Annual Report 2012 · Leadership Award at 2011 Global HR Excellence Awards. Nawras listing named Best IPO in the Middle East 2010 by EMEA Finance magazine. ISO IEC 27001:2005 certification

Annual Report 2012

His Majesty Sultan Qaboos bin Said

3 Vision, Mission, Values 4 The Nawras Story6 Financial Highlights of 20128 Operational Highlights of 201210 Board of Directors’ Report12 Board of Directors14 Management Review26 Executive Management30 Nawras in the Community32 Financial Review34 Corporate Governance Report43 Auditor’s Report (Corporate Governance)44 Auditor’s Report (Financial Statements)45 Audited Financial Statements and Notes

Our Vision To enrich the lives of people in Oman through better communication

Our Mission To be the communications provider and employer of choice in Oman

Our Values To be caring, excellent and pleasingly different

Annual Report 2012 | 3

04DecemberCompany incorporation, Nawras began site acquisition and staff recruitment.

05FebruaryNawras awarded Oman’s second mobile licence by Royal Decree.

MarchNawras network launched with more than 60 per cent of Oman’s population covered.Nawras secures $220 million start-up funding from a consortium of banks.

AprilMobile coverage provided throughout Oman, from the northernmost region of Musandum to Dhofar in the far south.

NovemberLaunch of Nawras Business Solutions.

DecemberOver 100 international roaming partners signed, covering more than 95 per cent of Omani travel destinations.

The Nawras Story

Nawras has quickly become one of Oman’s most respected and innovative companies, winning prestigious awards and achieving a number of notable firsts since its formation in 2004.

08JanuaryNawras signs up its millionth customer.

FebruaryAgreement signed with UK-based AeroMobile enabling Nawras customers to make in-flight calls and check email.

AprilInternational rates cut for customers calling Pakistan, India, Sri Lanka, Bangladesh, and The Philippines.

JuneNawras wins its first global award Above And Beyond the Call of Duty at the World Business Support Systems Awards in Amsterdam.Nawras launches BlackBerry services.

JulyNawras launches Oman’s then fastest mobile broadband internet service.

AugustLaunch of Nawras Rewards, Oman’s first telecoms loyalty programme.

DecemberNawras ranked Oman’s most popular telecom brand(Best Brands survey)

09JuneNawras named Middle East Call Centre of the Year at the INSIGHTS Awards in Dubai.Nawras awarded Oman’s second fixed-line licence by Royal Decree.

AugustIntroduction of self-service machines for quick and easy bill payment and recharge.

NovemberNawras awarded Superbrand status by Oman’s Superbrands Council.

DecemberCommsMEA honours Nawras with the Customer Service Provider of the Year, Middle East and Africa award.Nawras named Oman’s Best Telecom Service Provider for the third successive year.

06AprilSuccessful testing of Nawras’ 3G+ network

JulyNawras Sales Training Academy inaugurated.

AugustLaunch of mobile number portability, enabling new customers to keep their existing number when transferring to Nawras.

DecemberCustomer numbers reach 500,000.

07MayNawras cuts internet and data prices by as much as 80 per cent.

SeptemberNawras named Middle East Mobile Operator of the Year in the CommsMEA Awards.

OctoberLaunch of WebSMS, enabling customers to send SMS messages directly from computers.

NovemberLaunch of third generation 3G+ services, a first from Nawras.Nawras wins Middle East Business Achievement Award for Corporate Social Responsibility at the Leader Conference.

DecemberNawras and Oman Arab Bank launch mobile banking services.

| Nawras – Omani Qatari Telecommunications Company SAOG4

11JanuaryElite Points Program launched, bringing benefits for all customers enrolled in the programme.

MarchNawras receives Strategic Leadership Award at 2011 Global HR Excellence Awards.Nawras listing named Best IPO in the Middle East 2010 by EMEA Finance magazine.ISO IEC 27001:2005 certification achieved for Nawras information security management system.

AprilNawras lands its first sea cable as part of the Tata Global Network-Gulf cable project.

MayNawras CEO Ross Cormack named 2011 Outstanding Leader at TMT Finance Middle East Awards.

June Alam Al-Iktisaad Wal A’mal designates Nawras Best Performing Company – Large Cap.New Nawras store opens in Salalah Lulu location.

July Nawras wins Innovation in HR Strategy at Asia’s Best Employer Brand Awards

October Nawras trials fibre-to-the-home (FTTH) broadband with speeds of up to 100Mbps.Nawras wins Diamond Award Website of the Year at Oman Web Awards.

November Nawras wins Corporate Finance Award at the ACT ME Deals of the Year.Nawras goes live with Tata Global Network-Gulf cable.

DecemberNawras wins Operational Expansion of the Year at the CommsMEA Awards in Dubai.Nawras achieves 87 per cent broadband coverage of Omani households.New store opens in Al Khoud, taking the Nawras store portfolio to 27.

12January Nawras voted Oman’s most popular telecom choice.

FebruaryLaunched first mobile international credit transfer service in Oman.

MarchNawras first to demonstrate 4G LTE mobile broadband in Oman.

April Nawras selects Huawei for network modernisation and managed services.

May‘Maktabi’ office bundle launched to enhance communications for small and expanding enterprises.

JuneNawras starts Network Turbocharging to enhance customer experience.

JulyNawras family united by move to Nawras Campus.

AugustCaring Nawras Goodwill Journey 8 completed.

SeptemberSheikh Saud bin Nasser bin Faleh Al-Thani appointed Vice Chairman. Launch of Fixed Number Portability for corporate customers.Achieved ISO 27001 for entire IT department.

OctoberNawras wins Best Customer Strategy at Telecoms World Middle East.

NovemberSigns exclusive marketing agreement with WhatsApp, the world’s leading cross-platform messaging service.Announces sponsorship of Kickworldwide programme to develop football career opportunities for young Omanis.

DecemberWins ‘Customer Service Provider of the Year’ at CommsMEA Awards 2012. Unveils new concept flagship store in Muscat Grand Mall.

10FebruaryAgreement signed to land one of the world’s most advanced and largest submarine cable networks in Oman.

MayNawras receives the Leader in Telecommunications award at the Arab Investment Summit in Abu Dhabi.Launch of fixed services for business customers, marking the start of a new era in broadband accessibility in Oman.

JuneLaunch of Nawras fixed services for residential customers, offering home broadband and voice services.

AugustTwo million mobile customers.

OctoberNawras’ Initial Public Offering (IPO) fully subscribed.

NovemberNawras shares traded on the Muscat Securities Market for the first time.

DecemberNawras named Best Customer Service Provider of the Year at the CommsMEA Awards in Dubai.Nawras recognised for Omanisation achievements at the 26th GCC ceremony in Kuwait.Nawras named Superbrand of the Year, Oman.


Financial Highlights of 2012

2008 2009 2010 2011 2012

OMR 194m Revenue A reduction in SMS, and on net voice revenue, resulted in the small decline in full-year revenue. ä7.5%

Total EquityTotal equity increased by OMR 12 million to OMR 180 million.

ä3.2%Total AssetsTotal assets increased by 3.2 per cent to OMR 309 million, from OMR 299 million in 2011.

49 million

92 million

143 million

168 million180 million

Total Equity OMR


OMR 180m Total Equity

OMR 309m Total Assets The rise in total assets was attributable mainly to growth in property, plant and equipment.

Encouraging growth across all customer segments, record revenue in the last quarter, and growth in mobile and fixed data revenue offset the small decline in full year revenue which was caused by a reduction in SMS and on net voice revenue.

Total customers grew steadily throughout the year to reach 2.2 million, an increase of 12 per cent from 2011, and the best acquisition figure since 2010.

The investment in upgrading the Nawras network, which will generate more broadband data across a much wider spectrum, will benefit many of these new customers with a faster and higher-quality service.

2008 2009 2010 2011 2012

Total Assets OMR

174 million

208 million

291 million 299 million 309 million

Net Profit OMR

2008 2009 2010 2011 2012

20 million

42 million

50 million 48 million

37 million

Mobile (OMR 177 million) Fixed line (OMR 16 million)

Revenue Contribution

8.4%

91.6%


Operational Highlights of 2012

97% Investments in new technology increased

capacity substantially and brought the Nawras 3G+ network within reach of more than 60 per cent of the population – expected to rise to 97 per cent once the turbocharging programme has ended.

2.2mThe total number of Nawras customers exceeded 2 million, following growth for four consecutive quarters.

In partnership with Tata Communications, we launched a range of international services, including the Sultanate’s first Global Virtual Private Network (GVPN), to offer multinational companies secure international digital communications to more than 200 of the world’s main business hubs and data centres.

What does your business need?


Nawras expanded its national backbone infrastructure to more than 5000 kilometres of fibre and microwave backbone, and will continue to invest in and expand this core infrastructure.

An exclusive marketing agreement with WhatsApp, the world’s leading cross-platform mobile messaging service, gives Nawras an opportunity to target more than one million WhatsApp customers in Oman with new services.

Nawras was the first telecoms company in Oman to showcase the latest 4G LTE ahead of its launch.

In 2012 we began an extensive programme to turbocharge our network, upgrading our systems to meet the massive surge in demand for broadband and other services now and in the future.

ä63%Nawras’ fixed service customer base rose by 63 per cent in 2012.

68%Nawras secured a 68 per cent share of the growing market for prepaid BlackBerry usage.


