The National Detergent Co. SAOG

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Loraine Rose
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1 At 1 Legal status and principal activities The National Detergent Company SAOG, an Omani Joint Stock Company ( the Company ), was constituted in accordance with the Commercial Companies Law of Oman 1974, and Ministerial Decree number 78/1980 dated 3 November The principal activity of the company is manufacture and sale of detergents, liquid soaps and home care products. 2 Segment information Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Board considers the business from a divisional perspective. Divisionally, management considers the performance of Consumer division and other division. The reportable operating segments derive their revenue primarily from the manufacture and sale of detergents, liquid soap and homecare products. The directors review monthly analysis of production and sales by volume, sales, collections, cost of sales and factory cost by value, variance with budgets, financial position, and working capital facilities with utilisation status; raw materials and debtors on an overall Company basis. The following divisional analysis has been compiled based on the major division of the Company: 31 MAR Consumer division Other division Total Revenue 5,832, ,777 6,578,281 Cost of sales (4,443,627) (680,257) (5,123,884) Total overheads (1,105,068) (7,846) (1,112,914) Other Income 3, ,702 Profit from operations 287,587 58, ,185 Finance costs (38,012) (5,500) (43,512) Finance costs -net (38,012) (5,500) (43,512) Profit before tax 249,575 53, ,673 Taxation - - (32,721) Profit for the year 249,575 53, ,952 Other financial information Trade receivables 5,896, ,561 6,469,749 Plant, property and equipment addition 589, ,462 2 Segment information (continued) 1

2 At Consumer division Other division Total Revenue 5,635, ,021 6,199,155 Cost of sales (4,264,876) (500,918) (4,765,794) Total overheads (1,045,281) (9,119) (1,054,400) Other Income 3, ,266 Profit from operations 328,776 54, ,227 Finance costs (48,246) (4,860) (53,106) Finance income Finance costs -net (48,204) (4,860) (53,064) Profit before tax 280,572 49, ,163 Taxation - - (36,031) Profit for the year 280,530 49, ,132 Other financial information Trade receivables 5,782, ,390 6,299,680 Plant, property and equipment addition 11,147-11,147 21

3 At 3 Cost of sales 3 Materials consumed 4,029,882 3,682,533 Direct labour 483, ,169 Freight and handling charges 292, ,478 Utilities and direct expenses 207, ,384 Depreciation (see note 13) 110, ,230 5,123,884 4,765,794 4 Selling and distribution expenses Sales promotion and advertisement 385, ,376 Selling expenses 225, ,468 Employee related expenses (note 9) 147, ,425 Distribution Expenses 64,250 69, , ,641 5 Administrative and general expenses Employee related costs 177, ,941 Depreciation (see note 13) 29,135 30,663 Repairs expenses 18,304 27,460 Printing stationery and telephone expenses 14,552 9,736 Other expenses 13,550 14,032 Professional charges 22,227 9,203 Travelling conveyance 12,657 6,124 Directors sitting fees (see note 31) 3,600 3, , ,759 6 Employee related costs Employee related costs included under cost of sales, selling and distribution expenses and administrative expenses: Wages and salaries 524, ,271 Other benefits 185, ,733 End of service benefits (note 24) 53,219 52,060 Training and recruitment expenses 44,665 29, , ,535

4 At 7 Financial income and cost 23 Finance cost Interest on long term borrowings (20,111) (25,505) Interest on short term borrowings (23,109) (27,601) Foreign exchange difference (292) - (43,512) (53,106) Finance income Foreign exchange difference 42 Interest income on deposits Taxation (a) The tax (charge) for the year comprises: Current tax (31,988) (33,878) Deferred Tax (733) (2,153) (32,721) (36,031) (b) The reconciliation of tax on the accounting profit at the applicable rate of 12% after the basic exemption limit of 30,000 with the taxation charge in the statement of comprehensive income is as follows: Tax on accounting profit of 302,673 (31 Mar - 330,163) 32,721 36,020 Add/(less) tax effect of: Expenses not allowed - 11 Tax charge for the period in the statement of comprehensive income 32,721 36,031 (c) Taxation has been agreed with the Oman Taxation Authorities for all years up to Assessments relating to the year 2008 to 2012 are pending with the Oman Taxation Authorities. 9 Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. Net profit attributable to shareholders () 269, ,132 Number of shares outstanding (note 26) 17,012,500 17,012,500 Earnings per share (Bz) The diluted earnings per share is identical to the basic earnings per share.

