Professional Documents
Culture Documents
CONTENTS
About EHC Group
EHC Values
10
Board Members
12
Chairmans Report
14
CEOs Report
16
23
Financial Highlights
24
25
27
30
37
INTEGRITY
Keeping commitments and promises.
Representing the truth.
Acting in the best interests of the customer, company,
team and individual.
Adhering to the companys ethics.
Accurately representing own competencies.
RESPECT
Being sensitive to others time.
Recognizing contributions made byothers.
Supporting work/ life balance needs.
Treating others impartially and with dignity.
Practicing patience and active listening.
QUALITY
Insisting on high quality.
Making quality customer service a top priority.
Striving for continuous improvement.
Providing timely and constructive performance feedback.
Recruiting and developing quality staff.
CUSTOMER FOCUS
Making customers a top priority.
Considering long and short-term customer needs.
Delivering on commitments to customers.
Taking responsibility for improving customer service.
PROFESSIONALISM
Seeking and providing honest feedback.
Developing skills.
Considering organizational needs.
Sharing expertise and experience.
Supporting and mentoring others.
BOARD MEMBERS
12
LEADERSHIP TEAM
Mr. Vishwanath
CFO
CHAIRMANS Report
Dear Shareholders,
On behalf of the Board of Directors of the Electricity Holding Company SAOC (EHC), I am
pleased to present the annual report for the EHC Group for financial year ended 31 December
2012.
Operational Performance
FY2012, the EHC Group has continued to grow strongly contributing to the overall economic development of the country. Compared to 2011, the number of customers has increased by 8.6%
to 790,272, the electricity supplied has increased by 12.8% to 20,960 GWh and the Main interconnected system losses has marginally increased to 13.8% from 12.8%. The marginal increase
in system loss in 2012 is mainly due to the manpower issues faced with the outsourced meter
reading and billing contractors. Nevertheless, action has been taken to mediate the situation to
improve the meter reading to billing cycle.
The group companies have incurred capital expenditure of RO 242 million on network expansion compared to RO 286 million in 2011. EHC Group consisted of a staff strength of 2,696 as at
31 December 2012 of which 89% or 2,399 were Omani Nationals compared to 88% Omanisation
in 2011.
Financial Performance
The gross operating revenue of the Group increased by 17.6% from RO 560.3 million in 2011
to RO 659.1 million in 2012, the net profit after tax increased by 36.0% from RO 62.3 million
to RO 84.7 million, mainly due to increase in customers numbers and higher consumptions.
14
Strategic Direction
During the year, the EHC group has established new Vision, Mission and Values to focus on the
following key areas of activities to improve the people capabilities to ultimately strengthen our
customer relationship by delivering higher level of customer value added services:
1.
2.
3.
4.
5.
Acknowledgements
On behalf of the Board members, I would like to express our sincere gratitude to His Majesty Sultan Qaboos Bin Said for his support to the electricity and related water sector and for his strong
and wise leadership, which has paved the way for the ongoing development of Oman.
I would like to take this opportunity to thank all our customers, suppliers and all others who
have contributed to the success of the EHC Group.
I also thank our CEO, Mr. Omar Al-Wahaibi and CEOs/GMs of the subsidiary companies, the management team of the Group and all staff of the EHC Group for their dedication and commitment
to the continued growth and development of the Group.
15
Dear Shareholders,
Through the evaluation of past experiences and people engagement, the Group has collectively
developed a new Group Vision, Mission and Values to pave the direction and to commit to
progress towards delivery of higher value added services to customers and to secure financial
sustainability for the future of the sector.
The Group strategies provide a roadmap towards business performance goals for the coming
years. They have been established based on the following pillars:
1. Human Resource Development will continue to unfold and develop the talent and
capability of the Omani work force to meet the future challenges and developments
2. Health, Safety and Environment will ensure we remain committed to leading
safety practices and cultures across all of our businesses and continue driving
improvements in processes, procedures and individual behaviors
3. Customer Service will continue to create new innovations and environment to
improve the customer services, needs and expectations along with strengthening
our customer service team to cultivate the client and customer relationship culture
4. Asset Management will improve the asset capability and reliability and continue to
focus on minimizing risk and the associated maintenance cost.
5. Communication will ensure timely, transparent and positive communication with
all stakeholders to foster a close and co-ordinal relationship
16
The key part of the journey is the implementation of our new operating model which defines
that all parts of the group should work together to create a faster, less complex and more cooperative environment, thereby enhancing transparency, management accountability and
enabling rapid corrective action where required.
Challenges Ahead
In 2013 we will continue laying down the foundation and program designed to unlock our full
potential and capabilities. The key challenge is to turn our strategies into action and realize the
desired benefits in the future. This challenge can only be overcome by the combination of our
unique capabilities and talented management within the Group coming together to deliver the
Group to the next phase of achievement. Nevertheless, I am confident that with the exceptional
track record of the Groups Leadership in leading, growing and developing business will ensure
successfull delivery of the strategic initiatives.
