Page (7) 1 Legal status and principal activities Al Madina Investment Company SAOG (previously Transgulf Investment Holding Company SAOG) ( the Company or Company ) was incorporated as an Omani joint stock company on 10 March 1996. The Company commenced operations on 1 September 1996. On 13 May 2013, the shareholders of the Company in Extraordinary General Meeting approved the change of name from Transgulf Investment Holding Company SAOG to Al Madina Investment Company SAOG. The shareholders of the Company also passed a resolution to acquire the business of Al Madina Financial and Investment Services Company SAOC (note 24). The Company The consolidated financial statements include the results and the financial position of the Company and its Subsidiaries (together referred to as the ) and the s interest in associates. Shareholding percentage as at 31 March 2014 Shareholding percentage as at 31 December 2012 Country of incorporation Subsidiary companies 99.00% 99.00% Orient Dawn LLC Oman Shaden Development SAOC 70.00% - Oman Gulf Brand Company SAOC 66.67% - Oman Oman International Marketing SAOG 52.67% - Oman Principal activities Investments and real estate related activities Real estate activities Retail food products Real estate activities Associate companies Al Madina Real Estate Company SAOC 20.86% 20.86% Oman Real estate activities Flexible Industrial Packages Company SAOG 20.28% 20.28% Oman Manufacturing of industrial products Al Madina Financial and Investment Services Company SAOC - 19.64% Oman Investment and brokerage services Oman International Marketing SAOG - 20.00% Oman Investment related activities Corresponding amounts of the Company and the are not comparable as the Company and the consolidated financial statements have been prepared for different accounting periods as disclosed below: The company 2014 2013 Fifteen months period ended 31 March 2014 Nine months period ended 31 December 2013 Subsidiaries and associated companies Twelve months period ended 31 December 2012 Twelve months period ended 31 December 2013 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years/period s presented, unless otherwise stated. 2.1 Basis of preparation The Company and consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, and applicable requirements of the Commercial Companies Law and the Capital Market Authority of the Sultanate of Oman, The Company and consolidated financial statements are prepared under the historical cost convention, as modified by the revaluation of financial assets at fair value and investment property. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4. (a) Standards and amendments to existing standards effective 1 January 2013 The following standard has been adopted by the for the first time for the financial year beginning on or after 1 January 2013 and has a material impact on the : IFRS 12, Disclosures of interests in other entities includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles. IFRS10, Consolidated financial statements builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess.
Page (8) IFRS 13, Fair value measurement, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs (b) New and amended standards not yet effective but early adopted by the : The has early adopted IFRS 9 effectively from 1 April 2010, as well as the related consequential amendments to other IFRSs, mainly because this new accounting policy provides reliable and more relevant information for users to assess the amounts, timing and uncertainty of future cash flows. (c) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the : The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Company s accounting periods beginning on or after 1 April 2014 or later periods, but the Company has not early adopted them and the impact of these standards and interpretations is not reasonably estimable: Amendment to IAS 19 regarding defined benefit plans (Annual periods beginning on or after 1 July 2014); Amendment to IFRS 9 Financial instruments classification and measurement (Annual periods beginning on or after 1 January 2018); Amendments to IFRS 1, First time adoption - Annual periods beginning on or after 1 July 2014; Amendments to IFRS 3, Business combinations - Annual periods beginning on or after 1 July 2014; Amendments to IAS 40, Investment property - Annual periods beginning on or after 1 July 2014; Amendments to IFRS 13, Fair value measurement Annual periods beginning on or after 1 July 2014; Amendments to IFRS 2, Share-based payment Annual periods beginning on or after 1 July 2014; Amendments to IFRS 3, Business Combinations Annual periods beginning on or after 1 July 2014; Amendments to IFRS 8, Operating segments Annual periods beginning on or after 1 July 2014; Amendments to IFRS 13, Fair value measurement Annual periods beginning on or after 1 July 2014; Amendments to IAS 16, Property, plant and equipment Annual periods beginning on or after 1 July 2014; Amendments to IAS 38, Intangible assets Annual periods beginning on or after 1 July 2014; Amendments to IFRS 9, Financial instruments Annual periods beginning on or after 1 July 2014; Amendments to IAS 37, Provisions, contingent liabilities and contingent assets, Annual periods beginning on or after 1 July 2014; and IAS 39, Financial instruments Recognition and measurement. Annual periods beginning on or after 1 July 2014 2.2 Basis of preparation (a) Subsidiaries Subsidiaries are all entities (including structured entities) over which the has control. The controls an entity when the is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the. They are deconsolidated from the date that control ceases. The applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquired entity and the equity interests issued by the. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of acquiree s identifiable net assets. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive statement. Inter-company transactions, balances, income and expenses on transactions between the companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the. The Company accounts for its investment in subsidiary at fair value through other comprehensive income for the purpose of its separate financial statements (note 2.3.2).
