Report of Material Events
Dear Shareholders,
It is my pleasure, on behalf of the Board of Directors, to present to you the Unaudited Financial Statements of Salalah Mills Company along with its subsidiary for the First Half ended on 30TH June, 2010.
Sales
The total sales quantity by the parent company had increased by 6.7% during the first half of the current year compared to the first quarter of the year 2009. The total sales value during the first half of 2010 was RO 12 million, showing an increase of 1.5% only compared to the same period of 2009, due to lower selling prices in 2010 compared to 2009.
The subsidiary Company
The subsidiary company (Salalah Macaroni) made remarkable results during the first half of the current year. The net profit reached RO 396 thousand compared to RO 87 thousand, the net profit made during the first half of 2009. The Board of Directors had approved adding a long cut pasta line, which is expected to be in operation by the third quarter of 2011, this will increase the production lines to 3 with production capacity of more than 93 thousand metric tone per year.
Profit
The parent company made a net profit of RO 1,346,251 during the first half of the current year showing a decrease of 16.6% compared to the result of the same period of last year. This was due to the increase in the cost of wheat because of the stoppage of the Government subsidy and the increase in the shipping freight. While the consolidated group profit for the first Half of the year 2010 increased to RO 1,742,377, showing an increase of 2.4%.
Expansion Project
Dear shareholders, the new combined mill project for the production of flour and semolina is progressing as planned. In addition, the Board of Directors had approved the expansion of the mill building to accommodate a new production line.
Ahmed bin Abdullah Saeed Al Rawas
Chairman
SALALAH MILLS COMPANY (S.A.O.G)
Salalah – Sultanate of Oman
CONSOLIDATED AND PARENT COMPANY
INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
JUNE 30th 2010
Registered Office: Principal place of business:
P.O.Box: 67, Postal Code: 217 Raysut Industrial Estate
Al Awqadain Salalah
Salalah, Sultanate of Oman Sultanate of Oman
INDEX
Page / ExhibitChairman’s report / 1
Balance sheet as of June 30th 2010 / 2 / A
Statement of income for the 6 Months ended
June 30th 2010 / 3 / B
Statement of changes in shareholders' equity
for the 6 Months ended June 30th 2010 / 4 / C
Statement of cash flows for the for the 6 Months ended
June 30th 2010 / 5 / D
Notes to the financial statements / 6 - 24
4
SALALAH MILLS COMPANY (S.A.O.G)Salalah – Sultanate of Oman
BALANCE SHEET AS OF JUNE 30th 2010
EXHIBIT - A
Parent Company / Consolidated
ASSETS / Note / 30/06/2010 / 30/06/2009 / 30/06/2010 / 30/06/2009
Current Assets: / RO. / RO / RO. / RO.
Cash at bank and in hand / 5 / 3,484,036 / 268,265 / 4,018,263 / 413,500
Margin deposit / 6 / 222 / 222 / 222 / 222
Receivables and prepayments / 7 / 4,062,530 / 4,346,057 / 4,170,039 / 4,930,178
Investments / 8 / 293,000 / 160,000 / 293,000 / 160,000
Inventories / 9 / 7,938,724 / 5,796,975 / 8,396,503 / 6,676,134
Total Current Assets / 15,778,512 / 10,571,519 / 16,878,027 / 12,180,034
Non-current Assets:
Advance for machinery / 10 / 447,110 / 404,166 / 447,110 / 404,166
Property, plant and equipment / 11 / 6,729,597 / 6,360,279 / 11,298,581 / 10,927,489
Investment in subsidiary / 12 / 2,240,000 / 1,600,000 / -- / --
Total Non-current Assets / 9,416,707 / 8,364,445 / 11,745,691 / 11,331,655