Thank you
I would like to thank the Groups Leadership Team for their commitment to the future development
of the group and commitment to execute and ensure the success of the Group initiatives.
I would also like to thank all our employees for their hard work, willingness to embrace changes
and the remarkable effort and commitment towards achieving a successful 2012.
Finally I would like to thank the Board of Directors for their support and guidance.
Omar Al-Wahaibi
CEO
17
RO 3
million
230
31-40
+51
41-50
Investment in Employees (RO millions)
5.9
Million
6.1
Million
5.5
Million
Fatality
Transmission Company
for Majan
19
CUSTOMER SERVICE
During 2012, EHC group defined and agreed on the first
customer service policy, which set the guidelines for
managing customer relations and defining the priorities
of customer service in the distribution companies. Based
on this policy the 5 distribution companies devised and
95%
Efficiency at Customer
Call Centers
80%
85%
70%
Launching of a new Customer Service outlet in Muscat City Centre for MEDC
20
ASSET MANAGEMENT
The Companies performed well against the
initial Asset Management KPIs achieving
between 80 and 100% of targets.
The aim of the Group Asset Management strategy
implementation program is to enhance the asset
management systems of the six participating subsidiaries,
MEDC, MJEC, MZEC, OETC, RAECO and DPC. Enabling
them to be accredited to PAS 55/ISO certification,
an international standard for asset management, by
December 2015 in order to provide improved reliability
of supply to EHC Group customers and progressively
meet sector compliance obligations.
The program is based around 3 key themes of work;
The development of the technical asset
management requirements such as policy,
strategy and process design.
Building the internal asset management people
capability and capacity within the companies.
Providing appropriate asset management IT based
tools and techniques.
The focus of 2012 was to establish a sound foundation
for implementing best practice asset management
systems and has initially focused on:
Transformer at Buraimi
Annual Report 2012
21
COMMUNICATION
The sustainability and success of the Groups strategy is highly dependent on how it is viewed by key stakeholders and
communications function forms a critical part of building, maintaining and protecting such reputations. Effective
corporate communications offers a framework for effective coordination of all internal and external communication.
It is therefore critical that a message is transmitted in a coherent, credible and ethical manner.
In order to ensure the establishment of best practices communication strategy and policy for EHC and group of
companies, Group Communications and CSR Department has been formulated under EHC to oversee all the group
initiatives/issues and provide direction and resources in the following strategic initiatives:
1. Knowledge Sharing: To encourage knowledge and best practice sharing within the EHC Group of companies.
2. Demand Side Management:
a. To influence customer behavior with the objective of reducing average consumption per customer and the
overall peak demand.
b. To influence decision makers in the government to support policies to introduce new building codes and
specification aiming at reducing electricity consumption.
c. To influence decision makers in the government and big organizations to implement measure to reduce
their organization electricity consumption.
d. To demonstrate to the general public the support they are getting from the government that is making
their life much more comfortable.
3. Communication Policy and Processes:
a. Enable a streamlined and integrated communications approach to be implemented across EHC internal /
external stakeholders
b. Ensure the introduction of a practical and effective communications approach to seamlessly engage
external stakeholders as a group and as individual subsidiaries
4. To utilize the IT toward applying best practice in communication.
Operational Highlights
Energy Sold
Increase by 13%
Water Sold
Increase by 14%
Customer Numbers
Increase by 9%
Key Financials
Increase by 36%
Increase by 19%
Decrease by 7%
2012
2011
% Change
RO 000s
121,673
82,361
48%
RO 000s
84,686
62,291
36%
RO 000s
167,172
227,333
-26%
RO 000s
199,225
153,444
30%
Capital expenditure
RO 000s
238,656
285,510
-16%
Total Assets
RO 000s
2,176,708
1,933,909
13%
Total Equity
RO 000s
1,065,203
984,446
8%
Key Ratios
Earnings Per Share
RO
42.34
31.15
36%
RO
83.59
113.67
-26%
RO
532.60
492.22
8%
Key Operations
Electricity (MIS)
Units Generated
GWh
3,354
3,691
-9%
Units Purchased
GWh
18,464
15,548
19%
Units Transmitted
GWh
21,041
18,508
14%
Units Sold
GWh
18,503
16,375
13%
13.8
12.8
8%
GWh
4.4
4.0
11%
Units Generated
GWh
1,518
1,840
-18%
Units Purchased
GWh
1,431
716
100%
Units Sold
GWh
2,457
2,138
15%
16.7
15.5
8%
Distribution Loss
Max. Transmission system demand
Electricity (Rural*)
System Loss
Water
Units Generated
M CuM
52.4
49.5
6%
Units Purchased
M CuM
118.0
98.6
20%
Units Sold
M CuM
167.8
147.8
13%
Customers
MIS
Number
695,345
641,137
8%
Rural System
Number
94,927
86,346
10%
Total
Number
790,272
727,483
9%
Number
2,696
2,639
2%
Staff Count
* Rural System includes RAEC & Salalah systems
23
FINANCIAL HIGHLIGHTS
Total Revenue (increase RO 98.8 million)
24
790,272
4,872 GWh
POWER GENERATED Power production in the group decreased by 12% to
4,872 GWh compared to 5,531 GWh in 2011. This is in
line with plant retirement.
