RAYSUT CEMENT COMPANY (S.A.O.G.

A country rich in its history... and in the strength of its tradition, culture and heritage.. Sultanate of Oman. At a unique junction of ancient trade routes, Oman held the centre stage of commercial exchanges, spanning from the East to the West. Harmonious trading relations with the neighbouring states necessitated Oman participate in highly advanced construction activities - from aflaj and forts to ports and roads. A glittering tradition was initiated. Today, Raysut Cement Co. has maintained that tradition as the central philosophy of its mission, creating value additions which have greatly strengthened the basis for further future growth.

The
RAYSUT CEMENT COMPANY (S.A.O.G.)
Corporate Office: P.O. Box 1020, Salalah - 211, Sultanate of Oman Tel: 968-23219137, Fax: 968-23219291, e-mail: [email protected], Muscat Office: P.O. Box 662, Jibroo - 114, Sultanate of Oman Tel: 968-24712737, Fax: 968-24711871, e-mail: [email protected] website: www.raysutcement.com

BOND

of commitment

SINCERITY. DEDICATION. INTEGRITY. INNOVATION.

RAYSUT CEMENT CO. A GREAT WORLD STARTS WITH US!

JOINT VENTURES Mukalla - Raysut Cement receiving terminals in Yemen at Mukalla, Aden FEATURES State-of-the-art technology at 3 million tones of cement per annum First cement terminal in Oman 3x2400 MT capacity steel silos 1x5000 MT capacity steel silo Electronic packer &weighbridge Bulk & bagged cement despatches 100% Omani cement supplies PROMISE Truly Omani product Uninterrupted availability Focus on customer needs QUALITY OF CEMENT As per Omani & International standards OPC conforming to Omani Standards OS-7/2001 and British Standards BS EN 197 1:2000 CEM I 42.5 N MSRC conforming to ASTM C 150 Type II SRC conforming toASTM C 150 Type V Oil well cement Class G (HSR) and Class A(O) conforming to API specifications 10A Pozzomix as per PDO specification Welcome to Raysut Cement, RCC. The largest producer of cement in Oman, RCC have always set new standards of excellence... and achieved them. As the largest single source producer of 100% Omani cement, RCC have given the

nation solidity and consistency, over nearly two and a half decades. With tremendous sincerity, dedication and logistics implementation, RCC cement has been made available at distant corners of our country. Today, Omans first cement terminal at Muscat, with a capacity of 12,200 MT, has assured easy stock of

quality cement all along the the north, east and west of Oman. State-of-the-art technology in packer and weighbridge, bulk and bagged despatches, uninterrupted supply of cement of international standards, RCC have really laid a solid foundation... and the bond of strength.

AMONG TOP OMANI CORPORATES RANK Profit (Growth % from 2005:105.92) Market Capitalisation (RO 231 million) Return on equity (29.17%) Earning per share growth (71.67%) 5 4 5 4

interest rates and easy financing options, abundant liquidity and legislation recently enacted to allow foreign ownership. Furthermore, the governments more aggressive investment plans have triggered several mega construction projects especially in real estate and tourism exceeding US$ 30 billion, for the 7th 5-year plan, starting 2007. This is in line with the rest of the GCC countries Raysut Cement Company (RCC) was established in 1982 and is located in Salalah, in the southern region of Dhofar, in the Sultanate of Oman. In addition to being the sole producer of ordinary Portland cement in the south and west of the country, the company has pioneered the production of high grade special cements like high-sulphate resistant cement. RCC was also the first company in the country to be awarded the American Petroleum Institute accredition, back in 1986, the licence to carry their official monogram for the production and sale of oil well class G and and Light weight Cements for oil wells. Raysut Cement Company is an Omani private sector company, and with a current market capitalization of RO 70 million, it is one of the top 20 companies 0f Oman. The companys current annual cement capacity is three million tonnes produced in four preheater/precalciner kilns built in 1982, 1997, 2004 and 2007. Cement Sector In 2006, consumption of cement climbed to 2.7 millions tons an increase of 12.5% over previous year; consumption in GCC states increased substantially and price realization remained robust as well. The growing construction sector has a direct impact on cement consumption. Long-dormant Omani real estate market (including the industrial, residential and tourism sectors) offers big demand potential. Domestic cement consumption has risen from 2.4 million tons in 2005 to around 2.7 million tons in 2006 an increase of 12.5%. The trend is expected to continue in 2007 and grow by 15%. The growth is expected to further continue to 2010. The key drivers are, as always, a young growing population, low Cement Industry in Oman

