Initial Public Offering of 25,000,000 ordinary shares ...En).pdf · Voltamp Energy SAOG (Under...

PROSPECTUS

Underwriters

Co-Financial AdvisorLead Issue Manager & Financial Advisor Collecting Banks

Energising lives. Energising Oman.

www.voltampoman.com Voltamp Energy SAOG

(Under Transformation)

Initial Public Offering of 25,000,000 ordinary sharesOffer Price: RO 0.542 per share

(Comprising a nominal value of Baisas 100,premium of Baisas 440 and issue expenses Baisas 2 per share)

Issue Opens: 5th May, 2008Issue Closes: 3rd June, 2008

InvestmentManagementGroup

Energising livesEnergising Oman

www.voltampoman.com

PROSPECTUS

Voltamp Energy SAOG (under transformation)

Postal Address: P.O.Box 75, P.C: 124,Rusayl, Sultanate of Oman

Tel: 24446501Fax: 24446502

Initial Public Offering of 25,000,000 (twenty five million) Ordinary Shares

Total Offer Size: RO 13.55 million

Offer price: RO 0.542 per share(Comprising a nominal value of Baisas 100, premium of Baisas 440

and Issue Expenses Baisas 2 per share)

Lead Issue Manager & Financial AdvisorOman Arab Bank,

Investment Management GroupP.O. Box 2010, Postal Code: 112, Sultanate of Oman

Ph: 24762399 Fax: 24762377

Underwriters

Oman Arab Bank SAOC Vision Investment Services Co. SAOC

United Securities LLC Gulf Baader Capital Markets SAOC

Co-Financial AdvisorErnst & Young

PO Box: 1750, Ruwi, 112,Qurum, Muscat, Sultanate of Oman

Ph: 24559599 Fax: 24566043

Collecting BanksOman Arab Bank SAOC

Bank Muscat SAOGBank Dhofar SAOG

OFFERING PERIODOpening Date: May 5, 2008Closing Date: June 3, 2008

www.voltampoman.com

The Capital Market Authority (“CMA”) assumes no responsibility for the accuracy and adequacy of the statements and information contained in this Prospectus nor shall it have any liability for any damage or loss resulting from the reliance upon or use of any part of the same by any person. This Prospectus has been prepared in accordance with the requirements as prescribed by the CMA. This is an unofficial English translation of the original Prospectus prepared in Arabic and approved by the CMA in accordance with the Administrative Decision no. F/19/2008 dated 27/4/2008.

Underwriters



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Important Notice to Investors

The aim of this Prospectus is to present material information that may assist investors to make an appropriate decision as to whether or not to invest in the securities offered.

This Prospectus includes all material information and data and does not contain any misleading information or omit any material information that would have a positive or negative impact on the decision of whether or not to invest in the offered securities.

The issuer entity represented by the Founders/Selling Shareholders are jointly and severally responsible for the integrity and adequacy of the information contained in this Prospectus and confirm that, according to the best of their knowledge, due diligence has been observed in the preparation of this Prospectus and further confirm that no material information has been omitted, the omission of which would render this Prospectus misleading.

All investors should examine and carefully review this Prospectus in order to decide whether or not it would be appropriate to invest in the securities offered by taking into consideration all the information contained in this Prospectus in the context. Investors should not consider this Prospectus a recommendation by the issuer entity of the offered securities to buy the offered securities. Every investor shall bear the responsibility of obtaining independent professional advice on the investment in the offered securities and conduct his/her/its own independent valuation of the information and assumption contained herein using whatsoever analysis or projections he sees fit as to whether or not to invest in the securities offered.

It is to be noted that no person has been authorised to make any statements or provide information on the Company or the offered securities other than the persons whose names are indicated herein. In the event that any other person makes representations or provides any such information it should not be taken as authorised by the issuer entity or the issue manager.

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ADDITIONAL POINTS TO BE NOTED

This Prospectus includes relevant information that is deemed important and does not include any misleading information nor exclude any principal information, the omission of which may materially influence any investor’s decision pertaining to the investment in Shares through this Prospectus. All summaries of documents or provisions of documents provided in this Prospectus should not be relied upon as being comprehensive statements in respect of such documents and are only to be seen as being a brief summary of such documents.

All equity investments carry market risks to varying degrees. The value of any security can fall as well as rise depending on the market conditions.

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements, including statements about the Company’s beliefs and expectations. These future statements are based on the Company’s current plans, estimates and projections as well as its expectations of external conditions and events. They have implementable plans in place and thus have realistic expectations of achieving these. Forward-looking statements involve inherent risks and uncertainties and speak only as at the date they are made. The Company cautions investors that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to, the following:

♦ level of demand for the Company’s products and services;

♦ actions of the Company’s competitors;

♦ regulatory, legal and fiscal developments;

♦ success of the Company’s investments and capital expenditure programs;

♦ performance of the Omani economy; and

♦ other factors described under "Risk Factors and Mitigants" as given in chapter 16 of this Prospectus.

The Company will follow the rules and regulations of the Capital Market Authority, after it is listed in the Muscat Securities, and will communicate to its share holders periodically the progress of the new projects as mentioned in this prospectus including any changes in their plans if any. The Company will update the shareholders either directly from the Company or through the website of the Muscat Securities Market.

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Page No

IMPORTANT NOTICE TO INVESTORS ........................................................... 2

CHAPTER 1 – Definitions ................................................................................ 5

CHAPTER 2 – General Information on the Issue and Issuer ........................... 6

CHAPTER 3 – Share Split and its Effect ........................................................ 13

CHAPTER 4 – Issue Expenses .............................................................................. 15

CHAPTER 5 – Underwriting Arrangements ................................................... 16

CHAPTER 6 – Purpose of the Issue and Utilisation of the Proceeds ........... 17

CHAPTER 7 – Objectives of the Company and Approvals ........................... 18

CHAPTER 8 – Shareholding Details ............................................................... 21

CHAPTER 9 – Market and Economic Overview ............................................ 26

CHAPTER 10 – Description of the Company and Business Overview and Activities .................................................................................................. 34

CHAPTER 11 – Summarised Historical Consolidated Financial Statements 50 (For Financial Years 2005-2007)

CHAPTER 12 – Summarised Prospective Consolidated Financial Statements 73 (For Financial Years 2008-2014)

CHAPTER 13 – Dividends Policy .................................................................... 92

CHAPTER 14 – Valuation and Price Justification .......................................... 93

CHAPTER 15 – Related Party Transactions .................................................. 98

CHAPTER 16 – Risk Factors and Mitigants ................................................... 100

CHAPTER 17 – Corporate Governance ......................................................... 105

CHAPTER 18 – Rights and Liabilities of Shareholders ................................. 111

CHAPTER 19 – Conditions and Procedures of the Subscription of the Shares 115

CHAPTER 20 – Undertakings ......................................................................... 122

TABLE OF CONTENTS

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The Board : means the board of directors of the Company elected in accordance with the Articles of Association of the Company.

Business Day : means any day on which commercial banks are open for business in the Sultanate of Oman.

CCL : means the Commercial Companies Law of the Sultanate of Oman issued by Royal Decree 4/74 and the amendments thereto.

Company : means Voltamp Energy S.A.O.G (under transformation).

LLC : means Limited Liability Company

SAOC : means Closed Omani Joint Stock Company

SAOG : means General Omani Joint Stock Company

Employees : employees means those employees of the Company who have joined the Company on or before 29th February 2008 and continue to be in the employment of the Company at the Closing Date.

CHAPTER 1DEFINITIONS

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GENERAL INFORMATION ON THE ISSUE AND THE ISSUER

Name of the Issuer: Voltamp Energy SAOG (under transformation)

Commercial Registration No: 1262947 dated 03/08/1987 issued by the Ministry of Commerce & Industry

Principal Place of Business Postal Address : P.O.Box 75, P.C 124, Rusayl, Sultanate of Oman Tel: 24446501 Fax: 24446502

Company’s Duration: Unlimited

Financial Year: Commences on the first day of January and ends on the thirty first day of December of each year

Type of Shares and Voting Rights:

All the Equity Shares issued by the Issuer and the entire equity capital of the company consist of only Ordinary shares and each single share carrying the right to one vote at the Constitutive General Meeting of the Company and any General Meeting of the Company including any Extraordinary General Meeting.

Ordinary Shares: Equity Shares issued by the Issuer with a nominal value of one hundred Baisas (RO 0.100) and each share carrying the right to one vote at the Constitutive General Meeting of the Company and any General Meeting of the Company including any Extraordinary General Meeting.

Authorised Share Capital of the Company:

The Authorised share capital of the Company shall be RO. 10,000,000 (Rial Omani Ten Million), divided into 100,000,000 (One Hundred Million) Ordinary Shares.

Existing Ordinary SharesBefore the IPO:

RO 3,500,000 (Rial Omani Three Million Five Hundred Thousand) divided into 35,000,000 (35 Million) ordinary shares.

Offered Shares: Offer of 25,000,000 (Twenty Five Million) shares that consists of1. Offer of 10 Million shares to the public selling by the

promoters2. Issue of 15 Million New Ordinary Shares (after the

completion of IPO) for public subscription by the Company

3. The Company will allot 5% (1,250,000) of the offered shares for the Company employees and Managers as per the details given in this Prospectus

CHAPTER 2

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The Issued and Paid up Caital after IPO:

RO 5,000,000 (Rial Omani Five Million) dividend in to 50 Million shares

Par Value for the share: 100 Baisa for each share

Restrictions on the shares: Restrictions imposed on the Promoters:In accordance with Article 77 of the CCL, the Promoters of the Company shall not withdraw from the Company or dispose of their Shares prior to publication of two Balance Sheets pertaining to two consecutive financial years, effective from the date of listing of the Shares on the Muscat Securities Market. An exception to this shall be the cases of assignment of the Shares amongst the Shareholders themselves and cases of inheritance. The period during which the Promoters are not permitted to withdraw or dispose off their Shares may be extended for a further one year by a decision of the Minister of Commerce & Industry, at the request of the Capital Market Authority, without prejudice to the right held by the Promoters to make second grade pledge on those Shares.If any defect has taken place in the procedures pertaining to incorporation of the Company, the party concerned may within a period of five years from the incorporation of the Company, serve notice to it for remedying such a defect as per article 71 of the CCL. However, if the Company fails to take the initiative within one month of such notice for necessary remedial measures, the person concerned may have recourse to the competent court to pass a decision for dissolution of the Company. The Promoters, members of the Board of Directors and the first Auditors shall be held liable severally and jointly for the damages arising from the dissolution of the Company and which are attributable to their illegal acts or their negligence or omission in the incorporation of the Company.

Restrictions imposed on the Employees and ManagersThe Employees and Managers have no right to sell or transfer shares acquired pursuant to the IPO before six months. Thereafter, the Employees and the Managers may sell or transfer such shares without any restriction.

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Promoters/Selling Shareholders: The current partners/shareholders of the Company prior to the IPO who are offering a portion of their Shares through an Offer for Sale under this Prospectus to the extent of a maximum of 10,000,000 (Ten Million) Ordinary Shares out of their combined holding of 35,000,000 (Thirty Five Million) Ordinary Shares. Details of the number of Shares being offered by the Selling Shareholders are set out in the Chapter 7 of this Prospectus.

Shares held by the Promoters after the IPO:

25,000,000 (Twenty Five Million) Ordinary Shares i.e. 50% of the capital after the completion of IPO. Details of the individual holdings are set out in the Chapter 8 of this Prospectus.

Subscription Price of the Shares: Baisas 542 (Five Hundred and Forty Two) per Share consisting of Baisas 100 (One Hundred) nominal value, Baisas 440 (Four Hundred and Forty) share premium and Baisas 2 towards Issue Expenses.

Ratio of Offered Shares (25 Million Shares) to post IPO issued and paid up Share Capital (50 Million Shares) :

50% of the Issued and Paid Up Share Capital of the Company.

Main Purpose for which the proceeds of the Subscription would be utilised:

1) Proceeds from the Issue of New Ordinary Shares

Issue proceeds under this category aggregating to RO 8,100,000 (Rial Omani Eight Million, One Hundred Thousand) will accrue to the Company, and will be utilised by the Company for financing the ongoing capital expenditure, for meeting its long term working capital requirements and investment in future strategic projects.

2) Proceeds from the Offer for Sale of Existing Ordinary Shares

Issue proceeds under this category aggregating to RO 5,400,000 (Rial Omani Five Million, Four Hundred Thousand) will accrue to the Selling Shareholders only and not to the Company.

3) Issue Expenses Collected

The amount of RO 50,000 (Rial Omani Fifty Thousand) being collected towards part of the Issue Expenses from the total issue will accrue to the Company.

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Persons Qualified to Subscribe for the Shares Offered:

Subscription shall be open to Omanis, Non-Omanis, Individuals, Non-Indviduals, Corporate Bodies/Institutions/Investment Funds/Pension Funds.

Permissible Level of Non-Omani Shareholding after Listing:

Once the Shares are listed for trading on Muscat Securities Market, it will be permissible for non Omanis to own up to 70% of the Share Capital of the Company in accordance with the Law and the Memorandum & Articles of Association.

Commencement Date of the Subscription:

May 5, 2008

Closing Date of the Subscription:

June 3, 2008

Listing: The Shares will be listed for trading on the Muscat Securities Market

First Day of Trading: The first day the Shares are traded on the Muscat Securities Market

Minimum Limit for the Subscription under One Application:

Individuals including Employees & Board of Managers: 1,000 (One Thousand) Shares and in multiples of 100 thereafter

Non-Individuals: (Corporate Bodies/Institutions/Investment Funds) 10,100 (Ten Thousand One Hundred) Shares and in multiples of 100 thereafter

Maximum Limit for the Subscription under One Application:

Individuals & Non-Individuals: (Corporate Bodies/Institutions/Investment Funds) up to or equal to 10% of the total issue size which works out up to or equal to 2,500,000 (Two Million Five Hundred Thousands) Shares;

Employees: maximum eligible value of shares will be up to 19 (nineteen) times his/her basic salary as on 29th February 2008;

Managers: up to 50,000 (Fifty Thousand) Shares per Manager. Total of five managers.

Overall Offering Split and Allotment Procedures:

In case of over-subscription, the Offering of 25,000,000 (Twenty Five Million) Ordinary Shares shall be split among the eligible investor groups, in the following portions:

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(Contd.)

Category I – Individuals

17,500,000 (Seventeen Million Five Hundred Thousand) shares, being 70% of the Offered Shares for Retail applicants applying for a maximum of 10,000 (Ten Thousand) shares. Distribution of shares shall be on pro-rata basis. Individual Investors shall comprise of only natural persons.

Category II – Non Individual Investors

6,250,000 (Six Million Two Hundred Fifty Thousand) shares, being 25% of the Offered Shares for both natural and juristic persons including Individual applicants applying for more than 10,000 shares and for Corporate bodies/ Institutions / Investment Funds. Distribution of shares will be on pro-rata basis.

Category III – Employees and Managers

Employees: 1,000,000 (One Million) shares, being 4% of the Offered Shares for employees upto a maximum value of 19 times of their basic salary on firm allotment basis.Managers: 250,000 (Two Hundred Fifty Thousand) shares, being 1% of the Offered Shares for Managers upto maximum of 50,000 shares for each Manager of five Managers on firm allotment basis.

Any undersubcription in Category I shall be added to shares allocated for Category II and vice versa. Any undersubcription in Category III shall be added to Category I.

Allotment for Foreign Nationals will be limited to a maximum of 70% of the total shares offered. Foreign Corporate Body/ Institution/ Investment Fund is defined as one which is not incorporated in the Sultanate of Oman or in any of the GCC countries.

The final allocation on the above basis will be decided by the Lead Issue Manager and the Company in consultation with the CMA.

Underwriting Arrangements: The issue of 25 million shares aggregating issue amount of RO 13.50 million is underwritten by Gulf Baader Capital Markets S.A.O.C, Vision Investment Services Co. S.A.O.C, Oman Arab Bank S.A.O.C and United Securities L.L.C. The details are given in Chapter 5.

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Basis for Undersubscribed Shares:

In case of a shortfall in subscription, the shortfall shall be subscribed by the Underwriters.

Prohibitions with regard to the Applications for Subscription:

The subscribers to the shares issued as mentioned hereunder shall not be permitted to participate in the subscription:

1) Sole Proprietorship Establishments. Whereas, the owner of a Sole Proprietorship Establishment would be required to subscribe in his name only if he so desires.

2) Trust Accounts. Whereas, the Brokerage Companies would be required to address the Customers for the subscription in their personal names.

3) Multiple Applications for the subscription. Whereas, it is prohibited for any person to submit more than one application for subscription in his personal name.

4) Applications made under joint names, including the applications made in the name of legal heirs. Whereas, they or their legal attorney would be required to apply in their personal names.

All such applications shall be rejected without contacting the applicant.

Lead Issue Manager & Financial Advisor

Oman Arab Bank SAOC

Investment Management Group

P.O. Box 2010, PC 112, Ruwi

Sultanate of OmanEmail: [email protected]

Co-Financial Advisor: Ernst &YoungP.O. Box: 1750, Ruwi, PC 112,Ernst & Young Building,Qurum, Muscat, Sultanate of Omanwww.ey.com/me

Reporting Accountants: KPMGPO Box 641P.C. 112, RuwiSultanate of Oman

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Statutory Auditors: Statutory Auditors: (2006 & 2007)KPMGP.O. Box 641PC 112, RuwiSultanate of OmanFor the year: 2005Mazars Chartered Accountants & Co. LLCMuscat Gold Market BuildingP.O. Box 1092, PC 131Sultanate of Oman

Internal Auditors: BDO Jawad HabibP.O. Box 1176Ruwi, PC 112Sultanate of Oman

Legal Advisor for the IPO: Al Busaidy, Mansoor Jamal & Co., Muscat International Centre, Mezzanine Floor, Central Business District, Bait Al Falaj Street, P.O. Box 686, Ruwi, PC 112, Sultanate of Oman, Email: [email protected]

Legal Advisors for the

Company

Hamdan Al DureyBarristers and Legal ConsultantsCentral Business District,Building No 978, Flat No 53,P.O. Box 1633 PC 112,Ph: 24787667 Fax: 24787889, Sultanate of Oman

Collecting Banks: Bank Muscat SAOGBank Dhofar SAOGOman Arab Bank SAOC

Transfer and Registration Agent: Muscat Depository & Securities Registration Co. SAOC P.O. Box 952, PC 112, Ruwi, Sultanate of OmanTel: 24814827, Fax: 24817491

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SHARE SPLIT AND ITS EFFECT

Introduction

The Company has split the nominal value of the shares from RO 1.000 to Baisas 100 resulting in splitting each share into ten shares. This chapter elaborates on the effect of this decision. It is recommended that each subscriber read and understand it.

Definition of Share Split

Share Split refers to the intention of a Company to split its existing shares to number of shares by reducing the nominal value of the share and increasing the number of shares without any effect on the total value of the Company’s paid up Capital, or the total market capitalisation of the shares owned in the Company, even if the total of the number of shares will increase as a result of this division.

Objectives of Share Split

The Company is of the view that Share Split will achieve the following goals:

• Reduce the nominal value of the share making it affordable for a larger number of retail investors.

• Increase liquidity by multiplying the number of shares available for trading; and

• Facilitate a larger participation by the small/individual shareholders

Impact of Share Split

The decision of Share Split will not have any impact on the shareholding or the extent of each shareholders’ liabilities in the Company. The only direct impact is an increase in the number of shares. The Company considers that the benefits gained from the Share Split such as increase in liquidity and the shares that will be available for trading for all investors and participants in the Muscat Securities Market, will be in the best interest of the public.

The following table presents the impact of Share Split for the Company according to the financial statement for the year ended 31 December, 2007:

Before Split After Split

Nominal value per Share RO 1 Baisas 100

Number of Issued Capital Shares 3,500,000 35,000,000

Paid up Capital RO 3,500,000 RO 3,500,000

Shareholders Equity RO 4,362,271 RO 4,362,271

Book Value per Share RO 1.246 Baisas 124

Net Annual Profit RO 2,422,215 RO 2,422,215

Earning per Share Baisas 692 Baisas 69

CHAPTER 3

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Effect of Share Split

The decision to split shares does not have any impact on the total market capitalisation of the shares. In fact, Share Split is dividing the nominal value of the share in the same percentage.

The following is an explanation:

Assume,

- number of shares before split: 100 shares

- share price in MSM on the date of the general meeting: RO 5.420

Therefore after dividing one share into 10 shares, the result will be as follows:

After SplitBefore Split

1000 shares100 sharesNumber of shares

RO 0.542RO 5.420Share price

RO 542RO 542Total nominal share value

Share Split effects on dividend:

The decision of Share Split will not affect the Company’s policy regarding dividend distribution or dividend ratio. The dividend distribution system in the Sultanate of Oman is based upon accounting dividend as a percentage of nominal paid up value per share. Thus the nominal paid up value per share will be Baisas 100 after split and not RO 1.000; e.g. if the Company declared previously (before Share Split) dividend distribution of Baisas 350 per share (35% of nominal value before split), and presumably the Company decided to maintain this policy, this dividend will be after Share Split Baisas 35 per share (35% of the nominal value after split). For instance, if the shareholder holds 100 shares before Share Split, dividend distribution will be as follows:

Before Share Split After Share Split

Number of holding shares 100 shares 1000 shares

Nominal value of the share RO 1.000 Baisas 100

Dividend per share Baisas 350 Baisas 35

Dividend ratio to nominal value 35% 35%

Total distributed dividend RO 35 RO 35

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ISSUE EXPENSES

The costs of the Issue are estimated at RO 276,600 (Rial Omani Two Hundred and Seventy Six Thousand and Six Hundred Only), which equates to approximately 2.049% of the total proceeds of the Offering. The breakdown of the estimated expenses is contained in the table below:

Estimated Cost and Expenses Amount (RO)

Issue Managers & Financial Advisors 80,000

Collecting Banks 70,000

Underwriting fees 40,500

CMA & MDSRC Fees 10,100

Legal Advisor 20,000

Reporting Accountant 6,000

Marketing, Advertising and Publicity 40,000

Mailing and Postage 2,500

Other expenses and contingencies 7,500

Total Issue Expenditure 276,600

Issue Expenses collected @ 2 Baisas per share (50,000)

Difference between Estimated Expenses & the collection of Issue Expenses

226,600

The costs of the Issue will be partially met out of additional subscription amount of Baisas 2 per share paid by the applicants towards Share Issue Expenses.

The actual costs of the Issue less Issue Expenses collected, estimated at RO 226,600 will be charged to the Shareholders’ Equity of the Company.

CHAPTER 4

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UNDERWRITING ARRANGEMENTS

In case of a shortfall in the subscription of the Offered Shares, the shortfall shall be underwritten as under:

UnderwriterNumber of

Ordinary Shares underwritten

Percentage sharesunderwritten

Amount Underwritten@540

Baisas per share (RO)

Gulf Baader Capital Markets SAOC

9,109,000 36.44% 4,918,860

Vision Investment Services Co. SAOC

6,747,400 26.99% 3,643,596

Oman Arab Bank SAOC 5,000,000 20.00% 2,700,000

United Securities LLC 4,143,600 16.57% 2,237,544

Total 25,000,000 100.00% 13,500,000

The Company has entered into underwriting arrangements with the above entities. The underwriting fee is estimated at RO 40,500 (Rial Omani Forty Thousand Five Hundred)

In the event of any devolvement, the underwriters will subscribe to the extent of the shortfall as stated above, at a price of 540 Baisas per share and the Company shall not claim the issue expense of 2 Baisas per share, from the underwriters on such devolved shares.

CHAPTER 5

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PURPOSE OF THE ISSUE AND UTILISATION OF THE PROCEEDS

Objectives of the Issue:

• Raising capital for the purposes which are already mentioned in the Prospectus.

• Listing the Company’s Shares on the MSM.

• Partial divestment of Shares by the Selling Shareholders.

Utilisation of the Proceeds of the Issue:

• The Company will receive the proceeds of public subscription, amounting to RO 8,100,000 (Rial Omani Eight Million, One Hundred Thousand) relating to the issue of the new Ordinary Shares, which will be utilised for setting-up a 132 kv transformers manufacturing project in Oman in technical collaboration of Tatung Co. of Taiwan, to fund the ongoing capital expenditure for the distribution transformers project in Qatar, meeting long-term working capital requirement and to invest in the future strategic projects. The target timetable of the Company for the use of the proceeds of public subscription as follows:

Type of Expenses Amount Date

Capital Expenditure RO 6 Million 2008/09

Working Capital RO 2.1 Million 2008

Total RO 8.1 Million

• The Company will receive the proceeds of public subscription, amounting to RO 5,400,000 (Rial Omani Five Million, Four Hundred Thousand) relating to the offer for sale of the Existing Ordinary Shares, which will be distributed to the Selling Shareholders through this offering, which is at an offer price of RO 0.540 (Baisas Five Hundred and Forty) per share excluding Issue Expenses.

• The baisas 2 per share collected towards Issue Expenses will cover a portion of the expenses incurred by the Company in relation to the IPO.