25
52.4 MCuM
WATER DESALINATION -
118.0 MCuM
13.8%
- DISTRIBUTION LOSS-MIS
16.7%
9.4
8.0
7.1
26
7.7
27
29
Shareholder
2. Organizational Structure:
Ministry of Finance
BOD
Functional Reporting
Board of Directors
Company Secretary
Exceutives
Administrative Reporting
Vice President
Generation
Exceutive
Human Resources
Exceutive Strategy
& Planning
Exceutive
Information Technology
Exceutive
Risk Management
30
BoD
Audit Committee
The Audit Committee is expected to ensure that adequate processes are in place to ensure compliance with regulatory requirements, enhance the effectiveness of internal and external auditors through interacting with them and
insulating them from the undue influence of the management, and provide subject matter expertise to the Board
on matters of governance and risk. Their objectives are to:
Monitor the integrity of the financial statements of the company and any formal announcements relating to
the companys financial performance, reviewing significant financial reporting judgments contained in them;
Review the Companys internal financial controls, internal controls and risk management systems;
Monitor and review the effectiveness of the Companys internal audit function;
Review and monitor the external auditors independence and objectivity and the effectiveness of the audit
process, taking into consideration relevant Capital Market Authority regulation, Commercial Companies Law
and Sector Law; and any other related law; and
Adopt policy on the engagement of the external auditor to supply non-audit services, taking into account
relevant ethical guidance regarding the provision of non-audit services by the external audit firm.
31
Member Name
Chairman
Vice Chairman
Member
Member
32
33
Dates
Chairman
Vice Chairman
Member
Member
19-Feb-2012
Attended
Attended
Attended
Attended
Attended
Attended
Apologies
Attended
18-Apr-2012
Attended
Attended
Attended
Apologies
28-May-2012
Attended
Attended
Attended
Attended
19-Dec-2012
Attended
Attended
Attended
Attended
Dates
Chairman
Member
Member
13-Feb-2012
Attended
Attended
Attended
28-Feb-2012
Attended
Attended
Attended
28-May-2012
Attended
Attended
Attended
09-Sep-2012
Attended
Apologies
Attended
01-Dec-2012
Attended
Apologies
Attended
Dates
Chairman
Member
21-Oct-2012
Attended
Attended
7. Remuneration Matters
Subject to the applicable law and subject to the approval of the shareholder, it is proposed to pay a yearly remuneration to the members of the BoD out of the net profits of the financial year. Total sitting fees received for meetings of the BoD and any subcommittee shall not exceed RO 6,000 for each member as shown in the table below:
MEMBER
BOARD
3,250
2,500
2000
400
4,900
2,000
900
2,900
2,000
1,500
300
3,800
Grand Total
9,750
4,400
700
34
AUDIT
HR
ITC
400
400
Grand Total
3,650
15,250
35
Board of Directors
Company Secretary
The company has not paid any penalty and no strictures have been imposed on the company by Ministry of Commerce and Industry on any matter during the year.
The BoD adopts fixed dividend payout policy that provides ample internal financial reserves to support the future
capital investments.
Since the company is fully owned by the Government of the Sultanate of Oman, represented by MOF, EHC directly
reports to the shareholder through the MOF.
Statutory auditors express an opinion on the fairness with which EHC presents, in all material respects, its financial
positions the results of its operations, and its cash flows in line with internationally recognized Accounting Standards.
PriceWaterhouseCoopers (PWC) were the Statutory Auditors of EHC during 2012. PwC is one of the worlds largest providers of assurance, tax, and business consulting services. It has been operating in Oman for over 30 years
providing a broad spectrum of services to its clients ranging across Assurance, Business Advisory and Tax services.
