Oman & Emirates Investment Holding
Company SAOG
CONSOLIDATED AND PARENT COMPANY
FINANCIAL STATEMENTS
31 DECEMBER 2008
Oman & Emirates Investment Holding Company SAOG
COMPANY FINANCIAL STATEMENTS
31 December 2008
Contents
Page
Report of the auditors
1
Balance sheet
2
Statement of income
3
Statement of cash flow
4
Statement of changes in equity
Notes to the financial statements
5-6
7 - 46
Page 1
REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF
OMAN & EMIRATES INVESTMENT HOLDING COMPANY (S.A.O.G)
Report on the financial statements
We have audited the accompanying financial statements of Oman & Emirates Investment Holding Company
(S.A.O.G) ("the Parent company") and its Subsidiaries (“the Group”) set out on pages 2 to 46, which comprise the
consolidated and Parent company balance sheet as at 31 December 2008 and the consolidated and Parent company:
income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory notes.
Management’s responsibility for the financial statements
The Management is responsible for the preparation and fair presentation of these consolidated and Parent company
financial statements in accordance with International Financial Reporting Standards, the disclosure requirements of
the Capital Market Authority and the Commercial Companies Law of 1974 as amended. This responsibility
includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation
of the financial statements that are free from material misstatements, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated and Parent company financial statements based on
our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated and Parent company financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated and Parent company financial statements. The procedures selected depend on our judgment, including
the assessments of the risks of material misstatements of the consolidated and Parent company financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Parent
company’s preparation and fair presentation of the consolidated and Parent company financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Parent company’s or the Group’s internal control. An audit also includes evaluating the
appropriateness of accounting principles used and the reasonableness of the accounting estimates made by
Management, as well as evaluating the overall presentation of the consolidated and Parent company financial
statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion, the consolidated and Parent company financial statements present fairly, in all material respects, the
financial position of the Group and Parent Company as at 31 December 2008 and their financial performance and
their cash flows for the year then ended in accordance with International Financial Reporting Standards.
Report on other Legal and Regulatory Requirements
In our opinion, the consolidated and Parent company financial statements as at and for the year ended 31 December
2008, in all material respects comply with:

the relevant disclosure requirements of the Capital Market Authority; and

the Commercial Companies Law of 1974, as amended.
Emphasis of matter
Without qualifying our opinion, we draw attention to the notes 6 and 7 to the Parent company and consolidated
financial statements, which disclose a significant fall in the fair values of the investments held by the Parent
company and the Group
8 March 2009
KPMG
Page 2
Oman & Emirates Investment Holding Company SAOG
BALANCE SHEET
as at 31 December
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
7,005,189
1,105,913
647,592
15,601,036
18,489,694
11,042,537
5,928,721
12,907,567
84,000
------------------------72,812,249
==========
3,854,632
10,328,007
836,465
39,128,810
13,036,049
18,436,487
13,532,882
75,000
------------------------99,228,332
==========
312,108
2,384,764
12,997,675
18,416,894
10,034,017
2,562,985
2,819,554
84,808
------------------------49,612,805
==========
40,836
5,988,061
33,562,924
12,614,415
10,084,991
3,316,487
72,245
------------------------65,679,959
==========
5
4(iv)
16
17
18
18
8,536,465
3,268,386
16,942,093
18,378,193
4,407,807
----------------------51,532,944
----------------------21,279,305
==========
6,446,204
6,986,884
13,418,268
17,733,202
5,060,798
------------------------49,645,356
------------------------49,582,976
==========
4,545,446
4,436,653
521,518
13,924,284
12,652,768
2,347,232
----------------------38,427,901
----------------------11,184,904
==========
4,433,887
4,550,038
907,190
10,248,201
11,936,000
3,064,000
------------------------35,139,316
------------------------30,540,643
==========
19
20
22
12,187,500
2,747,324
1,915,826
3,015,026
------------------------19,865,676
1,413,629
------------------------21,279,305
7,500,000
2,747,324
2,622,728
34,023,484
------------------------46,893,536
2,689,440
------------------------49,582,976
12,187,500
2,500,000
1,912,056
(5,414,652)
------------------------11,184,904
------------------------11,184,904
7,500,000
2,500,000
2,205,453
18,335,190
------------------------30,540,643
------------------------30,540,643
==========
==========
694,161
694,161
==========
==========
The notes on pages 7 to 46 form an integral part of these financial statements.
==========
694,161
==========
==========
694,161
==========
Notes
ASSETS
Bank balances and cash
Receivables
Inventories
Trading investments
Investments available for sale
Investments in associates
Investments held for sale
Investments in subsidiaries
Property, plant and equipment
Intangible assets
5
8
6
6
9
10
4
11
14
TOTAL ASSETS
LIABILITIES
Bank overdrafts
Provision for bank guarantees
Accounts payable and accruals
Term loans
Loans from Governments
Deferred Government grant
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Legal reserve
Cumulative changes in fair value
Retained earnings/accumulated losses
Total equity
Minority interests
TOTAL EQUITY AND MINORITY
INTERST
Trust accounts
24
The financial statements were approved and authorised for issue in accordance with a resolution of the Board of
Directors on 8 March 2009.
Khalil Foulathi
Chairman
The report of the Auditors is set forth on page 1.
Awad Mohammed Faraj Bamkhalef
Chief Executive Officer
Page 3
Oman & Emirates Investment Holding Company SAOG
STATEMENT OF INCOME
for the year ended 31 December
Notes
Interest income
Brokerage commission income
Realised gain on sale of investments
Dividend income
Unrealised (loss) gain on investments
held for trading (net)
Gross loss on sale of food products
Other income
Write back of provision for doubtful debts
Share of (loss) profit from associates (net)
2008
Parent
RO
2007
Parent
RO
93,043
841,242
1,445,164
1,598,705
277,908
564,032
5,858,361
1,513,429
97,556
1,124,300
2,402,059
160,187
4,256,977
2,349,437
30
27
28
8
9
(16,960,859)
(1,103,166)
115,580
1,898
(3,020,651)
────────
(16,989,044)
────────
12,614,783
(1,276,929)
267,262
199,938
3,753,249
────────
23,772,033
───────
(14,463,016)
160,504
1,898
────────
(10,676,699)
────────
11,826,290
64,029
511,775
────────
19,168,695
────────
30
29
(1,965,123)
(1,906,180)
(235,093)
(15,463)
(2,075,940)
(500,683)
(6,000)
(36,000)
(1,759,389)
────────
(8,499,871)
────────
(25,488,915)
(1,697,216)
(895,003)
(1,090,037)
(519,172)
(242,274)
(124,483)
(26,610)
(469,136)
(479,115)
(35,293) (2, 572,872)
(743,084)
(500,683)
(258,800)
(1,312,626)
(950,179)
────────
────────
(5,405,940)
(6,510,643)
────────
────────
18,366,093 (17,187, 342)
(989,988)
(433,032)
(103,924)
(668,287)
(4,461,913)
(454,034)
(1,298,139)
(183,800)
(642,617)
────────
(9,235,734)
────────
9,932,961
8
4 (iv)
4&13
4&12
14
TOTAL EXPENSES
NET (LOSS) / PROFIT FOR THE
YEAR
════════
Attributable to:
Equity holders of the Parent
Minority interests
Earnings per share for (loss) / profit for
the year attributable to equity holders of
the parent (Restated)
2007
Group
RO
26
TOTAL INCOME
Staff related expenses
Administration expenses
Portfolio management fees
Provision for bad and doubtful debts
Provision for guarantee
Impairment of investments
Impairment of goodwill
Amortisation of intangible asset
Directors’ remuneration
Finance costs
2008
Group
RO
(24,445,958)
(1,042,957)
────────
(25,488,915)
════════
25
(0.201)
════════
════════
════════
17,676,795 (17,187, 342)
689,298
────────
────────
18,366,093 (17,187, 342)
════════
════════
9,932,961
───────
9,932,961
═══════
════════
0.145
════════
The attached notes on pages 7 to 46 form an integral part of these financial statements.
The report of the Auditors is set forth on page 1.
(0.141)
════════
0.082
═══════
Page 4
Oman & Emirates Investment Holding Company SAOG
STATEMENT OF CASH FLOWS
for the year ended 31 December
OPERATING ACTIVITIES
Profit / (Loss) before tax
Adjustments for:
Share of results of associates
Depreciation
Dividend and interest income
Realised gain on sale of investments
Unrealised gain on trading investments (net)
Impairment of investments, net of reversal
Profit on Sale of Investments
Amortisation of goodwill
Accrual for employees end of service benefits
Provision for bad and doubtful debts, net
Provision for guarantee
Interest expense
Bad debts written out of provision
Release of provision for end of service benefits
Provision for doubtful debts written back
Working capital changes
Receivables
Payables
Inventories
Deferred expenditure
Cash generated/ (used) in operations
Interest paid
End of service benefits paid
Net cash flow used in operating activities
INVESTING ACTIVITIES
Purchase of equipment
Proceeds from sale of property, plant and equipment
Dividend and interest income
Dividend from associates
Proceeds from sale of investments
Purchase of investments
Net cash flow from investing activities
FINANCING ACTIVITIES
New term loans and lease finance
Repayment of loans
Injection of capital
Payment of dividend
Payment of redemption proceeds
Net cash flow (used in) from financing activities
INCREASE/DECREASE IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the year
CASH AND CASH EQUIVALENTS AT THE END
OF THE YEAR
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
(25,488,915)
18,366,093
(17,187,342)
9,932,961
3,020,651
1,128,195
(1,691,748)
(1,445,164)
16,960,859
2,576,623
(65)
6,000
102,371
15,463
1,759,389
(171,253
(10,426)
(1,898)
────────
(3,239,918)
9,379,783
(3,794,618)
188,873
(15,000)
────────
2,519,120
(1,759,389)
(15,824)
────────
743,907
────────
(3,753,249)
1,052,315
(1,791,337)
(5,858,361)
(12,614,784)
778,377
40,964
26,610
1,312,625
(199,938)
────────
(2,640,685)
32,435
(2,509,623)
(4,256,977)
(11,826,290)
454,034
1,298,139
7,382
156,512
4,461,913
642,617
────────
(1,606,897)
(6,953,348)
3,559,933
(158,491)
(3,000)
────────
(6,195,591)
(1,312,625)
(19,588)
────────
(7,527,804)
────────
33,721
(2,499,615)
(1,124,300)
14,463,016
3,073,555
(65)
35,328
418,859
479,115
950,179
────────
(1,357,549)
2,591,939
(414,303)
────────
820087
(950,179)
(6,697)
────────
(136,789)
────────
(503,331)
515
1,691,748
717,554
21,329,175
(24,502,640)
────────
(1,266,979)
────────
(1,301,394)
52,759
1,791,337
91,182
23,518,408
(21,896,470)
────────
2,255,822
────────
(46,511)
292
2,499,615
15,147,534
(19,105,511)
────────
(1,504,581)
────────
(94,451)
37,768
2,509,623
19,777,369
(22,671,104)
────────
(440,795)
────────
3,523,825
(8,000)
(1,901,120)
(31,337)
────────
1,583,368
────────
7,411,013
(3,025,649)
1,352,000
(2,493,282)
(2,828,840)
────────
415,242
────────
3,676,083
(1,875,000)
────────
1,801,083
────────
7,401,543
(2,534,217)
(1,500,000)
────────
3,367,326
────────
1,060,296
(4,856,740)
159,713
(5,459,202)
(2,591,572)
────────
2,265,168
────────
(4,393,051)
────────
1,066,151
────────
(1,531,276)
════════
(2,591,572)
════════
(4,233,338)
════════
(4,393,051)
════════
The attached notes 7 to 46 form an integral part of these financial statements.
The report of the Auditors is set forth on page 1.