Board of Directors’ Report

Dear Shareholders

On behalf of the Board of Directors, I have pleasure in presenting the 2012 annual report of Omani Qatari Telecommunications Company SAOG “Nawras”.

Here in Oman, the Government’s positive attitude to business is allowing companies to operate and flourish in an environment of continuing stability. The continuing strong national economy has attracted an increasing number of regional and international firms keen to establish operations in the Sultanate, and to capitalise on the many opportunities here.

Nawras has maintained its unwavering commitment to investing in the best available technology for the benefit of our customers. This is a cornerstone of the Company’s operational strategy and will continue into 2013 and beyond. Additionally, 2012 saw considerable efforts focused on re-energising our customer experience. This involved significant investment in programmes aimed at improving our understanding of our customer needs. This investment will continue through 2013 and will result in continued enhancements to our customer experience.

In our third year as a public company, gross consolidated revenue was OMR 193.5 million (2011: OMR 196.9 million), yielding net profits of OMR 37.0 million after taxation. Earnings per share equated to OMR 0.057.

Nawras has maintained compound annual revenue growth of 45 per cent since the Company started operations in 2005. This achievement enables the Board to recommend that shareholders approve, at the AGM on 27 March 2013, a dividend of OMR 0.038 per share (38 baisa), which represents a yield of 8.2 per cent on the Company’s share price at the close of 2012.

Our focus in 2012 was on: new customer-driven initiatives; delivering the technology to increase customer choice; and to bring telecoms, media and data to a larger percentage of our population. In addition, we made substantial investments in people training and development.

By year end, for example, our plans to turbocharge our network with the introduction of 4G LTE, the latest wireless communications standard, were well-advanced, while the opening of our new flagship store in Muscat Grand Mall further enriched the customer experience, raising our brand’s profile among new and existing customers.

These important milestones would not have been realised without the dedication and contribution of the entire Nawras family – our human capital – that is the foundation of the Company’s on-going success. I offer my sincere thanks to them all for their contributions during 2012.

Their outstanding team effort resulted in continued steady growth in total customer numbers across all Nawras’ services. I am pleased to report that, as in previous years, our industry peers, the media, and other groups recognised this effort by honouring us with a number of prestigious awards covering customer service, technology, investor relations, and people and training initiatives.

How do we generate great shareholder returns?


As a Board, we also owe a considerable debt of gratitude to the Qtel Group, our major shareholder, for helping Nawras realise a number of important operational and financial goals for the year. The Group’s support is greatly appreciated and evidence of a very solid partnership.

On behalf of the Board of Directors, I offer my thanks to our shareholders, customers and partners for their trust and commitment. I join my colleagues in also acknowledging the considerable support of the Ministry of Transport and Communications, the Telecommunications Regulatory Authority (TRA), the Capital Market Authority (CMA) and Muscat Securities Market (MSM).

In closing, I offer my heartfelt gratitude to His Majesty Sultan Qaboos bin Said, may God protect him. Our leader’s vision and wisdom has been the driver for the emergence of Nawras as one of the Sultanate’s premier communications providers.

“ Nawras has maintained its unwavering commitment to investing in the best available technology for the benefit of our customers.”

Sayyed Amjad Mohamed Al BusaidiChairman


Board of Directors

Sayyed Amjad Mohamed Al Busaidi | Chairman

Mr Al Busaidi has chaired the Nawras Board since March 2011. In 1990 he joined the Diwan of Royal Court and he currently serves as Executive President of the Diwan of Royal Court Pension Fund. He was appointed Chairman of Bank Nizwa in July 2012, and also serves on the boards of NIFCO, National Mass Housing Company, and Shomookh Investment. He has a Master’s degree in Business Administration from Southern Cross University (Australia).

Mr Saleh Nasser Al-Riyami | Director

Mr Al-Riyami has been a member of the Nawras Board since the Company’s launch. He has more than 20 years’ experience as the Investment Expert for the Diwan of Royal Court and currently serves as the General Manager of National Mass Housing SAOC. He has also served as founder or director of many companies in Oman, as well as in managerial positions in the Ministry of Commerce and Public Authority of Social Security in Oman. Mr Al-Riyami is a Board member of Taageer Finance Company and Al Madina Insurance Company. He holds a Bachelor of Science in Business Administration from the University of Georgia (USA).

Sheikh Saud Nasser Faleh Al-Thani | Vice-Chairman

Sheikh Saud joined Qtel in 1990 and is currently Chief Executive Officer of Qtel Qatar. He also serves as Executive Director of Group HR and Acting Executive Director of General Services. He is also a member of the Arab Organisation for Satellite Communication. Sheikh Saud has a Bachelor of Arts in Public Administration from Western International University (USA).

Mr Mohamed Jassim Al-Kuwari | Director

Mr Al-Kuwari has been Qtel’s Chief Corporate Services Officer since 2011, having held several positions in the Group since 2005: Head of Talent Sourcing, Senior Manager of Manpower Planning and Talent Sourcing, and Assistant Director of Policy Development and HR Services. He was also appointed Executive Director, Group HR in 2011. Previously, Mr Al-Kuwari worked at Ras Laffan Liquefied Natural Gas. He holds a Bachelor of Science in Business Administration from the American University, Washington (USA).


Mr Ghassan Khamis Al Hashar | Director

Mr Al Hashar joined the Nawras Board as a representative of the Public Authority for Social Insurance (PASI) in 2011. He is currently the Authority’s Head of Asset Management – Local. He has more than 15 years’ experience in finance and investment management and represents PASI on the boards of numerous public and private companies. Mr Al Hashar is currently Chairman of Bank Muscat’s Fund Investors’ Committee and a Board member of Majan Development Company. He holds a Master’s Degree in Finance and Investment Management from the University of Aberdeen (UK).

Mr Khalil Ibrahim Al Emadi | Director

Mr Al Emadi is currently the Chief Executive Officer of Navlink lnc (one of Qtel’s partners). He has a strong background in telecommunications with 27 years of experience in mobile services and fixed telephony. Before joining Qtel, he worked at the Ministry of Transport and Communications. He was the Executive Director of Wireline Services until 2007 when, as part of an organisational restructuring, Qtel merged the previous Wireless and Wireline groups into the Networks Division, appointing Mr Al Emadi as Executive Director of Networks. He has a Bachelor of Science in Electrical/Electronic Engineering from Northrop University in California (USA).

Dr Shaikha Sultan Al Jabir | Director

Dr Al Jabir is currently Executive Director – New Businesses in Qtel Group (QG). Before joining QG, she was CIO of Qatar General Electricity and Water Corporation (Kahramaa), where she established a sophisticated ICT infrastructure, helping to put the organisation at the forefront of technology. She holds a PhD in Computer Science from the University of Surrey (UK), an MS in Telecommunications and Computers from George Washington University (USA), and a BS in Electrical Engineering from Kuwait University.

Mr Said Faraj Al Rabeea | Director

Mr Al Rabeea joined the Nawras Board in 2011. He has worked in the government sector for more than 30 years, during which time he has held a number of senior positions in human resources, information technology, and telecommunications. He currently sits on a number of a government boards in Oman. He has a Bachelor’s Degree in Business Administration.

Mr Mohanna Nasser Al Nuaimi | Director

Mr Al Nuaimi was appointed Group Chief Human Resources Officer of Qtel Group in 2008, after serving as Qtel Qatar’s Executive Director of Group Human Resources. He is a member of Qtel Group’s Management Committee and a Board member of several other Qtel Group companies. In 2009, Mr Al Nuaimi received the HR Leadership Award on behalf of Qtel Group for the World HRD Congress, an international honour for companies excelling in the field of people management. He holds a Bachelor of Science in Mechanical Engineering from Qatar University.


Management Review “ 2012 was marked by seismic changes in the country’s telecoms industry and in telephony provision.”

Ross CormackChief Executive Officer

What did we achieve in 2012?


Our new flagship store features a lounge where our business customers can access the latest telecoms technology to stay connected.

Renewed customer focus and state-of-the-art technology were the main highlights of 2012, contributing to a year in which Nawras demonstrated its ability to capitalise on the many opportunities presented by the rapid transformation of communications in Oman.

There can be no question that we witnessed the end of the beginning of the data revolution, a period which has seen Nawras move from a traditional telecoms operator to a data-centric company supported by a full IP network, serving customers with data, media and technology.

This marks a significant step towards realising the vision of Qtel Group, our majority shareholder, and is an extraordinary achievement considering that Nawras has been operational for only eight years.

Another noteworthy initiative was the research we conducted to give us detailed market intelligence. The outcome of this was a three-step programme: Researched, Analysed and Took Action. This has underpinned the revitalisation of our business proposition, with the introduction of new products, services and tariffs, and in effect supported the adoption of a new business model that is much more attuned to evolving customer needs.

The analysis has given us the ability to develop innovative strategies for customer acquisition and retention, a key advantage in a market that is set to become much more competitive, and to focus even more on making our customer experience dynamic, rewarding and different.

On the back of these far-reaching initiatives, it is pleasing to report that our customer numbers continued their upward trend during the year, the best acquisition since the third quarter of 2010. We now have approximately 2.2 million customers, an increase of more than 11 per cent on 2011.