5 At 10 Property, plant and equipment Furniture, Land Buildings Plant & machinery fixtures & office equipment Motor vehicles Capital work in progress Total Cost/valuation At 1 January 8,900,000 3,205,702 7,048, , , ,802 20,989,276 Transfer CWIP/Assets Additions ,536 4, , ,462 Disposal At 8,900,000 3,205,702 7,084, , ,530 1,244,275 21,579,738 Comprising : At cost 685,589 3,205,702 7,084, , ,530 1,244,275 13,365,327 At valuation 8,214, ,214,411 8,900,000 3,205,702 7,084, , ,530 1,244,275 21,579,738 Depreciation At 1 January - 1,803,595 4,397, , ,737-7,192,418 Charge for the year : Cost of sales - 21,747 88, ,603 Administrative and general expenses - 11,794-12,724 4,617-29,135 Disposal At - 1,837,136 4,486, , ,354-7,332,156 Net Book Value At 8,900,000 1,368,566 2,598,186 98,379 38,176 1,244,275 14,247,582 5

6 At 10 Property, plant and equipment (continued) Furniture, Land Buildings Plant & machinery fixtures & office equipment Motor vehicles Capital work in progress Total Cost/valuation At 1 January 8,900,000 3,176,610 6,960, , ,483-20,155,058 Transfer CWIP/Assets Additions - - 7,899 3, ,147 Disposal (99) - - (99) At 31 Mar 8,900,000 3,176,610 6,968, , ,483-20,166,106 Comprising : At cost 685,589 3,176,610 6,968, , ,483-11,951,694 At valuation 8,214, ,214,411 8,900,000 3,176,610 6,968, , ,483-20,166,106 Depreciation At 1 January - 1,670,035 4,070, , ,362-6,653,925 Charge for the year : Cost of sales - 22,075 86, ,230 Administrative and general expenses - 11,072-11,717 7,874-30,663 Disposal (34) - - (34) At 31 Mar - 1,703,182 4,156, , ,236-6,792,784 Net Book Value At 31 Mar 8,900,000 1,473,428 2,811, ,435 58,247-13,373,322 (a) Land was revalued as at 2012 by an independent valuer. The valuation was made on an open market basis. There was no significant difference between the last year valuation and the current market value. 6

7 At 11 Inventories Raw and packing materials 1,826,357 1,489,941 2,004,157 Finished goods 496, ,648 1,263,376 Stores and consumable spares 84,950 81,074 79,194 Work in progress 21,824 27,809 6,709 2,429,995 2,233,472 3,353,436 Less: Provision for slow moving stock (101,428) (89,428) (98,428) 2,328,567 2,144,044 3,255,008 Goods in transit (0) - 737,444 2,328,567 2,144,044 3,992,452 (a) The movement in provision for slow moving and obsolete stock is given below: Opening balance 98,428 86,428 86,428 Provision for the period/year 3,000 3,000 12,000 Closing balance 101,428 89,428 98, Financial instruments Categories of financial instruments The accounting policies for financial instruments have been applied to the line items below: Loans and receivables Assets as per statement of financial position Trade and other receivables (excluding 6,592,803 6,403,072 4,911,207 prepayments) Cash and cash equivalents 355, ,553 1,278,495 Total 6,948,766 6,887,625 6,189,702 Liabilities as per statement of financial position Total financial liabilities Long term loan 3,277,780 2,661,112 2,923,613 Trade and other creditors (excluding accruals) 2,626,536 2,758,688 4,214,407 Short term borrowings 2,203,605 2,210,952 1,500,000 Total 8,107,921 7,630,752 8,638,020 27

