Directors’ Report for the year ended 31st March 2021

Dear Shareholders,

On behalf of the Board of Directors, I have great pleasure in welcoming you to the 27thAnnual General Meeting of Al Anwar Investments SAOG (AIC). I take this opportunity to place before you the Annual Report on the activities and performance of your company for the financial year ending 31st March 2021.

Overview of the Group results

Al Anwar Investments has maintained a prudent and pro-active approach towards managing its investments. Business clusters of our Group companies are making efforts to have continued stability in the present challenging economic environment resulting from the impact of COVID 19 and reduction in oil prices. Certain associates have been resilient in these difficult market conditions and consequently have maintained their profitability. However, certain other investments have not done well due to the adverse market conditions. Overall, we believe that our investee companies are prepared for the difficult times. Our immediate objective is to ensure that we meet our commitments and prepare ourselves to take advantage of the opportunities which will arise once the current economic situation improves.

Al Anwar Investments has maintained a prudent and pro-active approach towards managing its investments. Business clusters of our Group companies are making efforts to have continued stability in the present challenging economic environment resulting from the impact of COVID 19 and reduction in oil prices. Certain associates have been resilient in these difficult market conditions and consequently have maintained their profitability. However, certain other investments have not done well due to the adverse market conditions. Overall, we believe that our investee companies are prepared for the difficult times. Our immediate objective is to ensure that we meet our commitments and prepare ourselves to take advantage of the opportunities which will arise once the current economic situation improves.

(OMR’000) 2020-21 2019-20
Total Income 1,650 2,029
Total Expenditure (1,643) (1,522)
Profit before Fair value loss 7 507
Fair value (loss) in financial assets (282) (330)
Net (Loss) Profit (275) 177

We reported a consolidated net loss of OMR 275,000 for year ended on 31stMarch 2021 as against profit of OMR 177,000 for the year ended on 31stMarch 2020, a decline mainly due to fair value loss of OMR 282,000in our marked to market investments in MSM and other investments at fair value.

Our shareholders equity at 31st March 2021 was OMR 31 million. OurDebt/ Equity ratio was a healthy 0.60:1 compared to 0.56:1 in the previous year.

Net assets per share as at 31st March2021 was 155baizasper share as against 163 baizasfor the previous year.

Our share price at 31stMarch 2021was 86 baizas, and was trading at 55% below the book value.

We will continue to focus on our three main sectors i.e. Financial Services, Manufacturing and Education.

 

Dividends

Because of challenging year for AIC, Board of Directors do not recommend dividend payment for this year.

Financial statements

The audited consolidated financial statements presented includes the following:

    1. The resultsof SubsidiaryCompanies for the year ended 31st December, 2020 of the following:
      • Al Anwar International Investment LLC, 100% subsidiary;
      • Al AnwarTaleem LLC (Formerly Al Anwar Development LLC), 100% subsidiary; and
      • Al Anwar Hospitality SAOC, 100% subsidiary inhospitality sector.
      • Al Anwar Industrial Investments SAOC, 100% subsidiary.
    2. The share of profit (loss) of Associate Companies for the year ended 31st December, 2020(AlRuwad International Education Services SAOC upto 31stJanuary2021) in which AICowns between 20% and 50% of share capital or has significant influence.
    3. Dividends from other investments.
    4. Realized and unrealized gains / losses from other listed/unlisted securities.

Performance of Investments

Subsidiaries

1. Al Anwar International Investments LLC(AAII)

AAII owns investments of OMR 7,896,224 at 31stDecember, 2020.

2. Al Anwar Taleem LLC (formerly Al Anwar Development LLC) (AAT)

AATowns investments of OMR 512,841 at 31stDecember, 2020.

3. Al Anwar Hospitality SAOC (AAHS)

We have entered into a Hotel Management Agreement with Accor Hotels for developing a 4 Star Business Hotel – NOVOTEL Muscat – Azaiba, near Airport, on a freehold land owned by us. Total development cost of the project is estimated to be around OMR 11.5mn to be funded by an optimum mix of debt and equity.  We have now received all regulatory permissions. However, due to COVID- 19, we have slowed down the project.

