Title :

 

                     Muscat Finance SAOG

                      Dividend Distribution Policy

         (Approved by the Board of Directors in January 2026)

 

 

Content :

 

1.      Objective of the policy

This Dividend Distribution Policy (the “Policy”) sets out the framework governing the declaration, recommendation, approval, and payment of dividends by Muscat Finance SAOG (the “Company”). This Policy is adopted in compliance with Muscat Stock Exchange Circular No. 3/2025 regarding Dividend Distribution Policy and other applicable laws and regulations of the Sultanate of Oman.

The primary objective of this Dividend Distribution Policy (the "Policy") is to establish transparent and consistent guidelines for dividend payments by the Company, ensuring an optimal balance between rewarding shareholders and retaining earnings for sustainable growth.

 

2.      Dividend Philosophy

The Company aims to:

• Deliver consistent returns to shareholders through dividends;
• Ensure financial stability; and
• Maintain sufficient liquidity for operational needs and strategic investments.

 

3.      Parameters for Dividend Distribution

The Board of Directors shall consider the following internal and parameters before declaring dividends:

Internal factors	External factors
Profitability and distributable surplus	Regulatory guidelines and statutory compliance
Cash flow position and liquidity requirements	Economic environment and market conditions
Leverage and gearing ratios	Industry-specific trends and competitive pressures
Debt repayment obligations and covenants/ conditions with Banks	Regulatory approval – Central Bank of Oman (“CBO”)
Retained earnings required for strategic growth	Shareholders’ approval at AGM

 

 

4. Dividend Payment Ratio

The Board aims to distribute dividends at a targeted payout ratio ranging between 50% to 60% of the annual net profits after tax. The exact percentage will be determined annually, considering the parameters outlined above in accordance with CBO circulars and guidelines.

 

-          Cash dividends can be paid, if leverage is less than 5 times and paid-up-capital (“PUC”) is greater than or equal to the requirements the cash dividends payout would be restricted to 15% of PUC or 60% of current year’s profits, whichever is less

 

 

4. Dividend Payment Ratio (continued)

-          Higher level of cash dividends can be considered, if the Company has achieved the required PUC and satisfactory leverage level, provided its loan loss provision coverage is more than 100% or net NPL ratio is less than 1;

 

-          No cash dividends may be paid, if the Company has not achieved stipulated paid-up-capital (“PUC”) level or it’s leverage levels are beyond the stipulated level of 5. However, if the Company has obtained extensions/ exemptions from CBO, a cash dividend may be considered up to 50% of current year’s net profit or 10% of PUC, whichever is less; and

 

-          No dividends shall be declared by the Company if there is no reported profit or if the Company has not made adequate provisions as per CBO norms.

 

5. Forms of Dividend

Dividends may be distributed in:

• Cash;
• Bonus shares (stock dividends); and
• Combination of cash and stock dividends.

The choice of dividend form will depend on shareholders’ expectations and the Company's financial strategy.

 

6. Frequency of Dividend Distribution

The Company intends to declare dividends annually after the audited financial statements are approved by the shareholders at the Annual General Meeting (“AGM”).

 

7. Procedure for Declaration and Payment of Dividends

• The Board shall recommend dividends based on financial performance;
• Dividend declaration shall be subject to approval by shareholders during the AGM or Extraordinary General Meeting; and
• Dividends shall be paid within 30 days from the date of declaration/ regulatory approvals, in compliance with regulatory timelines.

 

8. Dividend Communication and Transparency

• The Company shall communicate its dividend policy clearly in annual reports, corporate website, and investor communications on MSX; and
• Any changes in policy or deviations from standard practices shall be promptly disclosed with adequate rationale.

 

 

 

9. Circumstances of Dividend Retention

The Company may choose to retain earnings and not declare dividends under exceptional circumstances such as:

• Significant losses incurred;
• Regulatory requirements;
• Extraordinary business needs or economic downturns; and
• Requirement of funds for strategic expansions or acquisitions.

 

10. Review and Amendment

This policy shall be reviewed periodically by the Board, at least once every three years, and may be amended to align with regulatory changes, market conditions, or strategic direction of the Company.

 

11. Conflict Resolution

In case of conflict between this Policy and regulatory requirements, prevailing regulatory standards and legal guidelines shall supersede this policy.

 

12. Approval and Implementation

This Dividend Distribution Policy shall be effective from the date of approval by the Board of Directors.

 

13. Accounting & IFRS Treatment

Dividends are recognized in equity in the period in which they are approved by shareholders at the Annual General Meeting. In accordance with IAS 10 Events after the Reporting Period, a dividend proposed by the Board after the reporting date shall not be recognized as a liability at period-end; it is disclosed in the notes as a non-adjusting event until shareholder approval is obtained.