TOTAL ASSETS / 25,195,219 / 18,935,964 / 28,623,718 / 23,511,689
LIABILITIES AND EQUITY
Current Liabilities:
Bank borrowings / 13 / -- / 796,925 / -- / 821,925
Payables and accruals / 14 / 11,967,204 / 6,129,423 / 11,859,590 / 8,087,526
Term loans, current maturities / 15 / 300,000 / 300,000 / 300,000 / 300,000
Murabha Facility / 15A / -- / -- / 491,534 / 414,535
Provision for Income Tax / 16 / 183,786 / 208,504 / 183,786 / 208,504
Total Current Liabilities / 12,450,990 / 7,434,852 / 12,834,910 / 9,832,490
Non-current Liabilities:
Term loans, excluding current maturities / 15 / 904,853 / 1,046,400 / 904,853 / 1,046,400
Murabaha Facility / 15A / -- / -- / 1,049,919 / 1,422,128
Deferred Government Grant / 15 / 221,448 / 379,901 / 221,44822 / 379,901
Deferred tax liability / 16 / 233,006 / 241,465 / 233,006 / 241,465
Total Non-current Liabilities / 1,359,307 / 1,667,766 / 2,409,226 / 3,089,894
Total Liabilities / 13,810,297 / 9,102,618 / 15,244,136 / 12,922,384
Shareholders’ Equity:
Share capital / 17(a) / 4,125,000 / 3,750,000 / 4,125,000 / 3,750,000
Share Premium / 17(b) / 222,040 / 597,040 / 222,040 / 597,040
Legal reserve / 17(c) / 1,072,954 / 773,009 / 1,072,954 / 773,009
general reserve / 17(d) / 1,071,084 / 771,139 / 1,071,084 / 771,139
Retained earnings / 4,893,844 / 3,942,158 / 5,364,027 / 3,850,818
Total Shareholders’ equity / 11,384,922 / 9,833,346 / 11,855,105 / 9,742,006
Minority interest in subsidiary / -- / -- / 1,524,477 / 847,299
Total Equity – Exhibit – C / 11,384,922 / 9,833,346 / 13,379,582 / 10,589,305
TOTAL LIABILITIES AND EQUITY / 25,195,219 / 18,935,964 / 28,623,718 / 23,511,689
0 / 0 / 0 / 0
Net Assets Per Share / 18 / 0.276 / 0.262 / 0.287 / 0.260
The Board of Directors approved these financial / statements / for issue on / ------
Chairman Director
THE ACCOMPANYING NOTES 1 TO 31 FORM AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
SALALAH MILLS COMPANY (S.A.O.G)Salalah – Sultanate of Oman
STATEMENT OF INCOME
FOR THE PERIOD ENDED JUNE 30th 2010
EXHIBIT – B
Parent Company / Consolidated
Note / 30/06/2010 / 30/06/2009 / 30/06/2010 / 30/06/2009
RO. / RO. / RO. / RO.
Revenue / 12,011,698 / 11,827,515 / 14,798,739 / 13,583,470
Cost of revenue / 19 / (9,972,367) / (9,492,724) / (12,084,695) / (10,927,309)
gross profit / 2,039,331 / 2,334,791 / 2,714,044 / 2,656,161
Administrative and general expenses / 20 / (506, 657) / (429,249) / (705, 854) / (584,174)
Selling and promotion expenses / 22 / (19,828) / (16,146) / (43,118) / (26,313)
Other Income / 23 / 63,458 / 24,427 / 71,926 / 34,012
Net financing costs / 24 / (50,564) / (81,114) / (115,132) / (159,915)
-- / -- / -- / --
Profit for the year before taxation / 1,525,740 / 1,832,709 / 1,921,866 / 1,919,771
Provision for taxation / 16 / -179,489 / -218,125 / -179,489 / -218,125
Profit for the year / 1,346,251 / 1,614,584 / 1,742,377 / 1,701,646
Basic earnings per share / 25 / 0.033 / 0.043 / 0.042 / 0.045
Equity holders of parent company / 1,346,251 / 1,599,772 / 1,692,777
Minority interest / 142,605 / 8,869
1,742,377 / 1,701,646
THE ACCOMPANYING NOTES 1 TO 31 FORM AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
SALALAH MILLS COMPANY (S.A.O.G)Salalah – Sultanate of Oman
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30TH, 2010
EXHIBIT – C
Share capital / Share Premium / Legal reserve / general reserve / Proposed dividend / Retained earnings / Minority interest / Total
Parent Company: / RO. / RO. / RO. / RO. / RO. / RO. / RO. / RO.
