
(2) qtr 2008
Mazoon Electric
254000
(3) qtr 2008
Majan Electric Company
199000
(4) qtr 2008
Trade Links
238000
(2) qtr 2008
STS Company
187000
(3) qtr 2008
Al Falahi Company
186000
(2) qtr 2008
Rural Electric Company
156000
(2) qtr 2008
Omran Company
108000
(2) qtr 2008
List of contracts for VTO
During the year 2005, VTO was awarded a prestigious two -year call off contract from Qatar
General Electricity & Water Corporation (KAHRAMAA) to supply distribution transformers worth
QR 77,409,885. The contract was won by VTO in competition with the international manufacturers
who also bided for this contract.
Organisation and Management
The diagram below describes the high-level organisational structure for the combined entity of the
Company and VTO.
Organisational Chart (Voltamp Energy)
Managers
The following table shows the present composition of the board of Managers:
Board of Managers of Voltamp Energy
Name
Mr. Qais bin Mohamed Al Yousef - Chairman
Mr. Abdulredha bin Mustafa Sultan
Mr. Krishna Kumar Gupta
Mr. Saibal Sen
Mr. Sebastian Manavalan
Representing
SABCO
H.H.Seyyid Shihab bin Tariq Al Said
With respect to LLC’s, the CCL does not provide for a board of directors being responsible for the
management of LLC’s. LLC’s are, in accordance with Article 151 of the CCL, to be managed by
one or more managers who shall be natural persons and may be from amongst the shareholders or
non-shareholders. These managers shall be appointed for a specified or unspecified term in
accordance with or as required by the constitutive contract and as per the terms of the employment
contracts entered into by a manager with a company. By contrast, the management of Omani joint
stock companies is vested in a board of directors and the number of directors and their term of
office shall be specified in the Memorandum and Articles of Association.
In accordance with the CCL all persons appointed to act as or hold themselves out as managers of
an LLC must be registered with the MOCI as authorised signatories, to be seen to be managers in
accordance with Article 151 of the CCL.
Senior Management
The following section highlights the key personnel in positions of senior management:
Senior Management Team for Voltamp Energy and the Group Companies
Name
Designation
Mr. Mohamed bin Jaffar M. Sulaiman
Chief Executive Officer
Mr. Ajitkumar Gangal
General Manager-Operations
Mr. Abdullah bin Ahmed Al Zadjali
Deputy General Manager
Mr. Basant Bhageria
Finance Controller
Mr. T. Satyanarayana
VTO Works Manager
Mr. Pronab Chakraborthy
VE Works Manager
Mr. Rajiv Hingorani
ESD Manager
Mr. Benedict Paul D’Souza
Supply Chain Manager
Mr. Aasit M. Naik
Marketing Manager
8
Mohamed bin Jaffar M. Sulaiman: Chief Executive Officer .
Year of Joining
2004
Education
Civil and Architectural Degree - University of Miami, USA
Member in the American Society of Civil Engineers
Experience
Eng Jaffar has 26 years of techno-commercial experience. In his current
role as CEO, Mr Jaffar is responsible for managing
the operations of VE and VTO. He is also on the
board of VMCQ and has been closely involved in
the development of the Qatari operation and the new
project.
Prior to joining Voltamp, Eng. Jaffar has worked for
PDO where he attended senior management courses
in Europe and the Far East. He has also held the
positions of Chairman of the Contracting Committee
at the Omani Chamber of Commerce and Industry
and board member of Majan College.
Eng. Jaffar is a member of the American and Omani
societies of Civil Engineers.
8
*(Mr Mohamed Jaffar – the CEO of Voltamp has submitted his resignation from the Company for personal
reasons. The Board while accepting Mr Jaffar’s resignation, would like to place on record their thanks and
appreciation for Mohamed Jaffar’s efforts at Voltamp and wish him all the best in his future endeavours. Mr Jaffar
will remain in the Company till mid June 2008, as per the terms of his contract, and the Board has already started
the process to identify a suitable replacement. The General Manager of the Company will assume the duties of the
CEO in his absence.”)
Ajitkumar Kashinath Gangal: General Manager - Operations
Year of Joining
2007
Education
Bachelor of Electrical Engineering
Experience
Mr Gangal has 28 years of experience in the transformers industry. He has
experience in the area of distribution and power
transformers up to 400 kV class. As GM –
Operations, Mr Gangal is responsible for all
operational aspects of VTO. He is also a senior
member of the VPO project team.
Before joining Voltamp he worked with leading
companies such as Crompton Greaves Ltd, India and
Virginia Transformation Corporation, USA. He was
also engaged in the revival of Ganz Transformers
Plant in Hungary.
Abdullah bin Ahmed Al Zadjali: Deputy General Manager
Year of Joining
1998
Education
Master of Business Administration
Experience
Mr Al Zadjali has over 28 years of experience in human resources and
administration/finance. He is responsible for the
human resources, administration and legal functions
of the company. He is also responsible of handling
government related and legal matters arising during
shareholders’ meetings.
Basant Bhageria: Finance Controller
Year of Joining
2007
Education
Chartered Accountant
Experience
Mr Bhageria has 17 years of experience in finance, accounting, taxation
and commercial affairs within industries ranging
from chemicals, textiles, food products to FMCG.
He is currently responsible for the finance and
accounting of VE and VTO.
T. Satyanarayana: Works Manager - Transformers
Year of Joining
1997
Education
Experience
Mr Satyanarayana is responsible for the transformer design and
manufacturing functions. He also has responsibility
for the quality management system (ISO 9001) for
his division.
Pronab Chakraborty: Works Manager – Switchgears
Year of Joining
2002
Education
Bachelor of Mechanical Engineering
Experience
Mr Chakraborty has 28 years of experience in the field of electrical product
manufacturing. Currently he is responsible of the
switchgear division and all its related functions from
budgeting, procurement, designing and engineering,
production and sales. He is also responsible for the
quality management system (ISO 9001 standards)
for his division.
Rajiv Hingorani: Manager - Engineering Services Division (ESD)
Year of Joining
2004
Education
Experience
Mr Hingorani has over 15 years of experience in the transformer industry.
He is currently responsible as Profit Centre head for
the ESD division. The activities of the division
include repair and maintenance services for
transformers/substations and turnkey substation
contracts for erection and testing and commissioning
activities.
Benedict Paul D'Souza: Supply Chain Manager
Year of Joining
2002
Education
Bachelor of Electrical Engineering / Masters in Business Administration
Experience
Mr D’Souza has 21 years of experience in the transformers industry. He is
currently responsible for all activities related to
supply chain management.
Aasit M. Naik: Marketing Manager-Transformers
Year of Joining
2004
Education
Bachelor of Electrical Engineering / Diploma in Marketing and
Management
Experience
Mr Naik has over 20 years of experience in marketing transformers. He has
worked from several leading transformers
manufacturing companies in India such as Voltamp,
India, GEC, etc. Currently he is the Marketing Head
for the transformer business
Rewards & Recognition
Voltamp Energy and VTO are recipients of many prestigious awards and recognition from the
Government of Sultanate of Oman for their excellent performance in the field of manufacturing
and exporting electrical equipments.
The table below shows the number of times each company has been the recipient of the prestigious
His Majesty the Sultan’s Cup for best performing industrial companies in Oman, awarded since
1998:
List of Awards
Recognition
Company
HM Cup
Voltamp Energy LLC
HM Cup
HM Cup
Voltamp Energy LLC
HM Cup
HM Cup
HM Cup
Source: VE and VTO Management, 2007
Issuer
Ministry of Commerce and Industry
Date
2003
2003
2002
2002
2000
1998
ISO Certification
Voltamp is ISO-certified and currently has six internal auditors in order to carry out internal audits.
The internal audits occur twice a year. In addition, external audit every 9 to 12 months.
The Company maintains a Quality Management System Manual and “Voltamp Procedures”, both
of which are developed in line with the requirements of the ISO 9001:2000 Standard
Employees
As at 31 March 2008, the Company and its two subsidiaries employed 202 personnel comprising of
65 Omani Nationals (32%) and 137 expatriates (68%). The Omanisation level as at 31st December
2007 was 33% as against the requirement set by the Ministry of Manpower of 35% of the total
manpower. The Company has recently recruited some of expatriate technical employees as per job
requirement since the Company was not able to find suitable technically qualified people locally.
The Company plans to achieve the Omanisation target by the second quarter of 2008.
50%
600
45%
40%
35%
400
30%
25%
300
20%
200
15%
10%
100
5%
0
0%
2008
2009
2010
Employ ees
2011
2012
2013
Omanisation (ex cluding VMCQ)
Details of Loans availed by the Company as of 31st December 2007
Company
Type of loan
Volume
Remarks
Name
Voltamp
No loan or
Energy
bank
borrowings
outstanding as
of 31-12-07
Voltamp
Long Term
Long Term
Transformers
Loan and Bank Loan: RO
Oman LLC
Borrowings
145,833
Bank
borrowings:
RO 1,249,223
Voltamp
Long Term
Long Term
Manufacturing Loan
Loan RO
Company Co.
329,670
WLL (Qatar)
Major Debt Covenants:
For the Company
• To retain a minimum of 15% of net profit each year in the Company
2014
Omanisation
Employees
500
For its subsidiaries
• To retain a minimum of 15% of net profit each year in the Company
• Obtain prior consent of the bank to pay dividend of more than 50% of the annual profit &
such consent not to be unduly delayed unless obligations to the bank are in default.
• Leverage to be brought down to 3.00 by 31.12.08 by retention of profits
Land Details;
The Group does not own any freehold land. However its manufacturing facilities are set-up on
the lease lands for which lease agreements were entered into between the Company and the
Public Establishment for Industrial Estates.
The following are the details of lands taken on lease by the company to carry on its
manufacturing activities:
1. Plot of land 1703 measuring 4410 square meters and the building thereon measuring 1250
square meters located at Rusayl Industrial Estate.
2. Plot of land 249 measuring 4250 square meters located at Rusayl Industrial Estate
3. Plot of land 92, 93, 94 measuring 5402/74 square meters located at Rusayl Industrial Estate
Contingent Liabilities
The contingent liabilities as per the consolidated audited accounts of the Company as on 31st
December 2007 are as under:
Bonds (Surety) and Guarantees
Letters of Credit
Total
RO 1,183,276
RO
834,550
RO 2,017,826
Forward commodity contracts
Forward commodity contracts were entered into to manage exposure to fluctuations in the price of
copper, a key raw material. The settlement dates on open contracts were within one year from the
balance sheet date. The aggregate equivalent local currency amount was RO 1,090,331 (2006:
794,856) having a fair value of RO 1,028,193
Legal Proceedings
The Company does not have any major/material legal proceedings pending in a Court of Law in
Oman or outside, either instituted by, or against the Company.
Claims enforced against the Company
There are no claims enforced against the Company including by way of invoking of performance
guarantees or any other guarantees/bonds/encashment of retention amounts, in the last five years.
Material Contracts
The following material contracts may affect the Company’s business (other than ongoing execution
contracts, purchase/supply contracts, employment contracts and other general contracts of routine
nature):
a) Term Loan/Working capital loan with lenders (banks)
b) Lease agreements
c) Memorandum and Articles of Association of the Company. A copy of the
Memorandum and Articles of Association is available for perusal at the office of the
Company located at P.O.Box 75, P.C: 124, Rusayl, Sultanate of Oman. A copy of the
Memorandum and Articles of Association is also available from the CMA. The website
is www.omancma.org
Chapter 11
Summarised historical consolidated financial statements for 2005-2007
(Formerly known as Voltamp Manufacturing Company LLC)
Summarised historical consolidated financial statements
31 December 2005 to 2007
Summarised historical consolidated financial statements
Contents
Page
Report of the Auditors
1
Income statement
2
Balance sheet
3
Cash flow statement
4
Statement of changes in equity
5
Notes to the summarised historical consolidated financial statement
6 - 24
Page1
AUDITOR’S REPORT TO THE MEMBERS OF
VOLTAMP ENERGY SAOG (under transformation)
The summarised consolidated financial statements of Voltamp Energy SAOG under transformation (“the
Company”) for the years ended 31 December 2005 to 2007. The opinions on the above stated financial
statements have been extracted from audited consolidated financial statements
In our opinion, the summarised consolidated financial statements as at 31 December 2006 and 2007 have
been correctly extracted from the audited financial statements of the Group, on which unqualified opinion
was expressed.
In our opinion, the summarised audited financial statement as at 31 December 2005 has been correctly
extracted from the audited financial statements of the Group, on which another auditors, Mazars, had
expressed an unqualified opinion.
For a better understanding of the Company's financial position and the results of its operations for the year
and of the scope of audit, the summarized financial statements should be read in conjunction with the
financial statements from which the summarized financial statements were derived and audit report thereon.
1 April 2008
KPMG
Summarized Historical Consolidated Income Statement
for the period ended 31 December
Notes
Page 2
2007
RO
2006
RO
2005
RO
10,693,597
7,992,619
5,471,762
(7,002,719)
(6,247,602)
(4,281,585)
Gross profit
3,690,878
1,745,017
1,190,177
Other income
159,013
3,849,891
28,733
1,773,750
52,385
1,242,562
(877,602)
(696,058)
(579,074)
2,972,289
1,077,692
663,488
Finance charges
(201,600)
(190,450)
(125,714)
2,770,689
887,242
537,774
(348,474)
(100,000)
(41,673)
2,422,215
787,242
496,101
0.692
0.225
0.142
Income
Revenue
Cost of sales
8
Expenses
Selling, administrative and general expenses
Taxation
7
13
16
The notes 1 to 21 form an integral part of these summarized historical consolidated financial
statements
Summarized Historical Consolidated Balance Sheet
Assets
Notes
2007
RO
Page 3
2006
RO
2005
RO
Non-current assets
Property, plant and equipment
Investments
Deferred tax
Total non-current assets
3
18
13
521,201
666,704
15,472
1,203,377
565,354
11,100
576,454
596,464
12,710
609,174
Current assets
Inventories
Trade and other receivables
Cash in hand and at banks
Total current assets
4
5
6
2,564,161
3,453,046
86,699
6,103,906
2,411,179
3,066,359
3,443
5,480,981
1,124,983
2,017,730
4,189
3,146,902
Total assets
5
7,307,283
6,057,435
3,756,076
9
10
9
3,500,000
848,395
13,876
-
1,100,000
369,330
50,000
420,726
200,000
500,000
166,667
50,000
636,147
-
4,362,271
2,140,056
1,352,814
Equity and liabilities
Equity
Share capital
Legal reserve
General reserve
Retained earnings
Dividend Payable
9
Total equity
Liabilities
Non Current Liabilities
Long term loan
11
20,833
-
-
Current liabilities
Trade and other payables
Bank borrowings
Current portion of long term loan
12
11
11
1,549,956
1,249,223
125,000
1,398,439
2,518,940
-
1,192,934
1,196,992
13,336
Total current liabilities
2,924,179
3,917,379
2,403,262
Total liabilities
2,945,012
3,917,379
2,403,262
7,307,283
6,057,435
3,756,076
1.246
0.611
0.386
Net assets per share
17
The notes no. 1 to 21 forms an integral part of these summarized historical consolidated financial
statements
Page 4
Summarised historical consolidated cash flow statement
For the year ended 31 December
2007
RO
2006
RO
2005
RO
10,470,558
(8,045,184)
6,964,227
(7,934,251)
5,572,702
(4,968,343)
Cash generated from operations
2,425,374
(970,024)
604,359
Interest paid
Taxation paid
(201,600)
(120,787)
(190,451)
(69,840)
(125,714)
(42,918)
Net cash flows from / (used in) operating activities
2,102,987
(1,230,315)
435,727
Purchase of property, plant and equipment
Proceeds from sale of assets
Investment
(76,333)
12,558
(632,072)
(79,043)
-
(98,810)
-
Net cash flows from / (used in) investing activities
(695,847)
(79,043)
(98,810)
Cash flows from financing activities
Term loan received
Repayment of term loans
Dividend paid
250,000
(104,167)
(200,000)
(13,336)
-
(155,748)
(175,000)
(54,167)
(13,336)
(330,748)
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash flows from investing activities
Net cash flow from / (used in) financing activities
Increase / (decrease) in cash and cash equivalents during
the year
Cash and cash equivalents at the beginning of the year
1,352,973
(1,322,694)
6,169
(2,515,497)
(1,192,803)
(1,198,972)
Cash and cash equivalents at the end of the year
(1,162,524)
(2,515,497)
(1,192,803)
The notes no.1 to 21 forms an integral part of these summarized historical consolidated financial
statements
Page 5
Summarised historical consolidated statement of changes in equity
for the year ended 31 December 2005 to 2007
General
reserve
Dividend
payable /
(paid)
Retained
earnings
Share
capital
Legal
reserve
1 January 2005
Dividend paid
RO
500,000
-
RO
166,667
-
RO
50,000
-
160,000
(160,000)
RO
155,046
496,101
(15,000)
RO
1,031,713
496,101
(175,000)
1 January 2006
500,000
166,667
50,000
-
636,147
1,352,814
-
-
-
-
787,242
787,242
-
-
(600,000)
-
Transfer to Share
capital
Transfer to legal reserve
Dividend proposed
1 January 2007
600,000
Total
-
202,663
-
-
200,000
(202,663)
(200,000)
-
1,100,000
369,330
50,000
200,000
420,726
2,140,056
Transfer to share capital
Share capital under
registration
Dividend paid
400,000
-
-
-
2,422,215
(400,000)
2,422,215
2,000,000
-
(50,000)
-
(1,950,000)
-
-
479,065
-
-
(200,000)
(479,065)
(200,000)
31 December 2007
3,500,000
848,395
-
-
13,876
4,362,271
The notes no. 1 to 21 forms an integral part of these summarized historical consolidated financial
statements
1
Page 6
Legal status and principal activities
Voltamp Energy SAOG (under transformation) (“the Company”) is in the process of
registration as a joint stock company under the Commercial Companies Law of Oman.