where a total investment in projects of US$ 1.2 trillion is in pipeline for the next 5 years or so. Continued record performance

PRODUCTION: Costs and expenses We have produced 1,810,876 tons of cement as against 1,054,148 tons in the previous year, an increase of 71.8%. The clinker production for the year has also increased to 1,603,082 tons against 863,072 tons for the previous year an increase of 85.7%. We expect sales for 2007 to reach 2.3 million tonnes and 3 million tonnes in 2008. MARKETING The total dispatches amounted to 1.887 million tons against 1.174 million tons in the previous year, an increase of 60.7%. Our regional sales and exports crossed the 1 million ton landmark for the first time. The aggregate price realization for the year developed slightly upwards at the rate of 6.6% compared to previous year. Domestic Market Sales have been posted at 777,000 tons of cement as compared to 444,000 tons in the preThe companys ongoing efforts in reducing costs have resulted in a remarkable decrease in cost as a percentage to sales to 56% in 2006 from 65% in 2005. Distribution: Higher utilization of our specialised self discharging vessels resulted in lower distribution cost. As a percentage to sales these distribution expenses decreased to 17% from 19% in 2005. This despite increased charter rates, and increase in bunker fuel prices. Raw Materials: Our Raw material cost as percentage of sales, decreased from 5.1% in 2005 to 3.7% in 2006. This despite the increase of purchased materials such as high grade lime stone, imported iron ore and despite of the introduction of a royalty on quarried raw materials.

Mohammed Bin Ahmed Al Dheeb Chief Executive Officer

The companys excellent performance is a testimony of the high operating benchmarks that it has set for itself. The companys fundamental strength along with macroeconomic elements combined will deliver continued strong performance in future.

Continued record performance RCC continued breaking the previous best performance results and posted record results during fiscal 2006. The net sales increased to RO 47.974 million against RO 27.993 showing a growth of 71.4%. Net profit shot up by 105.9% to RO 20.658 million against 10.032 million recorded in the corresponding period of previous year. RCCs Performance

vious year. Our bulk dispatches as a percentage of total dispatches have gone up by 137% in 2006 as compared to 2005. Bag bulk ratio has significantly increased from 54:46 in 2005 to 39:61 in 2006. More efforts will be undertaken during the year to further reduce the bagged cement volume. Affiliated Companies

tons, as against 730,000 tons in the previous year. 69% of these export sales were to our joint venture company in Yemen through our terminals in Mukalla and Aden and through land route. In value terms these sales were up by 58.6% to RO 27.857 million as against RO 16.321 million in the previous year. Other Markets

The higher demand for our products in the regional market resulted in export prices to rise by about 13.7% this year. RCCs regional sales during the year were higher by 52% totalling to 1.10 million

We strengthen our position in East African markets as well as Somalia, Sudan, Zanzibar and the Gulf states. In total 344,000 tons of cement were dispatched to these countries.

