Title :

Dividend Distribution policy 

Content :

SALALAH MILLS COMPANY SAOG

Draft of Dividend Distribution Policy

 

05 March 2026

After compliments,

Board Resolution:

The Board of Directors of Salalah Mills Company SAOG, listed on the Muscat Stock Exchange, has decided in its meeting held on 05 March 2026 to approve the Dividend Distribution Policy of the Company.

Subject: Dividend Distribution Policy

This Dividend Distribution Policy (“Policy”) is issued by the Board of Directors of Salalah Mills Company SAOG in compliance with the applicable regulations and the requirements of the Muscat Stock Exchange

This policy supersedes and replaces the Dividend Policy approved on 6 June 2024

1. Purpose

The purpose of this Dividend Distribution Policy is to outline the principles and guidelines governing the distribution of profits to shareholders of Salalah Mills Company SAOG (“the Company”), while balancing:

(a)     Attractive and sustainable shareholder returns;

(b)    Retention of sufficient earnings for growth;

(c)     Financial stability and operational requirements;

(d)    Compliance with regulatory and covenant obligations.

This policy is issued in alignment with MSX Circular (3/2025) and applicable laws of the Sultanate of Oman.

2. Dividend to Shareholder Intent

The Board of Directors aims to provide consistent and stable returns to shareholders, subject to:

(a)     Availability of retained earnings;

 

(b)    Adequate liquidity and free cash flow;

 

 

(c)     Compliance with debt covenants and regulatory requirements;

(d)    Strategic capital expenditure and investment needs;

(e)     Long-term sustainability of the Company.

Dividend distribution remains subject to annual Board recommendation and shareholder approval.

3. Dividend Distribution Interval

The Company intends to distribute dividends on an annual basis, following approval at the Annual General Meeting (AGM).

Where deemed appropriate and subject to financial performance and legal compliance, the Board may recommend extraordinary, interim, quarterly, or semi-annual dividends to the Extraordinary General Meeting.

4. Dividend Distribution Strategy

Dividends may be distributed in one or more of the following forms:

(a)     Cash dividends (primary method);

(b)    Bonus shares (stock dividend);

(c)     Any other legally permissible mechanism determined appropriate by the Board.

The choice of distribution method will depend on the Company’s financial position, capital requirements, and shareholder value considerations.

5. Dividend Payout Framework

The Company shall determine optimal dividend distributions based on the following structured process:

(a) Financial Model

Management shall prepare and present to the Board a financial model indicating:

(i)       Free cash available for distribution for the past year;

(ii)     Forward-looking liquidity forecast for the current and future years;

 

(iii)   Capital expenditure requirements;

(iv)   Debt servicing obligations.

For the avoidance of doubt, free cash includes cash at the beginning of the period.

(b) Board Review

At the time of approving the annual audited financial statements, the Board shall:

(i)       Review and approve the financial model (either as presented or revised);

(ii)     Approve the proposed dividend distribution.

(c) Distribution Principle

Subject to availability of retained earnings, the Board shall approve dividend distribution by distributing available free cash after reserving amounts required for:

 

(i)       Approved or likely capital expenditure;

(ii)     Working capital requirements;

(iii)   Strategic investments;

(iv)   Financial covenant compliance.

No fixed payout ratio is guaranteed; however, the Company seeks to balance shareholder returns with long-term sustainability.

6. Key Considerations in Determining Dividend

The following factors shall be considered:

(a) Profitability and Retained Earnings

(i)       Net profit after tax for the fiscal year;

(ii)     Retained earnings balance;

(iii)   Comparison with industry benchmarks to maintain competitiveness.

(b) Cash Flow

(i)       Availability of cash and liquidity;

 

 

 

 

 

 

(ii)     Maintenance of minimum cash reserves to finance ordinary course of business and planned investments.

(c) Debt Obligations and Financial Covenants

(i)       Compliance with all debt covenants;

(ii)     Ability to meet short-term and long-term obligations;

 

(iii)   Net Debt to EBITDA levels;

(iv)   Dividend coverage ratio;

(v)     Free Cash Flow to Equity (FCFE) sufficiency.

(d) Regulatory Requirements

(i)       Compliance with Commercial Companies Law and regulations;

(ii)     Adherence to Financial Services Authority (FSA) guidelines;

(iii)   Compliance with MSX disclosure requirements.

 

(e) Economic and Industry Conditions

(i)       Overall macroeconomic environment;

(ii)     Flour industry market conditions;

(iii)   Raw material price volatility;

(iv)   Demand-supply dynamics;

(v)     Business expansion plans.

7. Dividend Declaration and Disclosure

For each dividend declared, the Company shall disclose:

(i)       Declaration (Announcement) Date;

(ii)     Cum-Dividend Date;

(iii)   Ex-Dividend Date;

 

(iv)   Record Date;

(v)     Payment Date;

(vi)   Dividend amount and payout ratio.

Such disclosures shall be made through:

(i)       The Company’s official website (Investor Relations section);

(ii)     The MSX portal.

The policy shall be published in both Arabic and English.

8. Approval Process

(i)       Recommendation for declaration and payment of dividends shall be made by the Board of Directors.

(ii)     Final approval of dividend amount and timing shall be made by shareholders at the AGM.

9. Dividend Payment

(i)       Dividends will be paid annually following AGM approval.

(ii)     The Company will strive to pay dividends within the stipulated regulatory timeframe.

(iii)   Extraordinary dividends may be proposed subject to approval at an Extraordinary General Meeting.

10. Communication and Investor Engagement

The Company shall:

(i)       Publish the Dividend Policy prominently on its website under Investor Relations;

(ii)     Disclose the policy on the MSX website;

 

 

(iii)   Communicate any amendments via official announcements;

(iv)   Direct dividend-related queries to the Investor Relations function.

Dividend-related inquiries may be directed to the Company’s Investor Relations Officer at [ [email protected]]

11. Review and Amendment

This Dividend Policy shall be reviewed periodically by the Board to ensure alignment with:

(i)       Financial performance;

(ii)     Strategic goals;

(iii)   Market conditions;

(iv)   Regulatory requirements.

Any amendments shall be approved by the Board and disclosed accordingly.

12. Disclaimer

Dividend distribution is subject to:

(i)       Availability of distributable profits;

(ii)     Shareholder approval;

(iii)   Compliance with applicable laws and financial covenants;

(iv)   Prevailing economic and financial conditions.

Nothing in this policy constitutes a binding obligation to declare dividends in any specific financial year.

Approved by the Board of Directors on 5^th March 2026

Chairman
Salalah Mills Company SAOG