The grassroots review of our operation also examined how we could enhance the dialogue with our independent distributors, who are important to our sales effort. We have now put in place a programme to work more closely with our top dealers and sub-distributors, to ensure more proactive merchandising, as well as to monitor efficiency. Their feedback has proved invaluable in helping us to shape and refine our sales strategy.

The explosive growth in data has driven the telecoms revolution in recent years: the demand for data-based services, particularly from under-25s who account for approximately half of the country’s population, has fuelled this growth.

Our recognition of the importance of this youth market helped us to create really powerful youth-friendly strategies. These are designed to capitalise on the surge in data usage, yet must be adaptable enough to accommodate more smart phones on our network, using video through sites like YouTube and data apps like WhatsApp, the leading cross-platform mobile messaging service in Oman and globally. The exclusive agreement we signed with WhatsApp made Nawras just the eighth operator worldwide to enter into such a relationship.

Nawras was the only Middle Eastern telecoms company to be shortlisted in Ragan’s PR Daily Digital PR and Social Media Awards 2012 in the ‘Best Use of Facebook’ category. This is a ringing endorsement of our youth communications strategy, and commitment to dynamic social media interaction, which resulted in 81,179 ‘fans’ on Facebook and 400,000 interactions between us and customers on Facebook and Twitter, by the end of the year.

In continuing our support for the community, the Company joined forces with Kickworldwide and the Oman Football Association to support a grassroots football programme. This was one of several exciting initiatives to bring our country’s youth and communities closer together.

We will continue to maintain our high profile in sports and community activities in the long term, and are proud to support the health and well-being of Omani citizens in this way.

Working with two of the Middle East’s best-known and successful sportsmen – Ali Al Habsi, the Oman and Wigan goalkeeper, and Ahmad Al Harthy, champion Omani racing driver – brings our brand directly into the community and reinforces our commitment to sport. We also sponsored a number of major sporting events throughout the year, including the Muscat Regatta 2012, as platinum sponsor, and Summer of Sports organised by the Ministry of Sports.

Since the first Goodwill Journey in 2005, Nawras has reached out to more than 7,000 individuals and families. We have visited more than 150 charitable organisations and NGOs, travelling 48,000 kilometres during the Holy Month of Ramadan to bring joy to the people of Oman.

We continued to support Government initiatives and made Nawras even more business-friendly, our launch of bulk SMS packages and Maktabi Mobile for small and medium sized businesses being good examples of this. We remain committed to the development of a telecoms infrastructure that supports Oman’s growing international commercial ambitions, and reflects its strategic geographic location.

The contribution of Oman’s Telecommunications Regulatory Authority (TRA) in this respect – particularly the release of new frequencies – was no less far-reaching. The TRA has shown substantial support for our industry by easing regulatory constraints, promoting a vision of broadband for all, and maintaining an environment that supports investments.

Membership of the Qtel Group brought experience and muscle to support the modernisation of the Nawras network, as well as the launch of new customer services and shared people training and development initiatives.


How can we best serve Oman?We contribute to the development of our country by providing the technology and services that help business and people communicate effectively - wherever they are.

Management Review Continued

2011

First sea cable landedThe first sea cable landed as part of the Tata Global Network - Gulf cable project and fibre-to-the-home (FTTH). Broadband speeds of up to 100Mbps trialled.

2010

New era for fixed services Fixed services launched for business and residential customers, a new era for broadband accessibility in the Sultanate.

2012

Turbo chargedTurbocharging our network continues and we demonstrate 4G LTE Mobile broadband for the first time in Oman.

4G




Our deal with WhatsApp

In November 2012, we entered into a strategic partnership with WhatsApp, the leading social media chat service, to offer exclusive branded plans to our customers.

There are currently more than 1 million customers in Oman using WhatsApp. This number will continue to grow - in parallel with the increase in the number of mobiles that can connect to the Internet - and as ‘chat’ moves from traditional SMS to ‘Instant Messaging’ over the Internet.

The under 25s market

Oman has one of the youngest populations in the region, with approximately 30 per cent between the ages of 15 and 24. This is expected to grow to nearly 40 per cent by 2020 and has become a key target market for Nawras.

Over the past three years, we have used in-depth research to develop award-winning youth products and services, with a particular focus on accessing music and social media from mobile phones. Our Shababiah product, for example, has quickly become a market leader, thanks to its competitive tariffs and easy access to social media.

We have also formed exclusive strategic partnerships with WhatsApp and Universal Music to launch services which have caught the imagination of our younger customers. Initiatives like these have served to consolidate our leadership position in the youth market.

We intend to build on this successful strategy during 2013 and beyond by continuing to bring our customers the best content from the best providers.

1mOne million Omanis using WhatsApp

30%Omani population in 2012between 15 and 24 years old

40%Expected increase in 2020


2012 was marked by seismic changes in the country’s telecoms industry and in telephony provision. Where competition was previously based around infrastructure and scale, access and service provision is the new territory now being fought over.

But Nawras is prepared for these fresh challenges, having started to turbocharge our network infrastructure, and upgraded our systems to meet the massive demand for broadband and other services now and in the future.

Cherishing our customers – new and oldAn organisation that receives an average of 10,000 calls a day is clearly in the public eye, so customer satisfaction is, and will continue to be, the cornerstone of the Nawras philosophy.

Our own research indicates that 82 per cent of our customers are happy with their experience, but we are working hard to improve this figure through a number of customer initiatives that we expect will deliver results in 2013.

A determination to build on this customer-centric culture, which has quickly become part of our DNA, was a feature of the year. Customer-facing companies like Nawras need to evolve, stay nimble, exceed expectations and convert customer promises into actions.

So we focused heavily on addressing three key issues: offering more personalised choices, enriching the customer experience, and making the customer journey more engaging and exciting. A Customer Experience Programme provided the impetus for these initiatives.

Although Nawras has a reputation for listening, we still carried out a far-reaching analysis of usage patterns to better understand how our market is segmented, so we could make more personalised offers to existing and potential customers.

We carried out hundreds of interviews and activated many focus groups in order to better understand how our customers view the ‘Nawras experience’. One of our objectives was to use this information to strengthen loyalty to the brand. The full impact of this exercise will be felt in the first half of 2013.

A complete re-evaluation of all our customer touch points and points of sale resulted in the commitment of further resources to up-skilling our family of sales and customer champions, and equipping all our front-line people with the tools necessary to help our customers. A suite of exciting new offers further served to re-energise the customer experience.

The opening of the Nawras flagship store at Muscat Grand Mall at the end of the year marked an important breakthrough for the Company, and one that we are confident will quickly earn ‘best in class’ status among Oman’s retailing businesses.

This shift from transaction-based to relationship-based retailing is an interesting development in the customer journey. We expect this trend to continue, particularly with the increase in new apps and data services.

We received the strongest possible endorsement for our customer initiatives, winning Best Customer Strategy at Telecoms World Middle East; Best Loyalty Programme Award at the CMO Asia Awards 2012; Telecoms Sector Winner at the Oman Customer Service Excellence Awards; and the CommsMEA Award for Customer Service Provider of the Year. We are delighted to have been nominated to receive these prestigious awards.

However, while we are confident that our initiatives have put us on track to deliver customer satisfaction consistently, we will not rest. Our aim is to become the benchmark for positive consumer relationships, not just in the telecoms sector, but for industry in Oman generally. Customer growth in successive quarters this year is an encouraging step towards achieving this ambition.

The Nawras family In promoting his vision for Oman’s on-going development, His Majesty Sultan Qaboos bin Said also emphasised the importance of the contribution that people could make individually. Nawras continued to play a valuable role in this process, not only as one of the country’s major employers, but in helping people get closer through the power of communications.

The Company has always taken very seriously its duty of care to develop the skills of Omani nationals in the workplace, so we welcome the news that the number of Omani managers doubled during the year, giving deserved promotions to some of our most promising people.

We sought to promote our talent wherever possible, so also appointed a number of new line managers – people changes that reflect the Company’s move to a more lifestyle-focused model, based on quality service.

Our HR teams worked to define clear career paths for our sales and store people, a major accomplishment among a number of other milestones that were reached during the year. We organised a two-day ‘All Hands’ gathering, which brought everybody in the Company together to celebrate our achievements, set shared goals for the year ahead, and underscore the importance of outstanding customer experience.

In close collaboration with our colleagues in Qtel Group, we formed a new People Experience Department, to make work more rewarding and motivating for all Nawras family members. The Department is responsible for conducting motivational and awareness workshops, communicating benefits and managing weekly team activities.

We received further recognition for our HR policies, winning the category for the Best Organisation with Innovative HR Practices at the 2012 Asia Pacific HRM Congress Communications Awards.

In progressing towards the adoption of international best practice across a number of operational areas, we developed a template for a more performance-based culture, only deploying staff with the right skill sets for specific roles and rewarding them accordingly.

A central plank in our HR strategy is to customise training to develop national talent, since it ensures long-term stability and continuity. We will continue to invest in specialist workshops, seminars and events, such as ‘Me and My Customer’ and ‘Me and My Manager,’ which are typical of the effort we devote to up-skilling people throughout the organisation.

Looking ahead, we intend to act on His Majesty’s call to change perceptions of the private sector. Our recruitment message is clear: the private sector offers similar opportunities to the public sector; has high standards of training and development; is well remunerated; and individuals can have great fun and make a real and positive contribution to the country’s future commercial success by working for leading companies like Nawras.