The company is presently registered in the Sultanate of Oman as a limited liability
company. Voltamp Transformers Oman LLC (“the Subsidiary”), registered in the
Sultanate of Oman, is a wholly-owned subsidiary of the Company.
Voltamp
Manufacturing Company, registered in Qatar, is 51% owned subsidiary of the Company.
The principal activities of the Company and its Subsidiaries (“the Group”) are
manufacture, sale and distribution of transformers, LV Switchgears and panels. The
Ultimate Holding Company of the Group is Al Anwar Holdings SAOG (“AAH”) [formerly
Al Anwar Industrial & Trading Co. SAOG (“AAITCO”)].
2
Basis of preparation
These summarized historical consolidated financial statements have been derived from the audited
consolidated financial statements of the Company for the years ended 31 December 2005 to 2007.
a)
Statement of compliance
The summarised historical consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) and the disclosure requirements of
Commercial Companies Law of 1974, as amended.
Adoption status of new IFRS and interpretations
In the current year, the Group has adopted IFRS 7 Financial Instruments: Disclosures,
which is effective for annual reporting periods beginning on or after 1 January 2007, and
the consequential amendments to IAS 1: Presentation of Financial Statements.
The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand the
disclosures provided in these financial statements regarding the Group’s financial
instruments and management of capital.
Four Interpretations issued by the International Financial Reporting Interpretations Committee are
effective for the current period. These are: IFRIC 7 Applying the Restatement Approach under IAS
29, Financial Reporting in Hyperinflationary Economies; IFRIC 8 Scope of IFRS 2; IFRIC 9
Reassessment of Embedded Derivatives; and IFRIC 10 Interim Financial Reporting and
Impairment. The adoption of these Interpretations has not led to any changes in the Group’s
accounting policies.
b)
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis expect for:
• forward commodity contracts are measured at fair value
• investments at fair value through profit or loss are measured at fair value.
c)
Page 5
Functional currency
These consolidated financial statements are presented in Rial Omani, which is the Group’s
functional currency.
d)
Use of estimates and judgments
The preparation of financial statements requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised and in any future periods
affected.
e)
New standards and interpretation not yet effective
A number of new standards, amendments to standards and interpretations are not yet effective for the
year ended 31 December 2007, and have not been applied in preparing these consolidated financial
statements:
•
IFRS 8 Operating Segments introduces the “management approach” to segment reporting. IFRS
8, which becomes mandatory for the Group’s 2009 financial statements, will require the
disclosure of segment information based on the internal reports regularly reviewed by the
Group’s Chief Operating Decision maker in order to assess each segment’s performance and to
allocate resources to them. The Group does not prepare internal reports containing segment
information and accordingly it is not expected that IFRS 8 will have any significant impact on
the financial statements.
•
Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires
that an entity capitalize borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset as part of the cost of that asset. It is not expected that revised
IAS 23 will have any significant impact on the financial statements.
•
IFRIC 11, IFRS 2 Company and Treasury Share Transactions requires a share-based payment
arrangement in which an entity receives goods or services as consideration for its own equity
instruments to be accounted for as an equity-settled share-based payment transaction, regardless
of how the equity instruments are obtained. IFRIC 11 is not expected to have any significant
impact on the financial statements.
•
IFRIC 12 Service Concession Arrangements provides guidance on certain recognition and
measurement issues that arise in accounting for public-to-private service concession
arrangements. IFRIC 12, which becomes mandatory for the Group’s 2008 financial statements, is
not expected to have any significant impact on the financial statement.
•
IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or
otherwise participate in, customer loyalty programmes for their customers. It relates to customer
loyalty programmes under which the customer can redeem credits for awards such as free or
discounted goods or services. IFRIC 13, which becomes mandatory for the Group’s 2009
financial statements, is not expected to have any significant impact on the financial statements.
e)
Page 6
New standards and interpretation not yet effective (continued)
•
IFRIC 14, IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction clarifies when refunds or reductions in future contributions in relation to defined
benefit assets should be regarded as available and provides guidance on the impact of minimum
funding requirements (MFR) on such assets. It also addresses when a MFR might give rise to a
liability. IFRIC 14 will become mandatory for the Group’s 2008 financial statements, is not
expected to have any significant impact on the financial statements.
The accounting policies set out below have been applied consistently by the Group entities and are
consistent with those used in the previous year.
3
Significant accounting policies
a)
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to
govern the financial and operating policies of an entity so as to obtain benefit from its activities. In
assessing control, potential voting rights that currently are exercisable are taken into account. The
financial statements of the subsidiaries are included in the consolidated financial statements from
the date that control commences until the date the control ceases.
Intragroup balances and transactions, and any unrealised gains and losses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
b)
Foreign currencies
Transactions in foreign currencies are translated to Rials Omani at the foreign exchange rate ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated to Rials Omani at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in the income statement. The
foreign currency gain or loss on monetary items is the difference between amortised costs in Rials
Omani at the beginning of the period, adjusted for effective interest and payments during the period
and the amortised costs in foreign currency translated at the exchange rate at the end of the period.
Foreign currency differences arising on the retranslation are recognised in the income statement.
c)
(i)
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
impairment losses.
Costs include expenditures that are directly attributable to the acquisition of the asset. The cost
includes any other cost that directly attributable to bringing the asset to a working condition for its
intended use, and the costs of dismantling and removing the items and restoring the site on which
they are located.
(c)
Property, plant and equipment (continued)
(i)
Recognition and measurement (continued)
Page 7
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
(ii)
Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying
amount of an item if it is probable that future economic benefits embodied within the part will flow
to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of
property, plant and equipment are recognized in the income statement as incurred.
(iii)
Depreciation
Depreciation is recognized in the income statement on a straight-line basis over the estimated useful
lives of each part of the property, plant and equipment. Assets under construction are not
depreciated. The estimated useful lives for the current and comparative periods are as follows:
Leasehold buildings
Plant and equipment
Motor vehicles
Furniture, fixtures and office equipment
Years
20
4 – 10
3–4
4–8
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
d)
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value
is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and selling expenses. The cost of inventories is based on the weighted
average cost principle and includes expenditure incurred in acquiring the inventories and
bringing them to their existing location and condition. In the case of work in progress,
cost includes raw material cost only.
e)
Impairment
(i)
Financial assets
A financial asset is considered to be impaired if objective evidence indicates that one or more
events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the
difference between its carrying amount, and the present value of estimated future cash flows
discounted at the original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The
remaining financial assets are assessed collectively in groups that share similar credit risks
characteristics.
e)
Impairment (continues)
(i)
Financial assets (continues)
Page 8
All impairment losses are recognized in income statement.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after
the impairment loss was recognized. For financial assets measured at amortized cost, the reversal is
recognized in income statement.
(ii)
Non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indications exist then the
asset’s recoverable amount is estimated.
An impairment loss is recognized if the carrying amount of an asset or cash generating unit is the
greater of its value in use and its fair value less costs to sell. In assessing the value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specified to the asset.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a
change in estimates used to determine the recoverable amount. An impairment loss is reversed only
to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortization, if no impairment loss had been recognized.
f)
Employee benefits
Payment is made to Omani Government Social Security Scheme under Royal Decree number 72/91
for Omani employees. Provision is made for amounts payable under the Oman Labour Law
applicable to non-Omani employees for accumulated periods of service at the balance sheet date.
g)
Provisions
A provision is recognized if, as a result of past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability.
h)
Revenue
Revenue from sale of goods is recognised in the income statement when the significant risks and
rewards of ownership have been transferred to the buyer. No revenue is recognised if there are
significant uncertainties regarding recovery of the consideration due, associated costs or the
possible return of goods.
i)
Page 9
Leases
Payments made under operating leases are recognised in profit or loss on a straight line basis over
the term of the lease. Lease incentives received are recognised as an integral part of the total lease
expense, over the term of the lease.
j)
Income tax
Income Tax on the results of the year comprises current and deferred tax. Income tax is recognised
in the income statement except to the extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income of the year, using tax rates enacted or
substantially enacted at the balance sheet date, and any adjustment to tax payable in respect to
previous years.
Deferred tax is calculated using the balance sheet liability method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amount used for taxation purposes. The amount of deferred tax provided is based on the
expected manner of realization or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits
will be available against which the unused tax losses and credits can be utilized. Deferred tax assets
are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
k)
Earnings per share
The Group presents basic earning per share (EPS) data for its ordinary share. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period.
l)
Provision for warranties
A provision for warranties is recognised when the underlying products or services are
sold. The provision is based on historical warranty data and a weighting of all possible
outcomes against their associated probabilities.
m)
Investments at fair value through profit or loss
Investments are designated at fair value through profit or loss, if the Group manages such investments
and makes purchases and sales decisions based on their fair value in accordance with the Group’s
documented risk management or investment strategy.
These are initially recognized at cost and subsequently measured at fair value. All related realize and
unrealized gains and losses, and dividend received are included in the income statement.
Page 10
n)
Dividends
Dividends are recognized as a liability in the period in which they are declared.
o)
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair
value, for both financial and non-financial assets and liabilities. Fair values have been determined
for measurement and /or disclosure purposes based on the following methods. Where applicable,
further information about the assumptions made in determining fair values is disclosed in the notes
specific to the asset or liability.
(i)
The market value of property is the estimated amount for which a property could be exchanged on
the date of valuation between a willing buyer and a willing seller in an arm’s length transaction
after proper marketing wherein the parties had each acted knowledgeably, prudently and without
compulsion. The market value of items of plant and equipments is based on the quoted market
prices for similar items.
(ii)
Inventory
The fair value of inventory is determined based on its estimated selling price in the ordinary course
of the business less the estimated costs of completion and sale, and a reasonable profit margin based
on the effort required to complete and sell the inventory.
(iii)
Trade debtors are carried at amortised cost less impairment losses. An estimate is made for doubtful
debts and impairment based on a review of all outstanding amounts at the year end. Bad debts are
written off during the year in which they are identified.
(iv)
The fair value of the forward commodity contracts is based on the listed market price.
(p)
Comparatives
Certain comparative information has been reclassified to conform to the presentation adopted in
these summarised historical consolidated financial statements.
Page 11
3
Furniture,
fixture &
office
equipment
RO
Factory
Building
RO
Plant and
equipmen
t
RO
47,022
441,567
950
899,772
41,884
82,800
16,850
(32,325)
288,551
16,649
(28,604)
1,759,715
76,333
(60,929)
47,022
442,517
941,656
67,325
276596
1,775,116
42,998
221,115
661,915
49,422
218,909
1,194,358
2,351
22,114
58,575
11,175
19,260
113,475
-
-
-
(30,008)
(23,910)
(53,918)
45,349
243,229
720,490
30,589
214,259
1,253,915
1,673
199,288
221,166
36,736
62,338
521,201
4,024
220,454
237,858
33,374
69,644
565,354
Lease
hold
Land
RO
Motor
vehicles
RO
Total
RO
Cost
1 January 2007
Additions
Disposals
31 December
2007
Depreciation
1 January 2007
Charge for the
year
Disposals
31 December
2007
Net book values
31 December
2007
31 December
2006
Page 12
3
Property, plant and equipment (contd.)
Lease
hold
Land
RO
Furniture,
fixture &
office
equipments
RO
Factory
Building
RO
Plant and
equipment
RO
Motor
vehicles
RO
42,672
438,069
888,599
59,375
258,783
1,687,498
4,350
3,500
11,174
40,810
29,768
89,602
-
-
(17,385)
-
(17,385)
47,022
441,569
899,773
82,800
288,551
1,759,715
38,404
199,176
601,358
54,804
197,303
1,091,045
4,594
21,939
60,557
12,006
21,604
120,700
-
-
-
(17,384)
-
(17,384)
42,998
221,115
661,915
49,426
218,907
1,194,361
Net book values
31 December
2006
4,024
220,454
237,858
33,374
69,644
565,354
31 December
2005
4,268
238,893
287,240
4,583
61,480
596,464
Total
RO
Cost
1 January 2006
Additions during
the year
Disposals
31 December
2006
-
Depreciation
1 January 2006
Charge for the
year
Disposals
31 December
2006
Page 13
3
Property, plant and equipment (contd.)
Lease
hold
Land
RO
Factory
Building
RO
Plant and
equipment
RO
Motor
vehicles
RO
Furniture,
fixture &
office
equipments
RO
Total
RO
Cost
1 January 2005
Additions during
the year
42,672
438,069
805,990
59,375
242,582
1,588,688
-
-
82,609
-
16,201
98,810
31 December 2005
42,672
438,069
888,599
59,375
258,783
1,687,498
1 January 2005
Charge for the year
Disposals
34,137
4,267
177,273
21,904
550,698
50,661
47,797
6,994
178,480
18,823
988,385
102,649
31 December 2005
38,404
199,177
601,359
54,791
197,303
1,091,034
Net book values
31 December 2005
4,268
238,892
287,240
4,584
61,480
596,464
31 December 2004
8,535
260,796
255,292
11,578
64,102
600,303
Depreciation
4
Inventories and work in progress
Raw materials
Work in progress
Finished goods
Provision for slow moving stock
2007
RO
2006
RO
2005
RO
2,246,255
228,803
247,149
(158,046)
2,071,009
335,436
125,360
(120,626)
907,191
117,536
100,256
-
2,564,161
2,411,179
1,124,983
Page 14
5
Trade receivables
Less provision for doubtful debt
Amount due from a related party
Advances, deposits and prepayments
Movement of Provision for doubtful debts
Opening Provision for doubtful debts
Add: Provided during the year
Less: Written off during the year
Less: Recovery during the year
Closing Provision for doubtful debts
6
43,991
10,890
(20,224)
(6,077)
28,580
2006
RO
3,009,730
(43,991)
2005
RO
1,949,938
(37,921)
100,620
3,066,359
105,713
2,017,730
37,921
6,070
32,232
5,689
43,991
37,921
Cash and cash equivalents
2007
RO
2006
RO
2005
RO
Cash in hand
Cash at bank :
Current account
Deposit account
Call deposit (copper trading account)
1,621
2,100
2,100
62,519
20
22,539
86,699
1,323
20
2,069
20
3,443
4,189
2007
RO
549,991
54,900
23,931
59,587
37,920
12,115
10,320
3,745
9,905
6,722
4,927
103,539
2006
RO
361,767
58,955
30,446
16,530
40,572
11,697
6,070
656
7,408
5,885
5,037
151,035
2005
RO
387,426
30,085
31,253
22,218
28,780
19,451
5,689
21,774
9,291
4,955
4,961
13,191
877,602
696,058
579,074
Employee costs
Depreciation
Communication costs
Traveling expenses
Legal and professional charges
Vehicle running expenses
Provision for doubtful debts
Advertisement and promotion expenses
Repairs and maintenance expenses
Insurance expenses
Printing and stationery expenses
Other expenses
8
2007
RO
3,330,586
(28,580)
900
150,140
3,453,046
Cost of sales
Cost of raw materials
Employee costs
Depreciation
Other manufacturing expenses
2007
RO
6,381,086
379,701
58,575
183,357
7,002,719
2006
RO
5,743,641
304,653
60,557
138,751
6,247,602
2005
RO
3,877,658
247,887
72,564
83,476
4,281,585
Page 15
9
Share capital
At 31 December 2007, the Company's authorised, subscribed and paid-up share capital
comprises 1,500,000 ordinary shares (2006: 1,100,000, 2005: 500,000) of RO 1 each. During
May 2007, the Company issued a stock dividend of 400,000 shares of RO 1 each.
At 31 December 2007, the Company has declared stock dividend of 2,000,000 shares of RO 1
each. At 31 December 2007, whilst share capital has been increased to RO 3,500,000; the
increase has not yet been registered with the Ministry of Commerce and Industry.
