Dear Shareholders,

It gives me great pleasure to welcome you all and present herewith the results of Oman Refreshment Co. (SAOG) for the year 2009.

Highlights

Year 2009 has brought many challenges to the Company as the economic crisis and the substantial increase in raw material costs overshadowed the Company’s objectives and reduced the momentum of growth that the Company has enjoyed over the past years.  This has led to a reduction in margin, which has necessitated to take a bold move of increasing the trade price which in turn has resulted in consumer price increase for the first time in many decades. Additionally, the Company has embarked on major redeployment of resources in an effort to improve overall efficiency and productivity to achieve profit objectives and growth.

Performance

Your Company continues to dominate market leadership in soft drinks industry, despite of trade and consumer price increase.

Sales volume achieved for the year 2009 was 19.8 million cases in comparison with 22.1 million cases for the year 2008 registering a decline of 10.5%.

Turnover for the year has showed a marginal decline of 1.7% at R.O. 42.8 million compared to previous year’s turnover of R.O. 43.5 million.

Decline in volume and turnover was due to a marginal trade and consumer price increase in March 2009 consequent to substantial increase in material cost as well as overhead expenses.

Production also registered a decline of 12.2% at 18.8 million cases in the year 2009 compared to 21.4 million cases for the year 2008, in line with the drop of sales volume.

Operating Results

Operating profit before tax was R.O. 2.46 million compared to previous year’s profit before tax of R.O. 2.91 million, a decline of 15.4%.

Net profit after tax for the year 2009 was R.O. 2.18 million in comparison with R.O. 2.56 million of the previous year registering a decline of 15.1%.

Earnings per share declined to 0.725 bzs in 2009 compared to 0.931 bzs in the year 2008.

Dividend

After reviewing the performance of the company as well as taking into account the liquidity requirements, future earning and shareholders interest, your Board of Directors has proposed a  dividend of 70% (equivalent to Baizas 700 for each share).

Adherence to Corporate Governance

In accordance with the directives of the code of Corporate Governance promulgated by Capital Market Authority, a detailed report on Corporate Governance duly certified by the statutory auditors is included within the annual report.

Internal Control System

The Board has reviewed the adequacy and effectiveness of the existing internal control system and found it to be satisfactory.

Outlook

The outlook of the company continues to be positive specially with the successful implementation of the new consumer prices of Carbonated Soft drinks and effective expansion of the new range of products. However, the company may have impact on 2010 profitability due to the volatile global market condition of commodities specially due to the steep increase in the price  of sugar , and as a result the Company monitors closely the prices and  forward cover commitment of various raw materials.

Appreciation

On behalf of the Board of Directors, I would like to express my sincere appreciation for the outstanding performance of the employees and management of ORC. I also take this opportunity to thank our consumers, customers, Pepsi Co International Company, our suppliers, and our shareholders for their continued support and contribution.

Finally, the Board of Directors and the management would like to record a message of gratitude and appreciation to His Majesty Sultan Qaboos Bin Said and his government for their guidance and direction, which continue to motivate and inspire us towards greater participation in the development and services of Oman.

BUTI OBAID AL MULLA
Chairman.