3
Contents
Financial Highlights 05
Board of Directors 06
Directors’ Report 09
Corporate Governance Compliance Certificate 13
Corporate Governance Report 15
Management Discussion & Analysis Report 25
Auditor’s Report 26
Financial Statements 29
6
Board of Directors
Dr. P. Mohamed Ali
The saga of Galfar is
synonymous with Dr. Mohamed
Ali, who led the growth of the
Company since its beginning
in 1972. The success of Galfar
and the preeminent position it
enjoys today in the engineering
and construction sector is
attributed to Dr. Mohamed Ali.
Besides his global business and
public involvement, Dr. Ali has
established many educational
institutions in Oman and
elsewhere and has significantly
contributed to the social and
economical development.
Upholding social responsibilities
is his passion.
Dr. Mohamed Ali is highly
regarded and respected in Oman
and India. He has received
many prestigious accolades and
awards such as Oman Civil Order
from His Majesty Sultan Qaboos
and the Pravasi Bharathiya
Samman from the President
of India.
Shk. Dr. Salim Bin Said
Bin Hamed Al Fannah
Al Araimi
Sheikh Dr. Salim bin Said bin Hamed Al Fannah Al Araimi is considered one of the most prominent businessmen widely known in the field of specialized and general engineering and contracting works in the Sultanate of Oman and GCC countries. Sheikh Salim Al Fannah Al Araimi was born in the year 1940 in Sur which is famous as a commercial city since ancient time, with the interaction of people traveling to the Arabian Gulf region, Iraq, India and Africa.
Sheikh Salim Al Fannah Al Araimi started businesses in Muscat in 1970, by establishing Arabian Trading and Services Company, and then Galfar Engineering and Contracting Co. LLC in 1972. Since then it has played a significant role in the field of building and infrastructure development over the past years. Galfar was transformed to a Public Joint Stock Company into 2007 and is considered as a leading company in the specialized and general engineering and contracting sector in the Sultanate of Oman.
Sheikh Salim Al Fannah Al Araimi is the Chairman of Galfar Engineering and Contracting Co. SAOG, Bank Sohar (SAOG) and Salim International Investment Holding LLC besides his direct contribution and active participation in establishing and managing many companies, commercial establishments and prestigious educational institutions in Sultanate of Oman.
The humanitarian and charitable activities in which he has involved is worth mentioning as he is benevolently contributing to these activities. Presently he is a member of the Board of Directors of the Oman Charitable Organisation and founder of university colleges contributing in this concern. Sheikh Salim Al Fannah Al Araimi has been awarded an honorable Doctorate Degree in Technology, by the Glasgow Caledonian University, Scotland, United Kingdom. He had acted as the vice president of Oman Chamber of Commerce and Industry and held the membership of Franco-Arab Chamber of Commerce, and also the Presidency of the Oman Football Association. He being passionate about sport especially in football, has contributed in establishing Arobah Club, one of prominent Omani and Gulf clubs with reputation in both Gulf and Arab region.
Dr. Adil bin Abdul Aziz
Al Kindy
Dr. Adil bin Abdul Aziz Al Kindy
was born on 13/12/1964 he
holds a Bachelor degree in
Civil Engineering (Sheffield,
UK 1989) and a PhD in Civil
Engineering (Loughborough,
UK 1998). Dr. Adil held various
senior possessions at Muscat
Municipality the last being
Director General of Technical
Affairs until December 2003, then
moved to The Oil and Gas Sector
as Chief Executive of Oman
Refineries and Petrochemicals
Company up to December
2010. Dr. Adil Al Kindy was
appointed by Royal Decree to
be a Member of State Council in
October 2011. Currently he is a
Chairman and Member of several
public and private Boards such
as Sultan Qaboos University
Council SQUC, Public Authority
for Academic Accreditation and
Chairman of the Oman Society of
Engineers. Also he is a Founder
member of Bank Nizwa, the first
Islamic Bank in Oman.
Dr. Hatem Bakheit
Saeed Al-Shanfari
Dr. Hatem Al-Shanfari has
diverse experience that span
into Academia, business and
civil society in Oman. His current
responsibilities include the
following: Faculty Member in
the Department of Economics
& Finance at Sultan Qaboos
University SQU. Member of
the Board of Governors of the
Central Bank of Oman CBO,
member of the Board of Oman
Chamber of Commerce and
Industry, Vice Chairman of the
Board of Omani Economic
Association OEA, Chairman of
the Board of Directors of Gulf
Investment Services Company
(SAOG), Chairman of the Board
of Directors of Gulf Baader
Capital Markets Company
(SAOC), Board Member of Galfar
Engineering and Contracting Co.
(SAOG), Chairman of the Board
of Directors of the First Mazoon
Fund, and Member of Advisory
Council of the Management
Center at the American University
in Cairo.
Hatem’s previous experience
included board memberships in
Al Omaniya Financial Services
Company (SAOG) and Omani
Packaging Company (SAOG).
Hatem holds a doctorate in
Economics from University
of Strathclyde in Glasgow,
Scotland. He also has earned an
MA in Economic Planning from
the Institute of Social Studies
at the Hague, the Netherlands
and BSc in Engineering from
Washington University in St.
Louis, Missouri, USA.
Sheikh Yahya Bin
Abdullah Bin Salim
Al Araimi
Sheikh Yahya Bin Abdullah
Bin Salim Al Araimi joined the
Ministry of Foreign Affairs in the
year 1985 and was assigned as
Charge d’Affaires to the Embassy
of the Sultanate in New Delhai
in 1989. He currently serves as
the Ambassador of the Sultanate
of Oman in Islamic Republic of
Iran. Previously, he served as
the Ambassador of the Sultanate
of Oman in republic of Italy. He
was granted with Cavalier Grade
of Friendship by the President of
Republic of Italy in the year 2006.
Sheikh Yahya Al Araimi holds a
Bachelor degree in Economic
and Political Science from Cairo
University; Masters in Political
Science from Jamiah Milliah
Islamiah University, New Delhi
and M.B.A. in Finance from the
European school of Economics,
Rome-Italy.
6
7
Mr. Hamad Mohammad
Al Wahaibi
Mr. Hamad Al Wahaibi has built
a career with14 years experience
in investments and assets
management. He currently holds
the offices of Deputy Director-
Investment with the Ministry
of Defense Pension Fund
Boards, and Audit Committees
Membership in Galfar
Engineering and Contracting
(SAOG), Voltamp Energy Co.
(SAOG), Al Madina Insurance
Co (SAOC), and Shaden
Development Co. (SAOC).
Hamad holds a MBA in finance
from University of Technology,
Sydney and is a Chartered
Financial Analyst (CFA) Charter
holder from CFA Institute Global.
He graduated from Sultan
Qaboos University in Bachelor
of Science in Commerce &
Economics in Operations
Management.
Sheikh / Salim Bin
Abdullah Bin Said Al
Rawas
Sheikh/ Salim Bin Abdullah
Bin Said Al Rawas, holder of
Bachelor degree in Economics.