How can we work smarter?We re-evaluated our customer touch points and points of sale, resulting in the commitment of further resources to up-skilling our family of sales champions.



Oneteam

We work together as one team, equipping our front-line people with the tools necessary to help

ensure our customers receive the best possible service.


Management Review Continued Turbocharging our technology Turbocharging has now laid the foundations to support future technologies and, in effect, to future-proof the Company.

The release of spectrum under Oman’s National Broadband Strategy will mean that we can provide a faster and better data experience, as the use of a second carrier for the 2100 spectrum means that we have another lane to our 3G data highway. Further, the TRA has provided us with the spectrum for 4G (LTE), which will lead to even faster speeds and less latency in areas where it is deployed.

It has proved to be the best possible solution in allowing us to evolve our network in response to rapidly changing market conditions. This has involved upgrading all 2G sites to 3G+, boosting speed and capacity, and finalising plans for the launch of 4G LTE at 1800 MHz, which will make the very newest technology available to our customers.

The TRA’s approval for additional spectrums will double the data capacity and create a network to meet the evolving demands of customers. We continue to support the TRA in its ambition of bringing telephony services to remote areas.

Nawras expanded its national backbone infrastructure to more than 5,000 kilometres of fibre and microwave backbone, and will continue to invest in and expand this core infrastructure.

Nawras has also swapped out and expanded parts of its core network to cope with the increase in data traffic. This equipment was deployed in our new state-of-the-art Data Centre located in Muscat, of which the first phase was completed in September 2012. Further, we continue to support our business customers’ facilities by deploying fibre to more and more buildings, as well as to our business customers wherever they may be located in Oman.

WiMAX is a technology that has proved successful with more than 40,000 customers, an increase of 63 per cent on 2011, and we also intend to roll out plans for further Home Broadband and Voice services lines.

The year witnessed a massive growth in data applications and usage, demanding forensic capacity planning and forecasting. We expect no let-up in this phenomenon into 2013 and beyond, but remain confident that the programme of investment in new technology will feed through with a substantial increase in the number of base stations.

The upsurge in data usage prompted a dramatic increase in data-related revenues. Another significant financial highlight was real, substantive growth in international traffic. Continued growth in data revenues is on track to compensate for the decline in SMS revenues, which was reported previously and is a symptom of the industry’s natural migration towards data services.

The Turbocharging Programme will increase capacity and bring the 3G+ network within reach of 97 per cent of the population by the end of the Turbocharging Programme in 2015. Improving our 3G+ network, redeploying existing equipment wherever possible is, and will continue to be, a consideration for our technology teams.

Three further units in our IT department achieved ISO 2700 certification during 2012, confirming that Nawras’ information handling, processing and storage is aligned to best international practice and ensures security and consistency. Our IT department also received ISO 27001 certification for secure data storage and handling, making Nawras one of the first companies in the Sultanate to be granted ISO status for its entire IT Department.

Our goal is to become the benchmark in Oman for positive customer experiences and overall satisfaction, with a target of 97 per cent of happy customers.

The growth in customer numbers to 2.2 million during 2012 was matched by rising customer satisfaction, reaching 85 per cent, but we will continue to strive to offer the ultimate customer experience.

12

85%

13

97%

2.2mGrowth in customer numbersOur goal is to achieve even higher levels of customer satisfaction, in line with growing our overall customer base.


While we are closer to our ambition of operating at the cutting edge of technology, nothing will distract us from our primary goal: harnessing its power and resources to improve communication and data services for the benefit of our existing and future customers.

Turning challenges into opportunitiesOur future is one of immense potential and growth. The challenge – and opportunity – is to provide communications access to the majority of the population; to reduce operating costs while investing to maintain our market position; to retain existing customers; and to welcome new ones.

Our opportunity – and challenge – is to harness the huge untapped potential among customers currently not making use of data services with exciting, cost-effective offers; to encourage existing customers to spend more; to acquire new, higher-spending customers; and to make better use of the network by offering customers off-peak data bundles.

Partnerships with manufacturers and application providers will feature strongly in the next phase of the Nawras evolution. We are already working side by side with Tata Communications to offer a comprehensive range of international services, including the first Global Virtual Private Network (GVPN) in Oman. These alliances will undoubtedly help create efficiencies and economies of scale, and speed the time to market.

Revenue and network sharing, with regional or international partners, offers further exciting options once these are assessed as being in the best interests of our stakeholders.

Over 400 base stations were upgraded during the year, the latest phase in an ongoing logistical and financial commitment by the Company. Such substantial investments are but various stages on the journey towards achieving the wider coverage and capacity footprint that is now firmly within our grasp.

While we do not underestimate the scale of the task ahead, we are confident in our ability to realise the TRA’s strategy for Oman.

Nawras firstsContinued emphasis on making our customers’ lives easier and increasing their choices saw a number of notable firsts in social media, apps and data: the Facebook SMS service; new data bundles, including an off-peak monthly mobile broadband bundle; a free SMS notification service to show data usage when roaming; an SMS news service in association with Reuters; and international credit transfer.

We showcased the latest 4G for the first time in Oman; were one of the first companies to obtain ISO status for its entire IT Department, with the award of ISO 27001 certification for secure data storage and handling; and our flagship store in Muscat Grand Mall opened at the end of the year – the first of its kind in the Sultanate.

The introduction of a fixed number portability (FNP) service in Oman gives our business customers the opportunity to keep their existing numbers when joining Nawras from another telecommunications operator. Additionally, the first Global Virtual Private Network (GVPN), in association with Tata Communications, offers multinational companies global reach, via our domestic network, to more than 200 of the world’s main business hubs and data centres.

AwardsOver the years, Nawras has achieved widespread industry recognition by receiving a remarkable variety of awards, and 2012 was no exception.

In addition to the customer service awards noted earlier, our other awards were for Best Merchant Kiosks Services (Bank Muscat Partners Progress); Top Brand – Popular Choice of Telecom Service Providers and Top Brand – Management Choice of Telecom Service Providers (Business Today – Best Brands Survey); Oman’s Largest Corporates 2011 – Top 10 (Oman Economic Review); and Best Corporate Website 2012 Oman – Investor Relations (KWD Webranking).

Our ‘7x7’ Facebook competition was shortlisted in Ragan’s PR Daily Digital PR and Social Media Awards 2012 in the ‘Best Use of Facebook’ category, having impressed the judges with our innovation, ability to engage with customers and the lasting impact of the promotion. Nawras was the only Middle Eastern telecoms company to be shortlisted.

We were also recognised as Best Organisation with Innovative HR Practices at the Asia Pacific HRM Congress Communications Awards and received an Al Mar’a Excellence Award for Technology.

AcknowledgementsOur values – to be caring, excellent and pleasingly different – are worth restating in the context of this review, because they guided every one of us in the organisation and influenced key Nawras initiatives during the year.

It is a mark of a company’s maturity to be able to accept rapid change and adapt accordingly. We achieved this, meeting the many challenges of the year with the customary resolve and focus on customers that have become our trademark.

We can now celebrate that achievement and look forward to the year ahead when, as before, we will pull together as one team in the interests of our customers, this great Company and its many stakeholders.

Ross CormackChief Executive Officer


How do we grow the Nawras brand?We focus on making every interaction with our customers as pleasant as possible. Our aim is to become the benchmark for positive consumer relationships, not just in the telecoms sector, but in Oman generally.

Customers visiting our new flagship store in Muscat Grand Mall are greeted by a Brand Ambassador who welcomes them, asks their requirements and then directs them to the appropriate zone or sales pod where an expert Sales Champion can provide assistance.

Rewarding loyalty and commitment Our Elite Program is a points-based reward scheme designed to build long-term relationships with our residential and business customers and to recognise their loyalty.

1,100Brand Ambassadors Every single member of the Nawras Family – our staff – is an official ambassador for the brand.

1.4mElite ProgramMore than 1.4 million customers joined our Elite Program.


The new website highlights our core brand values by being customer-friendly and encouraging positive interaction with businesses and consumers. We have also introduced an audio facility, in Arabic and English, to help customers who are visually impaired or dyslexic or who have reading difficulties.

A key element in our brand strategy is the under-25 market, which accounts for almost half the country’s population.

72,000 ‘likes’ on Facebook, and counting...

400,000 interactions with our customers on Twitter and counting...

Prompt and efficient handling of more than 10,000 enquiries a day helps make customers’ lives easier and strengthens loyalty to the brand.

We are raising the bar to reach our target of 97 per cent happy customers.

97%Customer satisfaction

CommunityWorking with two of the Middle East’s best-known and successful sportsmen – Ali Al Habsi, the Oman and Wigan goalkeeper, and Ahmad Al Harthy, champion Omani racing driver – brings our brand directly into the community and reinforces our commitment to sport.


Executive Management

Ross CormackChief Executive Officer (CEO)

Ross has been CEO of Nawras since 2004 and has more than 25 years of experience in the telecommunications industry, having led four different telecommunications companies, served on the Board of Directors of six companies, and shareholder-managed 16 companies across Europe, the Middle East and Asia.

Abdulla Issa Al-RawahyChief Strategy Officer (CSO)

Abdulla has been Chief Strategy Officer of Nawras since 2008 and has over 30 years of experience in the telecommunications sector, with leading roles in network planning and projects, and strategy and corporate business development for both fixed and mobile telecommunications.