Members of the Company who own 10% or more of the Company’s shares, whether in
their name or through a nominee account, are as follows:
Shareholder
SABCO LLC
10
Holding
%
57.42
21.29
2007
Number of shares held
2006
2005
2,009,700
745,150
631,620
234,190
287,096
106,452
Legal reserve
Article 154 of the Commercial Company’s Law of 1974 requires that 10% of a company’s
net profit be transferred to a non-distributable legal reserve until the amount of legal
reserve becomes equal to one third of the company’s issued share capital. Hence during
the years 2006 and 2007 a sum of 10% of net profit of the Company is transferred to legal
reserve.
11
Bank borrowings
T
Bank overdraft
Loans against trust receipts
Bill discounting
2007
RO
2006
RO
2005
RO
552,600
696,623
-
562,762
1,956,178
2,518,940
435,337
601,187
160,468
1,249,223
Term loan
Repayment due with in 12 months included in
current liability
1,196,992
145,833
(125,000)
20,833
The Company has borrowing facility in the amount of RO 850,000 (2006: RO 850,000,
2005: RO 450,000) which is secured against the property, plant and equipment. The
borrowing facility carries interest rate ranging from 7.0% to 7.5% p.a.
Page 16
The Subsidiary has borrowing facility in the amount of RO 3,820,000 (2006: RO 3,320,000,
2005: RO 3,045,000) which is secured against property, plant and equipment of the
Subsidiary and corporate guarantee of the Company. The borrowing facility carries interest
rate ranging from 6.5% to 7.5% p.a.
12
Trade accounts payable
Amount due to a related party
Other payables-fair value loss on forward commodity
contracts (refer note 19)
Accrued expenses
Other payables
Provision for income tax
2007
RO
2006
RO
2005
RO
734,856
10,650
982,272
13,601
930,346
-
62,138
124,966
-
406,896
3,357
322,059
1,549,956
177,600
192,747
100,000
1,398,439
69,841
1,192,934
The Group has provided for warranties mainly in respect of sale of transformers and electrical items,
and repair jobs in the amount of RO 87,737 (2006: RO 68,125,2005: 2005:RO 51,218) and RO 20,918
(2006: RO 12,961,2005:RO8,284) respectively. The provision included in accruals is established on
estimates based on historical warranty data associated with similar products and services. The Group
expects to incur the liability over the next one year.
13
Income tax
The tax rate applicable to the Company taxable profit is 12% (2006 – 12%, 2005:12%) on taxable
profit in excess of RO 30,000. The determination of taxable income for the year takes into account
adjustments for tax purposes, which include items relating to both income and expense and which are
based on the current understanding of the existing tax laws, regulations and practices.
2007
Current tax
Deferred tax
Income tax arrears Paid
322,059
(4,372)
20,787
348,474
2006
2005
101,610
(1,610)
53,836
(12,163)
100,000
41,673
Deferred tax assets arises on accounting of timing difference of depreciation and the provisions for
bad debts and slow moving inventory and the movement is as follows:
2007
2006
2005
Opening balance
Movement during the year
(11,100)
(4,372)
(12,710)
1,610
(547)
(12,163)
Closing balance
(15,472)
(11,100)
(12,710)
Page 17
Reconciliation of effective tax rate
Effective
Rate %
Profit before tax
Income tax as per rates mentioned
above
Tax exempt revenue
Excess (short) provision for tax
Current tax
Deferred tax
Tax expense for the year
2007
RO
2,770,689
12
2006
RO
2005
RO
887,242
537,774
101,610
(1,610)
100,000
53,836
(12,163)
41,673
325,283
(4,123)
13
25,539
1,775
348,474
In the case of the Company the assessments for the tax years ended 2004 to 2006 has not been
finalized with the Secretariat General for Taxation at the Ministry of Finance. In the case of the
Subsidiary, the income tax assessments up to the year 2002 have been finalized. The income tax
assessment for the years 2003 to 2006 has not been finalized. The Management considers that
additional tax liability, if any, in respect of open tax years would not be material to the financial
position of the Group as at 31 December 2007.
14
Employee costs
Wages and salaries
Other benefits
Contribution to defined retirement plan
Increase in liability for unfunded defined benefit
retirement plan
15
2007
RO
2006
RO
2005
RO
662,127
221,614
14,572
31,379
548,526
89,767
13,893
14,234
508,191
102,075
13,435
11,612
929,692
666,420
635,313
Related party transactions
During the year the Group has entered into transactions with entities over which certain Directors
are able to exercise significant influence. The Group also entered into transactions with the ultimate
Holding Company and its associates. In the ordinary course of business, such related parties
provide goods and render services to the Group. The Group also provides goods and renders
services to such related parties. The Group considers that the terms of purchase, sale of goods and
provision of services are comparable with those that could be obtained from third parties. The
details are as follows:
2007
RO
Purchases
Other Income
Revenue
34,501
77,380
211,549
2006
RO
2005
RO
15,646
52,527
-
1,390
Page 18
16
Basic earnings per share
Basic earning per share is calculated by dividing the net profit of the Group for the year by the
number of shares outstanding during at the year end as follows:-.
2007
2006
2005
Net profit for the year (RO)
2,422,215
787,242
496,101
Number of shares outstanding at the year end
(Nos.)
3,500,000
3,500,000
3,500,000
0.692
0.225
0.142
Basic earnings per share (RO)
During the year ended 31 December 2007, the Company issued 2,400,000 bonus shares of RO 1
each (2006:600,000 bonus shares of RO1 each, 2005:Nil) to the existing Members since the
bonus issue was without consideration; the issue is treated as if it has occurred prior to the
beginning of 2005.
17
Net assets per share are calculated by dividing the net assets at the balance sheet date by the number of
shares outstanding as follows:
2007
2006
2005
Net assets (RO)
4,362,271
2,140,056
1,352,814
Number of shares in issue at the year end
(Nos.)
3,500,000
3,500,000
3,500,000
1.246
0.611
0.386
Net assets per share (RO)
During the year ended 31 December 2007, the Company issued 2,400,000 bonus shares of RO 1
each (2006:600,000 bonus shares of RO1 each, 2005:Nil) to the existing Members since the
bonus issue was without consideration; the issue is treated as if it has occurred prior to the
beginning of 2005.
Page 19
18
Investments
2007
RO
At Cost
Voltamp
Manufacturing
(“VMCQ”)
Company,
Qatar
At fair value through profit or loss
Portfolio investment
19
2006
RO
2006
RO
432,072
-
-
234,632
-
-
666,704
-
-
During the year 2007, the Company has made investment in the amount of RO 432,072(2006: Nil,
2005: Nil) in VMCQ and holds 51% of the equity. At 31 December 2007, the VMCQ did not
commence operations and has not prepared its financial statements. Accordingly the results of VMCQ
have not been consolidated.
.
Contingencies and Commitments
2007
RO
Guarantees and Letter of credits
2,017,826
2006
RO
1,645,269
-
2005
RO
2,379,574
-
Forward commodity contracts were entered into to manage exposure to fluctuations in Copper
price. The settlement dates on open contracts were within one year from the balance sheet date.
The aggregate equivalent local currency amount was RO 1,090,331 (2006: 794,856, 2005: Nil)
having a fair value of RO 1,028,193 (2006: RO 669,890, 2005: Nil).
20
Financial instruments and financial risk management
Financial instruments carried on the balance sheet comprise cash and bank balances, investments,
trade and other receivables, bank borrowings and trade and other payables.
The Group has exposure to the following risks from its use of financial instruments:
(i)
Credit risk
(ii)
Liquidity risk
(iii)
Market risk
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the receivables from
customers.
Page 20
20
Financial instruments and financial risk management (continued)
Credit risk (continued)
The Group has a credit policy and management monitors exposure to credit risk on an ongoing basis,
assesses recoverability, and makes provision for balances whose recoverability is in doubt. The
maximum exposure to Credit risk on trade and other receivables and investments is limited to their
carrying values at the reporting date.
The maximum exposure to credit risk for trade receivables (including amount due from a related
party) at the reporting date by geographic region was:
Carrying amount
Amount in RO
2007
2006
2005
RO
RO
RO
Domestic
GCC Countries
Total
1,913,940
1,417,546
3,331,486
1,774,605
1,235,125
3,009,730
704,198
1,245,740
1,949,938
The Group’s most significant customer accounts for RO 1,282,626 of the trade receivables carrying
amount at 31 December 2007 (2006: RO 1,146,624, 2005: RO 298,566)
Impairment losses
The aging of trade receivables (including amount due from a related party) at the reporting date
was:
Amount in RO
Gross
2007
Not past due
Impairmen
t
2007
Gross
2006
Impairme
nt
2006
Gross
2005
Impairment
2005
2,582,25
0
Past due 1-90 days 714,257
Past due 91-365
34,979
days
1,450 2,092,384
846,557
27,130
70,789
- 1,286,143
- 625,874
43,991
37,921
37,921
3,331,48
6
28,580 3,009,730
43,991 1,949,938
37,921
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall
due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group uses local banks operating in the Sultanate of Oman to ensure that it has sufficient cash
on demand to meet expected operational expenses and sufficient credit facilities to manage its
liquidity risk. The Group has total credit facilities in the amount of totaling of RO 4.42 million from
three banks. Short term loans and overdraft ranging are, on average, utilized for period of 15 to 30
Page 21
days to bridge the gap between collections of receivables and settlement of product purchase bills
during the middle of every month
Page 22
20
Liquidity risk (continued)
The maturities of Group’s undiscounted financial liabilities at reporting date is as below:
31 December 2007
Carrying Contractual less than 6
amount cash flows
months
RO
RO
RO
6 months 1 year to 2
to 1 year
years
RO
RO
Non-derivative financial
liabilities
Term loan
Bank borrowings
31 December 2006
145,833
1,249,223
1,549,956
152,669
1,257,951
1,549,956
66,992
1,257,951
1,549,956
64,648
-
21,029
-
2,945,012
2,960,576
2,874,899
64,648
21,029
amount cash flows
months
RO
RO
RO
to 1 year
years
RO
RO
liabilities
Bank borrowings
31 December 2005
2,518,940
1,398,439
2,552,310
1,398,439
2,552,310
1,398,439
-
-
3,917,379
3,950,749
3,950,749
-
-
amount cash flows
months
RO
RO
RO
to 1 year
years
RO
RO
liabilities
Term Loan
Bank borrowings
13,366
1,196,992
1,230,855
13,366
1,219,992
1,230,855
13,366
1,219,992
1,230,855
-
-
2,441,213
2,464,213
2,464,213
-
-
Page 23
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates,
equity prices and commodity price risk (Copper) will affect the Group’s income or the value of its
holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return on risk. In respect of
commodity price risk the Group manages its exposure by entering into forward contracts to mitigate
such risks.
Currency risk
The Group is exposed to foreign exchange risk on sales, purchases, receivables and payables arising
primarily from GCC currencies and US Dollar exposures which are pegged to the Omani Rial.
Interest rate risk
The Group manages its exposure to interest rate risk on term loan and short term borrowings by
ensuring that they are on fixed rate basis.
Fair value estimation
The fair value of portfolio investment is determined by reference to Stock Exchange quoted market
prices at the close of business on the balance sheet date. The fair value of forward commodity
contracts is determined using forward commodity market rates at the balance sheet date.
The carrying amounts of the other financial assets and liabilities approximately equal to their fair
values.
Capital management
The Group’s policy is to maintain an optimum capital base to maintain investor, creditor and market
confidence to sustain future growth of business as well as return on capital.
21
Comparatives
Certain comparative information has been reclassified to conform to the presentation adopted in
these financial statements.
Chapter 12
Prospective consolidated financial statements for 2008-2014
Prospective consolidated financial statements
31 December 2008 to 2014
Page 24
Prospective consolidated financial statements
Contents
Page
Accountants reports
1-2
Prospective income statement
3
Prospective balance sheet
4-5
Prospective statement of changes in equity
6-7
Prospective cash flow statement
Significant accounting policies and assumptions
8 - 10
11 - 17
Page 1
ACCOUNTANT’S REPORT TO THE BOARD OF DIRECTORS OF
VOLTAMP ENERGY SAOG (under transformation)
We have examined the prospective consolidated financial statements for Voltamp Energy SAOG (under
transformation) (“the Company”) for the years ending 31 December 2008 to 2014 (“the Projections”), set
out on pages 3 to 10 in accordance with International Standard on Assurance Engagements (ISAE 3400)
applicable to the examination of prospective financial statements.
Management of the Company is solely responsible for the Projections including the assumptions set out on
note 2 to 5 on which the Projections are based.
We draw attention to the following:
•
The Projections are based on business plan prepared by an independent consultants engaged by the Lead
Issue Manager and Financial Advisor.
•
The business plan is based on:
- projections prepared by management for the Voltamp Energy LLC (the parent company formally
known as Voltamp Manufacturing Company LLC) and Voltamp Transformers Oman LLC (its
existing wholly owned subsidiary), and
- a financial feasibility study conducted by an independent consultants engaged by the Company, for a
Voltamp Manufacturing Company Qatar (51 % subsidiary under construction in Qatar), and
- a financial feasibility study conducted by an independent consultants engaged by the Company, for
Voltamp Power LLC (a wholly owned subsidiary to be incorporated in Oman) with suitable
modification by the management.
The Projections have been prepared for the purpose of providing prospective consolidated financial
statement to potential purchasers of the Company’s shares that are being offered in a public issue in
accordance with the Prospectus. The Projections have been prepared using a set of assumptions that include
hypothetical assumptions about future events and Management’s actions that are not necessarily expected to
occur. Consequently, readers are cautioned that the Projections may not be appropriate for purposes other
than that described above.
Based on our examination of the evidence supporting the assumptions, nothing has come to our attention,
which causes us to believe that these assumptions do not provide a reasonable basis for the Projections,
assuming that the hypothetical assumptions occur. Further, in our opinion, the Projections are properly
prepared on the basis of the assumptions and are presented in accordance with International Standard on
Assurance Engagements.
Even if the events anticipated under the hypothetical assumptions described above occur, actual results are
still likely to be different from the Projections since anticipated events frequently do not occur as expected
and the variation may be material.
(continued on page 2)
Page 2
(continued from page 1)
The assumptions in respect of capacity and operating information for the years 2008 to 2014 are set out in
note 5 (k) and 5 (l) on page 18 and 19 respectively to the projections, which is based on targeted market
share and estimated customer demand. If the Company is not able to achieve the targeted market share and
the estimated customer demand the Company will not be able to achieve the projected results included in
these projections.