8 At 13 Trade and other receivables Trade receivable 6,469,749 6,299,680 4,715,420 Less: provision for impairment losses on receivables (253,376) (209,477) (244,556) 6,216,373 6,090,203 4,470,864 Other receivables 375, , ,133 Prepayments 171, ,976 93,873 Due from related parties (see note 30) 1,167 1,820 1,210 6,763,924 6,536,048 5,005,080 (a) The fair value of trade and other receivables are assumed to be the same as their carrying amounts. The company does not hold any collateral as security. Details of gross exposure of trade debtors are as follows: Not Due (90 days) 4,856,060 4,795,518 2,928,081 Past due not impaired 1,360,313 1,294,685 1,542,783 Past due and impaired 253, , ,556 6,469,749 6,299,680 4,715,420 (b) Movement in the provision for impairment is as follows: Opening balance 244, , ,477 Provision for the year 9,000 9,000 45,950 Write off during the year (180) 0 (1,871) Closing balance 253, , ,556 8

9 At 14 Cash and bank balances Cash at bank 343, ,379 1,268,822 Cash in hand 12,408 3,174 9, , ,553 1,278,495 Cash and bank balances includes call deposit of 11,963 ( - NIL) placed with a commercial bank at a fixed interest rate 0.30% per annum ( % per annum) and have maturities of less than one month. 15 Share capital (a) The company s authorised, issued and subscribed share capital comprises 17,012,500 ordinary shares of baizas 100 each. At, the following shareholders held 10% or more of the shares of the Company: (%) (%) Oman International Development and Investment Company SAOG , ,170 Dr. Omar Bin Abdul Muniem Al Zawawi , ,082 Bhacker Suleiman Jaffer Company , ,822 Mohammed Abdul Hussain Bhacker Al Lawati , ,882 (b) Share premium of 364,263 ( - 364,263) represents amounts that arose through a business combination model when former Bausher Chemicals SAOG was merged with the company. 16 Legal reserve In accordance with the Commercial Companies Law of Oman 1974, this reserve is equal to one third of the value of the company s paid up share capital and is not available for distribution. 17 Revaluation reserve The revaluation reserve represents the surplus on revaluation of freehold land. Based on open market valuation, revaluation gain net of tax 7,228,682 was recognised under equity. This reserve is not available for distribution. 18 Proposed dividend The Board of Directors, at their meeting held on 16 February was approved a 40 % cash dividend for of per share ( cash dividend of per share) totalling to 680,500 ( ,438). 9

10 At 19 Borrowings Non-current Loans from commercial banks Loan (Oman Arab Bank SAOC) 2,077,780 2,661,112 2,223,613 Loan II (Oman Arab Bank SAOC) 1,200, ,000 Less: Current portion included under current liabilities (583,332) (583,332) (583,332) Total non-current portion of the borrowings 2,694,448 2,077,780 2,340,281 Current Loans against trust receipts - 400,209 - Bills discounting 1,000, , ,000 Bank overdrafts - 910,743 - Short term loan 950, ,000 1,000,000 Total current borrowings 1,950,000 2,210,952 1,500,000 a) Loan was obtained by the Company during the previous year as term loan of 3,050,000 (sanctioned amount is 3,500,000) from Oman Arab Bank SAOC at a rate of 3.75% per annum. The principal is to be paid in equal monthly instalments of 48,611, which commenced in August b) Loan II the company has also obtained another term loan of 1,200,000 (sanctioned 1,200,000) from Oman Arab Bank SAOC at a rate of 3.75% per annum for the liquid plant. The principal to be paid in 60 equal monthly instalments, which will commence on 19 December c) The Company had obtained credit facilities comprising overdrafts, loans against trust receipts, letters of credit, short term loan and bill discounting facilities from commercial banks during the period. Interest is charged at rates ranging between 3.5% and 7% (2012-6% and 8%) per annum. 10

