On behalf of the Board of Directors, I take pleasure in
placing before you the results of the Company for the year ended 31 December
Economic environment and outlook
economic environment has seen some softening as a result of sustained lower oil
prices. While confidence in the local financial system remained comfortable, we
have witnessed some tightening of liquidity and the resultant increase in
borrowing rates. Over the last two years, despite the challenges arising from
lower oil prices, the national economy proved to be able to maintain positive
The Government of
Oman is taking steps to proactively manage the impact of reduced oil prices
through adequate levels of public investment with the aim to enhance economic
diversification, increase employment rates and strengthen social development to
continue a growth trajectory of over 3% in year 2018. Over the medium term,
while still having substantial reliance on oil revenues, the fundamental
positive aspects of a young population, improving inflation, education and
geographical location of Oman will enable growth of the economy through non-oil
Our Company has a well-diversified geographical
spread inside Oman, coupled with a diversified product profile and we are well
positioned to meet the financing requirements of both the Retail and SME
segments. We anticipate a reasonable
credit offtake in the medium term with a need to balance credit risk with
positive market growth.
Merger with Oman Orix Leasing Company SAOG
Our Company is
in an advanced stage in the acquisition process of Oman Orix Leasing
Company SAOG (OOLC) through a merger by incorporation. The
merged Company will emerge as the largest Finance and Leasing Company in
Sultanate of Oman. The Company aims to raise RO 45.84 million through a
combination of Perpetual Bonds of RO 18.20 million and Rights Issue of RO 27.64
million. We believe that the merger will enhance our market presence through
increase in customer reach, service channels and enable rapid expansion through
launch of new products.
Upon completion of the merger with
Oman Orix Leasing Company, the Company’s headcount will approximately double.
It is expected that the process of streamlining and consolidation of operations
will result in more people being redeployed from back end operations to
customer facing areas. We expect that
consolidation of systems and processes and adopting best practices across the
merged company would result in a substantially improved customer experience,
increased staff efficiency levels and higher speed of business operations.
The company has adopted a prudent approach to credit
approvals over the past few years. Within this overall conservative credit
strategy, the company has been expanding its branch network to enable access to
more customers which meet the credit profile. Net finance assets have grown 4.20%
during the year to reach Rials 200.54 million from Rials 192.53 million as on
31 December 2016.
Your company continues to follow a prudent provisioning
policy based on its assessment of the risks inherent to its portfolio and is in
full compliance with provisioning norms prescribed by the Central Bank of Oman
and the International Financial Reporting Standards.
Overall, the Company achieved a net profit of Rials 7.02
million for the year ended 31 December 2017 (Rials 6.35 million in 2016), an
increase of 10.57%.
While the low global and regional growth forecast for the
medium term combined with the sustained drop in oil prices is expected to
create stress on the liquidity and funding costs, the company is well
positioned to deal with the changing business environment as a result of its
strong financial position, well established processes, well trained personnel
and long experience in this business.
Management Discussion and Analysis Report
The Management Discussion & Analysis Report which forms a part of
this annual report provides more detailed insight into the financial statements
and operations of the company for the year 2017.
The particulars of dividend distributed for the previous 5 years is
Amount in Rials million
|Capital on dividend Paid
Since the merger by incorporation of Oman Orix Leasing Company SAOG into National Finance is expected to
take place during the first quarter of 2018, the Board recommends that no
dividend be declared till such time that the merger is completed. Upon
completion of the merger, the Board will review the situation and may decide to
recommend a dividend out of retained earnings later during the year.
Your Company has been complying with all the requirements of the code of corporate governance, as specified by the Capital Market Authority (CMA). A detailed report on corporate governance is set out along with a certificate from the Statutory Auditors in compliance with CMA regulations
Update on Corporate Social Responsibility activities
current year, the company has entered into a co-operation agreement with Fund for Development of Youth Projects (Sharakah) for
conducting workshops in Financial Planning for the SME segment across
Oman aiming at improving skill levels of existing and prospective SME
enterpreneurs. Sharakah provides financial
Support and Post-financial Support to SMEs. The Company will continue to
explore avenues to assist the development of the SME sector.
National Finance joined hands with OMINVEST and Zubair SEC in their
endeavor for empowering local businesses and creating opportunities for Omani
nationals by offering competitive and convenient solutions to develop and grow
their business. National Finance believes that such collaborations will
scale up the success stories of start-ups and encourage a positive trend.
During the year, the company had donated Rials 10,000 each to Dar Al
Atta and Oman Charitable Organization, Rials 5,000 to Oman Bahjah Orphan
Society and RO 2,000 to Al Noor Association for the Blind out of the amount
approved by the shareholders for distribution to charities.
Your company remains committed to Omanisation and as
on 31 December 2017, the number of Omani staff was 133 out of the
total staff strength of 161. The Omanisation percentage works out to 82.61%
which is more than the prescribed target of 80%.
I am joined by all the members of the Board of Directors and the Management in expressing deep gratitude to His Majesty Sultan Qaboos Bin Said for his dynamic and progressive leadership. We also extend our sincere gratitude to the Central Bank of Oman, Capital Market Authority, Muscat Securities Market, our bankers, depositors, vehicle and equipment dealers, customers and shareholders for the support extended for the growth of the Company
On behalf of the Board of Directors I also thank the management and staff for their dedication and hard work
Taya Jandal Ali