CHAPTER 6

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OBJECTIVES OF THE COMPANY AND APPROVALS

Overview

The Company was incorporated in the Sultanate of Oman on 3 August 1987 as a Limited Liability Company (“LLC”) and is currently undergoing the due process of transformation from an LLC into a “SAOG’’ organised under the laws of the Sultanate of Oman. The Company is the flagship Company of the well established and well diversified Al Anwar Holdings SAOG in the Sultanate of Oman. The Company has manufacturing facilities in Rusayl Industrial Area, Sultanate of Oman for Transformers and LV Switchgear Panels. The Company is on the fast growth path in the field of Electrical Products enjoying international acceptance and a preferred source status for its products and services in the Utilities & Oil & Gas sector throughout the MENA region.

The Company holds the following material permits and licenses:

1 Ministry of Commerce and Industry: CommercialRegistration

Commercial RegistrationNumber: 1262947

Date of Registration:3/8/1987

Expiry date: 2/8/2012

2 Ministry of Commerce and Industry: IndustrialLicense

Registration Number: 2547

Expiry Date: 02/08/2012

3 Oman Chamber of Commerce & Industry:Membership

Registration Number: 1614Expiry Date: 31/12/2008

4 Ministry of Environment & Climate Affairs : License License Number: 3674Expiry Date: 04/06/08

ISO 9001:2000 Certification

The Company holds an ISO 9001:2000 Certification for marketing, design, manufacturing, testing and commissioning of all its products.

Company Objectives

The objects for which the Company is established are:

(i) to carry on all or any of the business of purchasing, importing, generating, transmitting, transforming, converting, distributing, supplying, selling, exporting and dealing in electricity and all other forms of energy and products or services associated therewith;

(ii) to locate, establish, construct, equip, operate, use, manage and maintain transforming, switching, conversion transmission and distribution facilities, cables, overhead lines, substations, switching stations, tunnels, cable bridges, link boxes, telecommunications stations, masts, aerials and dishes, fibre optic circuits, satellites and satellite microwave connections, heat pumps, plant and equipment used for combined heat and power schemes;

CHAPTER 7

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(iii) to acquire (whether by usufruct, lease, concession, grant, or otherwise) establish, develop, exploit, operate and maintain land, any estates in land, which may seem to the Company capable or possibly capable of affording or facilitating the purchase, transmission, transformation, conversion, supply distribution, generation, development, production or manufacture of electricity or any other forms of energy in accordance with the laws of Oman;

(iv) to carry on all or any of the business of designers, developers, manufacturers, constructors, installers, operators, users, inspectors, testers, maintainers, repairers, servicers, suppliers, distributors, importers and exporters of and dealers in cables, wires, meters, pylons, tracks, rails, pipelines, and any other plant, apparatus, equipment, systems and things used in connection with the transmission, transformation, conversion, supply, distribution, control and generation of electricity or any other forms of energy;

(v) to provide or procure the provision of such facilities and services as may be necessary or desirable to forecast electricity/energy demand and to satisfy such demand;

vi) to appoint and enter into agreements or arrangements with any person to represent the Company or any other organisation or person at meetings of local, national and international organisations and bodies concerned with activities connected or associated with any of the businesses or activities of the Company and to provide services of all kinds to such organisations and bodies;

vii) to carry on all or any of the business of and provide services associated with, engineers (including without limitation, electrical, mechanical, heating, ventilation, civil, chemical, telecommunications and gas engineers), mechanics, technicians, draftsmen, designers, surveyors, architects and builders for achievement of the Company’s abovementioned objects in compliance with the prevailing laws;

Resolutions Passed

The Shareholders of the Company unanimously passed the following resolutions in their meetings held on 10th December 2007 and 24th February 2008.

1. Approved the proposal for conversion of the Company from an LLC to an SAOG as per the provisions of the CCL.

2. Approved the new Authorised Share Capital of the Company which would be RO 10,000,000 (Rial Omani Ten Million) and the Issued Share Capital of RO 5,000,000 (Rial Omani Five Million) divided into 50,000,000 (Rial Omani Fifty Million) Ordinary Shares of 100 Baisas each (RO 0.100).

3. Approved the transformation as a part of the process of selling/issuing the Offered Shares to the public through an IPO which would comprise of two (2) components:-

i) Offer for sale of 10,000,000 (ten million) Ordinary Shares of face value Baisas. 100 each at an issue price of Baisas 542 per share to the public by the existing Shareholders (Promoters).

ii) Fresh issue of 15,000,000 (fifteen million) new Ordinary Shares by the Company, to the public of face value Baisas 100 each at an issue price of Baisas. 542 per share.

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iii) Out of the total 25,000,000 (twenty five million) Shares which would be offered to the public, up to 1,250,000 (one million two hundred fifty thousand) Shares would be reserved for the Managers and the Employees of the Company.

4. Approved that post IPO, the current shareholders (Promoters) would hold 50% of the issued share capital of the Company and the public including the Employees and the Managers would hold the remaining 50%.

5. Approved the consent of the current shareholders’ in the LLC Company to offer a portion of their Ordinary Shares to the public as part of the IPO. The number of shares to be offered by each of the Promoters is as shown hereunder.

Promoter’s Name No. of shares before transformationFace value Bz 100

No. of Shares to beOffered For SaleFace value Bz 100

Al Anwar Holdings SAOG 20,097,000 5,742,000

SABCO LLC 7,451,500 2,129,000

Mr. Mushtaq bin Abdullah bin Jaffer 3,160,500 903,000

H.H. Seyyid Shihab bin Tariq Al Said 2,597,000 742,000

Mr. Mohammed bin Abdul Rasool Al Jamali 1,130,500 323,000

Dr. Ali bin Jaffar bin Mohammed 563,500 161,000

Total 35,000,000 10,000,000

6. Approved to form a constitutive committee consisting of the following members:

i) Mr. Qais bin Mohamed Al Yousef, Chairman

ii) Mr. Abdulredha bin Mustafa Sultan, Director

iii) Mr. Saibal Sen, Director

iv) Mr. Sebastian Manavalan, Director

v) Mr. Krishna Kumar Gupta, Director

The above committee is authorised to do all such acts and deeds required for the IPO such that the IPO shall be in compliance with statutory and regulatory requirements and approvals.

7. Approved the draft Memorandum & Articles of Association of the Company as per the requirements of the CCL pertaining to SAOG Companies for the submission to the competent authorities and their approval.

8. Approved the appointment of Oman Arab Bank SAOC as Lead Issue Manager and authorised them or their representatives to complete the due diligence and all legal, financial and accounting matters pertaining to conversion and transformation of the Company from an LLC to an SAOG Company and the preparation and finalisation of the IPO documents as required by the concerned official bodies and also to appoint a Co-Financial Advisor.

9. Approved the appointment of KPMG as the reporting Accountants and Al Busaidy, Mansoor Jamal & Co. as Legal Advisors for the IPO.

21

SHAREHOLDING DETAILS

Promoters and Selling Shareholders of the Company (before transformation):

Name of Shareholder Number of shares* Percentage

Al Anwar Holdings SAOG 20,097,000 57.42%

SABCO LLC 7,451,500 21.29%

Mr. Mushtaq bin Abdullah bin Jaffer 3,160,500 9.03%

H.H. Seyyid Shihab bin Tariq Al Said 2,597,000 7.42%

Mr. Mohammed bin Abdul Rasool Al Jamali 1,130,500 3.23%

Dr. Ali bin Jaffar bin Mohammed 563,500 1.61%

Total 35,000,000 100%

* after split

Pursuant to a unanimous resolution of the Shareholders, the Share Capital of the Company was increased from RO 1,500,000 (Rial Omani One Million Five Hundred Thousand) to RO 3,500,000 (Rial Omani Three Million Five Hundred Thousand) through an issue of Bonus Shares of RO 2,000,000 (Rial Omani Two Million) to the Promoters/Selling Shareholders. The Shares were issued by way of Bonus Shares.

Post Offer Equity Structure:

The Public shareholding and the minimum Promoters’/Selling Shareholders’ shareholding after the IPO is envisaged as under:

Sl.No

Promoter/Selling Shareholder and Public

Nationality No. of Ordinary Shares

Nominal Value by RO

Ratio to Capital

1. Al Anwar Holdings SAOGOmani

Company14,355,000 1,435,500 28.71%

2. SABCO LLCOmani

Company5,322,500 532,250 10.65%

3.Mr. Mushtaq bin Abdullah bin Jaffer

Omani 2,257,500 225,750 4.52%

4.H.H. Seyyid Shihab bin Tariq Al Said

Omani 1,855,000 185,500 3.71%

5.Mr. Mohammed bin Abdul Rasool Al Jamali

Omani 807,500 80,750 1.62%

6. Dr. Ali bin Jaffar bin Mohammed Omani 402,500 40,250 0.81%

7.Public (including Employees and Managers)

Omani / Non Omani

25,000,000 2,500,000 50.00%

Total 50,000,000 5,000,000 100%

CHAPTER 8

22

Promoters’ Voting Rights

Pursuant to the IPO and conversion into a Public Joint Stock Omani Company, the issued and paid-up share capital of the Company will be RO 5,000,000 (Rial Omani Five Million) divided into 50,000,000 (fifty million) Ordinary Shares with a nominal value of One Hundred Baizas each (RO 0.100). Each single share will carry the right to one vote at the Constitutive General Meeting of the Company and any General Meeting of the Company including any Extraordinary General Meeting.

The Promoters and Selling Shareholders will hold 25,000,000 (twenty five million) Ordinary Shares which will have one vote per share, the same as other Ordinary Shares issued to the public. The Promoters and the Selling Shareholders will effectively have 50% of the voting rights.

Restrictions imposed on the Promoters:

In accordance with Article 77 of the CCL, the Promoters of the Company shall not withdraw from the Company or dispose of their Shares prior to publication of two Balance Sheets pertaining to two consecutive financial years, effective from the date of listing of the Shares on the Muscat Securities Market. An exception to this shall be the cases of assignment of the Shares amongst the Shareholders themselves and cases of inheritance. The period during which the –Promoters are not permitted to withdraw or dispose of their Shares may be extended for a further one year by a decision of the Minister of Commerce & Industry, at the request of the Capital Market Authority, without prejudice to the right held by the Promoters to make second grade pledge on those Shares.

If any defect has taken place in the procedures pertaining to incorporation of the Company, the party concerned may within a period of five years from the incorporation of the Company, serve notice to it for remedying such a defect as per article 71 of the CCL. However, if the Company fails to take the initiative within one month of such notice for necessary remedial measures, the person concerned may have recourse to the competent court to pass a decision for dissolution of the Company. The Promoters, members of the Board of Directors and the first Auditors shall be held liable severally and jointly for the damages arising from the dissolution of the Company and which are attributable to their illegal acts or their negligence or omission in the incorporation of the Company.

Brief profile of the Main Promoters:

AL ANWAR HOLDINGS SAOG

Al Anwar Holdings SAOG is establised in 1994 by a group of prominent institutions and business houses. Al Anwar was instrumental in pioneering industrial development in Oman in various industrial segments including Transformers and Switchgears.

Al Anwar has promoted, nurtured, created and shared wealth with the investing populace of this country in the past. In its current business model with a well diversified and geographically dispersed investments in industrial and non-industrial sectors such as financial services and insurance.

Al Anwar has invested in several companies of repute. Some of Al Anwar’s current and past investments include: National Aluminum Products Co SAOG, Al Anwar Ceramic Tiles SAOG, Al Maha Ceramic Tiles SAOC, Falcon Insurance SAOC and Taageer Finance Co SAOG.

23

Board of Directors:

SL. No Name of the Director Independent/Non Indepedent

Position

1 Brig. Masoud Humaid Al Harthy Independent Chairman

2 Mr. Qais Mohammed Musa Al Yousef Independent Dy. Chairman

3 Mr. Shabir Musa A. Al Yousef Independent Director

4 Mr. Abdulredha Mustafa Sultan Independent Director

5 Mr. Nawwaf Ghubash Ahmed Al Merri Independent Director

6 Mr. Hamed Rashid Al Dhaheri Independent Director

7 Mr. Mohamed A. M. Al Khonji Independent Director

AL ANWAR HOLDINGS SAOG

SHAREHOLDERS HOLDING 1% AND MORE AS ON 31 MARCH 08

Sl. No. Name No.of shares %

1 Fincorp Investment Co.LLC 22,574,290 25.49%

2 Financial Services Co. Trust-Gulf 17,995,800 20.32%

3 Al Khonji Investment LLC 7,000,000 7.91%

4 Mohammed & Ahmed Al Khonji Co 4,457,470 5.03%

5 Mohamed Hafedh Ali Dhahab 3,005,490 3.39%

6 Oman Arab Bank- Asset Mgt-Trust Gulf 1,050,351 1.19%

7 Oman Construction Co. LLC 889, 295 1.00%

8 Others 31,577,304 35.66%

Total 88,550, 000 100%

The Board of Al Anwar is comprised of eminent personalities from business and industry and it has a highly professional management team.

Details of its current investments, financial performance and vision can be accessed through its website, www.alanwarholdings.com. As the company is listed, its financial performance can also be accessed through the MSM website.

SABCO LLC / SABCO Group

Established during the early Renaissance years of the 70s with a capital of RO 500,000, SABCO Group has grown into an integrated investment, commercial, industrial and service organisation to day. It is registered with the Ministry of Industry and Commerce and also the Oman Chamber of Commerce. The SABCO group has more than 100 employees today.

SABCO group has made its presence in the field of services, manufacturing, real estate, contracting, distribution and oil and gas and security and defence through Direct and Associate Businesses.

24

SABCO Commercial Centre, Voltamp Manufacturing Company LLC (Presently Voltamp Energy SAOG (under transformation), National Mineral Water Co. SAOG and Oman Marketing and Services Company deserve special mention among the group companies of SABCO Group.

Shareholders of SABCO.

a. Sayyid Badr Bin Hamad Bin Homood Al Bu Said – Secretary General - Ministry of Foreign Affairs (Rank of a minister)

b. Sayyid Khalid Bin Hamd Bin Hamood Al Bu Said – Chairman of SABCO Group and Al Ahli Bank SAOG.

c. Sayyid Aymen Bin Hamad Bin Hamood Al Bu Said – Vice Chairman of SABCO Group.

d. Zawan Bint Hamad Suleiman Al Nabhani

e. Sayyida Waffa Bint Hamad Al Nu Said.

Direct Businesses

Sabco LLC: A holding company involved in private and public sector project development and representation of world renowned companies.

Oman Perfumery LLC / Amouage Limited – The House of Amouage : Manufacturer, International distributor and retailer of luxury “Amouage” perfumes, home fragrances, skincare and accessories . The website is www.amouage.com

SABCO Commercial Centre: Oman’s pioneering boutique shopping mall opened in 1984.

SABCO Art LLC / SABCO Press LLC: A full service communication and entertainment solutions provider. www.sabcoart.com

Oman Expo LLC: A pioneer in Oman’s events industry organising diversified exhibitions, events and conferences. The website is www.omanexpo.com

Al Hail Investments LLC : A property development and Asset Management Company. The website is www.alhailinvestments.com

Sabco Media SAOC : A media company which owns, manages and operates Radio, TV and other media related activities.

MUSHTAQ ABDULLAH JAFFER AL SALEH

v Born in 1951

v Master of International Politics, U.L.B. Brussels, Belgium

v His Majesty The Sultan conferred upon him First Order of Al-Nouman Decoration in 1990

v Languages: Fluent in Arabic, English and French

Official Profile:

v Joined The Ministry of Foreign Affaires in 1974. Served and promoted to several positions till appointed Ambassador Extraordinary and Plenipotentiary to Djibouti in 1977, Japan in 1980, Algeria in 1983 and China in 1987

v Upon the request of GCC, The Government of Oman seconded him to serve as the very first Ambassador Extraordinary & Plenipotentiary of GCC to the European Union (1992-1996)

25

v Opted for an early retirement plan in 2002

v Appointed in 1998 One of the Five Representatives, representing Oman in the newly created GCC Consultative Council for a term of three years

v Re-appointed for second term in 2001

Business Profile:

Participated and chaired several renowned companies listed on Muscat Securities Market (1996-2005), mainly:

v Chairman of Board of Directors of Oman Orix Leasing

v Vice Chairman of Board of Directors of Gulf Hotels

v Vice Chairman of Board of Directors of Commercial Bank

v Vice Chairman of Board of Directors of Oman Carpets

v Vice Chairman of Board of Directors of Hilton Salalah

v Member of Board of Directors of AlKhaleej Polypropylene

v Member of Board of Directors of Oman National Holdings

26

MARKET AND ECONOMIC OVERVIEW

With an established base in Oman and currently entering into Qatar, the Company is looking to diversify to cover other countries within the Gulf and the wider MENA region.

An overview of the projected macroeconomic growth in some of the key markets in which the Company operates and/or expects to have a presence is shown below:

GCC’s Nominal GDP and the Expected Growth in the GCC and MENA Region

USD Billion 2008 2009 2010 2011

MIDDLE EAST 1,544 1,705 1,865 2,013

Growth 11% 10% 9% 8%

Oman 41 43 46 49

Growth 6% 6% 7% 7%

Qatar 70 77 83 89

Growth 14% 9% 8% 7%

Saudi Arabia 400 429 460 490

Growth 8% 7% 7% 7%

NORTH AFRICA 513 551 588 625

Growth 11% 7% 7% 6%

Source: Global Insight, 2007

Oman Economic Overview

Total Nominal GDP

Oman is currently witnessing a period of significant economic growth. The country’s economy has expanded by 10.64%, measured in Gross Domestic Product (“GDP”) terms, from 2005 to 2007 compared to 9.29% during the preceding 3 years. As a result, nominal GDP has increased from RO 7.9 billion in 2002 to RO 14.6.billion in 20071. This economic growth has been primarily driven by the contribution of petroleum activities which has increased by 47.8 % to the total GDP due to rising oil prices in the world markets.

Nominal GDP, 2002-2007

CHAPTER 9

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2002 2003 2004 2005 2006 2007

Petroleum Activ ities Non Petroleum Activ ities

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2002 2003 2004 2005 2006 2007

In R

O M

illio

n

0%

5%

10%

15%

20%

25%

Nominal GDP Grow th

Source: Statistical Yearbook 2007, Ministry of National Economy; www.mone.gov.om, 2008

1 Figures for 2007 are preliminary

27

Oman Economic Activities

Source: Statistical Yearbook October 2007, Ministry of National Economy

The contribution from non-petroleum activities rose by 18% in 2006 principally on the strength of the 45% growth in manufacturing, 20% in building and construction activities and 24% in transport, storage and communication. Oman’s non-oil exports have increased by 39% from RO 1.1 billion in 2005 to RO 1.6 billion in the year 2006.

Economic Drivers

Oman’s long-term economic growth plans are embodied in the Vision 2020 (“Vision”) document which sets out the strategic goals to be achieved by the year 2020. The fundamental goals of the Vision are as follows:

Ñ To develop and upgrade Omani human resources in order to cope with technological progress and attain international competitiveness.

Ñ To develop a private sector capable of optimum use of human and natural resources in an efficient and ecologically sound way, in close collaboration with the government.

Ñ To utilise the geo-strategic location of the Sultanate, optimise the use of its natural resources and promote economic diversification.

Ñ To distribute the fruits of development among all regions and all citizens.

Ñ To preserve, safeguard and develop the achievements accomplished in the past twenty- five years.

From a planning perspective, the Government links developmental priorities and budgetary plans to five-year planning cycles. The current five-year plan is an important stepping-stone towards achieving the Vision through which the Government is seeking to achieve a GDP growth rate of 7.4% for the period 2000-20202. The Vision’s aim is that by 2020, Oman’s economy will have limited reliance on oil revenues and would have diversified into non-oil sectors such as natural gas, downstream industries and tourism.

It is projected that by 2020, the share of oil revenues in Oman’s GDP would be around 9% (compared to 48% in 2006) while natural gas revenues will contribute 10% (compared to 3.6% in 2006) to the GDP.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2002 2003 2004 2005 2006 2007

Petroleum Activ ities Non Petroleum Activ ities

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2002 2003 2004 2005 2006 2007

In R

O M

illio

n

0%

5%

10%

15%

20%

25%

Nominal GDP Grow th

1 Ministry of National Economy

28

Economic Diversification

The non-oil industrial sector’s contribution to GDP is expected to rise from the current level in 2006 of 14.2% to 29% in 2020. This structural shift is expected to have a significant impact on Oman’s future economic development. To achieve these goals, the Government is focusing on the following economic drivers:

Ñ Increasing Foreign Direct Investment: During the past few years, positive steps towards privatisation have been taken as part of the structural reform program. These steps are aimed at supporting the country’s development strategy and making the Omani economy more attractive to foreign and local investors. Some key steps that have been taken include the lifting of foreign direct investment-related restrictions relating to most sectors, streamlining business regulations and adopting a “one-stop” investment approach. The ratification of the Free Trade Agreement (“FTA”) with the United States in 2006 is an indication of the Government’s commitment to economic reform and diversification. Oman’s membership in the World Trade Organisation (“WTO”) in 2000 is an effort towards the liberalisation of its markets.

Ñ Industrialisation: The industrial sector is also expected to help Oman realise its Vision 2020. In 1994, the industrial sector accounted for only 4.3% of GDP, while today nearly 8.5% of GDP is accounted for by this sector. Oman is planning to raise the contribution of manufacturing to the GDP to 15% by 2020. Currently, Muscat, Sohar and Salalah are the key centres of the process of industrialisation. Sohar is undergoing a huge transformation with around USD 12 billion worth of developments. Five major projects have been already announced namely Sohar Refinery Project, Sohar Methanol Project, Oman-India Fertilizer project, Ferro-Chrome project and Sohar Fertilizer project. Continued activity in the industrial sector is anticipated with the Government’s commitment to its long term target of diversifying away from the oil and gas sector. A key component of this diversification includes various proposed aluminium-related downstream projects.

Ñ Tourism: Vision 2020 stresses the importance of diversifying the economic base of the country and identifies tourism as one of the important economic drivers which can help realise the Vision. In order for the Government to meet its long-term targets, a tourism growth rate of 15% to 20% per annum3 needs to be achieved. As a step in this direction, the Government is enhancing the role of the private sector in projects and activities. The Ministry of Tourism (“MoT”), established in 2004, has already signed agreements with private developers for implementing 14 projects worth more than RO 6.6 billion.

Qatar Economic Overview

Nominal GDP

Qatar’s economy is in a high growth phase. The nominal GDP in Qatar grew significantly by 24.2% in 2006 after witnessing a strong growth of 33.8% in 2005 and 34.8% in 2004. In 2006, Qatar’s GDP per capita increased by 15.5% to reach USD 57,350, and is expected to reach USD 68,467 by the year 20084.

Qatar’s Nominal GDP

QR Million 2003 2004 2005 2006Total GDP (Million Rial Qatari) 85,663 115,512 154,564 191,909% Change 21.5% 34.8% 33.8% 24.2%

Source: Annual Report 2005, 2006, Qatar Central Bank3 “Vision Oman 2020”, Ministry of National Economy4 Qatar National Bank

29

Qatar’s GDP as Oil and Non-Oil Activities

Source: Qatar Economic Review 2007, Qatar National Bank

Economic Activities

The oil and gas sector has grown to QR 118,707 million in 2006 from QR 92,071 million in 2005 which is equivalent to a growth rate of 29%. The non-oil sector has increased by 17.14% in 2006 to reach QR 73,202 million. In 2006, finance, insurance and real estate represented 21.5% of the total non-oil sector and manufacturing sector represented 19.3%. Building and construction sector has increased by 17.7% in 2006 and reached QR 10,291 million comparing to QR 8,744 million in 2005.

The table below provides the break down of the non-oil sector in Qatar for 2005 and 2006:

GDP for Non-Oil Sector

QR Million 2005 Share 2006 Share Growth

Agriculture & Fishing 216 0.6% 233 0.3% 7.9%

Manufacturing 13,042 20.9% 14,098 19.3% 8.1%

Electricity & Water 2,209 3.5% 2,424 3.3% 9.7%

Building & Construction 8,744 14.0% 10,291 14.1% 17.7%

Trade, Rest, & Hotels 6,869 11.0% 7,616 10.4% 10.9%

Transport & Communication 5,114 8.2% 5,612 7.7% 9.7%

Finance, Ins. & Real Estate 14,785 23.7% 15,760 21.5% 6.6%

Other Services 11,514 18.4% 17,168 23.5% 49.1%

Total 62,493 100.0% 73,202 100.0% 17.1%

Source: Qatar Economic Review 2007, Qatar National Bank

Economic Drivers

The main drivers that contribute to Qatar’s strong economic performance are highlighted below:

Ñ Qatar’s oil production averaged 800,000 bpd5 during the first half of 2007. Qatar’s oil production increased by 31,000 bpd during the year 2006, to average 810,000 bpd, compared to an average of 779,000 bpd produced during 2005.