This despite the increase of purchased materials such as high grade lime stone, imported iron ore and despite of the introduction of a royalty on quarried raw materials. Energy Cost: The Companys efforts in increasing efficiency of its plants resulted in a savings of approximate-

ly 2% in the energy cost (thermal and electrical). Employee cost: Employee cost per ton of cement produced has decreased from RO 1.736 in 2005 to RO 1.191 in 2006 despite the fact that employee expenditure has increased by 17.8% over previous year. This has been due to a significantly higher productivity per employee has significantly increased

productivity per employee has significantly increased to 5,100 tons in 2006 from 3,100 tons in 2005. Companys Growth Strategy Capacity Expansion The positive industry outlook and after a thorough due diligence of

the regional markets the company has decided to further expand its manufacturing facilities by installing a third line of 1.2 million tonnes per annum commissioned in 2005 and fourth line of 0.850 million t/a currently under commissioning and expected to com-

ments from construction activity within and outside the country. Expansion The very low investment cost of US$ 56 per annual tonne capacity, if benchmarked with internationally operated cement corporations, has been achieved through application of diligent and superior modern cost manage-

A minimum of equipment through a design to streamline the amount and types of equipment High reliability of equipment Low environmental impact The main components of the third line included: A single rotor hammer crusher for limestone at 600tph,and an impact crusher for additives at 200tph designed by TCDRI. Belt stacker and longitudinal bridge reclaimer designed by TCDRI. 240tph vertical roler mill MPS4000B from Gebr.Pfeiffer with a continuous blending/raw mill silo of 10,000 t capacity designed by TCDRI. A Pyroprocessing system consisting of a 5 stage single string cyclone preheater/ precalciner Pyroclone type with low NOx,low CO design, with by-pass system from KHD Humboldt Wedag, Germany. A 4.2X50m two support rotary kiln from KHD Humboldt Wedag. New 3rd generation clinker cooler from KHD Humboldt Wedag, Germany, Pyro-step type. Clinker silo with 40,000 t capacity design by TCDRI.

commissioning and expected to commence commercial operations in July 2007. With this unit, the company ensures its long-term position as a regional market player and

achieves the critical mass necessary to cope with any unforeseen external pressures in the future. Raysut Cement Company is well placed to cater to major cement require-

ment techniques, maximum utilisation of existing assets and infrastructure, and a close collaboration between the engineering/design of the general contractor and RCC's project management team. These principles of simple and proven engineering resulted in: State-of-the-art equipment

and bag filters including all material transfer points. Emissions to be in the range of 30 -50mg/Nm3, with gas equipment designed and supplied by TCDRI. The positive industry outlook encouraged us to expand further. Decision was taken to add a new fourth production line which is currently under construction and expected to be operational by July 2007 taking the total cement capacity to 3.0 million tons p.a. The same concept as for line 3 is followed for line 4 with a consortium leader being the KHD/Germany. The industrial, residential and other construction projects currently under implementation in Oman will be driving local consumption at least up to 2010. Outlook for the Future We estimate local con-

sumption to grow by 15% in 2007 and to continue this growth upto 2010, after which we forecast a gradual slowdown in growth rates, which we assume at an average of 6-8% per annum. RCC is expanding its operations in the neighboring countries espe-

Maintaining pollution free environment has always been one of the guiding principles of your company. In this regard our company has been certified for Environmental Quality Management according to ISO 14001:2004 in 2006. RCCs excellent performance is a testimony of the high operating benchmarks that it has set for itself. The companys fundamental strength along with macroeconomic

elements combined will deliver continued strong performance in future.

Clinker silo with 40,000 t capacity design by TCDRI. Combined cement grinding mill with roller press in semi-finished circuit with V-separator from KHD Humboldt Wedag, in association with TCDRI,with a capacity of 150 tph. Two Haver and Boecker, Germany, 8spout rotary packers with a capacity of 110tph each. The master process control automation and expert system will be supplied by ABB, Switzerland, in association with TCDRI as an

integrated solution comprising the process portal management, portal management,maintenance support, statistical process control, energy management and optimization, expert optimiser, dispatch and cement production accountant. Laboratory automation for optimum mix design and lowest possible quality variation will comprise Phillips systems with integrated XRF equipment. Extremely strict environmental protection systems comprising a series of modern ESP

cially in Yemen where demand is expected to continue being strong in the Short and Long Term duration. Yemens present consumption is approximately 200 Kgs of cement per capita. This figure is by far the lowest among all GCC countries where average consumption per capita ranges between 1,500 - 2,900 kgs. Environment RCC recognizes its responsibility to society and the environment.