Page (9) (d) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. (c) Disposal of subsidiaries When the ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost with the change in carrying amount recognised in statement of comprehensive income. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (d) Associates Associates are all entities over which the has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor s share of the profit or loss of the investee after the date of acquisition. The s investment in associates includes goodwill identified on acquisition. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to the statement of comprehensive income where appropriate The s share of post-acquisition profit or loss is recognised in the statement of comprehensive income, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. The determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to share of profit/(loss) of an associate in the statement of comprehensive income. Profits and losses resulting from upstream and downstream transactions between the and its associate are recognised in the s financial statements only to the extent of unrelated investor s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the. The Company accounts for its investment in associates at fair value through other comprehensive income for the purpose of its separate financial statements (note 2.3.2). 2.3 Financial instruments 2.3.1 Financial assets at amortised cost A debt investment is classified as amortised cost only if both of the following criteria are met: the objective of the s business model is to hold the asset to collect the contractual cash flows; and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in the debt investment are considered in determining whether the cash flows of the investment are solely payment of principal and interest on the principal outstanding and are not accounted for separately. 2.3.2 Equity instruments All equity investments are initially and subsequently measured at fair value. Equity investments that are held for trading are measured at fair value through profit or loss. For all other equity investments, the can make an irrevocable election at initial recognition to recognise changes in fair value through other comprehensive income rather than profit or loss. 2.3.3 Other At initial recognition, the measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value though profit or loss are expensed in the income statement Where the s management has elected to present unrealised and realised fair value gains and losses on equity investments in other comprehensive income, there is no subsequent recycling of fair value gains and losses to profit or loss. Dividends from such investments continue to be recognised in profit or loss as long as they represent a return on investment Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses
Page (10) 2.4 Share capital Ordinary shares are classified as equity, Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects 2.5 Fair value The Company and s measures fair value using the following fair value hierarchy that reflects the significance of the input used in the making the measurements: Level 1: Quoted market price (unadjusted) in an active market. Level 2: Valuation techniques based on observable inputs. This category included instruments valued using quoted market price in the active market using for similar instruments, quoted market for identical or similar instruments in market that are considered less than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Level 3: Valuation techniques using significant unobservable inputs. This category includes instruments that are valued based on quoted prices of similar instruments where significant unobservable adjustments or assumptions are required to reflect difference between the instruments. 2.6 Foreign currency translation Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Company and consolidated income statement. Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on nonmonetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in the Company and consolidated income statement as part of fair value gain or loss. 2.7 Impairment The carrying amount of the Company and s assets other than deferred tax asset are reviewed at each financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. (a) Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics All impairment losses are recognised in the Company and consolidated income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortized cost, the reversal is recognised in the Company and consolided income statement (b) Non-financial assets The carrying amounts of the Company and s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indications exist then the asset s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specified to the asset. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 2.8 Cash and cash equivalents For the purpose of statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities up to three months or less and bank overdraft. 2.9 Receivables and prepayments Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Company and the will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate, Bad debts are written off during the year in which they are identified.
Page (11) 2.10 Inventory of real estate properties Inventory of real estate includes cost of land and buildings, expenditure incurred for design cost, raw materials, direct labour and other direct costs incurred in bringing the assets to their present location and condition. Real estate is held with the objective of development and resale in the ordinary course of business and is stated at lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less incidental selling expenses 2.11 Inventory Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and consists of the direct cost of goods and related direct expenses. The cost of finished goods includes an appropriate portion of direct labour and related production overheads. Net realisable value is the price at which stock can be sold in the normal course of business after allowing for the costs to be incurred in marketing, selling and distribution. Provision is made where necessary for obsolete, slow-moving and defective items. 2.12 Property and equipment Property and equipment are stated at historical cost, less accumulated depreciation and impairment losses, Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in an asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the and the cost of the item can be measured reliably, All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: Computer Furniture, fixtures and office equipment Motor vehicles 3 years 4-5 years 5 years Building and Tilal Office 25 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each financial position date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement 2.13 Intangible assets Intangible asset is initially recognised at cost and amortised using the straight-line method over the estimated useful life of five years. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each financial position date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. 2.14 Investment properties Investment properties, comprise of land and buildings, and are held for capital appreciation and not occupied by the Company. Investments properties are initially recognised at cost, being the fair value of the consideration given including acquisition charges associated with the investment. Subsequent to initial recognition, these properties are revalued to their fair values and any increase or decrease in the fair values is reflected in the income statement. 2.15 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. The recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the s activities, as described below. Sales of goods Revenue from sale of goods is recognised when the has transferred to the buyer significant risks and rewards of ownership of the goods. Brokerage commission income Brokerage commission income is recognised on completion of each deal Dividend Dividend income in relation to the securities portfolio is recognised in the Company and consolidated income statement when the right to receive dividends is established Revenue from sale of investments Realised gain or loss on sale of investment represents the difference between sale proceeds and carrying value of securities sold, calculated on a weighted average basis. 2.16 Finance income and expense Finance income and cost is recognised on an accrual basis using the effective interest method.
Page (12) 2.17 Employee benefits End of service benefits are accrued in accordance with the terms of employment of the s employees at the financial position date, having regard to the requirements of the Oman Labour Law 2003 as amended, Employee entitlements to annual leave and leave passage are recognised when they accrue to employees and an accrual is made for the estimated liability arising as a result of services rendered by employees up to the financial position date. These accruals are included in liabilities Contributions to a defined contribution retirement plan and occupational hazard insurance for Omani employees in accordance with the Omani Social Insurances Law of 1991 are recognised as an expense in the income statement as incurred. 2.18 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred, Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. 