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2003 2004 2005 2006

Con

trib

utio

n to

GD

P (Q

R m

illio

n)

Oil & Gas sector Non-oil sector

5 Barrel per day

30

Ñ Qatar’s exports have increased by 32.2% in 2006, to reach QR 123.9 billion. The oil and gas exports reached QR 111.2 billion of which 57% is accounted for by oil exports and the balance 43% by gas exports.

Ñ Qatar’s oil price averaged USD 61.1 during the first half of 2007. In 2006, oil price has increased by 21.7% to reach USD 62.9 compared to USD 51.7 in 2005.

Ñ The population in Qatar was 522,023 as per the 1997 census, and has grown in 2004 by 43% to reach 744,029 according to the 2004 census.

Ñ The total assets of Qatari banks have increased by 46.7% in 2006 to reach QR 167.6 billion, and their net profits increased by 28.9% to reach QR 5,523 million in the same year.

Ñ Many development projects in sectors such as infrastructure, health, education and tourism have further contributed to the economic performance. Mega projects are undergoing development:

- Infrastructure: the New Doha International Airport project is estimated to cost USD 2.5 billion and will be completed in three phases (2009, 2012 and 2015). Several roads and expressways projects are under implementation. Amongst the major road projects is the Qatar-Bahrain Bridge with an estimated value of USD 2 billion.

- Gas and LNG6: Al-Khaleej Gulf Project, the Dolphin project and Kuwait-Qatar gas supply project are expected to enhance Qatar’s gas production capabilities and increase gas sales to the domestic consumers and gas export market. RasGas LNG 3,4 and 5, RasGas LNG 6 and 7 Qatargas II and III projects are aimed at enhancing the production and export of LNG.

- Leisure and tourism: the Pearl of the Gulf project, estimated at USD 2.5 billion, is a man-made island which is expected to include over 7,500 dwelling units, 3 luxury hotels and entertainment centres, restaurants and parks. The project master plan focuses on the creation of new hotels and tourist attractions, and it is designed to develop a tourism base of 1.4 million by 2010. The total additional spending is expected at USD 15 billion.

- Healthcare: Hamad Medical City project is estimated to cost around USD 0.4 billion and will include a 300-bed unit, a dialysis unit, medical staff accommodation and laboratories. Hamad Southern Area Hospital estimated to cost USD 57 million will include 200-bed facility. The USD 26 million Cardiology Hospital which comprises of a 110-bed facility is being developed at Rumailah.

Industry Information

Power Industry in the GCC

The power and utility sector in all GCC countries is witnessing significant growth. The current economic development, increasing industrial capacity and population growth is outstripping demand for electricity in the region. According to the World Energy Council, an additional 100 gigawatts of power generation capacity would be needed by 2020, which is projected to cost an estimated USD 150 billion.6 Liquefied Natural Gas

31

The current GCC power capacity is illustrated in the following graph:

Present GCC Power Capacity

Source: The Power of Watt, ABQ Zawya Ltd, 2007

The future GCC power capacity is illustrated in the following graph:

Future GCC Power Capacity

Source: The Power of Watt, ABQ Zawya Ltd, 2007

Market Demand for Transformers

The high demand for power has resulted in a significant increase in demand for power transformers. During 2006, the market demand for power transformers in the MENA region was 32,595 MVA (Megavolt Ampere). Oman represented 8% of the total MENA demand; KSA has the biggest share of 19%, Qatar 6%, UAE 15%, Kuwait 6% and Bahrain 2%. At present, more than 90% of the transformer demand in the GCC is met by imports. This represents a significant business potential for existing players to replace imported products.

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000

UAE

Oman

Bahrain

Saudi Arabia

Qatar

Kuw ait

MW

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

UAE

Oman

Bahrain

Saudi Arabia

Qatar

Kuw ait

MW

Installed Capacity Additional Capacity

32

The power transformer market demand for 2006 is illustrated in the following graph:

Transformer Market Size, MVA

Source: Feasibility Study for Power Transformers, A. F. Ferguson & Co., 2007

The power transformer market for the MENA region is projected to reach 75,080 MVA (Megavolt Ampere) in 2012 as per the following graph:

Power Transformer Demand Forecast 2012


It is this significant growth in the demand for power transformer that the Company endeavours to capture with its new projects in Oman and Qatar.

O m a n

2,610

Y em e n

2 10

K S A

6,3 75

U A E

4 ,9 15

S yria

6 00

Jorda n

64 0

Q a ta r

1 ,8 05

Iraq

3,41 5

K uw ait

1 ,965E g ypt

1 ,525

S u dan

5 20

Ira n

4 ,86 0

T urke y

2 ,4 00

B a hra in

7 55

O m a n

2,610

Y em e n

2 10

K S A

6,3 75

U A E

4 ,9 15

S yria

6 00

Jorda n

64 0

Q a ta r

1 ,8 05

Iraq

3,41 5

K uw ait

1 ,965E g ypt

1 ,525

S u dan

5 20

Ira n

4 ,86 0

T urke y

2 ,4 00

B a hra in

7 55

-2,0004,0006,0008,000

10,00012,00014,00016,00018,000

Saudi

Arabia

UAEIra

qOman

Qatar

Kuwait

Egypt

Sudan

Bahrai

n

Yemen

Other c

ountr

ies

MVA

33

Customer Sectors

In 2006, 73% of the MENA demand for power transformers came from entities in the utility sector, 16% of demand was contributed by the oil and gas sector and 11% by heavy industry. The graph below illustrates the demand for the three main sectors in the GCC countries:

Demand for Power Transformers by Sector


0%

20%

40%

60%

80%

100%

120%

Oman KSA Qatar UAE Kuw ait Bahrain Yemen

Mark

et

dem

an

d

Utility Oil and Gas Heav y Industry

34

CHAPTER 10

DESCRIPTION OF THE COMPANY AND BUSINESS OVERVIEW AND ACTIVITIES

Overview:

Established in 1987, the Voltamp Energy is the flagship company of the Al Anwar Group. It manufactures low voltage switchgear panels through a franchisee agreement with Schneider-France.

Current Ownership Structure

Voltamp Energy is to be converted from LLC to SAOG as part of the IPO process. The proposed ownership structure, incorporating the additional project, is expected to be as follows:

Planned Ownership Structure*

The 0.01% shareholding held by Al Anwar Holdings SAOG in VTO is under trust of VE. A similar structure is anticipated for the shareholding structure of VPO whereby 100 shares of VPO will be held by VTO under trust of VE.

Other Shareholders

21.29%

SABCO LLC

Voltamp Energy LLC

Voltamp Transformers Oman LLC

99.99% 51%

Al Anwar Holdings SAOG

Voltamp Manufacturing Company Qatar (under

construction)

21.29%57.42%

0.01%

Other Shareholders

21.29%

SABCO LLC

Voltamp Energy LLC


99.99% 51%



construction)

21.29%57.42%

0.01%

New Shareholders

(post-IPO)SABCO LLC

Voltamp Energy SAOG

(under transformation)


99.99% 51%



construction)

0.01%

Voltamp Power Oman LLC (proposed)

99.99%

Other Shareholders

(pre-IPO)

28.71% 10.65% 10.65% 50.00%

0.01%

New Shareholders

(post-IPO)SABCO LLC

Voltamp Energy SAOG

(under transformation)


99.99% 51%



construction)

0.01%

Voltamp Power Oman LLC (proposed)

99.99%

Other Shareholders

(pre-IPO)

28.71% 10.65% 10.65% 50.00%

0.01%

35

Brief Profile of Subsidiaries of the Company

Voltamp Transformers Oman LLC (“VTO”)

Established in 1991 in collaboration with Babcock Transformers UK, VTO is a certified ISO 9001 company that specialises in a range of power, distribution and speciality transformers. It designs and manufactures special multi-tap transformers for the oil & gas sector.

VTO has a state-of-the-art manufacturing facility located in the Rusayl Industrial Area, Sultanate of Oman where it currently manufacturers transformers with capacities ranging from 50 kVA to 15 MVA, 33 kV class.

In addition to manufacturing activities, VTO also offers services relating to the erection, commissioning, servicing and testing of transformers and associated equipment through its Engineering and Services Division .

VTO is currently looking to expand its customer base in the wider MENA region, with a primary focus on the GCC markets, including Kingdom of Saudi Arabia, Kuwait, United Arab Emirates, and Yemen.

The Projected Financials are given in the following table

VOLTAMP TRANSFORMERS OMAN LLC

Projected Income statementfor the year ended 31 December

2008 2009 2010 2011 2012 2013 2014RO RO RO RO RO RO RO

IncomeRevenue 10,700,000 13,036,000 16,426,000 17,607,825 18,938,216 20,447,628 22,173,133Cost of sales -7,334,450 -8,930,391 -11,340,572 -12,168,350 -13,076,518 -14,099,604 -15,272,261Gross profit 3,365,550 4,105,609 5,085,428 5,439,475 5,861,698 6,348,024 6,900,872Percentage of gross profit 31.45% 31.49% 30.96% 30.89% 30.95% 31.05% 31.12%Other income 141,904 90,000 102,000 107,400 113,205 119,445 126,154

3,507,454 4,195,609 5,187,428 5,546,875 5,974,903 6,467,469 7,027,026ExpensesSelling, administrative and general -810,679 -967,978 -1,193,688 -1,303,960 -1,387,531 -1,505,886 -1,616,551

Profit from operations 2,696,775 3,227,631 3,993,740 4,242,915 4,587,372 4,961,583 5,410,475Finance charges -175,000 -175,000 -175,000 -175,000 -175,000 -175,000 -175,000Profit for the year before taxation 2,521,775 3,052,631 3,818,740 4,067,915 4,412,372 4,786,583 5,235,475

Taxation -299,013 -362,716 -454,649 -484,550 -525,885 -570,790 -624,657Net profit for the year 2,222,762.00 2,689,915.00 3,364,091.00 3,583,365.00 3,886,487.00 4,215,793.00 4,610,818.00Earnings per share for the year 2.223 2.690 3.364 3.583 3.886 4.216 4.611

Voltamp Manufacturing Company Qatar

VMCQ was established in 2007 in Qatar with an initial capital of QR 16.2 million. VE owns 51% of VMCQ and the remainder is owned by two Qatari companies; Al-Salam International Investment Company LLC and Al Arkan Al Arabah, own the remaining 49%.

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The manufacturing of transformers at VMCQ is expected to start in July 2008 and will focus on manufacturing transformers as well as associated switchgear. It is expected that VMCQ will initially cater to the needs of the Qatar and Bahrain markets, which are currently experiencing significant growth.

VMCQ will manufacture oil filled transformers up to 10 MVA / 33 kV class, dry type transformers up to 1.6 MVA / 11kV class and LV switchgear. The specific products will include:

Ñ Normal transformers for utilities applications

Ñ 3 winding and 4 winding transformers for special applications

Ñ Transformers for industrial applications

Ñ Transformers for VSD applications

Ñ Transformers with tappings on both the primary and secondary windings (tappings up to 50% earthing transformers)

The main reasons for establishing VMCQ are:

Ñ The economic growth in Qatar and the new mega projects are still under development, which offer product demand potential

Ñ There is no local transformer manufacturer in Qatar, at present, which would allow VMCQ to benefit from a first mover advantage as a local manufacturer

Ñ VTO has existing customers in Qatar, such as Qatar General Electricity and Water Corporation (“KAHRAMAA”), through which it has developed a strong brand name and product presence in the local market. It should be possible to leverage the existing customers and reputation to further penetrate the market while providing improved post-sales support through the local operation

Ñ Qatar’s strategic position will enable Voltamp to access customers in Bahrain, Kuwait and KSA

About the Consultant:

The detailed feasibility study was undertaken by Deloitte consultants relating to VMCQ’s operation and a brief about the consultants is given below:

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates.Delotte Touche Tohmatsu is an organisation of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual Capital of 120,000 people worldwide, Deloitte delivers services in four professional areas-audit, tax, consulting and financial advisory services- and serves more than one-half of the world’s largest companies, as well as large national enterprises, public institutions, locally important clients, and successful, fast-growing global growth companies. Services are not provided by the Deloitte Touche Tohmatsu Verein,and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas.

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Key Sectors of Demand for the VMCQ Project:

The feasibility study conducted by Deloitte highlights the following key sectors from which demand is expected to be generated:

Ñ Infrastructure

Ñ Tourism

Ñ Healthcare

Ñ Education

Ñ Utilities

Ñ Heavy Industries

Ñ Oil & Gas

The Projected Financials for the VMCQ as per the feasibility study conducted by Deloitte Consultants is given below:

VMCQ

Projected Income Statements (2008-2014)

2008 2009 2010 2011 2012 2013 2014RO RO RO RO RO RO RO

Income

Revenue 2,865,242.00 9,321,458.00 10,355,604.00 11,508,142.00 12,793,144.00 14,226,425.00 15,825,770.00

Cost of sales -2,486,364 -7,575,496 -8,379,508 -9,294,590 -10,326,819 -11,141,725 -12,384,526

Gross profit 378,878 1,745,962 1,976,096 2,213,552 2,466,325 3,084,700 3,441,244

Percentage of gross profit 13.22% 18.73% 19.08% 19.23% 19.28% 21.68% 21.74%

Other income

378,878 1,745,962 1,976,096 2,213,552 2,466,325 3,084,700 3,441,244

Expenses

Selling, administrative and general -569,645 -933,649 -1,014,125 -1,092,424 -1,181,059 -1,288,698 -1,407,817

Profit from operations -190,767 812,313 961,971 1,121,128 1,285,266 1,796,002 2,033,427

Finance charges -59,028 -47,223 -41,320 -35,417 -29,514 -23,611 -17,708

Profit for the year before taxation -249,795 765,090 920,651 1,085,711 1,255,752 1,772,391 2,015,719

Taxation 0 0 0 0 0 0 0

Net profit for the year -249,795.00 765,090.00 920,651.00 1,085,711.00 1,255,752.00 1,772,391.00 2,015,719.00

Earnings per share for the year -0.016 0.050 0.060 0.071 0.082 0.115 0.131

Capacity utilisation

Growth 225.33% 11.09% 11.13% 11.17% 11.20% 11.24%

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Voltamp Power Oman LLC (Under formation)

As part of its growth strategy, the Company is proposing to set up a new project (VPO), which will be located in the Sohar Industrial Estate. The project aims to enhance the Company’s product range by offering power transformers up to 150 MVA/132 kV class This extension of the product portfolio will allow the Company to further enhance its brand name in the local and regional power sector.

The new project will cater to local demand as well as the wider GCC and MENA region. The power transformer market is growing strongly and this project provides the Company with an opportunity to benefit from this growth while, at the same time, providing a diversification to its current product portfolio.

The location in Sohar Industrial Estate provides easy access to the industrial hub being developed around Sohar Port, Sohar Refinery and the aluminium smelter. In addition, Sohar Port will facilitate the efficient import raw materials and export transformers. VPO’s location is Sohar, near to the UAE, will also enable to the company to easily access the large and growing UAE transformer market.

An independent project feasibility study has been completed by M/S.A.Ferguson & Co, reputed consultants from India, whose brief is given below and the Company’s management expects to progress to a more detailed planning phase in the coming months. At this stage, the initial cost of the project is estimated at RO 9 million and is expected to commence production by January 2010.

The Company has entered into a technology collaboration agreement with Tatung Co. of Taiwan for production of power transformers up to 150 MVA/132 kV class. Tatung is a diversified international company involved in the design and manufacture of a wide variety of industrial products. Tatung is a leader in the power and energy business and its products include power transformers up to 345 kV (and being expanded up to 500kV), oil-filled and dry distribution transformers, switchgear, copper rods, bare copper wires, telecommunication cables, and optical fibre cables. Tatung was founded in 1918 and is headquartered in Taipei, Taiwan.

Profile of A Ferguson & Co.

AFF is one of the leading firms of Chartered Accountants and Management Consultants in India. They have a long history of providing high quality and specialised services in most areas of management consultancy.

They provide a range of specialist management consultancy services in various functions and sectors, drawing on resources from a large domestic and international network. With consulting experience of over 30 years in India, they are a pioneer and leader in several consultancy products and services.

They pride themselves in not being just another ‘consultancy’ organisation. Their business philosophy is to add value to their client’s business by providing a solution most appropriate to the business context, with specific emphasis on the implementability of their recommendations. They believe in building long term relationships with their clients, and it is no surprise that their client retention rate is among the highest in the business. Further information about them can

39

be found at http://www.afferguson.com/. The Projected Financials in the future for the Project as per the study conducted by the consultants A Ferguson & Co. are given below:

Projected Income Statement for Voltamp Power Oman LLC for the period 2008-2014

(Year ending 31st December)

2008 2009 2010 2011 2012 2013 2014

RO RO RO RO RO RO RO

Income

Revenue 0 3,010,000 9,693,000 16,169,000 21,613,000 25,341,000

Cost of sales 0 -3,044,335.00 -7,460,384.00 -11,776,825.00 -15,401,715.00 -18,028,467.00

Gross profit 0 -34,335 2,232,616 4,392,175 6,211,285 7,312,533

Percentage of gross profit 0.00% -1.14% 23.03% 27.16% 28.74% 28.86%

Other income 0 0 0 0 0 0

0 -34,335 2,232,616 4,392,175 6,211,285 7,312,533

Expenses

Selling, administrative and general

-358,00 -1,348,776 -1,720,852 -2,151,532 -2,697,757 -3,182,441

Profit from operations -358,000 -1,383,111 511,764 2,240,643 3,513,528 4,130,092

Finance charges 0 -461,000 -451,000 -515,000 -497,000 -463,000

Profit for the year befoe taxation

-358,000 -1,844,111 60,764 1,725,643 3,016,528 3,667,092

Taxation 0 0 0 0 0 0

Net Profit for the year -358,000 -1,844,111 60,764 1,725,643 3,016,528 3,667,092

Earnings per share for the year

-0.090 -0.461 0.015 0.431 0.754 0.917

Products and Services

The following section outlines the switchgear and transformer products that the Company and VTO respectively, manufacture and market in the region. Transformers are split into Low Power, Medium Power and Power categories as described below:

Transformer Categorisation

Category Power RangeLow power transformers (“LPT”) 3 MVA to 15 MVA, 33 kV classMedium power transformers (“MPT”) 15 MVA to 50 MVA, any voltage classPower Transformers (“PT”) Above 50 MVA, any voltage class


The Company is engaged in the design and manufacture of low (up to 1 kV) voltage control and distribution systems which primarily involves engineering, assembly and testing of LV switchgear products. The main products include:

Ñ Intelligent and conventional motor control centres

Ñ Power control centres

Ñ Main and sub-main distribution boards

Ñ Auto mains failure and auto transfer switch panels with PLC controls7 Voltamp Energy LLC, 2007

40

Ñ Auto synchronising generator control panels

Ñ Capacitor banks and harmonic filter panels

Ñ Custom built control panels

Ñ Feeder pillars and metering panels

The Company has established a strong market in Oman with major clients such as Petroleum Development Oman (“PDO”), the Ministry of Housing, Electricity and Water and Oman Refinery Company.


VTO is engaged in the manufacturing and supply of oil filled transformers in the following categories:

Ñ Distribution transformers from 50 kVA to 3,000 kVA/ 33 kV class

Ñ Low Power transformers up to 15 MVA/ 33 kV class

Ñ Earthing transformers

Ñ Special transformers with multi-tap construction

The following graph illustrates the different types of product and their respective share based on sales in 2007:

Sales by Products Type

The graph highlights that almost 67% of VTO’s sales is in the non standard segment. This is a key strength as it allows VTO to operate in a niche market which offers higher margins as well as allowing it to differentiate itself from competition.

In addition to its manufacturing capability, VTO provides engineering and maintenance services as detailed below:

Ñ Maintenance contracts which include examination of transformers, cleaning of brushings, annual oil sampling, transformer site testing and complete transformer overhauls

Ñ On-site assessment services for measurement of insulation and winding resistance, magnetic circuit test, winding ratio test, insulating oil test and all sorts of cable terminations checking

Ñ Field supervision and testing of transformers up to 132 kV

Ñ On-site repair which consists of electrical checks, oil quality analysis, cleaning, checking the function of all protection devices, overhauling the tap changer and testing the transformer

Low Power10%

Standard23%

Non-Standard67%

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Ñ Factory services for ratings up to 20 MVA / 33 kV class

Ñ Delivery of spare parts and components

Ñ Technical support, which includes failure analysis and oil analysis

Ñ Turnkey sub-station projects including management capabilities relating to every phase of the project from supply, erection and installation through to final commissioning of substations up to 33kV voltage class

VTO has an agreement of exclusivity with a laboratory in Sharjah to provide technical services for oil analysis, insulation and other testing services.

Customer Segments


The Company has a 14%7 market share in the Omani market for low voltage switchgear based on 2007 sales. The Company caters to the utility, oil and gas, infrastructure and industry sectors as indicated in the following graph:

The Company’s Market Segments 2007

Source: Voltamp Energy LLC


VTO’s customer base covers three key industries and is spread across Oman and the wider MENA region:

Ñ Utilities: VTO serves major clients in the power and energy sector such as the Ministry of Defence Oman, Majan Electricity Co., Mazoon Electricity Co., Rural Area Electricity Co. Ministry of Defence Muscat, KAHRAMAA, Sharjah Electricity & Water Authority, Dubai Electricity & Water Authority and PEC-Aden.

Ñ Oil & Gas: some of VTO’s large clients include PDO, Occidental of Oman, Kuwait Oil Company, Joint Operations, Kuwait National Petroleum Company (“KNPC”).

Ñ Heavy Industry: VTO provides products to industrial companies such as Sohar Aluminium, Sohar Refinery, Oman Gas Co. and Oman LNG.

In addition, VTO is also focusing on the tourism sector. In this sector, VTO provides a range of products to major hotels as well as large, integrated tourism projects in Oman. Customers in this segment include the Al Bustan Palace, Shangri-La’s Barr Al Jissah Resort and The Wave.

Oil & Gas

53%

Utility

25%

Industry

16%

Infrastructure

6%

42

VTO Market Segments 2007

Source: Voltamp Transformers Oman LLC

Voltamp Manufacturing Company Qatar

The detailed feasibility study undertaken relating to VMCQ’s operation highlights the key sectors from which demand is expected to be generated:

Ñ Infrastructure

Ñ Tourism

Ñ Healthcare

Ñ Education

Ñ Utilities

Ñ Heavy Industries

Ñ Oil & Gas

As indicated earlier, Qatar’s economy is experiencing significant growth and the sectors listed above are key beneficiaries of the growth.

Major Contracts

The tables below highlight some of the recent contract wins for the Company and VTO:

List of contracts for the Company:

Name of the Contract Value of the Contract (RO) Expected Completion Date

Oman Refinery 420,000 (3-4) qtr 2008

Al Opera 152,000 (3-4) qtr 2008

Galfar (Sur&Buraimi Projects) 90,000 (2-3) qtr 2008

Oman Gas 92,000 (2) qtr 2008

Muscat Airport 100,000 (3) qtr 2008

PDO 205,000 (2-3) qtr 2008

Al Anwar Ceramics 40,000 (2) qtr 2008

Switches & Boards 348,000 (2-4) qtr 2008

Oil & Gas25%

Utility44%

Industry24%

Infrastructure7%

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List of contracts for VTO

Name of the Contract Value of the Contract (RO) Expected Completion Date

Bechtel-Sohar Aluminium 116,000 (3) qtr 2008

Bahwan Engineering 1,563,000 (3) qtr 2008

Al Tayar Co. Qatar 3,000,000 (4) qtr 2008

L&T Oman 323,000 (2) qtr 2008

Mazoon Electric 254,000 (3) qtr 2008

Majan Electric Company 199,000 (4) qtr 2008

Trade Links 238,000 (2) qtr 2008

STS Company 187,000 (3) qtr 2008

Al Falahi Company 186,000 (2) qtr 2008

Rural Electric Company 156,000 (2) qtr 2008

Omran Company 108,000 (2) qtr 2008

During the year 2005, VTO was awarded a prestigious two -year call off contract from Qatar General Electricity & Water Corporation (KAHRAMAA) to supply distribution transformers worth QR 77,409,885. The contract was won by VTO in competition with the international manufacturers who also bided for this contract.

Organisation and Management

The diagram below describes the high-level organisational structure for the combined entity of the Company and VTO.

Organisational Chart

Voltamp Energy

44

Managers

The following table shows the present composition of the Board of Managers:

Board of Managers of Voltamp Energy

Name Representing

Mr. Qais bin Mohamed Al Yousef - Chairman Al Anwar Holdings SAOG

Mr. Abdulredha bin Mustafa Sultan Al Anwar Holdings SAOG

Mr. Krishna Kumar Gupta Al Anwar Holdings SAOG

Mr. Saibal Sen SABCO

Mr. Sebastian Manavalan H.H.Seyyid Shihab bin Tariq Al Said

With respect to LLC’s, the CCL does not provide for a board of directors being responsible for the management of LLC’s. LLC’s are, in accordance with Article 151 of the CCL, to be managed by one or more managers who shall be natural persons and may be from amongst the shareholders or non-shareholders. These managers shall be appointed for a specified or unspecified term in accordance with or as required by the constitutive contract and as per the terms of the employment contracts entered into by a manager with a company. By contrast, the management of Omani joint stock companies is vested in a board of directors and the number of directors and their term of office shall be specified in the Memorandum and Articles of Association.

