The National Detergent Co. SAOG

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1 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 Way No. 3605, Al Ghubrah, Sultanate of Oman Sohar Detergent Powder Unit Road No. 5, Phase 1, Sohar Industrial Estate, Sultanate of Oman Sulphonation Unit Way No. 6421, Ghala Industrial Estate, Sultanate of Oman Soap Unit Road No. 13, Rusayl Industrial Estate, Sultanate of Oman Sohar Liquid Unit Phase No. 5, Sohar Industrial Estate, Sultanate of Oman Liquid Unit (Industrial & Institutions) Road No. 2, Rusayl Industrial Estate, Sultanate of Oman

2 THE NATIONAL DETERGENT CO. SAOG UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE PRERIOD ENDED 30 JUNE Contents Page Unaudited summary of performance 2 Unaudited statement of comprehensive income 3 Unaudited statement of financial position 4 Unaudited statement of changes in equity 5 Unaudited statement of cash flows 6 Unaudited notes to the financial statements 7-19

3 UNAUDITED SUMMARY OF PERFORMANCE For the Gross profit 3,364,631 3,224,899 Net profit 728, ,330 Bz Bz Net assets per share Bzs 813 Bzs 793 Basic earnings per share Bzs 43 Bzs 27 2

4 UNAUDITED STATEMENT OF COMPREHENSIVE INCOME For the Note Revenue 2 11,835,925 11,113,957 5,556,762 5,017,735 Cost of sales 3 (8,471,294) (7,889,058) (4,041,975) (3,615,505) Gross profit 3,364,631 3,224,899 1,514,787 1,402,230 Selling and distribution expenses 4 (1,860,968) (2,011,648) (887,905) (943,959) Administrative and general expenses 5 (551,478) (530,803) (270,970) (251,913) Other operating income 12,098 15,782 6,358 8,898 Profit from operations 964, , , ,256 Finance costs 7 (109,743) (113,684) (53,918) (50,455) Finance income 7 2,470 1,875 1, Finance costs -net (107,273) (111,809) (52,340) (49,548) Profit before tax 857, , , ,708 Taxation 8 (128,552) (124,091) (46,490) (24,855) Profit and total comprehensive income for the period 728, , , ,853 Basic earnings per share 9 Bzs 43 Bzs 27 Bzs 15 Bzs 8 The attached notes 1 to 25 form part of these financial statements. 3

5 UNAUDITED STATEMENT OF FINANCIAL POSITION At Note Assets Non-current assets Property, plant and equipment 10 9,756,817 10,155,796 10,084,910 Current assets 9,756,817 10,155,796 10,084,910 Inventories 11 3,445,488 3,389,928 3,352,713 Trade and other receivables 13 7,530,896 6,956,398 5,202,291 Assets held for sale 5,785,796 5,776,986 5,785,796 Cash and cash equivalents , , ,907 17,357,070 16,968,638 14,986,707 Total assets 27,113,887 27,124,434 25,071,617 Equity Share capital 15 1,701,250 1,701,250 1,701,250 Share premium , , ,263 Legal reserve , , ,083 Revaluation reserve 17 7,322,250 7,322,250 7,322,250 Retained earnings 3,875,807 3,527,996 3,912,912 Total equity 13,830,653 13,482,842 13,867,758 Liabilities Non-current liabilities Long term loans ,238 1,743,306 1,369,272 Deferred tax 19 1,523,448 1,487,747 1,509,638 End of service benefits , , ,428 Current liabilities 3,235,966 3,930,764 3,540,338 Current maturities of term loans , , ,068 Short term loans and overdrafts 18 3,228,953 3,290,947 1,786,146 Trade and other payables 21 5,955,505 5,416,843 5,010,253 Taxation 8 114,742 73, ,054 10,047,268 9,710,828 7,663,521 Total liabilities 13,283,234 13,641,592 11,203,859 Total equity and liabilities 27,113,887 27,124,434 25,071,617 Net assets per share 22 Bzs 813 Bzs 793 Bzs 815 The financial statements were approved by the Board of Directors on 26 July and were signed on their behalf by: Mohammed Abdul Hussain Bhacker Vice Chairman V Sundaresan Chief Executive Officer The attached notes 1 to 25 form part of these financial statements. 4

6 UNAUDITED STATEMENT OF CHANGES IN EQUITY At Share Capital Share Premium Legal Reserve Revaluation Reserve Retained Earnings Total At 1 January 1,701, , ,083 7,580,682 3,916,291 14,129,569 Comprehensive income: Profit for the year , ,246 Deferred taxation on tax rate change (258,432) - (258,432) Transaction with owners: Dividend paid (850,625) (850,625) At 1,701, , ,083 7,322,250 3,912,912 13,867,758 At 1 January 1,701, , ,083 7,322,250 3,912,912 13,867,758 Comprehensive income: Profit for the period , ,458 Transaction with owners: Dividend paid (765,563) (765,563) At 1,701, , ,083 7,322,250 3,875,807 13,830,653 The attached notes 1 to 25 form part of these financial statements. 5

7 UNAUDITED STATEMENT OF CASH FLOWS For the Operating activities Profit before taxation 857, ,421 1,039,264 Add/(less): Depreciation 383, , ,321 (Profit)/loss on disposal of property, plant and equipment - (3,280) (3,450) Interest expense 107, , ,868 End of services benefits expenses 67,148 71, ,152 Operating profit before changes in working capital 1,414,859 1,152,062 2,121,155 and payment of end of service benefits Payment of end of service benefits (11,296) (5,014) (78,930) Working capital changes: Inventories (92,775) 250, ,882 Trade and other receivables (2,328,605) (1,714,661) 39,445 Trade and other payables 945, , ,279 Cash flows (used in)/from operating activities (72,565) 196,923 2,476,831 Interest paid (107,273) (111,809) (219,868) Tax paid (119,054) (119,270) (119,270) Net cash flows (used in) from operating activities (298,892) (34,156) 2,137,693 Investing activities Acquisitions of property, plant and equipment (55,335) (157,797) (468,449) Proceeds from disposal on property, plant and equipment - 4,300 4,470 Cash flows used in investing activities (55,335) (153,497) (463,979) Financing activities Repayment of long term loans (374,034) (665,701) (1,221,686) Short term loans 947, ,000 (247,894) Dividend paid (765,563) (850,625) (850,625) Cash flows from financing activities (191,703) (816,326) (2,320,205) Net decrease in cash and cash equivalents (545,930) (1,003,979) (646,491) Cash and cash equivalents at the beginning of the year 411,867 1,058,358 1,058,358 Cash and cash equivalents at the end of the period (134,063) 54, ,867 Cash and cash equivalent comprise: Cash at bank and in hand 594, , ,907 Bank borrowings - overdraft (728,953) (790,947) (234,040) The attached notes 1 to 25 form part of these financial statements. (134,063) 54, ,867 6

8 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: Consumer division Other division Total Revenue 11,153, ,536 11,835,925 Cost of sales (7,895,366) (575,928) (8,471,294) Total overheads (2,369,751) (42,695) (2,412,446) Other Income 11, ,098 Profit from operations 899,870 64, ,283 Finance costs- net (101,863) (5,410) (107,273) Profit before tax 857,010 Taxation (128,552) Profit for the year 728,458 Other financial information Trade receivables 6,777, ,832 7,261,849 Plant, property and equipment addition 53,185 2,150 55,335 7

9 At 2 Segment information (continued) Consumer division Other division Total Revenue 10,268, ,586 11,113,957 Cost of sales (7,264,574) (624,484) (7,889,058) Total overheads (2,484,193) (58,258) (2,542,451) Other Income 14,061 1,721 15,782 Profit from operations 533, , ,230 Finance costs- net (109,634) (2,175) (111,809) Profit before tax 586,421 Taxation (124,091) Profit for the year 462,330 Other financial information Trade receivables 6,261, ,455 6,642,879 Plant, property and equipment addition 154,603 3, ,797 8

10 At 3 Cost of sales 9 Materials consumed 5,982,515 5,451,209 2,832,235 2,415,812 Direct labour (note 6) 1,026,390 1,029, , ,459 Freight and handling charges 612, , , ,247 Utilities and direct expenses 502, , , ,124 Depreciation (note 10) 347, , , ,863 4 Selling and distribution expenses 8,471,294 7,889,058 4,041,975 3,615,505 Sales promotion and advertisement 1,199,317 1,385, , ,820 Employee related expenses (note 6) 373, , , ,128 Distribution Expenses 203, , ,147 84,551 Selling expenses 84, ,953 45,449 36,460 1,860,968 2,011, , ,959 5 Administrative and general expenses Employee related costs (note 6) 390, , , ,475 Depreciation (note 10) 36,024 44,730 19,210 22,261 Repairs expenses 36,880 31,963 16,732 13,032 Printing stationery and telephone expenses 22,871 28,518 12,569 14,228 Other expenses 30,854 25,394 12,955 11,362 Professional charges 15,470 16,485 9,119 7,546 Travelling conveyance 11,897 9,105 7,163 4,409 Directors sitting fees (note 25) 7,200 7,200 3,600 3, , , , ,913 6 Employee related costs Employee related costs included under cost of sales, selling and distribution expenses and administrative expenses: Wages and salaries 1,280,602 1,254, , ,717 Other benefits 388, , , ,589 End of service benefits (note 20) 67,148 71,519 18,907 17,181 Training and recruitment expenses 53,437 27,621 30,970 18,575 1,789,912 1,751, , ,062