(5,889,678)
(237,005)
────────
(7,733,580)
(642,617)
(9,536)
────────
(8,385,733)
────────
Page 5
Oman & Emirates Investment Holding Company SAOG
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2008
Group
Notes
At 1 January 2007
Net movement in available for sale
investments
Net income and expense for the year
recognised directly in equity
Net profit for the year
Total income and expense for the year
Payment of dividend for the year 2007
Injection of capital
Redemption of units
Transfer to legal reserve
Transfer to retained earnings
7,500,000
Net income and expense for the year
recognised directly in equity
Net loss for the year
Total
RO
RO
RO
30,127,354
4,297,891
34,425,245
22
----------------------- ------------------------ ------------------------
589,387
------------------------
589,387
------------------------ ------------------------
22
------------------------ ------------------------ -----------------------11,794
- (2,000,000)
----------------------- ------------------------ -----------------------7,500,000 2,747,324
═══════ ════════ ════════
589,387
-----------------------589,387
-----------------------2,622,728
════════
589,387
172,374
761,761
17,676,795 17,676,795
689,298 18,366,093
------------------------ ------------------------ ------------------------ -----------------------17,676,795 18,266,182
861,672 19,127,854
(1,500,000) (1,500,000)
(993,283) (2,493,283)
1,352,000
1,352,000
(2,828,840) (2,828,840)
(11,794)
2,000,000
------------------------ ------------------------ ------------------------ -----------------------34,023,484 46,893,536
2,689,440 49,582,976
════════ ════════ ════════ ════════
----------------------- ------------------------ ------------------------
(706,902)
------------------------
(706,902)
(175,397)
(882,299)
------------------------ ------------------------ ------------------------ ------------------------
22
22
15,858,483
Total
equity
2,033,341
20
2,735,530
Minority
interest
2,000,000
At 31 December 2007
Net movement in available for sale
investments
Share
Capital
RO
Attributable to equity holders of the Parent Company
Cumulative
Legal
Special
changes
Retained
reserve
reserve in fair value
earnings
RO
RO
RO
RO
172,374
761,761
------------------------ ------------------------
(706,902)
(706,902)
(175,397)
(882,299)
(24,445,958) (24,445,958) (1,042,957) (25,488,915)
----------------------- ------------------------ ------------------------ ----------------------------------------------- ------------------------ ------------------------ -----------------------Total income and expense for the year
(706,902)
(24,445,958) (25,152,860) (1,218,354) (26,371,214)
Stock Dividend for 2006 – 25%
1,875,000
(1,875,000)
Stock Dividend for 2007 – 30%
2,812,500
(2,812,500)
Payment of dividend for 2007 – 20%
(1,875,000) (1,875,000)
(26,120) (1,901,120)
Redemption of units
(31,337)
(31,337)
----------------------- ------------------------ ------------------------ ----------------------------------------------- ------------------------ ------------------------ -----------------------At 31 December 2008
12,187,500 2,747,324
1,915,826
3,015,026 19,865,676
1,413,629 21,279,305
═══════ ════════ ════════ ════════
════════ ════════ ════════ ════════
The attached notes on pages 7 to 46 form an integral part of these financial statements. The report of the Auditors is set forth on page 1.
Page 6
Oman & Emirates Investment Holding Company SAOG
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2008
Parent Company
Notes
At 1 January 2007
Net movement in available for sale investments
22
Net income and expense for the year recognised
directly in equity
Net profit for the year
22
Total income and expense for the year
Payment of dividend for the year 2007
Transfer to retained Earnings
At 31 December 2007
Net movement in available for sale investments
22
Net income and expense for the year recognised
directly in equity
Net loss for the year
22
Total income and expense for the year
Stock Dividend for 2006 – 25%
Stock Dividend for 2007 – 30%
Payment of dividend for 2007 – 20%
At 31 December 2008
Share
capital
RO
Attributable to equity holders of the Parent Company
(Accumulated
Cumulative
losses)
Legal
Special changes in fair
/retained
reserve
reserve
value
earnings
RO
RO
RO
RO
Total
RO
7,500,000 2,500,000
------------------------ ----------------------------------------------- ------------------------
2,000,000
-----------------------------------------------
2,039,550
-----------------------165,903
------------------------
7,902,229
-----------------------------------------------
21,941,779
-----------------------165,903
------------------------
------------------------ ------------------------
-----------------------(2,000,000)
165,903
-----------------------165,903
-
9,932,961
-----------------------9,932,961
(1,500,000)
2,000,000
165,903
9,932,961
-----------------------10,098,864
(1,500,000)
-
7,500,000 2,500,000
════════ ════════
------------------------ ------------------------
════════
------------------------
2,205,453
════════
(293,397)
------------------------
18,335,190
════════
------------------------
30,540,643
════════
(293,397)
------------------------
------------------------ -----------------------1,875,000
2,812,500
------------------------ -----------------------12,187,500 2,500,000
════════ ════════
----------------------------------------------════════
(293,397)
-----------------------(293,397)
-----------------------1,912,056
════════
(17,187,342)
-----------------------(17,187,342)
(1,875,000)
(2,812,500)
(1,875,000)
-----------------------(5,414,652)
════════
(293,397)
(17,187,342)
-----------------------(17,480,739)
(1,875,000)
-----------------------11,184,904
════════
The attached notes on pages 7 to 46 form an integral part of these financial statements.
The report of the Auditors is set forth on page 1.
Page 7
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
1
ACTIVITIES
Oman & Emirates Investment Holding Company SAOG (“the Parent company”) is registered as an
Omani joint stock company. It is engaged in investment activities and related services in accordance
with Royal Decree No. 10/93 and its Articles of Association. The Parent company is licensed to carry
out financial investment activities through its branch in the United Arab Emirates (the UAE) by the
Central Bank of the UAE. The Parent company’s registered head office address is at PO Box 2205,
Ruwi, Postal Code 112, Sultanate of Oman. Oman & Emirates Investment Holding Company SAOG
and its subsidiaries (“the Group”) operate in the Sultanate of Oman and the UAE.
2
BASIS OF PREPARATION
The consolidated and Parent company financial statements are prepared under the historical cost
convention modified to include the measurement at fair value of trading and available for sale
investments.
The financial statements have been presented in Rial Omani, which is the Group’s and the Parent
company’s functional currency.
a)
Statement of compliance
The consolidated and Parent company financial statements have been prepared in accordance with the
International Financial Reporting Standards (IFRS), the disclosure requirements of the Capital Market
Authority of the Sultanate of Oman and the requirements of the Commercial Companies Law of 1974,
as amended.
b)
Use of estimates and judgements
The preparation of financial statements requires management to make judgement, 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 revised on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised in any future periods affected.
c)
Adoption status of new and forthcoming IFRS and interpretation
(i)
New standards and interpretations not yet adopted and relevant for the Parent company and Group’s
operations:
A number of new standards, amendments to standard and interpretations are not yet effective for the
year ended 31 December 2008, and have not been applied in preparing these 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 a change in the
presentation and 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 is currently in the process of determining the potential effect of
this standard on the Group’s segmental reporting.

Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an
entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a
qualifying asset as part of the cost of that asset. The revised IAS 23 will become mandatory for the Group’s
2009 financial statements. In accordance with the transitional provisions the Group will apply the revised
IAS 23 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective
date. Therefore there will be no impact on prior periods in the Group’s 2009 financial statements.
Page 8
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
2
BASIS OF PREPARATION (continued)
c)
Adoption status of new and forthcoming IFRS and interpretation (continued)
(ii)
New standards and interpretations not yet adopted and relevant for the Group’s operations (continued):
(iii)
d)

Revised IAS 1 Presentation of Financial Statements (2007) introduces the term total comprehensive
income, which represents changes in equity during a period other than those changes resulting from
transactions with owners in their capacity as owners. Total comprehensive income may be presented in
either a single statement of comprehensive income (effectively combining both the income statement
and all non-owner changes in equity in a single statement), or in an income statement and a separate
statement of comprehensive income. Revised IAS 1, which becomes mandatory for the Group’s 2009
financial statements, is expected to have a significant impact on the presentation of the financial
statements.

Revised IFRS 3, which becomes mandatory for the Group’s 2010 financial statements, will be applied
prospectively and therefore there will be no impact on prior periods in the Group’s 2010 financial
statements.

Amended IAS 27 Consolidated and Separate Financial Statements (2008) requires accounting for
changes in ownership interests by the Group in a subsidiary, while maintaining control, to be
recognised as an equity transaction. When the Group loses control of a subsidiary, any interest retained
in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss.
The amendments to IAS 27, which become mandatory for the Group’s 2010 financial statements, are
not expected to have any significant impact on the financial statements.
New standards and interpretations not relevant for the Group’s operations

IFRIC 13 Customer Loyalty Programmes

Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial
Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

Amendment to IFRS 2 Share-based Payment
Basis of consolidation
The consolidated financial statements comprise the audited financial statements of Oman & Emirates
Investment Holding Company SAOG and its subsidiaries: United Brokerage Company LLC, Majan
Capital Fund, Omani Euro Food Industries Co SAOG, Omani Pedigree Goat Breeding Co LLC and
Dhofar Fisheries Industries Co SAOG drawn up to 31 December 2008. The financial statements of the
subsidiaries are prepared for the same reporting year as the Parent Company, using consistent
accounting policies.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
All intercompany balances and transactions and unrealised profits arising from intra-group transactions,
are eliminated.
Companies are classified as subsidiaries where the Parent company has control over the company.
Minority interests represent the portion of profit or loss and net assets in interest in United Brokerage
Company LLC, Majan Capital Fund, Omani Euro Food Industries Co SAOG and Dhofar Fisheries
Industries Co SAOG not held by the Group and are presented separately in the income statement and
within equity in the consolidated balance sheet and, separately from Parent company shareholders’
equity.
Page 9
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
3
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these
financial statements.
e)
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand, bank balances and short term deposits with an
original maturity of three months or less.
For the purpose of the consolidated cash flows statement, cash and cash equivalents consist of cash and
cash equivalents defined above, net of outstanding bank overdrafts.
f)
Trading investments
These are initially recognised at cost and subsequently re-measured at fair value. All related realised
and unrealised gains and losses, and dividends received are included in the income statement.
g)
Investments available for sale
After initial recognition, investments are classified “available-for-sale,” and are re-measured at fair
value. Unrealised gains and losses on re-measurement to fair value are reported as a separate
component of equity until the investment is derecognised or the investment is determined to be
impaired. On derecognition or impairment the cumulative gain or loss previously reported in equity, is
included in the statement of income for the period.
h)
Investments in associates
The Group’s investments in associates are accounted for under the equity method of accounting. These
are entities in which the Group has between 20% to 50% of the voting power or over which it exercises
significant influence. Investments in associates are carried in the balance sheet at cost, plus postacquisition changes in the Group’s share of net assets of the associate, less any impairment in value.
The statement of income reflects the Group’s share of the results of its associates.
Except for a non-material associate, the reporting dates of the associate and the Group are identical.
The associates’ accounting policies conform to those used by the Group for like transactions and events
in similar circumstances.
Where separate financial statements are prepared, investments in associates are accounted for at cost
less impairment losses.
i)
Investments in subsidiaries
The investments in subsidiaries are accounted for under the purchase method of accounting. These are
entities in which the Parent company has between 50% to 100% of the voting power or over which it
has the power directly or indirectly to govern the financial and operating policies of an entity. Where
separate financial statements are prepared, investments in subsidiaries are carried in the balance sheet
at cost, less any impairment in value of any individual investment.
j)
Investments held to maturity
Investments held to maturity represent investments where the group has the positive intention and
ability to hold to maturity. These are initially recorded at cost and subsequently re-measured at
amortised cost using the effective interest method, less any provision for impairment. Amortised cost is
calculated by taking into account any discount or premium on acquisition over the period to maturity.
For investments carried at amortised cost, gains and losses are recognised in income when the
investments are derecognised or impaired, as well as through the amortisation process.
Page 10
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
3
SIGNIFICANT ACCOUNTING POLICIES (continued)
k)
Impairment and uncollectibility of financial assets
An assessment is made at each balance sheet date to determine whether there is objective evidence that
a financial asset or group of financial assets may be impaired. If such evidence exists, the estimated
recoverable amount of that asset is determined and any impairment loss recognised for the difference
between the recoverable amount and the carrying amount. Impairment losses are recognised in the
statement of income.
l)
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted
average basis. Raw materials and packing materials cost represents the invoice value of materials and
related direct expenses. Work in progress cost represents a proportionate cost of the raw materials,
direct labour and other attributable overheads. Finished goods cost represents the cost of the raw
materials, direct labour and other attributable overheads. Net realisable value is based on estimated
selling price in the ordinary course of business less any further costs expected to be incurred to
completion and sale.
m)
Accounts receivable
Accounts receivable are stated at original invoice amount less a provision for any uncollectible
amounts. An estimate for doubtful debts is made when collection of the full amount is no longer
probable. Bad debts are written off when established.
n)
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in
value.
Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as
follows:
Building
Plan and machinery
Furniture, fixtures and office equipment
Leasehold improvements
Vehicles
over 20 to 40 years
over 15 to 20 years
over 3 to 5 years
over 5 years
over 3 to 4 years
Expenditure for major additions and improvements are capitalised, while maintenance and repairs
which do not enhance the economic lives of the assets, its capacity or reducing substantially operating
costs are charged to expense when incurred. An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. When items
of property, plant and equipment are retired, derecognised or otherwise disposed off the related cost
and accumulated depreciation thereto are removed and any resultant gain or loss is included in the
income statement.
The carrying values of these assets are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. If any such indication exists and
where the carrying values exceed the estimated recoverable amount, the assets are written down to their
recoverable amount.
Page 11
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
3
SIGNIFICANT ACCOUNTING POLICIES (continued)
o)
Intangible assets
i.
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost
of the business combination over the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if
events or changes in circumstances indicate that the carrying value may be impaired.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of
cash- generating units), to which the goodwill relates. Where the recoverable amount of the cashgenerating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is
recognised.
ii.
Other intangible assets
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at
cost less accumulated amortisation and accumulated impairment losses.
p)
Provisions
Provisions are recognised when the group has an obligation (legal or constructive) arising from a past
event, and the costs to settle the obligation are both probable and able to be reliably measured.
q)
Taxation
Taxation is provided for in accordance with Omani fiscal regulations.
Deferred income taxation is provided using the liability method on all temporary differences at the
balance sheet date. Deferred income tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realised or the liability is settled, based on laws that
have been enacted at the balance sheet date.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
r)
Accounts payable and accruals
Liabilities are recognised for amounts to be paid in the future for services received, whether billed or
not.
s)
Term loans
Term loans are carried on the balance sheet at their principal amount. Interest is charged as an expense
as it accrues, with unpaid amounts included in accounts payable and accruals.
Page 12
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
3
SIGNIFICANT ACCOUNTING POLICIES (continued)
t)
Loans from the Government
The loans from the Governments of Oman and UAE are carried on the balance sheet at fair value being
the fair value of consideration received. The fair value of the consideration received is the sum of all
future cash payments, discounted using the market borrowing rates of interest for loans having similar
maturity to discount the future contractual cash flow.
The difference between the fair value and the principal amount of the loans is treated as a Government
grant and deferred over the period of the loans.
u)
Deferred Government grant
The deferred government grant is recognised as income over the periods necessary to match it on a
systematic basis to the costs which it is intended to compensate.
v)
Employees’ end of service benefits
Contributions to a defined contribution retirement plan, for Omani employees in accordance with the
Oman Social Insurance Scheme, are recognized as an expense in the income statement as incurred.
Provisions for non-Omani employee terminal benefits under an unfunded defined benefit retirement
plan, is made in accordance with Omani Labour Law and is calculated by estimating the amount of
future benefits that employees have earned in return for their service in the current and prior periods.
The obligation is calculated using the projected unit credit method and is discounted to its present
value.
w)
Fiduciary assets
Assets held in trust or in a fiduciary capacity are not treated as assets of the Group.
x)
Revenue recognition
Sales are recognised when the significant risks and rewards of ownership of the goods have passed to
the buyer and can be reliably measured.
Brokerage commission is recognised on completion of each deal.
Interest revenue is recognised on an accrual basis net of related provisions for amounts considered
doubtful of collection.
Dividends are recognised when the right to receive the dividend is established.
y)
Directors’ remuneration
Directors’ remuneration is calculated by the Parent company and each of its subsidiaries based on the
individual company’s net profit for the year (before Directors’ remuneration), applying the overall
limits set out by the current regulations governing the determination of Directors’ remuneration.
Page 13
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
3
SIGNIFICANT ACCOUNTING POLICIES (continued)
z)
Foreign currencies
i)
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance sheet date. All differences are taken to the income statement.
ii) The accounting records of Parent company’s branch at Abu Dhabi and that of its subsidiary United
Brokerage Company LLC are maintained in UAE Dirhams. The Rial Omani amounts included in
the consolidated and Parent company financial statements have been translated at an exchange rate
of 0.1047 Rial Omani to each UAE Dirham for the income statement and the balance sheet items.
As both the Rial Omani and UAE Dirham are pegged to the US Dollar, no differences arise on
translation.
aa)
Trade and settlement date accounting
All “regular way” purchases and sales of financial assets are recognised on the trade date, i.e. the date
that the entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the time frame generally established by regulation
or convention in the market place.
bb)
Fair values
For investments traded in organised financial markets, fair value is determined by reference to quoted
market bid prices at the close of business on the balance sheet date. For unquoted investments, a
reasonable estimate of the fair value is determined by reference to the market value of a similar
investment or is based on the expected discounted cash flows. Where fair values cannot be reliably
measured, investments are measured at cost.
The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates
for items with similar terms and risk characteristics.
cc)
Classification of investments
Management decides on acquisition of an investment whether it should be classified as held to
maturity, held for trading or available for sale.
For those deemed to be held to maturity management ensures that the requirements of IAS 39 are met
and in particular the Group has the intention and ability to hold these to maturity.
The Group classifies investments as trading if they are acquired primarily for the purpose of making a
short term profit by the dealers.
All other investments are classified as available for sale.
dd)
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing products or
services (business segment), or in providing products or services within a particular economic
environment (geographical segment), which is subject to risks and rewards that are different from those
of other segments.
ee)
Dividends
Dividends are recommended by the Board after considering the profit available for distribution and the
Parent Company’s future cash requirements and are subject to approval by the shareholders at Annual
General Meeting. Dividends are recognized as a liability in the period in which they are declared.
Page 14
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
4
INVESTMENTS IN SUBSIDIARIES
i)
The consolidated financial statements include the financial statements of the Parent company and
the subsidiaries listed in the following table:
2007
2007
2008
2008
Percentage
Percentage
Company name
Activity
Cost
held
Cost
Held
RO
%
%
(i) United Brokerage
Company LLC, UAE
(ii)Majan Capital Fund
(iii) Omani Pedigree
Goat Breeding Co LLC
(iv) Omani Euro Food
Industries Co SAOG
(vI Dhofar Fisheries
Industries Co SAOG
Financial
services
Financial
services
Breeding of
Goats
Manufacture
of baby food
Fish
Processing
Total cost
Less: Impairment losses
for (i), (iv) and (v)
above
1,570,500
50.00
1,570,500
50.00
1,412,059
90.83
1,412,059
90.31
324,644
100.00
324,644
100.00
1,913,251
65.80
1,913,251
65.80
2,517,812
----------------------7,738,266
99.13
2,517,812
----------------------7,738,266
99.13
(4,918,712)
(4,421,779)
----------------------2,819,554
=========
----------------------3,316,487
=========
(i) United Brokerage Co LLC
The Group has 50% holding in United Brokerage Co LLC (“UBC”) a company registered in UAE.
The Board of Directors believe that the Group has the power to govern the financial and
operational policies of UBC as at 31 December 2008. Accordingly, it continues to be accounted as
a subsidiary. In view of the loss and erosion in equity capital the Parent Company has charged an
impairment towards investment for RO 487,649.
(ii) Majan Capital Fund
The Parent company has holding at 90.83% as on 31 December, 2008 ( 31 December, 2007 90.31%). The holding has increased as some of the units of the minority unitholders were
redeemed during the year.
iii) Omani Pedigree Goat Breeding Co LLC
During 2007, the Parent company has invested RO 216,644 in Omani Pedigree Goat Breading Co
LLC, a company registered in the Sultanate of Oman. As at 31 December 2008, the investment is
carried at cost, as the Board of Directors considers this approximates to fair value. The holding in
this company includes 3,246 shares (1%) not held in the Parent company’s name but held by a
Director as a trustee of the Parent company. During 2008, the Parent Company has extended an
advance of RO 541,200 (2007 RO 588,356) pending registration for increase in share capital of the
company.
iv) Dhofar Fisheries Industries Co SAOG
The Parent Company has 99.13% holding in Dhofar Fisheries Industries Co SAOG (“DFIC”) a
company registered in the Sultanate of Oman. As at 31 December 2008, DFIC’s accumulated
losses have exceeded the share capital of the company. Hence, the Parent Company has fully
established an impairment provision against the total investment of RO 2,517,812 in the share
capital of the company and also against the loan of RO 2,253,007 extended till 31 December 2008.
In view of the continuing losses and erosion of the equty capital of DFIC, the Parent Company has
established a further provision of RO 479,115 towards its guarantee obligations against the total
borrowings of RO 4,436,653 payable by DFIC to its lenders as at 31 December 2008.
Page 15
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
4
INVESTMENTS IN SUBSIDIARIES (continued)
v)
Omani Euro Food Industries Co. SAOC
The Parent Company has 65.8% holding in Omani Euro Food Industries Co SAOG (OEFIC) as at
31 December 2008. Due to the continuing losses incurred by OEFIC, the entire investment in the
OEFIC as at 31 December 2008 was treated as fully impaired and charged to the income statement.
During 2008, the Parent company has charged RO 9,284 towards impairment of its investment in
this company.
The holding in Omani Euro Food Industries Co SAOG, includes 4,000 shares, not held in the
Parent company’s name but held by a former Director and an employee as a trustee of the Parent
Company.
5
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the statement of cash flows comprise the following balance sheet
amounts:
Bank balances and cash
Bank overdrafts
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
7,005,189
(8,536,465)
────────
(1,531,276)
═══════
3,854,632
(6,446,204)
────────
(2,591,572)
═══════
312,108
(4,545,446)
────────
(4,233,338)
═══════
40,836
(4,433,887)
────────
(4,393,051)
═══════
Group
Bank balances and cash include bank deposits of RO 5,874,706 (31 December 2007 - RO 3,596,038)
with a commercial bank in UAE. This is denominated in UAE Dirhams, with an average interest
ranging from 3% to 4.62% (31 December 2007 – 3.6%). A bank deposit of RO 4,513,606 (31
December 2007 – RO 3,596,038) has been pledged against overdraft facilities.
Bank balances and cash include bank deposits at 31 December 2008 of RO 205,392 (31 December
2007 of RO 424,256) with a commercial bank in Oman. This was denominated in Rial Omani currency
with an average annual interest of 2% (31 December 2007 – 1% to 3.5%).
Bank overdrafts include balances of RO 3,281,695 (31 December 2007 – RO 2,998,882) with commercial
banks in Oman. These are denominated in Rial Omani with effective annual interest rates ranging from
7% to 8% (31 December 2007 – 6% to 9%). These facilities are secured by the pledge of securities with a
carrying value of RO 2,000,000 (31 December 2007 - RO 3,300,000) and corporate guarantee from the
Parent company.
Bank overdraft include balances of RO 5,254,770 (31 December 2007 – RO 3,017,672) with commercial
banks in the UAE. These are denominated in UAE Dirhams with effective annual interest rate ranging
from 6.81% (31 December 2007 – 5.58% to 9%). These facilities are secured by the pledge of securities
with a carrying value of RO 4,761,963 (31 December 2007 - RO 5,932,754).
Page 16
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
5
CASH AND CASH EQUIVALENTS (continued)
Parent Company
Bank balances and cash include bank deposits at 31 December 2008 of RO 205,392 (2007 RO Nil) with a
commercial bank in Oman. This was denominated in Rial Omani, with an annual interest of 2%.
Bank overdrafts include balances of RO 1,500,316 (31 December 2007 – RO 1,416,215) with commercial
banks in Oman. These are denominated in Rial Omani with effective annual interest rates ranging from
7% to 8% (31 December 2007 – 6% to 9%). These facilities are secured by the pledge of securities with a
carrying value of RO 2,000,000 (31 December 2007 - RO 3,300,000).
Bank overdraft includes balances of RO 3,045,130 (31 December 2007 – RO 3,017,672) with commercial
banks in the UAE. These are denominated in UAE Dirhams with effective annual interest rate ranging
from 6.81% (31 December 2007 – 6 % to 9%). These facilities are secured by the pledge of securities
with a carrying value of RO 4,554,450 (31 December 2006 - RO 4,554,450).