In accordance with the CCL all persons appointed to act as or hold themselves out as managers of an LLC must be registered with the MOCI as authorised signatories, to be seen to be managers in accordance with Article 151 of the CCL.

Senior Management

The following section highlights the key personnel in positions of senior management:

Senior Management Team for the Group

Name Designation

Mr. Mohamed bin Jaffar M. Sulaiman Chief Executive Officer

Mr. Ajitkumar Gangal General Manager-Operations

Mr. Abdullah bin Ahmed Al Zadjali Deputy General Manager

Mr. Basant Bhageria Finance Controller

Mr. T. Satyanarayana VTO Works Manager

Mr. Pronab Chakraborthy VE Works Manager

Mr. Rajiv Hingorani ESD Manager

Mr. Benedict Paul D’Souza Supply Chain Manager

Mr. Aasit M. Naik Marketing Manager

45

Mohamed bin Jaffar M. Sulaiman: Chief Executive Officer*

Year of Joining 2004

Education Civil and Architectural Degree - University of Miami, USAMember in the American Society of Civil Engineers

Experience Eng Jaffar has 26 years of techno-commercial experience. In his current role as CEO, Mr Jaffar is responsible for managing the operations of VE and VTO. He is also on the board of VMCQ and has been closely involved in the development of the Qatari operation and the new project.

Prior to joining Voltamp, Eng. Jaffar has worked for PDO where he attended senior management courses in Europe and the Far East. He has also held the positions of Chairman of the Contracting Committee at the Omani Chamber of Commerce and Industry and board member of Majan College.Eng. Jaffar is a member of the American and Omani societies of Civil Engineers.

Ajitkumar Kashinath Gangal: General Manager - Operations


Education Bachelor of Electrical Engineering

Experience Mr Gangal has 28 years of experience in the transformers industry. He has experience in the area of distribution and power transformers up to 400 kV class. As GM – Operations, Mr Gangal is responsible for all operational aspects of VTO. He is also a senior member of the VPO project team.Before joining Voltamp he worked with leading companies such as Crompton Greaves Ltd, India and Virginia Transformation Corporation, USA. He was also engaged in the revival of Ganz Transformers Plant in Hungary.

Abdullah bin Ahmed Al Zadjali: Deputy General Manager


Education Master of Business Administration

Experience Mr Al Zadjali has over 28 years of experience in human resources and administration/finance. He is responsible for the human resources, administration and legal functions of the company. He is also responsible of handling government related and legal matters arising during shareholders’ meetings.

*(Mr Mohamed Jaffar – the CEO of Voltamp has submitted his resignation from the Company for personal reasons. The

Board while accepting Mr Jaffar’s resignation, would like to place on record their thanks and appreciation for Mohamed

Jaffar’s efforts at Voltamp and wish him all the best in his future endeavours. Mr Jaffar will remain in the Company till

mid June 2008, as per the terms of his contract, and the Board has already started the process to identify a suitable

replacement. The General Manager of the Company will assume the duties of the CEO in his absence.”)

46

Basant Bhageria: Finance Controller


Education Chartered Accountant

Experience Mr Bhageria has 17 years of experience in finance, accounting, taxation and commercial affairs within industries ranging from chemicals, textiles, food products to FMCG. He is currently responsible for the finance and accounting of VE and VTO.

T. Satyanarayana: Works Manager - Transformers



Experience Mr Satyanarayana is responsible for the transformer design and manufacturing functions. He also has responsibility for the quality management system (ISO 9001) for his division.

Pronab Chakraborty: Works Manager – Switchgears


Education Bachelor of Mechanical Engineering

Experience Mr Chakraborty has 28 years of experience in the field of electrical product manufacturing. Currently he is responsible of the switchgear division and all its related functions from budgeting, procurement, designing and engineering, production and sales. He is also responsible for the quality management system (ISO 9001 standards) for his division.

Rajiv Hingorani: Manager - Engineering Services Division (ESD)



Experience Mr Hingorani has over 15 years of experience in the transformer industry. He is currently responsible as Profit Centre head for the ESD division. The activities of the division include repair and maintenance services for transformers/substations and turnkey substation contracts for erection and testing and commissioning activities.

Benedict Paul D’Souza: Supply Chain Manager


Education Bachelor of Electrical Engineering / Masters in Business Administration

Experience Mr D’Souza has 21 years of experience in the transformers industry. He is currently responsible for all activities related to supply chain management.

47

Aasit M. Naik: Marketing Manager-Transformers


Education Bachelor of Electrical Engineering / Diploma in Marketing and Management

Experience Mr Naik has over 20 years of experience in marketing transformers. He has worked from several leading transformers manufacturing companies in India such as Voltamp, India, GEC, etc. Currently he is the Marketing Head for the transformer business

Rewards & Recognition

Voltamp Energy and VTO are recipients of many prestigious awards and recognition from the Government of Sultanate of Oman for their excellent performance in the field of manufacturing and exporting electrical equipments.

The table below shows the number of times each company has been the recipient of the prestigious His Majesty the Sultan’s Cup for best performing industrial companies in Oman, awarded since 1998:

List of Awards

Recognition Company Issuer Date

HM Cup Voltamp Energy LLC Ministry of Commerce and Industry 2003

HM Cup Voltamp Transformers Oman LLC Ministry of Commerce and Industry 2003

HM Cup Voltamp Energy LLC Ministry of Commerce and Industry 2002




Source: VE and VTO Management, 2007

ISO Certification

Voltamp is ISO-certified and currently has six internal auditors in order to carry out internal audits. The internal audits occur twice a year. In addition, external audit every 9 to 12 months.

The Company maintains a Quality Management System Manual and “Voltamp Procedures”, both of which are developed in line with the requirements of the ISO 9001:2000 Standard

Employees

As at 31 March 2008, the Company and its two subsidiaries employed 202 personnel comprising of 65 Omani Nationals (32%) and 137 expatriates (68%). The Omanisation level as at 31st December 2007 was 33% as against the requirement set by the Ministry of Manpower of 35% of the total manpower. The Company has recently recruited some of expatriate technical employees as per job requirement since the Company was not able to find suitable technically qualified people locally. The Company plans to achieve the Omanisation target by the second quarter of 2008.

48

Details of Loans availed by the Company as of 31st December 2007

Name of the Group Company

Type of Loan Amount (RO) Remarks


No loan or bank borrowings outstanding

-


Long term loan & bank borrowings:

Long term loan RO 145,833 bank borrowings: 1,249,223

Total 1,359,056

Voltamp Manufacturing Co.WLL (Qatar)

Three Long term loans Long term loans RO 329,670

No bank borrowings

Major Debt Covenants:

For the Company

• To retain a minimum of 15% of net profit each year in the Company

For its subsidiaries

• To retain a minimum of 15% of net profit each year in the Company

• Obtain prior consent of the bank to pay dividend of more than 50% of the annual profit & such consent not to be unduly delayed unless obligations to the bank are in default.

• Leverage to be brought down to 3.00 by 31.12.08 by retention of profits

Land Details;

The Group does not own any freehold land. However its manufacturing facilities are set-up on the lease lands for which lease agreements were entered into between the Company and the Public Establishment for Industrial Estates.

The following are the details of lands taken on lease by the company to carry on its manufacturing activities:

0

100

200

300

400

500

600

2008 2009 2010 2011 2012 2013 2014

Empl

oyee

s

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Om

anis

atio

n

Employ ees Omanisation (ex cluding VMCQ)

49

1. Plot of land 1703 measuring 4410 square meters and the building thereon measuring 1250 square meters located at Rusayl Industrial Estate

2. Plot of land 249 measuring 4250 square meters located at Rusayl Industrial Estate

3. Plot of land 92, 93, 94 measuring 5402/74 square meters located at Rusayl Industrial Estate

Contingent Liabilities

The contingent liabilities as per the consolidated audited accounts of the Company as on 31st December 2007 are as under:

Bonds (Surety) and Guarantees RO 1,183,276

Letters of Credit RO 834,550

Total RO 2,017,826

Forward Commodity Contracts

Forward Commodity Contracts were entered into to manage exposure to fluctuations in the price of copper, a key raw material. The settlement dates on open contracts were within one year from the balance sheet date. The aggregate equivalent local currency amount was RO 1,090,331 (2006: 794,856) having a fair value of RO 1,028,193

Legal Proceedings

The Company does not have any major/material legal proceedings pending in a Court of Law in Oman or outside, either instituted by, or against the Company.

Claims enforced against the Company

There are no claims enforced against the Company including by way of invoking of performance guarantees or any other guarantees/bonds/encashment of retention amounts, in the last five years.

Material Contracts

The following material contracts may affect the Company’s business (other than ongoing execution contracts, purchase/supply contracts, employment contracts and other general contracts of routine nature):

a) Term Loan/Working capital loan with lenders (banks)

b) Lease agreements

c) Memorandum and Articles of Association of the Company. A copy of the Memorandum and Articles of Association is available for perusal at the office of the Company located at P.O.Box 75, P.C: 124, Rusayl, Sultanate of Oman. A copy of the Memorandum and Articles of Association is also available from the CMA. The website is www.omancma.org

Summarised historical consolidated financial statements for 2005-2007

Voltamp Energy SAOG (under transformation)(Formerly known as Voltamp Manufacturing Company LLC)

Summarised historical consolidated financial statements

31 December 2005 to 2007

50

CHAPTER 11

52

VOLTAMP ENERGY SAOG (under transformation)(Formerly known as Voltamp Manufacturing Company LLC)

Summarised Historical Consolidated Income Statementfor the period ended 31 December

2007 2006 2005RO RO RO

Income

Revenue 10,693,597 7,992,619 5,471,762

Cost of sales (7,002,719) (6,247,602) (4,281,585)

Gross profit 3,690,878 1,745,017 1,190,177

Other income 159,013 28,733 52,385

3,849,891 1,773,750 1,242,562

Expenses

Selling, administrative and general expenses (877,602) (696,058) (579,074)

Profit from operations 2,972,289 1,077,692 663,488

Finance charges (201,600) (190,450) (125,714)

Profit for the year before taxation 2,770,689 887,242 537,774

Taxation (348,474) (100,000) (41,673)

Net profit for the year 2,422,215 787,242 496,101

* Earnings per share for the year 0.692 0.225 0.142

The notes 1 to 21 form an integral part of these summarised historical consolidated financial statements

* Before Split

53


Summarised Historical Consolidated Balance Sheetfor the year ended 31 December

Assets 2007 2006 2005RO RO RO

Non-current assetsProperty, plant and equipment 521,201 565,354 596,464Investments 666,704 - - Deferred tax 15,472 11,100 12,710Total non-current assets 1,203,377 576,454 609,174

Current assetsInventories 2,564,161 2,411,179 1,124,983Trade and other receivables 3,453,046 3,066,359 2,017,730Cash in hand and at banks 86,699 3,443 4,189

Total current assets 6,103,906 5,480,981 3,146,902

Total assets 7,307,283 6,057,435 3,756,076

Equity and liabilities

EquityShare capital 3,500,000 1,100,000 500,000Legal reserve 848,395 369,330 166,667General reserve - 50,000 50,000Retained earnings 13,876 420,726 636,147Dividend Payable - 200,000 -

Total equity 4,362,271 2,140,056 1,352,814

Liabilities

Non Current LiabilitiesLong term loan 20,833 - -

Current liabilitiesTrade and other payables 1,549,956 1,398,439 1,192,934Bank borrowings 1,249,223 2,518,940 1,196,992Current portion of long term loan 125,000 - 13,336

Total current liabilities 2,924,179 3,917,379 2,403,262

Total liabilities 2,945,012 3,917,379 2,403,262

Equity and liabilities 7,307,283 6,057,435 3,756,076

* Net assets per share 1.246 0.611 0.386

The notes no. 1 to 21 forms an integral part of these summarised historical consolidated financial statements

* Before Split

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Summarised historical consolidated cash flow statementFor the year ended 31 December

2007 2006 2005RO RO RO

Cash flows from operating activities

Cash receipts from customers 10,470,558 6,964,227 5,572,702Cash paid to suppliers and employees (8,045,184) (7,934,251) (4,968,343)

Cash generated from operations2,425,374 (970,024) 604,359

Interest paid (201,600) (190,451) (125,714)Taxation paid (120,787) (69,840) (42,918)

Net cash flows from / (used in) operating activities 2,102,987 (1,230,315) 435,727

Cash flows from investing activities

Purchase of property, plant and equipment (76,333) (79,043) (98,810)Proceeds from sale of assets 12,558 - -Investment (632,072) - -

Net cash flows from / (used in) investing activities (695,847) (79,043) (98,810)

Cash flows from financing activitiesTerm loan received 250,000 - -Repayment of term loans (104,167) (13,336) (155,748)Dividend paid (200,000) - (175,000)

Net cash flow from / (used in) financing activities (54,167) (13,336) (330,748)

Increase / (decrease) in cash and cash equivalents during the year 1,352,973 (1,322,694) 6,169

Cash and cash equivalents at the beginning of the year (2,515,497) (1,192,803) (1,198,972)

Cash and cash equivalents at the end of the year (1,162,524) (2,515,497) (1,192,803)

The notes no.1 to 21 forms an integral part of these summarised historical consolidated financial statements

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Summarised historical consolidated statement of changes in equityfor the year ended 31 December 2005 to 2007

Sharecapital

Legal reserve

Generalreserve

Dividend payable /

(paid)Retainedearnings Total

RO RO RO RO RO

1 January 2005 500,000 166,667 50,000 160,000 155,046 1,031,713

Net profit for the year - - - - 496,101 496,101

Dividend paid - - - (160,000) (15,000) (175,000)

1 January 2006 500,000 166,667 50,000 - 636,147 1,352,814

Net profit for the year - - - - 787,242 787,242

Transfer to Share capital 600,000 - - (600,000) -

Transfer to legal reserve - 202,663 - - (202,663) -

Dividend proposed - - - 200,000 (200,000) -

1 January 2007 1,100,000 369,330 50,000 200,000 420,726 2,140,056

Net profit for the year - - - - 2,422,215 2,422,215

Transfer to share capital 400,000 - - - (400,000)

Share capital under registration

2,000,000 - (50,000) - (1,950,000) -

Transfer to legal reserve - 479,065 - - (479,065) -

Dividend paid - - - (200,000) (200,000)

31 December 2007 3,500,000 848,395 - - 13,876 4,362,271

The notes no. 1 to 21 forms an integral part of these summarised historical consolidated financial statements

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1 Legal status and principal activities

Voltamp Energy SAOG (under transformation) (“the Company”) is in the process of registration as a joint stock company under the Commercial Companies Law of Oman. The company is presently registered in the Sultanate of Oman as a Limited Liability Company. Voltamp Transformers Oman LLC (“the Subsidiary”), registered in the Sultanate of Oman, is a wholly-owned subsidiary of the Company. Voltamp Manufacturing Company, registered in Qatar, is 51% owned subsidiary of the Company.

The principal activities of the Company and its Subsidiaries (“the Group”) are manufacture, sale and distribution of transformers, LV Switchgears and panels. The Ultimate Holding Company of the Group is Al Anwar Holdings SAOG (“AAH”) [formerly Al Anwar Industrial & Trading Co. SAOG (“AAITCO”)].

2 Basis of preparation

These summarised historical consolidated financial statements have been derived from the audited consolidated financial statements of the Company for the years ended 31 December 2005 to 2007.

a) Statement of compliance

The summarised historical consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and the disclosure requirements of Commercial Companies Law of 1974, as amended.

Adoption status of new IFRS and interpretations

In the current year, the Group has adopted IFRS 7 Financial Instruments: Disclosures, which is effective for annual reporting periods beginning on or after 1 January 2007, and the consequential amendments to IAS 1: Presentation of Financial Statements.

The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand the disclosures provided in these financial statements regarding the Group’s financial instruments and management of capital.

Four Interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period. These are: IFRIC 7 Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies; IFRIC 8 Scope of IFRS 2; IFRIC 9 Reassessment of Embedded Derivatives; and IFRIC 10 Interim Financial Reporting and Impairment. The adoption of these Interpretations has not led to any changes in the Group’s accounting policies.

b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for:

• forward commodity contracts are measured at fair value

• investments at fair value through profit or loss are measured at fair value.

Notes (forming part of the summarised historical consolidated financial statements)

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c) Functional currency

These consolidated financial statements are presented in Rial Omani, which is the Group’s functional currency.

d) Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

e) New standards and interpretation not yet effective

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2007, and have not been applied in preparing these consolidated financial statements:

• IFRS 8 Operating Segments introduces the “management approach” to segment reporting. IFRS 8, which becomes mandatory for the Group’s 2009 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Group’s Chief Operating Decision maker in order to assess each segment’s performance and to allocate resources to them. The Group does not prepare internal reports containing segment information and accordingly it is not expected that IFRS 8 will have any significant impact on the financial statements.

• Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. It is not expected that revised IAS 23 will have any significant impact on the financial statements.

• IFRIC 11, IFRS 2 Company and Treasury Share Transactions requires a share-based payment arrangement in which an entity receives goods or services as consideration for its own equity instruments to be accounted for as an equity-settled share-based payment transaction, regardless of how the equity instruments are obtained. IFRIC 11 is not expected to have any significant impact on the financial statements.

• IFRIC 12 Service Concession Arrangements provides guidance on certain recognition and measurement issues that arise in accounting for public-to-private service concession arrangements. IFRIC 12, which becomes mandatory for the Group’s 2008 financial statements, is not expected to have any significant impact on the financial statement.

• IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers. It relates to customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services. IFRIC 13, which becomes mandatory for the Group’s 2009 financial statements, is not expected to have any significant impact on the financial statements.


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e) New standards and interpretation not yet effective (continued)

• IFRIC 14, IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on the impact of minimum funding requirements (MFR) on such assets. It also addresses when a MFR might give rise to a liability. IFRIC 14 will become mandatory for the Group’s 2008 financial statements, is not expected to have any significant impact on the financial statements.

The accounting policies set out below have been applied consistently by the Group entities and are consistent with those used in the previous year.

3 Significant accounting policies

a) Basis of consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date the control ceases.

Intragroup balances and transactions, and any unrealised gains and losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

b) Foreign currencies

Transactions in foreign currencies are translated to Rials Omani at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Rials Omani at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. The foreign currency gain or loss on monetary items is the difference between amortised costs in Rials Omani at the beginning of the period, adjusted for effective interest and payments during the period and the amortised costs in foreign currency translated at the exchange rate at the end of the period. Foreign currency differences arising on the retranslation are recognised in the income statement.

c) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

Costs include expenditures that are directly attributable to the acquisition of the asset. The cost includes any other cost that 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.


59


(c) Property, plant and equipment (continued)

(i) Recognition and measurement (continued)

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.

(ii) Subsequent costs

The cost of replacing 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 income statement as incurred.

(iii) Depreciation

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of the property, plant and equipment. Assets under construction are not depreciated. The estimated useful lives for the current and comparative periods are as follows:

YearsLeasehold buildings 20Plant and equipment 4 – 10Motor vehicles 3 – 4Furniture, fixtures and office equipment 4 – 8

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

d) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of inventories is based on the weighted average cost principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of work in progress, cost includes raw material cost only.

e) Impairment

(i) Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risks characteristics.


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e) Impairment (continues)

(i) Financial assets (continues)

All impairment losses are recognised in income statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in income statement.

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indications exist then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specified to the asset.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

f) Employee benefits

Payment is made to Omani Government Social Security Scheme under Royal Decree number 72/91 for Omani employees. Provision is made for amounts payable under the Oman Labour Law applicable to non-Omani employees for accumulated periods of service at the balance sheet date.

g) Provisions

A provision is recognised if, as a result of past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

h) Revenue

Revenue from sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

i) Leases

Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.


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j) Income tax

Income Tax on the results of the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income of the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect to previous years.

Deferred tax is calculated using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

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 utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

k) Earnings per share

The Group presents basic earning per share (EPS) data for its ordinary share. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

l) Provision for warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

m) Investments at fair value through profit or loss

Investments are designated at fair value through profit or loss, if the Group manages such investments and makes purchases and sales decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy.

These are initially recognised at cost and subsequently measured at fair value. All related realised and unrealised gains and losses, and dividend received are included in the income statement.

n) Dividends

Dividends are recognised as a liability in the period in which they are declared.

o) Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and /or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to the asset or liability.


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(i) Property, plant and equipment

The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant and equipments is based on the quoted market prices for similar items.

(ii) Inventory

The fair value of inventory is determined based on its estimated selling price in the ordinary course of the business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventory.

(iii) Trade and other receivables

Trade debtors are carried at amortised cost less impairment losses. An estimate is made for doubtful debts and impairment based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified.

(iv) Forward commodity contracts

The fair value of the forward commodity contracts is based on the listed market price.

(p) Comparatives

Certain comparative information has been reclassified to conform to the presentation adopted in these summarised historical consolidated financial statements.

3 Property, plant and equipment

Lease holdLand

FactoryBuilding

Plant and equipment

Motor vehicles

Furniture, fixture

& office equipment Total

RO RO RO RO RO ROCost1 January 2007 47,022 441,567 899,772 82,800 288,551 1,759,715Additions 950 41,884 16,850 16,649 76,333

Disposals (32,325) (28,604) (60,929)

31 December 2007 47,022 442,517 941,656 67,325 276,596 1,775,116

Depreciation1 January 2007 42,998 221,115 661,915 49,422 218,909 1,194,358Charge for the year 2,351 22,114 58,575 11,175 19,260 113,475

Disposals - - - (30,008) (23,910) (53,918)

31 December 2007 45,349 243,229 720,490 30,589 214,259 1,253,915

Net book values

31 December 2007 1,673 199,288 221,166 36,736 62,338 521,201

31 December 2006 4,024 220,454 237,858 33,374 69,644 565,354


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3 Property, plant and equipment (contd.)

Lease holdLand

FactoryBuilding

Plant and equipment

Motor vehicles

Furniture, fixture


RO RO RO RO RO ROCost1 January 2006 42,672 438,069 888,599 59,375 258,783 1,687,498Additions during the year

4,350 3,500 11,174 40,810 29,768 89,602

Disposals - - - (17,385) - (17,385)

31 December 2006 47,022 441,569 899,773 82,800 288,551 1,759,715

Depreciation1 January 2006 38,404 199,176 601,358 54,804 197,303 1,091,045Charge for the year 4,594 21,939 60,557 12,006 21,604 120,700

Disposals - - - (17,384) - (17,384)

31 December 2006 42,998 221,115 661,915 49,426 218,907 1,194,361Net book values 31 December 2006 4,024 220,454 237,858 33,374 69,644 565,354

31 December 2005 4,268 238,893 287,240 4,583 61,480 596,464

3 Property, plant and equipment (contd.)

Lease holdLand

FactoryBuilding

Plant and equipment

Motor vehicles

Furniture, fixture


RO RO RO RO RO ROCost1 January 2005 42,672 438,069 805,990 59,375 242,582 1,588,688Additions during the year

- - 82,609 - 16,201 98,810

31 December 2005 42,672 438,069 888,599 59,375 258,783 1,687,498

Depreciation

1 January 2005 34,137 177,273 550,698 47,797 178,480 988,385Charge for the year 4,267 21,904 50,661 6,994 18,823 102,649Disposals

31 December 2005 38,404 199,177 601,359 54,791 197,303 1,091,034

Net book values 4,268 238,892 287,240 4,584 61,480 596,464

31 December 2005

31 December 2004 8,535 260,796 255,292 11,578 64,102 600,303


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4 Inventories and work in progress

2007 2006 2005RO RO RO

Raw materials 2,246,255 2,071,009 907,191

Work in progress 228,803 335,436 117,536

Finished goods 247,149 125,360 100,256

Provision for slow moving stock (158,046) (120,626) -

2,564,161 2,411,179 1,124,983

5 Trade and other receivables

2007 2006 2005RO RO RO

Trade receivables 3,330,586 3,009,730 1,949,938

Less provision for doubtful debt (28,580) (43,991) (37,921)

Amount due from a related party 900

Advances, deposits and prepayments 150,140 100,620 105,713

3,453,046 3,066,359 2,017,730

Movement of Provision for doubtful debts

Opening Provision for doubtful debts 43,991 37,921 32,232

Add: Provided during the year 10,890 6,070 5,689

Less: Written off during the year (20,224)

Less: Recovery during the year (6,077)

Closing Provision for doubtful debts 28,580 43,991 37,921

6 Cash and cash equivalents

2007 2006 2005RO RO RO

Cash in hand 1,621 2,100 2,100Cash at bank :Current account 62,519 1,323 2,069Deposit account 20 20 20

Call deposit (copper trading account) 22,539

86,699 3,443 4,189


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7 Selling,administrativeandgeneralexpenses

2007 2006 2005RO RO RO

Employee costs 549,991 361,767 387,426Depreciation 54,900 58,955 30,085Communication costs 23,931 30,446 31,253Traveling expenses 59,587 16,530 22,218Legal and professional charges 37,920 40,572 28,780Vehicle running expenses 12,115 11,697 19,451Provision for doubtful debts 10,320 6,070 5,689Advertisement and promotion expenses 3,745 656 21,774Repairs and maintenance expenses 9,905 7,408 9,291Insurance expenses 6,722 5,885 4,955Printing and stationery expenses 4,927 5,037 4,961Other expenses 103,539 151,035 13,191

877,602 696,058 579,074

8 Costofsales

2007 2006 2005RO RO RO

Cost of raw materials 6,381,086 5,743,641 3,877,658Employee costs 379,701 304,653 247,887Depreciation 58,575 60,557 72,564Other manufacturing expenses 183,357 138,751 83,476

7,002,719 6,247,602 4,281,585

9 Share capital

At 31 December 2007, the Company’s authorised, subscribed and paid-up share capital comprises 1,500,000 ordinary shares (2006: 1,100,000, 2005: 500,000) of RO 1 each. During May 2007, the Company issued a stock dividend of 400,000 shares of RO 1 each.

At 31 December 2007, the Company has declared stock dividend of 2,000,000 shares of RO 1 each. At 31 December 2007, whilst share capital has been increased to RO 3,500,000; the increase has not yet been registered with the Ministry of Commerce and Industry.

Members of the Company who own 10% or more of the Company’s shares, whether in their name or through a nominee account, are as follows:

Shareholder Holding Number of shares held% 2007 2006 2005

Al Anwar Holdings SAOG 57.42 2,009,700 631,620 287,096SABCO LLC 21.29 745,150 234,190 106,452


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10 Legal reserve

Article 154 of the Commercial Company’s Law of 1974 requires that 10% of a company’s net profit be transferred to a non-distributable legal reserve until the amount of legal reserve becomes equal to one third of the company’s issued share capital. Hence during the years 2006 and 2007 a sum of 10% of net profit of the Company is transferred to legal reserve.

11 Bank borrowings2007 2006 2005

RO RO ROBank overdraft 552,600 562,762 435,337Loans against trust receipts 696,623 1,956,178 601,187Bill discounting - - 160,468

- - -

1,249,223 2,518,940 1,196,992

Term loan 145,833Repayment due with in 12 months included in current liability

(125,000)

20,833

The Company has borrowing facility in the amount of RO 850,000 (2006: RO 850,000, 2005: RO 450,000) which is secured against the property, plant and equipment. The borrowing facility carries interest rate ranging from 7.0% to 7.5% p.a.

The Subsidiary has borrowing facility in the amount of RO 3,820,000 (2006: RO 3,320,000, 2005: RO 3,045,000) which is secured against property, plant and equipment of the Subsidiary and corporate guarantee of the Company. The borrowing facility carries interest rate ranging from 6.5% to 7.5% p.a.

12 Trade and other payables

2007 2006 2005RO RO RO

Trade accounts payable 734,856 982,272 930,346Amount due to a related party 10,650 13,601 -Other payables-fair value loss on forward commodity contracts (refer note 19) 62,138 124,966 -

Accrued expenses 406,896 177,600 192,747Other payables 3,357Provision for income tax 322,059 100,000 69,841

1,549,956 1,398,439 1,192,934

The Group has provided for warranties mainly in respect of sale of transformers and electrical items, and repair jobs in the amount of RO 87,737 (2006: RO 68,125, 2005: RO 51,218) and RO 20,918 (2006: RO 12,961,2005:RO8,284) respectively. The provision included in accruals is established on estimates based on historical warranty data associated with similar products and services. The Group expects to incur the liability over the next one year.


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13 Income tax

The tax rate applicable to the Company taxable profit is 12% (2006 : 12%, 2005:12%) on taxable profit in excess of RO 30,000. The determination of taxable income for the year takes into account adjustments for tax purposes, which include items relating to both income and expense and which are based on the current understanding of the existing tax laws, regulations and practices.

2007 2006 2005Current tax 322,059 101,610 53,836Deferred tax (4,372) (1,610) (12,163)Income tax arrears Paid 20,787

348,474 100,000 41,673

Deferred tax assets arises on accounting of timing difference of depreciation and the provisions for bad debts and slow moving inventory and the movement is as follows:

2007 2006 2005

Opening balance (11,100) (12,710) (547)Movement during the year (4,372) 1,610 (12,163)

Closing balance (15,472) (11,100) (12,710)

Reconciliation of effective tax rateEffective 2007 2006 2005Rate % RO RO RO

Profit before tax 2,770,689 887,242 537,774Income tax as per rates mentioned above 12 325,283Tax exempt revenue (4,123)Excess (short) provision for taxCurrent tax 25,539 101,610 53,836Deferred tax 1,775 (1,610) (12,163)

Tax expense for the year 13 348,474 100,000 41,673

In the case of the Company the assessments for the tax years ended 2004 to 2006 has not been finalised with the Secretariat General for Taxation at the Ministry of Finance. In the case of the Subsidiary, the income tax assessments up to the year 2002 have been finalized. The income tax assessment for the years 2003 to 2006 has not been finalised. The Management considers that additional tax liability, if any, in respect of open tax years would not be material to the financial position of the Group as at 31 December 2007.

14 Employee costs 2007 2006 2005

RO RO ROWages and salaries 662,127 548,526 508,191Other benefits 221,614 89,767 102,075Contribution to defined retirement plan 14,572 13,893 13,435Increase in liability for unfunded defined benefit retirement plan

31,379 14,234 11,612

929,692 666,420 635,313


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15 Related party transactions

During the year the Group has entered into transactions with entities over which certain Directors are able to exercise significant influence. The Group also entered into transactions with the ultimate Holding Company and its associates. In the ordinary course of business, such related parties provide goods and render services to the Group. The Group also provides goods and renders services to such related parties. The Group considers that the terms of purchase, sale of goods and provision of services are comparable with those that could be obtained from third parties. The details are as follows:

2007 2006 2005RO RO RO

Purchases 34,501 15,646 52,527Other Income 77,380Revenue 211,549 - 1,390

16 Basic earnings per share

Basic earning per share is calculated by dividing the net profit of the Group for the year by the number of shares outstanding during at year end as follows:-.

2007 2006 2005

Net profit for the year (RO) 2,422,215 787,242 496,101Number of shares outstanding at the year end (Nos.) 3,500,000 3,500,000 3,500,000Basic earnings per share (RO) 0.692 0.225 0.142

During the year ended 31 December 2007, the Company issued 2,400,000 bonus shares of RO 1 each (2006:600,000 bonus shares of RO1 each, 2005:Nil) to the existing Members since the bonus issue was without consideration; the issue is treated as if it has occurred prior to the beginning of 2005.

17 Net assets per share

Net assets per share are calculated by dividing the net assets at the balance sheet date by the number of shares outstanding as follows:

2007 2006 2005

Net assets (RO) 4,362,271 2,140,056 1,352,814

Number of shares in issue at the year end (Nos.) 3,500,000 3,500,000 3,500,000

Net assets per share (RO) 1.246 0.611 0.386

During the year ended 31 December 2007, the Company issued 2,400,000 bonus shares of RO 1 each (2006:600,000 bonus shares of RO1 each, 2005:Nil) to the existing Members since the bonus issue was without consideration; the issue is treated as if it has occurred prior to the beginning of 2005.


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18 Investments

2007 2006 2006RO RO RO

At CostVoltamp Manufacturing Company, Qatar (“VMCQ”) 432,072 - -At fair value through profit or lossPortfolio investment 234,632 - -

666,704 - -

During the year 2007, the Company has made investment in the amount of RO 432,072(2006: Nil, 2005: Nil) in VMCQ and holds 51% of the equity. At 31 December 2007, the VMCQ did not commence operations and has not prepared its financial statements. Accordingly the results of VMCQ have not been consolidated.

19 Contingencies and Commitments

2007 2006 2005RO RO RO

Guarantees and Letter of credits 2,017,826 1,645,269 2,379,574- -

Forwardcommoditycontracts

Forward commodity contracts were entered into to manage exposure to fluctuations in Copper price. The settlement dates on open contracts were within one year from the balance sheet date. The aggregate equivalent local currency amount was RO 1,090,331 (2006: 794,856, 2005: Nil) having a fair value of RO 1,028,193 (2006: RO 669,890, 2005: Nil).

20 Financial instruments and financial risk management

Financial instruments carried on the balance sheet comprise cash and bank balances, investments, trade and other receivables, bank borrowings and trade and other payables.

The Group has exposure to the following risks from its use of financial instruments:

(i) Credit risk

(ii) Liquidity risk

(iii) Market risk

Creditrisk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the receivables from customers.


70


20 Financial instruments and financial risk management (continued)

Creditrisk(continued)

The Group has a credit policy and management monitors exposure to credit risk on an ongoing basis, assesses recoverability, and makes provision for balances whose recoverability is in doubt. The maximum exposure to Credit risk on trade and other receivables and investments is limited to their carrying values at the reporting date.

The maximum exposure to credit risk for trade receivables (including amount due from a related party) at the reporting date by geographic region was:

Carrying amount

Amount in RO

2007 2006 2005RO RO RO

Domestic 1,913,940 1,774,605 704,198GCC Countries 1,417,546 1,235,125 1,245,740

Total 3,331,486 3,009,730 1,949,938

The Group’s most significant customer accounts for RO 1,282,626 of the trade receivables carrying amount at 31 December 2007 (2006: RO 1,146,624, 2005: RO 298,566)

Impairment losses

The aging of trade receivables (including amount due from a related party) at the reporting date was:

Amount in RO

Gross Impairment Gross Impairment Gross Impairment2007 2007 2006 2006 2005 2005

Not past due 2,582,250 1,450 2,092,384 - 1,286,143 -Past due 1-90 days 714,257 - 846,557 - 625,874 -Past due 91-365 days 34,979 27,130 70,789 43,991 37,921 37,921

3,331,486 28,580 3,009,730 43,991 1,949,938 37,921

Liquidityrisk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group uses local banks operating in the Sultanate of Oman to ensure that it has sufficient cash on demand to meet expected operational expenses and sufficient credit facilities to manage its liquidity risk. The Group has total credit facilities in the amount of totaling of RO 4.42 million from three banks. Short term loans and overdraft ranging are, on average, utilized for period of 15 to 30 days to bridge the gap between collections of receivables and settlement of product purchase bills during the middle of every month.


71



Liquidityrisk(continued)

The maturities of Group’s undiscounted financial liabilities at reporting date is as below:

31December2007Carrying amount

RO

Contractual cash flows

RO

less than 6 months

RO

6 months to 1 year

RO

1 year to 2 years

RONon-derivativefinancialliabilitiesTerm loan 145,833 152,669 66,992 64,648 21,029Bank borrowings 1,249,223 1,257,951 1,257,951 - -Trade and other payables 1,549,956 1,549,956 1,549,956 - -

2,945,012 2,960,576 2,874,899 64,648 21,029


RO


RO

less than 6 months

RO

6 months to 1 year

RO

1 year to 2 years

RONon-derivativefinancialliabilitiesBank borrowings 2,518,940 2,552,310 2,552,310 - -Trade and other payables 1,398,439 1,398,439 1,398,439 - -

3,917,379 3,950,749 3,950,749 - -


RO


RO

less than 6 months

RO

6 months to 1 year

RO

1 year to 2 years

RONon-derivativefinancialliabilitiesTerm Loan 13,366 13,366 13,366Bank borrowings 1,196,992 1,219,992 1,219,992 - -Trade and other payables 1,230,855 1,230,855 1,230,855 - -

2,441,213 2,464,213 2,464,213 - -

Marketrisk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, equity prices and commodity price risk (Copper) will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. In respect of commodity price risk the Group manages its exposure by entering into forward contracts to mitigate such risks.

Currency risk

The Group is exposed to foreign exchange risk on sales, purchases, receivables and payables arising primarily from GCC currencies and US Dollar exposures which are pegged to the Omani Rial.


72



Interest rate risk

The Group manages its exposure to interest rate risk on term loan and short term borrowings by ensuring that they are on fixed rate basis.

Fairvalueestimation

The fair value of portfolio investment is determined by reference to Stock Exchange quoted market prices at the close of business on the balance sheet date. The fair value of forward commodity contracts is determined using forward commodity market rates at the balance sheet date.

The carrying amounts of the other financial assets and liabilities approximately equal to their fair values.

Capital management

The Group’s policy is to maintain an optimum capital base to maintain investor, creditor and market confidence to sustain future growth of business as well as return on capital.

21 Comparatives

Certain comparative information has been reclassified to conform to the presentation adopted in these financial statements.


Prospective consolidated financial statements for 2008-2014

Voltamp Energy SAOG (under transformation)(Formerly known as Voltamp Manufacturing Company LLC)

Prospective consolidated financial statements

31 December 2008 to 2014

CHAPTER 12

73

76


Sum

mar

ised

pro

spec

tive

co

nso

lidat

ed in

com

e st

atem

ent

For

the

per

iod

end

ed 3

1 D

ecem

ber

2008

2009

2010

2011

2012

2013

2014

RO

RO

RO

RO

RO

RO

RO

Inco

me

Rev

enue

14,3

34,4

7320

,397

,784

27,8

46,7

6636

,925

,267

46,1

38,0

6754

,723

,722

62,0

74,4

18

Cos

t of

sal

es(1

0,18

5,08

4)(1

4,71

6,34

6)(2

0,94

4,44

3)(2

7,08

8,77

3)(3

3,34

4,26

4)(3

9,02

1,99

3)(4

4,15

4,97

5)

Gro

ss p

rofi

t4,

149,

389

5,68

1,43

86,

902,

323

9,83

6,49

412

,793

,803

15,7

01,7

2917

,919

,443

Oth

er in

com

e16

0,38

095

,000

107,

000

112,

400

118,

205

124,

445

131,

154

Exp

ense

s

Sel

ling,

ad

min

istr

ativ

e an

d g

ener

al e

xpen

ses

(1,3

44,7

85)

(2,0

86,3

11)

(3,3

72,9

88)

(3,9

26,9

54)

(4,5

11,4

10)

(5,2

57,1

89)

(5,9

51,7

22)

Pro

fit

fro

m o

per

atio

ns2,

964,

984

3,69

0,12

73,

636,

335

6,02

1,94

08,

400,

598

10,5

68,9

8512

,098

,875

Fina

nce

char

ges

(226

,104

)(2

20,0

84)

(678

,073

)(6

65,0

62)

(726

,052

)(7

05,0

42)

(668

,031

)

Pro

fit

for

the

year

bef

ore

tax

atio

n2,

738,

879

3,47

0,04

32,

958,

262

5,35

6,87

87,

674,

546

9,86

3,94

311

,430

,844

Taxa

tion

(336

,753

)(4

05,3

42)

(512

,741

)(5

61,8

88)

(629

,817

)(7

06,0

19)

(801

,088

)

Net

pro

fit

for

the

year

2,40

2,12

63,

064,

701

2,44

5,52

14,

794,

990

7,04

4,72

99,

157,

924

10,6

29,7

56

Ear

ning

s p

er s

hare

fo

r th

e ye

ar0.

048

0.06

10.

049

0.09

60.

141

0.18

30.

213

The

sign

ifica

nt a

ccou

ntin

g p

olic

ies

& a

ssum

ptio

ns o

n no

te 2

to 5

form

an

inte

gral

par

t of t

hese

pro

spec

tive

cons

olid

ated

fina

ncia

l sta

tem

ents

77


Sum

mar

ised

pro

spec

tive

co

nso

lidat

ed b

alan

ce s

heet

For

the

per

iod

end

ed 3

1 D

ecem

ber

2008

2009

2010

2011

2012

2013

2014

RO

RO

RO

RO

RO

RO

RO

Ass

ets

No

n-cu

rren

t as

sets

Pro

per

ty, p

lant

and

eq

uip

men

t2,

417,

987

9,46

9,58

19,

393,

303

8,31

3,84

27,

347,

372

6,19

4,27

05,

359,

457

Inta

ngib

le a

sset

s78

1,51

558

6,13

639

0,75

719

5,37

8-

--

Inve

stm

ent

200,

000

200,

000

200,

000

200,

000

200,

000

200,

000

200,

000

Def

erre

d t

ax

15,4

7215

,472

15,4

7215

,472

15,4

7215

,472

15,4

72

Tota

l no

n-cu

rren

t as

sets

3,41

4,97

410

,271

,189

9,99

9,53

28,

724,

692

7,56

2,84

46,

409,

742

5,57

4,92

9

Cur

rent

ass

ets

Inve

ntor

ies

2,93

1,05

73,

693,

706

4,83

7,00

36,

036,

387

7,15

9,66

58,

298,

925

9,33

3,34

7

Trad

e an

d o

ther

rec

eiva

ble

s3,

767,

113

4,87

1,53

86,

636,

374

8,41

1,07

110

,153

,607

11,8

29,1

3213

,345

,085

Cas

h in

han

d a

nd a

t b

anks

8,50

1,70

27,

244,

057

7,40

4,14

49,

505,

654

13,5

49,4

1419

,601

,581

26,7

26,7

19

Tota

l cur

rent

ass

ets

15,1

99,8

7215

,809

,301

18,8

77,5

2123

,953

,112

30,8

62,6

8639

,729

,638

49,4

05,1

51

Tota

l ass

ets

18,6

14,8

4626

,080

,490

28,8

77,0

5332

,677

,804

38,4

25,5

3046

,139

,380

54,9

80,0

80

Eq

uity

and

liab

iliti

es

Eq

uity

Sha

re c

apita

l5,

000,

000

5,00

0,00

05,

000,

000

5,00

0,00

05,

000,

000

5,00

0,00

05,

000,

000

Sha

re p

rem

ium

6,40

0,00

06,

400,

000

6,40

0,00

06,

400,

000

6,40

0,00

06,

400,

000

6,40

0,00

0

Lega

l res

erve

1,05

9,07

11,

312,

350

1,60

4,90

41,

976,

866

2,42

4,02

72,

816,

072

3,28

5,58

3

Ret

aine

d e

arni

ngs

455,

326

1,51

6,74

81,

919,

715

4,59

2,74

39,

440,

311

16,4

56,1

9024

,866

,435

Div

iden

d p

ayab

le1,

750,

000

1,75

0,00

01,

750,

000

1,75

0,00

01,

750,

000

1,75

0,00

01,

750,

000

Tota

l eq

uity

14,6

64,3

9715

,979

,098

16,6

74,6

1919

,719

,609

25,0

14,3

3832

,422

,262

41,3

02,0

18

78


2008

2009

2010

2011

2012

2013

2014

RO

RO

RO

RO

RO

RO

RO

Liab

iliti

es

No

n cu

rren

t lia

bili

ties

Long

ter

m lo

an40

1,39

25,

859,

218

5,80

9,04

44,

607,

696

3,45

5,52

22,

303,

348

1,15

1,17

4

Cur

rent

liab

iliti

es

Trad

e an

d o

ther

pay

able

s1,

878,

224

2,54

2,00

03,

323,

216

4,25

4,15

15,

007,

322

5,74

7,42

26,

371,

540

Sho

rt t

erm

ban

k b

orro

win

gs1,

650,

000

1,65

0,00

03,

020,

000

2,89

5,00

03,

746,

000

4,46

4,00

04,

953,

000

Cur

rent

por

tion

of lo

ng t

erm

loan

20,8

3350

,174

50,1

741,

201,

348

1,20

2,34

81,

202,

348

1,20

2,34

8

Tota

l cur

rent

liab

iliti

es3,

549,

057

4,24

2,17

46,

393,

390

8,35

0,49

99,

955,

670

11,4

13,7

7012

,526

,888

Tota

l lia

bili

ties

3,95

0,44

910

,101

,392

12,2

02,4

3412

,958

,195

13,4

11,1

9213

,717

,118

13,6

78,0

62

Eq

uity

and

liab

iliti

es18

,614

,846

26,0

80,4

9028

,877

,053

32,6

77,8

0438

,425

,530

46,1

39,3

8054

,980

,080

Net

ass

ets

per

sha

re0.

293

0.31

90.

333

0.39

40.

500

0.64

80.

826

The

sign

ifica

nt a

ccou

ntin

g p

olic

ies

& a

ssum

ptio

ns o

n no

te 2

to 5

form

an

inte

gral

par

t of t

hese

pro

spec

tive

cons

olid

ated

fina

ncia

l sta

tem

ents

Sum

mar

ised

pro

spec

tive

co

nso

lidat

ed b

alan

ce s

heet

(Con

td.)

For

the

per

iod

end

ed 3

1 D

ecem

ber

79


Sum

mar

ised

pro

spec

tive

co

nso

lidat

ed c

ash

flo

w s

tate

men

tFo

r th

e ye

ar e

nded

31

Dec

emb

er

2008

2009

2010

2011

2012

2013

2014

RO

RO

RO

RO

RO

RO

RO

Cas

h fl

ow

s fr

om

op

erat

ing

act

ivit

ies

Cas

h re

ceip

ts fr

om c

usto

mer

s14

,180

,786

19,3

88,3

5926

,188

,930

35,2

62,9

7044

,513

,737

53,1

72,6

4360

,689

,619

Cas

h p

aid

to

sup

plie

rs a

nd e

mp

loye

es(1

1,42

9,23

9)(1

6,54

8,40

4)(2

3,29

3,17

9)(2

8,72

3,16

1)(3

6,86

3,90

6)(4

3,36

5,56

5)(4

9,26

6,72

3)

Cas

h ge

nera

ted

from

op

erat

ions

2,75

1,54

72,

839,

955

2,89

5,75

16,

539,

808

7,64

9,83

19,

807,

078

11,4

22,8

96

Inte

rest

pai

d

(226

,104

)(2

20,0

84)

(678

,073

)(6

65,0

62)

(726

,052

)(7

05,0

42)

(668

,031

)

Taxa

tion

pai

d(3

36,7

53)

(405

,342

)(5

12,7

41)

(561

,888

)(6

29,8

17)

(706

,019

)(8

01,0

88)

Net

cas

h fl

ow

s fr

om

/ (u

sed

in)

op

erat

ing

act

ivit

ies

2,18

8,69

02,

214,

529

1,70

4,93

75,

312,

858

6,29

3,96

28,

396,

017

9,95

3,77

7

Cas

h fl

ow

s fr

om

inve

stin

g a

ctiv

itie

s

Pur

chas

e of

pro

per

ty, p

lant

and

eq

uip

men

t(2

,793

,833

)(6

,331

,000

)(1

,114

,676

)(1

35,0

00)

(199

,028

)(1

59,6

76)

(415

,465

)

Acq

uisi

tion

of in

tang

ible

s as

sets

(127

,894

)(8

49,0

00)

--

--

-

Inve

stm

ent

466,

704

--

--

--

Net

cas

h fl

ow

s fr

om

/ (u

sed

in)

inve

stin

g a

ctiv

itie

s(2

,455

,023

)(7

,180

,000

)(1

,114

,676

)(1

35,0

00)

(199

,028

)(1

59,6

76)

(415

,465

)

80


Sum

mar

ised

pro

spec

tive

co

nso

lidat

ed c

ash

flo

w s

tate

men

t (C

ontd

.)

For

the

year

end

ed 3

1 D

ecem

ber

2008

2009

2010

2011

2012

2013

2014

RO

RO

RO

RO

RO

RO

RO

Cas

h fl

ow

s fr

om

fina

ncin

g a

ctiv

itie

s

Issu

e of

eq

uity

und

er IP

O1,

500,

000

--

--

--

Sha

re is

sue

pre

miu

m6,

600,

000

--

--

--

Sha

re is

sue

colle

cted

50

,000

Issu

e ex

pen

ses

incu

rred

(250

,000

)-

--

--

-

Term

loan

rec

eive

d40

1,39

25,

508,

000

--

--

-

Rep

aym

ent

of t

erm

loan

s(2

0,83

3)(5

0,17

4)(5

0,17

4)(1

,201

,348

)(1

,152

,174

)(1

,152

,174

)(1

,152

,174

)

Div

iden

ds

pai

d-

(1,7

50,0

00)

(1,7

50,0

00)

(1,7

50,0

00)

(1,7

50,0

00)

(1,7

50,0

00)

(1,7

50,0

00)

Net

cas

h fl

ow

fro

m /

(use

d in

) fi

nanc

ing

act

ivit

ies

8,28

0,55

93,

707,

826

(1,8

00,1

74)

(2,9

51,3

48)

(2,9

02,1

74)

(2,9

02,1

74)

(2,9

02,1

74)

Incr

ease

/ (

dec

reas

e) i

n ca

sh a

nd c

ash

equi

vale

nts

dur

ing

the

yea

r8,

014,

226

(1,2

57,6

45)

(1,2

09,9

13)

2,22

6,51

03,

192,

760

5,33

4,16

76,

636,

138

Cas

h an

d c

ash

equi

vale

nts

at t

he b

egin

ning

of

the

yea

r(1

,162

,524

)6,

851,

702

5,59

4,05

74,

384,

144

6,61

0,65

49,

803,

414

15,1

37,5

81

Cas

h an

d c

ash

equi

vale

nts

at t

he e

nd o

f th

e ye

ar6,

851,

702

5,59

4,05

74,

384,

144

6,61

0,65

49,

803,

414

15,1

37,5

8121

,773

,719

Cas

h &

cas

h eq

uiva

lent

s co

mp

rise

:

Cas

h at

ban

k an

d in

han

d8,

501,

702

7,24

4,05

77,

404,

144

9,50

5,65

413

,549

,414

19,6

01,5

8126

,726

,719

Sho

rt t

erm

ban

k b

orro

win

gs(1

,650

,000

)(1

,650

,000

)(3

,020

,000

)(2

,895

,000

)(3

,746

,000

)(4

,464

,000

)(4

,953

,000

)

6,85

1,70

25,

594,

057

4,38

4,14

46,

610,

654

9,80

3,41

415

,137

,581

21,7

73,7

19

The

sign

ifica

nt a

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83


1 Legal status and principal activities

Voltamp Energy SAOG (under transformation) (“the Company”) is in the process of registration as a joint stock company under the Commercial Companies Law of Oman. The company is presently registered in the Sultanate of Oman as a limited liability company.