4. Al Anwar Industrial Investments SAOC

Al Anwar Investments SAOGestablished a closed joint stock company in the Sultanate of Oman together with Al Anwar International Investments LLC (AAII) and Al Anwar Taleem LLC (Formerly Al Anwar Development LLC) in accordance with the laws of the Sultanate of Oman, under the name of “Al Anwar Industrial Investments SAOC” (“Company”).

The Company has been established with an objective to transfer all the manufacturing sector associates to this company as cluster and seek strategic investors up to 40% stake in the company’s equity, to grow the cluster by acquisitions, mergers and enhancement of technology.

 

Associates

1. Al Maha Ceramics SAOG (AMC):

AMC reported revenue of OMR 9,009,838 for the year ended on 31stDecember 2020, as compared with OMR 7,440,084 for last year, anincrease of 21%.  Net profit after tax for the year is OMR 1,524,311 as compared to OMR 1,011,312 in the previous corresponding period, an increase of 51%, which is mainly due to increase in sales volume, better price realization and cost improvement initiatives.

2. Voltamp Energy SAOG (VE):

VE reported revenues of OMR 34,380,932 during the year ended on 31stDecember 2020, a decrease of 16% as compared to last year. VEreported loss after tax (attributed to shareholders of Parent Company) of OMR 357,023 during the year as compared to a profit of OMR 342,759 in last year for the same period. During the year the Company witnessed competition in the prices of distribution transformers in addition to the high price of imported raw materials which impacted the results of the company. The Company witnessed a decline in sales of its power transformer during 2020. Company has initiated many cost control initiatives to reduce its losses.

3. Arabia Falcon Insurance Company SAOG(AFIC):

AFIC recorded Gross Written Premium of OMR 18,285,838 during the year ended on 31stDecember 2020 as compared to OMR 16,904,632 for the last year, a growth of 8%. The Net profit after tax of company for the period is OMR 1,668,760 against OMR 1,122,144 of last year, a growth of 49%. AFIC has been consciously restructuring its portfolio to phase-out large loss-making accounts coupled with concerted efforts to write new businesses. The measures taken by the management has resulted in considerable reduction in overall net claims ratio to 34% in 2020from 49% in 2019.

4. Al Ruwad International for Education Services SAOC (AIS):

AIS recorded decline in revenue and profit before tax for the year ended on 31stJuly 2020, mainly due to student migration to school with lower fees. The school  is now a fully approved to provide International Baccalaureate (IB) curriculum.

5. National Biscuits Industries Ltd. SAOG (NABIL):

NABIL reported revenue of OMR 12,694,553 for the year ended on 30thJune 2020 as against OMR 12,551,496of last year, a growth of 1% over last year. The net profit for the year is OMR 875,419 as against OMR 770,297for the previous year, a growth of 14% over last year. The NABIL brand enjoys a significant brand image in Oman market and a good brand presence of across the GCC and the other countries.

6. National Detergent Co. SAOG (NDC):

NDC reported revenues of OMR 20,395,674 and net profit of OMR 891,688 for the year ended on 31st December 2020 exhibiting a growth of 4% on revenue and growth of 44% on Net profit over last year. The flagship brand BAHAR maintained its premier market position in Oman. Farah brand was repositioned to be a leader in health and hygiene and is now the top brand in Oman.

7. Oman Chlorine SAOG (OC)

The Oman Chlorine Group has reported revenue of OMR 15,597,163 for the year ended 31st December 2020 as compared with OMR 15,046,017 in the previous period, a growth of 4%. The net profit (Attributable to Parent Company Shareholders) for the period is OMR 104,381 as compared to loss of OMR 154,566 in the previous period.

The Oman operation reported a net profit of OMR 1,458,745 compared to previous period of OMR 1,632,235, a decline of 11%.  The lower sales realization on caustic soda has resulted in lower revenue and this impacted the profitability of the company. The expansion of its current plant in Sohar from 45 to 75 tons per day is scheduled to commence during 2021.

Union Chlorine LLC, UAE, a subsidiary, has declared net loss of OMR 949,310 during the year ended on 31stDecember 2020. The parent company’s share of loss is OMR 568,636. Despite the plant operating at capacity utilization of 101%, the revenue was lower due to lower international price of caustic flakes and consequently the subsidiary incurred losses. Loss of the company has been reduced by 38% in year ended on 31stDecember 2020 as compared to similar period of 2019.