2.19 Payables and accruals Liabilities are recognised for amounts to be paid for goods and services received, whether or not billed to the Company and the. 2.20 Directors remuneration The Directors remuneration is governed as set out in the Memorandum of Association of the Company, the Commercial Companies Law, regulations issued by the Capital Market Authority. The Annual General Meeting shall determine and approve the remuneration and the sitting fees for the Board of Directors and its sub-committees provided that such fees shall not exceed 5% of the annual net profit after deduction of the legal reserve and the optional reserve and the distribution of dividends to the shareholders provided that such fees shall not exceed RO 200,000. The sitting fees for each director shall not exceed RO 10,000 in one year. 2.21 Provisions A provision is recognised in the financial position when the Company and the has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessment of the time value of money and, where appropriate, the risks specific to the liability. 2.22 Dividends Dividends are recommended by the Board after considering the profits available for distribution and the Company s future cash requirements and are subject to approval by the shareholders at Annual General Meeting. Dividends are recognised as a liability in the financial statements in the period in which they are declared. 2.23 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions. 2.24 Income tax Income tax expense comprises current and deferred tax, Income tax expense is recognised in the income statement except to the extent that it relates to items recognized directly in equity, in which case it recognize in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is calculated using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affect neither the accounting nor taxable profits, and difference relating to subsidiaries and jointly controlled entities to the extent that they probably will not reverse in foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 4 Critical accounting estimates and assumptions The makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year, Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances,
Page (13) Fair value of investments not quoted in an active market As at the statement of financial position date, the unquoted investments amounting to RO 9.216 million (31 December 2012 - RO 7.332 million) for the Company and were fair valued using valuation techniques, mainly discounted cash flows or where the majority of underlying assets are fair valued, at net assts value. In addition, the also has accounted for its share of the profits/(losses) of certain associates where the unquoted equity investments are fair valued using similar valuation techniques. In discounted cash flow models, unobservable inputs are the projected cash flows of the relevant portfolio company and the risk premium for liquidity and credit risk that are incorporated into the discount rate. The uses judgement to select a variety of methods and make assumptions relating to the cash flows and discount rates considering the market conditions existing at the end of each reporting period and knowledge of the investee company operations. Though the management has taken due care and best of knowledge in selecting and applying those assumptions, changes in assumptions could affect the reported fair value of those investments and the actual results could be different from the estimated amounts. However, management is confident that, as of the reporting date, the actual results would not be materially different from the carrying amounts of those investments. Impairment of inventory of real estate properties The inventory of real estate properties are carried at the lower of cost (carrying amount) and net realisable values. The Company uses level 2 fair valuation method by comparing the selling prices of similar real estate properties. At 31 March 2014, the Company has assessed that the real estate properties are carried at lower of cost and net realisable values by comparing to the sale prices of similar real estate properties. Impairment of associates The tests annually whether investment in associates suffered any impairment. The recoverable amounts of investments have been determined based on value-in-use calculations. Such calculations involve use of certain estimates by management in order to determine the present value of estimated future cash flows expected to be generated by the associates. 5 Cash and cash equivalents Bank - current accounts 778,082 30,143 2,238,783 239,005 Cash in hand 1,007 45 1,007 45 779,089 30,188 2,239,790 239,050 6 Prepayments, advances and other receivables Receivables and prepayments, which are due within one year, comprise the following: Balance with broker 455,560-455,560 - Dividend receivable 13,800 236,019 13,800 236,019 Receivable from clients (brokerage related) 428,938-449,194 260,705 Due from related parties (note 25) 163,629 164,238 203,687 165,544 Prepaid expenses 32,175 19,749 55,983 21,326 Other receivables 583,056 1,152 632,771 1,152 1,677,158 421,158 1,810,995 684,746 7 Financial assets at fair value through profit and loss Quoted securities - Banking and investment sector 1,042,428-1,103,282 - - Services sector 1,984,985 1,417 1,984,985 1,417 - Industrial sector 644,095 241,648 644,095 241,648 3,671,508 243,065 3,732,362 243,065 Unquoted securities 10,218,583 6,459,207 10,221,083 6,459,207 Total 13,890,091 6,702,272 13,953,445 6,702,272