1 April 2008
KPMG
Page 3
Summarised prospective consolidated income statement
For the period ended 31 December
Notes
2008
RO
2009
RO
2010
RO
2011
RO
2012
RO
2013
RO
2014
RO
14,334,473
20,397,784
27,846,766
36,925,267
46,138,067
54,723,722
62,074,418
(10,185,084)
(14,716,346)
(20,944,443)
(27,088,773)
(33,344,264)
(39,021,993)
(44,154,975)
Gross profit
4,149,389
5,681,438
6,902,323
9,836,494
12,793,803
15,701,729
17,919,443
Other income
160,380
95,000
107,000
112,400
118,205
124,445
131,154
(1,344,785)
(2,086,311)
(3,372,988)
(3,926,954)
(4,511,410)
(5,257,189)
(5,951,722)
2,964,984
3,690,127
3,636,335
6,021,940
8,400,598
10,568,985
12,098,875
Finance charges
(226,104)
(220,084)
(678,073)
(665,062)
(726,052)
(705,042)
(668,031)
2,738,879
3,470,043
2,958,262
5,356,878
7,674,546
9,863,943
11,430,844
(336,753)
(405,342)
(512,741)
(561,888)
(629,817)
(706,019)
(801,088)
2,402,126
3,064,701
2,445,521
4,794,990
7,044,729
9,157,924
10,629,756
0.048
0.061
0.049
0.096
0.141
0.183
0.213
Income
Revenue
Cost of sales
8
Expenses
Taxation
7
13
16
The significant accounting policies & assumptions on note 2 to 5 form an integral part of these prospective consolidated financial statements
Summarised prospective consolidated balance sheet
Notes
Page 4
2008
RO
2009
RO
2010
RO
2011
RO
2012
RO
2013
RO
2014
RO
2,417,987
781,515
200,000
15,472
3,414,974
9,469,581
586,136
200,000
15,472
10,271,189
9,393,303
390,757
200,000
15,472
9,999,532
8,313,842
195,378
200,000
15,472
8,724,692
7,347,372
200,000
15,472
7,562,844
6,194,270
200,000
15,472
6,409,742
5,359,457
200,000
15,472
5,574,929
Assets
Non-current assets
Intangible assets
Investment
Deferred tax
Total non-current assets
3
18
13
Current assets
Inventories
Cash in hand and at banks
4
5
6
2,931,057
3,767,113
8,501,702
15,199,872
3,693,706
4,871,538
7,244,057
15,809,301
4,837,003
6,636,374
7,404,144
18,877,521
6,036,387
8,411,071
9,505,654
23,953,112
7,159,665
10,153,607
13,549,414
30,862,686
8,298,925
11,829,132
19,601,581
39,729,638
9,333,347
13,345,085
26,726,719
49,405,151
Total assets
5
18,614,846
26,080,490
28,877,053
32,677,804
38,425,530
46,139,380
54,980,080
9
5,000,000
6,400,000
1,059,071
455,326
1,750,000
5,000,000
6,400,000
1,312,350
1,516,748
1,750,000
5,000,000
6,400,000
1,604,904
1,919,715
1,750,000
5,000,000
6,400,000
1,976,866
4,592,743
1,750,000
5,000,000
6,400,000
2,424,027
9,440,311
1,750,000
5,000,000
6,400,000
2,816,072
16,456,190
1,750,000
5,000,000
6,400,000
3,285,583
24,866,435
1,750,000
14,664,397
15,979,098
16,674,619
19,719,609
25,014,338
32,422,262
41,302,018
Equity
Share capital
Share premium
Legal reserve
Retained earnings
Dividend payable
Total equity
10
9
Summarised prospective consolidated balance sheet
Notes
Page 5
2008
RO
2009
RO
2010
RO
2011
RO
2012
RO
2013
RO
2014
RO
Liabilities
Non current liabilities
Long term loan
11
401,392
5,859,218
5,809,044
4,607,696
3,455,522
2,303,348
1,151,174
Current liabilities
Short term bank borrowings
12
11
11
1,878,224
1,650,000
20,833
2,542,000
1,650,000
50,174
3,323,216
3,020,000
50,174
4,254,151
2,895,000
1,201,348
5,007,322
3,746,000
1,202,348
5,747,422
4,464,000
1,202,348
6,371,540
4,953,000
1,202,348
3,549,057
4,242,174
6,393,390
8,350,499
9,955,670
11,413,770
12,526,888
Total liabilities
3,950,449
10,101,392
12,202,434
12,958,195
13,411,192
13,717,118
13,678,062
18,614,846
26,080,490
28,877,053
32,677,804
38,425,530
46,139,380
54,980,080
0.293
.319
.333
.394
.500
.648
.826
17
Page 6
Summarised prospective consolidated cash flow statement
2008
RO
2009
RO
2010
RO
2011
RO
2012
RO
2013
RO
2014
RO
35,262,970
44,513,737
(28,723,161) (36,863,906)
53,172,643
(43,365,565)
60,689,619
(49,266,723)
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
14,180,786
19,388,359
26,188,930
(11,429,239) (16,548,404) (23,293,179)
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
Interest paid
Taxation paid
(226,104)
(336,753)
(220,084)
(405,342)
(678,073)
(512,741)
(665,062)
(561,888)
(726,052)
(629,817)
(705,042)
(706,019)
(668,031)
(801,088)
Net cash flows from / (used in) operating activities
2,188,690
2,214,529
1,704,937
5,312,858
6,293,962
8,396,017
9,953,777
Purchase of property, plant and equipment
Acquisition of intangibles assets
Investment
(2,793,833)
(127,894)
466,704
(6,331,000)
(849,000)
-
(1,114,676)
-
(135,000)
-
(199,028)
-
(159,676)
-
(415,465)
-
Net cash flows from / (used in) investing activities
(2,455,023)
(7,180,000)
(1,114,676)
(135,000)
(199,028)
(159,676)
(415,465)
Cash flows from investing activities
Consolidated cash flow statement (continued)
Page 7
Summarised prospective consolidated cash flow statement
2008
RO
2009
RO
2010
RO
2011
RO
2012
RO
2013
RO
2014
RO
Cash flows from financing activities
Issue of equity under IPO
Share issue premium
Share issue collected
Issue expenses incurred
Term loan received
Repayment of term loans
Dividends paid
1,500,000
6,600,000
50,000
(250,000)
401,392
(20,833)
-
-
-
-
-
-
-
5,508,000
(50,174)
(1,750,000)
(50,174)
(1,750,000)
(1,201,348)
(1,750,000)
(1,152,174)
(1,750,000)
(1,152,174)
(1,750,000)
(1,152,174)
(1,750,000)
Net cash flow from / (used in) financing activities
8,280,559
3,707,826
(1,800,174)
(2,901,348)
(2,902,174)
(2,902,174)
(2,902,174)
8,014,226
(1,257,645)
(1,209,913)
2,226,510
3,192,760
5,334,167
6,636,138
(1,162,524)
6,851,702
5,594,057
4,384,144
6,610,654
9,803,414
15,137,581
6,851,702
5,594,057
4,384,144
6,610,654
9,803,414
15,137,581
21,773,719
8,501,702
(1,650,000)
6,851,702
7,244,057
(1,650,000)
5,594,057
7,404,144
(3,020,000)
4,384,144
9,505,654
(2,895,000)
6,610,654
13,549,414
(3,746,000)
9,803,414
19,601,581
(4,464,000)
15,137,581
26,726,719
(4,953,000)
21,773,719
Increase / (decrease) in cash and cash equivalents during
the year
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Cash & cash equivalents comprise:
Cash at bank and in hand
Short term bank borrowings
The significant accounting policies & assumptions on note 2 to 5 form an integral part of these prospective consolidated financial statements.
Page 8
Prospective consolidated statement of changes in equity
1 January 2008
Increase in share capital - IPO proceeds
Increase in share premium - IPO proceeds
Shortfall in issue expenses
Profit for the year
Proposed dividend
Share
Capital
3,500,000
1,500,000
Share
Premium
-
Legal
Reserve
848,395
Proposed
Dividend
-
Retained
earnings
13,876
1,750,000
2,402,126
(210,676)
(1,750,000)
4,362,271
1,500,000
6,600,000
(200,000)
2,402,126
-
6,600,000
(200,000)
210,676
Total
31 December 2008
5,000,000
6,400,000
1,059,071
1,750,000
455,326
14,664,397
1 January 2009
Dividend paid
Profit for the year
Proposed dividend
5,000,000
6,400,000
1,059,071
1,750,000
(1,750,000)
455,326
1,750,000
3,064,701
(253,279)
(1,750,000)
14,664,397
(1,750,000)
3,064,701
-
31 December 2009
5,000,000
1,750,000
1,516,748
15,979,098
253,279
6,400,000
1,312,350
Consolidated statement of changes in equity (continued)
Page 9
Share
Capital
Share
Premium
Legal
Reserve
Proposed
Dividend
Retained
earnings
1 January 2010
Dividend paid
Profit for the year
Proposed Dividend
5,000,000
6,400,000
1,312,350
1,750,000
(1,750,000)
1,516,748
31 December 2010
5,000,000
6,400,000
1 January 2011
Dividend paid
Profit for the year
Proposed dividend
5,000,000
6,400,000
31 December 2011
5,000,000
6,400,000
1 January 2012
Dividend paid
Profit for the year
Proposed Dividend
5,000,000
6,400,000
31 December 2012
5,000,000
1,750,000
2,445,521
(292,554)
(1,750,000)
15,979,098
(1,750,000)
2,445,521
-
1,604,904
1,750,000
1,919,715
16,674,619
1,604,904
1,750,000
(1,750,000)
1,919,715
1,750,000
4,794,990
(371,962)
(1,750,000)
16,674,619
(1,750,000)
4,794,990
-
1,976,866
1,750,000
4,592,743
19,719,609
1,976,866
1,750,000
(1,750,000)
4,592,743
1,750,000
7,044,729
(447,161)
(1,750,000)
19,719,609
(1,750,000)
7,044,729
-
1,750,000
9,440,311
25,014,338
292,554
371,962
447,161
6,400,000
Total
2,424,027
Consolidated statement of changes in equity (continued)
Page
10
Share
Capital
Share
Premium
Legal
Reserve
Proposed
Dividend
Retained
earnings
1 January 2013
Dividend paid
Profit for the year
Proposed dividend
5,000,000
6,400,000
2,424,027
1,750,000
(1,750,000)
9,440,311
31 December 2013
5,000,000
6,400,000
1 January 2014
Dividend paid
Profit for the year
Proposed dividend
5,000,000
6,400,000
31 December 2014
5,000,000
1,750,000
9,157,924
(392,045)
(1,750,000)
25,014,338
(1,750,000)
9,157,924
-
2,816,072
1,750,000
16,456,190
32,422,262
2,816,072
1,750,000
(1,750,000)
16,456,190
1,750,000
10,629,756
(469,511)
(1,750,000)
32,422,262
(1,750,000)
10,629,756
-
1,750,000
24,866,435
41,302,018
392,045
469,511
6,400,000
Total
3,285,583
Page 11
(forming part of the prospective consolidated financial statements)
1
Legal status and principal activities
Voltamp Energy SAOG (under transformation) (“the Company”) is in the process of
registration as a joint stock company under the Commercial Companies Law of Oman.
The company is presently registered in the Sultanate of Oman as a limited liability
company.
•
Voltamp Transformers Oman LLC (“the Subsidiary”), registered in the
Sultanate of Oman, is a wholly-owned subsidiary of the Company.
•
Voltamp Manufacturing Company, registered in Qatar, is 51% owned
subsidiary of the Company.
•
Voltamp Power Oman LLC (the proposed wholly owned Subsidiary), is
part of this projections, which is yet to be formed.
The principal activities of the Company and its Subsidiaries (“the Group”) are
manufacture, sale and distribution of transformers, LV Switchgears and panels. The
ultimate holding company of the Group is Al Anwar Holdings SAOG (“AAH”) [formerly
Al Anwar Industrial & Trading Co. SAOG (“AAITCO”)].
2
Basis of preparation of the prospective consolidated financial statements for the Company
for the year ending 31 December 2008 to 2014 (“the Projections”)
These Projections have been prepared by the Management in accordance with the
following accounting policies and assumptions. Since the Projections relate to the
future, actual results are likely to be different from the projected results because
events and circumstances do not occur as expected and differences may be material.
(a)
Basis of preparation
These prospective consolidated financial statements have been prepared under the historical cost
basis, except that investments available for sale are stated at their fair values.
(b)
Statement of compliance
The Projections have been prepared in accordance with International Standards on Assurance
Engagements (“ISAE”) promulgated by the International Auditing and Assurance Standards
Board (“IAASB”).
c)
Functional currency
These prospective consolidated financial statements are presented in Rial Omani, which is the
Group’s functional currency.
d)
Use of estimates and judgments
The preparation of prospective consolidated financial statements requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Page 12
2
Basis of preparations (continued)
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and in any
future periods affected.
3
Hypothetical assumptions
(a)
Economic conditions
There will be no adverse changes to the prevailing economic climate in Oman during
the years ending 31 December 2008 to 2014, which may have a material impact upon
the Projections.
(b)
Laws and regulations
The existing laws and regulations of Oman, including those of taxation, will not change
during the years ending 31 December 2008 to 2014 in a manner which may have a
material impact upon the Projections.
(c)
Inflation
Inflation will not have a significant impact on the Projections.
(d)
Foreign currencies
It has been assumed that there will be no material foreign exchange gains and
losses during the years ending 31 December 2008 to 2014.
(e)
Markets and market share
It has been assumed that the Company will market its products in North Africa, GCC
countries and countries in Middle East region. The shares in the different markets are
available with the company.
(f)
Payroll costs
Salaries represent approximately 60% of selling, administration and general expenses
of the projected period. It is anticipated that the Group’s workforce will increase from
approximately 180 at the end of 2007 and over 550 by the end of 2014.
(g)
Term loans and working capital loans
Debts consist of the long term loans (at 6%) raised in order to fund primarily a proposed
subsidiary company and as well as working capital loans (at 7%) together amounting to
approximately RO 7.3 million by 2014.
The Group Management is in process of identifying and finalizing the source of financing.
Page 13
2
Basis of preparations (continued)
(h)
Dividend
The dividend payout for the projected period has been considered at 35% of the capital.
Page 14
4
Significant accounting policies
The significant accounting policies, except stated below on intangibles and amortization,
followed by the Company are in accordance as set out in the Note 3 on significant accounting
policies of Chapter 11 Summarised Consolidated Financial Statements of the prospectus
document.
Other Intangibles
Other intangibles assets that are acquired by the Group, which have finite useful lives, are
measured at cost less accumulated amortization and accumulated impairment losses.
Amortisation
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives
of intangibles assets, other than goodwill, from the date that they are available for use.
5
Best estimate assumptions
(a)
Property, plant and equipment (PPE)
The additions or deletions to property, plant and equipment have been assumed by Group during
the years ending 31 December 2008 to 2014.
PPE
(b)
2008
2009
2010
2011
2012
2013
2014
Additio
ns
(2,793,83
3)
(6,331,00
0)
(1,114,67
6)
(135,00
0)
(199,02
8)
(159,67
6)
(415,46
5)
Deletio
ns
-
-
-
-
-
-
-
Intangibles assets and amortisation
Technology transfer cost to acquire technology is recognised as intangible
assets in prospective consolidated financial statements and is amortised in
over the 5 years period.
(c)
Investments
Investments made listed securities and valued at cost.
Page 15
(d)
Inventories
The closing stock of inventories (consists of raw material, work in progress and
finished goods) has been considered on the number of days of cost of sales for the
years 2008 to 2014 respectively (135 days for 2007). No provisions have been
considered during above period.
Inventory
Number of days
2008
2009
2010
2011
2012
2013
2014
105
92
84
81
78
78
77
(e)
Average receivables, advances and prepayments
The receivables have been stated at gross, no provision for doubt debts has been considered.
The Company has projected sales receivables as between 96 days to 78 days over the
projected period which is lower than the past trends of 110 days
Receivables
Number of days
(f)
2008
2009
2010
2011
2012
2013
2014
96
87
87
83
80
79
78
Average trade and other payables
The average trade payables for projected period are 67 days to 53 days of cost of sales which
is compared to the past average of 80 days.
Average payables
Number of days
(g)
2008
2009
2010
2011
2012
2013
2014
67
63
58
57
55
54
53
Cash at bank and in hand
Cash and bank balances represent the cash and cash equivalents
comprising of cash at bank and in hand and short term bank borrowings
(h)
Short term borrowings
The Group uses local banks operating in the Sultanate of Oman to ensure that it has sufficient
cash on demand to meet expected operational expenses and sufficient credit facilities to
manage its liquidity risk.
The existing and planned borrowings facilities of
the Group are in range of 6.50 % to 8.00%.
(i)
Long term loan
Term loan of RO 5,508,000 have been assumed by the Company for Voltamp Power LLC
(subsidiary company to be incorporated).
(j)
Equity
Authorised share capital
The authorized share capital of the Voltamp Energy SAOG (under transformation) shall be
RO. 10,000,000 (ten million), divided into 100,000,000 (one hundred million) ordinary
shares.
Issued and paid up share capital of the Company (post IPO):
The issued and paid up share capital of the Company shall be RO. 5,000,000 (five million)
divided into 50,000,000 (fifty million) ordinary shares.
(j)
Equity (continued)
Share capital of the Company prior to the IPO
The issued and paid up share capital of the Company is RO 3,500,000 (three million, five
hundred thousand) divided into 35,000,000 (thirty five million) ordinary shares.
Shares offered
Existing promoters / stock selling shareholders and the Company have agreed to offer
10,000,000 (ten million) and 15,000,000 (Fifteen Million) new ordinary shares through the
Initial Public Offer respectively.
Promoter’s name
SABCO LLC
H.H. Seyyid Shihab bin Tariq Al
Said
Mr. Mohammed bin Abdul Rasool Al
Jamali
Total
Number of shares Number of shares to be
before transformation offered for sale face
face value Baisa 100
value Baisa 100
20,097,000
5,742,000
7,451,500
2,129,000
3,160,500
903,000
2,597,000
742,000
1,130,500
563,500
35,000,000
323,000
161,000
10,000,000
The offer comprises of two components:
1. Issue of the new ordinary shares for public subscription by the Company each with a
nominal value of Baisas 100 at an offer price of Baisas 542 (five hundred and forty two)
including issue expenses of Baisas 2 per share, out of which, up to 1,250,000 (one
million two hundred and fifty thousand) shares shall be set aside for subscription by the
employees and managers as follows:
a) up to 1,000,000 (one million) shares shall be offered to the employees; and
b) up to 250,000 (two hundred and fifty thousand) shares shall be offered to the
managers.
The new ordinary shares will rank pari-passu with the existing ordinary shares.
2. Offer for sale to the public of the existing ordinary shares by the selling shareholders
each with a nominal value of Baisas 100 at an offer price of Baisas 542 (five hundred and
forty two) which includes Baisas 440 (four hundred and forty) as share premium and
issue expenses of Baisas 2 per share.
Equity (continued)
Purpose for which the proceeds of the subscription would be utilized
Proceeds from the issue of new ordinary shares
Issue proceeds under this category aggregating to RO 8,100,000 (eight million, one hundred
thousand) will accrue to the Company, and will be utilized by the Company for financing the
ongoing capital expenditure, for meeting its long term working capital requirements and
investment in future strategic projects in other subsidiary companies.
