Muscat Securities Market

Market-Pre-Open

Market-Open

Muscat Securities Market

Financial ManagementGroup-5

PRAFUL ANCHALIYASHALLY RATHIVIJAY SANGTANISANYAM SINGHALPOONAM GAUNIYAL

Agenda

Economy of Oman Briefing

Market’s Profile General view Graphical view

Companies No. of companies Listing Procedure Merits & Demerits

Indices 30 Index objectives

Foreign Ownership Procedure & Regulations Incentives

3 Companies BankMuscat Oman United Insurance Company SAOG Oman Oil Marketing Company SAOG

Bibliography Credits

Oman's Economy

• Improved significantly since 1999 due to rising oil prices

• Moved ahead with privatisation of utilities

• Development of a body of commercial law to facilitate foreign investment

• Implementation of policies to reduce dependence on oil and expatriate labour

• Large amount of liquidity has led to development of mega projects like Industrial estates in Sohar

Muscat Securities Market

• Established by the Royal Decree issued on 21 June 1988

• Main purpose:

- Regulate and control Omani securities market

- Participate effectively for setting up Sultanate’s financial sector

• One of the highest regulated markets in the region

• Listed companies are required to publish quarterly financial results in accordance with International Accounting Standards

Muscat Securities Market

• Capital Market Authority (CMA), the regulatory body for MSM

• MSM is a govt. entity, financially and administratively independent from CMA but subject to its regulation

• Introduced new mechanisms to encourage stable dealings in securities and attract foreign investments

Bar Graph of MSM

Companies Listed

• Banking and Investment Sector : 69

• Industry Sector : 89

• Service Sector : 61

Rules for Listing

• The paid-up capital shall not be less than RO 2 million

• Company must have achieved a Net Profit during the last two years

• No. of days the company’s shares are traded should not be less than 30 and share turnover should not be less than 5% per annum

Listing Procedure (Omani Co.)

• Submit listing application along with :

- Commercial Register Certificate issued by Commercial Registrar

- Copies of company’s memorandum, article of association and the prospectus

- Copy of minutes of general meeting

- List of names of shareholders

Listing Procedure (Non-Omani Co.)

• Listing application should include :

- Company Information: name, location of head office, authorized signatories, date and place of constitution and capital

- Board of directors information: names of directors and executive management, remuneration, method of election and removal, no. of shares owned by each

Non-Omani Co. (Cont..)

• Info. on shares and shareholders

• Info. on company’s business: nature, changes and developments in last 3 years and its effects, future expansions

• Financial Statements: audited financial statements for last 3 years

Merits

• Creating a market for the company's shares

• Enhancing the status and financial standing of the company

• Increasing public awareness and public interest in the company and its products

• Providing the company with an opportunity to implement share option schemes for their employees

Merits (Cont..)

• Accessing to additional fund raising in the future by means of new issues of shares or other securities

• Facilitating acquisition opportunities by use of the company's shares

• Offering existing shareholders a ready means of realizing their investments

Demerits

• Increasing accountability to public shareholders

• Increasing costs in complying with higher level of reporting requirements

• Becoming more vulnerable to an unwelcome takeover

• Need to observe and adhere strictly to the rules and regulations by governing bodies

Demerits (Cont...)

• Relinquishing some control of the company following the public offering

• Suffering a loss of privacy as a result of media interest

Indices• MSM-30

- Established in 1992- Number of companies in each sector:

a) Banks & Investment : 10

b) Industry : 10

c) Service & Insurance : 10

Foreign Ownership

• Principal investment is in Oil sector

• Investments encouraged in areas like industry, agriculture and fishing through an initial 5-year tax exemption (subject to renewal)

• Foreign investments at MSM accounts for 30% in 2008 as compared to 16% in 2005

Foreign Ownership (Cont…)

• Foreign (non-GCC and non-arab) shareholding at MSM increased from 6.7% in 2005 to 12% in 2007

• Off late Raysut cement, Oman cables, Omantel and Bank Muscat have attracted foreign portfolio investments

3 Companies

Muscat Securities MarketOman United

Insurance CompanyOman Oil Marketing Company

Bank Muscat

BankMuscat

• The biggest financial service provider in Corporate Banking, Retail Banking, Investment Banking, Treasury, Private Banking and Asset Management

• 119 branches and about 320 ATMs and 91 CDMs

• Awarded “Best Bank in Oman” & “Gulf Excellence Award”

BankMuscat

• First Bank to receive ISO certification in the middle east region

• Plays a key role in development of investment banking & treasury

Financials

• Asset worth over USD 15 Billion

• Major & Strategic stakes:– 49% of share in BMI Bank in Bahrain– 35% in Saudi Pak Commercial Bank– 2.67% in HDFC Bank in India

• Dominant leadership position with an 87% share of the asset under management

• The dividend payout ratio has increased from 10%-15%

Graphical Representation

2009Righti st ’s View

Graphical Representation

2003

2004

2005

Left ist ’s View

Left ist ’s View

Left ist ’s View

Dividend Details

• 2008-09: Cash dividend aggregating to RO 21.5 million. (Rightist’s view)

• 2007: Cash dividend aggregating to RO 29.1 million.

• 2006: Cash dividend aggregating to RO 26.5 million.

• 2005: Cash Dividend aggregating to RO 14.9 million. (Leftist’s view)

• 2004: Cash Dividend aggregating to RO 12.8 million. (Leftist’s view)

• 2003: Cash Dividend aggregating to RO 7.3 million. (Leftist’s view)

OUIC, SAOG

• Established in 1985 to cater the future needs of general public and industrial, business and health medical sectors

• In 1999 it created auto repair division mainly to maximize OUIC’s motor insurance business

• Holds a market share of 14.5%

OUIC, SAOG

• Despite competition OUIC has achieved 25% growth in premium income

• Suffered huge losses in 2007 due to the claims after unusual weather conditions

Graphical Representation

2003

2004

2005

Left ist ’s View

Left ist ’s View

Middle-of-the-road View

Dividends

Leftist’s View

Middle-of-the-road View

Leftist’s View

OOMC, SAOG

• Established in 1959, now have over 100 employees

• 24% of retail market share with filling stations

• 50% owners of oil storage & distribution terminal, functioning in joint venture (JV) with Al- Maha supplying premier motor spirit, regular motor spirit, gas oil, jet A-1 and kerosene

OOMC, SAOG

• Omanoil caters to different segments of lubricant market:

• Highstreet• Commercial & Industrial• Rigs & Crushes• Franchise Workshops• Quick Lube - Lube Plus

Financials

• Retail business registered the biggest growth of 40%

• The performance of commercial and lubricant business has contributed to 15% and 23% increase in volume of sales

• Increase in profit after tax to RO 1.61 million

• Total sales volume has increased by 22%

Graphical Representation

2003

2004

2005

Middle-of-the-road View

Left ist ’s View

Left ist ’s View

Dividend Details

• 2007 - 47.5% CASH DIVIDEND i.e. RO 0.470 FOR RO 1 aggregating to RO 3.06m

• 2006 - 45% CASH DIVIDEND i.e. RO 0.450 FOR RO 1 aggregating to RO 2.9m

• 2005 - 30% CASH DIVIDEND i.e. RO 0.450 FOR RO 1 aggregating to RO 1.93m (Middle-of-the-road view)

• 2004 - 26% CASH DIVIDEND i.e. RO 0.260 FOR RO 1 aggregating to RO 1.67m (Leftist’s view)

• 2003 - 25% CASH DIVIDEND i.e. RO 0.250 FOR RO 1 aggregating to RO 1.61m (Leftist’s view)

Bibliography

• http://www.msm.gov.om/

• http://www.bankmuscat.com/

• http://www.ouic-oman.com/

• http://www.oomco.com/

• http://www.gulfbase.com/

THANK YOU

Market-Closed