Page (14) (a) Details of investments of which the s holding exceeds 10% of the market value of its investment portfolio are as follows: 9/30/2014 Holding % No. of shares Market value Cost RO RO Tilal Development Co. SAOC % 49.50 1,725,000 6,906,900 3,289,788 Al Madina Insurance Co SAOC % 15.00 15,119,997 1,738,800 1,970,578 3/31/2013 Tilal Development Co. SAOC % 48.97 1,150,000 3,282,100 2,600,000 Al Madina Real Estate Co. SAOC % 25.00 1,057,912 2,031,191 778,505 (b) (b) Movement in financial assets at fair value through profit and loss is as follows: At 1 April 13,817,504 7,955,408 13,873,218 7,955,408 Transfer to subsidiary during the period - (735,240) - (735,240) Less: Sales during the period (54,988) (489,720) (54,988) (489,720) Add: purchese during the period 43,156 45,656 - Add: Fair value gain 84,419 (28,176) 89,559 (28,176) At 30 Sept. 2014 13,890,091 6,702,272 13,953,445 6,702,272 (c) Quoted securities are investments listed on the Muscat Securities Market (MSM) and Dubai Financial Market (d) (e) (f) 8 Investments in associates and and 2013 2012 Holding % RO Holding % RO Al Madina Financial and Investment Services Co. SAOC - - % 00.00 - Flexible Industrial Packages Co. SAOG % 20.28 - % 20.28 96,108 Al Madina real estate SAOC % 20.86 8,425,014 % 00.00 - Oman International Marketing Co. SAOG % 20.00 26,011 8,425,014 122,119 (a) The movement in the carrying amount of investment in associates is as follows: (b) (c) (d) Certain shares with market value of approximately RO 6.61 million (31 December 2012 - RO 6.61 million) are pledged as securities against credit facilities obtained from commercial banks (note 16). Financial assets at fair value included 12% investment in Shaden Development Company SAOC. During the period, the Company got 10% on acquisition of business and purchased further 48% from a related party. Accordingly, the carrying amount of the investment is reclassified to investment in subsidiaries (note 9). Financial assets at fair value included 5.29% investment in Al Madina Real Estate Company SAOC. During the period, the Company got further 15.57% on acquisition of business. Accordingly, the carrying amount of the investment is reclassified to investment in associate (note 8). Sept. 2014 Jun 2013 RO RO At 1 April 8,652,028 3,020,522 Add: Purchase during the period Less: Sales during the period Fair value gain - - - (2,854,416) (227,014) (43,987) At 30 Sept. 2014 8,425,014 122,119 Investment in associate included 20% investment in Oman International Marketing Company SAOG. During the period, the Company acquired further 26.33% on acquisition of business and purchased further 6.34%. Accordingly, the carrying amount of the investment is reclassified to investment in subsidiaries (note 9). Effectively on 1 January 2013, the Company sold entire investment in associate (Al Madina Financial and Investment Services Company SAOC) to Al Madina Real Estate Company SAOC at the carrying value. At the date of the acquisition of investment, the carrying value of Al Madina Real Estate Company SAOC exceeded the value transferred from investment at fair value through profit and loss. Accordingly, the amount RO 1,663,117 has been recorded as goodwill. The s share of the assets, liabilities and results of its associates, all of which are registered in the Sultanate of Oman, are as follows:
Page (15) 30 Sep 2014 Assets Liabilities Revenues Profit Interest held % Al Madina real estate SAOC 9,390,693 2,620,783 89,820 (227,014) % 20.68 Flexible Industrial Packages Co. SAOG 971,626 1,151,066 22,349 - % 20.28 10,362,319 3,771,849 112,170 (227,014) 31 Mar 2013 Al Madina Financial and Investment Services Co. 32,124,928 613,809 72,162 13,912 % 19.64 Oman International Marketing Co. 1,385,521 1,002,766 65,301 17,490 % 20.28 SAOG Flexible Industrial Packages Co. SAOG 64,070 25,979 1,847 (26,127) % 20.00 33,574,519 1,642,554 139,310 5,275 (c) Investments in associates are non-current assets. 