OMAN REFRESHMENT COMPANY SAOG 11 NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 Legal status and principal activities Oman Refreshment Company SAOG ("the Company / the Parent company") is an Omani Joint Stock Company registered in the Sultanate of Oman on July 25, 1977 under the commercial registration no.01/05440/06. The Company’s Head Office is located at Al Ghubra and its registered address is PO Box 30, Postal code 111, CPO Airport, Sultanate of Oman. The principal activities of the Parent Company are the filling and distribution of soft drinks and trading in consumer packaged goods and related products primarily in the Sultanate of Oman. The Parent Company holds the franchise for filling and distribution of the entire range of Pepsi products in the Sultanate of Oman. During the year 2011, the Parent Company registered a subsidiary "Al Rawdah Integrated Trade & Investment Enterprises LLC" in Oman together with two other directors of the Parent Company as its shareholders. The two directors jointly own 70% of the shareholding in this subsidiary beneficially for and on behalf of the Parent Company, resulting in it being a wholly owned subsidiary of the Parent Company. There were no commercial activities undertaken by the subsidiary since inception. During the year, the Parent Company acquired 100% shareholding in Arabian Vending Machine LLC (‘the Subsidiary’). Arabian Vending Machine LLC is a limited liability Company registered and incorporated in the Sultanate of Oman. The Company’s principal activities are sale of vending machines and providing quality vending products. Refer to note 18 for details of major shareholders of the Company. Together, the Parent Company and its subsidiaries are referred to as “the Group”. The financial statements were authorized by the Board of Directors in the board meeting held on 4th February 2019. 2 Summary of significant accounting policies 2.1 Basis of preparation (a) Compliance with IFRS These financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), interpretations issued by the IFRS Interpretations Committee (IFRS IC), the requirements of the Commercial Companies Law of the Sultanate of Oman, 1974 (as amended) and comply with the disclosure requirements set out in the ‘Rules and Guidelines on Disclosure by issuer of Securities and Insider Trading’ is sued by the Capital Market Authority (CMA) of the Sultanate of Oman. (b) Historical cost convention These financial statements have been prepared on a historical cost basis except where otherwise described in the accounting policies below. (c) New and amended standards adopted by the Group The Group applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2018: IFRS 9 Financial Instruments; IFRS 15 Revenue from Contracts with Cutomers; Classification and Measurement of Share-based Payment Transactions – Amendments to IFRS 2; Annual Improvements 2014-2016 cycle; Transfers to Investment Property – Amendments to IAS 40; and Interpretation 22 Foreign Currency Transactions and Advance Consideration.
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OMAN REFRESHMENT COMPANY SAOG 11 11
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Legal status and principal activities
Oman Refreshment Company SAOG ("the Company / the Parent company") is an Omani Joint Stock Company
registered in the Sultanate of Oman on July 25, 1977 under the commercial registration no.01/05440/06. The
Company’s Head Office is located at Al Ghubra and its registered address is PO Box 30, Postal code 111, CPO
Airport, Sultanate of Oman.
The principal activities of the Parent Company are the filling and distribution of soft drinks and trading in
consumer packaged goods and related products primarily in the Sultanate of Oman. The Parent Company holds
the franchise for filling and distribution of the entire range of Pepsi products in the Sultanate of Oman.
During the year 2011, the Parent Company registered a subsidiary "Al Rawdah Integrated Trade & Investment
Enterprises LLC" in Oman together with two other directors of the Parent Company as its shareholders. The two
directors jointly own 70% of the shareholding in this subsidiary beneficially for and on behalf of the Parent
Company, resulting in it being a wholly owned subsidiary of the Parent Company. There were no commercial
activities undertaken by the subsidiary since inception.
During the year, the Parent Company acquired 100% shareholding in Arabian Vending Machine LLC (‘the
Subsidiary’). Arabian Vending Machine LLC is a limited liability Company registered and incorporated in the
Sultanate of Oman. The Company’s principal activities are sale of vending machines and providing quality
vending products.
Refer to note 18 for details of major shareholders of the Company.
Together, the Parent Company and its subsidiaries are referred to as “the Group”.
The financial statements were authorized by the Board of Directors in the board meeting held on 4th February
2019.
2 Summary of significant accounting policies
2.1 Basis of preparation
(a) Compliance with IFRS
These financial statements are prepared in accordance with International Financial Reporting Standards (IFRS),
interpretations issued by the IFRS Interpretations Committee (IFRS IC), the requirements of the Commercial
Companies Law of the Sultanate of Oman, 1974 (as amended) and comply with the disclosure requirements set
out in the ‘Rules and Guidelines on Disclosure by issuer of Securities and Insider Trading’ issued by the Capital
Market Authority (CMA) of the Sultanate of Oman.