Page 17
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
6
INVESTMENTS
2008
--------------------------------------------------------------------------------------------------------------------------Held for
Available
Original
trading
for sale
Total
cost
RO
RO
RO
RO
2007
----------------------------------------------------------------------------------------------------------------------------------Held for
Available for
Original
trading
sale
Total
cost
RO
RO
RO
RO
11,039,835
1,169,437
1,526,631
───────
13,735,903
───────
625,034
4,394,692
2,251,196
───────
7,270,922
───────
11,664,869
5,564,129
3,777,827
───────
21,006,825
───────
12,277,109
6,144,150
5,282,756
───────
23,704,015
───────
25,928,889
3,252,302
5,715,916
───────
34,897,107
───────
8,328
2,435,129
1,798,702
───────
4,242,159
───────
25,937,217
5,687,431
7,514,618
───────
39,139,266
───────
11,433,704
4,402,063
5,458,652
───────
21,294,419
───────
812,112
1,042,322
10,699
───────
1,865,133
───────
292,637
709,723
───────
1,002,360
───────
1,104,749
1,752,045
10,699
───────
2,867,493
───────
971,118
1,039,934
22,908
───────
2,033,960
───────
2,360,977
1,870,726
539,205
1,106,900
2,900,182
2,977,626
999,551
1,230,918
───────
4,231,703
───────
───────
1,646,105
───────
───────
5,877,808
───────
───────
2,230,469
───────
───────
───────
255,177
3,978,740
1,744,937
───────
5,978,854
──────
255,177
3,978,740
1,744,937
───────
5,978,854
───────
657,000
3,978,740
1,744,937
───────
6,380,677
───────
──────
───────
467,800
41,240
2,401,187
───────
2,910,227
──────
467,800
41,240
2,401,187
───────
2,910,227
───────
657,000
41,240
2,401,187
───────
3,099,427
───────
533,970
533,970
533,970
533,970
533,970
213,588
213,588
213,588
213,588
213,588
3,490,000
3,490,000
3,490,000
3,490,000
3,490,000
─────── ─────── ───────
───────
───────
───────
───────
4,237,558
4,237,558
4,237,558
4,237,558
4,237,558
─────── ───────
─────── ───────
───────
───────
───────
Total
39,128,810
13,036,049
52,164,859
15,601,036
18,489,694
34,090,730
36,356,210
═══════ ═══════
═══════ ═══════
═══════
═══════
═══════
Investments aggregating RO 16,423,548 (31 December 2007 – RO 27,309,773) are pledged to commercial banks as security against credit facilities.
533,970
213,588
3,490,000
───────
4,237,558
───────
30,861,,873
═══════
Group
Local quoted investments:
Banking and investment sector
Manufacturing sector
Services and other sectors
Overseas quoted investments:
Banking and investment sector
Services and other sectors
Industrial
Local unquoted investments:
Banking and investment sector
Service
Industrial
Overseas unquoted investment
Banking and investment sector
Industrial
Services and other sectors
In the case of certain ‘Available for sale’ investments, wherever the decline in value was substantial in comparison with the original cost of investment, such decline in value
amounting to RO 1,962,517 (see note 22) was charged as impairment of investment in the statement of income as against the policy of charging the same in the equity.
Page 18
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
Unquoted available for sale investments except the investments in funds are carried at cost, less of impairment if any, as the Board of Directors considers this approximate to
fair value.
Subsequent to 31 December 2008, there has been a significant volatility in the market values of the quoted investments held by the Group. Consequently, the values disclosed
as the balance sheet date many not be representative of values as subsequent date. Based on market values as at 8 th March 2009, the aggregate decrease in such values are in
the amount of approximately RO 2,946,582 in the case of ‘Held for trading’ and RO 463,528 in the case of ‘Available for Sale’ category of investments.
Page 19
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
6
INVESTMENTS (continued)
Parent
Local quoted investments:
Banking and investment sector
Manufacturing sector
Services and other sectors
Overseas quoted investments:
Banking and investment sector
Services and other sectors
Local unquoted investments:
Banking and investment sector
Service
Industrial
Overseas unquoted investment
Banking and investment sector
Industrial
Services and other sectors
Total
2008
--------------------------------------------------------------------------------------------------------------------------Held for
Available
Original
Trading
for sale
Total
cost
RO
RO
RO
RO
2007
----------------------------------------------------------------------------------------------------------------------------------Held for Available for
Original
trading
sale
Total
cost
RO
RO
RO
RO
9,960,585
760,003
656,667
───────
11,377,255
───────
614,730
4,394,692
2,251,196
───────
7,260,618
───────
10,575,315
5,154,695
2,907,863
───────
18,637,873
───────
9,796,124
5,394,108
4,042,678
───────
19,232,910
───────
23,944,237
2,062,165
4,024,848
───────
30,031,250
───────
2,435,129
1,798,702
───────
4,233,831
───────
23,944,237
4,497,294
5,823,550
───────
34,265,081
───────
9,759,235
3,313,037
4,000,986
───────
17,073,258
───────
645,403
975,017
───────
1,620,420
───────
292,637
647,227
───────
939,864
───────
938,040
1,622,244
───────
2,560,284
───────
719,940
895,750
───────
1,615,690
───────
1,893,474
1,638,200
───────
3,531,674
───────
539,205
693,594
───────
1,232,799
───────
2,432,679
2,331,794
───────
4,764,473
───────
748,373
1,011,869
───────
1,760,242
───────
───────
───────
255,177
3,978,740
1,744,937
───────
5,978,854
──────
255,177
3,978,740
1,744,937
───────
5,978,854
───────
657,000
3,978,740
1,744,937
───────
6,380,677
───────
───────
───────
467,800
41,240
2,401,187
───────
2,910,227
──────
467,800
41,240
2,401,187
───────
2,910,227
───────
657,000
41,240
2,401,187
───────
3,099,427
───────
───────
───────
12,997,675
═══════
533,970
213,588
3,490,000
───────
4,237,558
───────
18,416,894
═══════
533,970
213,588
3,490,000
───────
4,237,558
───────
31,414,569
═══════
533,970
213,588
3,490,000
───────
4,237,558
───────
31,466,835
═══════
───────
───────
33,562,924
═══════
533,970
213,588
3,490,000
───────
4,237,558
───────
12,614,415
═══════
533,970
213,588
3,490,000
───────
4,237,558
───────
46,177,339
═══════
533,970
213,588
3,490,000
───────
4,237,558
───────
26,170,485
═══════
Investments aggregating RO 16,216,035 (31 December 2007– RO 26,747,448) are pledged to commercial banks as security against credit facilities.
Page 20
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
forming part of the financial statements for the year ended 31 December 2008
‘Available for sale’ investments for which there has been a significant or prolonged decline in the fair value below their cost have been considered as impaired. For such
investments, the cumulative loss corresponding to the difference between the acquisition cost and the current fair value that has been recognized directly in equity was
recycled to the statement of income as impairment of investment in the amount of RO 1,962,517 (see note 22).
Unquoted available for sale investments except the investments in funds are carried at cost, less of impairment if any, as the Board of Directors considers this approximate to
fair value.
Subsequent to 31 December 2008, there has been a significant volatility in the market values of the quoted investments held by the Parent company. Consequently, the values
disclosed as the balance sheet date many not be representative of values as subsequent date. Based on market values as at 8th March 2009, the aggregate decrease in such
values are in the amount of approximately RO 2,632,547 in the case of ‘Held for trading’ and RO 459,739 in the case of ‘Available for Sale’ category of investments.
Page 21
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
7
DETAILS OF SIGNIFICANT INVESTMENTS
Details of the Group’s investment securities in which its holding exceeds 10% of the market value of its investment
portfolios, “ held for trading” and “available for sale”, as of 31 December 2008 are set out below:
Group
Holding
% of
investment
portfolio
Number of
securities
Carrying
and fair
value
RO
Original
cost
RO
31 December 2008
Portfolio held for trading
Quoted local securities:
Bank Muscat SAOG shares
14
9,108,688
=========
7,259,624
=========
5,714,369
=========
31 December 2007
Quoted local securities:
Bank Muscat SAOG Shares
26
9,668,847
=========
18,564,186
=========
5,627,774
=========
31 December 2008
Portfolio held for trading
Quoted local securities
Bank Muscat SAOG shares
15
8,643,997
=========
6,889,266
=========
4,984,038
=========
31 December 2007
Portfolio held for trading
Quoted local securities
Bank Muscat SAOG Shares
30
18,062,202
=========
5,212,623
=========
Parent company
9,407,397
=========
Details of the Group’s investment securities in which its holding exceeds 10% of the investee company’s share capital as at 31
December 2008 are as follows:
Holding
%
Number of
Securities
Carrying and
fair Value
RO
Original
Cost
RO
Group
31 December 2008
Investments available for sale:
Quoted local securities:
Oman Fiber Optic Co SAOG
Computer Stationery Industry Co SAOG
National Aluminium Products Co SAOG
16
11
11
580,457
110,996
3,600,000
──────
4,291,453
=========
1,915,508
361,847
943,200
──────
3,220,555
=========
735,965
362,349
1,650,747
──────
2,749,061
=========
31 December 2007
Investments available for sale:
Quoted local securities:
Oman Fiber Optic Co SAOG
Horizon Technologies SAOC
16
17
569,820
656,250
───────
1,226,070
=========
1,560,737
656,250
──────
2,216,987
=========
700,745
656,250
──────
1,356,995
=========
Page 22
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
7
DETAILS OF SIGNIFICANT INVESTMENTS (continued)
Holding
%
Number of
securities
Carrying
and fair
value
RO
15.91%
11.01%
580,457
110,996
1,915,508
361,847
735,965
362,349
10.72%
3,600,000
943,200
1,650,747
──────
4,291,453
=========
──────
3,220,555
=========
──────
2,749,061
=========
569,820
656,250
──────
1,226,070
=========
1,560,737
656,250
──────
2,216,987
=========
700,745
656,250
──────
1,356,995
══════
Parent company
31 December 2008:
Investments available for sale:
Quoted local securities:
Oman Fiber Optic Co SAOG
Computer Stationery Industry Co
SAOG
National Aluminium Products Co
SAOG
31 December 2007:
Investments available for sale:
Quoted local securities:
Oman Fiber Optic Co SAOG
Horizon Technologies Co SAOC
8
16
17
Original
Cost
RO
RECEIVABLE
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
Amounts due from related parties
Trade receivables
Advance for shares pending
allotment
Shareholders Loan
Other receivables
Prepaid expenses
33,114
463,205
370,433
5,372,492
4,271,005
-
3,102,407
48,662
3,937,500
171,180
171,180
834,913
453,238
181,927
225,174
239,992
28,549
───────
───────
───────
10,740,512
1,360,729
4,652,661
Provision for impairment in value
(412,505)
(254,816)
(2,267,897)
───────
───────
───────
10,328,007
1,105,913
2,384,764
══════
══════
══════
The movement in provision for impairment in value is analysed as follows:
3,937,500
127,114
28,917
───────
7,244,600
(1,256,539)
───────
5,988,061
══════
1 January
Provision charged during the year
Receivables written off
Transfer from provision for bank
guarantees
Write back of provision no longer
required
412,504
15,463
(171,253)
585,833
26,610
-
1,256,539
469,136
(48,380)
1,100,026
668,287
-
-
-
592,500
-
(199,938)
(1,898)
───────
───────
412,505
2,267,897
══════ ══════
(511,774)
───────
1,265,539
══════
31 December
(1,898)
───────
254,816
══════
Page 23
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
9
INVESTMENTS IN ASSOCIATES
Group
Associate
Activity
The Financial Corporation SAOG
Financial
Services
Hospitality
Services
Medical
Services
PET –
Recycling
Cargo
handling
Oman Hotels and Tourism Co SAOG
Oman Medical Projects Co SAOG
Horizon Technologies Co SAOC
Emirates Ship Investment Company LLC
Less: Impairment of goodwill
Less: Reclassified as investment held for sale
(See Note 10)
(i)
Carrying
value
2007
RO
Cost
2007
RO
Share of
results
2007
RO
-808,281
29 3,126,997
1,984,785
754,851
5,168,563
1,003,186
31 5,642,412
5,139,640
502,772
-
3,012,941
-
35
-
2,909,839
-
20
872,274
980,000
(107,726)
34
5,928,721
-
2,960,566
(397,581)
(3,107,830)
-
34 9,667,078
-
2,960,566
-
2,495,626
-
(5,928,721) (2,562,985)
----------------------- ----------------------11,042,537 13,046,958
========== ==========
---------------------(3,020,651)
=========
--------------------- ----------------------18,436,487 12,994,830
======== ==========
--------------------3,753,249
=========
Holding
2008
(%)
Carrying
value
2008
RO
Cost
2008
RO
Share of
results
2008
RO
37
3,994,834
3,885,454
31
6,175,429
38
Holding
2007
(%)
(i) The investment in Oman Medical Projects Co SAOG is carried at nil value as the investment was considered as fully impaired in the earlier years. The Parent Company’s share of
unabsorbed losses amounted to RO 789,652, as at 31 December 2008 (31 December 2007 – RO 607,568) is not recognized in the statement of income.