36
38
39
40
42
43
45
37
PricewaterhouseCoopers LLP
PO Box 3075, Ruwi 112
Suites 204-210 Hatat House
Wadi Adai, Muscat
Sultanate of Oman
Telephone +(968) 2455 9110
Facsimile +(968) 2456 4408
10 March 2013
Muscat, Sultanate of Oman
Chartered Accountants Licence No. MH/26 - Management Consultants Licence No. MA/161 - Commercial Register No. 5/30766/1
38
Note
2012 2011
RO 000
RO 000
Revenue
659,133 560,327
Operating costs
(466,098) (407,002)
Gross profit
193,035 153,325
General and administrative expenses
Other income
(84,332) (76,623)
12,970
5,659
10
2,461 2,492
Finance costs
11
(17,181) (16,068)
106,953 68,785
Taxation 12
(22,267) (6,494)
84,686 62,291
Profit for the year
Attributable to:
Owners of the parent
84,686 62,291
13
1,215 (2,135)
85,901 60,156
39
Note
2012 2011
RO 000
RO 000
ASSETS
Non-current assets
Property, plant and equipment
14
1,607,112 1,457,362
Goodwill
7,092 7,092
21,267 23,148
Advance payments
15
16
173,069
157,242
Bank deposits
19
48,311
32,769
1,856,851 1,677,613
Current assets
Inventories 17
39,974 37,855
Trade and other receivables
18
146,828 126,687
Bank deposits
19
70,461 31,031
20
62,594
60,723
319,857 256,296
Total assets
2,176,708 1,933,909
EQUITY
Capital and reserves
Share capital
21
2,000 2,000
Legal reserve
22
12,342 12,342
General reserve
23
3,000 3,000
Hedge reserve
13
(1,860) (3,075)
Retained earnings
421,123 336,989
Shareholders funds
628,598 633,190
25
Total equity
1,065,203 984,446
LIABILITIES
Non-current liabilities
Term loan
26
125,512 86,586
27
49,102 53,360
28
8,131 16,058
29
43,347 57,689
29
7,983 7,040
40
2012 2011
Note
RO 000
RO 000
LIABILITIES (continued)
Non-current liabilities (continued)
Provision for major maintenance
29
4,703 4,192
Deferred revenue
31
105,458 95,875
Hedging deficit
13
8,940 10,240
30
93,545 100,025
32
51,305
37,872
498,026 468,937
Current liabilities
Term loan
26
11,086 10,354
Short-term borrowings
33
305,000 190,000
Bank overdrafts
34
9,674 13,685
27
4,258 3,830
28
269,322 256,511
9,222 1,766
29
3,617 3,166
Hedging deficit
13
1,300
1,214
613,479 480,526
Total liabilities
1,111,505 949,463
The financial statements on pages 33 to 68 were approved by the Board of Directors on 23 February 2013 and were
signed on their behalf by:
H.E. Dr. Abdulmalik Abdullah Al Hinai
Director
41
Share
Legal General
capital
reserve reserve
RO 000
funds interest
RO 000
RO 000 RO 000
equity
RO 000
At 1 January 2011
2,000
12,342
3,000
(940)
275,537
633,190
925,129
925,129
Comprehensive income:
Profit for the year
62,291
62,291
62,291
(2,135)
(2,135)
(2,135)
(332)
(332)
(332)
Dividend paid
(507)
(507)
(507)
At 31 December 2011
2,000
12,342
3,000
(3,075)
336,989
633,190
984,446
984,446
984,446
At 1 January 2012
2,000
12,342 3,000
(3,075)
336,989
633,190
984,446
Comprehensive income:
Profit for the year
- 84,686
- 84,686
- 84,686
- -
1,215
- 1,215
- 1,215
(4,592)
(4,592)
(4,592)
At 31 December 2012
2,000
12,342 3,000
(501)
(1,860)
421,123
42
(501)
628,598 1,065,203
(501)
- 1,065,203
RO 000
RO 000
72,800 66,832
32 625
626 (600)
1,704 851
1,823 7,434
511 545
17,181 14,369
(2,461) (2,492)
1,256
1,699
200,425
158,048
(2,745) (2,131)
(26,436) 7,428
1,881 574
(15,827) (39,134)
9,583 18,738
(6,480) 38,404
7,592
46,112
167,993
227,681
(821)
(348)
167,172
227,333
(241,966) (285,510)
93 279
(54,972) (7,325)
2,461 2,492
(17,181)
(14,369)
(311,565)
(304,433)
Continued on page 44.
43
2012 2011
RO 000
RO 000
39,657 17,183
(3,830) (5,043)
(51) (332)
(501)
(507)
150,275
125,301
Net change in cash and cash equivalents
5,882
48,201
47,038 (1,163)
52,920
47,038
Cash and cash equivalents at the end of the year
62,594 60,723
(9,674) (13,685)
Bank overdraft
52,920 47,038
44
Shareholding percentage
99.99
Principal activities
desalination.
Wadi Al Jizi Power Company SAOC (WJPC)
99.99
Electricity generation.
99.99
Electricity transmission.
99.99
99.99
99.99
99.99
99.99
98.74
These consolidated financial statements represent the results of operations of the company and all the above
subsidiaries (together the group).
45
46
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 groups share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary, the difference is recognised directly in the consolidated statement of comprehensive income. Inter-company transactions, balances and unrealised gains and losses on transaction between group companies are eliminated.
Transactions and minority interests
The group treats transactions with non-controlling interest as transactions with equity owners of the group. For
purchases from non-controlling interests, the difference between any consideration paid and the relevant share
of the carrying value of net assets of the subsidiary acquired is recorded in equity. Gains or losses on the disposal
to non-controlling interests are also recorded in equity.
When the group ceases to have control or significant influence, the retained interest in the entity is remeasured
to its fair value, with the change in carrying amount recognised in consolidated statement of comprehensive
income. The fair value is the initial carrying amount for the purposes of subsequent 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 off the
related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income
are reclassified to consolidated statement of comprehensive income.