• Voltamp Transformers Oman LLC (“the Subsidiary”), registered in the Sultanate of Oman, is a wholly-owned subsidiary of the Company.

• Voltamp Manufacturing Company, registered in Qatar, is 51% owned subsidiary of the Company.

• Voltamp Power Oman LLC (the proposed wholly owned Subsidiary), is part of this projections, which is yet to be formed.

The principal activities of the Company and its Subsidiaries (“the Group”) are manufacture, sale and distribution of transformers, LV Switchgears and panels. The ultimate holding company of the Group is Al Anwar Holdings SAOG (“AAH”) [formerly Al Anwar Industrial & Trading Co. SAOG (“AAITCO”)].

2 Basis of preparation of the prospective consolidated financial statements for the Company for the year ending 31 December 2008 to 2014 (“the Projections”)

These Projections have been prepared by the Management in accordance with the following accounting policies and assumptions. Since the Projections relate to the future, actual results are likely to be different from the projected results because events and circumstances do not occur as expected and differences may be material.

(a) Basis of preparation

These prospective consolidated financial statements have been prepared under the historical cost basis, except that investments available for sale are stated at their fair values.

(b) Statement of compliance

The Projections have been prepared in accordance with International Standards on Assurance Engagements (“ISAE”) promulgated by the International Auditing and Assurance Standards Board (“IAASB”).

c) Functional currency

These prospective consolidated financial statements are presented in Rial Omani, which is the Group’s functional currency.

d) Use of estimates and judgments

The preparation of prospective consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Significantaccountingpoliciesandassumptions (forming part of the prospective consolidated financial statements)

84


3 Hypothetical assumptions

(a) Economic conditions

There will be no adverse changes to the prevailing economic climate in Oman during the years ending 31 December 2008 to 2014, which may have a material impact upon the Projections.

(b) Laws and regulations

The existing laws and regulations of Oman, including those of taxation, will not change during the years ending 31 December 2008 to 2014 in a manner which may have a material impact upon the Projections.

(c) Inflation

Inflation will not have a significant impact on the Projections.

(d) Foreign currencies

Ithasbeenassumed that therewillbenomaterial foreignexchangegainsandlossesduringtheyearsending31December2008to2014.

(e) Markets and market share

It has been assumed that the Company will market its products in North Africa, GCC countries and countries in Middle East region. The shares in the different markets are available with the Company.

(f) Payroll costs

Salaries represent approximately 60% of selling, administration and general expenses of the projected period. It is anticipated that the Group’s workforce will increase from approximately 180 at the end of 2007 and over 550 by the end of 2014.

(g) Term loans and working capital loans

Debts consist of the long term loans (at 6%) raised in order to fund primarily a proposed subsidiary company and as well as working capital loans (at 7%) together amounting to approximately RO 7.3 million by 2014.

The Group Management is in process of identifying and finalising the source of financing.

(h) Dividend

The dividend payout for the projected period has been considered at 35% of the capital.

4 Significant accounting policies

The significant accounting policies, except stated below on intangibles and amortization, followed by the Company are in accordance as set out in the Note 3 on significant accounting policies of Chapter 11 Summarised Consolidated Financial Statements of the prospectus document.


85


Other Intangibles

Other intangibles assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangibles assets, other than goodwill, from the date that they are available for use.

5 Best estimate assumptions

(a) Property, plant and equipment (PPE)

The additions or deletions to property, plant and equipment have been assumed by Group during the years ending 31 December 2008 to 2014.

PPE 2008 2009 2010 2011 2012 2013 2014

Additions (2,793,833) (6,331,000) (1,114,676) (135,000) (199,028) (159,676) (415,465)

Deletions - - - - - - -

(b) Intangibles assets and amortisation

Technology transfer cost to acquire technology is recognised as intangibleassets inprospectiveconsolidatedfinancialstatementsand isamortised inoverthe5yearsperiod.

(c) Investments

Investmentsmadelistedsecuritiesandvaluedatcost.

(d) Inventories

The closing stock of inventories (consists of raw material, work in progress and finished goods) has been considered on the number of days of cost of sales for the years 2008 to 2014 respectively (135 days for 2007). No provisions have been considered during above period.

Inventory 2008 2009 2010 2011 2012 2013 2014

Number of days 105 92 84 81 78 78 77

(e) Average receivables, advances and prepayments

The receivables have been stated at gross, no provision for doubt debts has been considered. The Company has projected sales receivables as between 96 days to 78 days over the projected period which is lower than the past trends of 110 days

Receivables 2008 2009 2010 2011 2012 2013 2014

Number of days 96 87 87 83 80 79 78


86


(f) Average trade and other payables

The average trade payables for projected period are 67 days to 53 days of cost of sales which is compared to the past average of 80 days.

Receivables 2008 2009 2010 2011 2012 2013 2014

Number of days 67 63 58 57 55 54 53

(g) Cash at bank and in hand

Cashandbankbalancesrepresentthecashandcashequivalentscomprisingofcashatbankandinhandandshorttermbankborrowings

(h) Short term borrowings

The Group uses local banks operating in the Sultanate of Oman to ensure that it has sufficient cash on demand to meet expected operational expenses and sufficient credit facilities to manage its liquidity risk.

Theexistingandplannedborrowingsfacilitiesof theGroupare in rangeof6.50%to8.00%.

(i) Long term loan

Term loan of RO 5,508,000 have been assumed by the Company for Voltamp Power LLC (subsidiary company to be incorporated).

(j) Equity

Authorised share capital

The authorised share capital of the Voltamp Energy SAOG (under transformation) shall be RO. 10,000,000 (ten million), divided into 100,000,000 (one hundred million) ordinary shares.

Issued and paid up share capital of the Company (post IPO):

The issued and paid up share capital of the Company shall be RO. 5,000,000 (five million) divided into 50,000,000 (fifty million) ordinary shares.

Share capital of the Company prior to the IPO

The issued and paid up share capital of the Company is RO 3,500,000 (three million, five hundred thousand) divided into 35,000,000 (thirty five million) ordinary shares.

Shares offered

Existing promoters / stock selling shareholders and the Company have agreed to offer 10,000,000 (ten million) and 15,000,000 (Fifteen Million) new ordinary shares through the Initial Public Offer respectively.


87


(j) Equity (continued)

Promoter’s nameNumber of shares

before transformationface value Baisa 100

Number of shares to beoffered for sale

face value Baisa 100Al Anwar Holdings SAOG 20,097,000 5,742,000SABCO LLC 7,451,500 2,129,000Mr. Mushtaq bin Abdullah bin Jaffer 3,160,500 903,000H.H. Seyyid Shihab bin Tariq Al Said 2,597,000 742,000Mr. Mohammed bin Abdul Rasool Al Jamali 1,130,500 323,000Dr. Ali bin Jaffar bin Mohammed 563,500 161,000Total 35,000,000 10,000,000

The offer comprises of two components:

3. Issue of the new ordinary shares for public subscription by the Company each with a nominal value of Baisas 100 at an offer price of Baisas 542 (five hundred and forty two) including issue expenses of Baisas 2 per share, out of which, up to 1,250,000 (one million two hundred and fifty thousand) shares shall be set aside for subscription by the employees and managers as follows:

a) up to 1,000,000 (one million) shares shall be offered to the employees; and

b) up to 250,000 (two hundred and fifty thousand) shares shall be offered to the managers.

The new ordinary shares will rank pari-passu with the existing ordinary shares.

4. Offer for sale to the public of the existing ordinary shares by the selling shareholders each with a nominal value of Baisas 100 at an offer price of Baisas 542 (five hundred and forty two) which includes Baisas 440 (four hundred and forty) as share premium and issue expenses of Baisas 2 per share.

Purpose for which the proceeds of the subscription would be utilised

Proceeds from the issue of new ordinary shares

Issue proceeds under this category aggregating to RO 8,100,000 (eight million, one hundred thousand) will accrue to the Company, and will be utilised by the Company for financing the ongoing capital expenditure, for meeting its long term working capital requirements and investment in future strategic projects in other subsidiary companies.

Proceeds from the offer for sale of existing ordinary shares

Issue proceeds under this category aggregating to RO 5,400,000 (five million, four hundred thousand) will accrue to the selling shareholders only and not to the Company.

Issueexpenses

The amount of RO 50,000 (fifty thousand) being collected towards part of the Issue Expenses from the total issue will accrue to the Company.


88


Legal reserve

Article 106 of the Commercial Companies Law of 1974, requires that 10% of the Company’s net profit to be transferred to a non-distributable legal reserve until the amount of the legal reserve equals one-third of the Company’s issued share capital.

Proposed dividend

The dividend payout for the projected period has been considered at 35% of the capital.

(k) Capacity utilisation to total capacity

YearVoltamp Energy

SAOG (under transformation)

Voltamp Transformers

Oman LLC

Voltamp ManufacturingCompany Qatar

VoltampPower LLC

2007 90% - 40% -2008 90% 56% 90% -

2009 90% 69% 90% -

2010 90% 82% 90% 12%

2011 90% 100% 90% 39%

2012 90% 100% 90% 65%

2013 90% 100% 90% 87%

2014 90% 100% 90% 100%

A subsidiary of the Company (Voltamp Transformer Oman LLC) has a production capacity of 2100 MVA with two full-fledged working shifts of 12 hours. Company produced 1200 MVA during 2007 and projecting increased utilisation by 20% from 2008 to 2010 when company reaches the maximum capacity.

The Company has projected a capital investment of over RO 600,000 till 2014 to increase the facility of Voltamp Energy Company LLC. The capacity of Voltamp Energy Company LLC can be increased with addition to factory building and manpower without much of investment on plant & machinery.


89


(l) Operating information

The group’s performance based on projections prepared by management, growth in operating parameters in comparison to the previous years is below in table:

Year 2008 2009 2010 2011 2012 2013 2014

GrowthincomparisontoPYinRevenue 34% 42% 37% 33% 25% 19% 13%Cost of sales 45% 44% 42% 29% 23% 17% 13%

Gross profit 12% 37% 21% 43% 30% 23% 14%Other income 1% -41% 13% 5% 5% 5% 5%Selling, administrative & general expenses

53% 55% 62% 16% 15% 17% 13%

Finance charges 12% -3% 208% -2% 9% -3% -5%Net profit before tax -1% 27% -15% 81% 43% 29% 16%

(m) Income tax

It may be noted that while preparing this the projections of the group, the deferred tax asset / liability arising out of on timing differences/losses has not been recognized.

Year 2008 2009 2010 2011 2012 2013 2014Tax liability (336,753) (405,342) (512,741) (561,888) (629,817) (706,019) (801,088)


90


Un audited Financial Statements for the Period ended 31st March 2008

VOLTAMP ENERGY LLC(INCLUDING SUBSIDIARY)

Consolidated Income Statement for the Quarter ended MARCH 2008

Particulars Amount In RO Actual Previous Yr. up to March 2008 Up to March 2007Income

Sales 3,223,571 2,162,469

Cost of Sales (2,132,563) (1,502,986)

Gross Profit 1,091,008 659,483

Other Income 18,453 8,364

Selling, Administrative and General Exp (339,550) (164,958)

Profit from operations 769,911 502,889

Finance Charges (35,632) (60,401)

Profit for the year before taxation 734,279 442,488

Taxation (85,714) (42,277)

Net profit for the period 648,565 400,211

Earnings per share (Annualised) 0.074 0.046

91


VOLTAMP ENERGY LLC(INCLUDING SUBSIDIARY)

Consolidated Balance Sheet

Particulars VEC (Incl. Subsidiary)

AUDITED As at UN AUDITED As at 12/31/2007 3/31/2008 R.O. R.O.Assets

Non-current assets Property Plant and equipment 521,201 496,510Investments 666,704 666,704Deffered tax asset 15,472 15,472Total non-current asstes 1,203,377 1,178,686

Current assets Inventories 2,564,161 3,255,259Trade and other receivables 3,453,046 4,041,892cash in hand and at banks 86,699 18,301Total current assets 6,103,906 7,315,452

Total assets 7,307,283 8,494,138

Equity and liabilities Equity Share capital 3,500,000 3,500,000Legal reserve 848,395 855,693

Retained Earnings 13,876 655,144

Total Equity 4,362,271 5,010,837

Liabilities

Non Current Liabilities Long term Loan 20,833 20,833Total Non current liabilities 20,833 20,833

Current liabilities Trade and other payables 1,549,956 1,314,196Bank borrowings 1,249,223 2,054,522Current portion of long term loan 125,000 93,750

Total current liabilities 2,924,179 3,462,468

Total liabilities 2,945,012 3,483,301

Equity and liabilities 7,307,283 8,494,138

Net Assets per share (RO) 0.124 0.143

92

DIVIDENDS POLICY

Dividends

The Offered Shares will rank equally with all other Ordinary Shares of the Company for any rights to dividends that may be declared and paid in respect of the financial year ending 31 December 2008 and in subsequent years. Following the offering, the shareholders’ register of the Company shall be amended to allow new shareholders to receive any declared dividends in future years.

In accordance with the CCL, 10% of the profits of every corporation incorporated in Oman must be transferred to a legal reserve until the reserve amounts to at least one third of the corporation’s share capital. Accordingly, the Company will be required to maintain such legal reserve.

The Company’s Cash Dividend Policy

The Company proposes to follow a reasonable dividend payout policy, subject to debt repayments, working capital and capital expenditure requirements. The amount of annual dividends and the determination of whether to pay dividends in any year may be affected by a number of other factors including the Company’s business prospects, financial performance, free cash availability, and the outlook for the power sector. The Company’s management will take into account dividend payout ratios within its industry/sector as well as dividend yields of other leading stocks on the MSM at the time of recommending dividends.

Proposed Dividend as per the Financial Projections 2008-2010

YEARPAID UP CAPITAL

DIVIDEND AMOUNT*

% ON CAPITAL

Value per share

In RO In RO

2008 5,000,000 1,750,000 35% 35 Baisas

2009 5,000,000 1,750,000 35% 35 Baisas

2010 5,000,000 1,750,000 35% 35 Baisas

* Subject to Shareholders’ approval in the Annual General Meeting and / or any other appropriate authorities.

Past Dividend Record of the Company (2005-2007)

Year Cash Dividend Stock Dividend Close Equity

2005 Nil Nil RO 500,000

2006 RO 200,000 RO 600,000 RO 1,100,000

2007 Nil RO 2,400,000 RO 3,500,000

CHAPTER 13

93

VALUATION AND PRICE JUSTIFICATION

Overview

The Lead Issue Manager and the Financial Advisor, Oman Arab Bank (“OAB”), has a strong and successful presence in Oman through a number of lead advisory and project financing mandates in Oman. They also have significant experience in IPO advisory work, for both new IPOs and as well as rights issues of existing public companies. Their most recent mandate included the recent Bank Sohar IPO & Galfar IPO and are on track to bring some more companies to a public listing on the Muscat Securities Market soon.

About Ernst & Young:

Ernst &Young has carried out the valuation for the Company. Ernst & Young is a global leader in assurance, tax, transaction and advisory services. The Muscat office of Ernst & Young first opened its doors in 1974, although the firm had been serving clients in Oman since the 1950’s. Much of Muscat has been developed only in the past 30 to 35 years, with Ernst & Young firmly establishing itself during this period.

In recent years the office has experienced significant growth. In the last ten years, the number of clients and people has trebled. It also serves a large number of clients in the oil & gas, manufacturing, retail and construction industries.

Executives of Ernst & Young Oman serve on a number of public advisory groups including committees led by the Capital Markets Authority and the Oman Centre for Investment Promotion and Export Development (OCIPED).

Offer Price

OAB has considered a number of qualitative and quantitative factors in determining the price offer for Voltamp shares. Some of the key factors in the analysis included :

a) Cash flow analysis based on the financial results of the Company for 2007, and future financial projections provided by Company management from 2008 to 2014;

b) The Lead Issue Manager, Oman Arab Bank has also had an independent valuation performed by a leading accounting firm, Ernst & Young, as required by the Capital Market Authority; A brief about Ernst & Young is given above:

c) Analysis of current multiples on the MSM;

d) Comparative analysis of selected peer companies listed on regional stock exchanges.

Based on an exhaustive analysis, the Lead Issue Manager has recommended an offer price of Baisas 540 per share.

The detailed cashflow analysis considered the following companies separately:

v Voltamp Energy LLC (“VE”)

v Voltamp Transformers Oman LLC (“VTO”)

v Voltamp Transformers Company Qatar (“VMCQ”)

v Voltamp Power LLC (“VPO”)

CHAPTER 14

94

The underlying reason is that there are a number of differences :

v The companies valued are different in size and sales volume.

v Two companies are existing, profit making companies (VE and VTO), while two companies are new:

o VMCQ has started construction but has not yet started operations and will be operating in a different geography

o VPO has not yet been formed

Cash Flow Analysis

The discounted cash flow (“DCF”) analysis has been the principal method used to value the Company. The DCF seeks to determine the net present value of projected free cash flows generated by the company for all providers of capital using the weighted average cost of capital (“WACC”) as the discount rate to reflect the time value of money and the predictability of the future cash flows streams. The average WACC applied to the 4 individual companies ranges between 12.2% and 14.2%. The total free cash flows which comprise the annually forecasted free cash flows and the terminal value of the Company at the end of the forecast period are discounted back to the present using the WACC to obtain the enterprise value (i.e. the value of all cash flows generated by the company) and then, by deduction of net debt, the value of shares in the company (the “Equity Value”).

DCF Advantages

• The most theoretically sound valuation method;

• Forward-looking analysis, based on future cash flow (less affected by accounting rules); allows expected operating strategy to be incorporated into the model;

• Less influenced by volatility of markets and other market conditions;

• Allows a valuation of the different components of a business separately from the business.

DCF Disadvantages

• Valuation is highly sensitive to underlying assumptions for cash flows, terminal value calculation and discount rate.

The key financial results and projections of the Company are given in the following table:

The Company’s financial projections are based on realistic and achievable assumptions, with the following highlights:

RO ʻ000Year ended December 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Income 5,472 7,993 10,694 14,334 20,398 27,847 36,925 46,138 54,724 62,074Gross Profit 1,190 1,745 3,691 4,149 5,681 6,902 9,836 12,794 15,702 17,919Net Profit 496 787 2,422 2,402 3,065 2,446 4,795 7,045 9,158 10,630

Share Capital 500 1,100 3,500 5,000 5,000 5,000 5,000 5,000 5,000 5,000Shareholders' Funds 1,353 2,140 4,362 14,664 15,979 16,675 19,720 25,014 32,422 41,302Net Assets 1,353 2,140 4,362 14,664 15,979 16,675 19,720 25,014 32,422 41,302

Key RatiosIncome Growth 20.02% 46.07% 33.79% 34.04% 42.31% 36.52% 32.60% 24.95% 18.61% 13.43%Gross Profit Margins 21.75% 21.83% 34.51% 28.95% 27.85% 24.79% 26.64% 27.73% 28.69% 28.87%Net Margins 9.06% 9.85% 22.65% 16.76% 15.03% 8.78% 12.99% 15.27% 16.73% 17.12%

Earnings per Share 99 72 69 48 61 49 96 141 183 213Book Value per Share 271 195 125 293 320 334 394 500 648 826

Historic Projected

Nominal value of each share - Bzs 100

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Voltamp’s financial projections are based on the following key assumptions:

Assumptions:

• Sales are projected to increase from RO 14 million in 2008 to RO 62 million in 2014, representing a CAGR of 28% for the period. A key component of this growth is attributable to the addition of Voltamp Manufacturing Co., Qatar (VMCQ) and Voltamp Power, Sohar (VPO). VMCQ is expected to generate revenue in 2008. VPO is expected to commence generating revenue in 2010. By 2014, it is projected that VPO would contribute the largest share to Voltamp’s total revenue, with the contribution being around 41%.

• Gross profit margins over the projection period are expected to stay broadly constant at between 27% and 29%. Gross profit margin for 2010 are projected to drop, essentially due to the commencement of operations of VPO It is anticipated that gross profit margin would improve steadily as the manufacturing process becomes more efficient and as a result, the Company’s projected gross margin level by 2014 would be in line with the Company’s normalised level. A similar explanation is applicable to the trend in projected net profit margin.

• While the gross profit margins in the projected financial statements are lower than that of 2007 (35%), they are a strong improvement on overall historical trends (2004-2006: 19%-22%). Management is confident that they can achieve the projected gross margins and even better the projections.

• Salaries represent approximately 60% of selling, administration and general expenses. It is anticipated that the Voltamp workforce will increase from approximately 180 at the end of 2007 to over 550 by the end of 2014. The major increase will be as a result of VPO which is expected to require approximately 200 people. Omanisation in 2008 is expected to be more than 35% and projected to increase to 41% by 2014.

Price Multiples

The Offer price of Baisas 540 per Share (excluding Baisas 2 of Issue Expenses) results in the following price multiples:

Ratios 2007 2008

PER 7.83 11.25

PBV 4.33 1.84

PER: Price Earnings Ratio

PBV: Price to Book Value Ratio

Market Multiples

Prices as of March 13, 2008 PER Multiples PBV Multiplies

Banking & Investments Sector Index 19.48 3.45

Industry Sector Index 15.50 3.82

Service & Insurance Index 13.28 3.90

MSM 30 General Index 16.59 3.63

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The Offer price of the Company’s Shares compares favorably with the prevailing aggregate PE multiples of the MSM. While PBV appears to be high compared to the market and sector PBV for 2007, however it should be noted that the share capital increased in 2007 due to the issue of new capital. The PBV drops thereafter to 1.84 in 2008, which should compare favorably with the Market.

Comparative Analysis

The Company is a diversified multi-disciplinary company specialised in the manufacture of transformers and low voltage switchgear panels. In the absence of directly comparable companies listed on the regional stock exchanges, the advisors have selected closely comparable companies operating in the power sector in the region. A comparative analysis has been conducted for benchmarking the Offer pricing of the Company against its regional peer group.

Name of the Company

Oman Cables (Oman)2007

El Nasr Transformers (Egypt)2007

Middle East Specialised Cables (KSA)2007

Voltamp Energy SAOG (under transformation)2007

Year 2007 2007 2007 2007

Net Profit Margin % 6.96 9.00 16.13 23.00

Operating margin % 11.49 10.12 19.12 35.00

Return on Assets % 14.86 11.16 14.36 33.00

Return on Equity % 72.58 24.49 34.55 56.00

Share capital Mn. 8.970 2.795 32.8 3.500

No of shares out standing Mn. 89.700 39.876 32.000 3.500

Shareholders’ Equity Mn. 27.914 0.9576 44.537 4.362

Net Profit Mn. 15.134 2.243 15.344 2.422

EPS 0.169 0.0562 0.468 0.692

Price as on 13-3-08 3.640 1.630 8.61 *5.40

PE x 21.54 28.985 17.90 7.83

PBV x 11.70 7.09 6.186 4.33

Dividend Yield % 1.09 0.250 1.488 ---

For the purpose of comparision, the financial figures are restated in Rial Omani. The following conversion rates have been used for the purpose.

1 Kuwaiti Dinar = 1.41957 RO

1 Saudi Riyal = 0.1025 RO

1 Qatari Riyal = 0.1056 RO

1 Egyptian Pound = 0.0701 RO

* In 2007 the face value of the share was RO 1.000. Hence we have used the price of RO 5.4 (equivalent to RO 0.540 after the change in face value to RO 0.100) for calculating the valuation ratios.

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The Offer price of the Company’s shares results in a lower PE multiple as compared to the average PE multiple of its peer group companies. Even performance indicators like ROE and ROA compare favourably with the sector peers. However, the investors should note that the difference may be due to certain industry specific factors, or particular financial status and prospects of the peer group companies. Due to the difference in the nature of operations of the different companies, there is no direct like-to-like comparision between the companies mentioned above. The above data is indicative only and should be used accordingly. Please note that the data for Voltamp is corresponding to the data for consolidated accounts for Voltamp Group and for the year 2007 prior to the capital restructuring.

