Directors’ Report for the year ended 31st March 2022

Dear Shareholders,

On behalf of the Board of Directors, I have great pleasure in welcoming you to the 28th Annual General Meeting of Al Anwar Investments SAOG (AAI). I take this opportunity to place before you the Annual Report on the activities and performance of your company for the financial year ended 31st March 2022.

Overview of the Group results

Al Anwar Investments has maintained a prudent and pro-active approach towards managing its investments. Our portfolio investment companies are making efforts to overcome the present challenging economic environment resulting from the impact of COVID-19 combined with low oil prices that prevailed during the last 5 years. Some of our portfolio investment companies have been resilient in these difficult market conditions and consequently have maintained their profitability. However, others have not done as well. Our immediate objective is to support our portfolio investment companies and to take advantage of investment opportunities as economic situation improves.

The summary of our results are as follows: –

(OMR’000) 2021-22 2020-21
Total Income 1,320 1,650
Total Expenditure (1,701) (1,643)
Profit before Fair value loss (381) 7
Fair value (loss) in financial assets (460) (282)
Income Tax (1) –
Net (Loss) Profit (842) (275)

The Company reported a consolidated net loss of OMR 842,000 for year ended on 31st March 2022 as against a loss of OMR 275,000 for the year ended on 31st March 2021, mainly due to fair value loss of OMR 460,000 in company’s marked to market investments in Muscat Security Exchange (MSX) and other investments at fair value.

The shareholders equity at 31st March 2022 was OMR 30 million. Our Debt/ Equity ratio was a 0.51 compared to 0.60 in the previous year.

Net assets per share as at 31st March 2022 was 151 baizas per share as against 155 baizas for the previous year.

Dividends

Our retained earnings as at 31st March 2022 was OMR 6.032 million, the Board of Directors recommend a cash dividend of 4% (last year: Nil) for the approval of shareholders.

Financial statements

The audited consolidated financial statements presented includes the following:

    1. The results of Subsidiary Companies for the year ended 31st December, 2021 of the following:
      • Al Anwar International Investment LLC, 100% subsidiary;
      • Al Anwar Taleem LLC, 100% subsidiary
      • Al Anwar Hospitality SAOC, 100% subsidiary in hospitality sector; and
      • Al Anwar Industrial Investments SAOC, 100% subsidiary.
    2. The share of profit (loss) of Associate Companies for the year ended 31st December, 2021(Al Ruwad International Education Services SAOC upto 31stJanuary2022) in which AAI owns 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 has investments of OMR 5,146,577 at 31st December, 2021.

2.Al Anwar Taleem LLC (AAT)

AAT has investments of OMR 535,487 at 31st December, 2021.

3.Al Anwar Hospitality SAOC (AAHS)

The company had 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 the company. The total development cost of the project is estimated to be around OMR 11.5mn which will funded through a mix of debt and equity.  We have received all the preliminary regulatory permissionsneeded for the project and have completed most of the design works needed to commence construction of the project.

4.Al Anwar Industrial Investments SAOC

The Company has been established with the objective to transfer all the manufacturing sector associates to this company as a cluster and seek strategic investors up to 40% stake in the company’s equity, to grow the cluster by acquisitions, mergers,and other value-added initiatives.

 

Associates

1.Al Maha Ceramics SAOG (AMC):

AMC reported revenue of OMR 9,821,837 for the year ended on 31stDecember 2021, as compared with OMR 9,009,838 for last year, anincrease of 9%.  Net profit after tax for the year is OMR 2,453,040 as compared to OMR 1,524,311 in the previous corresponding period, an increase of 62%, 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 31,524,601 during the year ended on 31st December 2021, a decrease of 8% as compared to last year. VE reported loss after tax (attributed to shareholders of Parent Company) of OMR 685,020 during the year as compared to loss of OMR 357,023 in last year for the same period. During the year competition in transformers business intensifiedand the increasein price of imported raw materials impacted the results of the company. The company has expanded its footprints in the export market and was able to sell its products in nine territories in 2021 as compared to eight in 2020.

3. Arabia Falcon Insurance Company SAOG (AFIC):

AFIC recorded Gross Written Premium of OMR 19,063,179 during the year ended on 31st December 2021 as compared to OMR 16,783,126for the last year, a growth of 14%. The Net profit after tax for the period is OMR 1,675,511 against OMR 1,668,760of last year, about same as last year. 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 resultedin reduction in overall net claims ratio to 37% in 2021 from 38% in 2020 in spite the increase in Life and Health insurance segments claim ratio and the effect of Shaheen cyclone.

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

The Company has reported a decline in revenue and profitability for the twelve months period ended on 31 January 2022. This is primarily due to lower number of students enrolled in the school during the last academic year.  The combined impact of Covid 19 and the challenging economic conditions had a considerable impact on private schools in Oman. Official statistics indicate that student enrollment in private schools in Oman has reduced from 116,483 to 78,529 in the 2020/21 school year (a decrease of over 33%). The school is now approved to provide International Baccalaureate (IB) curriculum at all levels. This should improve the school’s competitive position and support it in attracting higher number of students in future years.