47
Years
Buildings 30
Transmission and related assets
20-60
13-20
20-40
3-60
Decommissioning assets
8-50
5-7
20
Capital work-in-progress
Capital work-in-progress is stated at cost. When the underlying asset is ready for use in its intended condition and
location, work-in-progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with depreciation policies of the group.
2.5 Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the groups share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
48
2.7 Impairment
Financial assets
Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are impaired
where there is objective evidence that, as a result of one or more events that occurred after the initial recognition
of the financial asset, the estimated future cash flows of the investment have been impacted.
For financial assets, objective evidence of impairment could include:
Certain categories of financial assets, such as trade receivables that are assessed not to be impaired individually,
are subsequently assessed for impairment on a collective basis.
Objective evidence of impairment for a portfolio of receivables could include the groups past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the credit period as well
as observable changes in national or local economic conditions that correlate with default on receivables.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with
the exception of trade receivables, where the carrying amount is reduced through the use of a provision account.
When a trade receivable is considered uncollectible, it is directly written off as bad. Subsequent recoveries of
amounts previously written off are credited to the consolidated statement of comprehensive income.
49
2.8 Inventories
Inventories are stated at the lower of cost and net realizable value. Costs comprise purchase cost and where applicable, direct labor costs and those overheads that have been incurred in bringing the inventories to their present
location and condition. Cost is calculated principally using the weighted average method. Provision is made for slow
moving and obsolete inventory items where necessary, based on managements assessment.
50
2.13 Taxation
Income tax is calculated as per the fiscal regulations of the Sultanate of Oman.
Current tax is the expected tax payable on the taxable income for the year, using the tax rates ruling at the reporting date.
Deferred tax is provided using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Deferred tax is calculated on the basis of the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled based on tax rates (and tax laws) that have been enacted or substantially enacted
by the reporting date. The tax effects on the temporary differences are disclosed under non-current liabilities 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. The carrying amount of deferred tax assets
is reviewed at reporting date and reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
Deferred tax assets and liabilities are offset as there is a legally enforceable right to set off these in Oman.
Current and deferred tax is recognised as an expense or benefit in the consolidated statement of comprehensive
income except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity.
51
2.15 Provisions
Provisions are recognised in the consolidated statement of financial position when the group has a legal or constructive obligation as a result of a past event and it is probable that it will result in an outflow of economic benefit that can be reliably estimated.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where
a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the
present value of those cash flows.
2.17 Revenue
Revenue represents the sale of electricity to the government, commercial and residential customers within the
groups distribution network, sale of desalinated water, transmission connection charges and subsidy from government.
Revenue also includes the funding received from the Ministry of Finance (MOF) in respect of costs relating to the
Salalah business of Oman Power and Water Procurement Company SAOC, a subsidiary.
52
2.20 Leases
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are
charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the
lease.
Finance leases
Leases of property, plant and equipment where the group has substantially all the risks and rewards of ownership
are classified as finance leases. Finance leases are capitalised at the leases commencement at the lower of the fair
value of the leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The interest element of the finance
cost is charged to the statement of comprehensive income over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period.
53
54
2012 2011
RO 000
RO 000
Change in bank deposits interest income
1,187 601
Borrowings
The group has short-term interest bearing liabilities, which expose the group to interest rate risk. At the reporting
date the groups interest bearing financial instruments was as below:
2012 2011
RO 000
Term loan
136,598 96,940
305,000 190,000
Bank overdrafts
RO 000
9,674
13,685
448,572 300,625
A 1% increase or decrease in interest rates on interest bearing liabilities would have decreased/increased the
profit, by the amounts shown below
2012 2011
RO 000
RO 000
Term loan
1,116 883
2,770 1,330
Bank overdrafts
33
175
3,919 2,388
55
Less
1 year