(ii) Investments aggregating to RO 13,370,093 (31 December 2007 – RO 8,379,956) are pledged to commercial banks as security against credit facilities.
(iii) The market value of holdings in Fincorp is RO 7,955,494 (31 December 2007 – RO 3,360,543),Oman Hotels and Tourism Company SAOG is RO 5,732,716 (31 December
2007 – RO 5,561,310) and Oman Medical Projects Co SAOG RO 2,339857 (31 December 2007 – RO 1,017,340).
Page 24
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
9.
INVESTMENTS IN ASSOCIATES (continued)
Acquisition of Associates
i. Oman Medical Projects Co SAOG
During 2008, the Parent Company increased its holding in Oman Medical Projects Co SAOG (OMPC)
from 35.49% to 38.36% through additional acquisition of 175,303 equity shares amounting to RO
103,102. The goodwill amounted to RO 103,102 and this has been treated as fully impaired in view of
the continuing losses of the company.
ii. The Financial Corporation SAOG
During 2008, the Parent Company increased its holding in The Financial Corporation SAOG (FINCORP)
from 29.17% to 36.56% through additional acquisition of 444,578 shares amounting to RO 1,900,668.
The goodwill amounted to RO 1,137,295 and is being included as part of the carrying value as at 31
December 2008.
iii. Oman Hotels and Tourism Co SAOG
During 2008, the Parent Company increased its holdings in Oman Hotels and Tourism Co SAOG from
31.02% to 31.17% through acquisition of 7,202 equity shares amounting to RO 28,923. The goodwill
amounted to RO 14,504 and is being included as part of the carrying value as at 31 December 2008.
iv. Horizon Technologies Co SAOC
During 2008, the Parent Company increased its holdings in Horizon Technologies Co SAOC from 17.5%
to 20% through subscription of 323,750 equity shares amounting to RO 323,750. Till this additional
acquisition, the investment whose original cost was RO 656,250 was classified under ‘Available for Sale’
category and consequent to this additional acquisition, this investment has become an investment in an
Associate company. The total cost of this investment is RO 980,000 includes goodwill on acquisition
amounting to RO 107,913 and is included as part of the carrying value as at 31 December 2008.
2008
2007
RO
RO
Share of associates’ balance sheets
Assets
Liabilities
Net assets
23,929,686
49,545,003
9,478,998
24,710,723
───────
───────
14,450,688
24,834,280
══════
══════
5,229,710
12,248,279
══════
(3,020,651)
══════
3,753,249
══════
══════
Share of associates’ revenues and profit
Revenues
(Loss) / Profit
Page 25
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
9.
INVESTMENTS IN ASSOCIATES (continued)
Parent company at cost
2008
RO
2007
RO
-
2,960,566
(ii) The Financial Corporation SAOG
3,885,454
1,984,785
(iii) Oman Medical Projects Company SAOG
3,012,941
2,909,839
(iv) Oman Hotels and Tourism Company SAOG
5,168,563
5,139,640
980,000
-
Total cost
───────
13,046,958
───────
12,994,830
Less: impairment in value for (iii)
(3,012,941)
(2,909,839)
(i) Emirates Ship Investment Company LLC (see note 10)
(v) Horizon Technologies Co SAOC
───────
10,034,017
══════
───────
10,084,991
══════
10. INVESTMENT HELD FOR SALE
During February 2009, the Parent company has entered into an agreement with the co-shareholders of
Emirates Ship Investment Co LLC towards the divestment of its entire holding of 34.22% in favour of them
for a sale consideration of RO 5,928,721 (USD 15.4 Million) based on an enterprise valuation of USD 45
Million. As at 31 December 2008, the investment of the Parent company and the Group in this company has
been classified as held for sale and measured at the lower of its carrying amount and fair value less costs to
sell as at 31 December 2008. The goodwill paid in the earlier years towards acquisition of shares in this
company amounting to RO 397,581 which has been included in the cost of acquisition has been treated as
fully impaired as at 31 December 2008 and charged to the statement of income.
As against the original cost of this investment of RO 2,562,985, after impairment of goodwill, the carrying
value was RO 5,928,721 as at 31 December 2008.
Page 26
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
11
PROPERTY, PLANT AND EQUIPMENT
Group
1 January 2008, net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
31 December 2008, net of accumulated depreciation
At 1 January 2008
At cost
Accumulated depreciation
At 31 December 2008
At cost
Accumulated depreciation
Building
RO
Plant and
Machinery
RO
4,247,482
1,169
(136,943)
───────
4,111,708
═══════
8,007,153
30,913
(824,473)
───────
7,213,593
═══════
5,404,015
(1,156,533)
───────
4,247,482
═══════
5,405,184
(1,293,476)
───────
4,111,708
═══════
Furniture
and
fixtures
RO
41,375
59,366
Leasehold
improvements
RO
Office
equipment
RO
Vehicles
RO
Capital
work in
progress
RO
Total
RO
(27,036)
───────
73,705
═══════
───────
═══════
219,997
125,548
106,538
97,280
(450)
(85,438)
(54,306)
─────── ───────
240,647
168,522
══════ ═══════
891,327
208,065
───────
1,099,392
═══════
13,532,882
503,331
(450)
(1,128,196)
───────
12,907,567
═══════
13,070,139
(5,062,986)
───────
8,007,153
═══════
233,620
(192,245)
───────
41,375
═══════
98,561
(98,561)
───────
═══════
441,213
271,455
(221,216) (145,907)
─────── ───────
219,997
125,548
══════ ═══════
891,327
───────
891,327
═══════
20,410,330
(6,877,448)
───────
13,532,882
═══════
13,101,052
(5,887,459)
───────
7,213,593
═══════
292,986
(219,281)
───────
73,705
═══════
98,561
(98,561)
───────
═══════
544,237
355,835
(303,590) (187,313)
─────── ───────
240,647
168,522
══════ ═══════
1,099,392
───────
1,099,392
═══════
20,897,247
(7,989,680)
───────
12,907,567
═══════
The property, plant and equipment of a subsidiary company are mortgaged as security against Government and other term loans.
The depreciation charge for the year has been included in cost of sales, RO 933,006 (2007: RO 930,684) and administration expenses RO 195,190 (2007: RO 121,630).
Page 27
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
11
PROPERTY, PLANT AND EQUIPMENT (continued)
Parent
1 January 2008, net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
31 December 2008, net of accumulated depreciation
1 January 2008
At cost
Accumulated depreciation
31 December 2008
At cost
Accumulated depreciation
Furniture and
fixtures
RO
Leasehold
improvements
RO
-
Office
equipment
RO
Vehicles
RO
60,045
36,500
(26,941)
───────
69,604
═══════
72,245
46,511
(227)
(33,721)
───────
84,808
═══════
Total
RO
612
376
(312)
───────
676
═══════
───────
═══════
11,588
9,635
(227)
(6,468)
───────
14,528
═══════
90,890
(90,278)
───────
612
═══════
98,561
(98,561)
───────
═══════
79,314
(67,726)
───────
11,588
═══════
106,214
(46,169)
───────
60,045
═══════
374,979
(302,734)
───────
72,245
═══════
91,265
(90,589)
───────
676
═══════
98,561
(98,561)
───────
═══════
88,333
(73,805)
───────
14,528
═══════
142,714
(73,110)
───────
69,604
═══════
420,873
(336,065)
───────
84,808
═══════
-
Page 28
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
12
IMPAIRMENT OF GOODWILL
2007
Group
RO
2008
Group
RO
Goodwill arising on acquisition of:
- Subsidiaries (see note 4)
- Associates (see note 9 & 10)
Less: Impairment of goodwill
31 December
13
500,683
───────
500,683
(500,683)
───────
═══════
743,084
───────
743,084
(743,084)
───────
═══════
-
-
496,932
1,962,517
113,423
───────
2,075,940
═══════
743,084
───────
743,084
═══════
1,962,517
113,423
───────
2,572,872
═══════
500,683
───────
500,683
(500,683)
───────
═══════
2007
Parent
RO
555,055
743,084
───────
1,298,139
(1,298,139)
───────
═══════
IMPAIRMENT OF INVESTMENT
- Subsidiaries (see note 4)
- Available for sale
Quoted (see note 6 & 22)
Unquoted
31 December
14
2008
Parent
RO
555,055
743,084
───────
1,298,139
═══════
AMORTISATION OF INTANGIBLE ASSET
Omani Pedigree Goat Breeding Co LLC a subsidiary of the Group has entered into an agreement to
acquire technical know-how, including the management of the project at a cost of RO 150,000. The
amount is payable under various stages and upto 31 December 2008 RO 90,000 (31 December 2007 –
RO 75,000) was paid. Process technology costs representing technical know how fees are amortised
over five years from the date of commercial operations subject to impairment losses and during 2008,
RO 6,000 has been charged out of RO 90,000 towards amortization, as the operations have commenced
from 1st September 2008 and the balance of RO 84,000 is carried over.
15
TAXATION
The tax authorities in Oman follow the legal entity Concept. There is no concept of Group taxation in
Oman.
The Group’s entities consist of Oman & Emirates Investment Holding Company SAOG and Subsidiaries,
United Brokerage Company LLC, Majan Capital Fund, Omani Euro Food Industries Company SAOG,
Omani Pedigree Goat Breeding Co LLC and Dhofar Fisheries Industries Co SAOG.
a)
Oman & Emirates Investment Holding Company SAOG
The tax rate applicable to the Parent Company is 12% (31 December 2006 - 12%). For the purpose of
determining the taxable result for the year, the accounting profit has been adjusted for tax purposes.
Adjustments for tax purposes include items relating to both income and expense. The adjustments are
based on the current understanding of the existing tax laws, regulations and practices.
The adjustments to accounting profit for the year has resulted in a taxable loss.
Page 29
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
15
TAXATION (continued)
a)
Oman & Emirates Investment Holding Company SAOG (continued)
The Parent Company has taxation losses available for offset against future taxable profits as follows:
Available to 31 December 2007 (assessed)
Available to 31 December 2008 (declared)
Available to 31 December 2009 (declared)
Available to 31 December 2010 (declared)
Available to 31 December 2011 (declared)
Available to 31 December 2012 (declared)
2008
RO
2007
RO
1,953,007
2,093,510
889,618
1,712,027
5,036,154
1,856,555
=========
279,620
2,093,510
889,618
1,712,027
5,036,154
=========
The assessments of the Parent Company have been issued by the tax department up to the tax year 2002.
A deferred tax asset arises on the timing difference of provisions and brought forward losses. No deferred
tax has been recognized as it is not probable that future taxable profits will be available against which the
Parent company can utilise the benefit from provisions and brought forward losses.
b)
United Brokerage Company LLC
United Brokerage Company LLC is a limited liability company registered and incorporated in the United
Arab Emirates (UAE) and is engaged in providing brokerage services. The Company is not subject to
taxation in the UAE.
c)
Majan Capital Fund
The fund is domiciled in the Sultanate of Oman. Under Royal Decrees 54 and 55 of 2003, amending
certain provisions of the income tax laws, there are no income, capital gain or other taxes payable by the
Fund. Accordingly, the Fund has not made any provision for tax for the year ended 31 December 2008.
d)
Omani Euro Food Industries Company SAOG
No provision for taxation has made as the company has accumulated losses till 2008. No deferred tax is
recognized as the company has accumulated losses and the company continues to make losses and
therefore no future taxable profits are anticipated for set off.
e)
Dhofar Fisheries Industries Co SAOG
In accordance with Ministerial Decree No. 47/ 2002 issued by the Ministry of Finance, the Company was
exempted from income tax for a period of five years from the commencement of commercial operations
till 30 September 2006 and the company has been granted further exemption for a period of five year upto
22 May 2011.
The management has decided not to consider the potential deferred tax benefit arising from carry forward
losses until future profitability is consistently demonstrated.
f)
Omani Pedigree Goat Breeding Co LLC
No provision for taxation has been made as the company has incurred losses for the current year and
earlier years. Further the company is expected to be exempt from taxation as an ‘industrial’ project for a
period of 5 years from the date of commencement of commercial operations.