Said SafrarChief Customer Experience Officer (CCXO)

Said has worked for Nawras since 2008, originally as the Customer Service Director. He was appointed to his new role as Chief Customer Experience Officer in September 2011, as part of the Company’s focus on customer experience.

James MaxwellGeneral Counsel (GC)

James joined Nawras in 2007 and has over 15 years’ experience in providing legal and regulatory advice to leading corporates, with 10 years working exclusively in telecommunications.

Hussain Al-LawatiChief Government Relations Officer (CGRO)

Hussain joined Nawras in 2004 as a Section Head – Key Account Manager – Business Sales Head. Prior to Nawras he served at Oman National Dairy Products, British Petroleum Oman, and Mehdi Foods.


Jorgen Latte Chief Financial Officer (CFO)

Jorgen has been Chief Financial Officer of Nawras since 2009. Jorgen has almost 20 years of financial and managerial experience in the telecommunications sector, with 10 years in stand-alone CFO roles for mobile services companies.

Wolfgang Wemhoff Chief Technology Officer (CTO)

Wolfgang joined Nawras in 2011 and has more than 20 years of experience in the telecommunications industry, working for Mannesmann and Vodafone. He had leading roles in Vodafone Germany, in Vodafone Group, and recently in Vodafone Turkey.

John Vickerman CEO Advisor

John has more than 25 years’ experience with a number of high-profile global telecoms and media companies, including the first wholly owned 3G mobile business in Europe of which he was founder director.

Kumail Al-MoosawiDirector of People (DP)

Kumail has been with Nawras since 2004 and brings over 13 years’ experience in numerous business functions that include retail, operations, finance, customer service, audit, and human resources management.

Sean Casey Chief of Sales and Distribution (CSD)

Sean joined Nawras in 2012. He has over 15 years’ sales and managerial experience in the telecommunications sector in Australia, Saudi Arabia and now Oman.

Martin Lyne Chief Marketing Officer (CMO)

Martin joined Nawras in 2012, bringing over 20 years of commercial experience. He was previously Consumer Commercial Director of Orange UK, which achieved the fastest growth of any operator launching fourth to market.


How do we engage our many fans?Sponsoring music concerts and sporting events associates Nawras as a popular, youth-friendly brand in the minds of our country’s young people.


Social media such as Facebook and Twitter feature strongly in our

communication to 16-25 year olds.


Nawras in the Community

Corporate Social Responsibility (CSR) comes naturally to Nawras and is now firmly embedded in our culture. We serve the community both as employer and partner, sponsoring and supporting initiatives that go well beyond the norm in terms of their scope and positive impact.

Our engagement with the community embraced sponsorship, or support, for an extraordinary range of interests, events and causes. These included health (National Association of Cancer Awareness); employment (JOBEX); IT (Comex); sailing (Muscat Regatta); tourism (Salalah Tourism Festival); and arts and culture (Muscat Festival, Sohar Music Festival), as well as the less abled, the environment and many more.

Further, the Company’s active involvement in the community recognises no political or geographical boundaries. We continued to work with government ministries, NGOs and voluntary organisations with the sole aim of bettering our society for the benefit of others less fortunate or able.

This approach has served to create a level of interaction with our community – and, therefore, many of our customers – that goes well beyond the simply transactional, leading to a level of relationship that bonds us more closely and naturally than many other organisations.

Our Nawras Goodwill Journey is a prime example of this. Now in its eighth year, a group of fasting volunteers visited different charitable organisations across the country, over a ten-day period, to make essential donations which will have an enduring impact because they meet real local needs.

Since the first Goodwill Journey in 2005, Nawras has reached out to more than 7,000 individuals and families. Our volunteers have visited more than 150 charitable organisations and non-government organisations in the Sultanate, travelling 48,000 kilometres to bring joy to the people of Oman during the Holy Month of Ramadan.

Another highlight was our agreement with Kickworldwide, an organisation committed to ‘changing lives through football’. It is tasked with creating social awareness among young people, leading to a new employment stream for Omani nationals, including coaching, refereeing, sports science and law, journalism, and photography.

In December alone, we sponsored and supported the Muscat Youth Summit 2012, the first GCC Businesswomen’s Forum, and Oman Debate 2012, maintaining our commitment to engage with the local community and customers at every level.

While we continued to enjoy a strong profile as a result of our wide-ranging association with sporting and other events, the Company’s less public initiatives proved to have no less powerful an impact.

The SMS Charity Donation Service – also in its eighth successful year – proved, once again, the perfect marriage of technology, convenience and charitable giving, by enabling customers to make donations via SMS to Oman Charitable Organisation (OCO).

We have always recognised the role of women in our workplace. We are proud to be an equal opportunities employer and to reward the contribution of our female staff at many different levels. This included appointing nine of our most talented women to senior roles as store managers during the year.

How can we serve our community better?


We marked the third Omani Women’s Day with a colourful celebration, during which we showed Nawras family members a specially commissioned video highlighting the impact of Nawras women in the Company, as well as their contributions to family life and small businesses.

We also run the ‘Springboard’ programme in collaboration with the British Council, as part of a long-term commitment by us to empower women. This course enables women to grow their potential in the Company and community by giving them the confidence and skills to achieve their professional and personal goals.

To date, there have been more than 85 Nawras Springboard graduates, a statistic of which we are very proud.

Our duty of care to the community also extends to the environment and our impact upon it.

We are a member of the Environment Society of Oman and support the global drive for the preservation and responsible consumption of the world’s natural resources.

We backed that support with our participation in Earth Hour 2012 for the third consecutive year, ensuring that lights and all non-essential electrical appliances in the Nawras Campus, multimedia contact centre, and all 26 stores across the country were switched off for an hour, a tangible effort to reduce our carbon footprint.

Further ‘green’ initiatives include encouraging our customers to switch to electronic bills instead of paper ones and to use e-recharge through 75 convenient self-service machines located across the Sultanate. We also promoted mobile-to-mobile credit transfer as another way to avoid the use of plastic recharge cards.

A good corporate citizen is judged on many fronts, including its role in the community. For Nawras, 2012 reinforced the Company’s reputation in this respect, but also shaped the lasting legacy that is a hallmark of a strong and effective CSR policy.

That legacy is already taking many forms: improving fitness and health through our support for sporting activities; simply bringing people closer together to strengthen communities; boosting knowledge and education; generating well-being and a sense of belonging; and, through our various local programmes, giving communities the means to thrive.

Our proactive engagement with the community is now widely acknowledged. Its value to the Company cannot be overstated, since every member of the Nawras family benefits from the common goals and sense of purpose that it gives them as part of their daily working lives.

We will continue to be a responsible, caring Company by maintaining the high level of commitment to our community through an association with sporting, cultural and social events, for the benefit of the wider community and the country as a whole.

A private-public partnership between Nawras and Oman’s Ministry of Education (MoE) uses technology to support education, successfully linking the Ministry and every state school with a fast internet connection – meaning faster access, improved web browsing and data connectivity, and enhanced study support.

Faster Internet access benefits young students by helping them with their studies, and also allows their parents to monitor progress.

150The number of charitable organisations in Oman visited by Nawras volunteers since the annual Goodwill Journey started in 2005.


Financial Review

Encouraging growth across all customer segments, record revenue in the last quarter, and growth in mobile and fixed data revenue combined to offset a small decline in full-year revenue.

The 1.7 per cent decline in full-year revenue, to OMR 193.5 million from OMR 196.9 million in 2011, was driven by a reduction in SMS and on net voice revenue. However, Q4 revenue from international voice, and fixed and mobile data helped the company to achieve record quarterly revenue of OMR 51.4 million, compared to OMR 50.8 million in 2011.

Total customers grew steadily throughout the year to reach 2.2 million, an increase of 12 per cent from 2011 and the best acquisition figure since 2010.

The investment in upgrading the Nawras network, which will generate more broadband data across a much wider spectrum, will benefit many of these new customers with a faster and higher-quality service.

Revenues and EBITDAEBITDA, which stands for ‘earnings before interest, taxes, depreciation and amortisation’, compares over time the profitability of a company’s operations without the potentially distorting effects of changes in depreciation, amortisation, interest and tax.

Lower revenue and an increase in international call volumes, which led to higher operating expenses, caused EBITDA to decline during 2012 to OMR 94.9 million, against OMR 103.4 million in 2011, a fall of 8.2 per cent.

Margin and operating expenditureNawras’ EBITDA margin (EBITDA as a percentage of sales) was 49.1 per cent, against 52.5 per cent in 2011, reflecting the increase in international call volumes, which impacted gross margins. However, we were able to increase our international customer base by exploiting our international capacity.

As in previous years, the company’s focus on operational efficiency and tight cost control, allied to high levels of staff productivity, slowed the growth in total expenses. General, administrative and sales costs were OMR 44.3 million, a drop of approximately OMR 0.2 million on 2011.

Capital expenditureThe first half of 2012 was occupied with the renegotiation of a major vendor contract, to turbocharge the Nawras Radio Access Network (RAN) by upgrading all sites to enhanced 3G+, enhancing penetration, and increasing the entire network’s coverage, capacity and speed. The contract was awarded at the end of June.

Selected Financial and Operating Data

For the year ended 31 December 2012 2007 2008 2009 2010 2011 2012

(OMR million, except where stated)Revenues Prepaid 74 104 117 124 126 123

Postpaid 18 32 43 53 57 52Other 2 3 12 12 14 19Total 94 139 172 189 197 194

EBITDA (note 1) 25.5 53.8 87.5 102.5 103 95EBITDA Margin (%) 27.0 38.7 51.0 54.2 52.5 49.1Net Profit 8 20 42 50 48 37Net Debt (note 2) 47.6 38.0 39.3 21.6 10.7 2.9 Cash Flow Before Working Capital 21.5 44.0 72.5 87.0 86 77Capital Expenditure (note 3) Mobile 30 36 27 24 29 56

Fixed — — 25 50 12 5Total 30 36 52 74 41 61

ARPU (OMR) Mobile Prepaid 9.4 7.2 6.1 5.7 6.9 5.6 Mobile Postpaid 29.8 28.0 27.1 26.0 26.6 24.2 Mobile Blended 10.3 8.8 7.7 7.4 8.7 7.2

Customers (thousands) Mobile Prepaid 938 1,401 1,714 1,857 1,760 1,970Mobile Postpaid 79 111 147 169 173 179 Mobile Total 1,016 1,511 1,861 2,026 1,933 2,149 Fixed 8 27 44

Employees (number) 493 636 757 873 1,019 1,027

(1) EBITDA = Revenues minus operating expenses minus general and administrative expenses (excluding service fees). (2) Net debt = Gross debt minus cash and cash equivalents. (3) Including licensing fees.

Total customers grew steadily throughout the year to reach 2.2 million, an increase of 12 per cent from 2011 and the best acquisition figure since 2010.


However, the company has invested a total of OMR 331 million in network and IT-related capital expenditure since operations started in 2004, against a total of OMR 272 million by end 2011. Capex for the mobile network amounted to OMR 56.6 million during the year, with a further OMR 4.8 million invested in the fixed network. Nawras has also paid OMR 64 million towards licence fees since its inception.

ProfitabilityNet profit, which was affected by lower EBITDA and higher depreciation, declined 22.2 per cent to OMR 37 million, compared to OMR 47.5 million the previous year. The fall in net profit was partially offset by lower interest costs. Increased investment in network modernisation contributed to the higher depreciation, while a decrease in overall outstanding debt and the end of an above LIBOR interest rate swap agreement resulted in lower interest costs.

Tight control of total expenses (excluding royalties) contained the increase to 6 per cent, up from OMR 130.5 million to OMR 138.5 million.

Earnings per share of OMR 0.057 were down from the previous year’s OMR 0.073, and the Board has recommended a dividend of OMR 0.038 per share for approval at the annual general meeting on 27 March 2013.

Net debtA strong cash flow position supported the on-going reduction in long-term debt, resulting in a 72.9 per cent improvement in the net debt position, from OMR 10.7 million to OMR 2.9 million.

Cash flowNet cash from operating activities totalled OMR 73.9 million, compared to OMR 77.8 million in 2011. Cash and cash equivalents at the year-end stood at OMR 25 million, down from OMR 44 million in 2011.

Balance sheetThe 3.2 per cent rise in total assets, to OMR 309 million from OMR 299 million, was attributable mainly to growth in property, plant and equipment.

Total equity of OMR 180 million increased by OMR 12 million (7.5 per cent) over 2011, and net assets per share from OMR 0.257 to OMR 0.277. There was a decline in total liabilities from OMR 132 million to OMR 129 million, largely due to a reduction of OMR 27.5 million in interest-bearing borrowings. Total equity and liabilities increased to OMR 309 million, from OMR 299 million, an increase of 3.2 per cent.

ProspectsEfforts to maximise productivity through operating efficiencies, and continuing the preparations for the introduction of 4G LTE, a major cornerstone of our plans to boost the Nawras network to achieve higher levels of performance, remain firmly on track.

Our comprehensive network modernisation programme will provide the platform for the increased coverage, and the range of new data services, that will drive volumes and future revenue growth.

There will be an on-going focus on customer acquisition and retention, particularly in the business sector, where there is massive underlying demand. Nawras will use the results of the comprehensive market research and analysis it conducted during 2012 to develop the appropriate strategies to meet these objectives and to retain its competitive advantage.

09

72.5

08

44.0

0721.5

10

87.0

11

85.0

12

77.0

Cash Flow Before Working Capital

OMR million

09

208

08

174

07

158

10

291

11

299

12

309

ä3.2%Total Assets

OMR million

2012 Revenues Prepaid – OMR 123 million Postpaid – OMR 52 million Other – OMR 19 million

27%

63%

10%

ä7.5%Total Equity

OMR million

09

92

08

49

07

31

10

143

11

168

12

180

63%

ä49%Capital Expenditure

OMR million

Mobile Fixed 08

36

07

30

10

61

41

74

52

09 11 12


Corporate Governance Report

Nawras has always been committed to internationally recognised corporate governance practices and ethical business conduct. Nawras’ Board of Directors and Senior Management understand that their implementation of good governance practices and ethical business conduct results in sound business decisions. They also have a positive impact on public perceptions of the Company and benefit the wider economic and social development of Oman.

Nawras’ corporate governance practices meet Oman’s Capital Market Authority (CMA) requirements. Nawras currently has relevant policies and regulations that include:

• Acorporategovernancemanualdetailingtheroleandapplicationof corporate governance throughout the Company.

• Cleardelegationofpower,assetoutinacomprehensivemanual of authority.

• Clearrolesandresponsibilities,assetoutintherespectivecharters for each Board committee: the Executive Committee, the Audit Committee, and the Remuneration Committee – and each management committee: the Management Committee, the Promotion Committee, the Tender Committee, the Pricing Committee, and the Sponsorship Committee.

• Anorganisationstructurethatidentifiestheresponsibilitiesrelatedto the various executive positions within the Company and the corresponding reporting structures and procedure, including the extent of the authority of each position for approval of expenditure.

• Policiestogovernexpenditure,includingpoliciesandproceduresfor accounting and procurement.

• Policiesrelatedtohumanresourcesincludingsalaries,appointments,development, training, promotions, and termination of services.

• Apolicycoveringrelated-partytransactions,togetherwithappropriate codes of ethics that apply to the Board and the Company.

• AclearapproachtoindependenceinthecontextofDirectors that is (and was already) in compliance with the recent changes announced by the Capital Market Authority (CMA).

Board of DirectorsThe Board of Directors that managed Nawras throughout 2012 is shown in table 1 (page 35).

There was one change to the composition of the Board during 2012 as Nawras’ former Vice Chairman, Mr Khalid Al-Mahmoud, resigned following his promotion to a new role within Qtel Group: Group Chief Officer – Small and Medium Businesses. Nawras is grateful for the time given by Mr Khalid Al-Mahmoud as Vice Chairman and Director, as well as during his time working for Nawras as Chief Operating Officer between 2005 and 2010.

Mr Khalid Al-Mahmoud was replaced on the Board by Mr Mohamed Jassim Al-Kuwari. He was appointed as a temporary Director in accordance with the Company’s Articles of Association, and the Company will seek permanent appointment at the Annual General Meeting. Mr Khalid Al-Mahmoud was replaced as Vice Chairman of the Board by Sheikh Saud Al-Thani.

Further information on current Board members Sayyed Amjad Mohamed Al Busaidi ChairmanMr Al Busaidi has chaired the Nawras Board since March 2011. In 1990 he joined the Diwan of Royal Court and he currently serves as Executive President of the Diwan of Royal Court Pension Fund. He was appointed Chairman of Bank Nizwa in July 2012, and also serves on the boards of NIFCO, National Mass Housing Company, and Shomookh Investment. He has a Master’s degree in Business Administration from Southern Cross University (Australia).

Sheikh Saud Nasser Faleh Al-Thani Vice-ChairmanSheikh Saud joined Qtel in 1990 and is currently Chief Executive Officer of Qtel Qatar. He also serves as Executive Director of Group HR and Acting Executive Director of General Services. He is also a member of the Arab Organisation for Satellite Communication. Sheikh Saud has a Bachelor of Arts in Public Administration from Western International University (USA).

Mr Khalil Ibrahim Al Emadi DirectorMr Al Emadi is currently the Chief Executive Officer of Navlink lnc (one of Qtel’s partners). He has a strong background in telecommunications with 27 years of experience in mobile services and fixed telephony. Before joining Qtel, he worked at the Ministry of Transport and Communications. He was the Executive Director of Wireline Services until 2007 when, as part of an organisational restructuring, Qtel merged the previous Wireless and Wireline groups into the Networks Division, appointing Mr Al Emadi as Executive Director of Networks. He has a Bachelor of Science in Electrical/Electronic Engineering from Northrop University in California (USA).

Mr Ghassan Khamis Al Hashar Director Mr Al Hashar joined the Nawras Board as a representative of the Public Authority for Social Insurance (PASI) in 2011. He is currently the Authority’s Head of Asset Management – Local. He has more than 15 years’ experience in finance and investment management and represents PASI on the boards of numerous public and private companies. Mr Al Hashar is currently Chairman of Bank Muscat’s Fund Investors’ Committee and a Board member of Majan Development Company. He holds a Master’s Degree in Finance and Investment Management from the University of Aberdeen (UK).


Nawras’ Board of Directors and Senior Management understand that their implementation of good governance practices and ethical business conduct results in sound business decisions.