Shareholders' equity as of 01/01/2009 / 3,750,000 / 597,040 / 773,009 / 771,139 / - / 3,079,924 / -- / 8,971,112
Movement during 2009:
Share Premium / - / - / - / - / - / - / - / -
Profit for the year - Exhibit - B / -- / -- / -- / -- / -- / 2,999,457 / 2,999,457
Dividend paid / -- / -- / -- / -- / - / (750,000) / -- / (750,000)
Directors Remuneration / (2,349) / (2,349)
Proposed dividend / -- / -- / -- / -- / -- / -- / -- / -
Transfers / -- / -- / 299,945 / 299,945 / -- / (599,890) / -- / 0
Shareholders' equity as of Jan 1, 2010 - Exhibit - A / 3,750,000 / 597,040 / 1,072,954 / 1,071,084 / - / 4,727,142 / - / 11,218,220
Movement during 2010 / 375,000 ( / 375,000)
Profit for the period - Exhibit – B / -- / -- / -- / -- / 1,346,251 / 1,346,251
Dividend paid / -- / -- / -- / - / (1,125,000) / -- / (1,125,000)
Proposed Dividend / 0
Director Remuneration / (54,549) / (54,549)
Transfers / -- / -- / -- / -- / -- / -- / -- / --
Shareholders' equity as of 30th June 2010 - Exhibit - A / 4,125,000 / 222,040 / 1,072,954 / 1,071,084 / - / 4,893,844 / - / 11,384,922
Consolidated:
Shareholders' equity as of 01/01/2009 / 3,750,000 / 597,040 / 773,009 / 771,139 / - / 2,930,514 / 815,957 / 9,637,659
Movement during 2009: / -
Right Issue / - / - / - / - / - / - / - / -
Share Premium / - / - / - / - / - / - / - / -
Profit for the year - Exhibit - B / -- / -- / -- / -- / 3,365,529 / 205,915 / 3,571,444
Dividend paid / - / - / - / - / - / (750,000) / -- / (750,000)
Directors Remuneration / - / - / - / - / - / (2,349) / - / - / 2,349
Minority capital Investment / - / - / - / - / - / - / - / -
Transfers / -- / -- / 299,945 / 299,945 / -- / (599,890) / -- / -
Shareholders' equity as of Dec 31, 2008 - Exhibit - A / 3,750,000 / 597,040 / 1,072,954 / 1,071,084 / - / 4,943,804 / 1,021,872 / 12,456,754
Movement during 2010: / - / - / -
Additional Shares issued / 375,000 / (375,000) / 360,000 / 360,000
Profit for the year - Exhibit – B / - / - / -- / -- / -- / 1,599,772 / 142,605 / 1,742,377
Dividend paid / - / - / - / - / - / (1,125,000) / - / - / (1,125,000)
Proposed Dividend / - / - / - / - / 0 / 0 / -
Director Remuneration / - / - / (54,549) / - / (54,549)
Transfers / -- / -- / -- / -- / -- / -- / -- / --
Shareholders' equity as of 30 June 2010 - Exhibit - A / 4,125,000 / 222,040 / 1,072,954 / 1,071,084 / - / 5,364,027 / 1,524,477 / 13,379,582
THE ACCOMPANYING / NOTES 1 TO / 31 FORM AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
SALALAH MILLS COMPANY (S.A.O.G)
Salalah – Sultanate of Oman
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED JUNE 30th, 2010
EXHIBIT - D
Parent Company / Consolidated30/06/2010 / 30/06/2009 / 30/06/2010 / 30/06/2009
RO. / RO. / RO. / RO.
OPERATING ACTIVITIES:
Cash receipts from customers / 12,352,534 / 10,908,173 / 14,648,525 / 13,262,778
Cash paid to suppliers and employees / (11,188,653) / (7,635,939) / (13,273,826) / (9,519,786)
Cash from operations / 1,163,881 / 3,272,234 / 1,374,699 / 3,742,992
Dividend & Directors Remuneration / (1,179,549) / (750,000) / (1,179,549) / (750,000)
Preoperative Expenses / -
Income Tax Paid / (403,460) / (236,509) / (403,460) / (236,509)
Net financing Costs / (56,844) / (83,073) / (122,270) / (156,906)
Cash flows from operating activities / (475,972) / 2,202,652 / (330,580) / 2,599,577
INVESTING ACTIVITIES:
Adv for Machinery / - / (404,166) / - / (404,166)
Purchase of property, plant and equipment / (603,680) / (773,834) / (685,824) / (821,064)
Purchase of investment / (133,300) / - / - / -
Net cash (used in) investing activities / (736,980) / (1,178,000) / (1,238,251) / (1,225,230)
0
FINANCING ACTIVITIES: / 0
Shares issued / - / 1,000,000 / -
Short term loans / 0 / (2,083,076) / - / (2,148,075)
Long Term Loans / (300,000) / (294,120) / (494,447) / (294,120)
Loan to subsidiary / 0 / 160,000 / - / -
Margin deposit / - - - / - / - / -
Net cash (used in) financing activities / (300,000) / (2,217,196) / 505,553 / (2,442,195)
-1,512,952 / (1,063,278)
Net (decrease)/increase in cash and cash / (1,512,952) / (1,192,544) / (1,063,278) / (1,067,848)
Equivalents
Cash and cash equivalents at the beginning of / 4,996,988 / 1,460,809 / 5,081,541 / 1,481,348
the period
Cash and cash equivalents at the end of the / 3,484,036 / 268,265 / 4,018,263 / 413,500
period - (note 5)
THE ACCOMPANYING NOTES 1 TO 31 FORM AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
SALALAH MILLS COMPANY (S.A.O.G)
Salalah - Sultanate of Oman
NOTES TO THE FINANCIAL STATEMENTS
1. LEGAL STATUS AND PRINCIPAL ACTIVITIES
Salalah Mills Company SAOG ("the Parent Company") is an Omani general joint stock company registered in the Sultanate of Oman on September 25, 1995 under the commercial registration no.2/10366/4. The Parent Company is engaged in the milling of wheat and selling wheat flour, bran and feed.
The consolidated financial statements of the Company comprise the Parent Company and its subsidiary (together referred to as ‘the Group’). The details of the subsidiary set up during the period is as follows: