OMAN OIL MARKETING COMPANY SAOG Financial statements

31 December 2007

Registered address P.O. Box 92 Postal code 116 Sultanate of Oman

Principal place of business Mina Al Fahal Sultanate of Oman

OMAN OIL MARKETING COMPANY SAOG

Financial statements
31 December 2007

Contents

Page

Report of the Auditors Balance sheet Income statement Cash flow statement Statement of changes in equity Notes

1 2 3 4 5 6-22

REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF OMAN OIL MARKETING COMPANY SAOG
Report on the financial statements We have audited the accompanying financial statements of Oman Oil Marketing Company SAOG ("the Company") set out on pages 2 to 22, which comprise the balance sheet as at 31 December 2007, and the income statement, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Board of Directors responsibility for the financial statements The Board of Directors is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, the disclosure requirements of the Capital Market Authority and the Commercial Companies Law of 1974, as amended. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessments of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Oman Oil Marketing Company SAOG as at 31 December 2007 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on other Legal and Regulatory Requirements In our opinion, the financial statements of Oman Oil Marketing Company SAOG as at and for the year ended 31 December 2007, in all material respects comply with:

the relevant disclosure requirements of the Capital Market Authority; and the Commercial Companies Law of 1974, as amended.

22 January 2008

KPMG

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OMAN OIL MARKETING COMPANY SAOG

Balance Sheet
as at 31 December 2007 RO 2006 RO

Notes

Assets Property, plant and equipment Interest in Joint Venture Deferred tax Total non-current assets

3 4 &18 13

12,638,672 46,048 12,684,720 3,430,395 15,319,389 5,997,240 24,747,024 37,431,744 6,450,000 2,150,000 9,176,176 17,776,176 329,806 268,056 597,862 17,596,184 36,637 834,038 590,847 19,057,706 __________ 19,655,568 ____________ 37,431,744 0.276

10,647,439 17,007 62,981 10,727,427 3,589,735 16,465,147 1,790,027 21,844,909 32,572,336 6,450,000 2,150,000 6,559,417 15,159,417 335,326 240,241 575,567 13,888,722 2,000,000 653,038 295,592 16,837,352 __________ _ 17,412,919 __________ _ 32,572,336 0.235

Inventories Trade and other receivables Cash and cash equivalents Total current assets Total assets Equity Share capital Statutory reserve Retained earnings Total equity Liabilities Employees end of service benefits Provision for site restoration and abandonment cost Total non-current liabilities

5 6

7 8

9 10

Trade and other payables Payable to Joint Venture Short-term loan Income tax Environmental provision Total current liabilities

11 4 &18 12 13 14

Total liabilities Total equity and liabilities

Net assets per share

21&7

The notes on pages 6 to 22 form an integral part of these financial statements. These financial statements were approved and authorized for issue by the Board of Directors on 22 January 2008 and signed on their behalf by:

Chairman The report of the Auditors is set forth on page 1.

Chief Executive Officer

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OMAN OIL MARKETING COMPANY SAOG

Income statement
for the year ended 31 December 2007 RO 152,663,594 (137,781,096) 14,882,498 340,121 (6,652,081) (1,229,476) (722,494) 6,618,568 ________ 4,731 (127,990) 2006 RO 121,397,435 (109,578,451) 11,818,984 308,040 (5,861,974) (1,127,202) (383,278) 4,754,570 __________ 7,068 (171,174)

Notes Revenue Cost of sales Gross Profit Other income Administrative expenses Distribution expenses Other expenses Result from operating activities 18

3,14,15 &18

Finance income Finance expenses

18 18

Net finance cost Share of net loss from joint venture Profit before income tax Income tax expense Profit for the year Basic earnings per share 20 13 18

(123,259) _________ (53,644) _________ 6,441,665 (761,156) 5,680,509 0.088

(164,106) ________ (30,519) ________ 4,559,945 (543,915) 4,016,030 0.062

The notes on pages 6 to 22 form an integral part of these financial statements. The report of the Auditors is set forth on page 1.

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OMAN OIL MARKETING COMPANY SAOG

Cash flow statement
for the year ended 31 December 2007 RO 2006 RO

Note Cash flows from operating activities Profit before income taxes and after directors remuneration Add : Share of loss from joint venture Adjustments for: Depreciation (Profit)/Loss on disposal of property, plant and equipment Net finance costs Operating profit before working capital changes Change in inventories Change in receivables Change in payables Change in provisions and employee benefits Cash from operations Interest paid Income tax paid Net cash from operating activities Cash flows from investing activities Interest received Proceeds from disposal of property, plant and equipment Acquisition of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Decrease in short term loan Dividends paid Net cash used in financing activities Net change in cash and cash equivalents Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December

6,441,665 53,644 3 1,734,946 (27,142) 123,259 8,326,372 159,340 1,145,758 3,707,462 317,550 13,656,482 (127,990) (563,223) 12,965,269 4,731 55,296 (3,754,333) (3,694,306) (2,000,000) (3,063,750) (5,063,750) 4,207,213 1,790,027 5,997,240

4,559,945 30,519 1,498,698 64,769 164,106 6,318,037 (1,478,426) (4,168,376) 5,704,560 24,684 6,400,479 (171,174) (387,853) 5,841,452 7,068 5,643 (2,562,326) (2,549,615) (900,000) (2,902,500) (3,802,500) (510,663) 2,300,690 1,790,027

5 6 11 9

13

The notes on pages 6 to 22 form an integral part of these financial statements. The report of the Auditors is set forth on page 1.

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OMAN OIL MARKETING COMPANY SAOG

Statement of changes in equity
for the year ended 31 December

Share capital RO 1 January 2006 Dividends paid 2005 Net profit for the year 31 December 2006 6,450,000 6,450,000 6,450,000 6,450,000

Statutory reserve RO 2,150,000 2,150,000 2,150,000 2,150,000

Retained earnings RO 5,445,887 (2,902,500) 4,016,030 6,559,417 6,559,417 (3,063,750) 5,680,509 9,176,176

Total RO 14,045,887 (2,902,500) 4,016,030 15,159,417 15,159,417 (3,063,750) 5,680,509 17,776,176

1 January 2007 Dividends paid 2006 Net profit for the year 31 December 2007

The notes on pages 6 to 22 form an integral part of these financial statements. The report of the Auditors is set forth on page 1.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 1 Legal status and principal activities Oman Oil Marketing Co. SAOG (the Company) is registered as a joint stock company under the Commercial Companies Law of Oman and is engaged in the marketing and distribution of petroleum products. The Company is a subsidiary of Oman Oil Company SAOC, a closed joint stock Company registered in the Sultanate of Oman. The Company has entered into a Trademark License Agreement with Oman Oil Company SAOC dated 22nd September 2003, for the right to use the trademark Oman Oil, in exchange for an annual fee of 0.09% of all fuel sales. 2 Basis of preparation and significant accounting policies Basis of preparation a) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the disclosure requirements of the Capital Market Authority and the requirements of the Commercial Companies Law of 1974, as amended. b) Basis of measurement The financial statements have been prepared on the historical cost basis except for provisions for site restoration and abandonment cost which are measured at amortized cost. c) Functional currency These financial statements are presented in Riyal Omani (RO), which is the Companys functional currency. d) Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. In particular, estimates that involve uncertainties and judgments which have a significant effect on the financial statements include: provisions for impairment of receivables (note 6), provision for environmental remediation (note 14) and provision for site abandonment and restoration cost (note 10). Significant accounting policies The accounting policies set out below have been applied consistently by the Company and are consistent with those used in the previous year. a) Foreign currencies Transactions in foreign currencies are translated to the Companys functional currency at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting dates are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the period. Foreign currency differences arising on retranslation are recognized in the profit or loss.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 2 b) (i) Basis of preparation and significant accounting policies (continued) Property, plant and equipment Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Costs include expenditures that are directly attributable to the acquisition of the asset. The cost includes any other cost that is directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. (ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of an item if it is probable that future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in the income statement as incurred. (iii) Depreciation Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of the property, plant and equipment. Assets under construction are not depreciated. The estimated useful lives for the current and comparative periods are as follows: Years 10 to 20 2 to 13

Buildings Plant, equipment and vehicles Depreciation methods, useful lives and residual values are reassessed at each reporting date. c) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories include expenditures incurred in acquiring the inventories and bringing them to their existing location and condition, as follows:

Petroleum products and lubricants: purchase cost on a first-in-first out basis Stores: at weighted average cost

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 2 d) (i) Basis of preparation and significant accounting policies (continued) Impairment Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognized in income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost, the reversal is recognized in the income statement. (ii) Non-financial assets The carrying amounts of the Companys non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indications exist then the assets recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specified to the asset. Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. e) Employee benefits Defined contribution plan Obligations for contributions to a defined contribution retirement plan, for Omani employees, in accordance with the Oman Social Insurance Scheme, are recognized as an expense in the income statement as incurred. The Company's obligation in respect of non-Omani terminal benefits, under defined contribution retirement plan, is the amount of future benefit that such employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value. The discount rate used reflects current market assessments of the time value of money.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 2 f) Basis of preparation and significant accounting policies (continued) Provisions A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. An environmental provision is recognised when the Company, through environmental assessments, identifies a requirement for environmental remediation as a result of a past event and the associated costs can be reasonably estimated. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. g) Revenue Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, allowances and trade discounts. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably and there is no continuing management involvement with the goods. Transfers of risks and rewards vary depending on the individual terms of the contract of sale. h) Leases Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. i) Income tax Income tax comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is calculated using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary difference when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 2 j) Basis of preparation and significant accounting policies (continued) Earnings per share The Company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. k) New standards and interpretation not yet effective A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2007, and have not been applied in preparing these financial statements:

IFRS 8 Operating Segments introduces the management approach to segment reporting. IFRS 8, which becomes mandatory for the Companys 2009 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Companys Chief Operating Decision Maker in order to assess each segments performance and to allocate resources to them. The Company will be required to present segment information in respect of retail, commercial, lubes and aviation segments. Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. It is not expected that revised IAS 23 will have any significant impact on the financial statements. IFRIC 11 IFRS 2 Company and Treasury Share Transactions requires a share-based payment arrangement in which an entity receives goods or services as consideration for its own equity instruments to be accounted for as an equity-settled share-based payment transaction, regardless of how the equity instruments are obtained. IFRIC 11 is not expected to have any significant impact on the financial statements. IFRIC 12 Service Concession Arrangements provides guidance on certain recognition and measurement issues that arise in accounting for public-to-private service concession arrangements. IFRIC 12, which becomes mandatory for a companys 2008 financial statements, is not expected to have any significant effect on the Companys financial statements. IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers. It relates to customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services. IFRIC 13, which becomes mandatory for the Companys 2009 financial statements, is not expected to have any significant impact on the financial statements. IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on the impact of minimum funding requirements (MFR) on such assets. It also addresses when a MFR might give rise to a liability. IFRIC 14 will become mandatory for the Companys 2008 financial statements, is not expected to have any significant impact on the financial statements.

l)

Directors remuneration The total remuneration paid to non-executive directors comprising sitting fees and remuneration is in accordance with the provisions, and within the limits of, the Commercial Companies Law; the CMA guidance; and the Articles of Association of the Company. Executive directors, if any, apart from their contractual benefits and performance linked pay are not eligible for any sitting fees or fixed remuneration. Directors remuneration is recognised in the income statement.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 2 m) Basis of preparation and significant accounting policies (continued) Joint venture Joint venture: jointly controlled assets Investment in jointly controlled assets is recognized only to the extent of the Companys share of assets, classified according to the nature of assets, liabilities which it has incurred, income from the sale or use of its share of the output of the joint venture, together with its share of any expenses incurred by the joint venture. Joint venture: jointly controlled entity Investment in a jointly controlled entity is recognized using the equity method, from the date the Company obtains joint control, at cost plus the Companys share of post acquisition retained results and other changes in net assets. The Company discontinues the use of the equity method from the date on which it ceases to have joint control over, or have significant influence in, a jointly controlled entity. n) Dividends Dividends are recommended by the Board after considering the profit available for distribution and the Companys future cash requirements and are subject to approval by the shareholders at Annual General Meeting. Dividends are recognized as a liability in the period in which they are declared. o) Determination of fair values A number of the Companys accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and /or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to the asset or liability. (i) Property, plant and equipment The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant and equipments is based on the quoted market prices for similar items. (ii) Inventory The fair value of inventory is determined based on its estimated selling price in the ordinary course of the business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventory. (iii) Trade and other receivables The fair value of trade and other receivables approximates to their carrying amount due to their short term maturity.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) p) Share capital Ordinary and multi vote shares are classified as equity. 3 Property, plant and equipment Plant, equipment and vehicles RO 7,565,466 13,401 1,776,622 (28,154) (1,530,995) 7,796,340 14,675,987 (6,879,647) 7,796,340

Buildings RO Balance at 1 January 2007, net of accumulated depreciation Additions Transfers Disposals Depreciation for the year Balance at 31 December 2007, net of accumulated depreciation Property, plant and equipment: Cost Accumulated depreciation Net carrying amount 2,622,230 765,098 (203,951) 3,183,377 4,031,228 (847,851) 3,183,377

Assets under construction RO 459,743 3,740,932 (2,541,720) 1,658,955 1,658,955 1,658,955

Total RO 10,647,439 3,754,333 (28,154) (1,734,946) 12,638,672 20,366,170 (7,727,498) 12,638,672

The Companys 50% share of plant and equipment and assets under construction at the main storage depot at Mina Al Fahal (the depot) in the amount of RO 987,692 (2006: RO 1,036,378) and RO 12,953 (2006: RO 11,670), respectively, are included in property, plant and equipment. Under an agreement dated 6 December 1995 between the Company and Al Maha Petroleum Products Marketing Company SAOG (Al Maha):

such assets are controlled jointly with Al Maha and cannot be sold without the mutual consent of the Company and Al Maha; costs of this depot are shared equally with Al Maha; and the depot is operated by the Company for agreed management fees.

The land, on which the main storage depot and buildings are located, is leased from the Ministry of Oil and Gas jointly with Al Maha under a lease which commenced on 23 November 1998 and expires on 22 November 2008. 4 Interest in Joint Venture The Company has entered into a joint venture agreement with Al Sarooj Group LLC dated 10 June 2004 (the Agreement). Under the terms of the Agreement the Company has a 50% interest in a jointly controlled entity, Oman Oil Marketing & Sarooj Group LLC (the Joint Venture), a limited liability company incorporated in the Sultanate of Oman with share capital of RO 40,000. The Joint Venture was registered on 10 August 2004. The Joint Ventures principal activity is to carry out commercial activities in the oil and gas sector outside the Sultanate of Oman.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 4 Interest in Joint Venture (continued) The Companys share of assets and liabilities of the Joint Venture is as follows: 2007 RO Current assets Non-current assets Current liabilities Non-current liabilities 190,774 4,626 (236,690) (2,265) (43,555) 2006 RO 274,446 4,626 (261,228) (837) 17,007

Inventories 2007 RO Oil and lubricants Stores 3,422,898 7,497 3,430,395 2006 RO 3,581,279 8,456 3,589,735

Trade and other receivables 2007 RO Trade receivables Less: impairment provision 14,135,898 (954,848) 13,181,050 644,944 306,349 1,187,046 15,319,389 2006 RO 15,779,253 (1,028,329) 14,750,924 370,615 378,130 965,478 16,465,147

Amounts due from related parties (note 18) Other receivables Prepaid expenses

Changes in the impairment provision for trade accounts receivable during the year are as follows: 2007 RO 1,028,329 (73,367) (114) Balance at 31 December 954,848 The Company has accepted guarantees / collateral valued at RO 469,215 (2006: RO customers to secure fully/ partly their dues to the Company. Balance at 1 January (Released) provided during the year Written off during the year 2006 RO 575,183 458,490 (5,344) 1,028,329 === 9,304) from

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 6 Trade and other receivables (continued) The maximum exposure to credit risk for trade receivables (considered as being the gross carrying value before impairment provisions) at the reporting date by type of customer was: Carrying amount 2007 2006 RO RO Aviation Commercial Fuel Card Lubes Retail Others Less: Related party receivables Others Add: Receivable from Joint venture 2,192,879 5,653,749 3,661,111 620,673 2,186,427 535,323 14,850,162 (644,944) (103,119) 5,080,883 7,037,955 1,442,979 352,366 2,211,911 46,206 16,172,300 (370,615) (31,845)

33,799 9,413 14,135,898 15,779,253 Whilst the Company sells its products to a large number of customers in Oman, its five largest customers account for 33% of trade receivables at 31 December 2007 (2006: 38%). The aging of trade receivables at the reporting date was: Gross 2007 In thousands of Rials Not past due 10,599,389 Past due 1-90 days 3,337,693 Past due 91-360 days 289,319 More than one year 623,761 14,850,162 7 Share capital The shareholders in the extraordinary general meeting held on 25 March 2006 have resolved to amend the authorized share capital from 15,000,000 to 150,000,000 shares and the issued and fully paid share capital from 6,450,000 to 64,500,000 shares by reducing the nominal value of share from RO 1 per share to baizas 100 per share. The Companys authorized share capital consists of 150,000,000 (2006: 150,000,000) shares of baizas 100 each (2006: Baizas 100 each). The Companys issued and fully paid up share capital comprises 64,500,000 (2006: 64,500,000) shares of baizas 100 each (2006: Baizas 100 each) as follows: 20074 Number of shares Multi-vote shares Ordinary shares 3,225,000 61,275,000 64,500,000 2006 Number of shares 3,225,000 61,275,000 64,500,000 Impairment 2007 91,807 40,301 244,031 578,709 954,848 Gross 2006 9,746,772 5,017,669 754,430 653,429 16,172,300 Impairment 2006 43,248 49,462 329,379 606,240 1,028,329

In accordance with Article 5 of chapter two of the Companys Articles of Association, the holder of each multi-vote share is entitled to two votes at the annual general meeting of the Company.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 7 Share capital (continued) Shareholders of the Company who own 10% or more of the Companys shares, whether in their name or through a nominee account, are as follows: 2006 20074 No. of shares No. of shares Oman Oil Company SAOC Multi-vote shares Ordinary shares 3,225,000 28,380,000 31,605,000 3,225,000 28,380,000 31,605,000

Legal reserve As required by the Commercial Companies Law of the Sultanate of Oman, 10% of the profit of each year is transferred to a legal reserve until the reserve reaches a minimum one-third of the issued share capital. The Company has resolved to discontinue any further transfers to this reserve, as the reserve equals one-third of the issued share capital. This reserve is not available for distribution.

Employees end of service benefits 2007 RO Movements in the liability recognised in the balance sheet are as follows: Accrual as at 1 January Accrued during the year End of service benefits paid Accrual as at 31 December 2006 RO

335,326 45,752 (51,272) _______ 329,806

310,642 41,586 (16,902) _______ 335,326

10

Provision for site restoration and abandonment cost Movements in the provisions are as follows: 2007 RO As at 1 January Additional provision (net) Unwind of discount (included in finance costs) As at 31 December 240,241 13,401 14,414 _______ 268,056 2006 RO 207,678 20,102 12,461 _______ 240,241

The key assumptions underlying the estimate of this provision are as follows:

the average cost per filling station of restoration and abandonment is RO 4,000; the expected cash flows are discounted over the estimated life of the filling stations using an
interest rate of 6%; and

the estimated life of filling station is ten years.

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 11 Trade and other payables 2007 RO Trade accounts payable Accrued expenses Directors remuneration payable 14,510,619 3,010,565 75,000 17,596,184 2006 RO 12,907,631 908,591 72,500 13,888,722

The Company in accordance with Capital Markets Authority (CMA) regulations transfers dividends unclaimed for a period of more than 6 months from the date they became due to the CMAs investor fund. Such unclaimed dividends transferred during the year amounted to approximately RO 23,728 (2006: RO 9,031). Eligible shareholders who have not received their dividends are entitled to claim them from the CMA. Trade accounts and other payables are payable within 45 days on average from the balance sheet date.

12

Short-term loan The loan was repayable within one year of the balance sheet date. The loan was unsecured and carried interest at current market rates.

13

Income tax 2007 RO Current liability: Current year Prior years 2006 RO

778,000 56,038 834,038 778,000 (33,777) 16,933 761,156 62,981 (16,933) 46,048

583,000 70,038 653,038 583,000 (39,085) 543,915 23,896 39,085 62,981

Income statement: Current year Reversal of excess tax provision relating to earlier years Deferred tax relating to the origination and reversal of temporary differences

Deferred tax asset: At 1 January Movement for the year At 31 December

The deferred tax asset comprises the following temporary differences: Provisions and other charges Property, plant and equipment 237,778 (191,730) 46,048 281,704 (218,723) 62,981

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Notes
(forming part of the financial statements) 13 Income tax (continued) The Company is subject to income tax in accordance with the income tax law of the Sultanate of Oman at the enacted tax rate of 12% of taxable income in excess of RO 30,000. For the purpose of determining the tax expense for the year, the accounting profit has been adjusted for tax purposes. The reconciliation of tax as per accounting profit to effective tax is set out below: Reconciliation of effective tax rate 2007 RO 6,441,665 769,400 (117,212) 108,968 761,156 2006 RO 4,559,945 543,593 (7,127) 7,449 543,915

Rate % Profit before tax Income tax Effect of tax specific allowances Effect of tax specific disallowances Effective tax

Rate %

12.00 (1.83) 1.70

12.00 (0.16) 1.16

11.87

12.00

The adjustments are based on the current understanding of the existing tax laws, regulations and practices. The income tax assessment of the Company for the year 2006 has not been finalized with the Secretariat General of Taxation Affairs at the Ministry of Finance. The Management considers that additional tax liability, if any, in respect of open tax years would not be material to the financial position of th e Company as at 31 December 2007. The deferred tax asset has been computed at the tax rate of 12%. 14 Environmental provision 2007 RO Balance as at 1 January Provided during the year Utilised Balance as at 31 December 295,592 360,010 (64,755) 590,847 2006 RO 322,606 2,558 (29,572) 295,592

The Company provides for environmental remediation costs based on environmental contamination assessments made on its delivery and storage sites. The entire provision of RO 590,847 is expected to be used as per site specific remediation plans drawn up by the Company with their environmental consultants. 15 Employee costs 2007 RO Wages and salaries Other benefits Contributions to a defined contribution retirement plan Increase in liability for unfunded defined benefits retirement plan (907,382) (1,028,606) (60,276) (45,751) (2,042,015) 2006 RO (830,312) (866,203) (52,704) (41,586) (1,790,805)

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OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 16 Expenditure commitments Operating leases The Company has entered into certain long-term non-cancellable operating leases. Under the terms of these leases the future rental payments are as follows: 2007 RO Future minimum lease payments: Not later than one year Later than one year and not later than five years More than five years 472,542 727,114 454,911 1,654,567 Capital Commitments Contracted 505,156 405,298 2006 RO 402,870 612,378 559,034 1,574,282

17

Segmental information The Companys operating revenues arise primarily from the marketing and distribution of petroleum products in the Sultanate of Oman.

18

Related party transactions The Company has provided a corporate guarantee to a bank on behalf of the Joint Venture (refer note 22) for no consideration. The Company has entered into transactions with entities over which certain Directors are able to exercise significant influence. In the normal course of business, the Company provides services on commercial terms to related parties and avails services from related parties. The Directors believe that the terms of providing and receiving such services are comparable with those that could be obtained from third parties. The volumes of significant related party transactions during the year and with parties with a shareholding of 10% or more in the Company and / or related to Directors, were as follows: 2006 2007 RO RO Fuel sales to filling stations owned by Directors Fuel sales to commercial customers related to Directors of the Company Brand royalty IT and other services from companies owned directly or indirectly by Directors Remuneration to Directors Directors sitting fees Net interest paid Fee for accounting services Share of losses of Joint Venture 3,832,531 555,299 (133,699) (47,002) (75,000) (20,300) 31,436 6,000 (53,644) 3,125,667 (106,208) (65,136) (72,500) (17,300) 53,684 6,000 (30,519)

Sale of company car

5,500

Page 19

OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 18 Related party transactions (continued) Amounts due from related parties are disclosed in note 6. Bank balances in the amount of RO 419,002 (2006: RO 1,196,392) are with a related party bank. At 31 December 2006, an amount of RO 27,759 was due from an entity over which the Directors are able to exercise significant influence. 19 Dividends paid and proposed During the year, dividends of RO 0.0475 per share totaling RO 3,063,750 relating to 2006 were declared and paid (2006- RO 0.0450 per share totaling RO 2,902,500 relating to 2005). The Board of Directors has proposed a cash dividend of RO 0.0475 per share for 2007, totaling RO 3,063,750, which is subject to the approval of the shareholders at the Annual General Meeting. 20 Basic earnings per share Earnings per share are calculated by dividing the net profit for the year by the weighted average number of shares outstanding during the year as follows: 2007 Net profit for the year after deducting Directors remuneration (RO) Weighted average number of shares outstanding during the year (Nos.) Earnings per share (RO) 5,680,509 64,500,000 0.088 2006 4,016,030 64,500,000 0.062

21

Net assets per share The calculation of net assets per share is based on net assets for the year ended 31 December 2007 attributable to ordinary shareholders of RO 17,776,176 (31 December 2006: RO 15,159,417) and on 64,500,000 shares (31 December 2006: 64,500,000 shares).