(b) Historical cost convention
These financial statements have been prepared on a historical cost basis except where otherwise described in the
accounting policies below.
(c) New and amended standards adopted by the Group
The Group applied the following standards and amendments for the first time for their annual reporting period
commencing 1 January 2018:
IFRS 9 Financial Instruments;
IFRS 15 Revenue from Contracts with Cutomers;
Classification and Measurement of Share-based Payment Transactions – Amendments to IFRS 2;
Annual Improvements 2014-2016 cycle;
Transfers to Investment Property – Amendments to IAS 40; and
Interpretation 22 Foreign Currency Transactions and Advance Consideration.
OMAN REFRESHMENT COMPANY SAOG 12
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(d) New and amended standards adopted by the Group
The Group had to change its accounting policies following the adoption of IFRS 9 and IFRS 15. This is
disclosed in note 3. The other amendments listed above did not have any material impact on the amounts
recognised in prior periods and are not expected to significantly affect the current or future periods.
(e) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for
31 December 2018 reporting periods and have not been early adopted by the Group. The Group’s assessment of
the impact of these new standards and interpretations is set out below:
Title of the
standard
IFRS 16 Leases
Nature of
change
IFRS 16 was issued in January 2016. It will result in almost all leases being
recognised on the balance sheet by lessees, as the distinction between operating and
finance leases is removed. Under the new standard, an asset (the right to use the
leased item) and a financial liability to pay rentals are recognised. The only
exceptions are short-term and low-value leases.
Impact
The Group is currently in the process of assessing the effects on the financial
statements and hence it is not practical to disclose a reliable quantitative impact
until finalisation of this assessment.
Mandatory
application date
The Group will apply the standard from its mandatory adoption date of
1 January 2019.
There are no other standards that are not yet effective and that would be expected to have a material impact on
the entity in the current or future reporting periods and on foreseeable future transactions.
2.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Parent Company has control. The Parent Company controls an entity
when it 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.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-consolidated from the date that control ceaased.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The
cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost
of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as
goodwill.
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising
from such re-measurement are recognised in profit or loss.
OMAN REFRESHMENT COMPANY SAOG 13
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.2 Consolidation (continued)
(a) Subsidiaries (continued)
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.
When the Group ceases to have control any retained interest in the entity is re- measured to its fair value at the
date when control is lost, with the change in carrying amount recognised in profit or loss. 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 Group 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.
2.3 Revenue recognition
(i) Revenue from trading
The Group manufactures and sells food and beverage items in Sultanate of Oman. Sales are recognised when the
control of the products has transferred, being when the products are delivered to the customer, the customer has
full discretion over the use of the product, and there is no unfulfilled obligation that could affect customer’s
acceptance of the products. Delivery occurs when the products have been received by the customer and the risks
and obsolescence and loss have been transferred to the customer, and either the customer has accepted the
products in accordance with the purchase orders or the Group has objective evidence that all criteria of
acceptance have been satisfied.
The products are often sold with retrospective volume rebates based on aggregate sales over a 12 months period.
Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume
rebates. Accumulated experience is used to estimate and provide for the rebates, using the expected value
method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not
occur. A volume rebates liability (included in trade receivable) is recognised for expected volume rebates
payable to customers in relation to sales made until the end of the reporting period.
No element of financing is deemed present as the sales are made with credit terms of 120 days, which is
consistent with market practice.
A receivable is recognised when goods are delivered and accepted by the customer as this is the point in time
that the consideration is unconditional because only the passage of time is required before the payment is due.
(ii) Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods
or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does
not adjust any of the transaction prices for the time value of money.
OMAN REFRESHMENT COMPANY SAOG 14
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.4 Interest income and expense
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method
and interest received on funds invested. Financing costs are recognised as an expense in the statement of
comprehensive income in the period in which they are incurred.
Interest income is recognised in the statement of comprehensive income as it accrues, taking into account the
effective yield on the asset.
2.5 Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset
or assets or the arrangement conveys a right to use the asset.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight
line basis over the lease term.
2.6 Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The consolidated financial
statements are presented in ‘Rial Omani’, which is the Parent company’s functional and the Group’s presentation
currency.
Foreign currency transactions are translated into Rials Omani at the exchange rate prevailing on the transaction
date. Foreign currency assets and liabilities are translated into Rials Omani at the exchange rate prevailing at
the reporting date. Differences on exchange are dealt with in the consolidated and Parent Company’s statement
of comprehensive income.
2.7 Earnings and net assets per share
The Group presents earnings per share (“EPS”) and net assets per share data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Parent Company by the
weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding for the effects of all dilutive potential ordinary shares. Net assets per share is calculated by
dividing the net assets attributable to ordinary shareholders of the Parent Company by the weighted average
number of ordinary shares outstanding during the period.