Proceeds from the offer for sale of existing ordinary shares
Issue proceeds under this category aggregating to RO 5,400,000 (five million, four hundred
thousand) will accrue to the selling shareholders only and not to the Company.
Issue expenses
The amount of RO 50,000 (fifty thousand) being collected towards part of the Issue Expenses
from the total issue will accrue to the Company.
Legal reserve
Article 106 of the Commercial Companies Law of 1974, requires that 10% of the
Company’s net profit to be transferred to a non-distributable legal reserve until the
amount of the legal reserve equals one-third of the Company’s issued share capital.
Proposed dividend
The dividend payout for the projected period has been considered at 35% of the capital.
(k)
Capacity utilization to total capacity
Year
2007
2008
2009
2010
2011
2012
2013
2014
Voltamp Energy
SAOG (under
transformation)
90%
90%
90%
90%
90%
90%
90%
90%
Voltamp
Transformers
Oman LLC
56%
69%
82%
100%
100%
100%
100%
Voltamp
Manufacturing
Company Qatar
40%
90%
90%
90%
90%
90%
90%
90%
Voltamp
Power LLC
12%
39%
65%
87%
100%
Capacity utilisation to total capacity (continued)
A subsidiary of the Company (Voltamp Transformer Oman LLC) has a production capacity
of 2100 MVA with two full-fledged working shifts of 12 hours. Company produced 1200
MVA during 2007 and projecting increased utilisation by 20% from 2008 to 2010 when
company reaches the maximum capacity.
The Company has projected a capital investment of over RO 600,000 till 2014 to increase the
facility of Voltamp Energy Company LLC. The capacity of Voltamp Energy Company LLC
can be increased with addition to factory building and manpower without much of investment
on plant & machinery.
(l)
Operating information
The group’s performance based on projections prepared by management, growth in operating
parameters in comparison to the previous years is below in table:
Year
2008
2009
2010
2011
2012
2013
2014
Revenue
34%
42%
37%
33%
25%
19%
13%
Cost of sales
45%
44%
42%
29%
23%
17%
13%
Gross profit
12%
37%
21%
43%
30%
23%
14%
Other income
1%
-41%
13%
5%
5%
5%
5%
Selling, administrative & general
expenses
53%
55%
62%
16%
15%
17%
13%
Finance charges
12%
-3%
208%
-2%
9%
-3%
-5%
Net profit before tax
-1%
27%
-15%
81%
43%
29%
16%
Growth in comparison to PY in
(m)
Income tax
It may be noted that while preparing this the projections of the group, the deferred tax asset /
liability arising out of on timing differences/losses has not been recognized.
Year
Tax liability
2008
2009
2010
2011
2012
2013
2014
(336,753)
(405,342)
(512,741)
(561,888)
(629,817)
(706,019)
(801,088)
Un audited Financial Statements for the Period ended 31st March 2008
VOLTAMP ENERGY LLC
(INCLUDING SUBSIDIARY)
Consolidated Income Statement for the Quarter ended MARCH 2008
Particulars
Amount In RO
Actual
Previous Yr.
up to March
Up to March
2008
2007
Income
3,223,571
2,162,469
Sales
(2,132,563)
(1,502,986)
Cost of Sales
Gross Profit
Other Income
Selling,Administrative and General
Exp
1,091,008
18,453
659,483
8,364
(339,550)
(164,958)
Finance Charges
769,911
(35,632)
734,279
502,889
(60,401)
442,488
Taxation
(85,714)
(42,277)
648,565
400,211
0.185
0.114
Earnings per share
VOLTAMP ENERGY LLC
(INCLUDING SUBSIDIARY)
Consolidated Balance Sheet
Particulars
VEC (Incl. Subsidiary)
AUDITED As at
UN AUDITED As at
12/31/2007
3/31/2008
R.O.
R.O.
Assets
Non-current assets
Property Plant and equipment
Investments
Deffered tax asset
Total non-current asstes
521,201
666,704
15,472
1,203,377
496,510
666,704
15,472
1,178,686
Current assets
Inventories
cash in hand and at banks
2,564,161
3,453,046
86,699
3,255,259
4,041,892
18,301
6,103,906
7,315,452
Total assets
7,307,283
8,494,138
Equity
Share capital
Legal reserve
3,500,000
848,395
3,500,000
855,693
13,876
655,144
4,362,271
5,010,837
20,833
20,833
20,833
20,833
Current liabilities
Bank borrowings
1,549,956
1,249,223
125,000
1,314,196
2,054,522
93,750
2,924,179
3,462,468
Total liabilities
2,945,012
3,483,301
7,307,283
8,494,138
Net Assets per share
1.246
1.431
Retained Earnings
Total Equity
Liabilities
Non Current Liabilities
Long term Loan
Total Non current liabilities
CHAPTER 13
DIVIDENDS POLICY
Dividends
The Offered Shares will rank equally with all other Ordinary Shares of the Company for any
rights to dividends that may be declared and paid in respect of the financial year ending 31
December 2008 and in subsequent years. Following the offering, the shareholders’ register of
the Company shall be amended to allow new shareholders to receive any declared dividends
in future years.
In accordance with the CCL, any listed company in Oman must transfer 10% of its profits of
to a legal reserve until the reserve amounts to at least one third of the company’s share
capital. Accordingly, the Company will be required to maintain such legal reserve.
The Company’s Cash Dividend Policy
The Company proposes to follow a reasonable dividend payout policy, subject to debt
repayments, working capital and capital expenditure requirements. The amount of annual
dividends and the determination of whether to pay dividends in any year may be affected by a
number of other factors including the Company’s business prospects, financial performance,
free cash availability, and the outlook for the power sector. The Company’s management will
take into account dividend payout ratios within its industry/sector as well as dividend yields
of other leading stocks on the MSM at the time of recommending dividends.
Proposed Dividend as per the Financial Projections 2008-2010
YEAR
PAID UP
DIVIDEND % ON
CAPITAL
AMOUNT* CAPITAL
In RO
In RO
2008
5,000,000
1,750,000
35%
2009
5,000,000
1,750,000
35%
2010
5,000,000
1,750,000
35%
Value per
share
35 Baisas
35 Baisas
35 Baisas
* Subject to Shareholders’ approval in the Annual General Meeting and / or any other
appropriate authorities.
Past Dividend Record of the Company (2005-2007)
Year
Cash dividend
Stock dividend
Closing Equity
2005
NIL
NIL
RO 500,000
2006
RO 200,000
RO 600,000
RO 1,100,000
2007
NIL
RO 2,400,000
RO 3,500,000
CHAPTER 14
VALUATION AND PRICE JUSTIFICATION
Overview
The Lead Issue Manager and the Financial Advisor, Oman Arab Bank (“OAB”), has a strong
and successful presence in Oman through a number of lead advisory and project financing
mandates in Oman. They also have significant experience in IPO advisory work, for both
new IPOs and as well as rights issues of existing public companies. Their most recent
mandate included the Bank Sohar IPO & Galfar IPO and are on track to bring some more
companies to a public listing on the Muscat Securities Market soon.
About Ernst & Young:
Ernst &Young has carried out the valuation for the Company. Ernst & Young is a global
leader in assurance, tax, transaction and advisory services. The Muscat office of Ernst &
Young first opened its doors in 1974, although the firm had been serving clients in Oman
since the 1950’s. Much of Muscat has been developed only in the past 30 to 35 years, with
Ernst & Young firmly establishing itself during this period.
In recent years the office has experienced significant growth. In the last ten years, the number
of clients and people has trebled. It also serves a large number of clients in the oil & gas,
manufacturing, retail and construction industries.
Executives of Ernst & Young Oman serve on a number of public advisory groups including
committees led by the Capital Markets Authority and the Oman Centre for Investment
Promotion and Export Development (OCIPED).
Offer Price
OAB has considered a number of qualitative and quantitative factors in determining the price
offer for Voltamp shares. Some of the key factors in the analysis included :
a) Cash flow analysis based on the financial results of the Company for 2007, and future
financial projections provided by Company management from 2008 to 2014;
b) The Lead Issue Manager, Oman Arab Bank has also had an independent valuation
performed by a leading accounting firm, Ernst & Young, as required by the Capital
Market Authority; A brief about Ernst & Young is given below:
c) Analysis of current multiples on the MSM;
d) Comparative analysis of selected peer companies listed on regional stock exchanges.
Based on an exhaustive analysis, the Lead Issue Manager and the Financial Advisor has
recommended an offer price of Baisas 540 per share.
The detailed cash flow analysis:
The detailed cash flow analysis considered the following companies separately:

Voltamp Energy LLC (“VE”)

Voltamp Transformers Oman LLC (“VTO”)

Voltamp Transformers Company Qatar (“VMCQ”)

Voltamp Power LLC (“VPO”)
The underlying reason is that there are a number of differences :

The companies valued are different in size and sales volume.

Two companies are existing, profit making companies (VE and VTO), while two
companies are new:
o VMCQ has started construction but has not yet started operations and will be
operating in a different geography
o VPO has not yet been formed
Cash Flow Analysis
The discounted cash flow (“DCF”) analysis has been the principal method used to value the
Company. The DCF seeks to determine the net present value of projected free cash flows
generated by the company for all providers of capital using the weighted average cost of
capital (“WACC”) as the discount rate to reflect the time value of money and the
predictability of the future cash flows streams. The average WACC applied to the 4
individual companies ranges between 12.2% and 14.2%. The total free cash flows which
comprise the annually forecasted free cash flows and the terminal value of the company at the
end of the forecast period are discounted back to the present using the WACC to obtain the
enterprise value (i.e. the value of all cash flows generated by the company) and then, by
deduction of net debt, the value of shares in the company (the “Equity Value”).
DCF Advantages
• The most theoretically sound valuation method;
• Forward-looking analysis, based on future cash flow (less affected by accounting rules);
allows expected operating strategy to be incorporated into the model;
• Less influenced by volatility of markets and other market conditions;
• Allows a valuation of the different components of a business separately from the
business.
DCF Disadvantages
• Valuation is highly sensitive to underlying assumptions for cash flows, terminal value
calculation and discount rate.
The key financial results and projections of the Company are given in the following table:
The Company’s financial projections are based on realistic and achievable assumptions, with
the following highlights:
RO ‘000
Year ended December
2005
Historic
2006
2007
2008
2009
2010
Projected
2011
2012
2013
2014
Income
Gross Profit
Net Profit
5,472
1,190
496
7,993
1,745
787
10,694
3,691
2,422
14,334
4,149
2,402
20,398
5,681
3,065
27,847
6,902
2,446
36,925
9,836
4,795
46,138
12,794
7,045
54,724
15,702
9,158
62,074
17,919
10,630
Share Capital
Shareholders' Funds
Net Assets
500
1,100
3,500
5,000
5,000
5,000
5,000
5,000
5,000
5,000
1,353
1,353
2,140
2,140
4,362
4,362
14,664
14,664
15,979
15,979
16,675
16,675
19,720
19,720
25,014
25,014
32,422
32,422
41,302
41,302
42.31%
36.52%
Key Ratios
Income Growth
20.02%
46.07%
33.79%
34.04%
32.60%
24.95%
18.61%
13.43%
Gross Profit Margins
Net Margins
21.75%
9.06%
21.83%
9.85%
34.51%
22.65%
27.73%
15.27%
28.69%
16.73%
28.87%
17.12%
99
271
72
195
69
125
28.95%
27.85%
24.79%
26.64%
16.76%
15.03%
8.78%
12.99%
Nominal value of each share - Bzs 100
48
61
49
96
293
320
334
394
141
500
183
648
213
826
Earnings per Share
Book Value per Share
Voltamp’s financial projections are based on the following key assumptions:
Assumptions:
•
Sales are projected to increase from RO 14 million in 2008 to RO 62 million in 2014,
representing a CAGR of 28% for the period. A key component of this growth is
attributable to the addition of Voltamp Manufacturing Co., Qatar (VMCQ) and Voltamp
Power, Sohar (VPO). VMCQ is expected to generate revenue in 2008. VPO is expected
to commence generating revenue in 2010. By 2014, it is projected that VPO would
contribute the largest share to Voltamp’s total revenue, with the contribution being
around 41%.
•
Gross profit margins over the projection period are expected to stay broadly constant at
between 27% and 29%. Gross profit margin for 2010 are projected to drop, essentially
due to the commencement of operations of VPO It is anticipated that gross profit margin
would improve steadily as the manufacturing process becomes more efficient and as a
result, the Company’s projected gross margin level by 2014 would be in line with the
Company’s normalized level. A similar explanation is applicable to the trend in projected
net profit margin.
•
While the gross profit margins in the projected financial statements are lower than that of
2007 (35%), they are a strong improvement on overall historical trends (2004-2006: 19%22%).. Management is confident that they can achieve the projected gross margins and
even better the projections
•
Salaries represent approximately 60% of selling, administration and general expenses. It
is anticipated that the Voltamp workforce will increase from approximately 180 at the end
of 2007 to over 550 by the end of 2014. The major increase will be as a result of VPO
which is expected to require approximately 200 people. Omanisation in 2008 is expected
to be more than 35% and projected to increase to 41% by 2014.
Price Multiples
The Offer price of Baisas 540 per Share (excluding Baisas 2 of Issue Expenses) results in the
following price multiples:
Ratios
2007
PER
7.83
PBV
4.33
PER: Price Earnings Ratio
PBV: Price to Book Value Ratio
2008
11.25
1.84
Market Multiples
Prices as of March 13, 2008
Banking & Investments Sector Index
Industry Sector Index
Service & Insurance Index
MSM 30 General Index
PER Multiples
19.48
15.50
13.28
16.59
PBV Multiplies
3.45
3.82
3.90
3.63
The Offer price of the Company’s Shares compares favorably with the prevailing aggregate
PE multiples of the MSM. While PBV appears to be high compared to the market and sector
PBV for 2007, however it should be noted that the share capital increased in 2007 due to the
issue of new capital. The PBV drops thereafter to 1.84 in 2008, which should compare
favorably with the Market.
Comparative Analysis
The Company is a diversified multi-disciplinary company specialized in the manufacture of
transformers and low voltage switchgear panels. In the absence of directly comparable
companies listed on the regional stock exchanges, the advisors have selected closely
comparable companies operating in the power sector in the region. A comparative analysis
has been conducted for benchmarking the Offer pricing of the Company against its regional
peer group.
2007
El Nasr
Transformers
(Egypt)
2007
2007
6.96
11.49
14.86
72.58
2007
9.00
10.12
11.16
24.49
Middle East
Specialised
Cables
(KSA)
2007
2007
16.13
19.12
14.36
34.55
8.970
2.795
32.8
89.700
39.876
32.000
27.914
15.134
0.169
3.640
21.54
11.70
1.09
0.9576
2.243
0.0562
1.630
28.985
7.09
0.250
44.537
15.344
0.468
8.61
17.90
6.186
1.488
Oman
Cables
(Oman)
Name of the Company
Year
Net Profit Margin
Operating margin
Return on Assets
Return on Equity
Share capital
No of shares out standing
Shareholders’ Equity
Net Profit
EPS
Price as on 13-3-08
PE
PBV
Dividend Yield
%
%
%
%
Mn
.
Mn
.
mn.
mn.
x
x
%
Voltamp
Energy SAOG
(under
transformation)
2007
2007
23.00
35.00
33.00
56.00
3.500
3.500
4.362
2.422
0.692
*5.40
7.83
4.33
---
For the purpose of comparision, the financial figures are restated in Rial Omani. The
following conversion rates have been used for the purpose.
1 Kuwaiti Dinar = 1.41957 RO
1 Saudi Riyal = 0.1025 RO
1 Qatari Riyal = 0.1056 RO
1 Egyptian Pound = 0.0701 RO
* In 2007 the face value of the share was RO 1.000. Hence we have used the price of RO 5.4
(equivalent to RO 0.540 after the change in face value to RO 0.100) for calculating the
valuation ratios.
The Offer price of the Company’s shares results in a lower PE multiple as compared to the
average PE multiple of its peer group companies. Even performance indicators like ROE and
ROA compare favourably with the sector peers. However, the investors should note that the
difference may be due to certain industry specific factors, or particular financial status and
prospects of the peer group companies. Due to the difference in the nature of operations of
the different companies, there is no direct like-to-like comparision between the companies
mentioned above. The above data is indicative only and should be used accordingly. Please
note that the data for Voltamp is corresponding to the data for consolidated accounts for
Voltamp Group and for the year 2007 prior to the capital restructuring.
CHAPTER 15
RELATED PARTY TRANSACTIONS
Related Party Transactions (including Group/Associates)
For the financial year ended 31st December 2007 the following are classified as Related Party
Transactions and brief details are given below:
During the year the Group has entered into transactions with entities over which certain
managers are able to exercise significant influence. The Group also entered into transactions
with AAH and its associates. In the ordinary course of business, such related parties provide
goods and render services to the Group. The Group also provides goods and renders services
to such related parties. The Group considers that the terms of purchase, sale of goods and
provision of services are comparable with those that could be obtained from third parties. The
details are as follows: Related party transactions mentioned below are carried out in the
ordinary course of business on arm's length commercial terms.
Related Party transaction for the year 2007
For the financial year ended 31stDecember 2007
the following are classified as Related Party
Transactions and brief details are given below
Name of the Party
Nature of
Relationship
Details of Transaction
Amount(RO)
AL Maha Ceramics
Common
Director
Sale of goods
53,300
Premier Logistics
Common
Director
Purchase of goods/services
26,500
Mustafa Sultan Science & Ind
Voltamp Manufacturing company Qatar
Common
Director
Subsidary
Technology transfer fees
387
61,904
Voltamp Manufacturing Company LLC
Name of the Party
Nature of
Relationship
Amount(RO)
AL Maha Ceramics
Common
Director
Sale of goods
155,900
AL Anwar Blanks
Common
Director
Sale of goods
2,349
Premier Logistics
Common
Director
Subsidary
7,614
15,476
Voltamp Manufacturing Company LLC
(Consolidated)
Name of the Party
Nature of
Relationship
Amount(RO)
AL Maha Ceramics
Common
Director
Sale of goods
209,200
AL Anwar Blanks
Common
Director
Sale of goods
2,349
Premier Logistics
Common
Director
34,114
Mustafa Sultan Science & Ind
Common
Director
Subsidary
387
77,380
Related Party Transactions for the year 2007
1
Revenue by sale of
goods to
RO 211,549
2
Purchases of goods
and services from
RO 34,501
Almaha ceramics
(RO209,200)
Al Anwar Blanks
(RO2349)
Purchase of premier
logistics (RO
34,114) and
Mustafa Sultan
Science &Ind (RO
387)
CHAPTER 16
RISK FACTORS AND MITIGANTS
Prospective investors should carefully consider the risks described below in addition
to all other information presented in this Prospectus before deciding to purchase any
of the Offered Shares. Investors may note that the risks and mitigating factors
mentioned below are the Founders’ and the Company’s management opinion based
on their current knowledge and the information available with them. The actual risks
and the impact of such risks could be materially different from that mentioned herein.
1) Growth of Gulf Economy and Power Sector
The Company’s business and revenue is derived from products & services it provides in
the Sultanate of Oman, Qatar, other GCC countries and therefore the performance of the
Company is linked to the economic environment of GCC countries and in particular
Oman and Qatar. Any downtrend in the economy of GCC countries could impact the
growth of the Company.
2) Oil Price Risk and Geo Political Risk
The GCC regional economies are heavily reliant on oil and accordingly, the future oil
price scenario will determine to a large extent the economic conditions in the region.
While oil prices are currently at historic highs and GCC economies have witnessed
rapid growth on the back of high oil prices, any downturn in oil prices may have a
dampening affect on regional growth and thereby on the growth of business. As the
Company’s business emanates from the oil & gas and the Power & infrastructure sector,
such a fall in oil prices may impact the Company’s business and growth.
The political and international relationships/events in the region also significantly affect
the regional economies and any increase in the political risks would affect the economic
growth of the region in general.
The Risks:
Demand risk
The performance of the Company is dependent on the demand for distribution & power
transformers, switchgear panels & related products. A fall in demand due to economic
downtrend or any other factor could affect performance of the Company.
Mitigant:
In the short to medium term it is expected that the oil prices will move within the
prevailing price band and development of infrastructure will continue to drive Oman’s
economic growth. Given its track record and credentials, the Company believes it will
continue to benefit from the economic growth of GCC region.
Industry/sector concentration
Sale of Transformers & switchgears constitute a substantial portion of the Company’s
business. Thus, any downturn in the Power sector within GCC countries would affect
the Company’s business adversely.
Mitigant
Over the years, the power sector industry within GCC has been expanding steadily.
Corresponding to Oman economy’s robust growth in excess of 6% per annum, the
Company anticipates the power sector to continue growing in the foreseeable future.
Failure to win Bids/Tenders
The majority of the Company’s business comes from participation in and winning of
tenders to supply transformers and switchgears. However, there is an inherent risk that
the Company may not be able to win sufficient number of tenders due to competition
from either other Omani companies or international transformer/switchgears
manufacturing Companies.
Mitigant:
Based on a review of an excellent track record and proven expertise in its business, the
Company is well placed for upcoming Transformer & LV Switchgear business in Oman
and other GCC countries. The Company will continue bidding at competitive levels that
are economically viable for its business. Despite high cumulative rate of growth in the
past, the Company has projected a fairly modest level of growth in the financial
projections and is confident of achieving these levels.
Cancellation of Projects/ Contracts
Notwithstanding a robust order book on the basis of which the financial projections of
the Company are drawn, any cancellation of such contracts would affect the Company
adversely.
Mitigant:
The Company does not envisage any major cancellation of its ongoing orders as its
clients are mainly Government organizations and reputed private organizations in
Oman and other GCC countries.
Competition Risk, including entry of new competitors/international competitors
The Company faces competition from existing as well as new entrants into the sector.
Increased competition could potentially lead to pressures on the growth of business and
revenue, which would affect profitability of the Company.
Mitigant:
The Company believes that it is well placed to face competition. The proven and
enviable track record of supplying quality products in time has allowed the Company to
build an excellent reputation. It is well regarded by the clients and has developed
substantial expertise in manufacturing transformers and switchgears.
Performance Risk
While the Company has a robust order book of ongoing projects/contracts under
execution, the success and profitability of the Company primarily depends on its ability
to successfully execute these contracts. Any shortfall in supply will adversely impact
the Company’s financial performance, reputation and future prospects. Failure to
complete contractual work within the designated time schedule could potentially lead to
monetary penalties or compensation to the client. Such failure may be on account of
various factors including those on which the Company does not have any control, such
as fluctuations in raw material prices especially copper, CRGO and transformer oil.
Mitigant:
The Company has a credible track record of timely delivery of transformers &
switchgear, and at the same time maintaining quality and best practices relating to its
products & services. It has focused on maintaining and developing its expertise,
resources and technical skills to ensure that it is fully equipped to meet all its future
commitments. The Company’s production teams have extensive experience and use state
of the art technology in manufacturing standard as well as special transformers /
switchgears. Dedicated units ensure efficient mobilization of manpower and technical
resources, and the top management of the Company is closely involved in execution &
monitoring. External factors that may lead to delays are considered at the initial
planning stage, including contingencies for unforeseen situations. The Company has
set-up hedging mechanism through which it covers price fluctuation risk on its key raw
materials.
Profitability Risk
The Company’s profitability is directly linked to its input costs of material, labour, fuel,
and any unexpected increase in these costs could potentially impact the Company’s
profitability. Further, as a significant portion of the Company’s supply of products is
based on fixed price contracts, any increase in input cost will adversely affect
profitability.
Mitigant:
The Company factors such contingencies, while preparing its bids/tenders and normally
enters into contracts with suppliers of the key inputs relating to the project. Moreover,
in the event of cost increases on account of regulatory changes, the Company may
negotiate with the client to suitably pass on such escalations. The Company also covers
its risk of raw material price fluctuation through hedging mechanism.
Raw Material Price fluctuation Risks
The fluctuation of raw material costs such as copper and CRGO steel has a direct
impact on products pricing.
Mitigant:
The Company is taking several measures to absorb fluctuation of raw material cost
which includes restricting the time for which a quotation is valid and by using hedging
mechanism to minimize the impact of raw material price fluctuations.
Resources Risk
The current boom in the power sector in the region has led to a scarcity of materials and
skilled labour. Any constraint in the availability of raw materials and manpower could
potentially result in delays in completion of contracts.
Mitigant:
The Company has entered into long term supply contracts for supply of key raw
materials. Also, the Company over a period of time developed reliable vendor base who
assure timely delivery of quality products. The Company also takes sufficient care to
recruit required number of skilled and non-skilled labour well in advance. The
Company’s employees friendly HR policy ensure that its’ employees continue with the
Company for long time.
Physical Hazard Risks
The Company executes various complex projects that expose its personnel and
equipment to physical hazards. These may lead to loss of life and property through
accidents in the workplace.
Mitigant:
The Company places extreme importance to the safety of its personnel and puts in place
a number of safety measures in while manufacturing the goods or in the project
execution. Further, there is on-going training of the personnel in various safety
programmes. The Company also has a separate workshop that handles the maintenance
required for the equipment so as to keep these in proper condition. Suitable insurance
cover is also maintained.
Receivables Risk
Delays in realization of receivables may lead to liquidity constraint that would increase
the Company’s financial expenses and also hinder its ability to pay its suppliers, which
in turn would affect its project implementation and performance.
Mitigant:
The Company monitors its receivables position closely and effectively follows up the
recovery of its dues. Further, the Company’s financial position provides it the ability to
withstand any temporary liquidity needs and the infusion of long term funding through
this Issue will further strengthen the Company’s financial position.
Delays in obtaining work visas
Expatriate Manpower constitutes almost 65% of the Company’s work force, and their
number is envisaged to increase further due to upcoming 132 kV project to manufacture
power transformers at Sohar.
The Company has to obtain work visas for these expatriate workers in a timely manner,
and any delay in obtaining or refusal of work visas would severely hamper the
Company’s growth.
Mitigant:
The Company effectively liaises with the Government authorities with the aim of
facilitating its workforce requirements. Moreover, the Company is aiming through
training programmes to induct additional Omani employees for meeting its Omanisation
targets and reducing its need for expatriate personnel. The Government has always
been supportive of companies’ growth requirements in Oman.
Brand Risk;
The company is sharing the brand name Voltamp with several group companies which
could affect its Business in the long term
Mitigant:
The company feels it is a remote possibility and will not have any impact on the growth
of the Company
Share Price Risk
The Company’s Shares are to be listed for the first time on the Muscat Securities
Market and accordingly there is no prior trading in the Company’s Shares that may
provide a price history or trend. Further, the Company’s Shares are priced at a premium
to its nominal value.
Mitigant:
The Promoters/Selling Shareholders, advisors and the Lead Issue Manager, based on
the information provided by the Company, believe that the Company’s Shares are fairly
priced in relation to the MSM and peer companies share trading multiples. The
rationale underlying the pricing of the Shares is set out in the Chapter on Valuation and
Price Justification which demonstrates the validity of the proposed pricing.
Liquidity Risk
The Company’s Shares may not have adequate liquidity in the stock market after listing,
and investors may not be able to sell their Shares easily post listing.
All equity investments carry market risks to varying degrees. The value of any security
can fall as well as rise depending on market conditions.
Mitigant:
The management of the Company believes that the pricing of the Shares in relation to
the Company’s prospects has significant upside potential, which should lead to an
adequate level of demand for its Shares post listing. Moreover, the public holding of
50% of the Company’s post-Issue share capital should also result in sufficient liquidity
in the Shares in secondary market
Government Authorisations, Permits and Approvals
A number of authorizations, permits and approvals from various Government authorities
are required to enable the Company to conduct its business in the Sultanate of Oman.
There is no guarantee or assurance that these will be given or, if given, upon what terms
and conditions.
Mitigant:
The management of the Company believes that it has all the requisite authorizations,
permits and approvals to conduct its business in the Sultanate of Oman and has no
reason to believe that any of the same will be withdrawn or not renewed within the next
12 months. The Government has always been supportive of companies’ growth
requirements in Oman.
CHAPTER 17
CORPORATE GOVERNANCE
Corporate Governance
This section summarizes the Company’s corporate structure effective as at the date of this
Prospectus and the proposed Memorandum and Articles of Association. The description
provided hereafter is only a summary and does not purport to give a complete overview of the
Memorandum and Articles of Association, nor of relevant provisions of Omani law or the
CMA circulars, neither should it be considered as legal advice regarding these matters. A
copy of the Memorandum and Articles of Association is available from the registered office
of the Company or the CMA.
Management
Overview
The respective roles and responsibilities of the management bodies of the Company are in
large part governed by the previsions of the CCL, the Memorandum and Articles of
Association and, after listing on the MSM, by the Code and circulars issued by the CMA in
respect thereof.
The management of strategic issues of the Company will be entrusted to the Board. The
Board may perform all acts necessary or useful for achieving the objects of the Company,
with the exception of those acts that are by law or the Memorandum and Articles of
Association explicitly reserved for the shareholders general meeting.
Board
The Board shall consist of seven directors one of whom will be elected as the Chairman of
the Board. The following are the main provisions set out in the Memorandum and Articles of
Association, concerning the Board.
The management of the Company shall be entrusted to a Board of Directors comprising of 7
members from amongst the Shareholders or non-Shareholders provided that the nominated
Shareholder holds 40,000 Shares which he may not dispose off throughout the term of his
office to the extent that he no longer retains the status of a Shareholder in the Company. The
term of office of a Director shall be for a maximum period of 3 years, subject to re-elected
more than once. The period stipulated for election to the Board shall be calculated from the
date of the Annual General Meeting in which the Director is elected to the date of the third
Annual General Meeting following it. Where the date of such meeting exceeds the term of
three years, the membership shall be extended by Law to the date on which the meeting was
convened, save it shall not exceed the period stipulated in Article (120) of the Commercial
Companies Law.
Subject to the provisions of Article (95) of the Commercial Companies Law and without
prejudice to the provisions of the Company’s Articles of Association, a person to be elected
to the Board shall:
i)
be of a good reputation;
ii)
be at least 25 years old;
ii)
not be unable to discharge his debts to the Company to the Board of
which he intends to be elected as a member;
iv)
not have been declared insolvent or bankrupt unless his insolvency or
bankruptcy has been terminated in accordance with the Law;
v)
not have been convicted of felony or an offence of dishonourment,
unless he has been rehabilitated;
vi)
not be a member or a representative of a juristic person in four joint
stock companies whose head offices are in the Sultanate of Oman;
vi)
in case he is representing a juristic person, be authorised by such
juristic person to stand for election;
viii)
not be a member of a board of directors in a public or closed joint
stock company, the head office of which is the Sultanate of Oman,
conducting business similar to the objectives of the Company; and
ix)
submit a declaration stating the number of his Shares if he is a
Shareholder and undertaking not to dispose of such Shares, during the
term of his office as a Director, in any manner which may cause him to
cease being a Shareholder in the Company.
Without any prejudice to the regulations of the Commercial Companies Law mentioned
above, the following conditions will be fulfilled while forming the Board of Directors of the
Company.
1. The Board shall be comprised of a majority of non-executive directors. A nonexecutive director means “the member of the board who is not a whole time director
(employee director) and/or does not draw any fixed monthly or annual salary from the
Company”.
2. A minimum of 1/3rd of the total strength of the board (subject to a minimum of two)
shall comprise of independent directors.
3. He does not represent more than one legal person in the Board
4. The roles of CEO/General Manager and Chairman shall not be combined.
The Members of the Board of Directors will be elected through a secret ballot by the
Shareholders and each Shareholder will have the number of votes equivalent to the number of
shares he owns and he will have the right to utilize it all for one candidate or divide it
amongst the candidates of his choice by a vote card, the total number of votes should be
equivalent to the number of shares he owns.
The Membership which is done in violation of the above regulations will be null and void
from the date of election and the Board of Directors of the Company will call a general body
meeting to elect another Member within a maximum of one month from the date cancellation
and the Company shall have the right to demand the compensation for the losses from the
Member and everyone who facilitated his entry into the elections.
If the Member of the Board of Directors loses any of the conditions necessary for the
Membership, he must inform the board about the same and his place will be considered
vacant from the date of information, otherwise, his Membership will cease to exist from the
date it was found out by the Company, without prejudice to his liability in accordance with
law. And his place will be filled up in accordance with the regulations of the Article (98) of
Commercial Companies Law.
The Board of Directors will elect Chairman and Vice Chairman from its Members. The Vice
Chairman will officiate the Chairman when the latter is absent.
The Chairman of the Board of Directors shall implement the resolution of the Board of
Directors and shall conduct the regular business of the Company under the supervision
and control of the Board of Directors as per the authority specified in the Company’s
Article of Association and internal regulation.
If the office of a director becomes vacant, the Board of Directors will appoint a temporary
Member who is fulfilling all the conditions of Membership stipulated in the previous
Articles. In other case, regulations of Article (98) of Commercial Companies Law no.4/74
with regard to vacant seats will be applied.
The Board of Directors, in the cases other than approving the distribution of dividends,
approving the balance sheet, profit and loss account, and reports of Board, the Auditing
Committee and Auditors may pass resolutions without the need to convene a meeting of the
Board of Directors if five members out of seven members of the Board approve same in
writing.
The General Meeting shall specify the annual remuneration and sitting fees of the
Board and sub-committees at not more than 5% of the net profits of the year, after
deducting the legal and optional reserves in accordance with Article (101) of the
Commercial Companies Law and notionally calculating or distributing the dividends to
Shareholders at not less than 5% of the capital. The maximum total over-all limit of
entire remuneration paid by the Company shall be RO 200,000 (two hundred thousand),
with a sub-ceiling of RO 10,000 (ten thousand) as sitting fee for each Director.
Where the Company makes loss or less profits to the extent that notionally calculating
or distributing dividends to Shareholders is not possible, remuneration and sitting fees
shall be determined in accordance with the rules issued by the Capital Market
Authority.
If the capital of the Company has eroded, the Company may pay sitting fees to the members
of the Board for the meetings held during the year or years following the erosion of capital in
accordance with the limits prescribed by the concerned authority.
Any Director, who, by request, performs special services, travels or resides abroad for
any purpose of the Company may be paid an extra remuneration.
The remuneration for the Board shall be divided amongst the Directors in such proportions
and manner as they, by agreement, may determine, failing which the remuneration will be
divided equally amongst the Board.
The Board shall have full authority to perform all acts required for the management of
the Company pursuant to its objects. Such authority shall not be limited or restricted
except as provided by Law or by the Articles of Association of the Company, or the
resolution of the General Meeting.
The Board shall be responsible for the following:
A.
To approve the Company’s commercial and financial policies together with its
estimated budget with a view to achieving the objects of the company and to maintain
and promote the rights of its Shareholders;
B.
To develop, review and update necessary plans including strategic plans from time to
time in order to put into operation the company’s objectives and carry out its activities
in the light of the purpose underlying its establishment;
C.
To adopt the Company’s disclosure measures and to follow up the implementation
thereof in accordance with the disclosure rules and guidelines issued by the Capital
Market Authority;
D.
To supervise the performance of the executive management and to ensure that the work
proceeds in a manner which achieves the company’s objectives in the light of the
purpose underlying its establishment;
E.
To provide accurate information to the Shareholders on the dates specified by the
Capital Market Authority in the disclosure rules and guidelines;
F.
To appoint the Chief Executive Officer and/or the General Manager and/or the Deputy
General Managers provided that neither of them shall be the Chairman of the Board.
G.
To appraise the performance of the employees mentioned in the previous item and to
assess the work carried out by the committees formed by the board pursuant to Article
(102) of the Commercial Companies law;
H.
To approve the financial statements related to the Company’s business and work results
as submitted to the executive management to the board quarterly in away which reflects
the exact financial position of the Company;
I.
To include in the annual report presented to the general meeting the reasons which
justify the ability of the company to pursue its specified activities and the achievement
of its objectives;
J.
To include in the financial statements a full statement of all amounts which a Director
might have received during the course of each year including money paid to directors in
their capacity as employees of the Company
The Board shall introduce internal regulations for the regulation of the Company’s
management, the business of the Company and the affairs of its employees within one
year from the date of registration of the Company in the Commercial Register, in
accordance with the rules issued by the Capital Market Authority.
The Board shall not perform the following acts except if authorised to do so by the
resolution of a General Meeting:
a)
Make gifts, except business gifts in small and customary amounts.
b)
Sell all or a substantial part of the Company’s assets.
c)
Mortgage or pledge the assets of the Company, except to secure debts of the
Company incurred in the ordinary course of the Company’s business.
d)
Guarantee debts of third parties, except guarantees made in the ordinary
course of business pursuant to the Company’s objects.
The Board of Directors may appoint the Managing Director from the executive Members
provided he is free for the Company’s works.
The Company shall be bound by all acts performed by its board of directors, its chairman,
managing director and all other executives, if any as long as they act in the name of the
Company and within the scope of their powers.
It is not permitted for any of the Directors or main Company employees to utilize the
information that reaches them in the capacity of their positions or jobs, for achieving any
benefit for them or their minor children or for any of their relatives till the 4th degree, as a
result of transaction in the Company shares. It is also not permitted for any of them who have
direct or indirect interest with any authority who is involved in activities which aimed at
influencing the prices of shares issued by the Company and the regulations of Article 109 and
110 of Company law will be applied in case of violation.
A member of the board of directors or other related parties of the Company shall not have
any direct or indirect interest in the transactions or contracts concluded by the Company for
its account, except those concluded with them in accordance with the disclosure requirements
of the CMA.
The Members of the Board of Directors shall be liable to the Company, the shareholders and
third parties for the damages caused by their acts in violation of the law and their acts which
fall beyond the scope of their powers or by any fraud or negligence in the performance of
their duties or by their failure to act as prudent men under certain circumstances.
Any provisions or stipulations limiting the liability of the members of the Board of Directors
shall be null and void, and the Company shall reimburse any director the costs and sums
adjudged in any civil or criminal case brought against him as a result of his activities as a
member of the Board of Directors of the Company in the event that final judgment in such
case shall absolve the director of liability.
The Company may institute an action against any director of the Company it deems liable for
damages that have come upon it. The board of directors or the ordinary general meeting shall
take a decision appointing a person to pursue the case on behalf of the Company and
authorizing him to pay costs of the case from the funds of the company. Any shareholder may
propose suing the members of the Board of Directors, and if the ordinary general meeting
does not adopt his proposal, he may himself file the case on behalf of the Company. And the
case is successful, such shareholder shall be reimbursed the costs and expenses of the case
out of the sums adjudged and the balance shall be paid to the Company.
It is not permitted to file a lawsuit on the Members of the Board of Directors or their heirs
regarding the works they have done while discharging their duties, except in the case when
the case is filed within 5 years from the date of holding the general body, wherein the Board
of Directors submitted the accounts of the Company for the period including the act or the
shortcoming which is the reason for the complaint. This period shall not apply to suit filed by
the CMA.
First Board of Directors
A constitutive General Meeting of the Company is to be held after finalization of the
allotment of Shares and Shareholders attending the meeting may vote and elect the new
Board of Directors.
Announcement of the date and location for such shareholders general meeting shall be made
in the major newspapers in Oman.
Internal Regulations
In accordance with the provisions set out in Article (68) of the CCL, the Company is required
to lay down Internal Regulations for regulating the management of the Company, its business
and personnel affairs through its Board of Directors, within one year from the date of
transformation of the Company with the Commercial Registrar. These regulations shall cover
at least the following apart form the rules laid down by the Capital Market Authority:
1) Organizational Structure of the Company stating therein the responsibilities related to the
various posts of the Company and the reporting structure/ procedures.
2) Specifying the extent of the authority vested with each post with regard to approval of the
financial expenditure.
3) Fixing the allowance for the meetings, remuneration and other privileges as prescribed in
respect of the members of the Board of Directors and Committees constituted under its
auspices and the basis for their calculation.
4) The policies related to the Purchases and Service Contracts.
5) The minimum level of information required to be submitted to the Board of Directors.
6) The authorities, duties and responsibilities relevant to the executive management and
subcommittees constituted under the auspices of the Board of Directors of the Company.
7) The policies related to Human Resources including the salaries, appointment,
development, training, promotions and termination of the services etc., covering other
relevant aspects.
8) Investment Policies of the Company.
9) Policies for Related Parties Transactions.
10) Policies and measures for submission of material information in a transparent manner, to
the Capital Market Authority and the Muscat Securities Market within the specified time
including a definition of “material information”.
11) Any other regulations that the Board of Directors of the Company may deem necessary to
add for achieving adequate level of Corporate Governance.
It may be mentioned that the Company has already put in place a number of these policies.
The Company shall appropriately review the same in the light of its transformation into an
SAOG Company and also formulate such additional policies and procedures that may be
required in this context within the stipulated time period.
CHAPTER 18
RIGHTS AND LIABILITIES OF SHAREHOLDERS
I. Shareholder’s Liabilities:
The liability of a Shareholder shall be limited to the payment of the value of the Shares he /
she / it subscribes. He / She / It shall not be liable for the debts of the Company except within
the limit of the nominal value of the Shares subscribed for.
Any person whose shareholding, along with his minor children’s shareholding, reaches 10%
or more of the Company’s share capital, must inform the CMA about the same through a
written communication. Further he shall inform the CMA regarding any transaction or
dealing which leads to the increase of this percentage immediately after it happens.
No single person or related persons up to second degree shall hold 25% or more of the shares
of a Joint Stock Company whose shares are offered for public subscription, save in
accordance with the holding rules set out by the CMA.
All the shares of the Company shall have the same nominal value, and a share shall neither be
divided nor shall it be owned by more than one person except when such ownership is by
inheritance provided that the heirs are represented by the person whose name comes first in
the register and the owners of the share shall be responsible severally and jointly for the
liabilities arising from such ownership. However, the transfer of the share requires
endorsement by all joint owners.
The shares allotted to the Employees and the Managers shall be subject to the Lock-in Period.
II. Shareholder’s Rights
All Shares of a Joint Stock Company shall enjoy equal and inherent rights vested in their
ownership. which, in accordance with the CCL are:
1. The right to receive dividends declared by the general meeting.
2. Preference rights to subscribe for new Shares.
3. The right to share in the distribution of the assets of the Company in the event of
liquidation.
4. The right to assign Shares in accordance with the Law.
5. The right to inspect the Balance Sheet, Profit & Loss Statement, and Shareholders’
Register of the Company.
6. The right to receive notice of and to participate and vote in all general meetings either
personally or by proxy (one vote for each Ordinary Share ).
7. The right to apply for the annulment of any resolution adopted by the general meeting
or the Board if such resolution(s) are contrary to the prevailing laws, the
Memorandum and Articles of Association or other internal regulations of the
Company.
8. The right to institute legal actions on behalf of the Company and its Shareholders
against the Board or auditors thereof, pursuant to the CCL.
9. The CMA may, upon material reasons being raised by Shareholders who own at least
5% of the Shares of the Company, suspend resolutions passed by the general meeting
of the Company which are passed in favour or against holders of any category of
Shareholders or in the interests of the members of the Board or others.
III. Reports & Statements:
- The Board shall prepare un-audited Quarterly Financial Statements for the first, second and
third quarter of each financial year. It shall also prepare an Annual Report within two months
from the end of the financial year comprising of the audited Balance Sheet, Report of the
Board, Report on the discussions held by the Board and their analysis and Report on the
Organization & Management of the Company.
- The un-audited Quarterly Financial Statements shall be forwarded to the Information Centre
of Muscat Securities Market within thirty days from the end of each quarter or any other legal
period prescribed by the disclosure rules and conditions issued by CMA through Electronic
Transmission System of the Centre. The said Centre shall also be provided with two copies
duly endorsed by the Board. The Company shall also have it published within the said period.
Whereas, the audited Balance Sheet shall be forwarded, submitted and published two weeks
in advance of convening of the Annual Ordinary General Meeting.
- The Board shall extend invitation to the Shareholders for the Annual Ordinary General
Meeting within three months from date of ending of the financial year. The agenda for the
Annual General Meeting shall include the following:
1. To study and approve of the Report of the Board.
2. To study and approve of the Report on the Management and Organization.
3. To study and approve of the Auditors Report on the Balance Sheet, Profit & Loss
Account.
4. To review the report on declaration of dividend. However, such dividend shall be
distributed only from the net Profit generated or from the Special Reserves Accounts
subject always to the provisions set out in Article 106 of the CCL.
5. To review the report on the sitting allowance for the meetings of the members of
Board and committees constituted under it for the forthcoming financial year and
approve the same.
6. To review the annual remuneration (if any) of the members of the Board for the
forthcoming financial year.
7. To look into the transparency of any transactions held with the related parties
during the previous financial year (if any).
8. To make a note of any expected transactions with the related parties during the
next financial year (if any).
9. To appoint Auditors for the next financial year and fix their fees, taking into
consideration the provisions laid down in the Law.
The Board may convene the general meeting at any time and such meeting shall be convened
whenever required by the law or the Memorandum and Articles of Association, or upon
request of one or more shareholders who represent at least 25% of the capital of the
Company.
The Board shall establish the agenda of the general meeting. If the meeting is convened by
the auditors, the agenda shall then be established by them. The Board, or the Auditors if
necessary, shall include in the agenda any proposal put forward by shareholders who
represent more than 10% of the capital of the company provided that such proposal is
submitted for inclusion in the agenda at least one month before the date of the meeting.
The resolutions of the ordinary meeting shall be void unless the meeting is attended by
shareholders or their proxies who represent at least half the capital of the company. If such a
quorum is not formed, a second meeting shall be called to discuss the same agenda. The
second ordinary meeting shall be notified to the shareholders in the same manner as the first
meeting, at least one week prior to the date set for the second meeting. The resolution of the
meeting shall be valid regardless of the number of shares represented, provided that such
meeting is held within one month from the date of the first meeting. The resolution of the
ordinary general meeting shall be adopted by relative majority of the vote.
An Extraordinary General Meeting shall be convened to Consider and decide all matters
which such meeting is specifically authorised to settle in accordance with the law or the
Company’s Articles of Association.
Any amendments to the Memorandum and Articles of Association shall not be valid unless
approved by the Director General of Commerce and registered with the Commercial
Registrar, Ministry of Commerce & Industry.
The resolution of the extraordinary general meeting shall not be valid unless the meeting is
attended by shareholders and proxies representing at least three-quarters of the Company’s
capital. Failing such a quorum, a second meeting shall be convened to discuss the same
agenda. The shareholders shall be notified of the second extraordinary general meeting in the
same manner as the first extraordinary general meeting, at least two weeks prior to the date
set for the second meeting. The resolutions of the second meeting shall be valid if the
meeting is attended by shareholders or proxies representing more than half of the Company’s
capital, provided such meeting is held within six weeks of the date of the first meeting.
The resolutions of the extraordinary general meeting shall be adopted by a majority of threequarter of the votes cast in respect of a certain resolution, provided such resolution shall
always receive votes representing more than fifty percent of the Company’s capital.
Any Shareholder or any interested party may refer to the Commercial Court (the competent
department) within five years from the date on which the meeting was held, to decide on
nullification of any resolution if adopted during the meeting in violation of the law or the
provisions of the Company’s Articles of Association or its regulations, if any, or if adopted
by fraud or abuse of authority by any person.
IV. Transfer of ownership of the Shares:
The transfer of ownership of the Shares shall take place through disposition in accordance
with the instructions laid down by Muscat Securities Market. The transfer of ownership shall
also be entered in the Shareholders’ register in the Company and which shall include the
Shareholder’s name, his nationality, domicile and the number of Shares he holds and their
numbers.
The shareholding of each individual shall not exceed the maximum limit prescribed and
provided for in the CCL and Capital Market Law respectively, unless the necessary approvals
are secured.
V. Constitutive General Meeting:
- The calling of the Constitutive General Meeting of the Subscribers shall be treated as one of
the requirements for the incorporation of a Joint Stock Company. This General Meeting shall
look into all the measures that have been taken for incorporation of the Company under
convening of the meeting. The Promoters shall, within thirty days from expiry of the
Subscription invite the Subscribers to this meeting. The invitation and calling of this meeting
shall be in accordance with the provisions set out in the CCL and the Company’s Articles of
Association governing Extra Ordinary General Meetings.
- The Promoters shall submit to the Constitutive General Meeting a report, together with
supporting documents, including sufficient information on all the actions taken, the expenses
incurred for incorporation of the Company, and on all the obligations committed by the
Promoters on behalf of the Company that is under formation, together with the supporting
documents.
The Constitutive General Meeting shall have the authority to look into and pass resolution in
respect of the following matters:
1. To ratify the Report submitted by the Promoters with regard to the process of
incorporation of the Company and expenses incurred by them. The Promoters shall be
liable severally and jointly for the expenses incurred and commitments made on
behalf of the Company under transformation which have not been ratified by the
Constitutive General Meeting.
2. To verify and confirm whether the necessary conditions governing the incorporation
of the Company have been complied with.
3. To approve the Memorandum & Articles of Association of the Company. The
Meeting may amend the Memorandum & Articles of Association of the Company,
however, such amendment(s) shall not become valid and operative until approved by
the Director General of Commerce.
4. To elect the members of the first Board of Directors. This Board shall be responsible
for the registration of the Company with the Commercial Registrar within one month
from the date of the Constitutive General Meeting. The members of the Board shall be
liable severally and jointly for the damages arising from the failure to carry out this
registration.
5. To appoint the first External Auditors of the Company and fix their fees.
The expected date of the Constitutive General meeting (CGM): The CGM will be with in
30 days after the end of IPO and after finalizing the share allotment. The share holders in the
CGM will elect the first Board for the Company. The date for the Constitutive General
Meeting will be announced in the Omani News papers.
CHAPTER 19
CONDITIONS AND PROCEDURES FOR THE SUBSCRIPTION OF THE
SHARES
I .The subscription for the Offered Shares shall be open to Omanis, Non Omanis, Individuals,
Non Individuals and Corporate Bodies/Institutions/Investment Funds/Pension Funds.
Likewise, it shall be open to Omani as well as non-Omani corporates, institutions,
investment funds, and pension funds which have their accounts with Muscat Depository &
Securities Registration Co., as on the date and / or during the subscription period. It is
pertinent to mention here that it would be permissible for Foreign Nationals/corporates to
own shares of the Company once listed with Muscat Depository & Securities Registration
Co., to an extent of 70% of the Share Capital, in accordance with the Articles of Association
of the Company.