11 At 20 Deferred tax Deferred income taxes are calculated on all temporary differences under the liability method using a principal tax rate of 12% ( %). The deferred tax liability and the deferred tax (charge)/credit in the statement of comprehensive income and statement of equity, are attributable to the following items: Deferred tax liabilities 1 January (Charged)/ credited to statement of comprehensive income Deferred tax liability on depreciation and revaluation of property, plant and equipment (1,102,191) (2,151) (1,104,342) Deferred tax asset Provisions 41,158 1,418 42,576 Net deferred tax liabilities (1,061,033) (733) (1,061,766) Deferred tax liabilities 1 January (Charged)/ credited to statement of comprehensive income Deferred tax liability on depreciation and revaluation of property, plant and equipment (1,085,579) (3,593) (1,085,579) Deferred tax asset Provisions 34,429 1,440 35,869 Net deferred tax liabilities (1,051,150) (2,153) (1,053,303) 11

12 At 21 End of service benefits Opening balance 577, , ,036 Charge for the period/year (note 9) 53,219 52,060 95,983 Payments during the period/year (4,528) (1,227) (21,998) Closing balance 625, , , Trade and other payables Trade payables 2,118,807 2,306,849 3,694,251 Due to related parties (see note 30) 2,970 5,370 6,450 Accrued expenses 1,148, , ,411 Other payables 504, , ,706 3,775,428 3,656,915 4,750, Net assets per share Net assets per share is calculated by dividing the net assets at the year end by the number of shares outstanding at as follows: Net assets () 12,719,757 12,367,938 13,130,305 Number of shares in issue at the end of the period/year (note 18) 17,012,500 17,012,500 17,012,500 Net assets per share (Bzs)

13 At 24 Cash generated from operations The reconciliation of the profit before taxation to cash generated from operations is shown below: Operating activities Profit before taxation 302, , ,886 Add/(less): Depreciation 139, , ,463 (Profit)/loss on disposal of property, plant and equipment - (6,212) (6,212) Interest expense 43, , ,705 Interest received - (46) (46) End of services benefits expenses 53,219 85,770 85,770 Operating profit before changes in working capital and 539,142 1,574,566 1,574,566 payment of end of service benefits Payment of end of service benefits (4,528) (12,826) (12,826) Inventories 1,663,885 53,872 53,872 Trade and other receivables (1,758,844) (771,281) (771,281) Trade and other payables (975,390) (154,154) (154,154) Cash flows (used in)/from operating activities (535,735) 690, , Contingencies At, the Company had guarantees in the normal course of business amounting to 3,750 ( ,146) from which it is anticipated that no material liabilities will arise. 26 Commitments Purchase commitments At, the Company had purchase commitments amounting to 2,945,222 ( 2,509,459-1,894,402). Capital commitments At, the company had capital commitments amounting to 176,997 ( 124, ,185). 13

14 THE NATIONAL DETERGENT CO. SAOG NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (continued) 27 Related party transactions The Company has entered into transactions with entities related to the significant shareholders or directors ( related parties ). In the ordinary course of business, such related parties provide goods and render services to the Company. The Company also sells goods to such related parties. During the year, the following transactions were carried out with related parties: (i) Sales of goods Sales of goods: - related parties 1,526 1,856 (ii) Purchase of goods Purchase of goods: - related parties 5,620 (iii) Key management compensation Basic salaries and allowances 15,525 14,835 Other benefits and expenses 1,294 1,219 16,819 16,054 (iv) Remuneration to directors Directors sitting fees (note 8) 3,600 3,600 42,800 29,300 (v) Year end balances arising from sales/purchases of goods/services Receivable from related parties - other related parties (note 16) 1,167 1,820

15 THE NATIONAL DETERGENT CO. SAOG NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (continued) Payable to related parties (note 25) - shareholders 2,970 5,370 No provision has been required in and 2012 in respect of amounts due from related entities.

The National Detergent Co. SAOG

The National Detergent Co. SAOG UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE Principal place of business: Registered office P.O. Box 3104, Ruwi, Postal Code 112 Sultanate of Oman Corporate Office and Logistic Unit