Table 1: The composition of the Board of Directors during 2012 was:

Name Date of appointment Type of representationMembership of other Nawras Committees

Membership of Boards of other Joint Stock Companies

Sayyed Amjad Mohamed Al Busaidi (Chairman)

26 March 2011 Non-executive, non-independent Nil One

Sheikh Saud Nasser Faleh Al-Thani* (Vice Chairman)

16 March 2008 Non-executive, non-independent Executive Committee Nil

Mr Khalil Ibrahim Al Emadi 12 December 2010 Non-executive, non-independent Executive Committee NilMr Ghassan Khamis Al Hashar 26 March 2011 Non-executive, independent Audit Committee OneDr Shaikha Sultan Al Jabir 26 March 2011 Non-executive, non-independent Executive Committee NilMr Mohamed Jassim Al-Kuwari 29 July 2012 Non-executive, non-independent Executive Committee,

Remuneration Committee Nil

Mr Khalid Ibrahim Al-Mahmoud**(Vice Chairman)

26 March 2011 Non-executive, non-independent Executive Committee, Remuneration Committee

Nil

Mr Mohanna Nasser Al Nuaimi 26 March 2011 Non-executive, non-independent Remuneration Committee, Audit Committee

Nil

Mr Said Faraj Al Rabeea 27 July 2011 Non-executive, independent Executive Committee NilMr Saleh Nasser Al-Riyami 11 December 2004 Non-executive, independent Audit Committee

Remuneration Committee Two

* Sheikh Saud Nasser Faleh Al-Thani was appointed as the Vice Chairman at the Board Meeting on 29 July 2012.** Mr Khalid Al-Mahmoud was Vice Chairman until his resignation on 19 June 2012.

Table 2: Board meetings and attendance in 2012

1 2 3 4 5 6 7 8

30.1.12 22.2.12 27.3.12 24.4.12 18.6.12 29.7.12 21.10.12 16.12.12

Sayyed Amjad Mohamed Al Busaidi Yes Yes Yes Yes No Yes Yes YesMr Khalil Ibrahim Al Emadi Yes Yes Yes Yes Yes Yes Yes YesDr Shaikha Sultan Al Jabir Yes Yes Yes Yes No Yes Yes YesMr Saleh Nasser Al-Riyami Yes Yes Yes Yes Yes Yes Yes YesMr Khalid Ibrahim Al-Mahmoud Yes No Yes Yes Yes N/A N/A N/AMr Ghassan Khamis Al Hashar Yes Yes No Yes Yes Yes Yes YesMr Mohanna Nasser Al Nuaimi Yes Yes Yes Yes No Yes Yes YesSheikh Saud Nasser Faleh Al-Thani No No Yes Yes Yes Yes Yes YesMr Said Faraj Al Rabeea No Yes Yes Yes No Yes Yes YesMr Mohamed Jassim Al-Kuwari N/A N/A N/A N/A N/A N/A No Yes


Corporate Governance Report Continued Nawras has three Board committees: the Executive Committee, the Audit Committee and the Remuneration Committee.

Dr Shaikha Sultan Al Jabir Director Dr Al Jabir is currently Executive Director – New Businesses in Qtel Group (QG). Before joining QG, she was CIO of Qatar General Electricity and Water Corporation (Kahramaa), where she established a sophisticated ICT infrastructure, helping to put the organisation at the forefront of technology. She holds a PhD in Computer Science from the University of Surrey (UK), an MS in Telecommunications and Computers from George Washington University (USA), and a BS in Electrical Engineering from Kuwait University.

Mr Mohamed Jassim Al-Kuwari Director Mr Al-Kuwari has been Qtel’s Chief Corporate Services Officer since 2011, having held several positions in the Group since 2005: Head of Talent Sourcing, Senior Manager of Manpower Planning and Talent Sourcing, and Assistant Director of Policy Development and HR Services. He was also appointed Executive Director, Group HR in 2011. Previously, Mr Al-Kuwari worked at Ras Laffan Liquefied Natural Gas. He holds a Bachelor of Science in Business Administration from the American University, Washington (USA).

Mr Mohanna Nasser Al Nuaimi Director Mr Al Nuaimi was appointed Group Chief Human Resources Officer of Qtel Group in 2008, after serving as Qtel Qatar’s Executive Director of Group Human Resources. He is a member of Qtel Group’s Management Committee and a Board member of several other Qtel Group companies. In 2009, Mr Al Nuaimi received the HR Leadership Award on behalf of Qtel Group for the World HRD Congress, an international honour for companies excelling in the field of people management. He holds a Bachelor of Science in Mechanical Engineering from Qatar University.

Mr Said Faraj Al Rabeea Director Mr Al Rabeea joined the Nawras Board in 2011. He has worked in the government sector for more than 30 years, during which time he has held a number of senior positions in human resources, information technology, and telecommunications. He currently sits on a number of a government boards in Oman. He has a Bachelor’s Degree in Business Administration.

Mr Saleh Nasser Al-Riyami Director Mr Al-Riyami has been a member of the Nawras Board since the Company’s launch. He has more than 20 years’ experience as the Investment Expert for the Diwan of Royal Court and currently serves as the General Manager of National Mass Housing SAOC. He has also served as founder or director of many companies in Oman, as well as in managerial positions in the Ministry of Commerce and Public Authority of Social Security in Oman. Mr Al-Riyami is a Board member of Taageer Finance Company and Al Madina Insurance Company. He holds a Bachelor of Science in Business Administration from the University of Georgia (USA).

Board meetings and Board members’ attendance in 2012Attendances at Board meetings in 2012 are shown in table 2 (page 35).

Board committeesNawras has three Board committees: the Executive Committee, the Audit Committee and the Remuneration Committee.

Executive Committee The Executive Committee focuses on strategic issues and has responsibility for all budget and procurement related matters. The Committee comprises five members.

The only change in the composition of the Executive Committee in 2012 was the resignation of Mr Khalid Al-Mahmoud (explained in the preceding section on the Board of Directors) and the appointment of Mr Mohamed Al-Kuwari as his replacement.

The Executive Committee met four times during 2012. The dates and attendance at these meetings is shown in table 3 (page 37).

The Executive Committee’s terms of reference are:

• ApproveexpenditurewithinthelimitsspecifiedbytheBoard of Directors.

• Reviewandapproverecommendationsfortheawardoftenders.Approve procurements and contracts of values within the limits authorised under the Authority Manual or as delegated by the Board.

• Reviewthequalityandefficiencyofservicesandproductsprovidedby the Company and suggest means of developing and upgrading such services and products.

• FurnishManagementwithstrategicdirectivesonthepriorities and risks relating to financial and strategic investment operations.

• Approvefinancialandstrategicinvestmentsandrelatedmatterswith a maximum limit of US$ 10,000,000 (US Dollars ten million) for each investment operation, or US$ 100,000,000 (US Dollar one hundred million) for all investment operations in each whole calendar year.

• Approveinvestmentoperationsandtreasuryaffairs.• ReviewtheperformanceoftheCommitteeandpresentperiodic

updates on its activities to the Board of Directors.• ReviewdraftregulationsandpoliciesoftheCompanythatfallwithin

the Committee’s scope of work, and submit recommendations on the same to the Board of Directors.

• ReviewtheAuthorityManualandsubmitproposalsforamendmentof the same to the Board of Directors.

• SubmitreportstotheBoardofDirectorsincludingrecommendationson the scope, directives, quality, and level of investments undertaken by the Company, if any.


The Executive Committee focuses on strategic issues and has responsibility for all budget and procurement related matters.

Table 4: Audit Committee meetings and attendance in 2012

1 2 3 4 5 6 7

29.1.12 22.2.12 26.3.12 24.4.12 28/29.7.12 17.10.12 19.12.12

Mr Saleh Al-Riyami Yes Yes Yes Yes Yes Yes YesMr Mohanna Nasser Al Nuaimi Yes Yes Yes Yes Yes Yes YesMr Ghassan Khamis Al Hashar Yes Yes Yes Yes Yes Yes Yes

Table 5: Remuneration Committee meetings and attendance in 2012

RC.01 RC.02 RC.03 RC.04 RC.05 RC.06 RC.07 RC.08 RC.09

30.1.12 22.2.12 26.3.12 24.4.12 25.6.12 28.7.12 11.9.12 21.10.12 19.12.12

Mr Mohanna Al-Nuaimi (Chairman)

Yes Yes Yes Yes Yes Yes Yes Yes Yes

Mr Khalid Al-Mahmoud Yes Yes Yes Yes N/A N/A N/A N/A N/AMr Saleh Al-Riyami Yes Yes Yes Yes Yes Yes Yes No YesMr Mohamed Al Kuwari N/A N/A N/A N/A N/A N/A Yes No Yes

Table 6: Total remuneration paid to Directors in respect of 2012

Position Amount OMR

Sayyed Amjad Mohamed Al Busaidi Chairman 3,500Mr Khalid Ibrahim Al Mahmoud* Vice Chairman 5,000Sheikh Saud Nasser Faleh Al-Thani** Vice Chairman 4,500Mr Saleh Nasser Al-Riyami Director 10,000Mr Khalil Ibrahim Al Emadi Director 6,000Dr Shaikha Sultan Al Jabir Director 5,500Mr Ghassan Khamis Al Hashar Director 6,500Mr Mohanna Nasser Al Nuaimi Director 10,000Mr Said Faraj Al Rabeea Director 5,000Mr Mohamed Jassim Al Kuwari Director 2,000

* Mr Khalid Al-Mahmoud was Vice Chairman until his resignation on 19 June 2012.** Sheikh Saud Nasser Faleh Al-Thani was appointed as the Vice Chairman at the Board Meeting on 29 July 2012.