amount
contractual than
Total
RO 000
More
to than
cash flows
1 year
5 years
5 years
RO 000
RO 000
RO 000
RO 000
Non-interest bearing
Trade and other payables
277,453
277,453
269,322
8,131
Interest bearing
Term loan
136,598
166,846 11,086 101,317 24,195
305,000
Bank overdrafts
Finance lease liabilities
305,000
305,000
89,864
11,559
43,583
34,722
At 31 December 2010
Carrying
Less
1 year
amount
contractual than
Total
RO 000
More
to than
cash flows
1 year
5 years
5 years
RO 000
RO 000
RO 000
RO 000
Non-interest bearing
Trade and other payables
272,569
272,569
256,511
16,058
Interest bearing
Term loan
Short term borrowings
190,000
190,000
Bank overdrafts
13,685
13,685
13,685
57,190
101,588
11,725
45,050
44,813
The following are the contractual undiscounted cash flows associated with derivatives that are cash flows hedges:
56
National
1 year
fair
amount than
value
Less
RO 000
RO 000
More
to than
1 year
5 years
5 years
RO 000
RO 000
RO 000
10,240
62,854
7,979
41,179
13,696
31 December 2011
11,454
70,304
7,451
42,340
20,513
2012 2011
RO 000
RO 000
Government customers (including service concession receivable)
Other private customers
2,26,747 209,699
59,599
47,607
286,346
257,306
57
31 December 2012
Gross Impairment
Gross Impairment
Past
due but
due but
not impaired
not impaired
Past
31 December 2011
RO 000
RO 000
RO 000
RO 000
RO 000
RO 000
46,785 - -
38,687 - -
12,564 (204)
1 month to 3 months
3 months to 1 year
1 year to 5 years
RO 000
RO 000
173,069
157,242
113,277
100,064
21,772
16,070
118,772
63,800
62,594
60,723
489,484
397,899
Other receivables
Bank deposits
Cash and bank balances
58
59
RO 000
RO 000
Electricity sales
311,574
278,234
90,709
84,225
204,101
142,996
48,197
34,408
9,428
10,016
664,009
549,879
(4,876)
10,448
659,133
560,327
Water sales
Government subsidy
Funding for operation of Salalah concession
Other operating revenue
Adjustment as per price control methodology
60
6. Operating costs
2012 2011
RO 000
RO 000
353,770
292,621
69,220
63,986
19,742
24,886
8,558
8,278
7,059
6,712
Service expense
2,283
3,806
5,466
6,713
466,098
407,002
7. General and administrative expenses
2012 2011
RO 000
RO 000
44,876
42,696
Service expenses
22,596
19,823
Commission
9,468
8,629
3,580
2,846
489
571
3,323
2,058
84,332
76,623
Wages, salaries and other benefits
End of service benefits
2012 2011
RO 000
RO 000
45,606
39,195
6,329
10,213
51,935
49,408
Allocated to:
7,059
6,712
44,876
42,696
51,935
49,408
Operating costs
9. Other income
2012 2011
RO 000
RO 000
2,031
1,195
(32)
(625)
Other income
10,971
5,089
12,970
5,659
2012
2011
RO 000
RO 000
2,461
2,492
10. Finance income
Interest income
61
RO 000
RO 000
7,895
8,549
5,169
4,422
1,254
1,699
Short-term loans
2,366
1,218
497
180
17,181
16,068
Overdraft facilities
12. Taxation
Income tax is provided as per the provisions of the Law of Income Tax on Companies in Oman after adjusting
for items which are not taxable or disallowed. The tax rate applicable to the group is 12%. The deferred tax on
all temporary differences has been calculated and dealt with in the consolidated statement of comprehensive
income.
2012 2011
RO 000
RO 000
Current tax
8,836
1,785
Deferred tax
13,431
4,709
22,267
6,494
The respective companies within the group are liable to income tax in accordance with the Income Tax Law of
the Sultanate of Oman at the enacted tax rate of 12% on taxable income in excess of RO 30,000. The following is
a reconciliation of income taxes calculated on accounting profits at the applicable tax rate with the income tax
expense for the year:
2012 2011
RO 000
RO 000
106,953
68,785
12,834
7,981
(354)
105
954
5,471
(2,172)
4,457
85
22,267
6,494
Tax assessments for the following years onwards are pending assessment by Oman taxation authorities:
Taxation for Electricity Holding Company SAOC has been agreed with the Oman Taxation Authorities for all the
years up to 31 December 2010 whereas taxation has been agreed for all the subsidiaries with the Oman Taxation
Authorities for all years up to 31 December 2006. The companys management is of the opinion that additional
taxes, if any, related to the open tax years would not be material to the financial position of the company as at
31 December 2012.
62
RO 000
Generation facilities
Interconnection and transmission facilities
2012 2011
RO 000
16,925 17,843
4,342
5,305
21,267 23,148
Inventory
Less: provision for inventory obsolescence
2012 2011
RO 000
RO 000
56,743 54,473
(16,769) (16,618)
39,974 37,855
2012 2011
RO 000
At 1 January
(16,618) (19,623)
Provisions recognised/(reversed)
Amounts written off
At 31 December
RO 000
(626) 600
475
2,405
(16,769) (16,618)
63
2011
RO 000
RO 000
Trade receivables
113,277
100,064
(8,310)
(7,072)
104,967
92,992
20,089
17,625
Other receivables
21,772
16,070
146,828
126,687
2012
2011
RO 000
RO 000
At 1 January
7,072
6,314
(466)
(93)
1,704
851
At 31 December
8,310
7,072
The impairment provision substantially relates to government debts yet to be collected, taken over from erstwhile, Ministry of Housing, Electricity and Water (MHEW) as part of the transfer scheme and frozen accounts of
private customers.
The other receivables classes within trade and other receivables do not contain impaired assets.
19. Bank deposits
Bank deposits have maturity dates ranging from --- to---days (2011 - 90 to 1,024 days) from the reporting date
and are with commercial banks in Oman at commercial rates.