Gulf Chlorine WLL, Qatar, a subsidiary, has declared a net loss of OMR 1,495,088 during the year ended 31stDecember 2020. The parent company’s share of loss is OMR 762,495. The current capacity utilization of the main plant is still low at 43% and this is the major reason for the losses. With the projected commissioning of the Calcium Chloride Plant by Q2 2021 by the joint venture “United Chemicals”, Gulf Chlorine will be able to maximize its main plant load and accordingly improve its operating performance. The planned commission was in 2020 but has been delayed due to COVID- 19.

 

Other significant investments

1. Ominvest perpetual bonds

Ominvest perpetual bonds are carrying an interest rate of 7.75% per annum payable twice a year in June and December.  The rate is guaranteed for 5 year and there afterthe rates will be reset based on an agreed formula. For the year ended as on31stMarch 2021, AIC earned the interest amounting to approximately OMR 544,000.

2. Dhofar International Development and Investment Co SAOG (DIDIC)

AIC has an equity stake of 8.33% in DIDIC at the carrying value of OMR 5,751,605 as at 31st March 2021.The cost of the investment is OMR 6,241,610 and cumulative unrealized loss recognized due to decline in market value at 31st March 2021 is OMR 490,005. AIC also invested OMR 1,000,000 in DIDIC Bonds carrying interest rate of 9% per annuum. At 31st March 2021, the accrued interest recorded amounted to approximately OMR 94,000.DIDIC has not paid any interest from the day of issuance of the Bonds and deferred the interest payment to future dates.

3. Almondz Global Securities Ltd, India (AGSL)

AIC holds 11.94% equity stake in the AGSL, a company listed on The Bombay Stock Exchange (BSE), India, engaged in the business of broking, corporate finance, investment banking and healthcare. AGSL diversified its business into other sectors during the year. The carrying value of our stake in AGSL is OMR 476,972 as at 31st March 2021, however, our share of net assets of AGSL is OMR 961,000.

Omanization

AICGroup has always been fully committed of recruiting and training Omani employees and developing and promoting the local talent.AICOmanisation level at 31stMarch 2021 was50%.

Outlook

We foresee a challenging year ahead due to temporary suspension of public activities to contain the COVID-19 pandemic in Oman and around the world.

In the current capital market, AIC sees opportunity to make further investment and we are exploring opportunities in our strategic sectors, which will diversify our investment portfolio.

We are confident that AIC and its Group companies will continue to play a pivotal role in Oman’s economic growth, create job opportunities for Omani nationals, and attract foreign investments in the Sultanate of Oman.

AIC along with its associate, AI Maha Ceramics SAOG (AMC) signed a non-binding Memorandum of Understanding (MoU) with the shareholders of AI Hael Ceramics Co. LLC on 29th May 2021 to explore the possibility of jointly acquiring majority of the existing shares of AI Hael.

Acknowledgement

On behalf of the Board of Directors, I would like to take this opportunity to express our greetings and good wishes to His Majesty Sultan Haitham bin Tarik, and pray to Allah to grant him and his Government success to lead the country and the people to greater prosperity and progress.

As you all are aware that HE Qais bin Mohamed Al Yousef was appointed as the Minister of Commerce, Industry and Investment Promotion, by Royal Decree 111/2020, and consequently he had to relinquish the Directorship of Al Anwar Holdings SAOG with effectfrom 19 August 2020.  We acknowledge his significant contributions to our Company and the Group companies over the last 20 years, his contributions were very valuable in providing the strategic directions to our Group which has enabled us to achieve our growth. We wish him great success in his new responsibilities and pray for his continued success.

The Board records its sincere appreciation to Ministry of Commerce and Industry and Investment Promotion, Capital Market Authority, Muscat Securities Market, Bankers, Auditors, and Shareholders for their continued support to AIC and the group companies.

I would also like to express my sincere appreciation to the Board of Directors of all Al Anwar Group companies for direction given to the managements of the respective companies. I place on record my sincere thanks and appreciation for the dedicated efforts of the management team and all employees of the group companies.

I would also like to convey my sincere thanks to the Shareholders of AIC for the confidence they have reposed in the company and its Board.

For & on behalf of the Board of Directors of
Al Anwar Investments SAOG 

Masoud Humaid Malik Al Harthy
Chairman