11 At 7 Financial income and cost Finance cost Interest on long term borrowings 51,060 67,618 26,137 32,179 Interest on short term borrowings 58,683 46,066 27,781 18, , ,684 53,918 50,455 Finance income Foreign exchange difference 2,470 1,875 1, ,470 1,875 1, Taxation (a) The tax (charge) for the year comprises: Current tax 114,742 73,019 Deferred tax current year 13,810 14,944 Deferred Tax in respect of change in tax - 36, , ,091 (b) The reconciliation of tax on the accounting profit at the applicable rate of 15% with the taxation charge in the statement of comprehensive income is as follows: Tax on accounting profit of ( - 586,421) 128,552 87,963 Add/(less) tax effect of: Deferred Tax in respect of change in tax 36,128 Expenses not allowed - - Tax charge for the period/year in the statement of comprehensive income 128, ,091 (c) Taxation has been agreed with the Oman Taxation Authorities for all years up to Assessments relating to the year 2012 to 2016 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 () 728, ,330 Number of shares outstanding (note 15) 17,012,500 17,012,500 Earnings per share (Bz) The diluted earnings per share is identical to the basic earnings per share. 10

12 At Cost/valuation 10 Property, plant and equipment Furniture, Land Buildings Plant & machinery fixtures & office equipment Motor vehicles Capital work in progress Total At 1 January 3,643,232 3,356,818 10,062,781 1,002, ,935-18,379,347 Additions - 1,200 25,892 20,850-7,393 55,335 At 3,643,232 3,358,018 10,088,673 1,023, ,935 7,393 18,434,682 Comprising : At cost 408,232 3,358,018 10,088,673 1,023, ,935 7,393 15,199,682 At valuation 3,235, ,235,000 Depreciation 3,643,232 3,358,018 10,088,673 1,023, ,935 7,393 18,434,682 At 1 January - 1,033,072 6,042, , ,783-8,294,437 Charge for the year : Cost of sales - 84, , ,404 Administrative and general expenses ,431 1,097-36,024 At - 1,131,208 6,304, , ,880-8,677,865 Net Book Value At 3,643,232 2,226,810 3,783,906 95, ,393 9,756,817 11

13 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 3,643,232 3,214,712 9,936, , ,935 9,630 18,061,287 Transfer CWIP/Assets - 9, (9,630) - Additions - 132, ,446 59, ,449 Disposal - - (150,389) (150,389) At 3,643,232 3,356,818 10,062,781 1,002, ,935-18,379,347 Comprising : At cost 408,232 3,356,818 10,062,781 1,002, ,935-15,144,347 At valuation 3,235, ,235,000 3,643,232 3,356,818 10,062,781 1,002, ,935-18,379,347 Depreciation At 1 January - 843,184 5,670, , ,934-7,685,485 Charge for the year : Cost of sales - 162, , ,052 Administrative and general expenses - 27,203-44,217 2,849-74,269 Disposal - - (149,369) (149,369) At - 1,033,072 6,042, , ,783-8,294,437 Net Book Value At 3,643,232 2,323,746 4,020,778 96,002 1,152-10,084,910 (a) Land was revalued on an open market basis on 2015 by independent valuers. The net increase in the value of these assets was credited to the revaluation reserve in the statement of other comprehensive income for the year ended Management believes that market values at are not materially different from the carrying values based on aforesaid valuations. 12

14 At 11 Inventories Raw and packing materials 2,032,487 2,064,754 1,731,645 Finished goods 1,156,512 1,080,019 1,355,910 Stores and consumable spares 110, , ,308 Work in progress 30,859 30,631 18,888 3,329,961 3,290,649 3,214,751 Less: Provision for slow moving stock (72,242) (60,242) (66,242) 3,257,719 3,230,407 3,148,509 Goods in transit 187, , ,204 3,445,488 3,389,928 3,352,713 (a) The movement in provision for slow moving and obsolete stock is given below: Opening balance 66,242 57,372 57,372 Provision for the period/year 6,000 6,000 12,000 Write off during the year - (3,130) (3,130) Closing balance 72,242 60,242 66, 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 prepayments) 7,397,373 6,800,932 5,066,604 Cash and cash equivalents 594, , ,907 Total 7,992,263 7,646,258 5,712,511 Liabilities as per statement of financial position Total financial liabilities Long term loan 1,743,306 2,673,325 2,117,340 Trade and other creditors 5,955,505 5,416,843 5,010,253 Short term borrowings 3,228,953 3,290,947 1,786,146 Total 10,927,764 11,381,115 8,913,739 13