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RELATED PARTY TRANSACTIONS

Related Party Transactions (including Group/Associates)

For the financial year ended 31st December 2007 the following are classified as Related Party Transactions and brief details are given below:

During the year the Group has entered into transactions with entities over which certain managers are able to exercise significant influence. The Group also entered into transactions with AAH and its associates. In the ordinary course of business, such related parties provide goods and render services to the Group. The Group also provides goods and renders services to such related parties. The Group considers that the terms of purchase, sale of goods and provision of services are comparable with those that could be obtained from third parties. The details are as follows:

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Related Par ty transaction for the year 2007

For the financial year ended 31stDecember 2007the followingare classified as Related Par tyTransactions and br ief details are given belowVoltamp Transformers Oman LLC

Name of the Par tyNature of

Relationship Details of Transaction Amount(RO)

ALMahaCeramicsCommonDirector Sale of goods 53,300

Premier LogisticsCommonDirector Purchase of goods/services 26,500

MustafaSultan Science & IndCommonDirector Purchase of goods/services 387

Voltamp Manufacturing companyQatar Subsidary Technology transfer fees 61,904

VoltampManufactur ingCompany LLC




ALAnwar BlanksCommonDirector Sale of goods 2,349



VoltampManufactur ingCompany LLC(Consolidated)




ALAnwar BlanksCommonDirector Sale of goods 2,349


MustafaSultan Science & IndCommonDirector Purchase of goods/services 387


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Related Party Transactions for the year 2007

1 Revenue by sale of goods to

RO 211,549 Almaha ceramics(RO 209,200)

Al Anwar Blanks (RO 2349)

2 Purchases of goods and

services from

RO 34,501 Premier logistics (RO 34,114) and Mustafa Sultan Science

&Ind (RO 387)

Related party transactions mentioned above are carried out in the ordinary course of business on arm’s length commercial terms.

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RISK FACTORS AND MITIGANTS

Prospectiveinvestorsshouldcarefullyconsidertherisksdescribedbelowinadditionto all other information presented in this Prospectus before deciding to purchaseanyof theOfferedShares. Investorsmaynote that therisksandmitigating factorsmentionedbelowaretheFounders’andtheCompany’smanagementopinionbasedontheircurrentknowledgeandtheinformationavailablewiththem.Theactualrisksandtheimpactofsuchriskscouldbemateriallydifferentfromthatmentionedherein.

1) Growth of Gulf Economy and Power Sector

The Company’s business and revenue is derived from products & services it provides in the Sultanate of Oman, Qatar, other GCC countries and therefore the performance of the Company is linked to the economic environment of GCC countries and in particular Oman and Qatar. Any downtrend in the economy of GCC countries could impact the growth of the Company.

2) Oil Price Risk and Geo Political Risk

The GCC regional economies are heavily reliant on oil and accordingly, the future oil price scenario will determine to a large extent the economic conditions in the region. While oil prices are currently at historic highs and GCC economies have witnessed rapid growth on the back of high oil prices, any downturn in oil prices may have a dampening affect on regional growth and thereby on the growth of business. As the Company’s business emanates from the oil & gas and the Power & infrastructure sector, such a fall in oil prices may impact the Company’s business and growth.

The political and international relationships/events in the region also significantly affect the regional economies and any increase in the political risks would affect the economic growth of the region in general.

The Risks

Demand risk

The performance of the Company is dependent on the demand for distribution & power transformers, switchgear panels & related products. A fall in demand due to economic downtrend or any other factor could affect performance of the Company.

Mitigant:

In the short to medium term it is expected that the oil prices will move within the prevailing price band and development of infrastructure will continue to drive Oman’s economic growth. Given its track record and credentials, the Company believes it will continue to benefit from the economic growth of GCC region.

Industry/sector concentration

Sale of Transformers & switchgears constitute a substantial portion of the Company’s business. Thus, any downturn in the Power sector within GCC countries would affect the Company’s business adversely.

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Mitigant:

Over the years, the power sector industry within GCC has been expanding steadily. Corresponding to Oman economy’s robust growth in excess of 6% per annum, the Company anticipates the power sector to continue growing in the foreseeable future.

Failure to win Bids/Tenders

The majority of the Company’s business comes from participation in and winning of tenders to supply transformers and switchgears. However, there is an inherent risk that the Company may not be able to win sufficient number of tenders due to competition from either other Omani companies or international transformer/switchgears manufacturing Companies.

Mitigant:

Based on a review of an excellent track record and proven expertise in its business, the Company is well placed for upcoming Transformer & LV Switchgear business in Oman and other GCC countries. The Company will continue bidding at competitive levels that are economically viable for its business. Despite high cumulative rate of growth in the past, the Company has projected a fairly modest level of growth in the financial projections and is confident of achieving these levels.

Cancellation of Projects/ Contracts

Notwithstanding a robust order book on the basis of which the financial projections of the Company are drawn, any cancellation of such contracts would affect the Company adversely.

Mitigant:

The Company does not envisage any major cancellation of its ongoing orders as its clients are mainly Government organisations and reputed private organisations in Oman and other GCC countries.

Competition Risk, including entry of new competitors/international competitors

The Company faces competition from existing as well as new entrants into the sector. Increased competition could potentially lead to pressures on the growth of business and revenue, which would affect profitability of the Company.

Mitigant:

The Company believes that it is well placed to face competition. The proven and enviable track record of supplying quality products in time has allowed the Company to build an excellent reputation. It is well regarded by the clients and has developed substantial expertise in manufacturing transformers and switchgears.

Performance Risk

While the Company has a robust order book of ongoing projects/contracts under execution, the success and profitability of the Company primarily depends on its ability to successfully execute these contracts. Any shortfall in supply will adversely impact the Company’s financial performance, reputation and future prospects. Failure to complete contractual work within

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the designated time schedule could potentially lead to monetary penalties or compensation to the client. Such failure may be on account of various factors including those on which the Company does not have any control, such as fluctuations in raw material prices especially copper, CRGO and transformer oil.

Mitigant:

The Company has a credible track record of timely delivery of transformers & switchgear, and at the same time maintaining quality and best practices relating to its products & services. It has focused on maintaining and developing its expertise, resources and technical skills to ensure that it is fully equipped to meet all its future commitments. The Company’s production teams have extensive experience and use state of the art technology in manufacturing standard as well as special transformers / switchgears. Dedicated units ensure efficient mobilisation of manpower and technical resources, and the top management of the Company is closely involved in execution & monitoring. External factors that may lead to delays are considered at the initial planning stage, including contingencies for unforeseen situations. The Company has set-up hedging mechanism through which it covers price fluctuation risk on its key raw materials.

Profitability Risk

The Company’s profitability is directly linked to its input costs of material, labour, fuel, and any unexpected increase in these costs could potentially impact the Company’s profitability. Further, as a significant portion of the Company’s supply of products is based on fixed price contracts, any increase in input cost will adversely affect profitability.

Mitigant:

The Company factors such contingencies, while preparing its bids/tenders and normally enters into contracts with suppliers of the key inputs relating to the project. Moreover, in the event of cost increases on account of regulatory changes, the Company may negotiate with the client to suitably pass on such escalations. The Company also covers its risk of raw material price fluctuation through hedging mechanism.

Raw Material Price fluctuation Risks

The fluctuation of raw material costs such as copper and CRGO steel has a direct impact on products pricing.

Mitigant:

The Company is taking several measures to absorb fluctuation of raw material cost which includes restricting the time for which a quotation is valid and by using hedging mechanism to minimise the impact of raw material price fluctuations.

Resources Risk

The current boom in the power sector in the region has led to a scarcity of materials and skilled labour. Any constraint in the availability of raw materials and manpower could potentially result in delays in completion of contracts.

Mitigant:

The Company has entered into long term supply contracts for supply of key raw materials.

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Also, the Company over a period of time developed reliable vendor base who assure timely delivery of quality products. The Company also takes sufficient care to recruit required number of skilled and non-skilled labour well in advance. The Company’s employees friendly HR policy ensure that its’ employees continue with the Company for long time.

Physical Hazard Risks

The Company executes various complex projects that expose its personnel and equipment to physical hazards. These may lead to loss of life and property through accidents in the workplace.

Mitigant:

The Company places extreme importance to the safety of its personnel and puts in place a number of safety measures in while manufacturing the goods or in the project execution. Further, there is on-going training of the personnel in various safety programmes. The Company also has a separate workshop that handles the maintenance required for the equipment so as to keep these in proper condition. Suitable insurance cover is also maintained.

Receivables Risk

Delays in realisation of receivables may lead to liquidity constraint that would increase the Company’s financial expenses and also hinder its ability to pay its suppliers, which in turn would affect its project implementation and performance.

Mitigant:

The Company monitors its receivables position closely and effectively follows up the recovery of its dues. Further, the Company’s financial position provides it the ability to withstand any temporary liquidity needs and the infusion of long term funding through this Issue will further strengthen the Company’s financial position.

Delays in obtaining work visas

Expatriate Manpower constitutes almost 65% of the Company’s work force, and their number is envisaged to increase further due to upcoming 132 kV project to manufacture power transformers at Sohar.

The Company has to obtain work visas for these expatriate workers in a timely manner, and any delay in obtaining or refusal of work visas would severely hamper the Company’s growth.

Mitigant:

The Company effectively liaises with the Government authorities with the aim of facilitating its workforce requirements. Moreover, the Company is aiming through training programmes to induct additional Omani employees for meeting its Omanisation targets and reducing its need for expatriate personnel. The Government has always been supportive of companies’ growth requirements in Oman.

Brand Risk;

The company is sharing the brand name Voltamp with several group companies which could affect its Business in the long term.

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Mitigant:

The company feels it is a remote possibility and that it will not affect their operations.

Share Price Risk

The Company’s Shares are to be listed for the first time on the Muscat Securities Market and accordingly there is no prior trading in the Company’s Shares that may provide a price history or trend. Further, the Company’s Shares are priced at a premium to its nominal value.

Mitigant:

The Promoters/Selling Shareholders, advisors and the Lead Issue Manager, based on the information provided by the Company, believe that the Company’s Shares are fairly priced in relation to the MSM and peer companies share trading multiples. The rationale underlying the pricing of the Shares is set out in the Chapter on Valuation and Price Justification which demonstrates the validity of the proposed pricing.

Liquidity Risk

The Company’s Shares may not have adequate liquidity in the stock market after listing, and investors may not be able to sell their Shares easily post listing.

All equity investments carry market risks to varying degrees. The value of any security can fall as well as rise depending on market conditions.

Mitigant:

The management of the Company believes that the pricing of the Shares in relation to the Company’s prospects has significant upside potential, which should lead to an adequate level of demand for its Shares post listing. Moreover, the public holding of 50% of the Company’s post-Issue share capital should also result in sufficient liquidity in the Shares in secondary market

Government Authorisations, Permits and Approvals

A number of authorisations, permits and approvals from various Government authorities are required to enable the Company to conduct its business in the Sultanate of Oman. There is no guarantee or assurance that these will be given or, if given, upon what terms and conditions.

Mitigant:

The management of the Company believes that it has all the requisite authorisations, permits and approvals to conduct its business in the Sultanate of Oman and has no reason to believe that any of the same will be withdrawn or not renewed within the next 12 months. The Government has always been supportive of companies’ growth requirements in Oman.

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CORPORATE GOVERNANCE

Corporate Governance

This section summarises the Company’s corporate structure effective as at the date of this Prospectus and the proposed Memorandum and Articles of Association. The description provided hereafter is only a summary and does not purport to give a complete overview of the Memorandum and Articles of Association, nor of relevant provisions of Omani law or the CMA circulars, neither should it be considered as legal advice regarding these matters. A copy of the Memorandum and Articles of Association is available from the registered office of the Company or the CMA.

Management

Overview

The respective roles and responsibilities of the management bodies of the Company are in large part governed by the previsions of the CCL, the Memorandum and Articles of Association and, after listing on the MSM, by the Code and circulars issued by the CMA in respect thereof.

The management of strategic issues of the Company will be entrusted to the Board. The Board may perform all acts necessary or useful for achieving the objects of the Company, with the exception of those acts that are by law or the Memorandum and Articles of Association explicitly reserved for the shareholders general meeting.

Board

The Board shall consist of seven directors one of whom will be elected as the Chairman of the Board. The following are the main provisions set out in the Memorandum and Articles of Association, concerning the Board.

The management of the Company shall be entrusted to a Board of Directors comprising of 7 members from amongst the Shareholders or non-Shareholders provided that the nominated Shareholder holds 40,000 Shares which he may not dispose off throughout the term of his office to the extent that he no longer retains the status of a Shareholder in the Company. The term of office of a Director shall be for a maximum period of 3 years, subject to re-elected more than once. The period stipulated for election to the Board shall be calculated from the date of the Annual General Meeting in which the Director is elected to the date of the third Annual General Meeting following it. Where the date of such meeting exceeds the term of three years, the membership shall be extended by Law to the date on which the meeting was convened, save it shall not exceed the period stipulated in Article (120) of the Commercial Companies Law.

Subject to the provisions of Article (95) of the Commercial Companies Law and without prejudice to the provisions of the Company’s Articles of Association, a person to be elected to the Board shall:

i) be of a good reputation;

ii) be at least 25 years old;

ii) not be unable to discharge his debts to the Company to the Board of which he intends to be elected as a member;

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iv) not have been declared insolvent or bankrupt unless his insolvency or bankruptcy has been terminated in accordance with the Law;

v) not have been convicted of felony or an offence of dishonourment, unless he has been rehabilitated;

vi) not be a member or a representative of a juristic person in four joint stock companies whose head offices are in the Sultanate of Oman;

vi) in case he is representing a juristic person, be authorised by such juristic person to stand for election;

viii) not be a member of a board of directors in a public or closed joint stock company, the head office of which is the Sultanate of Oman, conducting business similar to the objectives of the Company; and

ix) submit a declaration stating the number of his Shares if he is a Shareholder and undertaking not to dispose of such Shares, during the term of his office as a Director, in any manner which may cause him to cease being a Shareholder in the Company.

Without any prejudice to the regulations of the Commercial Companies Law mentioned above, the following conditions will be fulfilled while forming the Board of Directors of the Company.

1. The Board shall be comprised of a majority of non-executive directors. A non-executive director means “the member of the board who is not a whole time director (employee director) and/or does not draw any fixed monthly or annual salary from the Company”.

2. A minimum of 1/3rd of the total strength of the Board (subject to a minimum of two) shall comprise of independent directors.

3. He does not represent more than one legal person in the Board

4. The roles of CEO/General Manager and Chairman shall not be combined.

The Members of the Board of Directors will be elected through a secret ballot by the Shareholders and each Shareholder will have the number of votes equivalent to the number of shares he owns and he will have the right to utilise it all for one candidate or divide it amongst the candidates of his choice by a vote card, the total number of votes should be equivalent to the number of shares he owns.

The Membership which is done in violation of the above regulations will be null and void from the date of election and the Board of Directors of the Company will call a general body meeting to elect another Member within a maximum of one month from the date cancellation and the Company shall have the right to demand the compensation for the losses from the Member and everyone who facilitated his entry into the elections.

If the Member of the Board of Directors loses any of the conditions necessary for the Membership, he must inform the board about the same and his place will be considered vacant from the date of information, otherwise, his Membership will cease to exist from the date it was found out by the Company, without prejudice to his liability in accordance with law. And his place will be filled up in accordance with the regulations of the Article (98) of Commercial Companies Law.

The Board of Directors will elect Chairman and Vice Chairman from its Members. The Vice Chairman will officiate the Chairman when the latter is absent.

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The Chairman of the Board of Directors shall implement the resolution of the Board of Directors and shall conduct the regular business of the Company under the supervision and control of the Board of Directors as per the authority specified in the Company’s Article of Association and internal regulation.

If the office of a director becomes vacant, the Board of Directors will appoint a temporary Member who is fulfilling all the conditions of Membership stipulated in the previous Articles. In other case, regulations of Article (98) of Commercial Companies Law no.4/74 with regard to vacant seats will be applied.

The Board of Directors, in the cases other than approving the distribution of dividends, approving the balance sheet, profit and loss account, and reports of Board, the Auditing Committee and Auditors may pass resolutions without the need to convene a meeting of the Board of Directors if five members out of seven members of the Board approve same in writing.

The General Meeting shall specify the annual remuneration and sitting fees of the Board and sub-committees at not more than 5% of the net profits of the year, after deducting the legal and optional reserves in accordance with Article (101) of the Commercial Companies Law and notionally calculating or distributing the dividends to Shareholders at not less than 5% of the capital. The maximum total over-all limit of entire remuneration paid by the Company shall be RO 200,000 (two hundred thousand), with a sub-ceiling of RO 10,000 (ten thousand) as sitting fee for each Director.

Where the Company makes loss or less profits to the extent that notionally calculating or distributing dividends to Shareholders is not possible, remuneration and sitting fees shall be determined in accordance with the rules issued by the Capital Market Authority.

If the capital of the Company has eroded, the Company may pay sitting fees to the members of the Board for the meetings held during the year or years following the erosion of capital in accordance with the limits prescribed by the concerned authority.

Any Director, who, by request, performs special services, travels or resides abroad for any purpose of the Company may be paid an extra remuneration.

The remuneration for the Board shall be divided amongst the Directors in such proportions and manner as they, by agreement, may determine, failing which the remuneration will be divided equally amongst the Board.

The Board shall have full authority to perform all acts required for the management of the Company pursuant to its objects. Such authority shall not be limited or restricted except as provided by Law or by the Articles of Association of the Company, or the resolution of the General Meeting.

The Board shall be responsible for the following:

A. To approve the Company’s commercial and financial policies together with its estimated budget with a view to achieving the objects of the Company and to maintain and promote the rights of its Shareholders;

B. To develop, review and update necessary plans including strategic plans from time to time in order to put into operation the company’s objectives and carry out its activities in the light of the purpose underlying its establishment;

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C. To adopt the Company’s disclosure measures and to follow up the implementation thereof in accordance with the disclosure rules and guidelines issued by the Capital Market Authority;

D. To supervise the performance of the executive management and to ensure that the work proceeds in a manner which achieves the company’s objectives in the light of the purpose underlying its establishment;

E. To provide accurate information to the Shareholders on the dates specified by the Capital Market Authority in the disclosure rules and guidelines;

F. To appoint the Chief Executive Officer and/or the General Manager and/or the Deputy General Managers provided that neither of them shall be the Chairman of the Board.

G. To appraise the performance of the employees mentioned in the previous item and to assess the work carried out by the committees formed by the board pursuant to Article (102) of the Commercial Companies law;

H. To approve the financial statements related to the Company’s business and work results as submitted to the executive management to the board quarterly in away which reflects the exact financial position of the Company;

I. To include in the annual report presented to the general meeting the reasons which justify the ability of the company to pursue its specified activities and the achievement of its objectives;

J. To include in the financial statements a full statement of all amounts which a Director might have received during the course of each year including money paid to directors in their capacity as employees of the Company

The Board shall introduce internal regulations for the regulation of the Company’s management, the business of the Company and the affairs of its employees within one year from the date of registration of the Company in the Commercial Register, in accordance with the rules issued by the Capital Market Authority.

The Board shall not perform the following acts except if authorised to do so by the resolution of a General Meeting:

a) Make gifts, except business gifts in small and customary amounts.

b) Sell all or a substantial part of the Company’s assets.

c) Mortgage or pledge the assets of the Company, except to secure debts of the Company incurred in the ordinary course of the Company’s business.

d) Guarantee debts of third parties, except guarantees made in the ordinary course of business pursuant to the Company’s objects.

The Board of Directors may appoint the Managing Director from the executive Members provided he is free for the Company’s works.

The Company shall be bound by all acts performed by its board of directors, its chairman, managing director and all other executives, if any as long as they act in the name of the Company and within the scope of their powers.

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It is not permitted for any of the Directors or main Company employees to utilise the information that reaches them in the capacity of their positions or jobs, for achieving any benefit for them or their minor children or for any of their relatives till the 4th degree, as a result of transaction in the Company shares. It is also not permitted for any of them who have direct or indirect interest with any authority who is involved in activities which aimed at influencing the prices of shares issued by the Company and the regulations of Article 109 and 110 of Company law will be applied in case of violation.

A member of the board of directors or other related parties of the Company shall not have any direct or indirect interest in the transactions or contracts concluded by the Company for its account, except those concluded with them in accordance with the disclosure requirements of the CMA.

The Members of the Board of Directors shall be liable to the Company, the shareholders and third parties for the damages caused by their acts in violation of the law and their acts which fall beyond the scope of their powers or by any fraud or negligence in the performance of their duties or by their failure to act as prudent men under certain circumstances.

Any provisions or stipulations limiting the liability of the members of the Board of Directors shall be null and void, and the Company shall reimburse any director the costs and sums adjudged in any civil or criminal case brought against him as a result of his activities as a member of the Board of Directors of the Company in the event that final judgment in such case shall absolve the director of liability.

The Company may institute an action against any director of the Company it deems liable for damages that have come upon it. The board of directors or the ordinary general meeting shall take a decision appointing a person to pursue the case on behalf of the Company and authorizing him to pay costs of the case from the funds of the company. Any shareholder may propose suing the members of the Board of Directors, and if the ordinary general meeting does not adopt his proposal, he may himself file the case on behalf of the Company. And the case is successful, such shareholder shall be reimbursed the costs and expenses of the case out of the sums adjudged and the balance shall be paid to the Company.

It is not permitted to file a lawsuit on the Members of the Board of Directors or their heirs regarding the works they have done while discharging their duties, except in the case when the case is filed within 5 years from the date of holding the general body, wherein the Board of Directors submitted the accounts of the Company for the period including the act or the shortcoming which is the reason for the complaint. This period shall not apply to suit filed by the CMA.

First Board of Directors

A constitutive General Meeting of the Company is to be held after finalisation of the allotment of Shares and Shareholders attending the meeting may vote and elect the new Board of Directors.

Announcement of the date and location for such shareholders general meeting shall be made in the major newspapers in Oman.

Internal Regulations

In accordance with the provisions set out in Article (68) of the CCL, the Company is required to

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lay down Internal Regulations for regulating the management of the Company, its business and personnel affairs through its Board of Directors, within one year from the date of transformation of the Company with the Commercial Registrar. These regulations shall cover at least the following apart form the rules laid down by the Capital Market Authority:

1) Organisational Structure of the Company stating therein the responsibilities related to the various posts of the Company and the reporting structure/ procedures.

2) Specifying the extent of the authority vested with each post with regard to approval of the financial expenditure.

3) Fixing the allowance for the meetings, remuneration and other privileges as prescribed in respect of the members of the Board of Directors and Committees constituted under its auspices and the basis for their calculation.

4) The policies related to the Purchases and Service Contracts.

5) The minimum level of information required to be submitted to the Board of Directors.

6) The authorities, duties and responsibilities relevant to the executive management and subcommittees constituted under the auspices of the Board of Directors of the Company.

7) The policies related to Human Resources including the salaries, appointment, development, training, promotions and termination of the services etc., covering other relevant aspects.

8) Investment Policies of the Company.

9) Policies for Related Parties Transactions.

10) Policies and measures for submission of material information in a transparent manner, to the Capital Market Authority and the Muscat Securities Market within the specified time including a definition of “material information”.

11) Any other regulations that the Board of Directors of the Company may deem necessary to add for achieving adequate level of Corporate Governance.

It may be mentioned that the Company has already put in place a number of these policies. The Company shall appropriately review the same in the light of its transformation into an SAOG Company and also formulate such additional policies and procedures that may be required in this context within the stipulated time period.

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RIGHTS AND LIABILITIES OF SHAREHOLDERS

I. Shareholder’s Liabilities:

The liability of a Shareholder shall be limited to the payment of the value of the Shares he / she / it subscribes. He / She / It shall not be liable for the debts of the Company except within the limit of the nominal value of the Shares subscribed for.

Any person whose shareholding, along with his minor children’s shareholding, reaches 10% or more of the Company’s share capital, must inform the CMA about the same through a written communication. Further he shall inform the CMA regarding any transaction or dealing which leads to the increase of this percentage immediately after it happens.

No single person or related persons up to second degree shall hold 25% or more of the shares of a Joint Stock Company whose shares are offered for public subscription, save in accordance with the holding rules set out by the CMA.

All the shares of the Company shall have the same nominal value, and a share shall neither be divided nor shall it be owned by more than one person except when such ownership is by inheritance provided that the heirs are represented by the person whose name comes first in the register and the owners of the share shall be responsible severally and jointly for the liabilities arising from such ownership. However, the transfer of the share requires endorsement by all joint owners.

The shares allotted to the Employees and the Managers shall be subject to the Lock-in Period.