Is one of the pioneer and
prominent business owners
in the Sultanate of Oman. He
currently holds the office of
Managing Director of Abdullah
Bin Said Bin Badr Al Rawas
Group of Companies, being one
of the private sector companies
doing business in the fields
of investment, transportation,
mining, and trading. In the same
time he holds membership of the
Board of Directors of Oman Oil
Company and Chairman of Oman
Oil Marketing Company (SAOG),
and a Member of the Board of
Directors of Galfar Engineering
and Contracting Company
(SAOG).
Sheikh/ Salim Al Rawas has
interest and contributions in
the public works arena where
he was elected previously for
the membership of Board of
Governors of the Central Bank,
Shura Council, and membership
of the Board of Directors of
Capital Market General Authority
and Sultan Qaboos University.
Also he was having contribution
previously in many of the private
sector companies where he
chaired the Board of Directors of
Dhofar Cattle Feed Co. (SAOG)
and Al Shati Hospital. He also
held the office of Vice Chairman
of the Board of Directors of
Dhofar International Development
& Investment Company, Dhofar
Insurance Company, and Oman
& UAE Company.
Eng. Salman Rashid Al
Fannah Al Araimi
Eng. Salman Rashid Al Fannah
Al Araimi received his Bachelor
of Civil Engineering from The San
Diego State University of USA.
He started his career at Oman
Telecommunications Co. (SAOG)
as Head of Civil & Electrical
Mechanical Engineer from 1988
to 1998 and then joined Nawras
Company SAOG as a consultant
for Civil & Electrical Mechanical
for two years.
Eng. Salman is currently the
Chairperson of Al Asala Group of
Companies.
Mr. Abdelbagi Daffalla
Abdelraouf
Mr. Abdelbagi Daffalla
Abdelraouf, holds a Bsc in
law from University of Cairo -
Khartoum. He worked in the legal
Profession in Sudan for more
than fifteen years as attorney
at Law and legal advisor for
local Firms and multinational
companies. He worked with
Mobil Oil Sudan in the post of
legal counsel and secretary of
the Board for nine years. He
joined Galfar in 2003 and after
transformation of the Company
to SAOG he was re-appointed by
the Board in the post of the legal
Advisor and Secretary of the
Board effective
October 9, 2007.
Ms. Khalood Mohamed
Rashid Al Fannah
Al Araimi
Ms. Khalood Mohamed Rashid
Al Araimi is the Vice-Chairperson
of Al Siraj Investment Holding
LLC. She holds a Bachelor of
Science degree with Honors
in E-commerce & Digital
Business from The University of
Nottingham, U.K.
She started her career in
Corporate Banking at Bank
Muscat SAOC. She is now
the Vice-Chairperson of Al
Siraj Investment Holding
LLC, and was also the Vice-
Chairperson of Muscat Finance
Co. Ltd. (SAOG), Director in
Gulf Plastic Industries Co.
SAOG, Oman Medical College
SAOC, Caledonian College
of Engineering, Al Dastoor
Contracting & Trading LLC and
Travel Point LLC & Travel City
LLC. She is also the Managing
Director of Advanced Technology
& Projects Co. LLC, Al Siraj
Contracting & Engineering LLC
and Delta International Projects &
Engineering LLC.
7
Director’s’ Report
Dear Shareholders,
AhlanvaSehlan,
On behalf of the Board of Directors, I welcome you to this Annual General Meeting
of Galfar Engineering & Contracting SAOG and to present the Annual Report for the
Year ended 31st December 2012.
Business Environment
Galfar leads the construction market securing some of the prestigious projects
tendered out by the Government, amidst stiff competition from local and international
companies.
The Business Environment looks bright with the announcement of several development
Projects in sectors relating to Roads, Oil and Gas, Power, water, wastewater and
other infrastructure.
Galfar is fully geared to execute the projects awarded through the established
tendering practices. Galfar has successfully formed alliances and relationship with
SMEs across the Sultanate through its established systems and practices, to be
availed on projects based on their individual specializations and capabilities. Presently
Galfar is sub-contracting more than 20% of its activities to local Omani SMEs, similarly
over 50% of Galfar’s revenue is spent on procurement activities within Oman.This
Practice will continue and grow with Galfar’s own growth in various construction
sectors. Galfar has taken upon itself a responsibility to encourage and support the
SME movement, being the prime requirement of the Government and His Majesty
Sultan Qaboos Bin Said.
Your Company is one of the first to adopt the revised labour laws, enhancing
salaries of Nationals. We continue to induct local Labour force who is ready to work
in the construction sector and wish to grow with Galfar.
Galfar will continue to play a vital role n the Construction Industry in all sectors
such as Oil and Gas, Roads, Bridges, Airports, Civil and Marine Infrastructure and
Utilities and Services including Operation and Maintenance. The upcoming Building
complexes, Railway, Roads and Tunnel Projects will be of particular interest for
Galfar’s advancement into futuristic technologies and mechanization.
In India we have secured various road projects in the BOOT sector with promising
returns. We have completed one project, two projects under execution with partners
and two projects alone. During the year Galfar Engineering & Contracting SAOG
Oman was awarded two projects on DBFOT basis worth RO 86 million. The portfolio
is expected to grow in other countries such as Saudi Arabia. In Libya, the company
is taking a cautious approach to commence operations.
Iraq in the meanwhile is being viewed by us with great interest, we have already
begun various registration processes and are currently pursuing some jobs in
which we have secured prequalification. Generally all such projects will be in the
infrastructure sectors.
9
M/s Al Khalij Heavy Equipment & Engineering
LLC, a subsidiary of the Company, engaged
in transportation and logistics business has
done well during 2012.
Aspire Projects and Services LLC, the wholly
owned subsidiary of Galfar, has entered the
Facilities Management sector,and Specialized
Engineering Solutions. This previously
untapped sector will open your company to
avenues in Facilities Management, Alternative
Power solutions, Green Energy solutions for
the building industry.
Through“Galfar Aspire Readymix Company
LLC”, we strive to deliver quality concrete
to several projects in�house as well as
external in several cities across Oman.
Operations
Galfar has continued to maintain its position
as the number one contracting company in
the Sultanate of Oman.
Details on the operating results of the
Company for the year 2012 and outlook for
the industry for 2013 are reflected in the
‘Management Discussion & Analysis’ report
included in the Annual Report for the year
2012.
The summary of the performance of the
Company (including Subsidiary) is as
follows:
In RO Million
Particulars 2012 2011
Gross revenue 336.50 307.22
Profit from
Operation
17.87 11.83
Net Profit After
Tax
9.21 5.26
Omanisation
Galfar continues to be an attractive
proposition to nationals seeking long term
and gainful employment in the private
sector. We can now boast of Omanization
at all levels with technically qualified youth
working in Galfar.
Galfar seeks to provide a unique experience
to individuals who join us, such that their
careers grow through a process of continuous
learning and on job training. A majority of
this is achieved through “mentorship” by
seniors in similar discipline.
The two training centers of Galfar at Sohar
and Al Hail which have now grown into a
separate entity, still continue to train and
qualify young Omanis to meet the growing
challenges of the construction industry.
