Title :

Dividend Distribution Policy

Content :

 

Dividend Distribution Policy

1. Introduction

2.  Purpose

3.  Dividend Distribution Strategy
3.1 Dividend Intent
3.2 Dividend Payout Ratio
3.3 Dividend Types
3.4 Factors Influencing Dividend Distribution
3.5 Special or Interim Dividends

4.  Financial Considerations
4.1 Net Profit or Net Income
4.2 Cash in Hand and Liquidity Position
4.3 Retained Earnings and Growth Strategy
4.4 Debt Obligations
4.5 Capital Expenditure Requirements
4.6 Economic and Industry Conditions
4.7 External Disruptions and Unforeseen Risks

5.  Dividend Declaration and Approval Process

6.  Disclosure and Investor Communication

7.  Legal and Compliance Framework

8.  Policy Review and Amendments

9. Contact Information

 

 

 

 

 

 

 

 

 

 

 

1. Introduction

The Board of Directors of Oman Refreshment Company SAOG (the “Company”) listed on the Muscat Stock Exchange (MSX), is committed to transparency and investor confidence. This policy outlines the Company’s approach to dividend distribution in alignment with the MSX guidelines (Circular 3/2025).

2. Purpose

The purpose of this policy is to ensure consistent disclosure and clarity regarding dividend payments, supporting informed investment decisions and compliance with regulations.

3. Dividend Distribution Strategy

The Company’s dividend distribution strategy is designed to balance shareholder returns with the Company’s long-term financial sustainability. The key components of the Company strategy are:

3.1 Dividend Intent

• The Company’s intent is to distribute dividends subject to financial performance of the Company and market conditions on annual or biannual or quarterly basis, which shall be declared accordingly.
• The Board retains the right, at its discretion (subject to approval by shareholders at the Annual General Meeting (AGM)), to declare, increase, decrease, or suspend dividends if required due to financial or economic circumstances.

3.2 Dividend Payout Ratio

• The payout ratio will be determined based on net profits, Liquidity and reinvestment needs.
• The Company aims for a payout ratio that will be determined every year by management and aligned with board, ensuring a balance between shareholder returns and business growth.

3.3 Dividend Types

• Cash Dividends: Distributed directly to shareholders  via Muscat Clearing and Depositary Company SAOC.
• Bonus Shares: Additional shares issued with or instead of cash dividends to increase shareholder value.

3.4 Factors Influencing Dividend Distribution

The Board will assess the following factors before declaring dividends:

• Financial Performance: Net income and Liquidity
• Retained Earnings: Availability of reserves for future growth and investment.
• Debt Obligations: Impact of dividend payouts on leverage and financial stability.
• Capex and New Projects: Planned and ongoing capital expenditure before determining dividend distributions.
• Economic Conditions: Market trends, industry performance, and macroeconomic environment.
• External Disruptions: Impact of unforeseen events such as geopolitical instability, wars, economic sanctions, or boycotts affecting business operations and revenue.

3.5 Special or Interim Dividends

• The Company may declare special dividends in exceptional cases, such as surplus cash reserves or one-time gains.
• Interim dividends may be distributed if financial performance permits and is subject to Board and Ordinary General Meeting’s approval.

4. Financial Considerations

Dividend distribution is subject to the Company's financial health, profitability, and long-term strategic objectives. The following key financial factors will be evaluated before deciding on dividend payouts:

4.1 Net Profit or Net Income

• The Company's net profit after tax will be the primary determinant of dividend distribution.
• The Board will assess profit margins, operating efficiency, and sustainability of earnings to ensure dividends do not compromise future stability.
• A history of stable or increasing profits will support consistent dividend payouts, while fluctuating earnings may require conservative distribution policies.

4.2 Cash in Hand and Liquidity Position

• Dividend payments will be based on the actual cash reserves available at the time of declaration, ensuring sufficient liquidity for operational and strategic needs.
• The Company will monitor its cash and cash equivalents to determine dividend affordability without jeopardizing short-term obligations.
• If cash reserves are low, the Board may decide to reduce or defer dividends to maintain financial flexibility.

4.3 Retained Earnings and Growth Strategy

• The Company will evaluate the retained earnings balance to determine whether reinvesting profits for expansion and acquisitions is more beneficial than paying dividends.
• A portion of earnings may be retained to:
• Fund future growth projects and capital expenditures.
• Improve operational efficiency and invest in technology upgrades.
• Maintain financial flexibility for unforeseen business opportunities.
• If growth prospects require significant reinvestment, the Company may opt for a lower dividend payout ratio or prioritize bonus shares over cash dividends.

4.4 Debt Obligations

• Dividend payments will be evaluated in the context of the Company’s debt to maintain financial stability.
• A high debt burden may necessitate lower dividend payouts to preserve liquidity and avoid financial distress.
• If debt levels are within acceptable limits, dividend payouts may remain stable or increase based on financial performance.

4.5 Capital Expenditure Requirements

• The Company will consider planned and ongoing capital expenditure before determining dividend distributions.
• A balance will be maintained between funding Capex and ensuring adequate shareholder returns.

4.6 Economic and Industry Conditions

Macroeconomic factors such as inflation, interest rates, currency fluctuations, and regulatory changes may impact dividend decisions.

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4.7 External Disruptions and Unforeseen Risks

• The Company will consider external factors that may impact financial stability, such as
• Geopolitical risks: Wars, sanctions, or political instability affecting business operations.
• Economic sanctions or trade restrictions: Potential disruptions to revenue streams.
• Product boycotts or reputational risks: Negative public sentiment impacting sales and profitability.
• Pandemics or natural disasters: Unforeseen global events affecting supply chains, production, and market demand.
• In times of uncertainty, the Company may choose to reduce or suspend dividends to preserve cash reserves and ensure business continuity.

5. Approval and Disclosure

• Approval Authority: Board of Directors of the Company
• Disclosure Requirements:
• Published on the Company’s website and MSX portal
• Bilingual presentation (English & Arabic)
• Clear declaration date, ex-dividend date, record date, and payment date

6. Legal and Compliance Framework

• Governed by Oman’s Commercial Companies Law and FSA regulations
• Amendments if any to this policy shall be reviewed annually or as required

7. Contact Information

For inquiries related to dividends, please contact Mr. Faizan Hamid, Investor Relations Officer (IRO) of the Company, [email protected]