II. Shareholder’s Rights

All Shares of a Joint Stock Company shall enjoy equal and inherent rights vested in their ownership. which, in accordance with the CCL are:

1. The right to receive dividends declared by the general meeting.

2. Preference rights to subscribe for new shares.

3. The right to share in the distribution of the assets of the Company in the event of liquidation.

4. The right to assign shares in accordance with the Law.

5. The right to inspect the Balance Sheet, Profit & Loss Statement, and Shareholders’ Register of the Company.

6. The right to receive notice of and to participate and vote in all general meetings either personally or by proxy (one vote for each Ordinary Share).

7. The right to apply for the annulment of any resolution adopted by the general meeting or the Board if such resolution(s) are contrary to the prevailing laws, the Memorandum and Articles of Association or other internal regulations of the Company.

8. The right to institute legal actions on behalf of the Company and its Shareholders against the Board or auditors thereof, pursuant to the CCL.

9. The CMA may, upon material reasons being raised by Shareholders who own at least 5% of the Shares of the Company, suspend resolutions passed by the general meeting of the Company which are passed in favour or against holders of any category of Shareholders or in the interests of the members of the Board or others.

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III. Reports & Statements:

- The Board shall prepare un-audited Quarterly Financial Statements for the first, second and third quarter of each financial year. It shall also prepare an Annual Report within two months from the end of the financial year comprising of the audited Balance Sheet, Report of the Board, Report on the discussions held by the Board and their analysis and Report on the Organization & Management of the Company.

- The un-audited Quarterly Financial Statements shall be forwarded to the Information Centre of Muscat Securities Market within thirty days from the end of each quarter or any other legal period prescribed by the disclosure rules and conditions issued by CMA through Electronic Transmission System of the Centre. The said Centre shall also be provided with two copies duly endorsed by the Board. The Company shall also have it published within the said period. Whereas, the audited Balance Sheet shall be forwarded, submitted and published two weeks in advance of convening of the Annual Ordinary General Meeting.

- The Board shall extend invitation to the Shareholders for the Annual Ordinary General Meeting within three months from date of ending of the financial year. The agenda for the Annual General Meeting shall include the following:

1. To study and approve of the Report of the Board.

2. To study and approve of the Report on the Management and Organization.

3. To study and approve of the Auditors Report on the Balance Sheet, Profit & Loss Account.

4. To review the report on declaration of dividend. However, such dividend shall be distributed only from the net Profit generated or from the Special Reserves Accounts subject always to the provisions set out in Article 106 of the CCL.

5. To review the report on the sitting allowance for the meetings of the members of Board and committees constituted under it for the forthcoming financial year and approve the same.

6. To review the annual remuneration (if any) of the members of the Board for the forthcoming financial year.

7. To look into the transparency of any transactions held with the related parties during the previous financial year (if any).

8. To make a note of any expected transactions with the related parties during the next financial year (if any).

9. To appoint Auditors for the next financial year and fix their fees, taking into consideration the provisions laid down in the Law.

The Board may convene the general meeting at any time and such meeting shall be convened whenever required by the law or the Memorandum and Articles of Association, or upon request of one or more shareholders who represent at least 25% of the capital of the Company.

The Board shall establish the agenda of the general meeting. If the meeting is convened by the auditors, the agenda shall then be established by them. The Board, or the Auditors

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if necessary, shall include in the agenda any proposal put forward by shareholders who represent more than 10% of the capital of the company provided that such proposal is submitted for inclusion in the agenda at least one month before the date of the meeting.

The resolutions of the ordinary meeting shall be void unless the meeting is attended by shareholders or their proxies who represent at least half the capital of the company. If such a quorum is not formed, a second meeting shall be called to discuss the same agenda. The second ordinary meeting shall be notified to the shareholders in the same manner as the first meeting, at least one week prior to the date set for the second meeting. The resolution of the meeting shall be valid regardless of the number of shares represented, provided that such meeting is held within one month from the date of the first meeting. The resolution of the ordinary general meeting shall be adopted by relative majority of the vote.

An Extraordinary General Meeting shall be convened to Consider and decide all matters which such meeting is specifically authorised to settle in accordance with the law or the Company’s Articles of Association.

Any amendments to the Memorandum and Articles of Association shall not be valid unless approved by the Director General of Commerce and registered with the Commercial Registrar, Ministry of Commerce & Industry.

The resolution of the extraordinary general meeting shall not be valid unless the meeting is attended by shareholders and proxies representing at least three-quarters of the Company’s capital. Failing such a quorum, a second meeting shall be convened to discuss the same agenda. The shareholders shall be notified of the second extraordinary general meeting in the same manner as the first extraordinary general meeting, at least two weeks prior to the date set for the second meeting. The resolutions of the second meeting shall be valid if the meeting is attended by shareholders or proxies representing more than half of the Company’s capital, provided such meeting is held within six weeks of the date of the first meeting.

The resolutions of the extraordinary general meeting shall be adopted by a majority of three-quarter of the votes cast in respect of a certain resolution, provided such resolution shall always receive votes representing more than fifty percent of the Company’s capital.

Any Shareholder or any interested party may refer to the Commercial Court (the competent department) within five years from the date on which the meeting was held, to decide on nullification of any resolution if adopted during the meeting in violation of the law or the provisions of the Company’s Articles of Association or its regulations, if any, or if adopted by fraud or abuse of authority by any person.

IV. Transfer of ownership of the Shares:

The transfer of ownership of the Shares shall take place through disposition in accordance with the instructions laid down by Muscat Securities Market. The transfer of ownership shall also be entered in the Shareholders’ register in the Company and which shall include the Shareholder’s name, his nationality, domicile and the number of Shares he holds and their numbers.

The shareholding of each individual shall not exceed the maximum limit prescribed and provided for in the CCL and Capital Market Law respectively, unless the necessary approvals are secured.

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V. Constitutive General Meeting:

- The calling of the Constitutive General Meeting of the Subscribers shall be treated as one of the requirements for the incorporation of a Joint Stock Company. This General Meeting shall look into all the measures that have been taken for incorporation of the Company under convening of the meeting. The Promoters shall, within thirty days from expiry of the Subscription invite the Subscribers to this meeting. The invitation and calling of this meeting shall be in accordance with the provisions set out in the CCL and the Company’s Articles of Association governing Extra Ordinary General Meetings.

- The Promoters shall submit to the Constitutive General Meeting a report, together with supporting documents, including sufficient information on all the actions taken, the expenses incurred for incorporation of the Company, and on all the obligations committed by the Promoters on behalf of the Company that is under formation, together with the supporting documents.

The Constitutive General Meeting shall have the authority to look into and pass resolution in respect of the following matters:

1. To ratify the Report submitted by the Promoters with regard to the process of incorporation of the Company and expenses incurred by them. The Promoters shall be liable severally and jointly for the expenses incurred and commitments made on behalf of the Company under transformation which have not been ratified by the Constitutive General Meeting.

2. To verify and confirm whether the necessary conditions governing the incorporation of the Company have been complied with.

3. To approve the Memorandum & Articles of Association of the Company. The Meeting may amend the Memorandum & Articles of Association of the Company, however, such amendment(s) shall not become valid and operative until approved by the Director General of Commerce.

4. To elect the members of the first Board of Directors. This Board shall be responsible for the registration of the Company with the Commercial Registrar within one month from the date of the Constitutive General Meeting. The members of the Board shall be liable severally and jointly for the damages arising from the failure to carry out this registration.

5. To appoint the first External Auditors of the Company and fix their fees.

The Expected Date of the Constitutive General Meeting (CGM): The CGM will be with in 30 days after the end of IPO and after finalising the share allotment. The share holders in the CGM will elect the first Board for the Company. The date for the Constitutive General Meeting will be announced in the Omani Newspapers.

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CONDITIONS AND PROCEDURES FOR THE SUBSCRIPTION OF THE SHARES

I. The subscription for the Offered Shares shall be open to Omanis, Non Omanis, Individuals, Non Individuals and Corporate Bodies/Institutions/Investment Funds/Pension Funds. Likewise, it shall be open to Omani as well as non-Omani corporates, institutions, investment funds, and pension funds which have their accounts with Muscat Depository & Securities Registration Co., as on the date and / or during the subscription period. It is pertinent to mention here that it would be permissible for Foreign Nationals/Corporates to own shares of the Company once listed with Muscat Depository & Securities Registration Co., to an extent of 70% of the Share Capital, in accordance with the Articles of Association of the Company.

II. Prohibitions with regard to the Applications for subscription:

The subscribers to the Shares issued as mentioned hereunder shall not be permitted to participate in the subscription:

1) Sole Proprietorship Establishments. Whereas, the owner of a Sole Proprietorship Establishment would be required to subscribe in his name only if he so desires.

2) Trust Accounts. Whereas, the Brokerage Companies would be required to address the Customers for the subscription in their personal names.

3) Multiple Applications for the subscription. Whereas, it is prohibited for any person to submit more than one application for subscription in his personal name.

4) Applications made under joint names, including the applications made in the name of legal heirs. Whereas, they or their legal attorney would be required to apply in their personal names.

All such applications shall be rejected without contacting the applicant.

III. Subscription on behalf of Minor Children:

1) For the purpose of this Issue, any person born after (01/05/1990) shall be treated as Minor.

2) Only a father may subscribe on behalf of his Minor children.

3) If the subscription is made on behalf of a Minor by any person other than the father, he shall be required to attach a valid Sharia (Legal) Power of Attorney issued by the competent authorities authorising him to deal in the funds of the Minor through sale, purchase and investment.

IV. Shareholder’s (investor’s) Number with Muscat Depository & Securities Registration Co. (SAOC) (“MDSRC”)

1) Any person who desires to subscribe to the Offered Shares has to have an account with the MDSRC as per its working form, which may be obtained from its Head Office or its site on the World Wide Web or from brokerage companies. Each subscriber may open an account through the following outlets:

- Head Office of the MDSRC based on the ground floor of the building of the CMA, Commercial Business District.

- Branch of Muscat Securities Market based in Salalah.

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- Office of the Brokerage Companies that are licensed by Muscat Securities Market.

- By fax no. 24817491.

2) With regard to the investors who presently hold accounts with the MDSRC, they shall be required, before the subscription, to confirm whether their accounts contain all their basic particulars, those being the name in full, postal address, Civil Status No., (as mentioned in the Personal Card (Civil) or Civil No., furnished in the Passport or Civil No., or as provided for in the new Birth Certificate) and details of the Bank Account. Every shareholder may update his particulars through the outlets mentioned above.

3) All correspondence, including allocation notices and dividend cheques, shall be sent to the subscriber at the address recorded at the MDSRC. Therefore, all subscribers shall verify the correctness of such addresses.

4) Each subscriber shall be required, after opening the account or updating his particulars, to secure from the MDRSC, the right number so as to have it registered in the Application for the subscription. The investor himself shall be responsible for verification of the number furnished in the Application for the subscription. The applications not bearing the correct Account Numbers shall be rejected without contacting the subscriber.

For more information on these Procedures, you are requested to contact:

Muscat Depository & Securities Registration Co., SAOC

Tel. 24814827 - Fax. 24817491

http: // www.csdoman.co.om/

Subscription Period:

The subscription shall commence on May 5, 2008, and end on June 3, 2008 with the end of the official working hours of the Banks.

Minimum Limit of Public subscription:

The number of shares subscribed by each Person shall not be less than 1000 Shares and in multiples of 100 thereafter. For juristic persons, corporates, investment funds, and pension funds, Shares subscribed to shall not be less than 10,100 shares and in multiples of 100 thereafter.

Maximum Limit of Public subscription:

It shall not be permissible for any person, himself and his Minor children, and for any juristic person to subscribe for more than 10% of the total issue size. In other words, the maximum limit for one subscriber and his Minor children shall not exceed 2,500,000 (two million, five hundred thousand) Shares.

For the purpose of calculation of this percentage the application for the subscription of the father (or guardian) shall be merged with the applications of the Minor children. If the volume of the shares subscribed exceeds the said percentage, the shares registered under each application shall be reduced proportionately before making the allotment.

Particulars of the Bank Account:

1) Each applicant shall be required to furnish the particulars of his bank account. The applicant

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shall not use the bank account number of any other person except in case of Minor children.

2) If the bank account is different from the Bank receiving the subscription, the applicant shall be required to submit a document in evidence of correctness of the bank account particulars as provided for in the application. This can be done by submitting any document from the applicant’s bank which shows the account name and number Such document may be a bank statement or a letter or any document issued by the said bank containing the said information. The applicant shall ensure that the evidence submitted is clearly legible and contains the full name and number of the account holder. For the sake of clarification, no proof of the bank account is required if the bank account is with the bank through which the subscription is submitted.

3) In accordance with the instructions issued by the CMA, the particulars of the bank account referred to above shall be recorded in the Registers of the MDSRC. This shall be used in the event of a transfer of any excess funds of the subscriptionor the crediting of a future dividends . An applicant who already has his bank account registered with the Registers of the MDSRC, the bank account number provided for in the application for the subscription will be used only for the purpose of a transfer of any excess sums.

4) The application for subscription containing the bank account number of a person other than the applicant shall be rejected, with the exception of applications made on behalf of Minor children that contain bank account particulars of their fathers.

Documentation Required:

1) Proof of Bank Account: In case the bank account is different from the bank to which the application is submitted, the proof of such account should be attached to the subscription form.

2) Authorised Signatory: In the case a person is signing the application form on behalf of any other person in his capacity as the authorised signatory (with the exception of the subscription made by a father on behalf of his Minor children), a copy of adequate legal documentation should be submitted; Such documentation should not have expired and should be registered with a competent legal authority.

Mode of subscription:

1) The subscriber shall be responsible for satisfying all the particulars and the validity of the information in the application. Banks receiving the subscription have been instructed to accept the applications for subscription satisfying all the requirements of the application forms and the Prospectus.

2) The subscriber, before filling the application form, shall read the Prospectus and the subscription terms and conditions.

3) The subscriber shall fill in the application form including the subscriber number with the MDRSC, Civil Number/Passport Number, and Date of Birth in the case of Minor children.

4) The subscriber shall submit the application form to one of the banks receiving the subscription referred to in the Prospectus and pay the value of the shares as specified in the Prospectus and attaching the identification documents.

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5) Where the value of the shares is paid by cheque or remittance, it shall be in the name of “Voltamp Energy SAOG (under transformation) (public subscription)”.

Banks receiving the subscription:

The applications for subscription shall be accepted by one of the following commercial banks during the official working hours only:

1. Bank Muscat SAOG

2. Oman Arab Bank SAOC

3. Bank Dhofar SAOG

The bank receiving the subscription shall accept the application for subscription after confirmation of compliance of the procedure and subject matter in line with the requirements as provided for in the Prospectus. The bank must instruct the subscribers to comply and fulfill any requirement that may appear in the application submitted.

The subscriber shall be responsible for submission of his application for subscription to one of the banks receiving the subscription before closing of the period for subscription. In this regard, the bank shall have the right not to accept any application for subscription that reaches it after the official working hours on the closing date of the period for subscription.

Acceptance of the Applications for subscription:

The banks receiving the subscription shall not accept applications for subscription under the following circumstances:

1) If the application is not signed by the applicant.

2) If the subscription price for the Offered Shares applied for is not paid pursuant to the conditions provided for in the Prospectus.

3) If the cheque through which payment was made is returned dishonored.

4) If the application does not have the number registered with the MDRSC.

5) If the application is submitted under the joint names.

6) If the subscriber is a sole proprietorship establishment or trust account.

7) If the shareholder number is incorrect.

8) If the subscriber submits more than one application in the same name, all of them shall be rejected.

9) If the supporting documents referred to in the Prospectus are not enclosed with the application.

10) If the application does not contain the bank account of the subscriber.

11) If the bank account details of the subscriber in the application are incorrect.

12) If the bank account details are not relevant to the subscriber, with the exception of applications submitted in the name of Minor children, who are allowed to make use of the bank account details held by their fathers.

13) If any legal or regulatory requirements are not met.

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If the bank observes, after receipt of the application and before expiry of the time schedule prescribed for handing over of the applications to the Lead Issue Manager, that the application has not complied with the legal requirements as provided for in the Prospectus, due effort shall be taken to contact the subscriber so as to correct the mistake detected. In the case of failure to have the mistake corrected within the period referred to, the bank receiving the subscription shall return the application for the subscription together with the subscription value before expiry of the period specified for handing over of the applications to the Lead Issue Manager.

Refusal of subscription Applications:

The Lead Issue Manager may reject any applications under any of the conditions referred to above, after securing the approval of the CMA. The Lead Issue Manager shall submit a comprehensive report to the CMA indicating the reasons behind such rejection.

Enquiry & Complaints:

The subscribers who intend to seek clarification or file complaints with regard to the issues related to the allotment or rejected applications or refund of the funds in excess of the subscription may contact the branch of the bank where the subscription was made. In case from the enquiry is not resolved by the branch, the subscriber should contact the person concerned as hereunder:

Bank Person in Charge Postal Address Phone No. Fax No. Email

Bank Muscat SAOG

Talal Abdul Hamid Al Zadjali(Wholesale Banking back office)

PO Box 134, Ruwi, PC112, Sultanate of Oman

24768213/14 24788864 [email protected]

Oman Arab Bank SAOC

Osama Qinna PO Box 2010,Ruwi 112, Muscat, Oman

24762324 24793953 [email protected]

Bank Dhofar SAOG

Mr. Adil Abdullah A. Razaq Al Hindi

PO Box 1507, Ruwi, Postal Code 112,Sultanate of Oman

24795517 24791131 [email protected]

If the bank receiving the subscription fails to resolve the enquiry/complaint, it shall refer the subject matter to the Lead Issue Manager and inform subscriber of the results. The subscriber should remain in contact only with the Bank receiving the subscription .


In case of over-subscription, the offering of 25,000,000 Ordinary Shares shall be split among the eligible investor groups, in the following portions:

Category I – Individuals

17,500,000 (seventeen million five hundred thousand) shares, being 70% of the Offered Shares for Individual applicants applying for a maximum of 10,000 (Ten Thousand) shares. Distribution of shares shall be on pro-rata basis. Individual Investors shall comprise of only natural persons.

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Category II – Non Individual Investors

6,250,000 (six million two hundred fifty thousand) shares, being 25% of the Offered Shares for both natural and juristic persons including Individual applicants applying for more than 10,000 shares and for Corporate bodies/ Institutions / Investment Funds. Distribution of shares will be on pro-rata basis.

Category III – Employees and Managers

1,000,000 (one million) shares, being 4% of the Offered Shares for employees up to a maximum value equivalent to 19 times of their basic salary on firm allotment basis.

250,000 (two hundred fifty thousand) shares, being 1% of the Offered Shares for Managers upto maximum of 50,000 shares each Manager of five Managers on firm allotment basis.

Any undersubcription in Category I shall be added to shares allocated for Category II and vice versa. Any undersubcription in Category III shall be added to Category I (Retail Investors).

Allotment for Foreign Nationals will be limited to a maximum of 70% of the total Shares offered. Foreign Corporate Body/ Institution/ Investment Fund is defined as one which is not incorporated in the Sultanate of Oman.

The final allocation on the above basis will be decided by the Lead Issue Manager and the Company in consultation with the CMA.

Basis for Undersubscribed Shares:

In case of a shortfall in subscription the shortfall will be subscribed by the Underwriters.

The following table shows expected time schedule for completion of the subscription procedures:

Procedure Date

Commencement of subscription 5/5/2008

Closing of subscription 3/6/2008

Due Date for the Issue Manager to receive the subscription Applications and Final Registers of the subscribers from the Banks receiving the subscription as per the understanding arrived at

13/6/2008

Notifying the Capital Market Authority of the outcome of the subscription and Proposal with regard to the allotment

18/6/2008

Approval of the Capital Market Authority with regard to the proposal for the allotment

21/6/2008

Commencement of refund and dispatch of the notices regarding allotment and Constitutive General Meeting Invitation

22/6/2008

Constitutive General Meeting 3/7/2008

Registering the company at the Commercial Registrar 13/7/2008

Listing of the shares with Muscat Securities Market 16/7/2008

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Listing & Trading of the shares of the Company:

The Offered Shares shall be listed on the Muscat Securities Market in accordance with the listing rules and regulations currently in force.

The expected date of listing in the above table is subject to the completion of legal quorum of the Constitutive General Meeting for the first time.

Responsibilities & Obligations:

The Lead Issue Manager, Banks receiving the subscription and MDRSC shall abide by the responsibilities and functions specified pursuant to the instructions and regulations laid down by the CMA. The said bodies shall also abide by any other responsibilities that are provided for in the agreements entered into between them and the Company.

The Parties concerned shall be required to take remedial measures with regard to the damages arising from any negligence committed in the performance of the functions and responsibilities assigned to them. The Lead Issue Manager shall be the body responsible before the surveillance authorities in taking suitable steps and measures for repairing such damages.

Allotment Letters and Refund of Money;

The Lead Issue Manager will arrange to allot the shares to the applicants with in 15 days after the end of IPO and the excess money will be refunded to the eligible applicants. The Issue Manager will send allotment letters to the applicants who have been allotted shares as per the addresses registered with the MDSRC

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UNDERTAKINGS

I. Company issuing the Securities:

The Promoters/Selling Shareholders jointly and severally offer undertaking that:

1) the information provided in this Prospectus is true and complete

2) due diligence has been taken to ensure that no material information has been omitted, the omission of which would render this Prospectus misleading.

2) all the provisions set out in the Capital Market Law, the CCL, and the rules and regulations issued pursuant to them have been complied with.

For the Promoters/Selling Shareholders: (Authorised Signatories)

Sr. Name Signature

1 Mr. Qais bin Mohamed Al Yousef Sd/-

2 Mr. Saibal Sen (on behalf of SABCO LLC) Sd/-

II. Lead Issue Manager:

In accordance with the responsibilities prescribed by Article 3 of the Executive Regulations of the Capital Market Law issued under Ministerial Decision No. 4/2001, and instructions issued by the CMA, we have reviewed all the relevant documents and other material required for the preparation of the Prospectus pertaining to the issue of shares of the Company.

The Promoters/Selling Shareholders are responsible for the authenticity of the information contained in the Prospectus, and they have confirmed that no material information has been omitted, the omission of which would render this Prospectus misleading.

We confirm that we have taken all necessary due care as required by the profession with regard to the Prospectus that has been prepared under our supervision, on the basis of the audit works referred to above and discussions held with the Company, its management and other officials and on the basis of the auditing carried out by us with the concerned authorities with regard to the subject matter of the Issue, profit projections, criteria and justifications for the pricing, and contents of the documents submitted to us.

We further confirm as hereunder;

1) We have taken all necessary and reasonable care in ensuring that the information furnished to us by the Company, and contained in the Prospectus, is consistent with the facts available in the documents, material and other documents pertaining to the Issue.

2) On the basis of our perusal and information made available to us by the Company, the Company has neither concealed any fundamental information nor omitted any material information, the omission of which would have made the Prospectus misleading.

3) The Prospectus and Issue relevant to it are consistent with all the rules and conditions governing transparency as provided for in the Capital Market Law and its amendments thereof, the Executive Regulations of the Capital Market Law and its amendments thereof, the applicable specimen Prospectus available with the CMA and the CCL.

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4) The data and information which have been presented in the Prospectus in Arabic (with its unofficial translation in English) are correct, reasonable and adequate as per our perusal so as to assist the investor in taking an appropriate decision whether or not to participate in the offer of the securities the subject matter of this Prospectus.

Full Name: Oman Arab Bank SAOC

Investment Management Group

Signature and Seal Sd/-

III. Legal Advisor

The Legal Advisor, whose name appears below, confirms that all the procedures undertaken with regard to offering of the Securities and the subject matter of the Prospectus, are in line with the laws and legislations related to the Company’s business, the CCL, the Capital Market Law and the regulation and directives issued pursuant to them, the requirement and rules for the issue of shares issued by the CMA, the applicable Specimen Prospectus available with the CMA, the Memorandum and Articles of Association and the resolutions of the general meeting and the board of directors of the Company. The Company has obtained all the consents and approvals of the official authorities are required to carry out the activities the subject matter of the Prospectus.

Full Name: Al Busaidy, Mansoor Jamal & Co.

Signature and Seal Sd/-

IV. Underwriters

The underwriters, whose names appear below, confirm that we have reviewed all studies regarding the transformation of the Company from a limited liability company to a joint stock company as per the Prospectus, and we have agreed to underwrite the issue out of our conviction of its feasibility in light of the information provided in the studies and the financial projections after transformation.

Oman Arab Bank SAOC

Sd/-

Vision Investment Services Co. SAOC

Sd/-

United Securities LLC

Sd/-

Gulf Baader Capital Markets SAOC

Sd/-

PROSPECTUS

Underwriters


Energising lives. Energising Oman.

www.voltampoman.com Voltamp Energy SAOG

(Under Transformation)

Initial Public Offering of 25,000,000 ordinary sharesOffer Price: RO 0.542 per share

(Comprising a nominal value of Baisas 100,premium of Baisas 440 and issue expenses Baisas 2 per share)

Issue Opens: 5th May, 2008Issue Closes: 3rd June, 2008


Energising livesEnergising Oman

www.voltampoman.com

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