II. Prohibitions with regard to the Applications for subscription:
The subscribers to the Shares issued as mentioned hereunder shall not be permitted to
participate in the subscription:
1) Sole Proprietorship Establishments. Whereas, the owner of a Sole Proprietorship
Establishment would be required to subscribe in his name only if he so desires.
2) Trust Accounts. Whereas, the Brokerage Companies would be required to address the
Customers for the subscription in their personal names.
3) Multiple Applications for the subscription. Whereas, it is prohibited for any person to
submit more than one application for subscription in his personal name.
4) Applications made under joint names, including the applications made in the name of legal
heirs. Whereas, they or their legal attorney would be required to apply in their personal
names.
All such applications shall be rejected without contacting the applicant.
III .Subscription on behalf of Minor Children:
1) For the purpose of this Issue, any person born after (01/05/1990) shall be treated as Minor.
2) Only a father may subscribe on behalf of his Minor children.
3) If the subscription is made on behalf of a Minor by any person other than the father, he
shall be required to attach a valid Sharia (Legal) Power of Attorney issued by the competent
authorities authorizing him to deal in the funds of the Minor through sale, purchase and
investment.
IV.Shareholder’s (investor’s) Number
Registration Co. (SAOC) (“MDSRC”)
with
Muscat
Depository
&
Securities
1) Any person who desires to subscribe to the Offered Shares has to have an account with the
MDSRC as per its working form, which may be obtained from its Head Office or its site on
the World Wide Web or from brokerage companies. Each subscriber may open an account
through the following outlets:
- Head Office of the MDSRC based on the ground floor of the building of the CMA,
Commercial Business District.
- Branch of Muscat Securities Market based in Salalah.
- Office of the Brokerage Companies that are licensed by Muscat Securities Market.
- By fax no. 24817491.
2) With regard to the investors who presently hold accounts with the MDSRC, they shall be
required, before the subscription, to confirm whether their accounts contain all their basic
particulars, those being the name in full, postal address, Civil Status No., (as mentioned in the
Personal Card (Civil) or Civil No., furnished in the Passport or Civil No., or as provided for
in the new Birth Certificate) and details of the Bank Account. Every shareholder may update
his particulars through the outlets mentioned above.
3) All correspondence, including allocation notices and dividend cheques, shall be sent to the
subscriber at the address recorded at the MDSRC. Therefore, all subscribers shall verify the
correctness of such addresses.
4) Each subscriber shall be required, after opening the account or updating his particulars, to
secure from the MDRSC, the right number so as to have it registered in the Application for
the subscription. The investor himself shall be responsible for verification of the number
furnished in the Application for the subscription. The applications not bearing the correct
Account Numbers shall be rejected without contacting the subscriber.
For more information on these Procedures, you are requested to contact:
Muscat Depository & Securities Registration Co., SAOC
Tel. 24814827 - Fax. 24817491
http: // www.csdoman.co.om/
Subscription Period:
The subscription shall commence on May 5, 2008, and end on June 3,2008 with the end of
the official working hours of the Banks.
Minimum Limit of Public subscription:
The number of shares subscribed by each Person shall not be less than 1000 Shares and in
multiples of 100 thereafter. For juristic persons, corporates, investment funds, and pension
funds, Shares subscribed to shall not be less than 10,100 shares and in multiples of 100
thereafter.
Maximum Limit of Public subscription:
It shall not be permissible for any person, himself and his Minor children, and for any juristic
person to subscribe for more than 10% of the total issue size. In other words, the maximum
limit for one subscriber and his Minor children shall not exceed 2,500,000 (two million, five
hundred thousand) Shares.
For the purpose of calculation of this percentage the application for the subscription of the
father (or guardian) shall be merged with the applications of the Minor children. If the
volume of the shares subscribed exceeds the said percentage, the shares registered under each
application shall be reduced proportionately before making the allotment.
Particulars of the Bank Account:
1) Each applicant shall be required to furnish the particulars of his bank account. The
applicant shall not use the bank account number of any other person except in case of
Minor children.
2) If the bank account is different from the Bank receiving the subscription, the applicant
shall be required to submit a document in evidence of correctness of the bank account
particulars as provided for in the application. This can be done by submitting any
document from the applicant’s bank which shows the account name and number Such
document may be a bank statement or a letter or any document issued by the said bank
containing the said information. The applicant shall ensure that the evidence submitted is
clearly legible and contains the full name and number of the account holder. For the sake
of clarification, no proof of the bank account is required if the bank account is with the
bank through which the subscription is submitted. 3) In
accordance
with
the
instructions issued by the CMA, the particulars of the bank account referred to above
shall be recorded in the Registers of the MDSRC. This shall be used in the event of a
transfer of any excess funds of the subscriptionor the crediting of a future dividends . An
applicant who already has his bank account registered with the Registers of the MDSRC,
the bank account number provided for in the application for the subscription will be used
only for the purpose of a transfer of any excess sums.
4) The application for subscription containing the bank account number of a person other
than the applicant shall be rejected, with the exception of applications made on behalf of
Minor children that contain bank account particulars of their fathers.
Documentation Required:
1) Proof of Bank Account: In case the bank account is different from the bank to which the
application is submitted, the proof of such account should be attached to the subscription
form.
2) Authorised Signatory: In the case a person is signing the application form on behalf of
any other person in his capacity as the authorised signatory (with the exception of the
subscription made by a father on behalf of his Minor children), a copy of adequate legal
documentation should be submitted; Such documentation should not have expired and
should be registered with a competent legal authority.
Mode of subscription:
1) The subscriber shall be responsible for satisfying all the particulars and the validity of the
information in the application. Banks receiving the subscription have been instructed to
accept the applications for subscription satisfying all the requirements of the application
forms and the Prospectus.
2) The subscriber, before filling the application form, shall read the Prospectus and the
subscription terms and conditions.
3) The subscriber shall fill in the application form including the subscriber number with the
MDRSC, Civil Number/Passport Number, and Date of Birth in the case of Minor
children.
4) The subscriber shall submit the application form to one of the banks receiving the
subscription referred to in the Prospectus and pay the value of the shares as specified in
the Prospectus and attaching the identification documents.
5) Where the value of the shares is paid by cheque or remittance, it shall be in the name of
“Voltamp Energy SAOG (under transformation) (public subscription)”.
Banks receiving the subscription:
The applications for subscription shall be accepted by one of the following commercial banks
during the official working hours only:
1. Bank Muscat SAOG
2. Oman Arab Bank SAOC
3. Bank Dhofar SAOG
The bank receiving the subscription shall accept the application for subscription after
confirmation of compliance of the procedure and subject matter in line with the requirements
as provided for in the Prospectus. The bank must instruct the subscribers to comply and fulfill
any requirement that may appear in the application submitted.
The subscriber shall be responsible for submission of his application for subscription to one
of the banks receiving the subscription before closing of the period for subscription. In this
regard, the bank shall have the right not to accept any application for subscription that
reaches it after the official working hours on the closing date of the period for subscription.
Acceptance of the Applications for subscription:
The banks receiving the subscription shall not accept applications for subscription under the
following circumstances:
1) If the application is not signed by the applicant.
2) If the subscription price for the Offered Shares applied for is not paid pursuant to the
conditions provided for in the Prospectus.
3) If the cheque through which payment was made is returned dishonored.
4) If the application does not have the number registered with the MDRSC.
5) If the application is submitted under the joint names.
6) If the subscriber is a sole proprietorship establishment or trust account.
7) If the shareholder number is incorrect.
8) If the subscriber submits more than one application in the same name, all of them shall be
rejected.
9) If the supporting documents referred to in the Prospectus are not enclosed with the
application.
10) If the application does not contain the bank account of the subscriber.
11) If the bank account details of the subscriber in the application are incorrect.
12) If the bank account details are not relevant to the subscriber, with the exception of
applications submitted in the name of Minor children, who are allowed to make use of the
bank account details held by their fathers.
13) If any legal or regulatory requirements are not met.
If the bank observes, after receipt of the application and before expiry of the time schedule
prescribed for handing over of the applications to the Lead Issue Manager, that the
application has not complied with the legal requirements as provided for in the Prospectus,
due effort shall be taken to contact the subscriber so as to correct the mistake detected. In the
case of failure to have the mistake corrected within the period referred to, the bank receiving
the subscription shall return the application for the subscription together with the subscription
value before expiry of the period specified for handing over of the applications to the Lead
Issue Manager.
Refusal of subscription Applications:
The Lead Issue Manager may reject any applications under any of the conditions referred to
above, after securing the approval of the CMA. The Lead Issue Manager shall submit a
comprehensive report to the CMA indicating the reasons behind such rejection.
Enquiry & Complaints:
The subscribers who intend to seek clarification or file complaints with regard to the issues
related to the allotment or rejected applications or refund of the funds in excess of the
subscription may contact the branch of the bank where the subscription was made. In case
from the enquiry is not resolved by the branch, the subscriber should contact the person
concerned as hereunder:
Bank
Bank
Muscat
SAOG
Oman
Arab
Bank
SAOC
Bank
Dhofar
SAOG
Person
in
Charge
Talal
Abdul
Hamid
Al
Zadjali
(Wholes
ale
Banking
back
office)
Osama
Qinna
Mr.
Adil
Abdulla
h A.
Razaq
Al Hindi
Postal
Address
Phone No.
Fax No.
Email
PO Box 134,
Ruwi, PC112,
Sultanate of
Oman
24768213/
14
24788864
[email protected]
PO Box 2010, 24762324
Ruwi
112,
Muscat,
Oman
PO Box 1507, 24795517
Ruwi, Postal
Code
112,Sultanate
of Oman
24793953
[email protected]
24791131
[email protected]
If the bank receiving the subscription fails to resolve the enquiry/complaint, it shall refer the
subject matter to the Lead Issue Manager and inform subscriber of the results. The subscriber
should remain in contact only with the Bank receiving the subscription .
Overall Offering Split and Allotment Procedures:
In case of over-subscription, the offering of 25,000,000 Ordinary Shares shall be split among
the eligible investor groups, in the following portions:
Category I – Individuals
17,500,000 (seventeen million five hundred thousand) shares, being 70% of the Offered
Shares for Individual applicants applying for a maximum of 10,000 (Ten Thousand) shares.
Distribution of shares shall be on pro-rata basis. Individual Investors shall comprise of only
natural persons.
Category II – Non Individual Investors
6,250,000 (six million two hundred fifty thousand) shares, being 25% of the Offered Shares
for both natural and juristic persons including Individual applicants applying for more than
10,000 shares and for Corporate bodies/ Institutions / Investment Funds. Distribution of
shares will be on pro-rata basis.
Category III – Employees and Managers
1,000,000 (one million) shares, being 4% of the Offered Shares for employees up to a
maximum value equivalent to 19 times of their basic salary on firm allotment basis.
250,000 (two hundred fifty thousand) shares, being 1% of the Offered Shares for Managers
upto maximum of 50,000 shares each Manager of five Managers on firm allotment basis.
Any undersubcription in Category I shall be added to shares allocated for Category II and
vice versa. Any undersubcription in Category III shall be added to Category I (Retail
Investors).
Allotment for Foreign Nationals will be limited to a maximum of 70% of the total Shares
offered. Foreign Corporate Body/ Institution/ Investment Fund is defined as one which is not
incorporated in the Sultanate of Oman.
The final allocation on the above basis will be decided by the Lead Issue Manager and the Company
in consultation with the CMA.
Basis for Undersubscribed Shares:
In case of a shortfall in subscription the shortfall will be subscribed by the Underwriters.
The following table shows expected time schedule for completion of the subscription
procedures:
Procedure
Date
Commencement of subscription
5/5/2008
Closing of subscription
3/6/2008
Due Date for the Issue Manager to receive the subscription 13/6/2008
Applications and Final Registers of the subscribers from the
Banks receiving the subscription as per the understanding
arrived at
Notifying the Capital Market Authority of the outcome of 18/6/2008
the subscription and Proposal with regard to the allotment
Approval of the Capital Market Authority with regard to the 21/6/2008
proposal for the allotment
Commencement of refund and dispatch of the notices
regarding allotment and Constitutive General Meeting
Invitation
Constitutive General Meeting
Registering the company at the Commercial Registrar
Listing of the shares with Muscat Securities Market
22/6/2008
3/7/2008
13/7/2008
16/7/2008
Listing & Trading of the shares of the Company:
The Offered Shares shall be listed on the Muscat Securities Market in accordance with the
listing rules and regulations currently in force.
The expected date of listing in the above table is subject to the completion of legal quorum of
the Constitutive General Meeting for the first time.
Responsibilities & Obligations:
The Lead Issue Manager, Banks receiving the subscription and MDRSC shall abide by the
responsibilities and functions specified pursuant to the instructions and regulations laid down
by the CMA. The said bodies shall also abide by any other responsibilities that are provided
for in the agreements entered into between them and the Company.
The Parties concerned shall be required to take remedial measures with regard to the damages
arising from any negligence committed in the performance of the functions and
responsibilities assigned to them. The Lead Issue Manager shall be the body responsible
before the surveillance authorities in taking suitable steps and measures for repairing such
damages.
Allotment Letters and Refund of Money;
The Lead Issue Manager will arrange to allot the shares to the applicants with in 15 days after
the end of IPO and the excess money will be refunded to the eligible applicants. The Issue
Manager will send allotment letters to the applicants who have been allotted shares as per the
addresses registered with the MDSRC
CHAPTER 20
UNDERTAKINGS
I. Company issuing the Securities:
The Promoters/Selling Shareholders jointly and severally offer undertaking that:
1) the information provided in this Prospectus is true and complete
2) due diligence has been taken to ensure that no material information has been omitted, the
omission of which would render this Prospectus misleading.
2) all the provisions set out in the Capital Market Law, the CCL, and the rules and
regulations issued pursuant to them have been complied with.
For the Promoters/Selling Shareholders (Authorized Signatories):Sr.
Name
1
Mr. Qais bin Mohamed Al Yousef
2
Mr. Saibal Sen (on behalf of Sabco LLC)
Signature
II. Lead Issue Manager:
In accordance with the responsibilities prescribed by Article 3 of the Executive Regulations
of the Capital Market Law issued under Ministerial Decision No. 4/2001, and instructions
issued by the CMA, we have reviewed all the relevant documents and other material required
for the preparation of the Prospectus pertaining to the issue of shares of the Company.
The Promoters/Selling Shareholders are responsible for the authenticity of the information
contained in the Prospectus, and they have confirmed that no material information has been
omitted, the omission of which would render this Prospectus misleading.
We confirm that we have taken all necessary due care as required by the profession with
regard to the Prospectus that has been prepared under our supervision, on the basis of the
audit works referred to above and discussions held with the Company, its management and
other officials and on the basis of the auditing carried out by us with the concerned
authorities with regard to the subject matter of the Issue, profit projections, criteria and
justifications for the pricing, and contents of the documents submitted to us.
We further confirm as hereunder;
1) We have taken all necessary and reasonable care in ensuring that the information
furnished to us by the Company, and contained in the Prospectus, is consistent with the
facts available in the documents, material and other documents pertaining to the Issue.
2) On the basis of our perusal and information made available to us by the Company, the
Company has neither concealed any fundamental information nor omitted any material
information, the omission of which would have made the Prospectus misleading.
3) The Prospectus and Issue relevant to it are consistent with all the rules and conditions
governing transparency as provided for in the Capital Market Law and its amendments
thereof, the Executive Regulations of the Capital Market Law and its amendments
thereof, the applicable specimen prospectus available with the CMA and the CCL..
4) The data and information which have been presented in the Prospectus in Arabic (with its
unofficial translation in English) are correct, reasonable and adequate as per our perusal
so as to assist the investor in taking an appropriate decision whether or not to participate
in the offer of the securities the subject matter of this Prospectus.
Full Name:
Signature & Seal
III. Legal Advisor
The Legal Advisor, whose name appears below, confirms that all the procedures undertaken
with regard to offering of the Securities and the subject matter of the Prospectus, are in line
with the laws and legislations related to the Company’s business, the CCL, the Capital
Market Law and the regulation and directives issued pursuant to them, the requirement and
rules for the issue of shares issued by the Capital Market Authority (CMA), the applicable
Specimen Prospectus available with the Capital Market Authority (CMA), the Memorandum
and Articles of Association and the resolutions of the general meeting and the board of
directors of the Company.. The Company has obtained all the consents and approvals of the
official authorities are required to carry out the activities the subject matter of the Prospectus.
Full Name:
Signature and Seal
IV. Underwriters
The underwriters, whose names appear below, confirm that we have reviewed all studies
regarding the transformation of the company from a limited liability company to a joint stock
company as per the prospectus and we have agreed to underwrite the issue out of our
conviction of its feasibility in light of the information provided in the studies and the
financial projections after transformation.
Oman Arab Bank SAOC
Vision Investment Services Co. SAOC
Gulf Baader Capital Markets SAOC