15 At 13 Trade and other receivables Trade receivable 7,261,849 6,642,879 5,055,300 Less: provision for impairment losses on receivables (326,408) (325,694) (336,121) 6,935,441 6,317,185 4,719,179 Other receivables 460, , ,792 Prepayments 133, , ,468 Due from related parties (see note 25) 1, ,530,896 6,956,398 5,202,291 (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) 4,916,158 4,247,821 3,793,855 Past due not impaired 2,019,283 2,069, ,324 Past due and impaired 326, , ,121 7,261,849 6,642,879 5,055,300 (b) Movement in the provision for impairment is as follows: Opening balance 336, , ,436 Provision for the year 7,663 12,000 70,150 Write off during the year (17,376) (4,742) (52,465) Closing balance 326, , ,121 14

16 At 14 Cash and bank balances Cash at bank 576, , ,695 Cash in hand 18,503 31,059 10, , , , 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: 30 Jun 30 Jun (%) (%) Al Anwar Holdings SAOG , 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 in 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 gains net of tax 7,322,250 ( 7,322,250) was recognised under equity. This reserve is not available for distribution. 15

17 At 18 Borrowings Non-current Loans from commercial banks Loan I - 181,951 - Loan II 600, , ,000 Loan III 1,143,306 1,651,374 1,397,340 Less: Current portion included under current liabilities (748,068) (930,019) (748,068) Total non-current portion of the borrowings 995,238 1,743,306 1,369,272 Current Bank overdrafts 728, , ,040 Short term loan 2,500,000 2,500,000 1,552,106 Total current borrowings 3,228,953 3,290,947 1,786,146 (a) Loan I It was obtained by the Company during the 2012 as term loan of 3,050,000 (sanctioned amount is 3,500,000) at a rate of 5% 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) at a rate of 5% per annum for the liquid plant under construction at Sohar industrial estate. The principal to be paid in 60 equal monthly instalments of 20,000, which commenced in January (c) Loan III - The Company has also obtained another term loan of 2,032,425 (sanctioned 2,500,000) at a rate of 3 months LIBOR plus 2.9% per annum for the Non Tower Detergent (NTD) plant under construction at Sohar industrial estate. The principal to be paid in 16 equal quarterly instalments, which commenced on 24 December (d) 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 3.00 % and 6.5% ( % and 6.5 %) per annum. 16

18 At 19 Deferred tax Deferred income taxes are calculated on all temporary differences under the liability method using a principal tax rate of 15% ( - 15%). 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: 1 January (Charged)/ credited to statement of comprehensive income Charged to statement of change in equity Deferred tax liabilities Deferred tax liability on depreciation and revaluation of property, plant and equipment (1,569,993) (13,253) - (1,583,246) Deferred tax asset Provisions 60,355 (557) - 59,798 Net deferred tax liabilities (1,509,638) (13,810) - (1,523,448) 1 January (Charged)/ credited to statement of comprehensive income Charged to other comprehensive income Deferred tax liabilities Deferred tax liability on depreciation and revaluation of property, plant and equipment (1,223,340) (63,866) (258,432) (1,545,638) Deferred tax asset Provisions 45,098 12,793-57,891 Net deferred tax liabilities (1,178,242) (51,073) (258,432) (1,487,747) 17

19 At 20 End of service benefits Opening balance 661, , ,206 Charge for the year (note 9) 67,148 71, ,152 Payments during the year (11,296) (5,014) (78,930) Closing balance 717, , , Trade and other payables Trade payables 3,463,799 2,468,723 3,042,267 Due to related parties (see note 25) 8,312 3,940 2,470 Accrued expenses 2,010,873 2,514,161 1,446,738 Other payables 472, , ,778 5,955,505 5,416,843 5,010, 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 31 March as follows: Net assets () 13,830,653 13,482,842 13,867,758 Number of shares in issue at the end of the year (note 18) 17,012,500 17,012,500 17,012,500 Net assets per share (Bzs) Contingencies At, the Company had guarantees in the normal course of business amounting to 55,541 ( 64,100 and - 60,555) from which it is anticipated that no material liabilities will arise. 24 Commitments Purchase commitments At, the Company had purchase commitments amounting to 2,795,701 ( 2,163,541 and - 2,197,599). Capital commitments At, the company had capital commitments amounting to 122,045 ( 283,084 and - 106,811). 18

20 At 25 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 4,277 4,021 (ii) Purchase of goods Purchase of goods: - related parties 28,641 43,596 (iii) Key management compensation Basic salaries and allowances 38,880 37,440 Other benefits and expenses 3,240 3,084 42,120 40,524 (iv) Remuneration to directors Directors sitting fees (note 5) 7,200 7,200 (v) Year end balances arising from sales/purchases of goods/services Receivable from related parties - other related parties (note 13) 1,204 1,169 Payable to related parties (note 21) - shareholders 8,312 3,940 No provision has been required in and 2016 in respect of amounts due from related entities. 19

The National Detergent Co. SAOG

The National Detergent Co. SAOG 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,