Corporate Governance
Your Company follows high standards of
Corporate Governance. A detailed Corporate
Governance Report is included in the Annual
Report for the year ended 2012.
Health, Safety and Environment
Our company also continues to be the
leading light when it comes to Health,
Safety and Environment. We also credit
ourselves in taking care of our social
responsibilities. Our track record in Safety
cannot be paralleled and over the years we
have continued our endeavour to provide a
safe environment to the entire workforce
whether they be at site or in the camps.
10
Outlook
During 2012 your company bagged Rial
Omani 454 million worth of Projects to
maintain the order book back log at RO. 685
million at the beginning of this year. Our
endeavour will be to continue to maintain
this level of order book while bettering it in
a sustainable manner.
There is a general optimism in the
construction industry with the government
having decided to proceed with the awards
for many long pending projects in all the
sectors of the construction industry.
There are several large road projects planned
for the coming few years and Galfar is fully
geared for competing and securing these.
Large scale expansion is planned in the
water and electricity transmission and
distribution and this too will form one of the
target markets for Galfar.
The Oil and Gas projects scenario looks
very promising even outside of the service
contract. With our Engineering, Procurement
and Construction capabilities now being
delivered in-house, Galfar has begun to
seek every opportunity in the Engineering,
Procurement and Construction projects being
tendered out.
Your company will pursue growth by
participating in various projects in Roads,
Oil and Gas , Power, Water, Wastewater
and the other infrastructure development
sectors already in the tendering stage and
likely to be tendered.
To strengthen the Company’s balance sheets
and to support its long term growth the
Board of Directors have recommended to
increase the Issued and Paid-up Capital of
the Company, by issuing on a rights basis,
1.5:10 Shares at a price of Baizas 280
(two hundred eighty) per share including
an amount of 2 Baizas per share towards
share issue expense. Consequently, the
issued and paid-up share capital of the
Company will go up, from RO 33 Million to
37.95 Million.
On Record
We are grateful to His Majesty Sultan
Qaboos Bin Said for his visionary leadership
and providing opportunities for the private
and public sector in participating in the
development of the Oman’s economy.
The Board would like to thank all Ministries,
Capital Market Authority, Muscat Securities
Market, Muscat Clearing and Depository
SAOC, Muscat Municipality, Royal Oman
Police, Petroleum Development of Oman
and other Companies working in the Oil &
Gas sector in Oman, Commercial Banks and
Financial Institutions in Oman and abroad
where we have relationships, Consultants,
Sub contractors, Suppliers and all Clients of
the Company, for their generous cooperation
and continued support.
We would also like to thank all the labour
force, the staff and management of the
Company for the effort extended to improve
the company’s performance.
Salim Said Hamad Al Fannah Al Araimi
Chairman
11
Corporate Governance Report
15
Company’s Philosophy
Galfar Engineering and Contracting SOAG, is convinced with the importance of the need for
good corporate governance and healthy corporate practices for a company to succeed in the
long run, fulfill its plans and realize its objectives. The concept of governance at Galfar
envisages care of the Company to enhance the value of all its stakeholders, that by adhering
to proper methods of management, internal controls, accountability, corporate governance
rules and high level of transparency to the extent of not affecting the competitive position of
the Company. The Company continues applying a well defined Management Systems
Procedures (MSPs) in accordance with ISO 9001, the adherence to such principles would
be attainable.
The company is fully abiding by the corporate governance code issued by the Capital
Market Authority (CMA). The company has taken all necessary steps to fulfill the objective
of good corporate governance.
The Board Members have professional and/or practical experiences in their diversified
fields of profession as shown as profile in the Annual Report booklet. They have given
great support to the Board to exercise its widest authorities in managing the Company and
supervise the good performance of the Company’s business. The Board is responsible for
achieving the company’s objectives. For this purpose, the Board is assisted by various
committees and the higher executive management of the company. The Board has formed
the executive Committee, the Audit Committee and other ad hoc committees when the
need arises such as the procurement committee. In addition, there is a well-
structured organization for the management executives whose duties and authorizations
are defined in the manual of authority approved by the Board.
In general the board exercises its primary functions and duties in line with the powers
stipulated in article 35 of the Articles of Association of the company.
Board of Directors
The First Board of Directors which was duly elected by the Constitutive General Meeting of
the Shareholders on 9 October, 2007 comprises of nine members. The board comprises of
nine Directors, eight non executive and one executive. Five of the non executive directors
are independent.
The Members of the Board are all having professional and practical experience in their
respective corporate fields ensuring proper direction and control of company’s activities.
No director is a member of more than 4 joint stock public companies whose shares are
listed on the Muscat Securities Market (MSM) and no director is chairman of more than 2
public companies whose principal office is in the Sultanate of Oman. None of the directors
is a member of a Board of Directors of a joint stock public or closed company which carries
out similar business and whose principal office is in the Sultanate of Oman.
Sr. No. Name of Directors &
Representatives
Designation Category Directorship in other
Joint Stock Companies
1 Sheikh Dr.Salim Said Hamed
Al Fannah Al Araimi
Chairman Non - Executive Bank Sohar S.A.O.G,
Oman Medical
College S.A.O.C
2 Dr.P. Mohamed Ali Vice Chairman &
Managing Director
Executive Tabreed Oman
S.A.O.C, Oman Medical
College S.A.O.C
3 Dr.Hamed Hashim Mohamed
Al Dhahab (Till 26.07.2012)
Director Non - Executive
Independent
A’sharqiya Investment
Holding Co. S.A.O.G
4 Dr.Adil Abdulaziz Yahya
Al Kindy
Director Non - Executive
Independent
Bank Nizwa SAOG
5 Dr.Hatem Bakheit Saeed
Al Shanfari
Director Non - Executive
Independent
Gulf Investment
Services Co. S.A.O.G,
Gulf Baader Capital
Markets Co. S.A.O.C
6 Sheikh Salim Abdullah
Saeed Badr Al Rawas
Director Non - Executive
Independent
Oman Oil Marketing
Company S.A.O.G
7 Sheikh Yahya Abdullah
Al Fannah Al Araimi
Director Non - Executive
Independent
NIL
8 Engr. Salman Rashid
Al Fannah Al Araimi
Director Non - Executive
Independent
NIL
9 Ms.Budoor Mohamed Rashid
Al Fannah Al Araimi
(Till 18.10.2012)
Director Non - Executive Gulf Plastic Industries
Co. S.A.O.G, A’Sharqiya
Investment Holding Co.
S.A.O.G, Oman Medical
College S.A.O.C
10 Mr. Hamad Mohamed
Al Wahaibi
(From 18.10.2012)
Director Non - Executive Voltamp Energy Co.
(SAOG), Al Madina
Insurance Co (SAOC),
and Shaden
Development Co.
(SAOC).
11 Ms. Khalood Mohamed
Rashid Al Fannah Al Araimi
(From 19.10.2012)
Director Non - Executive Gulf Plastic Industries
Co. S.A.O.G
Oman Medical College
S.A.O.C
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Board Meetings:
During the year 2012, the Board held 5 meetings. The following table shows details of the same.