Page 30
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
16
ACCOUNTS PAYABLE AND ACCRUALS
Accounts payable
Other payables and accruals
Interest payable
Directors’ remuneration
Due to related parties
Lease finance
Unclaimed dividend
Employees’ end of service benefit
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
1,194,066
772,318
31,885
44,996
888,423
9,743
104,514
222,441
───────
3,268,386
═══════
4,648,613
872,350
12,600
261,425
1,036,105
9,470
146,321
───────
6,986,884
═══════
22,874
223,077
31,885
26,332
104,514
112,836
──────
521,518
══════
20,633
609,623
12,600
180,129
84,205
──────
907,190
══════
Movements in the liability recognized for employees end of service benefits
1 January
Expenses recognised in the statement
of income
Transfers
End of service benefits paid
31 December
17
146,321
124,945
84,205
86,359
102,371
(10426)
(15,825)
──────
222,441
═════
40,964
(19,588)
──────
146,321
═════
45,754
(10426)
(6,697)
──────
112,836
═════
7,382
(9,536)
──────
84,205
═════
TERM LOANS
Notes
Bank in Oman
Rial Omani term loans
(i)
13,552,809
10,220,067
10,535,000
7,050,000
Banks in UAE
UAE Dirham term loan
(ii)
3,389,284
3,198,201
3,389,284
3,198,201
───────
16,942,093
═══════
───────
13,418,268
═══════
───────
13,924,284
═══════
───────
10,248,201
═══════
Page 31
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
17
TERM LOANS (continued)
Group:
(i)
The Group obtained the Rial Omani term loans which carry effective annual interest rates ranging
from 6% to 7.5% per annum (31 December 2007 – 5% to 8.5%). The loans are secured by pledge
over Parent Company’s trading investments, a corporate guarantee of the Parent company and
first charge on the current assets of a subsidiary company and second charge over the property,
plant and equipment of the subsidiary company.
(ii)
The Group obtained the UAE dirham term loans which carry effective annual interest rates ranging
from 6.81% to 8.50% per annum (31 December 2007 – 5.86% to 6.90%). The loans are secured
by pledge over Parent Company’s trading investments.
Parent:
(i)
The Parent company obtained the Rial Omani term loans which carry effective annual interest
rates ranging from 6% to 7.5% per annum (31 December 2007 – 6% to 8.5%). The loans are
secured by pledge over Parent Company’s trading investments
(ii)
The Parent Company obtained the UAE dirham loans which carry effective annual interest rates
ranging from 6.81% to 8.50% per annum (2007 – 5.86% to 6.90%). These loans are secured by
pledge over company’s trading investments.
The maturity of the bank loans are as follows:
Due within one year
Due after one year
18
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
7,872,064
9,070,029
3,823,258
9,595,010
7,175,824
6,748,460
3,230,758
7,017,443
───────
16,942,093
═══════
───────
13,418,268
═══════
───────
13,924,284
═══════
───────
10,248,201
═══════
LOAN FROM GOVERNMENTS
Loan from Governments
Loan 1 – OEFIC
Loan 2 & 3 – OEFIC
Loan 4 – DFICO
15,000,000
15,000,000 15,000,000
15,000,000
2,194,000
2,198,000
1,600,000
1,588,000
4,000,000
4,000,000
─────── ───────
───────
───────
15,000,000
22,786,000 22,794,000
15,000,000
Less: Deferred Government grant
(3,064,000)
(2,347,232) (3,064,000)
(2,347,232)
Less: Deferred Government grant
(1,643,109) (1,558,119)
Less: Deferred Government grant
(438,679)
(417,466)
───────
───────
───────
───────
11,936,000
18,378,193 17,733,202
12,652,768
═══════ ═══════
═══════
═══════
(i)
In 2001, the Parent company received interest free loans from the Governments of Oman and
UAE of RO 7,500,000 each amounting to RO 15,000,000. The loans are repayable in
November 2011. The loans have been stated at the fair value of consideration received. The fair
value of the consideration received is the sum total of all future payments, discounted using the
market borrowing rate of 6% for loans having similar maturity at the time of availment of loan.
The difference between fair value and book value is treated as a deferred Government grant
income and is released to income over the period necessary to match it with the related
Government loan interest expense. The terms of the loan agreement provides for the payment of
10% interest for any delay in repayment of the loans on maturity.
Page 32
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
18
LOAN FROM GOVERNMENTS (continued)
ii)
The Government Soft Loans 1, 2 and 3 were arranged through Oman Arab Bank SAOC,
carrying interest at 3% per annum (net of subsidy). The loans have been rescheduled during the
year 2008 and the repayments are as under:
Loan 1 is repayable over 14 years in annual installments commencing from 2009 – RO
4,000, RO 5,000, RO 6,000, RO 15,000, RO 25,000, RO 28,000, RO 35,000, RO 50,000,
RO 100,000, RO 150,000, RO 280,000, RO 400,000, RO 500,000 and RO 600,000 in 2022.
Loan 2 is repayable over 7 years in annual installments commencing from 2009 - RO 4,000,
RO 4,000, RO 5,000, RO 40,000, RO 75,000, RO 135,000, RO 200,000 and RO 329,000 in
2016.
Loan 3 is repayable over 9 years in annual installments commencing from 2009 - RO 2,000,
RO 2,000 RO 6,000, RO 25,000, RO 50,000, RO 75,000, RO 100,000, RO 140,000, RO
150,000 and RO 246,000 in 2018.
These loans are secured against a first ranking legal mortgage over all present and future assets
of the company. The amortised cost has been determined by effective interest rate method
which is 9.5% per annum.
iii)
19
Loan 4 from the Government of the Sultanate of Oman carry interest at 3% per annum and is
payable in 8 equal annual installments commencing from June 2005. The loan is secured by
registered mortgage of the company’s property, plant and equipment and endorsement of the
insurance policy in respect of these assets in favour of the commercial bank disbursing the loan
and the Government of the Sultanate of Oman. The loan agreements contain restrictive
covenants that relate to the payment of the dividends and disposal of the company’s property,
plant and equipment. The company has defaulted in the repayment of the loan installment in the
current year. (2007: similar default) The amortised cost has been determined by effective
interest rate method which is 9% per annum.
SHARE CAPITAL
Authorised – 200,000,000 Shares of RO 0.100 each
(31 December 2007 – 7,500,000 shares of RO 1 each)
Issued – 121,875,000 Shares of RO 0.100 each
(31 December 2007 - 7,500,000 shares of RO 1 each)
2008
RO
2007
RO
20,000,000
7,500,000
12,187,500
7,500,000
════════
════════
At an extraordinary general meeting of the Parent Company’s shareholders held on 29 April 2006, the
shareholders approved the increase in the authorized share capital to RO 20 Million from
RO 7.5 Million, grant of a stock dividend at 25% for the year 2005, aggregating to RO 1,875,000 and
also the split of 10 shares having a face value of 100 Baizas each for each share having a face value of
RO 1 each. These changes were effected in February 2008 after receipt of the Royal Decree No. 16 /
2008 dated 12 February 2008. Besides, based on the approval of the shareholders at the Annual General
Meeting held on 31 March 2008, the shareholders were credited with a stock dividend at 30%,
aggregating to RO 2,812,500 for the year 2007 in April 2008.
Shareholders of the Parent Company who own 10% or more of the shares, whether in their name, or
through a nominee account, and the number of shares they hold are as follows:
%
Abu Dhabi Investment Company, UAE
30
2008
3,656,250
════════
2007
2,250,000
════════
Page 33
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
20
LEGAL RESERVE
As required by Oman company law, 10% of the profit for the year is transferred to legal reserve until
such time as the reserve totals one third of the paid up share capital. In view of the losses incurred
during 2008, no amount has been transferred by the Parent Company and the subsidiaries. The reserve
is not available for distribution.
The balance at the end of the year represents amounts relating to the Parent Company and its share of
reserves of its subsidiaries.
2007
2007
2008
2008
Group
Parent
Group
Parent
RO
RO
RO
RO
Parent company
Subsidiaries
31 December
21
2,500,000
247,324
───────
2,747,324
═══════
2,500,000
247,324
───────
2,747,324
═══════
2,500,000
───────
2,500,000
═══════
2,500,000
───────
2,500,000
═══════
REVALUATION RESERVE
The Parent company’s share in the revaluation reserve account which was arisen from the revaluation
of land and buildings of the associates namely Oman Hotels and Tourism Co SAOG and Oman
Medical Projects as at 31 December 2008 amounted to RO 3,910,985 (31 December 2007 – RO
3,871,120) and RO 4,364,902 (31 December 2007 – RO 4,364,902) respectively. Similarly, the Parent
company’s shares in revaluation of land and buildings of a subsidiary namely Omani Euro Food
Industries Co SAOG (OEFICO) which was taken to the statement of Income during the year ended 31
December 2006 by OEFICO amounted to RO 790,724. All these amounts have not been recognized in
the accounts of the Group and also Parent company as at 31 December 2008.
22
CUMULATIVE CHANGES IN FAIR VALUES
Relating to available for sale
investments
1 January
Realised during the year
Net movement in fair values
during the year
Transfer to impairment of
investments - Quoted
31 December
23
2,622,728
(5,875)
2,033,341
(445,989)
2,205,453
(5,875)
2,039,550
(445,989)
(2,663,544)
1,035,376
(2,250,039)
611,892
1,962,517
───────
1,915,826
═══════
───────
2,622,728
═══════
1,962,517
───────
1,912,056
═══════
───────
2,205,453
═══════
DIVIDENDS
In view of the losses during the year, no dividend has been proposed for 2008 as against 30% stock
dividend and 20% cash dividend declared for 2007.
Page 34
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
24
TRUST ACCOUNTS
The nominal value of securities held by the Parent company under trust for customers and not treated
as assets of the Parent Company are analysed as follows:
2007
RO
2008
RO
Securities held under asset management agreement
25
694,161
════════
694,161
═══════
EARNINGS PER SHARE
Earnings per share calculated by dividing the net (loss) / profit for the year by the weighted average
number of shares outstanding during the year is as follows:
Net (loss) / profit for the year
attributable to equity holders of the
parent (RO)
2008
Group
2007
Group
(Restated)
(24,445,958)
17,676,795
(17,187,342)
9,932,961
───────
────────
───────
121,875,000
121,875,000
────────
(0.141)
==========
───────
0.082
==========
────────
Weighted average number of
shares outstanding during the year
(Nos.)
121,875,000
Earnings per share (RO)
────────
(0.201)
===========
121,875,000
───────
0.145
==========
2007
Parent
(Restated)
2008
Parent
No figure for diluted earnings per share has been presented as the Group and the Parent Company have
not issued any instruments which would have an impact on earnings per share when exercised.
26
INTEREST INCOME
Interest on bonds
Interest on fixed deposits
Others
27
86,501
6,542
───────
93,043
═══════
9,000
214,655
54,253
───────
277,908
═══════
5,392
92,164
───────
97,556
═══════
9,000
96,934
54,253
───────
160,187
═══════
GROSS LOSS ON SALE OF FOOD PRODUCTS
The gross loss on sale of food products and biological assets recorded by the Parent company’s
subsidiaries OEFIC, DFIC and OPGB arises from the following:
Sales
Cost of sales
Gross loss
3,201,177
(4,304,343)
────────
(1,103,166)
════════
4,165,434
(5,442,363)
────────
(1,276,929)
════════
────────
════════
────────
════════
Page 35
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
28
OTHER INCOME
Fund management income
Miscellaneous income
29
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
56,079
59,501
───────
115,580
═══════
55,192
212,070
───────
267,262
═══════
56,079
104,425
───────
160,504
═══════
55,192
8,837
───────
64,029
═══════
137,378
108,560
149,335
119,200
72,200
195,190
79,447
43,643
37,015
40,267
94,940
829,005
───────
1,906,180
═══════
116,873
87,756
101,787
110,514
64,190
121,630
70,340
48,012
22,629
28,613
3,022
35,787
278,884
───────
1,090,037
═══════
82,964
54,995
30,654
59,031
16,392
33,721
27,988
22,050
37,015
12,244
94,940
47,178
───────
519,172
═══════
67,832
60,731
40,743
54,587
9,721
32,434
25,003
16,200
22,359
8,319
3,022
35,787
56,294
───────
433,032
═══════
ADMINISTRATION EXPENSES
Legal and professional fees
Traveling expenses
Advertisement and promotion
Rent
Securities market fees and charges
Depreciation
Postage, fax and telephone
Directors’ sitting fees
General meeting expenses
Repairs and maintenance
Seminar expenses
Project development expenses
Others
30
2008
Group
RO
NET ( LOSS) / PROFIT FOR THE YEAR
The net (loss) / profit for the year is stated after:
Staff costs:
Salaries and benefits
Employees’ end of service benefits
Post employees benefits
Net unrealised gain on trading
investments:
Unrealised gain on trading
investments
Unrealised loss on trading
investments
1,822,015
102,371
40,737
───────
1,965,123
══════
1,644,185
30,771
22,260
───────
1,697,216
══════
835,549
45,754
13,700
───────
895,003
══════
969,959
7,382
12,647
───────
989,988
========
73,514
12,704,866
69,626
11,905,748
(17,034,373)
------------------------(16,960,859)
═══════
(90,082)
------------------------12,614,784
═══════
(14,532,642)
------------------------(14,463,016)
═══════
(79,458)
------------------------11,826,290
═══════
Page 36
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
31
PERFORMANCE DATA
Net assets
Net assets per share
32
2008
Group
RO
2007
Group
RO
(Restated)
19,865,676
--------------------------0.163
═══════
46,893,536
------------------------0.385
═══════
2008
Parent
RO
11,184,904
--------------------------0.092
═══════
2007
Parent
RO
(Restated)
30,540,643
------------------------0.251
=========
RELATED PARTY TRANSACTIONS
Related parties represent associated companies, major shareholders, directors and key management
personnel of the Parent company, and companies of which they are principal owners. Pricing policies
and terms of these transactions are approved by the Parent company’s management.
Transactions with related parties included in the income statement are as follows:
Sales and income
- Associated companies
- Subsidiary companies
- Key management personnel
- Major shareholders
- Others
Purchases and expenses
- Associated companies
- Subsidiary companies
- Key management personnel
- Major shareholder
- Others
- Directors
15,643,695
4,831,218
───────
20,474,913
═══════
22,589,935
830,791
2,185
───────
23,422,911
═══════
9,554,735
438,076
4,831,218
───────
14,824,029
═══════
14,760,036
830,791
───────
15,590,827
═══════
10,207,960
150,987
6,008,292
256,952
──────
16,624,191
═══════
10,534,790
103,924
120,196
6,627
35,293
306,812
───────
11,107,642
═══════
4,753,976
182,059
6,008,292
──────
10,944,327
═══════
5,247,608
103,924
120,196
35,293
200,000
──────
5,707,021
══════
370,433
──────
370,433
(3,597)
───────
366,836
══════
10,971
4,237,891
22,143
──────
4,271,005
(2,267,897)
───────
2,003,108
═══════
370,433
2,731,974
──────
3,102,407
(1,207,876)
───────
1,894,531
═══════
Amounts due from related parties are as follows:
Associated companies
Subsidiary companies
Others
Less: Impairment provision
10,971
22,143
──────
33,114
(2,564)
───────
30,550
═══════
Page 37
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
32
RELATED PARTY TRANSACTIONS (continued)
Amounts due to related parties are as follows:
Associated companies
Others
Directors
2008
Group
RO
2007
Group
RO
44,038
844,385
44,996
──────
933,419
══════
1,014,024
22,081
261,425
──────
1,297,530
══════
2008
Parent
RO
26,332
──────
26,332
══════
2007
Parent
RO
180,129
──────
180,129
══════
Compensation of key management personnel
The remuneration of directors and other members of key management during the year was as follows:
Directors’ sitting fees
Directors’ remuneration
Key management personnel
- Short-term benefits
- Post employment benefits
60,943
36,000
154,339
5,670
───────
256,952
═══════
48,012
258,800
264,526
5,670
───────
577,008
═══════
22,050
-
16,200
183,800
154,339
5,670
───────
182,059
═══════
264,526
5,670
───────
470,196
═══════
The commitments and contingency with related parties are detailed in the note 33 to these financial
statements. The Parent company has established a provision in the amount of RO 4,436,653 towards
borrowings by Dhofar Fisheries Industry Co., (“DFIC”), against which Parent company has given
Corporate and Bank guarantees.
33
COMMITMENTS AND CONTINGENCIES
The Parent Company’s bankers have issued a letter of guarantee to the Central Bank of the UAE on
behalf of the Parent Company for RO 314,100 (31 December 2007: RO 314,100) for carrying out
investment banking activities.
The Parent company’s bankers have issued unconditional guarantees aggregating to RO 250,000 (2007
– RO 250,000) to a bank towards credit facilities granted to Omani Euro Food Industries Co SAOG.
The Parent company has given securities amounting to RO 372,912 (2007 – RO 815,979) to a bank by
way of lien towards credit facilities granted to United Brokerage Co LLC.
The Parent company’s bankers have issued unconditional guarantees aggregating to RO 2,094,000
(2007 – RO 2,617,500) to a bank towards guarantee facilities extended to United Brokerage Co LLC.
The bankers of United Brokerage Co LLC, a subsidiary of the Group, have issued, an unconditional
guarantee to the Securities Markets in United Arab Emirate of Abu Dhabi aggregating to RO 2,931,600
(31 December 2007: RO 3,664,500) for carrying out brokerage activities.
The Parent company has given corporate guarantee amounting to RO 6,588,822 (31 December 2007 RO 6,588,822) to Emirates ship Investment Co LLC towards injection of shareholders funds by 31
December 2008 for meeting its investment commitment in a new joint venture which has secured a
long term revenue contract from a steel company of the Abu Dhabi Government. Subsequently in
February 2009, the parent company has reached an agreement with the co-shareholders of ESHIPS
whereby this guaranteed amount will be discharged by them and not by the parent company.
Page 38
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
33
COMMITMENTS AND CONTINGENCIES (continued)
The Parent company has commitment towards injection of the balance share capital of RO 145,800
(2007 – RO 687,000) in Omani Pedigree Goat Breeding Co LLC.
Omani Pedigree Goat Breeding Co LLC has contractual and non-contractual commitments amounting
to RO 3,600 (31 December 2007: RO 241,190) and RO Nil (31 December 2007: RO 1,600,000)
respectively as at 31 December 2008.
The Board of Directors believes that the fair value of this guarantee is not significant to the Parent
Company’s and the Group financial position as at 31 December 2008.
34
SEGMENTAL INFORMATION
The Group operates in the investment industry. The Group’s operating revenues arise primarily from
investment activities. The Group operates in two geographic locations; the Sultanate of Oman and the
United Arab Emirates. The geographical analysis of income, expenses, profit and assets and liabilities
is based primarily upon the location of the branch responsible for reporting the results.
Group
Oman
2008
RO
Operating income
Overheads
Provision no longer
required write back
Net income
Finance cost
Provision for doubtful
debts
Share of profits of
associates
Reversal (establish)
for impairment of
investments
(13,187,096)
(2,193,798)
1,898
UAE
2007
RO
17,485,876
(1,999,587)
199,938
Total
2008
RO
2007
RO
(783,195)
(1,912,598)
2,332,971
(1,029,941)
-
-
2008
RO
(13,970,291)
(4,106,396)
1,898
2007
RO
19,818,847
(3,029,528)
199,938
───────
(15,378,996)
───────
(1,211,697)
───────
15,686,227
───────
(1,028,443)
───────
(2,695,793)
───────
(547,692)
───────
1,303,030
───────
(284,183)
───────
(18,074,789)
───────
(1,759,389)
───────
16,989,257
───────
(1,312,626)
(1,982)
(752)
(13,481)
(25,858)
(15,463)
(26,610)
87,179
(2,048,243)
1,257,623
(3,107,830)
2,495,626
(3,020,651)
3,753,249
(35,293)
(27,697)
-
(2,075,940)
(35,293)
(743,084)
(397,581)
-
(506,683)
(743,084)
-
(36,000)
(258,800)
Impairment of
goodwill
(109,102)
Directors’
remuneration
(36,000)
(258,800)
-----------------------(18,698,841)
-----------------------14,877,478
-----------------------(6,790,074)
-----------------------3,488,615
-----------------------(25,488,915)
-----------------------18,366,093
------------------------
------------------------
------------------------
------------------------
------------------------
------------------------
52,863,166
═══════
33,385,445
═══════
70,250,056
═══════
30,339,333
═══════
72,812,249
═══════
51,532,944
═══════
99,228,332
═══════
49,645,356
═══════
(Loss) / Profit before
tax
Segment assets
Segment liabilities
-
19,949,083
═══════
18,147,499
═══════
28,978,276
═══════
19,306,023
═══════
Page 39
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
34
SEGMENTAL INFORMATION (continued)
Parent
Oman
Operating income
Overheads
Provision no longer
required write back
Net income
Finance cost
Provision for
doubtful debts
Provision for
guarantee
Reversal (establish)
for impairment of
investments
Impairment of
goodwill
Directors’
remuneration
(Loss) / Profit before
tax
Segment assets
Segment liabilities
35
UAE
Total
2008
RO
2007
RO
(9,329,646)
(1,177,043)
16,325,651
(1,149,841)
(1,348,950)
(361,616)
2,331,269
(377,103)
1,898
───────
(10,504,791)
───────
(656,772)
511,775
───────
15,687,585
───────
(403,252)
───────
(1,710,566)
───────
(293,407)
───────
1,954,166
───────
(239,365)
(467,839)
(661,446)
(1,297)
(6,841)
(479,115)
(4,461,913)
(2,057,526)
(454,034)
(103,102)
2008
RO
2007
RO
2008
RO
(10,678,596)
(1,538,659
2007
RO
18,656,920
(1,526,944)
511,775
1,898
─────── ───────
(12,215,357) 17,641,751
─────── ───────
(642,617)
(950,179)
(469,136)
(668,287)
-
(479,115)
(4,461,913)
(515,346)
-
(2,572,872)
(454,034)
(1,298,139)
(397,581)
-
(500,683)
(1,298,139)
-----------------------(14,269,145)
(183,800)
-----------------------8,225,001
-----------------------(2,918,197)
-----------------------1,707,960
-----------------------(17,187,342)
(183,800)
-----------------------9,932,961
══════
══════
══════
══════
══════
══════
51,114,207
38,135,474
═══════ ═══════
21,248,254
24,298,155
═══════ ═══════
-
14,565,752
11,477,331
49,612,805
═══════ ═══════ ═══════
13,891,062
14,129,746
38,427,901
═══════ ═══════ ═══════
14,565,752
═══════
13,891,062
═══════
FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risks from its use of financial instruments:
(ii)
(iii)
(iv)
(v)
(vi)
Market price risk
Interest rate risk
Currency risk
Liquidity risk
Credit risk
Information about exposure to each of the above risks, the objectives, polices and processes for
measuring and managing risk, and the management of capital and further quantitative disclosures are
included in these financial statements.
Page 40
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
35
FINANCIAL RISK MANAGEMENT (continued)
The Board of Directors has overall responsibility for the establishment and oversight of the risk
management framework. The senior management team is responsible for monitoring the identified risks
and they report regularly to the Board of Directors on their activities.
The risk management framework is established to identify and analyse various types of the risks faced,
to set appropriate controls, to monitor risks and to ensure effective operation of the set controls. Risk
management policies and systems are reviewed regularly to reflect changes in the market conditions
and the Group’s activities. The management through the internal procedures aims to develop a
disciplined and constructive control environment in which all employees understand their roles and
obligations. The internal audit undertakes both regular and ad-hoc reviews of adherence to internal
controls and procedures, the results of which are reported to the audit committee and the Board of
Directors.
Market price risk
The Group’s equity securities are susceptible to market price risk arising from uncertainties about future
prices of the equity instruments. The market risk is managed and moderated through a careful selection
of securities, diversification of securities, a close review of the overall market position done on a
regular basis, applying risk measurement techniques such as position limits and stop loss limits and
control the exposures within acceptable parameters, while optimizing return on risk.
At 31 December, the over all market exposures were as follows:
Trading investments
Available for Sale Investments
Total
% of total assets
Sensitivity of a 10% change (+) or (-)
in market price of trading investments
on statement of income
Sensitivity of a 10% change (+) or (-)
in market price of available for sale
investments on cumulative changes in
fair values
2008
Group
RO
2007
Group
RO
2008
Parent
RO
15,601,036
8,273,282
-------------------------
12,997,676
8,200,482
-------------------------
23,874,318
═══════
32.8 %
═══════
39,128,810
5,888,264
--------------------------45,017,074
═══════
43.7%
══════
1,560,103
823,328
2007
Parent
RO
21,198,158
═══════
42.3 %
═══════
33,562,924
5,466,630
------------------------39,029,554
══════
57.1%
══════
3,912,881
1,299,767
3,356,292
588,826
820,048
546,663
During the year 2008, there has been a significant volatility in the local and international financial
markets. This has caused a significant decrease in the quoted investments held by the Group and the
Parent company (see note 6 and 7).
Interest rate risk
The Group is exposed to interest rate risk that arises from timing difference in the maturity and repricing of the Group’s interest bearing assets and liabilities (bank deposits, bank overdraft and term
loans). The management monitors the interest rate risk by setting limits on the interest rate gaps for
stipulated periods. Moreover, the Group manages its exposure to interest rate risk by ensuring that
significant borrowings and long term financing are on a fixed rate basis.
Page 41
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
35
FINANCIAL RISK MANAGEMENT (continued)
Interest rate risk (continued)
At 31 December, the interest rate risk exposures were as follows:
2007
Group
RO
2008
Group
RO
Short term deposits (see note 5)
Bank Overdrafts (see note 5)
Term loan from banks (see note 16)
6,080,098
(8,536,465)
(16,942,093)
---------------------------
3,596,038
(6,446,204)
(13,418,268)
---------------------------
(19,398,460)
═══════
(16,268,434)
═══════
2008
Parent
RO
205,392
(4,545,446)
(13,924,284)
--------------------------
2007
Parent
RO
(4,433,887)
(10,248,201)
--------------------------
(18,264,338) (14,682,088)
═══════ ═══════
Currency risk
The group is exposed to currency risk on transactions executed in foreign currencies. The foreign
currency in which these transactions are primarily denominated is US Dollar. The group ensures that its
net foreign currency exposure is kept at an acceptable level by buying and selling foreign currencies at
spot rates when appropriate.
Amount and quantum of transactions in these foreign currencies are minimal and hence the Group’s
related exposure to currency risk is also minimal.
At 31 December, the currency risk exposures were as follows:
Currency
Trading investments
USD
2008
Group
RO
-----------------------═══════
2007
2008
Group
Parent
RO
RO
89,298
------------------------ -----------------------(16,268,434)
═══════
══════
2007
Parent
RO
-----------------------(14,682,088)
═══════
The accounting records of Parent Company’s branch at Abu Dhabi and that of its subsidiary United
Brokerage Company LLC are maintained in UAE Dirhams. The Rial Omani amounts included in the
consolidated and Parent Company financial statements have been translated at an exchange rate of
0.1047 Rial Omani to each UAE Dirham for the income statement and the balance sheet items. As both
the Rial Omani and UAE Dirham are pegged to the US Dollar, no differences arise on translation.
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 company’s reputations.
The Group’s substantial part of the assets is in investments that are traded in Muscat Securities Market,
Abu Dhabi Securities Market and Dubai Financial Exchange and these can be readily disposed off. The
Group limits its liquidity risk by ensuring bank facilities are available. Client and broker receivables,
included in trade receivables are settled within 30 days. Trade accounts payable are normally settled
within 60 days of the date of purchase.
Page 42
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
35
FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk (continued)
At 31 December, the liquidity risk exposures were as follows:
Bank overdrafts
- 6 months or less
Provision for bank guarantees
- 6 months or less
- 6 to 12 months
- 1 to 2 years
- 2 to 5 years
- More than 5 years
Accounts payable and accruals
- 6 months or less
Term loans
- 6 months or less
- 6 to 12 months
- 1 to 2 years
- 2 to 5 years
- More than 5 years
Loans from Governments
- 6 months or less
- 6 to 12 months
- 1 to 2 years
- 2 to 5 years
- More than 5 years
TOTAL
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
8,536,465
-------------------------------------------------------------------------
6,446,204
-------------------------------------------------------------------------
4,545,446
-------------------------
4,433,887
-------------------------
1,715,094
296,250
592,500
1,777,500
55,309
------------------------4,436,653
-------------------------
296,250
296,250
592,500
2,370,000
995,038
------------------------4,550,038
-------------------------
3,268,386
-------------------------
6,986,884
-------------------------
521,518
-------------------------
907,190
-------------------------
6,415,014
1,457,050
2,843,055
6,226,974
------------------------16,942,093
-------------------------
2,912,308
910,950
4,599,943
4,787,500
207,567
------------------------13,418,268
-------------------------
6,066,894
1,108,930
2,008,460
4,740,000
------------------------13,924,284
-------------------------
2,616,058
614,700
4,007,443
3,010,000
------------------------10,248,201
-------------------------
2,510,000
15,511,000
929,000
3,836,000
------------------------22,786,000
------------------------51,532,944
═══════
2,011,000
517,000
17,972,000
2,294,000
------------------------22,794,000
------------------------49,645,356
═══════
15,000,000
------------------------15,000,000
------------------------38,427,901
═══════
15,000,000
------------------------15,000,000
------------------------35,139,316
═══════
Credit risk
Credit risk is the risk of financial loss to the Group or Parent company if a customer or counter party to
a financial instrument fails to meet its contractual obligations, and arises principally from the
receivables from a customer. Credit risk on receivable and bank balances is limited as the receivables
are shown net of provision for bad and doubtful receivables and bank balances are held with reputed
local banks.
Page 43
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
35
FINANCIAL RISK MANAGEMENT (continued)
Credit risk (continued)
The Group attempts to control credit risk by monitoring credit exposures, limiting transactions with
specific counter parties and continually assessing the creditworthiness of counter parties. The Group
also takes securities as collateral in respect of certain financial assets. In monitoring customer credit
risk, customers are assessed based on whether they are individuals or legal entity, their ageing profile,
maturity and existence of previous financial difficulties.
Management has credit policy in place and exposure to credit risk is monitored on an ongoing basis.
The company evaluates its customers and limits the credit risk by ensuring that collections are in line
with agreed terms and conditions and by taking securities as collateral for trading balances.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in
respect of amounts due from customers. The main components of this allowance are a specific loss
component that relates to individually significant exposure and a collective loss component established
for groups of similar assets in respect of losses that have been incurred but not yet identified.
The Group limits its exposure to credit risk of trading investments by only investing in liquid securities
which are listed in the organized securities market, which have ‘fail-safe’ settlement and delivery
procedures.
The Group provides financial guarantees on account of subsidiaries and associates (note 30) based on
the needs and where the Group has the ability to control the operations.
At 31 December, the ageing of receivables and the impairment loss were as follows:
Gross receivables due
- Not past due
- Past due 3 – 30 days
- Past due 31 – 90 days
- More than 90 days
Allowance for impairment loss
- Not past due
- Past due 3 – 30 days
- Past due 31 – 90 days
- More than 90 days
2008
Group
RO
2007
Group
RO
30,051
118,949
205,484
108,721
-----------------------463,205
------------------------
1,226,166
3,947,284
40,628
158,414
-----------------------5,372,492
------------------------
---------------------------------------------
48,662
----------------------48,662
-----------------------
27,550
-----------------------27,550
-----------------------435,655
═══════
157,915
----------------------157,915
---------------------5,214,577
══════
-------------------------------------------══════
-
2008
Parent
RO
2007
Parent
RO
48,662
----------------------48,662
----------------------══════
Page 44
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
35
FINANCIAL RISK MANAGEMENT (continued)
Credit risk (continued)
The amount due from 5 major customers for the Parent Company and each of the subsidiaries are stated
as under:
2007
2007
2008
2008
RO
%
RO
%
Parent Company
Subsidiaries:
- Majan Capital Fund
- Dhofar Fisheries Industries Co SAOG
- Omani Euro Food Industries Co SAOG
- Omani Goat Breeding Co LLC
- United Brokerage Co LLC
Total
% on total receivables
-
-
48,662
100%
13,628
3,432
194,986
238,807
----------------------450,853
----------------------97%
100%
96%
97%
97%
-------------------------------------------------
79,346
132,267
160,556
2,801,949
----------------------3,222,780
----------------------60%
100%
90%
100%
57%
-------------------------------------------------
Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future developments of the business. The Board of Directors monitors return
on shareholders’ equity, minority interests, dividend declarations, creation of reserves, ploughing back
of profits and borrowing parameters in relation to equity.
There were no changes in the Group’s approach to capital management during the year.
The Group also seeks to maintain a balance between the higher returns that might be possible with
higher levels of borrowings and the advantages and security afforded by a sound capital position. In
respect of subsidiaries and associates, which have suffered losses particularly and have caused erosion
in their equity position, the parent company endeavours to restructure the capital of such companies
and inject appropriate level of capital along with existing and new investors.
As at 31 December 2008 the Parent Company and its subsidiaries are not subject to externally imposed
capital requirements. As at 31 December 2008, DFICO a subsidiary, has lost more than three quarters
of its share capital, necessitating the injection of share capital to continue it as a going concern.
36
FAIR VALUES OF FINANCIAL INSTRUMENTS
Financial instruments comprise financial assets and financial liabilities.
Financial assets consist of cash and bank balances, investments and receivables. Financial liabilities
consist of bank overdrafts, term loans, payables, and accrued expenses.
Fair value is the amount for which as asset could be exchanged or a liability settled between
knowledgeable, willing parties in an arm’s length transaction. Differences can therefore arise between the
book values under the historical cost method and fair value estimates. Underlying the definition of fair
value is a presumption that an enterprise is a going concern without any intention or need to liquidate,
curtail materially the scale of its operations or undertake transactions on adverse terms.
The fair value of quoted trading and available for sale investments is based on market prices at the
balance sheet date. In assessing the fair value of non-traded financial instruments, the Group makes
assumptions that are based on market conditions existing at each balance sheet date.
Page 45
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
36
FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)
The face values less any estimated credit adjustments for other financial assets and liabilities with a
maturity of less than one year are assumed to approximate to their fair values.
The fair values of financial assets and liabilities of the Group are approximately to its carrying value
and not materially different from the carrying value.
37
FINANCIAL INCOME AND EXPENSE
Recognised in profit or loss
Dividend Income from Investments:
- Trading
- Available for sale
- Associates
- Subsidiaries
Realised gain on sale of investments:
- Trading
- Available for sale
- Subsidiaries
Finance Cost:
- Term Loans
- Overdrafts
- Bank Charges
Interest income (see note 26)
2008
Group
RO
2007
Group
RO
2008
Parent
RO
2007
Parent
RO
1,101,590
497,115
------------------------1,598,705
═══════
1,191,500
321,929
------------------------1,513,429
═══════
943,932
497,115
717,554
243,458
------------------------2,402,059
═══════
903,959
321,929
91,182
1,032,367
------------------------2,349,437
═══════
1,440,650
4,514
------------------------1,445,164
═══════
5,217,368
640,993
------------------------5,858,361
═══════
1,119,786
4,514
------------------------1,124,300
═══════
3,615,984
640,993
------------------------4,256,977
═══════
1,300,177
327,221
131,991
------------------------1,759,389
═══════
870,195
331,544
110,887
------------------------1,312,626
═══════
714,667
230,919
4,593
------------------------950,179
═══════
398,789
229,827
14,001
------------------------642,617
═══════
93,043
═══════
277,908
═══════
97,556
═══════
160,187
═══════
1,908,973
6,853
2,383,694
232,946
-
1,912,056
-
2,205,453
-
------------------------1,915,826
═══════
6,088
------------------------2,622,728
═══════
------------------------1,912,056
═══════
------------------------2,205,453
═══════
Recognised directly in equity
Cumulative changes in fair values:
Net change in fair value of Available
for sale investments
Hedging reserve of Associates
Investment reserve of subsidiaries
Investment valuation reserve of
Associates
Page 46
Oman & Emirates Investment Holding Company SAOG
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
38
KEY SOURCES OF ESTIMATION UNCERTAINTY
Impairment of accounts receivables
An estimate of the collectible amount of accounts receivable is made when collection of the full
amount is no longer probable. For individually significant amounts, this estimation is performed on an
individual basis. Amounts which are not individually significant, but which are past due, are assessed
collectively and a provision applied according to the length of time past due, based on historical
recovery rates.
Valuation of unquoted equity investments
Valuation of unquoted equity investment is normally based on one of the following:

recent arm’s length market transactions

current fair value of another instrument that is substantially the same; or

the expected cash flows discounted at current rates applicable for items with similar terms and risk
characteristics; or

other valuation models
If the fair value of an unquoted equity investment cannot be reliably measured, it is measured at cost.
39
COMPARATIVE FIGURES
Certain corresponding figures for previous year have been reclassified in order to conform with the
presentation in the current year.