2.8 Directors’ remuneration
Director’s remuneration has been computed in accordance with the Article 101 of the Commercial Companies
Law of 1974, as per the requirements of Capital Market Authority and will be recognised as an expense in the
consolidated and Parent Company’s statement of comprehensive income.
2.9 Dividend distribution
The Board of Directors of the Group recommends to the Shareholders the dividend to be paid out of the Group’s
profits. The Directors take into account appropriate parameters including the requirements of the Commercial
Companies Law of 1974 (as amended) and other relevant directives issued by CMA while recommending the
dividend. Dividends are recognised as a liability when declared and approved.
OMAN REFRESHMENT COMPANY SAOG 15
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.10 Income tax
Income tax on the results for the year comprises current tax calculated as per the fiscal regulations of the
Sultanate of Oman and deferred tax.
Current tax is recognised in the statement of comprehensive income as 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 income tax is provided, using the liability method, for all temporary differences arising between the tax
bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax
rates are used to determine deferred tax. Deferred income tax assets and liabilities are offset as there is a legally
enforceable right to offset these in Oman. The tax effects on the temporary differences are disclosed under non-
current assets as deferred tax.
Income tax on the results for the year comprises current tax calculated as per the fiscal regulations of the
Sultanate of Oman and deferred tax.
Current tax is recognised in the statement of comprehensive income as 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 income tax is provided, using the liability method, for all temporary differences arising between the tax
bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax
rates are used to determine deferred tax. Deferred income tax assets and liabilities are offset as there is a legally
enforceable right to offset these in Oman. The tax effects on the temporary differences are disclosed under non-
current assets as deferred tax.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the unused tax losses and credits can be utilised. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
The principal temporary differences arise from depreciation on property, plant and equipment, provision for
impairment of trade receivables and provisions for slow moving inventories.
2.11 Property, plant and equipment
(i) Recognition and measurement
Property, plant and equipment is stated at cost less accumulated depreciation and impairment, if any. The cost of
property, plant and equipment is the purchase price together with any incidental expenses. Subsequent costs are
included in the assets’ 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 Group and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive
income during the financial year in which they are incurred.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost includes any other
cost that is directly attributable to bringing the asset to a working condition for its intended use, and the costs of
dismantling and removing the items and restoring the site on which they are located.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal.
OMAN REFRESHMENT COMPANY SAOG 16
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.11 Property, plant and equipment (continued)
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within
“other income” in the statement of comprehensive income.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the cost of those assets. All other borrowing costs are recognised as expenses
in the period in which they are incurred.
(ii) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of
an item if it is probable that future economic benefits embodied within the part will flow to the Group and its
cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are
recognised in the statement of comprehensive income as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets
are assessed and if a component has a useful life that is different from the remainder of that asset, that component
is depreciated separately. Depreciation is recognised in the statement of comprehensive income on a straight-line
basis over the estimated useful lives of each part of the property, plant and equipment. The estimated useful lives
for the current and comparative periods are as follows:
Buildings 10 - 20 years
Leasehold improvements 2 - 5 years
Plant and machinery 3 - 10 years
Motor vehicles 3 - 5 years
Tools and equipment 3 - 20 years
Furniture, fixtures and office equipment 2 - 4 years
Coolers 5 years
Land is not depreciated as it is deemed to have indefinite life.
Capital work-in-progress is not depreciated until it is transferred into one of the above categories at the time
when it is ready for use.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted
prospectively if appropriate.
OMAN REFRESHMENT COMPANY SAOG 17
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.12 Intangible assets
(i) Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested
for impairment annually, or more frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
(ii) Customer contracts
Customer contracts acquired in a business combination are recognised at fair value at the acquisition date. They
have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment
losses. They are recognised at their fair value at the date of acquisition and are subsequently amortised on a
period of 5 years on a straight-line basis.
2.13 Investments in subsidiaries
(a) Classification.
Subsidiaries are all entities over which the Parent Company has control. The Parent Company controls an entity
when it 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.
(b) Valuation.
In the separate financial statements of the Parent Company, investments in subsidiaries are stated at cost less
any diminution in the value of specific investment, which is other than temporary. Investment income is
accounted for in the year in which entitlement is established.
2.14 Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its assets (or cash-generating units) to
determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any).
The loss arising on an impairment of an asset is determined as the difference between the recoverable amount
and carrying amount of the asset and is recognised immediately in the consolidated and Parent Company’s
statement of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount and the increase is recognised as income immediately, provided that the
increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised earlier.
OMAN REFRESHMENT COMPANY SAOG 18
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.15 Financial assets
(i) Classification
From 1 January 2018, the Group on initial recognition classifies its non-derivative financial instruments in the
following measurement categories:
those to be measured subsequently at fair value (either through other comprehensive income (FVOCI), or
through profit or loss (FVTPL), and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial instruments and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For
investments in equity instruments that are not held for trading, this will depend on whether the Group has made
an irrevocable election at the time of initial recognition to account for the equity investment at fair value through
other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets
changes
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group has transferred substantially all the
risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Debt instruments
There are three measurement categories into which the Group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. Interest income
from these financial assets is included in finance income using the effective interest rate method. Any
gain or loss arising on derecognition is recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as
separate line item in the statement of profit or loss.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are measured
at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of
impairment gains or losses, interest income and foreign exchange gains and losses which are
recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from equity to profit or loss and recognised in other
gains/(losses). Interest income from these financial assets is included in finance income using the
effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses)
and impairment expenses are presented as separate line item in the statement of profit or loss.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A
gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or
loss and presented net within other gains/(losses) in the period in which it arises.
OMAN REFRESHMENT COMPANY SAOG 19
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (continued)
2 Summary of significant accounting policies (continued)
2.15 Financial assets (continued)
(iii) Measurement (continued)
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has
elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification
of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such
investments continue to be recognised in profit or loss as other income when the Group’s right to receive
payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/ (losses) in the statement of
profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other changes in fair value.
(iv) Impairment
From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses associated with
its financial instruments carried at amortised cost. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables, see note 5.1 (b) for further details.
(v) Accounting policies applied until 31 December 2017
The Group has applied IFRS 9 retrospectively, but has elected not to restate comparative information. As a result,
the comparative information provided continues to be accounted for in accordance with the Group’s previous
accounting policy.
Classification
Until 31 December 2017, the Group classified its financial assets in the following categories:
financial assets at fair value through profit or loss,
loans and receivables,
held-to-maturity investments, and
available-for-sale financial assets.
The classification depended on the purpose for which the investments were acquired. Management determined
the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity,
re-evaluated this designation at the end of each reporting period.
Reclassification
The Group could choose to reclassify a non-derivative trading financial asset out of the held for trading category
if the financial asset was no longer held for the purpose of selling it in the near term. Financial assets other than
loans and receivables were permitted to be reclassified out of the held for trading category only in rare
circumstances arising from a single event that was unusual and highly unlikely to recur in the near term. In
addition, the Group could choose to reclassify financial assets that would meet the definition of loans and
receivables out of the held for trading or available-for-sale categories if the Group had the intention and ability to
hold these financial assets for the foreseeable future or until maturity at the date of reclassification.
Reclassifications were made at fair value as of the reclassification date. Fair value became the new cost or
amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date
were subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and
held-to-maturity categories were determined at the reclassification date. Further increases in estimates of cash
As per the credit policy of the Group, customers are extended a credit period of up to 90 days in the normal
course of business. However, in some cases, due to the market conditions and historical business relationship
with the customer the credit period may be extended by a further period of 60 days. The credit quality of
financial assets is determined by the customers history of meeting commitments, market intelligence related
information and management’s trade experience.
The aging of trade receivables at the reporting date for the Group and Parent Company was:
Group
Parent
Company Group
Parent
Company
2018 2018 2017 2017
RO RO RO RO
Not past due 4,446,033 4,411,033 4,555,045 4,555,045
Due up to 90 days 1,182,377 1,146,210 944,734 944,734
More than 90 days 1,099,980 1,063,814 619,899 619,899
6,728,390 6,621,057 6,119,678 6,119,678
With respect to exposures with banks, management considers the credit risk exposure to be minimal as the
Group deals with reputed banks. Management does not expect any losses from non-performance by these
counterparties. Cash at banks including deposits
Group
Parent
Company Group
Parent
Company 2018 2018 2017 2017
RO RO RO RO
P-2 2,598,225 2,598,225 180,455 180,455
P-3 17,153,010 17,153,010 23,652,642 23,647,825
Not rated 13,121,395 13,067,880 6,985,855 6,985,855
32,872,630 32,819,115 30,818,952 30,814,135
The rest of the statement of financial position item is cash on hand. The stated rating is as per the global bank
ratings by Moody’s Investors Service.
(ii) Impairment of financial assets The Group has trade receivables and other financial assets at amortised cost as financial assets that are subject to
IFRS 9’s new expected credit loss model. While cash and cash equivalents are also subject to the impairment
requirements of IFRS 9, the identified impairment loss was immaterial. Trade receivables The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristic and the days past due.
OMAN REFRESHMENT COMPANY SAOG 26
NOTES TO THE CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS