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His Majesty Sultan Qaboos bin Said

3

Contents

Financial Highlights 05

Board of Directors 06

Directors’ Report 09

Corporate Governance Compliance Certificate 13

Corporate Governance Report 15

Management Discussion & Analysis Report 25

Auditor’s Report 26

Financial Statements 29

5

Financial Highlights

6

Board of Directors

Dr. P. Mohamed Ali

The saga of Galfar is

synonymous with Dr. Mohamed

Ali, who led the growth of the

Company since its beginning

in 1972. The success of Galfar

and the preeminent position it

enjoys today in the engineering

and construction sector is

attributed to Dr. Mohamed Ali.

Besides his global business and

public involvement, Dr. Ali has

established many educational

institutions in Oman and

elsewhere and has significantly

contributed to the social and

economical development.

Upholding social responsibilities

is his passion.

Dr. Mohamed Ali is highly

regarded and respected in Oman

and India. He has received

many prestigious accolades and

awards such as Oman Civil Order

from His Majesty Sultan Qaboos

and the Pravasi Bharathiya

Samman from the President

of India.

Shk. Dr. Salim Bin Said

Bin Hamed Al Fannah

Al Araimi

Sheikh Dr. Salim bin Said bin Hamed Al Fannah Al Araimi is considered one of the most prominent businessmen widely known in the field of specialized and general engineering and contracting works in the Sultanate of Oman and GCC countries. Sheikh Salim Al Fannah Al Araimi was born in the year 1940 in Sur which is famous as a commercial city since ancient time, with the interaction of people traveling to the Arabian Gulf region, Iraq, India and Africa.

Sheikh Salim Al Fannah Al Araimi started businesses in Muscat in 1970, by establishing Arabian Trading and Services Company, and then Galfar Engineering and Contracting Co. LLC in 1972. Since then it has played a significant role in the field of building and infrastructure development over the past years. Galfar was transformed to a Public Joint Stock Company into 2007 and is considered as a leading company in the specialized and general engineering and contracting sector in the Sultanate of Oman.

Sheikh Salim Al Fannah Al Araimi is the Chairman of Galfar Engineering and Contracting Co. SAOG, Bank Sohar (SAOG) and Salim International Investment Holding LLC besides his direct contribution and active participation in establishing and managing many companies, commercial establishments and prestigious educational institutions in Sultanate of Oman.

The humanitarian and charitable activities in which he has involved is worth mentioning as he is benevolently contributing to these activities. Presently he is a member of the Board of Directors of the Oman Charitable Organisation and founder of university colleges contributing in this concern. Sheikh Salim Al Fannah Al Araimi has been awarded an honorable Doctorate Degree in Technology, by the Glasgow Caledonian University, Scotland, United Kingdom. He had acted as the vice president of Oman Chamber of Commerce and Industry and held the membership of Franco-Arab Chamber of Commerce, and also the Presidency of the Oman Football Association. He being passionate about sport especially in football, has contributed in establishing Arobah Club, one of prominent Omani and Gulf clubs with reputation in both Gulf and Arab region.

Dr. Adil bin Abdul Aziz

Al Kindy

Dr. Adil bin Abdul Aziz Al Kindy

was born on 13/12/1964 he

holds a Bachelor degree in

Civil Engineering (Sheffield,

UK 1989) and a PhD in Civil

Engineering (Loughborough,

UK 1998). Dr. Adil held various

senior possessions at Muscat

Municipality the last being

Director General of Technical

Affairs until December 2003, then

moved to The Oil and Gas Sector

as Chief Executive of Oman

Refineries and Petrochemicals

Company up to December

2010. Dr. Adil Al Kindy was

appointed by Royal Decree to

be a Member of State Council in

October 2011. Currently he is a

Chairman and Member of several

public and private Boards such

as Sultan Qaboos University

Council SQUC, Public Authority

for Academic Accreditation and

Chairman of the Oman Society of

Engineers. Also he is a Founder

member of Bank Nizwa, the first

Islamic Bank in Oman.

Dr. Hatem Bakheit

Saeed Al-Shanfari

Dr. Hatem Al-Shanfari has

diverse experience that span

into Academia, business and

civil society in Oman. His current

responsibilities include the

following: Faculty Member in

the Department of Economics

& Finance at Sultan Qaboos

University SQU. Member of

the Board of Governors of the

Central Bank of Oman CBO,

member of the Board of Oman

Chamber of Commerce and

Industry, Vice Chairman of the

Board of Omani Economic

Association OEA, Chairman of

the Board of Directors of Gulf

Investment Services Company

(SAOG), Chairman of the Board

of Directors of Gulf Baader

Capital Markets Company

(SAOC), Board Member of Galfar

Engineering and Contracting Co.

(SAOG), Chairman of the Board

of Directors of the First Mazoon

Fund, and Member of Advisory

Council of the Management

Center at the American University

in Cairo.

Hatem’s previous experience

included board memberships in

Al Omaniya Financial Services

Company (SAOG) and Omani

Packaging Company (SAOG).

Hatem holds a doctorate in

Economics from University

of Strathclyde in Glasgow,

Scotland. He also has earned an

MA in Economic Planning from

the Institute of Social Studies

at the Hague, the Netherlands

and BSc in Engineering from

Washington University in St.

Louis, Missouri, USA.

Sheikh Yahya Bin

Abdullah Bin Salim

Al Araimi

Sheikh Yahya Bin Abdullah

Bin Salim Al Araimi joined the

Ministry of Foreign Affairs in the

year 1985 and was assigned as

Charge d’Affaires to the Embassy

of the Sultanate in New Delhai

in 1989. He currently serves as

the Ambassador of the Sultanate

of Oman in Islamic Republic of

Iran. Previously, he served as

the Ambassador of the Sultanate

of Oman in republic of Italy. He

was granted with Cavalier Grade

of Friendship by the President of

Republic of Italy in the year 2006.

Sheikh Yahya Al Araimi holds a

Bachelor degree in Economic

and Political Science from Cairo

University; Masters in Political

Science from Jamiah Milliah

Islamiah University, New Delhi

and M.B.A. in Finance from the

European school of Economics,

Rome-Italy.

6

7

Mr. Hamad Mohammad

Al Wahaibi

Mr. Hamad Al Wahaibi has built

a career with14 years experience

in investments and assets

management. He currently holds

the offices of Deputy Director-

Investment with the Ministry

of Defense Pension Fund

Boards, and Audit Committees

Membership in Galfar

Engineering and Contracting

(SAOG), Voltamp Energy Co.

(SAOG), Al Madina Insurance

Co (SAOC), and Shaden

Development Co. (SAOC).

Hamad holds a MBA in finance

from University of Technology,

Sydney and is a Chartered

Financial Analyst (CFA) Charter

holder from CFA Institute Global.

He graduated from Sultan

Qaboos University in Bachelor

of Science in Commerce &

Economics in Operations

Management.

Sheikh / Salim Bin

Abdullah Bin Said Al

Rawas

Sheikh/ Salim Bin Abdullah

Bin Said Al Rawas, holder of

Bachelor degree in Economics.

Is one of the pioneer and

prominent business owners

in the Sultanate of Oman. He

currently holds the office of

Managing Director of Abdullah

Bin Said Bin Badr Al Rawas

Group of Companies, being one

of the private sector companies

doing business in the fields

of investment, transportation,

mining, and trading. In the same

time he holds membership of the

Board of Directors of Oman Oil

Company and Chairman of Oman

Oil Marketing Company (SAOG),

and a Member of the Board of

Directors of Galfar Engineering

and Contracting Company

(SAOG).

Sheikh/ Salim Al Rawas has

interest and contributions in

the public works arena where

he was elected previously for

the membership of Board of

Governors of the Central Bank,

Shura Council, and membership

of the Board of Directors of

Capital Market General Authority

and Sultan Qaboos University.

Also he was having contribution

previously in many of the private

sector companies where he

chaired the Board of Directors of

Dhofar Cattle Feed Co. (SAOG)

and Al Shati Hospital. He also

held the office of Vice Chairman

of the Board of Directors of

Dhofar International Development

& Investment Company, Dhofar

Insurance Company, and Oman

& UAE Company.

Eng. Salman Rashid Al

Fannah Al Araimi

Eng. Salman Rashid Al Fannah

Al Araimi received his Bachelor

of Civil Engineering from The San

Diego State University of USA.

He started his career at Oman

Telecommunications Co. (SAOG)

as Head of Civil & Electrical

Mechanical Engineer from 1988

to 1998 and then joined Nawras

Company SAOG as a consultant

for Civil & Electrical Mechanical

for two years.

Eng. Salman is currently the

Chairperson of Al Asala Group of

Companies.

Mr. Abdelbagi Daffalla

Abdelraouf

Mr. Abdelbagi Daffalla

Abdelraouf, holds a Bsc in

law from University of Cairo -

Khartoum. He worked in the legal

Profession in Sudan for more

than fifteen years as attorney

at Law and legal advisor for

local Firms and multinational

companies. He worked with

Mobil Oil Sudan in the post of

legal counsel and secretary of

the Board for nine years. He

joined Galfar in 2003 and after

transformation of the Company

to SAOG he was re-appointed by

the Board in the post of the legal

Advisor and Secretary of the

Board effective

October 9, 2007.

Ms. Khalood Mohamed

Rashid Al Fannah

Al Araimi

Ms. Khalood Mohamed Rashid

Al Araimi is the Vice-Chairperson

of Al Siraj Investment Holding

LLC. She holds a Bachelor of

Science degree with Honors

in E-commerce & Digital

Business from The University of

Nottingham, U.K.

She started her career in

Corporate Banking at Bank

Muscat SAOC. She is now

the Vice-Chairperson of Al

Siraj Investment Holding

LLC, and was also the Vice-

Chairperson of Muscat Finance

Co. Ltd. (SAOG), Director in

Gulf Plastic Industries Co.

SAOG, Oman Medical College

SAOC, Caledonian College

of Engineering, Al Dastoor

Contracting & Trading LLC and

Travel Point LLC & Travel City

LLC. She is also the Managing

Director of Advanced Technology

& Projects Co. LLC, Al Siraj

Contracting & Engineering LLC

and Delta International Projects &

Engineering LLC.

7

Director’s’ Report

Dear Shareholders,

AhlanvaSehlan,

On behalf of the Board of Directors, I welcome you to this Annual General Meeting

of Galfar Engineering & Contracting SAOG and to present the Annual Report for the

Year ended 31st December 2012.

Business Environment

Galfar leads the construction market securing some of the prestigious projects

tendered out by the Government, amidst stiff competition from local and international

companies.

The Business Environment looks bright with the announcement of several development

Projects in sectors relating to Roads, Oil and Gas, Power, water, wastewater and

other infrastructure.

Galfar is fully geared to execute the projects awarded through the established

tendering practices. Galfar has successfully formed alliances and relationship with

SMEs across the Sultanate through its established systems and practices, to be

availed on projects based on their individual specializations and capabilities. Presently

Galfar is sub-contracting more than 20% of its activities to local Omani SMEs, similarly

over 50% of Galfar’s revenue is spent on procurement activities within Oman.This

Practice will continue and grow with Galfar’s own growth in various construction

sectors. Galfar has taken upon itself a responsibility to encourage and support the

SME movement, being the prime requirement of the Government and His Majesty

Sultan Qaboos Bin Said.

Your Company is one of the first to adopt the revised labour laws, enhancing

salaries of Nationals. We continue to induct local Labour force who is ready to work

in the construction sector and wish to grow with Galfar.

Galfar will continue to play a vital role n the Construction Industry in all sectors

such as Oil and Gas, Roads, Bridges, Airports, Civil and Marine Infrastructure and

Utilities and Services including Operation and Maintenance. The upcoming Building

complexes, Railway, Roads and Tunnel Projects will be of particular interest for

Galfar’s advancement into futuristic technologies and mechanization.

In India we have secured various road projects in the BOOT sector with promising

returns. We have completed one project, two projects under execution with partners

and two projects alone. During the year Galfar Engineering & Contracting SAOG

Oman was awarded two projects on DBFOT basis worth RO 86 million. The portfolio

is expected to grow in other countries such as Saudi Arabia. In Libya, the company

is taking a cautious approach to commence operations.

Iraq in the meanwhile is being viewed by us with great interest, we have already

begun various registration processes and are currently pursuing some jobs in

which we have secured prequalification. Generally all such projects will be in the

infrastructure sectors.

9

M/s Al Khalij Heavy Equipment & Engineering

LLC, a subsidiary of the Company, engaged

in transportation and logistics business has

done well during 2012.

Aspire Projects and Services LLC, the wholly

owned subsidiary of Galfar, has entered the

Facilities Management sector,and Specialized

Engineering Solutions. This previously

untapped sector will open your company to

avenues in Facilities Management, Alternative

Power solutions, Green Energy solutions for

the building industry.

Through“Galfar Aspire Readymix Company

LLC”, we strive to deliver quality concrete

to several projects in�house as well as

external in several cities across Oman.

Operations

Galfar has continued to maintain its position

as the number one contracting company in

the Sultanate of Oman.

Details on the operating results of the

Company for the year 2012 and outlook for

the industry for 2013 are reflected in the

‘Management Discussion & Analysis’ report

included in the Annual Report for the year

2012.

The summary of the performance of the

Company (including Subsidiary) is as

follows:

In RO Million

Particulars 2012 2011

Gross revenue 336.50 307.22

Profit from

Operation

17.87 11.83

Net Profit After

Tax

9.21 5.26

Omanisation

Galfar continues to be an attractive

proposition to nationals seeking long term

and gainful employment in the private

sector. We can now boast of Omanization

at all levels with technically qualified youth

working in Galfar.

Galfar seeks to provide a unique experience

to individuals who join us, such that their

careers grow through a process of continuous

learning and on job training. A majority of

this is achieved through “mentorship” by

seniors in similar discipline.

The two training centers of Galfar at Sohar

and Al Hail which have now grown into a

separate entity, still continue to train and

qualify young Omanis to meet the growing

challenges of the construction industry.

Corporate Governance

Your Company follows high standards of

Corporate Governance. A detailed Corporate

Governance Report is included in the Annual

Report for the year ended 2012.

Health, Safety and Environment

Our company also continues to be the

leading light when it comes to Health,

Safety and Environment. We also credit

ourselves in taking care of our social

responsibilities. Our track record in Safety

cannot be paralleled and over the years we

have continued our endeavour to provide a

safe environment to the entire workforce

whether they be at site or in the camps.

10

Outlook

During 2012 your company bagged Rial

Omani 454 million worth of Projects to

maintain the order book back log at RO. 685

million at the beginning of this year. Our

endeavour will be to continue to maintain

this level of order book while bettering it in

a sustainable manner.

There is a general optimism in the

construction industry with the government

having decided to proceed with the awards

for many long pending projects in all the

sectors of the construction industry.

There are several large road projects planned

for the coming few years and Galfar is fully

geared for competing and securing these.

Large scale expansion is planned in the

water and electricity transmission and

distribution and this too will form one of the

target markets for Galfar.

The Oil and Gas projects scenario looks

very promising even outside of the service

contract. With our Engineering, Procurement

and Construction capabilities now being

delivered in-house, Galfar has begun to

seek every opportunity in the Engineering,

Procurement and Construction projects being

tendered out.

Your company will pursue growth by

participating in various projects in Roads,

Oil and Gas , Power, Water, Wastewater

and the other infrastructure development

sectors already in the tendering stage and

likely to be tendered.

To strengthen the Company’s balance sheets

and to support its long term growth the

Board of Directors have recommended to

increase the Issued and Paid-up Capital of

the Company, by issuing on a rights basis,

1.5:10 Shares at a price of Baizas 280

(two hundred eighty) per share including

an amount of 2 Baizas per share towards

share issue expense. Consequently, the

issued and paid-up share capital of the

Company will go up, from RO 33 Million to

37.95 Million.

On Record

We are grateful to His Majesty Sultan

Qaboos Bin Said for his visionary leadership

and providing opportunities for the private

and public sector in participating in the

development of the Oman’s economy.

The Board would like to thank all Ministries,

Capital Market Authority, Muscat Securities

Market, Muscat Clearing and Depository

SAOC, Muscat Municipality, Royal Oman

Police, Petroleum Development of Oman

and other Companies working in the Oil &

Gas sector in Oman, Commercial Banks and

Financial Institutions in Oman and abroad

where we have relationships, Consultants,

Sub contractors, Suppliers and all Clients of

the Company, for their generous cooperation

and continued support.

We would also like to thank all the labour

force, the staff and management of the

Company for the effort extended to improve

the company’s performance.

Salim Said Hamad Al Fannah Al Araimi

Chairman

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Corporate Governance Report

15

Company’s Philosophy

Galfar Engineering and Contracting SOAG, is convinced with the importance of the need for

good corporate governance and healthy corporate practices for a company to succeed in the

long run, fulfill its plans and realize its objectives. The concept of governance at Galfar

envisages care of the Company to enhance the value of all its stakeholders, that by adhering

to proper methods of management, internal controls, accountability, corporate governance

rules and high level of transparency to the extent of not affecting the competitive position of

the Company. The Company continues applying a well defined Management Systems

Procedures (MSPs) in accordance with ISO 9001, the adherence to such principles would

be attainable.

The company is fully abiding by the corporate governance code issued by the Capital

Market Authority (CMA). The company has taken all necessary steps to fulfill the objective

of good corporate governance.

The Board Members have professional and/or practical experiences in their diversified

fields of profession as shown as profile in the Annual Report booklet. They have given

great support to the Board to exercise its widest authorities in managing the Company and

supervise the good performance of the Company’s business. The Board is responsible for

achieving the company’s objectives. For this purpose, the Board is assisted by various

committees and the higher executive management of the company. The Board has formed

the executive Committee, the Audit Committee and other ad hoc committees when the

need arises such as the procurement committee. In addition, there is a well-

structured organization for the management executives whose duties and authorizations

are defined in the manual of authority approved by the Board.

In general the board exercises its primary functions and duties in line with the powers

stipulated in article 35 of the Articles of Association of the company.

Board of Directors

The First Board of Directors which was duly elected by the Constitutive General Meeting of

the Shareholders on 9 October, 2007 comprises of nine members. The board comprises of

nine Directors, eight non executive and one executive. Five of the non executive directors

are independent.

The Members of the Board are all having professional and practical experience in their

respective corporate fields ensuring proper direction and control of company’s activities.

No director is a member of more than 4 joint stock public companies whose shares are

listed on the Muscat Securities Market (MSM) and no director is chairman of more than 2

public companies whose principal office is in the Sultanate of Oman. None of the directors

is a member of a Board of Directors of a joint stock public or closed company which carries

out similar business and whose principal office is in the Sultanate of Oman.

Sr. No. Name of Directors &

Representatives

Designation Category Directorship in other

Joint Stock Companies

1 Sheikh Dr.Salim Said Hamed

Al Fannah Al Araimi

Chairman Non - Executive Bank Sohar S.A.O.G,

Oman Medical

College S.A.O.C

2 Dr.P. Mohamed Ali Vice Chairman &

Managing Director

Executive Tabreed Oman

S.A.O.C, Oman Medical

College S.A.O.C

3 Dr.Hamed Hashim Mohamed

Al Dhahab (Till 26.07.2012)

Director Non - Executive

Independent

A’sharqiya Investment

Holding Co. S.A.O.G

4 Dr.Adil Abdulaziz Yahya

Al Kindy


Independent

Bank Nizwa SAOG

5 Dr.Hatem Bakheit Saeed

Al Shanfari


Independent

Gulf Investment

Services Co. S.A.O.G,

Gulf Baader Capital

Markets Co. S.A.O.C

6 Sheikh Salim Abdullah

Saeed Badr Al Rawas


Independent

Oman Oil Marketing

Company S.A.O.G

7 Sheikh Yahya Abdullah

Al Fannah Al Araimi


Independent

NIL

8 Engr. Salman Rashid

Al Fannah Al Araimi


Independent

NIL

9 Ms.Budoor Mohamed Rashid

Al Fannah Al Araimi

(Till 18.10.2012)

Director Non - Executive Gulf Plastic Industries

Co. S.A.O.G, A’Sharqiya

Investment Holding Co.

S.A.O.G, Oman Medical

College S.A.O.C

10 Mr. Hamad Mohamed

Al Wahaibi

(From 18.10.2012)

Director Non - Executive Voltamp Energy Co.

(SAOG), Al Madina

Insurance Co (SAOC),

and Shaden

Development Co.

(SAOC).

11 Ms. Khalood Mohamed

Rashid Al Fannah Al Araimi

(From 19.10.2012)

Director Non - Executive Gulf Plastic Industries

Co. S.A.O.G

Oman Medical College

S.A.O.C

16

Board Meetings:

During the year 2012, the Board held 5 meetings. The following table shows details of the same.

Sr. No.Name of Directors &

Representatives

Meeting 29 Meeting 29

Contd.)

Meeting 30 Meeting 31 Meeting 32

07 Mar.

2012

12 Apr.

2012

13 May

2012

26 Jul.

2012

18 Oct.

2012

1 Sheikh Dr.Salim Said Hamed

Al Fannah Al Araimi

2 Dr.P. Mohamed Ali

3 Dr.Hamed Hashim Mohamed

Al Dhahab (Till 26.07.2012)N/A

4 Dr.Adil Abdulaziz Yahya

Al Kindy

5 Dr.Hatem Bakheit Saeed

Al Shanfari

6 Sheikh Salim Abdullah

Saeed Badr Al Rawas

7 HE Yahya Abdullah

Al Fannah AlAraimi

8 Engr. Salman Rashid

Al Fannah Al Araimi

9 Ms.Budoor Mohamed Rashid

Al Fannah Al Araimi

(Till 18.10.2012)

10 Mr. Hamad Mohamed

Al Wahaibi

(WEF 18.10.2012)N/A N/A N/A N/A

11 Khalood Mohamed Rashid Al

Fannah Al Araimi

(WEF 19.10.2012)N/A N/A N/A N/A N/A

Remuneration to the Board of Directors:

The total amount of remuneration proposed to be paid to the Directors excluding sitting fees for the

year 2012 is RO.156,700/-. The sitting fees payable for the period is RO 43,300/-. During the year

2012 an amount of RO 149,988 was paid as Director’s Remuneration, including sitting fees, for the

year 2011.

Board Secretary

Mr.Abdelbagi Daffalla, of a legal profession career, was appointed secretary of the Board. The secretary

records minutes of the Board meetings as well as the resolutions passed. He handles liaison works between

the Board, Board committees and follow-up actions to be taken and informing concerned parties.

17

Other Committees: Executive Committee:

The Board has formed, an Executive Committee which consists of 4 members, to oversee in general,

setting of business and strategic plans, policies of the Company, review decisions taken on various

matters concerning the operation of the company and any other matters assigned by the Board.

The Executive Committee exercises its functions in accordance with the Executive Committee

Charter. The committee held six meetings during the year 2012

Name of members of the committee Designation

Dr.Adil Abdulaziz Yahya Al Kindy Chairman

Dr.P. Mohamed Ali Member

Salman Rashid Al Araimi Member

Sheikh Salim Abdullah Saeed Badr Al Rawas Member

Excom-Attendance Sheet

Name of members

of the committee

1st

Meeting

27

2nd

Meeting

28

3rd

Meeting

29

4th

Meeting

30

5th

Meeting

31

6th

Meeting

32

03 Mar.

2012

07 Jun.

2012

18 Jul.

2012

17 Sep.

2012

16 Oct.

2012

14 Nov.

2012

Dr.Adil Abdulaziz Yahya

Al Kindy

Dr.P. Mohamed Ali

Sheikh Salim Abdullah

Saeed Badr Al Rawas

Salman Rashid Al Araimi

Audit Committee

The audit committee is appointed by the board of directors to assist the board in discharging its

oversight responsibilities. The audit committee will oversee the financial reporting process to ensure

the balance, transparency and integrity of published financial information. The audit committee will

also review: the effectiveness of the company’s internal financial control and risk management

system; the effectiveness of the internal audit function; the independent audit process including

recommending the appointment and assessing the performance of the external auditor; the

company’s process for monitoring compliance with laws and regulations affecting financial reporting

and code of business conduct.

18

In performing its duties, the committee will maintain effective working relationships with the board

of directors, management, and the external and internal auditors. To perform its role effectively,

each committee member will need to develop and maintain his skills and knowledge, including an

understanding of the committee’s responsibilities and of the company’s business, operations and

risks. The Committee held six meetings during the year 2012.

Audit Committee Members Designation

Dr Hamed Al Dhahab (Till 26.07.2012)Chairman

(Former)

HE Yahya Al Fannah Al Araimi Member

Dr Hatem Al ShanfariChairman

(Present)

Ms. Budoor Al Fannah Al Araimi (Till 18.10.2012)Member

(Former)

Mr. Hamad Mohamed Al Wahaibi (WEF 18.10.2012)Member

(Present)

Ms. Khalood Mohamed Rashid Al Fannah Al Araimi

(wef 19.10.2012)

Member

(Present)

Audit Committee Meeting & Attendance Details - Year 2012

Audit Committee

Members

Meeting Dates / Attendance

1st

Meeting

2nd

Meeting

3rd

Meeting

4th

Meeting

5th

Meeting

6th

Meeting

06 Mar.

2012

11Apr.

2012

09 May.

2012

25 Jul.

2012

05 Sep

2012

17 Oct.

2012

Dr Hamed

Al DhahabN/A N/A

HE Yahya Al Fannah

Al Araimi

Dr Hatem

Al Shanfari

Ms. Budoor

Al Fannah

Al Araimi

Procedure for Standing as a Candidate for the Board:

The right to stand as a candidate for membership of the Board of Directors of the Company is open

to shareholders and non shareholders.

19

In case of a shareholder, whether in personal

capacity or representing a juristic person, he

must have a minimum equity of not less than

10000 shares.

Key Management Remuneration:

Total remuneration during the financial year

2012 to top Management (top 5) was RO

752,203/-.

Compliance with Rules and Regulations:

The Company has been compliant with all

the applicable rules and regulations issued

by MSM, CMA and that stipulated in the

Commercial Companies Law 1974 as amended.

An Audit Team from Capital Market Authority

(CMA) conducted a general audit over the Year

2011, to ensure the company’s commitment

to the Corporate Governance Code of SAOG

companies and other regulations and laws

issued by the CMA. Their respective report,

commended the Company’s commitment

towards Corporate Governance and other

regulations and laws. The Company participated

in a discussion workshop on the new Definition

of Independent Director organized by the CMA

on the 20th of January 2013 and also the

Transparency and Disclosure in capital markets

seminar organized by Capital Markets Authority

on 23 January 2013. The discussion workshop

aimed at opening communication and dialogue

between CMA, the companies and legal

advisors to explain the recent moves of CMA in

approving the new amendment to the definition

of independent director and to acquaint with

the motives behind such amendment and the

goals intended there from through application

of the new definition and ways for overcoming

the challenges facing the companies in such

application. The seminar aimed to promote

awareness of disclosure and transparency

in the financial markets and to acquaint with

best international and local practices for

the regulation of disclosure by Public Joint

Stock Companies. The seminar focused on

senior managements in the public and private

sectors, investment funds and companies

and other concerned parties and we in Galfar

have been compliant with the new definition of

Independent Director and disclosing material

information in a transparent manner.

Communication with Shareholders and Investors:

The company maintains good communication

relations with the shareholders and Investors and

responds as much as possible to their queries

and requests in line with the disclosures rules.

The company, during the period, conducted

several phone interviews with financial analysts

and investors.

The company publishes its un-audited financial

results in the newspapers on a quarterly

basis and the audited financial statements

annually. Detailed financial statements are

sent to shareholders on request. The company

publishes its quarterly and annual results in

MSM website. Detailed financial statements

are sent to shareholders on request. The

company posts its quarterly and annual results

on MSM website, and also on the Company’s

website: www.galfar.com. All the Company’s

announcements are posted on MSM’s

website.

The Management discussions and analysis

report forms an integral part of the Annual

Report.

20

Statement on market price and distribution of holdings:

High / Low price during each month

Sr. No. Month High Low Closing

1 January 2012 0.347 0.335 0.335

2 February 2012 0.404 0.333 0.394

3 March 2012 0.420 0.370 0.379

4 April 2012 0.440 0.380 0.421

5 May 2012 0.432 0.372 0.398

6 June 2012 0.415 0.388 0.392

7 July 2012 0.392 0.355 0.365

8 August 2012 0.380 0.362 0.369

9 September 2012 0.439 0.369 0.413

10 October 2012 0.420 0.390 0.385

11 November 2012 0.390 0.363 0.367

12 December 2012 0.374 0.357 0.364

Distribution of ownership of shares between shareholders (Including Shares having preferential

voting rights)

Sr. No. Catergory No. of

ShareholdersNo. of Shares

% of

Shareholding

1 Less than 5% 5,116 113,078,498 34.27

2 5% to 10% 3 73,665,954 22.32

3 Abover 10% 3 143,255,548 43.41

Total 5,122 330,000,000 100.00

There are no Securities / Convertible Financial Instruments as on the Balance Sheet date which will

have an impact on the Shareholders’ equity.

Profile of the Statutory Auditors

Ernst & Young are the statutory auditors of the Company. Ernst & Young is one of Oman’s oldest

established accounting firms, having had a permanent office in the country since 1974. The practice

comprises around 180 professionals, and is working under the direction of six partners. The

Oman office forms part of Ernst & Young’s MENA practice, with 102 partners and over 5626 other

professionals in 18 offices in 13 countries throughout the region. The MENA practice is a member

firm of Ernst & Young Global, operating in more than 140 countries with approximately 167,000

personnel world-wide.

21

Audit Fees of the Company and Subsidiaries and fees for other services paid to the Auditor :

Sr. No. Particulars Amount

(In RO)

1 Statutory audit fees (Parent) 22,000

2 Statutory audit fees Al Khalij Heavy Equipments &

Engineering LLC (Subsidiary)

2,500

3 Statutory audit fees Galfar Training Institute LLC (Subsidiary) 2,000

4 Statutory audit fees Galfar Engineering & Contracting India Pvt. Ltd.

(Subsidiary)

3,928

5 Statutory audit fees Aspire Projects & Service LLC. (Subsidiary) 2,000

The Board of Directors acknowledges as at December 31, 2012:

The Board of Directors acknowledges:

• With its liability for the preparation of financial statements in accordance with the

applicable standards and rules.

• Review of the efficiency and adequacy of internal control systems of the Company and that it

complies with internal rules and regulations. In order to enhance and strengthen the efficiency

of the internal control systems, the Company has appointed a chief internal auditor and also

recruited technical auditors in the Internal Audit Department.

• That there is no material matter that affects the continuation of the Company and its ability to

continue its production and operations during the next financial year.

Salim Said Hamed Al Fannah Al Araimi

Chairman

23

Management Discussion & Analysis Report

OverviewGalfar Engineering and Contracting SAOG, is one of the largest multi-disciplined engineering

& contracting company in the Sultanate of Oman. The capability of Galfar to meet various

requirements in the engineering and construction industry has made the Company preferred

choice of various customers both in the Government and Private Sectors.

Main Objectives and Operational Results

The Company is committed to continual improvement to achieve its objectives of conducting

business in a manner which is beneficial to all. There is a main focus on delivering projects

on time to the satisfaction of the stakeholders with maximum in country value. It includes

upgrading our infrastructure and expertise to meet future challenges and maintaining a

motivated and competent workforce who achieves excellence in Quality, Health, Safety

and environmental protection.

The turnover of the Company including subsidiaries was RO 336.504 million in 2012 as

compared to RO 307.222 million in 2011. The Company recorded a profit after tax of

RO 9.206 million in 2012 as compared to RO 5.264 million in 2011.

Galfar Engineering & Contracting SAOG has five subsidiaries the performance of which is

as follows. Al Khalij Heavy Equipment & Engineering LLC which specializes in hiring out of

equipments recorded a turnover of RO 1.741 Million in 2012, as compared RO 1.701 million

in 2011. Galfar Engineering & Contracting India Pvt. Ltd., which is engaged in construction

activities in India, recorded a turnover of RO 9.872 million in 2012 as compared to RO 4.034

million in 2011. Galfar Training Institute LLC which specializes in the field of training Omanis

is various trades recorded a turnover of RO 1.041 Million during the year 2012 as compared

to RO 0.806 during the year 2011. Aspire Projects and Services LLC which is a specialized

engineering and services company had a turnover of RO 1.752 million during the year 2012.

Galfar Aspire Readymix LLC, which produces Readymix concrete, recorded a turnover of

RO 1.273 million during the year 2012.

25

Human Resources

Human Resources is a strategic business

partner of each and every business unit in Galfar.

Our objective is to foster development of our

employees through attractive and cohesive HR

policies, and a work environment which attracts

and motivates caliber workforce. We aim to be

the employer of choice in the industry.

In 2012, Galfar manpower strength was over

23,000. Galfar has a strong omanization

program to train and develop nationals and to

assist them to grow with the company.

Presently, among the private sector Galfar has

one of the largest number of Omani’s in the

Sultanate.

Quality, Health, Safety and Environment

Our Quality & HSE Management Systems are

periodically reviewed and updated so that they

remain relevant and comprehensive to meet

business expectations.

The upgrading of Quality Management System

to comply with the applicable ISO standards in

2011 was followed by the reissue of the Tier

III documentation in 2012 to align with the

current industry practices. Periodic risk based

surveillance audits by Det Norske Veritas (DNV)

against ISO 9001:2008, ISO 14001:2004,

OHSAS 18001:2007 and ISO 29001:2010

international standards continue to provide

assurance to stakeholders on our ability to

meet their expectations.

The ASME ‘U’ & ‘R’ Stamp Recertification by

the American Society of Mechanical Engineers

(ASME) was another significant achievement

of the year 2012 which demonstrates our

continued capability for the ‘Construction and

Repair of Pressure Vessels’.

During year 2012 we have worked 85 million man

hours and have driven 115 million kilometers

collectively in our projects throughout the

country, whilst achieving the best performance.

Our Lost Time Injury Frequency recorded for

the year 2012 is 0.24

Several achievements were recorded in terms

of man hours worked without Lost Time Injury

in our projects / units. The significant ones

are 13 million man hours in Off-Plot Delivery

Contract of Oil and Gas Unit, 18 million man

hours in Roads & Bridges Unit, 12 million man

hours in Oil and Gas Unit and 11 million man

hours in Environment Unit.

We are reviewing the performance on a monthly

basis and initiating actions for continual

improvement.

Risks

Risks are periodically identified and assessed.

The risks and control measures are presented

to and discussed with the board in every board

meeting.

The commitment of the Government towards

infrastructure development in the Oman makes

it attractive for new players to enter the market.

Notwithstanding this we expect our 2013

results to be better than 2012.

Our resource mobilization capabilities continue

to be our major strength. The equipment spread

available within Galfar remains unparalleled in

the local market. Each year the fleet is updated

and amended for the actual workload.During

the year the addition to fixed assets was

RO 31.654 Million.

Internal Controls Systems

The Board assures that there is a detailed

delegation of authority to the various levels of

management and adequate corporate control

of the organization. The Management is also

fully aware of its responsibility towards all

the stakeholders. The Company addresses

these issues by maintaining clearly defined

operating procedures which are updated as

and when necessary.

The Accounting Manual implemented in 2012,

is being reviewed for any upgrades, on a

periodic basis.

26

Outlook

The volume of work in Oman is high with the

announcement of many infrastructure projects.

In addition the oil and gas sectors development

plans remain very significant.

The Company’s order book position is healthy.

Galfar’s Order Book stood at RO 685 million at

the beginning of the year 2013.

We have active presence in all the sectors

namely Oil & Gas, Roads, Bridges and Airports,

Civil, Utilities and Services including Operation

and Maintenance, and have the preparedness

to take up any challenge whether in Roads,

Ports, Airports, Power, Water and Wastewater

Sectors. We have establishments in every

part of Oman, be it Jabal Akhdar, Musandam,

Hasik, Sohar, Sur, Duqm or Salalah to start up

projects swiftly.

This kind of versatility in operations and the

wide logistic base are difficult for others to

establish thus making Galfar a trusted one stop

solution provider for our esteemed customers.

The Indian operations of Galfar created

significant value and is expected to remain a

key growth area as the demand for roads and

highways is phenomenal. The Indian operation

have been recently awarded two major highway

projects during the fourth quarter of 2012 worth

RO 86 million.

Our subsidiary in Libya has been dormant

during the period and will be revived as soon

as the conditions are favourable.

Galfar recently registered a branch office

in KSA. We have also started the process of

prequalification in Saudi Arabia.

Under the visionary leadership of His Majesty

Sultan Qaboos, who in 42 years of his rule

has transformed this country into a powerful

modern economy in the region, we endeavor

to reach even higher standards of project

delivery through continuous introspection

of our procedures and systems and will lead

by action in Omanisation as a true Omani

enterprise.

Galfar’s broad image as a premier Omani

company with international presence is without

comparison, and we can deliver projects in all

the sections of engineering and construction

industry, with high quality standards in a safe

and timely manner to the entire satisfaction of

all stake holders.

Dr. P Mohamed Ali

Vice Chairman and

Managing Director

27

30

Parent Company Consolidated

Notes 2012 2012

RO’ 000 RO’ 000

320,615 328,817

25 3,560 7,687

324,175 336,504

26 (298,656) (307,633)

Profit on contracts 25,519 28,871

27 (10,034) (11,001)

15,485 17,870

28 (7,116) (7,829)

29 2,598 2,784

6 - (1,436)

10,967 11,389

24 (1,389) (2,183)

PROFIT AND COMPREHENSIVE

INCOME FOR THE YEAR9,578 9,206

Profit and comprehensive income

attributable to:

9,578 9,044

- 162

9,578 9,206

Basic and diluted earnings per

share attributable to the equity

shareholders of the parent company

30 0.029 0.027

31


Notes 2012 2012

RO’ 000 RO’ 000

ASSETS

Non-current assets

4 107,534 116,803

5 1,105 -

6 8,719 9,729

7 125 145

22,249 22,249

139,732 148,926Current assets

8 32,593 32,828

9 189,462 195,889

10 44,778 45,313

11 21,654 17,451

12 12,631 12,674

13 1,736 3,468

302,854 307,623TOTAL ASSETS 442,586 456,549EQUITY AND LIABILITIES

Equity

14 33,000 33,000

15 16,503 16,503

17 11,000 11,106

18 - (1,019)

30,964 31,420

91,467 91,010

- 848

Total equity 91,467 91,858Non-current liabilities

19 22,612 22,900

20 8,658 8,788

24 7,120 7,302

33 5,109 5,437

32,828 32,828

76,327 77,255Current liabilities

21 58,094 61,903

22 35,650 35,650

19 32,393 32,694

33 4,008 4,261

23 143,165 150,925

24 1,482 2,003

274,792 287,436Total liabilities 351,119 364,691TOTAL EQUITY AND LIABILITIES 442,586 456,549

Net assets per share (RO) 31 0.277 0.276

32


Notes 2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

OPERATING ACTIVITIES

10,967 11,389

22,214 22,824

(1,840) (1,888)

2,106 2,167

7,184 7,912

(68) (83)

- 1,436

40,563 43,757

(3,744) (3,788)

(24,749) (28,419)

(3,641) (156)

308 5,000

(5,499) (5,499)

9,578 9,578

12,816 20,473

(1,165) (2,290)

(902) (938)

10,749 17,245

INVESTING ACTIVITIES

(27,234) (31,654)

7,687 8,013

(113) (2,512)

(11,621) (11,624)

68 82

(31,213) (37,694)

FINANCING ACTIVITIES

12,171 14,679

9,422 8,951

9,800 9,800

(7,184) (7,912)

(3,960) (3,960)

20,249 21,558

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(215) 1,109

1,951 2,359

1,736 3,468

33

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35

1 ACTIVITIES

2 SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

Accounting Convention

Changes in accounting policy and disclosures

IAS 12 Income Taxes (Amendment) - Deferred Taxes: Recovery of Underlying Assets

IFRS 7 Financial Instruments: Disclosures — Enhanced Derecognition Disclosure Requirements

Accounting policies

36

Basis of consolidation

Business combinations and goodwill

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

37

Investments in associates

Property, plant and equipment


Business combinations and goodwill (Continued)

38

Capital work in progress

Available-for-sale investments

Inventories

Contract work in progress


Property, plant and equipment (Continued)

39


Impairment of non-financial assets

Financial instruments

Trade and other receivables

Term deposits

Cash and cash equivalents

Trade and other payables

40

Interest-bearing loans and borrowings

Borrowing costs

Leases

Group as a lessee

Derecognition of financial assets and liabilities


41

Impairment of financial assets

Offsetting

Provisions

Accruals for employees’ benefits

Dividend on ordinary shares

Taxation

Current income tax

Deferred taxation


42

Contract revenue and profit recognition

Sales and service income


Taxation (Continued)

Deferred taxation (Continued)

43

Contract costs

Interest income

Dividend income

Directors’ remuneration

Foreign currency translation


44

Segment reporting

Significant accounting judgments, estimates and assumptions

3 STANDARDS ISSUED BUT NOT YET EFFECTIVE

The following standards, amendments and interpretations are not yet effective:

IAS 1 Financial Statement Presentation - Presentation of Items of Other Comprehensive Income

IAS 19 Employee Benefits (Revised)

IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

IAS 32 Offsetting Financial Assets and Financial Liabilities — Amendments to IAS 32


45

IFRS 1 Government Loans - Amendments to IFRS 1

IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities — Amendments to IFRS 7

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

IFRS 11 Joint Arrangements

3 STANDARDS ISSUED BUT NOT YET EFFECTIVE (Continued)

46

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

Annual Improvements May 2012

IFRS 1 First-time Adoption of International Financial Reporting Standards

IAS 1 Presentation of Financial Statements

IAS 16 Property Plant and Equipment

IAS 32 Financial Instruments, Presentation

IAS 34 Interim Financial Reporting

3 STANDARDS ISSUED BUT NOT YET EFFECTIVE (Continued)

47

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4 PROPERTY, PLANT AND EQUIPMENT (Continued)


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000

21,579 22,176

635 648

22,214 22,824

5 INVESTMENT IN SUBSIDIARIES

Proportion Place of

Principal of shares incorpo- 2012 2011

Name of the subsidiaries activity acquired ration Cost Cost

RO’ 000 RO’ 000

600

149

8

200

148

1,105

6 INVESTMENT IN ASSOCIATES

Name of the Associates Parent Company Consolidated

50

6 INVESTMENT IN ASSOCIATES (Continued)

2012 2011

RO’ 000 RO’ 000

5,366

35,110

(6,519)

(24,228)

Net assets and carrying amount of the investment 9,729

2011

RO’ 000

4,194

(1,436)

7 AVAILABLE FOR SALE INVESTMENTS

Parent company Consolidated

2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

125 145

51

8 INVENTORIES


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

32,918 33,179

(325) (351)

32,593 32,828

9 TRADE RECEIVABLES


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

157,875 161,824

1,091 3,246

30,496 30,819

189,462 195,889

10 WORK IN PROGRESS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

44,778 45,313

3,044 6,464

11 ADVANCES, PREPAYMENTS AND OTHER RECEIVABLES


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

9,495 4,886

3,705 3,951

5,231 5,340

576 606

1,230 1,230

1,284 1,284

133 154

21,654 17,451

52

12 DEPOSITS WITH BANKS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

12,631 12,631

- 43

12,631 12,674

13 CASH AND BANK BALANCES


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

310 326

1,426 3,142

1,736 3,468

14 SHARE CAPITAL


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

Authorised:

50,000 50,000

Issued and fully paid:

33,000 33,000

53

14 SHARE CAPITAL (Continued)

15 SHARE PREMIUM

16 DIVIDEND

17 STATUTORY RESERVE

18 FOREIGN CURRENCY TRANSLATION RESERVE

54

19 TERM LOANS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

55,005 55,005

- 589

55,005 55,594

32,393 32,393

- 301

32,393 32,694

22,612 22,612

- 288

22,612 22,900

32,393 32,694

11,927 12,333

10,685 10,567

55,005 55,594

2012 2011

LIBOR + 1.75% to 2.00% LIBOR + 1.75% to 2.00%

4.99% to 8.25% 5.65% to 8.25%

20 EMPLOYEES’ END OF SERVICE BENEFITS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

7,454 7,559

2,106 2,167

(902) (938)

8,658 8,788

55

21 BANK BORROWINGS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

45,240 45,240

12,854 16,663

- -

58,094 61,903

22 SHORT TERM LOANS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

35,650 35,650

23 TRADE AND OTHER PAYABLES


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

54,773 56,488

32,477 33,544

26,313 26,911

3,044 6,464

5,558 5,780

5,064 5,078

3,135 3,164

2,246 2,654

9,995 9,995

560 847

143,165 150,925

56

24 TAXATION


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

1,613 2,520

(224) (337)