20. Cash and bank balances
2012 2011
RO 000
RO 000
66
62
Bank accounts
62,528
60,661
62,594
60,723
Cash on hand
64
RO 000
RO 000
Non-current
125,512 86,586
11,086
Current
10,354
136,598 96,940
The group syndicated long-term loan facilities from financial institutions in the aggregate amount of approximately RO 131 million including refinancing of the existing term loan of RO 65 million. These facilities bear interest at US Dollar denominated LIBOR plus applicable margins. Margin percentages range from 0.53% to 3.25%
(2011 - 0.63% to 3.25%). Up to 31 December 2012, facilities of approximately RO 126 million
(2011 - RO 100 million) have been drawn.
The term loan is repayable in half yearly installments which commenced from 4 November 2007. The loan repayment schedule is as follows:
31 December 2012
Carrying
less
1 year
amount than
More
to
than
1 year
5 years
5 years
RO 000
RO 000
RO 000
RO 000
Liability
24,195
65
Less
1 year
amount than
RO 000
More
to
1 year
5 years
5 years
RO 000
RO 000
RO 000
Liability
than
38,078
The loan agreements contain certain restrictive covenants, which amongst other; include restrictions over project
finance ratios. The loans are secured by a pari-passu legal mortgage over certain property, plant and equipment
and over the groups rights under the concession arrangements.
27. Finance lease liabilities
Minimum
lease
payments
Present value of
Minimum
Present value of
minimum lease
lease
minimum lease
payments
payments
payments
RO 000
RO 000
3,830
Later than 1 year not later than 5 years 43,583 21,770 45,050
20,158
RO 000
2011
34,722
27,332
44,813
33,202
57,190
Non-current lease liabilities
Current lease liabilities
RO 000
RO 000
49,102
53,360
4,258
3,830
53,360
57,190
RO 000
RO 000
Non-current
Other payables
8,131 16,058
Current
Trade payables
26,322 68,456
Other payables
82,444 5,620
Accruals
160,556 182,435
269,322 256,511
277,453
272,569
Non-current other payables mainly relates to retention monies for capital work-in-progress contracts and facilities
maintenance provision.
66
29. Provisions
2012 2011
RO 000
RO 000
Non-current
Employee benefits
Decommissioning costs
Major service expense
7,983
7,040
43,347
57,689
4,703
4,192
56,033
68,921
Current
Employee benefits
3,617
3,166
2012 2011
RO 000
RO 000
10,206
3,130
1,095
5,606
Additions others
728
1,828
Payments made
( 429)
(358)
At 31 December
11,600
10,206
At 1 January
Additions Omani ESB
Movement in provision for decommissioning costs
At 1 January
Adjustment
Unwinding of decommissioning provision
At 31 December
2012 2011
RO 000
RO 000
57,689
60,415
(15,598)
(4,425)
1,256
1,699
43,347
57,689
The provision for decommissioning costs represents the present value of managements best estimate of the
future sacrifice of the economic benefits that will be required to remove the facilities and restore the affected
area at the groups leased sites. The estimate has been made on the basis of quotes obtained from third party
contractors.
Movement in provision for major maintenance costs
2012 2011
RO 000
RO 000
At 1 January
4,192
3,647
1,552
1,552
(1,041)
(1,007)
4,703
4,192
30. Advance from Ministry of Finance
Advance from Ministry of Finance represents the amount received for capital expenditure for specified projects
subsequent to 1 January 2009 and is classified as non-current liability.
67
RO 000
RO 000
RO 000
Assets
Provision for inventory obsolescence
(1,490) 1,490
(639) 639
Deferred revenue
Decommissioning assets
(2,140)
207
(1,933)
(7,726)
(7,723)
Liability
2,140 (2,140)
Advance payments
37,872 13,431 51,305
Balance at 1 January 2011 Charge/(credit) for the year Balance at 31 December 2011
RO 000
RO 000
RO 000
Assets
Provision for inventory obsolescence
(160)
(27)
(187)
(757)
(92)
(849)
(1,993)
(428)
(2,421)
(969)
(521)
(1,490)
Deferred revenue
(638)
(1)
(639)
Decommissioning assets
(1,751)
(389)
(2,140)
Liability
Advance payments
2,208
(68)
2,140
37,223
6,235
43,458
Net deferred tax liability
68
33,163
4,709
37,872
2011
RO 000
RO 000
305,000
190,000
The groups short-term borrowings are denominated in Rial Omani.
The credit facility bears a fixed interest rate and is due for bullet repayment on 30 June 2012. Borrowings are secured by letter of guarantee issued by Electricity Holding Company SAOC. These borrowings are expected to be
re-financed through long-term credit facilities to be arranged in due course.
34. Bank overdrafts
The group has credit facilities with Bank Muscat SAOG including overdrafts to finance the working capital requirements and to support its other operational requirements. Bank overdrafts are repayable on demand and
carry interest at commercial rates.
35. Related parties
Related parties comprise the shareholders, directors, key management personnel and business entities in which
they have the ability to control or exercise significant influence in financial and operating decisions.
The group maintains balances with these related parties which arise in the normal course of business. Outstanding balances at year end are unsecured and settlement occurs in cash.
The parent company and PAEW have common directors and hence are considered as related parties. During the
year, the parent company provided Support services to PAEW earning revenue of RO 0.038 million
(2011 - RO 0.070 million). The year end trade receivable balances amounted to RO 0.118 million
(2011 - RO 0.080 million). The parent company also incurred costs on behalf of PAEW and the year end amounts
receivable relating to this amounted to RO 1.474 million (2011 - RO 1.023 million).
No expenses have been recognised in the year (2011 - RO Nil) for bad or doubtful debts in respect of amounts
owed by related parties.
Key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the group, directly or indirectly, including any Director (whether executive or otherwise). The compensation for key managerial personnel during the year is as follows:
2012 2011
RO 000
RO 000
4,805
5,551
717
794
429
571
5,951
6,916
69
RO 000
RO 000
105,399
1.099,637
1,046,806
1,622,137
1,828,492
2,878,551
2,980,697
Capital commitments
90,451
94,727
Letters of credit
8,387
8,812
38. Contingencies
Al Ghubrah Power & Desalination Company SAOC
a) The Ministry of Oil and Gas (MOG) has levied an interest of RO 803,564 (2011 - RO 807,837), pertaining to delayed payment of gas invoices for the years 2005 to 2008 at an interest rate of 6%.
The management is of the opinion that these interest charges may not be payable as there is no contractual
obligation in the absence of gas supply agreement between the company and the MOG. Further the company
believes that the 6% rate of interest is significantly high. The company is in the process of negotiation with
MOG for the waiver of these interest charges.
b) The heirs of Habib Khalfan Al Hasni have lodged a claim amounting to RO 1,324,000 in respect of a piece of
land within the premises of the company. The claim is pending retrial proceedings in the Appeal Court.
c) Kent International LLC has lodged a case in the Primary Court for damages in respect of alleged unilateral
termination of Purchase Order # G009/15454 dated 26 September 2009. The amount of damages to be paid
as per the claim is yet to be determined by an expert.
Dhofar Power Company SAOC and its subsidiary
(a) Transmission and Distribution - Extension and Enhancement Allowance (T & DEE Allowance)
The group has accrued the T & DEE allowance at a rate of RO 106,865 per month based on the contracted
value of the Transmission and Distribution Extension and Enhancement work. The Government disputed the
determination of T & DEE allowance by the group and contended that the allowance should be determined
based on the estimated value of T & D Extension and Enhancement work executed by the group, i.e., RO
88,415 per month. In accordance with the provisions of the Concession Agreement, the matter was referred
to a legal expert who gave a ruling in favour of the group on 24 August 2005.
70
71
73
and related
RO 000
under
plant
and related
assets finance
Assets Distribution
RO 000
assets
assets
vehicles
and
Plant Capital
spares
Total
work-in-
and progress
RO 000
RO 000
RO 000
RO 000 RO 000
RO 000
RO 000
Cost
1 January 2012
74,788
Additions
2,739
Transfers
11,036
Disposals/adjustments
9,095
82,927
662,032 158,024
46,014
84,385 6,314
3,244
38,028 21,329
286,842 269,342
378,864 269,342
784,445 185,667
(325)
(18,841)
(450)
30,417
(19,291)
Depreciation
1 January 2012
Charge for the year
Transfers
10,626
29,748
132,786
130,126
38,716
6,148
10,370
2,838
361,358
2,913
7,120
19,918
28,702
8,950
747
3,791
659
72,800
(51)
- - 16
184
- 51
(200) - -
(266)
( 266)
13,488
36,868
152,704
158,844
47,850
6,895
13,946
3,297
434,892
Disposals/adjustments
31 December 2012
341,996 116,638
Buildings Transmission
plant
assets finance
23,522
Assets Distribution
and related
625,601 137,817
assets
assets
vehicles
and
Plant Capital
Total
spares work-in-
and progress
RO 000
RO 000
RO 000
RO 000
RO 000
RO 000
RO 000
RO 000
59,539
260,736
269,342
543,091
104,359
50,565
15,873
11,636
RO 000
RO 000
Cost
1 January 2011
Additions
Transfers
3,532
12,070
Disposals/adjustments (353)
31 December 2011
74,788
1,930
24,295
- 78,309 8,595
-
(119)
286,842
269,342
40,632 46,457
-
225,093 1,540,234
(1,387)
(4,993)
(169)
(431)
46,014
19, 734
10,306
(14)
(7,466)
Depreciation
1 January 2011
8,023
23,261
112,868
104,639
32,397
4,980
7,611
2,375
296,154
2,768
6,504
19,918
25,445
7,259
1,228
2,846
864
66,832
Transfers
Disposals/adjustments (165)
31 December 2011
42 338
- (380)
(17)
(1,278)
(60)
(87)
(21)
(1,628)
10,626
29,748
132,786
130,126
38,716
6,148
10,370
2,838
361,358
64,162
257,094
136,556
531,906
119,308
39,866
9,364
7,468
74
291,638 1,457,362
75