Annual Report 2014

Annual Report 2014 - Board of Directors' Report

On behalf of the Board of Directors, I am pleased to submit the annual report of Al Maha Petroleum Products Marketing Co. SAOG, to you for the year ended 31 December 2014, which marks the completion of 20 years of our operations.

Overview

Even though oil prices have declined during the last quarter of 2014, the Oman's economy continues to remain strong and looks well placed to mitigate the risks caused by the oil price fall.

2014 was a year when your Company continued to progress at a faster pace. For the financial year ended 31 December 2014, your Company recorded sales of RO 369.7 million, an increase of 16.1% (RO 51.2 million) over 2013 and net profit has reached RO 10.7 million, an increase of 3.1% over 2013.  

Total equity has increased to RO 48.6 million at the end of 2014 from RO 44.8 million at the end of 2013, registering a growth of 8.5 %.

Earnings per share have also increased to RO 0.155 in 2014, compared to RO 0.151 in 2013(earnings per share of 2013 were restated due to splitting of each share into 10 shares on 25 March 2014)

Major events during the year

1) Capitalising on the rapidly growing demand for petroleum products, we expanded our filling stations network by opening 6 brand new filling stations in 2014. Now there are 188 retail outlets in various locations in Oman, with another 6 stations in various stages of construction.

As part of the ongoing rebranding programme, your Company, during the year, continued its dynamic and innovative approach to offer our customers various services and products in a modern ambience. Since the commencement of the rebranding process, 59 existing filling stations have been rebranded & refurbished till the end of 2014. 

2) The commercial sales segment continued to deliver strong sales performance during the year in a challenging business environment through effective marketing strategies and responsiveness to changing customer needs.

3) Backed up by new contracts won during the year, the aviation sales segment also recorded a significant growth.

4) With the objective to make your Company's shares more attractive and affordable to investors, the Extraordinary General Meeting of the Company held on 25 March 2014 resolved to split each share having nominal value of one Riyal Omani into 10 shares with a nominal value of one hundred Baisa per share. As a result of this, the total number of issued & paid-up shares of the Company has increased from 6.9 million shares to 69 million shares.

5) On 24 December 2014, the Managing Director (at that time) & the Senior Marketing Manager (at that time) of the company were called & questioned by the concerned authorities. Subsequently, a court case was initiated against the two employees in their personal capacities.  The Board of Directors resolved on 28 December 2014 to suspend the services of the two employees until further notice & nominated on 30 December 2014 Al Sayyid Munther Saif Hamed Al-Busaidi - the Deputy Chairman, to take over the responsibilities of the managing director until further notice .

Based on an independent legal opinion, the company cannot be held liable for the wrongful acts of these two employees especially because if the allegations against them are proved, it will be a case where the two employees were acting outside the scope of their lawful authority & will be liable to any party who suffers loss arising from their actions.

The Board of Directors has taken necessary measures to ensure that internal controls are in place in all business areas.

Market share

Your Company's market share in 2014 increased to approximately 34% based on the information published in the financial results of the other petroleum products marketing companies.

Reliance on suppliers / customers

The Oman Refineries and Petrochemical Company LLC, continues to be the sole supplier of petroleum products from its depots in Mina Al Fahal, Sohar & Salalah (Raysut).

Our customers portfolio included commercial & government organizations and no sales were made to any of our customers which exceeded 10% of total sales in 2014.

Future plans

Despite the decline of oil prices, the Government has already reiterated that development projects would continue and ensured that steps are being taken to mitigate the negative effects of the oil price slump. Your Company looks for an optimistic year ahead for sustainable growth in our business.

Dividend

In line with our consistent dividend policy of maintaining a sustainable dividend payment, which will address the financial strength of the Company, support its long term strategies and at the same time, will pay a reasonable dividend to the shareholders, the Board of Directors has recommended a cash dividend of 110% of share capital (Baiza 110 per share) against 2014 profit, subject to the approval of the shareholders' Annual General Meeting.

Below are the dividends declared since 2009 :

 

2014

2013

2012

2011

2010

2009

Cash dividend :

 RO '000

 % of share capital

 

7,590

110%

 

6,900

100%

 

6,210

90%

 

5,865

85%

 

 4,830

 70%

 

3,795

55%

 

Social responsibility

Your Company is committed towards being a responsible corporate and will continue to participate in community engagement activities to create long-term benefit for the community and society at large.

Further. Your Company is committed to continuing efforts to recognise hazards, assess health, safety and environment risks in our operations and taking steps to mitigate those risks to enhance our safety performance.

Acknowledgement

On behalf of the Board of Directors, I take this opportunity to express our most humble gratitude and loyalty to His Majesty Sultan Qaboos Bin Said, who has been providing ideal political, economic, and financial framework for all the sectors of the economy to flourish.

We thank our shareholders and customers for their continued support. We extend our thanks to the officials of Capital Market Authority and Muscat Securities Market for their valuable support and co-operation. We also appreciate the dedicated and committed service of our staff members.

On behalf of the Board of Directors

 

Noor Bin Mohamed Bin Abdul Rahman
Chairman
22 February 2015