Directors’ Report for the year ended 31st March 2023
Dear Shareholders,
On behalf of the Board of Directors, I have great pleasure in welcoming you to the 29th Annual General Meeting of Al Anwar Investments SAOG (AAI). I take this opportunity to place before you the Annual Report on the activities and performance of your company for the financial year ended 31st March 2023.
AAI has maintained a prudent and pro-active approach towards managing its investments. Our portfolio investment companies are making efforts to overcome the present challenging economic environment. Some of our portfolio investment companies have been resilient in these difficult market conditions and consequently have maintained their profitability. However, others have not done as well. Our immediate objective is to support our portfolio investment companies and to take advantage of investment opportunities as the economic situation improves.
| 2022-23 | 2021-22 | |
| (OMR’000) | (OMR’000) | |
| Total Income | 2,426 | 1,320 |
| Total Expenditure | (1,434) | (1,701) |
| Profit/ (loss) before Fair value loss | 992 | (381) |
| Fair value loss in financial assets | (638) | (460) |
| Income Tax | – | (1) |
| Net Profit / (loss) | 354 | (842) |
| Other Comprehensive Income | 1,615 | 13 |
| Total Comprehensive Income/ (loss) | 1,969 | (829) |
The Company reported a consolidated net profit of OMR 354,000 for the year ended on 31st March 2023 as against a loss of OMR 842,000 for the year ended on 31st March 2022, mainly on account of improvement in the Share of Profit (SoP) from associate companies as compared to last year and a gain of OMR 493,407from the sale of 5% stake of Al Maha Ceramics SAOG.
During 2022-23, the Company invested in securities that have been classified as Fair Value through Other Comprehensive Income (FVOCI). The profits or loss from these investments are therefore classified in Other Comprehensive Income and do not impact the Net Profit/(loss) of the Company. The total value of the securities classified as FVOCI has increased to OMR 9,251,968 as of 31st March 2023 from OMR 3,145,693 as of 31st March 2022.
As of 31 March 2023, a fair value gain of OMR 1,678,591 has been generated from investments classified as FVOCI and as a result, the total comprehensive income (Net Profit/(loss) plus Other Comprehensive Income) for the year ended on 31st March 2023 is OMR 1,968,347 as against a loss of OMR 829,445 for the period ended on 31st March 2022
The shareholders’ equity on 31st March 2023 is OMR 31.3 million. Debt/ Equity ratio is 0.55 compared to 0.51in the previous year.
Net assets per share as at 31st March 2023 is 157 baizas per share as against 151 baizas for the previous year.
Dividends
The company’s accumulated profits (retained earnings) as of 31st March 2023, are OMR 5.6 million. The Board of Directors recommends a cash Dividend of 5% (Last year: 4%) and a Stock Dividend of 3% (last year: Nil) for the approval of shareholders.
Financial statements
The audited consolidated financial statements presented include the following:
1. The results of Subsidiary Companies for the year ended 31st December 2022 of the following:
a) Al Anwar International Investment LLC, 100% subsidiary;
b) Al AnwarTaleem LLC, 100% subsidiary
c) Al Anwar Hospitality SAOC, 100% subsidiary in the hospitality sector; and
d) Al Anwar Industrial Investments SAOC, 100% subsidiary.
2. The share of profit (loss) of Associate Companies for the year ended 31st December 2022(AlRuwad International Education Services SAOC up to 31st January 2023) in which AAI owns between 20% and 50% of share capital or has significant influence.
3. Dividends from investments classified at Fair Value.
4. Realized and unrealized gains/losses from other listed/unlisted securities.
Performance of Investments
Associates
1. Al Maha Ceramics SAOG (AMC):
AMC reported revenue of OMR 9,977,477 for the year ended on 31st December 2022, as compared with OMR 9,821,837 for last year, an increase of 1.59%. Net profit after tax for the year is OMR 3,123,618 as compared to OMR 2,453,040in the previous corresponding period, an increase of 27%, which is mainly due to an increase to interest income on fixed deposits and savings in administrative expenses.
AAI has sold its 5% stake in the company during the year and recorded a realized gain of OMR 493,407. At the existing shareholding of 18.74%, our Board believes that AAI still has a significant influence on the company hence the investment continues to be classified as an Associate.
2. Voltamp Energy SAOG (VE):
VE reported revenues of OMR 35,842,036 during the year ended on 31st December 2022, an increase of 13.69% as compared to last year. VE reported a net loss (attributable to shareholders of the Parent Company) of OMR 1,252,910 during the year as compared to a loss of OMR 685,020 in last year. During the year competition in the transformers business intensified and the increase in price of imported raw materials impacted the results of the company. During the year the company made a provision for identified risks on its receivables which has impacted the results of the company substantially.
3. Arabia Falcon Insurance Company SAOG (AFIC):
AFIC recorded Gross Written Premium of OMR 21,522,574 during the year ended on 31st December 2022 as compared to OMR 19,063,179 for the last year, a growth of 13%. The Net profit after tax for the period is OMR 1,048,611 against OMR 1,675,511of last year, a decrease of 37%, due to an increase in Unearned Premium Reserve (UPR) and increase in Motor claims, caused by higher spare parts cost and an increase in number of claims. The company has been restructuring its portfolio to phase-out large loss-making accounts coupled with concerted efforts to write new businesses.
4. Al Ruwad International for Education Services SAOC (AIS):
The Company has reported lower revenue and a marginal loss for the twelve-month period ended on 31 January 2023 as compared to loss of last year. This is primarily due to a lower number of students enrolled in the school during the academic year.
The school has entered into a Memorandum of Understanding (MoU) with Ellesmere School, United Kingdom, and signed the Governance agreement on 4th November 2022. This should improve the school’s competitive position and support it in attracting a higher number of students in future years.
5. National Biscuits Industries Ltd. SAOG (NABIL):
NABIL reported revenue of OMR 14,114,615 for the twelve-month period ended on 31st December 2022 as against OMR 10,602,000 of last year, an improvement of 33% from last year. However, the net profit for the period declined to OMR 143,922 as against OMR 393,000 for the same period of last year, due to an increase in commodity prices, overheads and a sharp increase in freight costs across all markets. The NABIL brand along with the new value-added portfolio of products enjoys a significant brand image in Oman market and has a good brand presence across the GCC markets and other regions as well.
6. National Detergent Co. SAOG (NDC):
NDC reported revenues of OMR 19,641,345 for the year ended 31st December 2022 as compared to last year’s 17,768,828, a growth of 11%. The Company reported a net loss of OMR 440,334 as compared to net loss of OMR 57,903 of last year. The major reasons for the loss include higher input costs and logistic costs due to the global geo-political situation and higher crude oil prices in the first half of the year. With the strong efforts of the management,the company was able to take effective measures to reduce various costs and overheads. The flagship brand BAHAR maintained its premier market position in Oman.
7. Oman Chlorine SAOG (OC)
Oman Chlorine Group has reported revenue of OMR 31,359,462 for the year ended 31st December 2022 as compared with OMR 19,663,444in the previous period, a growth of 59%. The net profit (Attributable to Parent Company Shareholders) for the period is OMR 3,919,497 as compared to loss of OMR 258,052in the previous period.This significant Increase in revenue and profitability is mainly as a result of improvement in performance reported by the subsidiaries located in UAE and Qatar.
The Oman operation reported a net profit of OMR 2,685,042 compared to the previous period of OMR 1,830,204a growth of 47%. The enhanced capacity of the Caustic Soda Plant from 45 MTPD to 75 MTPD has led to higher customer retention and improved revenues whilst cost efficiency has improved. The company consistently maintained the capacity utilization of the plant above 100% for both the plants on a combined basis.
Union Chlorine LLC, UAE, a subsidiary, has increased net profit of OMR 1,118,710 for the year ended on 31st December 2022, compared to loss of OMR 878,465 in the previous period. The parent company’s share of profit is OMR 670,108. The plant operating at capacity utilization of 103%, the revenue was higher while capitalizing on the international demand and securing more contracts at higher realizations.
Gulf Chlorine WLL, Qatar, a subsidiary, has increased net profittoOMR 1,109,532 during the year ended 31st December 2022, compared to loss of OMR 3,030,000 in the previous period. The parent company’s share of profit is OMR 565,862. With the Calcium Chloride Plant commissioned fully by United Chemicals, Gulf Chlorine will be able to run the existing plant at higher capacity which will enable the company to post improved operating performance. The company has further strengthened its long-term agreements and its position with the major players in Qatar.
Other significant investments
1. Ominvest perpetual bonds
AAI held Ominvest perpetual bonds of OMR 1,517,874 as of 31st March 2023. Bonds are carrying an interest rate of 7.75% per annum payable twice a year in June and December. Ominvest declared that the Bonds will be redeemed on 6th June 2023. For the year ended as of 31st March 2023, AAI earned interest amounting to OMR 258,751.
2. Bank Dhofar SAOG
AAI has an equity stake of 1.47% in Bank Dhofar at a carrying value of OMR 7,029,098 as at 31st March 2023. The investment is classified at fair value. The Bank has reported total operating income of OMR 91.7mn, an improvement of 11% from last year’s OMR 82.4mn. Net profit after tax for the year is OMR 33.1mn as compared to OMR 27.6mn in the previous corresponding period, an increase of 20%.
3. Dhofar International Development and Investment Co SAOG (DIDIC)
AAI has an equity stake of 6.84% in DIDIC at a carrying value of OMR 4,499,902 as at 31st March 2023. The investment is classified at fair value. The company has achieved consolidated net profits (Attributable to parent shareholders) of OMR 9,690,895 for the year 2022, as compared to a net profit of OMR 3,884,632 of last year. The reason for the increase in the profits is due to an increase in realized profit from selling some assets at fair value through profits and losses, an increase in the share of profits from the associate companies, in addition to decrease in borrowing costs.
4. Almondz Global Securities Ltd, India (AGSL)
AAI holds 11.94% equity stake in the AGSL, a company listed on The Bombay Stock Exchange (BSE), India, engaged in the business of broking, corporate finance, investment banking and healthcare. Investment is classified at fair value. AGSL diversified its business into other sectors during the year. The carrying value of our stake in AGSL is OMR 851,931 as at 31st March 2023.
Omanisation
AAI has always been fully committed of recruiting and training Omani employees and developing and promoting the local talent. AAI Omanisation level at 31st March 2023 is 67%.
Outlook
Oman’s economy is expected to continue to improve as restrictions related to Covid-19 ease and oil prices recover from the lows witnessed in prior years. S&P Global Ratings has revised Oman’s rating outlook to positive from stable, citing its improving fiscal position, progress on reforms and rising oil prices.
AAI has maintained a prudent and active approach towards managing its investment portfolio. Our objective this year is to:
• continue to support and pro-actively manage our investment companies and,
• take advantage of investment opportunities available in the market
We are confident that AAI and its investment portfolio companies will continue to play a pivotal role in Oman’s economic growth, create job opportunities for Omani nationals, and attract foreign investments in the Sultanate of Oman.
Acknowledgment
On behalf of the Board of Directors, I would like to take this opportunity to express our greetings and good wishes to His Majesty Sultan Haitham bin Tarik, and pray to Allah to grant him and his government success to lead the country and the people to greater prosperity and progress.
The Board records its sincere appreciation to the Ministry of Commerce and Industry and Investment Promotion, Capital Market Authority, Muscat Stock Exchange, Bankers, Auditors for their continued support.
I would also like to express my sincere appreciation to the Board of Directors of all our portfolio investment companies for the direction given to the management of the respective companies. I place on record my sincere thanks and appreciation for the dedicated efforts of the management team and all employees of our portfolio investment companies.
I would also like to convey my sincere thanks to the Shareholders of Al Anwar Investments SAOG for the confidence they have reposed in the company and its Board.
For & on behalf of the Board of Directors of
Al Anwar Investments SAOG
Brig. (Rtd.) Masoud Humaid Al Harthy
Chairman