OMINVEST Net Profit rises to RO 33.7 million
Oman International Development and Investment Company SAOG (OMINVEST), one of the oldest and the largest investment company in the Sultanate, announced its initial unaudited financial results for the year ended 31 December 2020. The financial results are subject to statutory audit, review by the Audit and Control Committee, and approval of the Board of Directors of OMINVEST.
At the Group level, Net Profit attributable to the shareholders of OMINVEST rose by 5% to RO 33.7m, whereas Net Profit at the Parent company level rose by 6% to RO 38.1m, compared to the previous year.
Mr. Abdulaziz Al Balushi, Group CEO of OMINVEST, attributed the company’s resilient performance to its major subsidiaries and associate companies and certain strategic transactions completed during an otherwise extremely challenging year. He added that OMINVEST’s portfolio companies nimbly adjusted to new operating routines necessitated by the onset of COVID-19 and continued to serve their customers efficiently. Mr. Al Balushi stated that OMINVEST ended the year with a strong financial position. Particularly, the company built a substantially large liquidity cushion enabling it to withstand difficult economic conditions and take advantage of emerging investment opportunities. Although OMINVEST has had the capacity to avail more long-term debt facilities at attractive terms, the company maintained a conservative debt profile with its net Debt/Equity ratio still well below 1.0x. The company intends to prudently deploy its excess liquidity and unused debt capacity to undertake new investments to achieve its future growth and diversification objectives.
During the year, OMINVEST’s banking subsidiary Oman Arab Bank (OAB) successfully merged with Alizz Islamic Bank (Alizz); completed its listing on the Muscat Securities Market and became SAOG. Importantly, Alizz was seamlessly integrated into OAB as its Islamic Banking subsidiary, offering a wider array of products and services to its clients and realizing mutual synergies across the platforms. Preceding the merger transaction, OMINVEST also sold an 11.76% stake in OAB to Arab Bank plc, resulting in OMINVEST’s shareholding in OAB declining from 51% (before the merger) to 31.64% in the combined entity (after the merger). After the sale of the stake, OAB’s classification in OMINVEST’s financials was changed from a Subsidiary to an Associate with effect from 30 June 2020. Therefore, in line with IFRS requirements, from the date of the reclassification to an Associate, OMINVEST stopped consolidating OAB’s financials and implemented the Equity Method of Accounting. In addition, sale of its partial equity stake in OAB will result in lower share of income with effect from the date of reclassification.
In another major transaction during the year, our subsidiary Jabreen Capital sold 6.74% of the Treasury Shares at attractive terms. In addition, International General Insurance (IGI), a portfolio company of Jabreen Capital, successfully listed on Nasdaq, resulting in partial liquidation of our stake, and generating decent cash proceeds. These transactions further boosted OMINVEST’s cash position and the overall strength of its balance sheet.
Responding to questions related to the impact of COVID-19 and low oil prices on local and regional businesses, Mr. Al Balushi explained that Omani and regional businesses across all key sectors continue to operate under challenging and uncertain economic conditions. He stated that while COVID-19 is coming well under control in Oman due to our Government’s excellent response, the negative effects of COVID-19 continue to linger due to a severe second wave of the virus in the US, Europe, and most of Asia. While lauding Omani’s government’s new policy initiatives and reforms to restore the Sultanate’s economic strength over the next few years, Mr. Al Balushi cautioned that 2021 will be another difficult year for the local and regional businesses as protracted weakness in oil price is leading to rising sovereign debt levels, budget deficits and tight liquidity conditions in the banking sector. Therefore, companies need to become much more creative and efficient to survive through these difficult times and emerge stronger. Mr. Al Balushi highlighted that being cognizant of such macro challenges, OMINVEST is prudently managing its assets and liabilities, aiming to further diversify and grow to maximize shareholder value while keeping potential risks well anchored.