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

NABIL reported revenue of OMR 10,602,902 for the twelve months period ended on 31st December 2021 as against OMR 13,422,044of last year, a decline of 21% from last year. The net profit for the year is OMR 393,468 as against OMR 918,724for the previous year, a decline of 57% from last year. This is largely due to increase in cost of raw materials, rising logistic costs and a loss of a contract from a major client. The company is about to launch a new line of premium biscuit & cookies which should mitigate its reliance on the shrinking market of traditional biscuits. NABIL brand enjoys a significant brand image in Oman and a good brand presence across the GCC and the other countries.

6. National Detergent Co. SAOG (NDC):

NDC reported revenues of OMR 17,768,828for the year ended 31st December 2021 as compared to last year’s 20,395,674, a decline of 13%. The Company reported a net loss of OMR 57,903 as compared to net profit of OMR 891,688. Decline in demand from consumers and increase in raw material prices are the main factors that affected financial performance of the company. To reduce this impact, NDC is focusing on controlling costs and introducing new products.The flagship brand BAHAR maintained its premier market position in Oman.

7. Oman Chlorine SAOG (OC)

Oman Chlorine Group has reported revenue of OMR 19,663,444 for the year ended 31st December 2021 as compared with OMR 15,597,163 in the previous period, a growth of 23%. The net loss (Attributable to Parent Company Shareholders) for the period is OMR 258,052 as compared to profit of OMR 104,381 in the previous period.This significant decline in profitability is mainly on account of losses reported by the subsidiaries located in UAE and Qatar.

The Oman operation reported a net profit of OMR 1,830,204 compared to previous period of OMR 1,458,745, a growth of 26%. The overall sales volume in the Oman plant increased by 34.5% owing to improved demand mainly for Caustic lye, Hydrochloric Acid and Calcium Chloride

Union Chlorine LLC, UAE, a subsidiary, has declared net loss of OMR 878,465for the year ended on 31st December 2021, compared to loss of OMR 949,000 in previous period. The parent company’s share of loss is OMR 526,200. The decrease in revenue was because of lower volume in caustic soda lye, Hypo and calcium chloride prills. Union Chlorine marginsimproved substantially in the last quarter of 2021 due to improvement in sales prices and expects to generate positive returns and healthy cashflows in 2022.

Gulf Chlorine WLL, Qatar, a subsidiary, has declared a net loss of OMR 3,030,000 during the year ended 31st December 2021, compared to loss of OMR 1,495,000 in previous period. The parent company’s share of loss is OMR 1,545,436. With the Calcium Chloride Plant commissioned fully by United Chemicals, Gulf Chlorine will be able to run the existing plant at higher capacity which will enable the company to post improved operating performance. The company is under discussion to enter medium to long term contract with several leading entities for supply of various products. With the lifting of GCC Embargo, the company is in a position to cater to new markets in the region. Discussion is going on with several customers (local and regional) and the contracts are under pipeline.

 

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 thereafterthe rates will be reset based on the agreed formula. For the year ended as on31stMarch 2022, AAI earnedinterest amounting to approximately OMR 519,000.

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

AAI has an equity stake of 6.73% in DIDIC at carrying value of OMR 4,547,107as at 31stMarch 2022.The investment is classified at fair value. AAI also invested OMR 1,000,000 in DIDIC Bonds carrying interest rate of 9% per annuum. There was an accrued interest of OMR 143,159on bonds, which was not paid by the DIDIC.During the month of May’21, DIDIC Board approved to convert its bonds alongwith the accrued interest at an issue price of OMR 0.190 per share. Accordingly, AAI bonds was converted to equity shares.

DIDIC has reported net profit for the period is OMR 3,884,632 as compared to OMR 43,402,631. The comparative of last year included a one-time deemed acquisition gain of subsidiaries and associates of OMR 45,717,782.

3. Almondz Global Securities Ltd, India (AGSL)

AAI holds 11.94% equity stake in the AGSL, a company listed on The Bombay Stock Exchange (BSE), India, engaged in the business of broking, corporate finance, investment banking and healthcare. Investment is classified at fair value. AGSL diversified its business into other sectors during the year. The carrying value of our stake in AGSL is OMR 1,536,407 as at 31st March 2022.

Omanization

AAI has always been fully committed of recruiting and training Omani employees and developing and promoting the local talent.AAIOmanisation level at 31stMarch 2022 was67%.

Outlook

Oman’s economy is expected to continue to improve as restrictions related to Covid-19 ease and oil prices recovers from the lows witnessed in prior years. S&P Global Ratings has revised Oman’s rating outlook to positive from stable, citing its improving fiscal position, progress on reforms and rising oil prices.

AAI has maintained a prudent and active approach towards managing its investment portfolio.  Our objective this year is to:

  • continue to support and pro-actively manage our investment companies and,
  • take advantage of investment opportunities available in the market

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

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.

The Board records its sincere appreciation to Ministry of Commerce and Industry and Investment Promotion, Capital Market Authority, Muscat Stock Exchange, Bankers, Auditorsfor their continued support.

I would also like to express my sincere appreciation to the Board of Directors of all our portfolio investment 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 our portfolio investment companies.

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

 

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

Masoud Humaid Malik Al Harthy
Chairman