Username Password
Forgot Your Password?
New User Register
Chairman's Message PDF Print E-mail

Board of Directors’ Report


Dear Shareholders, 


On behalf of the Board of Directors, it is my pleasure to present to you the audited financial results of your company for the year ended 31st December 2018.


The Economic Environment 

The year 2018 was witness to volatility in oil prices together with geopolitical issues. While the first three quarters of the year registered a fairly steady revival in oil price, it dropped significantly by the year-end. The average oil price however remained above the budgeted level and contributed to increased revenue from oil and aided in reducing the budget deficit. Considering the fluctuations in oil prices, the government was constrained to adopt a balanced approach and prioritize its spending on essential projects and conserve resources to meet exigencies. The government mobilized funds from the international markets and through local borrowing to bridge the budget deficit. Market liquidity was modest despite experiencing some volatility and the banking sector provided the required funds to support the planned developmental activities. The government’s focus on diversification into non-oil segments during the past few years gained momentum and has started yielding the desired results. These segments are poised to increase their contribution to revenue over a period of time.  

2018 was a tough year for FLC’s as a whole and in particular for your company. The market witnessed a slowdown in implementation of developmental projects thus providing limited opportunities for expansion of business. This triggered a decline in the demand for commercial vehicles and equipment due to a dearth of avenues for deployment of assets, excess capacity, drop in hiring rates and delayed settlement of dues by contractors. The sale of private vehicles also registered a decline as a result of increase in cost of living and the conservative outlook of citizens and residents. These developments resulted in a decline in the overall market size triggering intense competition. Banks continued their penetration into vehicle financing and SME funding segment further reduced the market share of FLCs and increased competition among peers. Though there were indications of easing of market liquidity, it was volatile and pushed up borrowing cost. This resulted in finer margins and decline in net interest income. The market continued to reel under the delayed payment cycle resulting in the strained cash flow of borrowers. This resulted in a cascading effect of borrowers delaying / defaulting on their loan obligations and triggered the increase in the incidence of delinquencies during the year. 

The year under review 

In 2018 the company booked a modest volume of business despite the restrained market conditions. The loan book of the company as at 31 December 2018 was at RO 101.46 Million as against RO 113.59 Million as at 31st December 2017. The company recorded a net profit of RO 755,374 for the year 2018 as against RO 1.02 Million for the previous year. The decline in profit is attributed to the decline in instalment finance income and the higher provision made to cover the increase in the level of impaired loans and to comply with IFRS 9 requirements. Despite the concerted efforts on the recovery front, impaired assets increased to RO 27.37 Million as at 31st December 2018 as against RO 21.61 Million as at 31st December 2017.  

The company holds cumulative provisions of RO 14.81 Million as at December 2018, including reserved interest and a Special Reserve of RO 2.37 Million to guard against delinquencies. The Management is pursuing necessary recovery measures to control and bring down the level of impaired loans in the ensuing year. 

The company’s fund position was comfortable throughout the year despite tight market liquidity. Banks renewed / enhanced the credit facilities extended to the company to meet its business needs. Some of the banks also expressed their willingness to extend additional credit facilities to meet the business needs of the company.
During December 2017, the company became aware of some financial irregularities at its Nizwa Branch. The company took appropriate actions by informing the relevant law enforcement agencies and related disclosures have been updated on the MSM website. The Company has also taken various corrective measures to strengthen internal controls including centralization of certain key functions of the branches at the Head Office.


The Board of Directors do not to recommend any dividend distribution for the year 2018. 

Looking Ahead 

The State Budget for the year 2019 continues to focus on the long-term goals of economic diversification, curtailing expenditure and reducing the deficit. The budget aims at supporting the government’s initiatives of prioritizing spending on infrastructure projects to stimulate economic growth and encouraging private sector participation in developmental projects. The budget envisages a sizable outlay for developmental activities. The government would pursue ongoing projects and prioritize its outlay on developing infrastructure to supplement its diversification plans in line with available fiscal resources and movement in oil prices. The continued thrust on diversification is aimed at creating the infrastructure to augment income streams from the non-oil segments to reduce the dependence on revenue from oil over the years to achieve sustainability. 

The budget also continues its focus on achievement of social development objectives by increasing its expenditure on social welfare and basic services such as education, healthcare and housing sectors for the benefit of the citizens. The budget also aims at enhancing the skills of citizens and generate employment opportunities. Certain government projects are being earmarked for SMEs to foster avenues for self-employment. These measures are expected to stimulate economic activity and provide opportunities for business in the ensuing year. Concerted steps to reduce the delayed payment cycle through hastening the settlement of contractual dues would aid in easing liquidity and trigger the pace of economic growth. 

UFC would pursue a cautious approach and optimize the market opportunities to grow its loan book with emphasis on asset quality. The company would continue its focus on maintaining a balanced loan portfolio with the objective of mitigating risk. The company has sourced adequate credit lines from banks to meet its business requirements and some of the banks are keen to extend additional credit limits to aid the company’s business plans. We expect the market to provide reasonable opportunities for business but competition is likely to be intense, which could result in lending rates coming under pressure. Cost of borrowing is likely to remain high till market liquidity eases. Company would continue its concerted efforts on the collection front to control and bring down the level of impaired loans. The prevailing delayed payment cycle and its cascading effect on the cash flow of borrowers poses a challenging task. The company would continue its pursuit of achieving better operational efficiency through optimum utilization of resources.  

Human Resources 

UFC is compliant with the prescribed Omanisation percentage. The company recruits aspiring Omanis and provides continuous training to its employees to impart the required knowledge and skill sets to discharge the tasks assigned to them efficiently and improve their proficiency to shoulder higher responsibilities. The company provides a congenial working environment to encourage Omani staff to achieve their career goals.  

Corporate Governance 

The company adopts the best corporate governance practices and is compliant with the prescribed code. The corporate governance philosophy and practices pursued by the company are contained in the report on corporate governance accompanied by the report of Statutory Auditors.  

Corporate social responsibility 

As part of its corporate social responsibility initiatives, UFC provides employment to fresh Omani graduates and diploma holders and imparts training to groom them as productive resources and raise their standard of living. The company participates in social programs by conducting regular blood donation camps and offers employment to the physically challenged. The company also extends funding to SME’s and local community contractors in interior regions and indirectly aids in providing employment opportunities and a source of livelihood to the locals in the vicinity. 


The Board of Directors and Management express their highest gratitude to His Majesty Sultan Qaboos bin Said and respectfully acknowledge his dynamic leadership and utmost caring to nurture the local economy. 

On behalf of the Board I wish to express our gratitude to the Central Bank of Oman, Capital Market Authority, Ministry of Commerce and Industry, Ministry of Manpower, Royal Oman Police and other Regulatory Authorities and thank them for their support and guidance. We also take this opportunity to extend our sincere thanks to our bankers, shareholders and other stakeholders for their unstinted support.  

On behalf of the Board I would like to place on record my appreciation and thank the Management and staff for their individual and collective contribution to achieving operational efficiency and realizing the company’s goals. 

May God bless all of us. 

Mohamed Abdulla Al Khonji




Feedback | Privacy Policy | Site Map
Copyright © 2009 - UFC
P.O. Box 3652, P.C. 112, Ruwi Sultanate of Oman. C.R. No.: 1/58096/5, E-mail:ufc@ufcoman.com, Website: www.ufcoman.com