1,389 2,183


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

1,034 1,927

1,613 2,520

- (154)

(1,165) (2,290)

1,482 2,003

57

24 TAXATION (Continued)

31 Dec

2012

RO’ 000

7,159

-

(39)

7,120

31 Dec

2012

RO’ 000

7,296

-

6

7,302

25 SALES AND SERVICES INCOME


2012 2012

RO’ 000 RO’ 000

3,216 4,562

344 2,085

- 1,040

3,560 7,687

58

26 CONTRACT COST


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

85,369 87,433

93,767 94,849

44,404 46,413

21,579 22,176

19,346 19,967

14,661 15,038

14,104 15,282

5,426 6,232

- 243

298,656 37,633

27 GENERAL AND ADMINISTRATIVE EXPENSES


2012 2011 2012 2011

RO, 000 RO, 000 RO’ 000 RO’ 000

5,031 5,620

3,353 3,459

5,168 5,334

2,585 2,632

1,450 1,578

1,880 1,882

1,071 1,111

876 910

556 615

635 648

557 601

369 385

189 191

266 349

152 152

- 816

24,138 26,283

(14,104) (15,282)

10,034 11,001

59

28 NET FINANCING COSTS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

7,184 7,912

(68) (83)

7,116 7,829

29 OTHER INCOME


2012 2012

RO, 000 RO’ 000

1,840 1,888

(43) (18)

801 914

2,598 2,784

30 EARNINGS PER SHARE


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

9,578 9,044

330,000 330,000

0.029 0.027

31 NET ASSETS PER SHARE


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

91,467 91,010

330,000 330,000

0.277 0.276

60

32 RELATED PARTY TRANSACTIONS


2012 2011 2012 2011

RO’ 000 RO’ 000 RO’ 000 RO’ 000

567 567

669 1,044

3,374 3,374

298 298

8,492 8,502

150 150


2012 2012

RO 000 RO’ 000

697 697

8,798 4,189

9,495 4,886


2012 2012

RO 000 RO’ 000

150 150

2,096 2,504

2,246 2,654

61

32 RELATED PARTY TRANSACTIONS (Continued)


2012 2012

RO’ 000 RO’ 000

713 1,098

39 39

752 1,137

33 COMMITMENTS AND CONTINGENCIES


2012 2012

RO’ 000 RO’ 000

193,971 212,767

21,760 21,760

144 144

1,005 1,005

216,880 235,676

Finance lease liabilities

Parent

2012 2011

Minimum

payments

Persent value

of payments

RO’ 000 RO’ 000

4,352 4,008

5,345 5,109

9,697 9,117

(580) -

9,117 9,117

62

33 COMMITMENTS AND CONTINGENCIES (Continued)

Consolidated

2012 2011

Minimum

payments

Persent value

of payments

RO’ 000 RO’ 000

4,352 4,261

5,926 5,437

10,278 9,698

(580) -

9,698 9,698

Legal cases

Penalties

34 BUSINESS SEGMENTS

63

34

BU

SIN

ES

S S

EG

ME

NT

S (

Co

nti

nu

ed

)

Co

nstr

uc

tio

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2012

2012

2012

2012

20

12

20

12

335,0

29

1,2

73

1,7

41

1,0

41

(2,5

80

)3

36

,50

4

323,5

81

1,0

49

1,4

03

1,0

14

25

13

27

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8

11,4

48

224

338

27

(2,8

31

)9

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6

Se

gm

en

t a

sse

ts a

nd

lia

bilit

ies

459,6

21

1,8

03

3,2

56

154

(8,2

85

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56

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9

361,6

67

1,4

29

1,4

81

57

57

36

4,6

91

27,3

39

4,1

87

125

3-

31

,65

4

64

35 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT

Market risk

Interest rate risk

Foreign currency risk

Equity price risk

Credit risk

65

35 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (Continued)

Capital management

(A) CREDIT RISK


2012 2012

RO’ 000 RO’ 000

52,745 53,068

203,744 210,383

21,654 17,451

12,631 12,674

1,736 3,468

292,510 297,044


2012 2012

RO’ 000 RO’ 000

149,874 151,032

46,792 46,792

7,078 12,559

203,744 210,383

66


(A) CREDIT RISK (Continued)


Gross

RO’ 000 RO’ 000

31 December 2012

97,937 100,965

35,062 37,951

14,563 16,066

56,182 55,401

203,744 210,383


Gross Impairment Gross Impairment

RO’ 000 RO’ 000

(B) LIQUIDITY RISK

a) Parent Company

Carrying

amount 0 - 90 days

91 - 180

days

181 - 365

days>365 days

Year endedRO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000

31 December 2012

67


(B) LIQUIDITY RISK (Continued)

b) Parent company

Carrying

amount 0 - 90 days

91 - 180

days

181 - 365

days >365 days

Year ended RO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000

31 December 2011

292,580 174,741 41,244 23,007 53,588

a) Consolidated

Carrying

amount

0 - 90 days 91 - 180

days

181 - 365

days

>365 days

RO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000

b) Consolidated

Carrying 0 - 90 days 91 - 180 181 - 365 >365 days

amount days days

RO’ 000 RO’ 000 RO’ 000 RO’ 000 RO’ 000

(C) INTEREST RATE RISK

68

36

FA

IR V

AL

UE

S O

F F

INA

NC

IAL

IN

ST

RU

ME

NT

S

F

air

va

lue

s

Ca

rryin

g a

mo

un

tF

air

va

lue

2012

20

12

Gro

up

Pa

ren

tG

rou

pP

are

nt

Fin

an

cia

l a

sse

ts

195,8

89

189,4

62

195,8

89

18

9,4

62

145

125

145

12

5

4,8

86

9,4

95

4,8

86

9,4

95

16,1

42

14,3

67

16,1

42

14

,36

7

9,7

29

9,8

24

9,7

29

9,8

24

226,7

91

223,2

73

226,7

91

22

3,2

73

Fin

an

cia

l lia

bilit

ies

90,0

32

87,2

50

90,0

32

87

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0

2,6

54

2,2

46

2,6

54

2,2

46

61,9

03

58,0

94

61,9

03

58

,09

4

91,2

44

90,6

55

91,2

44

90

,65

5

245,8

33

238,2

45

245,8

33

23

8,2

45

69

37 KEY SOURCES OF ESTIMATION UNCERTAINTY

Estimates and assumptions

Impairment of accounts receivable

Percentage of completion

Impairment of inventories

Useful lives of property, plant and equipment

Impairment of equity investments

70

37 KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

Taxes

Claims

38 COMPARATIVE AMOUNTS

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