Sr. No.Name of Directors &
Representatives
Meeting 29 Meeting 29
Contd.)
Meeting 30 Meeting 31 Meeting 32
07 Mar.
2012
12 Apr.
2012
13 May
2012
26 Jul.
2012
18 Oct.
2012
1 Sheikh Dr.Salim Said Hamed
Al Fannah Al Araimi
2 Dr.P. Mohamed Ali
3 Dr.Hamed Hashim Mohamed
Al Dhahab (Till 26.07.2012)N/A
4 Dr.Adil Abdulaziz Yahya
Al Kindy
5 Dr.Hatem Bakheit Saeed
Al Shanfari
6 Sheikh Salim Abdullah
Saeed Badr Al Rawas
7 HE Yahya Abdullah
Al Fannah AlAraimi
8 Engr. Salman Rashid
Al Fannah Al Araimi
9 Ms.Budoor Mohamed Rashid
Al Fannah Al Araimi
(Till 18.10.2012)
10 Mr. Hamad Mohamed
Al Wahaibi
(WEF 18.10.2012)N/A N/A N/A N/A
11 Khalood Mohamed Rashid Al
Fannah Al Araimi
(WEF 19.10.2012)N/A N/A N/A N/A N/A
Remuneration to the Board of Directors:
The total amount of remuneration proposed to be paid to the Directors excluding sitting fees for the
year 2012 is RO.156,700/-. The sitting fees payable for the period is RO 43,300/-. During the year
2012 an amount of RO 149,988 was paid as Director’s Remuneration, including sitting fees, for the
year 2011.
Board Secretary
Mr.Abdelbagi Daffalla, of a legal profession career, was appointed secretary of the Board. The secretary
records minutes of the Board meetings as well as the resolutions passed. He handles liaison works between
the Board, Board committees and follow-up actions to be taken and informing concerned parties.
17
Other Committees: Executive Committee:
The Board has formed, an Executive Committee which consists of 4 members, to oversee in general,
setting of business and strategic plans, policies of the Company, review decisions taken on various
matters concerning the operation of the company and any other matters assigned by the Board.
The Executive Committee exercises its functions in accordance with the Executive Committee
Charter. The committee held six meetings during the year 2012
Name of members of the committee Designation
Dr.Adil Abdulaziz Yahya Al Kindy Chairman
Dr.P. Mohamed Ali Member
Salman Rashid Al Araimi Member
Sheikh Salim Abdullah Saeed Badr Al Rawas Member
Excom-Attendance Sheet
Name of members
of the committee
1st
Meeting
27
2nd
Meeting
28
3rd
Meeting
29
4th
Meeting
30
5th
Meeting
31
6th
Meeting
32
03 Mar.
2012
07 Jun.
2012
18 Jul.
2012
17 Sep.
2012
16 Oct.
2012
14 Nov.
2012
Dr.Adil Abdulaziz Yahya
Al Kindy
Dr.P. Mohamed Ali
Sheikh Salim Abdullah
Saeed Badr Al Rawas
Salman Rashid Al Araimi
Audit Committee
The audit committee is appointed by the board of directors to assist the board in discharging its
oversight responsibilities. The audit committee will oversee the financial reporting process to ensure
the balance, transparency and integrity of published financial information. The audit committee will
also review: the effectiveness of the company’s internal financial control and risk management
system; the effectiveness of the internal audit function; the independent audit process including
recommending the appointment and assessing the performance of the external auditor; the
company’s process for monitoring compliance with laws and regulations affecting financial reporting
and code of business conduct.
18
In performing its duties, the committee will maintain effective working relationships with the board
of directors, management, and the external and internal auditors. To perform its role effectively,
each committee member will need to develop and maintain his skills and knowledge, including an
understanding of the committee’s responsibilities and of the company’s business, operations and
risks. The Committee held six meetings during the year 2012.
Audit Committee Members Designation
Dr Hamed Al Dhahab (Till 26.07.2012)Chairman
(Former)
HE Yahya Al Fannah Al Araimi Member
Dr Hatem Al ShanfariChairman
(Present)
Ms. Budoor Al Fannah Al Araimi (Till 18.10.2012)Member
(Former)
Mr. Hamad Mohamed Al Wahaibi (WEF 18.10.2012)Member
(Present)
Ms. Khalood Mohamed Rashid Al Fannah Al Araimi
(wef 19.10.2012)
Member
(Present)
Audit Committee Meeting & Attendance Details - Year 2012
Audit Committee
Members
Meeting Dates / Attendance
1st
Meeting
2nd
Meeting
3rd
Meeting
4th
Meeting
5th
Meeting
6th
Meeting
06 Mar.
2012
11Apr.
2012
09 May.
2012
25 Jul.
2012
05 Sep
2012
17 Oct.
2012
Dr Hamed
Al DhahabN/A N/A
HE Yahya Al Fannah
Al Araimi
Dr Hatem
Al Shanfari
Ms. Budoor
Al Fannah
Al Araimi
Procedure for Standing as a Candidate for the Board:
The right to stand as a candidate for membership of the Board of Directors of the Company is open
to shareholders and non shareholders.
19
In case of a shareholder, whether in personal
capacity or representing a juristic person, he
must have a minimum equity of not less than
10000 shares.
Key Management Remuneration:
Total remuneration during the financial year
2012 to top Management (top 5) was RO
752,203/-.
Compliance with Rules and Regulations:
The Company has been compliant with all
the applicable rules and regulations issued
by MSM, CMA and that stipulated in the
Commercial Companies Law 1974 as amended.
An Audit Team from Capital Market Authority
(CMA) conducted a general audit over the Year
2011, to ensure the company’s commitment
to the Corporate Governance Code of SAOG
companies and other regulations and laws
issued by the CMA. Their respective report,
commended the Company’s commitment
towards Corporate Governance and other
regulations and laws. The Company participated
in a discussion workshop on the new Definition
of Independent Director organized by the CMA
on the 20th of January 2013 and also the
Transparency and Disclosure in capital markets
seminar organized by Capital Markets Authority
on 23 January 2013. The discussion workshop
aimed at opening communication and dialogue
between CMA, the companies and legal
advisors to explain the recent moves of CMA in
approving the new amendment to the definition
of independent director and to acquaint with
the motives behind such amendment and the
goals intended there from through application
of the new definition and ways for overcoming
the challenges facing the companies in such
application. The seminar aimed to promote
awareness of disclosure and transparency
in the financial markets and to acquaint with
best international and local practices for
the regulation of disclosure by Public Joint
Stock Companies. The seminar focused on
senior managements in the public and private
sectors, investment funds and companies
and other concerned parties and we in Galfar
have been compliant with the new definition of
Independent Director and disclosing material
information in a transparent manner.
Communication with Shareholders and Investors:
The company maintains good communication
relations with the shareholders and Investors and
responds as much as possible to their queries
and requests in line with the disclosures rules.
The company, during the period, conducted
several phone interviews with financial analysts
and investors.
The company publishes its un-audited financial
results in the newspapers on a quarterly
basis and the audited financial statements
annually. Detailed financial statements are
sent to shareholders on request. The company
publishes its quarterly and annual results in
MSM website. Detailed financial statements
are sent to shareholders on request. The
company posts its quarterly and annual results
on MSM website, and also on the Company’s
website: www.galfar.com. All the Company’s
announcements are posted on MSM’s
website.
The Management discussions and analysis
report forms an integral part of the Annual
Report.
20
Statement on market price and distribution of holdings:
High / Low price during each month
Sr. No. Month High Low Closing
1 January 2012 0.347 0.335 0.335
2 February 2012 0.404 0.333 0.394
3 March 2012 0.420 0.370 0.379
4 April 2012 0.440 0.380 0.421
5 May 2012 0.432 0.372 0.398
6 June 2012 0.415 0.388 0.392
7 July 2012 0.392 0.355 0.365
8 August 2012 0.380 0.362 0.369
9 September 2012 0.439 0.369 0.413
10 October 2012 0.420 0.390 0.385
11 November 2012 0.390 0.363 0.367
12 December 2012 0.374 0.357 0.364
Distribution of ownership of shares between shareholders (Including Shares having preferential
voting rights)
Sr. No. Catergory No. of
ShareholdersNo. of Shares
% of
Shareholding
1 Less than 5% 5,116 113,078,498 34.27
2 5% to 10% 3 73,665,954 22.32
3 Abover 10% 3 143,255,548 43.41
Total 5,122 330,000,000 100.00
There are no Securities / Convertible Financial Instruments as on the Balance Sheet date which will
have an impact on the Shareholders’ equity.
Profile of the Statutory Auditors
Ernst & Young are the statutory auditors of the Company. Ernst & Young is one of Oman’s oldest
established accounting firms, having had a permanent office in the country since 1974. The practice
comprises around 180 professionals, and is working under the direction of six partners. The
Oman office forms part of Ernst & Young’s MENA practice, with 102 partners and over 5626 other
professionals in 18 offices in 13 countries throughout the region. The MENA practice is a member
firm of Ernst & Young Global, operating in more than 140 countries with approximately 167,000
personnel world-wide.
21
Audit Fees of the Company and Subsidiaries and fees for other services paid to the Auditor :
Sr. No. Particulars Amount
(In RO)
1 Statutory audit fees (Parent) 22,000
2 Statutory audit fees Al Khalij Heavy Equipments &
Engineering LLC (Subsidiary)
2,500
3 Statutory audit fees Galfar Training Institute LLC (Subsidiary) 2,000
4 Statutory audit fees Galfar Engineering & Contracting India Pvt. Ltd.
(Subsidiary)
3,928
5 Statutory audit fees Aspire Projects & Service LLC. (Subsidiary) 2,000
The Board of Directors acknowledges as at December 31, 2012:
The Board of Directors acknowledges:
• With its liability for the preparation of financial statements in accordance with the
applicable standards and rules.
• Review of the efficiency and adequacy of internal control systems of the Company and that it
complies with internal rules and regulations. In order to enhance and strengthen the efficiency
of the internal control systems, the Company has appointed a chief internal auditor and also
recruited technical auditors in the Internal Audit Department.
• That there is no material matter that affects the continuation of the Company and its ability to
continue its production and operations during the next financial year.
Salim Said Hamed Al Fannah Al Araimi
Chairman
23
Management Discussion & Analysis Report
OverviewGalfar Engineering and Contracting SAOG, is one of the largest multi-disciplined engineering
& contracting company in the Sultanate of Oman. The capability of Galfar to meet various
requirements in the engineering and construction industry has made the Company preferred
choice of various customers both in the Government and Private Sectors.
Main Objectives and Operational Results
The Company is committed to continual improvement to achieve its objectives of conducting
business in a manner which is beneficial to all. There is a main focus on delivering projects
on time to the satisfaction of the stakeholders with maximum in country value. It includes
upgrading our infrastructure and expertise to meet future challenges and maintaining a
motivated and competent workforce who achieves excellence in Quality, Health, Safety
and environmental protection.
The turnover of the Company including subsidiaries was RO 336.504 million in 2012 as
compared to RO 307.222 million in 2011. The Company recorded a profit after tax of
RO 9.206 million in 2012 as compared to RO 5.264 million in 2011.
Galfar Engineering & Contracting SAOG has five subsidiaries the performance of which is
as follows. Al Khalij Heavy Equipment & Engineering LLC which specializes in hiring out of
equipments recorded a turnover of RO 1.741 Million in 2012, as compared RO 1.701 million
in 2011. Galfar Engineering & Contracting India Pvt. Ltd., which is engaged in construction
activities in India, recorded a turnover of RO 9.872 million in 2012 as compared to RO 4.034
million in 2011. Galfar Training Institute LLC which specializes in the field of training Omanis
is various trades recorded a turnover of RO 1.041 Million during the year 2012 as compared
to RO 0.806 during the year 2011. Aspire Projects and Services LLC which is a specialized
engineering and services company had a turnover of RO 1.752 million during the year 2012.
Galfar Aspire Readymix LLC, which produces Readymix concrete, recorded a turnover of
RO 1.273 million during the year 2012.
25
Human Resources
Human Resources is a strategic business
partner of each and every business unit in Galfar.
Our objective is to foster development of our
employees through attractive and cohesive HR
policies, and a work environment which attracts
and motivates caliber workforce. We aim to be
the employer of choice in the industry.
In 2012, Galfar manpower strength was over
23,000. Galfar has a strong omanization
program to train and develop nationals and to
assist them to grow with the company.
Presently, among the private sector Galfar has
one of the largest number of Omani’s in the
Sultanate.
Quality, Health, Safety and Environment
Our Quality & HSE Management Systems are
periodically reviewed and updated so that they
remain relevant and comprehensive to meet
business expectations.
The upgrading of Quality Management System
to comply with the applicable ISO standards in
2011 was followed by the reissue of the Tier
III documentation in 2012 to align with the
current industry practices. Periodic risk based
surveillance audits by Det Norske Veritas (DNV)
against ISO 9001:2008, ISO 14001:2004,
OHSAS 18001:2007 and ISO 29001:2010
international standards continue to provide
assurance to stakeholders on our ability to
meet their expectations.
The ASME ‘U’ & ‘R’ Stamp Recertification by
the American Society of Mechanical Engineers
(ASME) was another significant achievement
of the year 2012 which demonstrates our
continued capability for the ‘Construction and
Repair of Pressure Vessels’.
During year 2012 we have worked 85 million man
hours and have driven 115 million kilometers
collectively in our projects throughout the
country, whilst achieving the best performance.
Our Lost Time Injury Frequency recorded for
the year 2012 is 0.24
Several achievements were recorded in terms
of man hours worked without Lost Time Injury
in our projects / units. The significant ones
are 13 million man hours in Off-Plot Delivery
Contract of Oil and Gas Unit, 18 million man
hours in Roads & Bridges Unit, 12 million man
hours in Oil and Gas Unit and 11 million man
hours in Environment Unit.
We are reviewing the performance on a monthly
basis and initiating actions for continual
improvement.
Risks
Risks are periodically identified and assessed.
The risks and control measures are presented
to and discussed with the board in every board
meeting.
The commitment of the Government towards
infrastructure development in the Oman makes
it attractive for new players to enter the market.
Notwithstanding this we expect our 2013
results to be better than 2012.
Our resource mobilization capabilities continue
to be our major strength. The equipment spread
available within Galfar remains unparalleled in
the local market. Each year the fleet is updated
and amended for the actual workload.During
the year the addition to fixed assets was
RO 31.654 Million.
Internal Controls Systems
The Board assures that there is a detailed
delegation of authority to the various levels of
management and adequate corporate control
of the organization. The Management is also
fully aware of its responsibility towards all
the stakeholders. The Company addresses
these issues by maintaining clearly defined
operating procedures which are updated as
and when necessary.
The Accounting Manual implemented in 2012,
is being reviewed for any upgrades, on a
periodic basis.
26
Outlook
The volume of work in Oman is high with the
announcement of many infrastructure projects.
In addition the oil and gas sectors development
plans remain very significant.
The Company’s order book position is healthy.
Galfar’s Order Book stood at RO 685 million at
the beginning of the year 2013.
We have active presence in all the sectors
namely Oil & Gas, Roads, Bridges and Airports,
Civil, Utilities and Services including Operation
and Maintenance, and have the preparedness
to take up any challenge whether in Roads,
Ports, Airports, Power, Water and Wastewater
Sectors. We have establishments in every
part of Oman, be it Jabal Akhdar, Musandam,
Hasik, Sohar, Sur, Duqm or Salalah to start up
projects swiftly.
This kind of versatility in operations and the
wide logistic base are difficult for others to
establish thus making Galfar a trusted one stop
solution provider for our esteemed customers.
The Indian operations of Galfar created
significant value and is expected to remain a
key growth area as the demand for roads and
highways is phenomenal. The Indian operation
have been recently awarded two major highway
projects during the fourth quarter of 2012 worth
RO 86 million.
Our subsidiary in Libya has been dormant
during the period and will be revived as soon
as the conditions are favourable.
Galfar recently registered a branch office
in KSA. We have also started the process of
prequalification in Saudi Arabia.
Under the visionary leadership of His Majesty
Sultan Qaboos, who in 42 years of his rule
has transformed this country into a powerful
modern economy in the region, we endeavor
to reach even higher standards of project
delivery through continuous introspection
of our procedures and systems and will lead
by action in Omanisation as a true Omani
enterprise.
Galfar’s broad image as a premier Omani
company with international presence is without
comparison, and we can deliver projects in all
the sections of engineering and construction
industry, with high quality standards in a safe
and timely manner to the entire satisfaction of
all stake holders.
Dr. P Mohamed Ali
Vice Chairman and
Managing Director
27
30
Parent Company Consolidated
Notes 2012 2012
RO’ 000 RO’ 000
320,615 328,817
25 3,560 7,687
324,175 336,504
26 (298,656) (307,633)
Profit on contracts 25,519 28,871
27 (10,034) (11,001)
15,485 17,870
28 (7,116) (7,829)
29 2,598 2,784
6 - (1,436)
10,967 11,389
24 (1,389) (2,183)
PROFIT AND COMPREHENSIVE
INCOME FOR THE YEAR9,578 9,206
Profit and comprehensive income
attributable to:
9,578 9,044
- 162
9,578 9,206
Basic and diluted earnings per
share attributable to the equity
shareholders of the parent company
30 0.029 0.027
31
Parent Company Consolidated
Notes 2012 2012
RO’ 000 RO’ 000
ASSETS
Non-current assets
4 107,534 116,803
5 1,105 -
6 8,719 9,729
7 125 145
22,249 22,249
139,732 148,926Current assets
8 32,593 32,828
9 189,462 195,889
10 44,778 45,313
11 21,654 17,451
12 12,631 12,674
13 1,736 3,468
302,854 307,623TOTAL ASSETS 442,586 456,549EQUITY AND LIABILITIES
Equity
14 33,000 33,000
15 16,503 16,503
17 11,000 11,106
18 - (1,019)
30,964 31,420
91,467 91,010
- 848
Total equity 91,467 91,858Non-current liabilities
19 22,612 22,900
20 8,658 8,788
24 7,120 7,302
33 5,109 5,437
32,828 32,828
76,327 77,255Current liabilities
21 58,094 61,903
22 35,650 35,650
19 32,393 32,694
33 4,008 4,261
23 143,165 150,925
24 1,482 2,003
274,792 287,436Total liabilities 351,119 364,691TOTAL EQUITY AND LIABILITIES 442,586 456,549
Net assets per share (RO) 31 0.277 0.276
32
Parent Company Consolidated
Notes 2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
OPERATING ACTIVITIES
10,967 11,389
22,214 22,824
(1,840) (1,888)
2,106 2,167
7,184 7,912
(68) (83)
- 1,436
40,563 43,757
(3,744) (3,788)
(24,749) (28,419)
(3,641) (156)
308 5,000
(5,499) (5,499)
9,578 9,578
12,816 20,473
(1,165) (2,290)
(902) (938)
10,749 17,245
INVESTING ACTIVITIES
(27,234) (31,654)
7,687 8,013
(113) (2,512)
(11,621) (11,624)
68 82
(31,213) (37,694)
FINANCING ACTIVITIES
12,171 14,679
9,422 8,951
9,800 9,800
(7,184) (7,912)
(3,960) (3,960)
20,249 21,558
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(215) 1,109
1,951 2,359
1,736 3,468
33
Sh
are
ca
pit
al
RO
’ 000
Sh
are
pre
miu
m
RO
’ 000
Sta
tuto
ry
rese
rve
RO
’ 000
Re
tain
ed
ea
rnin
gs
RO
’ 000
To
tal
RO
’ 000
(No
te 1
4)
(No
te 1
5)
(No
te 1
7)
Ba
lan
ce
at
1 J
an
ua
ry 2
011
Ba
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t 31 D
ec
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r 2
011
Ba
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31 D
ec
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be
r 2012
33,0
00
16,5
03
11
,00
03
0,9
64
91
,46
7
34
Att
rib
uta
ble
to
eq
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y h
old
ers
of
the
pa
ren
t co
mp
an
y
Sh
are
ca
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are
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ve
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ea
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To
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No
n-
co
ntr
ollin
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intr
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To
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eq
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y
RO
’ 000
RO
’ 000
RO
’ 000
RO
’ 000
RO
’ 000
RO
’ 000
RO
’ 000
RO
’ 000
(No
te 1
4)
(No
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5)
(No
te 1
7)
(No
te 1
8)
Ba
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1 J
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31 D
ec
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33,0
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16,5
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31,4
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Fo
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35
1 ACTIVITIES
2 SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
Accounting Convention
Changes in accounting policy and disclosures
IAS 12 Income Taxes (Amendment) - Deferred Taxes: Recovery of Underlying Assets
IFRS 7 Financial Instruments: Disclosures — Enhanced Derecognition Disclosure Requirements
Accounting policies
36
Basis of consolidation
Business combinations and goodwill
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
37
Investments in associates
Property, plant and equipment
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Business combinations and goodwill (Continued)
38
Capital work in progress
Available-for-sale investments
Inventories
Contract work in progress
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, plant and equipment (Continued)
39
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of non-financial assets
Financial instruments
Trade and other receivables
Term deposits
Cash and cash equivalents
Trade and other payables
40
Interest-bearing loans and borrowings
Borrowing costs
Leases
Group as a lessee
Derecognition of financial assets and liabilities
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
41
Impairment of financial assets
Offsetting
Provisions
Accruals for employees’ benefits
Dividend on ordinary shares
Taxation
Current income tax
Deferred taxation
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
42
Contract revenue and profit recognition
Sales and service income
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Taxation (Continued)
Deferred taxation (Continued)
43
Contract costs
Interest income
Dividend income
Directors’ remuneration
Foreign currency translation
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
44
Segment reporting
Significant accounting judgments, estimates and assumptions
3 STANDARDS ISSUED BUT NOT YET EFFECTIVE
The following standards, amendments and interpretations are not yet effective:
IAS 1 Financial Statement Presentation - Presentation of Items of Other Comprehensive Income
IAS 19 Employee Benefits (Revised)
IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)
IAS 32 Offsetting Financial Assets and Financial Liabilities — Amendments to IAS 32
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
45
IFRS 1 Government Loans - Amendments to IFRS 1
IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities — Amendments to IFRS 7
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements
IFRS 11 Joint Arrangements
3 STANDARDS ISSUED BUT NOT YET EFFECTIVE (Continued)
46
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
Annual Improvements May 2012
IFRS 1 First-time Adoption of International Financial Reporting Standards
IAS 1 Presentation of Financial Statements
IAS 16 Property Plant and Equipment
IAS 32 Financial Instruments, Presentation
IAS 34 Interim Financial Reporting
3 STANDARDS ISSUED BUT NOT YET EFFECTIVE (Continued)
47
4 P
RO
PE
RT
Y, P
LA
NT
AN
D E
QU
IPM
EN
T -
Pa
ren
t C
om
pa
ny
Land
RO
’ 000
Buuild
ing
and
cam
ps
RO
’ 000
Pla
nt
and
machin
ery
RO
’ 000
Mo
tor,
vehic
les
and
eq
uip
ment
RO
’ 000
Furn
iture
and
eq
uip
ment
RO
’ 000
Co
mp
ute
rs
and
so
ftw
are
RO
’ 000
Pro
ject
eq
uip
men
t
RO
’ 0
00
Cap
ital
wo
rk-i
n-
pro
gre
ss
RO
’ 0
00
To
tal
RO
’ 0
00
Co
st
1,2
78
25,5
96
114,4
50
69,9
55
13,1
75
3,1
55
13
,81
85
,06
32
46
,49
0
De
pre
cia
tio
n
-18,4
93
59,0
33
38,7
28
11,6
42
960
10
,10
0-
13
8,9
56
Ne
t b
oo
k v
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e
1,2
78
7,1
03
55,4
17
31,2
27
1,5
33
2,1
95
3,7
18
5,0
63
10
7,5
34
48
4 P
RO
PE
RT
Y, P
LA
NT
AN
D E
QU
IPM
EN
T -
Co
nso
lid
ate
d
Land
RO
’ 000
Buuild
ing
and
cam
ps
RO
’ 000
Pla
nt
and
machin
ery
RO
’ 000
Mo
tor,
vehic
les
and
eq
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ment
RO
’ 000
Furn
iture
and
eq
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ment
RO
’ 000
Co
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rs
and
so
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are
RO
’ 000
Pro
ject
eq
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men
t
RO
’ 0
00
Cap
ital
wo
rk-i
n-
pro
gre
ss
RO
’ 0
00
To
tal
RO
’ 0
00
Co
st
1,2
78
25,7
60
123,8
13
74,9
48
13,4
30
3,2
07
13
,93
25
,55
52
61
,92
3
De
pre
cia
tio
n
-18,5
25
62,6
33
41,1
18
11,7
62
974
10
,10
8-
14
5,1
20
Ne
t b
oo
k v
alu
e
1,2
78
7,2
35
61,1
80
33,8
30
1,6
68
2,2
33
3,8
24
5,5
55
11
6,8
03
49
4 PROPERTY, PLANT AND EQUIPMENT (Continued)
Parent Company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000
21,579 22,176
635 648
22,214 22,824
5 INVESTMENT IN SUBSIDIARIES
Proportion Place of
Principal of shares incorpo- 2012 2011
Name of the subsidiaries activity acquired ration Cost Cost
RO’ 000 RO’ 000
600
149
8
200
148
1,105
6 INVESTMENT IN ASSOCIATES
Name of the Associates Parent Company Consolidated
50
6 INVESTMENT IN ASSOCIATES (Continued)
2012 2011
RO’ 000 RO’ 000
5,366
35,110
(6,519)
(24,228)
Net assets and carrying amount of the investment 9,729
2011
RO’ 000
4,194
(1,436)
7 AVAILABLE FOR SALE INVESTMENTS
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
125 145
51
8 INVENTORIES
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
32,918 33,179
(325) (351)
32,593 32,828
9 TRADE RECEIVABLES
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
157,875 161,824
1,091 3,246
30,496 30,819
189,462 195,889
10 WORK IN PROGRESS
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
44,778 45,313
3,044 6,464
11 ADVANCES, PREPAYMENTS AND OTHER RECEIVABLES
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
9,495 4,886
3,705 3,951
5,231 5,340
576 606
1,230 1,230
1,284 1,284
133 154
21,654 17,451
52
12 DEPOSITS WITH BANKS
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
12,631 12,631
- 43
12,631 12,674
13 CASH AND BANK BALANCES
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
310 326
1,426 3,142
1,736 3,468
14 SHARE CAPITAL
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
Authorised:
50,000 50,000
Issued and fully paid:
33,000 33,000
53
14 SHARE CAPITAL (Continued)
15 SHARE PREMIUM
16 DIVIDEND
17 STATUTORY RESERVE
18 FOREIGN CURRENCY TRANSLATION RESERVE
54
19 TERM LOANS
Parent Company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
55,005 55,005
- 589
55,005 55,594
32,393 32,393
- 301
32,393 32,694
22,612 22,612
- 288
22,612 22,900
32,393 32,694
11,927 12,333
10,685 10,567
55,005 55,594
2012 2011
LIBOR + 1.75% to 2.00% LIBOR + 1.75% to 2.00%
4.99% to 8.25% 5.65% to 8.25%
20 EMPLOYEES’ END OF SERVICE BENEFITS
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
7,454 7,559
2,106 2,167
(902) (938)
8,658 8,788
55
21 BANK BORROWINGS
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
45,240 45,240
12,854 16,663
- -
58,094 61,903
22 SHORT TERM LOANS
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
35,650 35,650
23 TRADE AND OTHER PAYABLES
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
54,773 56,488
32,477 33,544
26,313 26,911
3,044 6,464
5,558 5,780
5,064 5,078
3,135 3,164
2,246 2,654
9,995 9,995
560 847
143,165 150,925
56
24 TAXATION
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
1,613 2,520
(224) (337)
1,389 2,183
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
1,034 1,927
1,613 2,520
- (154)
(1,165) (2,290)
1,482 2,003
57
24 TAXATION (Continued)
31 Dec
2012
RO’ 000
7,159
-
(39)
7,120
31 Dec
2012
RO’ 000
7,296
-
6
7,302
25 SALES AND SERVICES INCOME
Parent company Consolidated
2012 2012
RO’ 000 RO’ 000
3,216 4,562
344 2,085
- 1,040
3,560 7,687
58
26 CONTRACT COST
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
85,369 87,433
93,767 94,849
44,404 46,413
21,579 22,176
19,346 19,967
14,661 15,038
14,104 15,282
5,426 6,232
- 243
298,656 37,633
27 GENERAL AND ADMINISTRATIVE EXPENSES
Parent Company Consolidated
2012 2011 2012 2011
RO, 000 RO, 000 RO’ 000 RO’ 000
5,031 5,620
3,353 3,459
5,168 5,334
2,585 2,632
1,450 1,578
1,880 1,882
1,071 1,111
876 910
556 615
635 648
557 601
369 385
189 191
266 349
152 152
- 816
24,138 26,283
(14,104) (15,282)
10,034 11,001
59
28 NET FINANCING COSTS
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
7,184 7,912
(68) (83)
7,116 7,829
29 OTHER INCOME
Parent Company Consolidated
2012 2012
RO, 000 RO’ 000
1,840 1,888
(43) (18)
801 914
2,598 2,784
30 EARNINGS PER SHARE
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
9,578 9,044
330,000 330,000
0.029 0.027
31 NET ASSETS PER SHARE
Parent company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
91,467 91,010
330,000 330,000
0.277 0.276
60
32 RELATED PARTY TRANSACTIONS
Parent Company Consolidated
2012 2011 2012 2011
RO’ 000 RO’ 000 RO’ 000 RO’ 000
567 567
669 1,044
3,374 3,374
298 298
8,492 8,502
150 150
Parent Company Consolidated
2012 2012
RO 000 RO’ 000
697 697
8,798 4,189
9,495 4,886
Parent Company Consolidated
2012 2012
RO 000 RO’ 000
150 150
2,096 2,504
2,246 2,654
61
32 RELATED PARTY TRANSACTIONS (Continued)
Parent Company Consolidated
2012 2012
RO’ 000 RO’ 000
713 1,098
39 39
752 1,137
33 COMMITMENTS AND CONTINGENCIES
Parent Company Consolidated
2012 2012
RO’ 000 RO’ 000
193,971 212,767
21,760 21,760
144 144
1,005 1,005
216,880 235,676
Finance lease liabilities
Parent
2012 2011
Minimum
payments
Persent value
of payments
RO’ 000 RO’ 000
4,352 4,008
5,345 5,109
9,697 9,117
(580) -
9,117 9,117
62
33 COMMITMENTS AND CONTINGENCIES (Continued)
Consolidated
2012 2011
Minimum
payments
Persent value
of payments
RO’ 000 RO’ 000
4,352 4,261
5,926 5,437
10,278 9,698
(580) -
9,698 9,698
Legal cases
Penalties
34 BUSINESS SEGMENTS
63
34
BU
SIN
ES
S S
EG
ME
NT
S (
Co
nti
nu
ed
)
Co
nstr
uc
tio
nM
an
ufa
ctu
rin
gH
irin
gT
rain
ing
Elim
ina
tio
nC
on
so
lid
ate
d
2012
2012
2012
2012
20
12
20
12
335,0
29
1,2
73
1,7
41
1,0
41
(2,5
80
)3
36
,50
4
323,5
81
1,0
49
1,4
03
1,0
14
25
13
27
,29
8
11,4
48
224
338
27
(2,8
31
)9
,20
6
Se
gm
en
t a
sse
ts a
nd
lia
bilit
ies
459,6
21
1,8
03
3,2
56
154
(8,2
85
)4
56
,54
9
361,6
67
1,4
29
1,4
81
57
57
36
4,6
91
27,3
39
4,1
87
125
3-
31
,65
4
64
35 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT
Market risk
Interest rate risk
Foreign currency risk
Equity price risk
Credit risk
65
35 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (Continued)
Capital management
(A) CREDIT RISK
Parent Company Consolidated
2012 2012
RO’ 000 RO’ 000
52,745 53,068
203,744 210,383
21,654 17,451
12,631 12,674
1,736 3,468
292,510 297,044
Parent Company Consolidated
2012 2012
RO’ 000 RO’ 000
149,874 151,032
46,792 46,792
7,078 12,559
203,744 210,383
66
35 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (Continued)
(A) CREDIT RISK (Continued)
Parent Company Consolidated
Gross
RO’ 000 RO’ 000
31 December 2012
97,937 100,965
35,062 37,951
14,563 16,066
56,182 55,401
203,744 210,383
Parent Company Consolidated
Gross Impairment Gross Impairment
RO’ 000 RO’ 000
(B) LIQUIDITY RISK
a) Parent Company
Carrying
amount 0 - 90 days
91 - 180
days
181 - 365
days>365 days
Year endedRO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000
31 December 2012
67
35 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (Continued)
(B) LIQUIDITY RISK (Continued)
b) Parent company
Carrying
amount 0 - 90 days
91 - 180
days
181 - 365
days >365 days
Year ended RO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000
31 December 2011
292,580 174,741 41,244 23,007 53,588
a) Consolidated
Carrying
amount
0 - 90 days 91 - 180
days
181 - 365
days
>365 days
RO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000
b) Consolidated
Carrying 0 - 90 days 91 - 180 181 - 365 >365 days
amount days days
RO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000
(C) INTEREST RATE RISK
68
36
FA
IR V
AL
UE
S O
F F
INA
NC
IAL
IN
ST
RU
ME
NT
S
F
air
va
lue
s
Ca
rryin
g a
mo
un
tF
air
va
lue
2012
20
12
Gro
up
Pa
ren
tG
rou
pP
are
nt
Fin
an
cia
l a
sse
ts
195,8
89
189,4
62
195,8
89
18
9,4
62
145
125
145
12
5
4,8
86
9,4
95
4,8
86
9,4
95
16,1
42
14,3
67
16,1
42
14
,36
7
9,7
29
9,8
24
9,7
29
9,8
24
226,7
91
223,2
73
226,7
91
22
3,2
73
Fin
an
cia
l lia
bilit
ies
90,0
32
87,2
50
90,0
32
87
,25
0
2,6
54
2,2
46
2,6
54
2,2
46
61,9
03
58,0
94
61,9
03
58
,09
4
91,2
44
90,6
55
91,2
44
90
,65
5
245,8
33
238,2
45
245,8
33
23
8,2
45
69
37 KEY SOURCES OF ESTIMATION UNCERTAINTY
Estimates and assumptions
Impairment of accounts receivable
Percentage of completion
Impairment of inventories
Useful lives of property, plant and equipment
Impairment of equity investments