22

Contingencies At 31 December 2007 the Company had contingent liabilities in respect of guarantees and other matters arising in the ordinary course of business, from which it is anticipated that no material liabilities will arise, amounting to RO 534,887 (2006: RO 1,364,314). The Company has also provided a corporate guarantee of RO 500,000 (2006: RO 500,000), to secure a credit facility of RO 1 million for the joint venture (see note 4).

23

Financial instruments The following note presents information on the risks, arising from the Companys use of financial instruments namely credit risk, liquidity risk and market risk that the Company is exposed to, its objectives, policies and processes for measuring and managing risk and the Companys management of capital. Further quantitative disclosures are included throughout these financial statements.

Page 20

OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 23 Financial instruments (continued) The Board of Directors has overall responsibility for the establishment and oversight of the Companys risk management framework. The Board has entrusted the audit committee with the responsibility of development and monitoring the Companys risk management policies and procedures and its compliance with them. Risk management policies and systems are reviewed regularly to ensure that reflect any changes in market conditions and the Companys activities. The Company, through its induction and training program, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. Foreign currency risk Foreign currency risk is minimal as most transactions are either denominated in RO, US Dollars or in currencies linked to US Dollars. The rate of exchange between RO and US Dollars has remained unchanged since January 1986.

Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companys receivables from customers. The carrying amount of financial assets represents the maximum credit exposure. Trade and other receivables: Credit is extended to corporate customers only with an objective of optimizing the Companys profits and the prime responsibility for providing credit to customers and the timely collection of all debts rests with the functional manager. Credit has a cost to the business and necessary controls and procedures are established to manage the Companys credit risk and its working capital. It is therefore Oman Oil Marketing Companys policy to have effective credit control systems in place which are flexible enough to respond to changing market needs yet rigorous enough to ensure that customer credit limits are established and regularly updated on the basis of reliable up-to-date information. Generally credits are not allowed in excess of agreed credit periods except for government customers and debts are collected within agreed credit terms and grace days. A stop supply mechanism is in place which will automatically inactivate customer accounts and stop further supplies in the event of a delay of payment beyond the credit period and the grace days. All exceptions and overrides are approved in line with the policy guidelines. Debtor positions are regularly monitored and reviewed to assess the overall risk and exposure. Though losses on account of default are infrequent, adequate provisions for impairment based on the ageing of the debts are made to reflect the debtors position as accurately as possible in the financial statements. The significant concentration of credit risk has been disclosed in note 6. The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Investments: The Company does not hold any investments other then its interest in a joint venture.

Page 21

OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 23 Financial instruments (continued) Guarantees: The Company only provides financial guarantees to government bodies in the form of tender and performance bond, and a guarantee of RO 0.5 million to Bank Muscat on behalf of its Joint venture Oman Oil Marketing & Sarooj Group LLC. As at 31st December 2007 the total amount of guarantees provided was in the amount of RO 1 million. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Companys approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companys reputation. The Company uses local and international banks operating in the Sultanate to ensure that it has sufficient cash on demand to meet expected operational expenses and sufficient credit facilities to manage its liquidity risk. The Company has a credit facilities totaling of RO 34 million from 6 banks which are unsecured and unutilized at the balance sheet date. Short term loans and overdraft ranging are, on average, utilized for period of 7 to 14 days to bridge the gap between collections of receivables and settlement of product purchase bills during the middle of every month. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Companys income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. Currency risk The Companys foreign exchange transactions are very minimal and, as a consequence, the Management do not believe that Company has significant exposure to market risk. Interest rate risk The Company manages its exposure to interest rate risk by ensuring that borrowings are on a contracted fixed rate basis as far as possible. Other Market risk The Company is not exposed to other significant market risk. Capital Management The Boards policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on equity, which the Company defines as net profit divided by total shareholders equity. The Board of Directors also monitors the level of dividends to ordinary shareholders. There were no changes in the Companys approach to capital management during the year. The Company is not subject to externally imposed capital requirements.

Page 22

OMAN OIL MARKETING COMPANY SAOG

Notes
(forming part of the financial statements) 23 Financial instruments (continued) The Board of Directors believes that the fair values of financial assets and liabilities are not significantly different to their carrying amounts at the Balance sheet date