9 Investment in subsidiary The movement in investment in subsidiaries are as follows: Sept. 2014 Jun 2013 RO RO At 1 April 4,789,499 541,224 Add: Purchase of invesment in subsidiary 4,662 3,261,874 Less: Sales during the period - - Fair value gain (47,712) (9,262) At 30 Sept. 2014 4,746,449 3,793,836 (a) During the period, the Company purchased a small percentage holding in Shaden Development Company SAOC 10 Investment property (a) (b) At 1 April 1,110,665 305,000 5,410,665 305,000 Add: invesment during the tear 23,655-23,655 - Add: invesment in subsidiaries - - 575,000 3,461,365 Adjustment for fair value - - - - At 30 Sept. 2014 1,134,320 305,000 6,009,320 3,766,365 The investment properties of the Company were valued by independent, professional valuers on 31 March 2014 on an open market basis using level 2 inputs. The investment properties (primarily lands) from a subsidiary, Shaden Development Company SAOC, were fair valued by an independent professional valuer on 13 February 2014 on an open market basis using level two inputs. 11 Investment property During the period, management assessed the carrying amount of inventories of real estate properties of a subsidiary, Shaden Development Company SAOC, to the net realisable value and recorded an impairment of RO 493,697 (2012 nil). 12 Equipment and vehicles Co. Furniture & Fixtures Office Equipments Computers Motor Vehicles Building Tilal office interior RO RO Cost At 1 April 2014 101,565 191,529 3,445 548,441 137,406 982,386 Additions - 4,570 - - - 4,570 Disposals - - - - - - At 30 Sept. 2014 101,565 196,099 3,445 548,441 137,406 986,956 Depreciation At 1 April 2014 32,882 161,948 3,444 29,157 42,006 269,437 Charge for the period 9,028 5,319-10,999 13,777 39,123 Disposals - - - - - - At 30 Sept. 2014 41,910 167,267 3,444 40,156 55,783 308,560 Net book Value At 30 Sept. 2014 59,655 28,832 1 508,285 81,623 678,396 Total
Page (16) Furniture & Fixtures Office Equipments Computers Motor Vehicles Building Tilal office interior RO RO Cost At 1 April 2014 182,021 349,261 3,445 548,441 137,406 1,220,574 Additions - 4,570 - - - 4,570 Disposals - - - - - - At 30 Sept. 2014 182,021 353,831 3,445 548,441 137,406 1,225,144 Depreciation At 1 April 2014 58,041 196,027 3,444 29,157 42,006 328,675 Charge for the period 9,028 5,319-10,999 13,777 39,123 Disposals - - - - - - At 30 Sept. 2014 67,069 201,346 3,444 40,156 55,783 367,798 Net book Value At 30 Sept. 2014 114,952 152,485 1 508,285 81,623 857,346 Cost At 1 January 2013 9,008 6,077 3,445 - - 18,530 Additions 60,661 473 - - - 61,134 At 31 March 2013 69,669 6,550 3,445 - - 79,664 Depreciation At 1 January 2013 8,373 5,798 3,444 - - 17,615 Charge for the period 3,265 120 - - - 3,385 At 31 March 2013 11,638 5,918 3,444 - - 21,000 Net book Value At 31 March 2013 58,031 632 1 - - 58,664 13 Share capital The Company s authorised, issued and paid-up share capital of RO 0.100 each, is as follows: (a) Total Authorised Issued and fully paid Share capital 50,000,000 15,000,000 18,831,944 6,687,500 (b) At 30 June 2014, investor who owned more than 10% of the share capital is as under: Al Madina Real Estate Company 12.67% SAOC MB Holding Company LLC 11.35% 50,000,000 15,000,000 18,831,944 6,687,500 The shareholders of the Company have passed a resolution in the Extra Ordinary General meeting held on 12 May 2013 to increase the authorised share capital of the Company from RO 15 million to RO 50 million. The shareholders also approved issuance of 121,144,444 shares of RO 0.100 which is pending registration on acquisition of business. 14 Legal reserves In accordance with Article 106 of the Commercial Companies Law of 1974, annual appropriations of 10% of the net profit for the year are transferred to this reserve until such time the legal reserve equals at least one third of the Company s share capital. The legal reserve is not available for distribution. 15 Dividends The Board of Directors recommended a stock dividend of 10% of the paid - up capital for the year ended 31 March 2014 subject to the approval of shareholders at the forthcoming Annual General Meeting. On 28 April 2013, the shareholders in the Annual General Meeting approved a cash dividend of 5% amounting to RO 577,500. 16 Term loans Term loan A - Company During the period, the company has to pay the loan in full. Have been obtained from the Bank of Islamic facilities loan carries an annual Lease rate of 5.14 % the facilities loan repaid in installments semi-annually. The facilities loan is secured by a pledge over certain investments and real estate investment company
Page (17) Term loan C- Subsidiary Company The term loan of RO 4.28 million has been obtained by a subsidiary company. The term loan carries annual interest rate of 8% per annum and is repayable in quarterly instalments from 1 April 2014. The loan is secured against the project land of the subsidiary company. 17 End of service benefits At 1 April 52,327 68,096 52,327 68,096 Charge for the period 10,806 4,778 18,858 4,778 Paid for the period (3,710) - (3,710) - At 30 Sept. 2014 59,423 72,874 67,475 72,874 18 Trade and other payables Payables and accruals, which are due within one year, comprise the following: Due to related parties 995,604 553,418 1,050,973 720,222 Advance from customers - - 6,257,126 3,336,842 Accrued expenses 673,376 91,719 1,055,789 114,083 Accounts payable 266,848 1,018 330,470 19,684 19 Salaries and related costs 1,935,828 646,155 8,694,358 4,190,831 Salaries and allowances 330,721 120,304 330,721 120,304 Social security costs 15,838 2,844 15,838 2,844 End of service benefits 10,807 4,778 10,807 4,778 Other benefits 245,617 10,985 245,617 10,985 20 Administrative and general expenses 602,983 138,911 602,983 138,911 Directors and committee sitting fees 20,000 26,400 37,800 33,800 Annual general meeting expenses 26,331 14,655 26,331 14,655 Advertising 5,837 4,090 6,587 5,974 Professional fees 34,530 6,520 40,370 9,095 Hotel and travelling expenses 7,505 5,538 9,577 6,859 Repair & maintance 15,033-15,033 - Postage and telephone 18,010 2,790 18,010 2,790 Rent - 980 600 980 Training and seminar 6,133 2,250 6,133 2,250 Registration fees 18,848 1,830 19,683 2,225 Insurances 6,285 1,652 6,285 1,652 Water and electricity 3,028 412 3,028 412 Stationery and printing 1,480-2,270 915 Bank charges 67,590 617 67,590 632 Operating expenses - subsidiaries Co. - 111,067 Miscellaneous expenses 19,639 3,386 19,679 3,413 250,249 71,120 390,043 85,652
Page (18) 21 Income tax The is liable to pay income tax at the rate of 12% of the taxable profits in excess of RO 30,000 in accordance with the income tax law of the Sultanate of Oman. No income tax provision has been made in the Company in view of the carried forward tax losses of RO 3,142,921 of the Company for the years up to 31 March 2014 (31 December 2012 - RO 2,909,399). Provision for taxation has been recognised in respect of subsidiary companies. The Company's income tax assessments for the years up to 2003 have been finalised by the Department of Taxation Affairs at the Ministry of Finance. The tax assessment of Al Madina Financial and Investment Services Company SAOC (the acquired business) has been finalised upto 2008 by the Department of Taxation Affairs at the Ministry of Finance The management believes that additional taxes, if any, in respect of the open tax assessments would not be significant to the financial position of the or the Company at 31 March 2014 Deferred tax assets in respect of the tax losses have not been recognised because it is uncertain whether future taxable profits will be available against which the Company and the can utilise these benefits. 22 Basic earnings per share The calculation of basic earnings per share, based on the net profit for the year attributable to shareholders and the weighted average number of shares outstanding during the year, is as follows: Profit for the period (828,013) (311,219) (1,102,737) (364,467) Weighted average number of shares 20,715,138 6,687,500 20,715,138 6,687,500 Basic earning per share (0.004) (0.005) (0.005) (0.005) 23 Net assets per share The calculation of net assets value per share, based on the total equity at the end of the period and the number of shares outstanding at the end of period. Net assets attributable to equity holders, is as follows: Total equity 23,013,621 7,632,273 23,013,620 7,632,274 Number of shares 207,151,380 66,875,000 207,151,380 66,875,000 Net assets value per share 0.111 0.114 0.111 0.114 24 Related party transactions The Company and the has entered into transactions with its associates and other entities over which certain directors are able to exercise significant influence. The nature of the significant type of related party transactions during the period was as follows: (a) Transactions Sept. 2014 Jun 2013 Sep 2012 Sep 2011 Subscription of shares in associates - - - - Purchase of shares in subsidiaries 4,750 2,640,961 4,750 2,640,961 Sale of shares through an associate - 3,092,705-3,092,705 Commission income from an associate - 18,636-18,636 (b) Key management compensation Sep 2012 Jun 2013 Sep 2012 Jun 2013 Short term employment benefits 121,821 63,000 121,821 63,000 Social security costs 4,410 2,520 4,410 2,520 126,231 65,520 126,231 65,520
Page (19) (c) Directors sitting fee and remuneration Sep 2012 Jun 2013 Sep 2012 Jun 2013 20,000 26,400 37,800 26,400 (d) Period end balances arising from sale and purchase of investments, dividend income and commission income Sep 2012 Jun 2013 Sep 2012 Jun 2013 995,604 553,418 1,050,973 720,222 163,629 164,238 203,687 165,544