Table 3: Executive Committee meetings and attendance in 2012

1 2 3 4

26.03.12 18.4.12 5.6.12 15.8.12

Mr Khalil Ibrahim Al Emadi Yes Yes Yes YesMr Khalid Ibrahim Al Mahmoud Yes Yes Yes N/ADr Shaikha Sultan Al Jabir Yes Yes Yes YesSheikh Saud Nasser Faleh Al-Thani Yes No Yes YesMr Said Faraj Al Rabeea Yes Yes Yes YesMr Mohamed Al Kuwari N/A N/A N/A Yes


The Audit Committee assists the Board to oversee the integrity of the Company’s policies and financial statements, including validating and recommending them for Board approval.

Audit Committee The Audit Committee assists the Board to oversee the integrity of the Company’s policies and financial statements, including validating and recommending them for Board approval. It also oversees the performance of the Company’s internal audit function. The Committee comprises three directors.

The Audit Committee met seven times during 2012. The dates and attendance at these meetings is shown in table 4 (page 37).

The Audit Committee’s terms of reference are:

• EstablishtheInternalAuditdepartment’sobjectives,policies and scope.

• ReviewInternalAudit’squarterlyreportsraisedtotheCommittee,withcopies to the Chairman and the members of the Board of Directors.

• ReviewtheExternalAuditors’Report.• Raiseobservationsandrecommendationsregardingthepoints

included in such reports to the Board of Directors.• ApprovetheInternalAuditdepartment’sannualplans.• SelecttheCompany’sExternalAuditorsandraiserecommendations

on their appointment and fees.• SelecttheCompany’sChiefInternalAuditor,makerecommendations

on his/her appointment and appraise his/her performance.• Overseeadministratively,financiallyandtechnicallytheInternal

Audit department including the proposal and implementation of its operating and capital budget, its organisational structure, training, development and promotion of staff, all in accordance with the applicable regulations of the Company.

• EvaluatetheInternalandExternalAuditperformance.• ReviewandstudytheCompany’sregulationsandpolicies,

whenever exigency dictates this, and raise suggestions on their amendments to the Board of Directors.

Remuneration Committee The Remuneration Committee focuses on the compensation and benefits of employees and supervises the Company’s Omanisation and succession programmes. The Committee comprises three directors.

The Remuneration Committee met 9 times during 2012. The dates and attendance at these meetings is shown in table 5 (page 37).

The Remuneration Committee’s terms of reference are:

• RecommendtheappointmentandterminationoftheCEOandallGrade 1 executive managers.

• ApprovetheappointmentandterminationofallGrade2managers.• RecommendtheannualperformanceratingoftheCEO.• ApprovetheannualperformanceratingofallGrade1

executive managers.• ApprovetheNawrascorporatescore.

• OverseetheRemunerationpoliciesoftheCompany,includingvariable compensation systems and incentive programmes. Approve any changes to such systems and programmes.

• PeriodicallyreviewtheCompany’sHRandTrainingPolicies,the Job Evaluation Policy, and the employee performance evaluation.

• ApproveanyexceptionstoHRpolicies,includingforcompensationand benefits that are outside the authority of management.

Total remuneration paid to Directors in respect of 2012Nawras Directors are each paid a sitting fee of OMR 500 per Board or Committee meeting. Table 6 (page 37) details the total sitting fee amounts paid to the Directors during 2012.

Additionally, at the Company’s Annual General Meeting held on 27 March 2012, the shareholders approved a further distribution to the Directors of OMR 138,750, to be divided between the Directors.

Related-party transactions 2012Related-party transactions entered into by the Company during 2012 are shown in table 7 (page 39).

The majority of the increase is attributable to Long Term Incentives (LTI) obligations for senior management (2011 amount 0). The balance of the increase is attributable to the addition of new senior management in Q4 2011. The service fee payable to Qtel International as per the Technical Services Agreement comprised 3 per cent of gross revenues for 2012.

Senior managementNawras’ senior management team during 2012 is shown in table 8 (page 39).

Table 9 (page 39) is an outline of the current organisational structure:

Ross CormackChief Executive OfficerRoss has been CEO of Nawras since 2004 and has more than 25 years of experience in the telecommunications industry, having led four different telecommunications companies, served on the Board of Directors of six companies, and shareholder-managed 16 companies across Europe, the Middle East and Asia. His recent experience has included serving as Executive Director Wireless for Qtel, CEO and founder of Singapore-based Virgin Mobile Asia and Managing Director of Hong Kong CSL. Ross holds a Double Honours Bachelor of Science and Bachelor of Communications in Engineering Production and Economics from the University of Birmingham (UK). Ross is also serving as Acting Chief People Officer until an appointment is made.

Corporate Governance Report Continued


The Remuneration Committee focuses on the compensation and benefits of employees and supervises the Company’s Omanisation and succession programmes.

Table 7: Related-party transactions during 2012

TransactionOMR 2012

OMR 2011 % Change

Directors and Key Management remuneration comprising: 1,976,935 1,417,753 39%Salaries/remuneration and benefits 1,726,624 1,177,105 47%Directors’ remuneration 200,000 200,000 0%Employees’ end of service benefits 50,311 40,648 24%The majority of the increase is attributable to Long Term Incentives (LTI) obligations for senior management (2011 amount 0). The balance of the increase is attributable to the addition of new senior management in Q4 2011.

Service fee payable to Qtel International as per Technical Services Agreement comprising 3% of gross revenues for 2012 5,821,486 5,889,412 -1%

Other expenses, comprising: 1,003,716 1,297,338 -23%•Reimbursementofsalariesofsecondedstaffandothercostreimbursements

(Qatar Telecommunication) 54,258 54,583 -1%•Reimbursementofsalariesandotherexpensesofsecondedstaff

(Qtel Group) 264,611 323,426 -18%•Siterentalexpenses

(ISS Pension Fund) - 149,607 -100%•Sitemaintenanceexpenses

(Elite Technology LLC) 684,847 769,722 -11%

Table 8: Senior management

Ross Cormack Chief Executive OfficerJorgen Latte Chief Financial OfficerAbdulla Al-Rawahy Chief Strategy OfficerWolfgang Wemhoff Chief Technical OfficerSaid Safrar Chief Customer Experience Officer Martin Lyne Chief Marketing Officer James Maxwell General CounselHussain Al-Lawati Chief Government Relations Officer Sean Casey Chief Sales and Distribution Officer Kumail Al-Moosawi Director of People

Table 9: Nawras organisational structure

Chief Financial Officer(CFO)

Chief People Officer(CPO)

Chief Technical Officer(CTO)

Chief Marketing Officer(CMO)

Chief Sales & Distribution

Officer(CSDO)

Chief Customer Experience

Officer(CCXO)

General Counsel

(GC)

Chief Strategy Officer(CSO)

Chief Government

Relations Officer

Finance People Technology Marketing Sales & Distribution

CustomerExperience GC Strategy Government

Relations

Chief Executive Officer(CEO)


The Nawras website has a comprehensive Investor Relations section where shareholders can view the Company’s quarterly financial information, disclosure policy, and frequently asked questions.

Jorgen LatteChief Financial OfficerJorgen has been Chief Financial Officer of Nawras since 2009. Jorgen has almost 20 years of financial and managerial experience in the telecommunications sector, with 10 years in stand-alone CFO roles for mobile services companies and additional prior experience at TeliaSonera and Tele2. Jorgen holds a Bachelor of Arts in Finance and Accounting from Stockholm University (Sweden).

Abdulla Issa Al-RawahyChief Strategy OfficerAbdulla has been Chief Strategy Officer of Nawras since 2008 and has over 30 years of experience in the telecommunications sector, with leading roles in network planning and projects, and strategy and corporate business development for both fixed and mobile telecommunications. Prior to joining Nawras, Abdulla served as Technical Advisor to the Minister of Transport and Communications, President of Omantel, and Chairman and founding Member of the Oman Fibre Optic Company. Abdulla holds a Bachelor of Engineering Technology and Master of Science in Electrical Engineering from the University of Central Florida (USA).

Wolfgang WemhoffChief Technology OfficerWolfgang joined Nawras in 2011 and has more than 20 years of experience in the telecommunications industry, working for Mannesmann and Vodafone. He had leading roles in Vodafone Germany, in Vodafone Group, and recently in Vodafone Turkey. Wolfgang holds a Bachelor of Engineering Technology from University Munster (Germany) and a Bachelor of Business Administration from University Dortmund (Germany).

Said SafrarChief Customer Experience Officer Said has worked for Nawras since 2008, originally as the Customer Service Director. He was appointed to his new role as Chief Customer Experience Officer in September 2011, as part of the Company’s focus on customer experience. Prior to joining Nawras Said worked in the banking industry and has more than 15 years’ working experience with Oman International Bank and Bank Dhofar. Said holds a Masters in Business Administration from the University of Hull (UK).

Martin Lyne Chief Marketing OfficerMartin joined Nawras in 2012, bringing over 20 years of commercial experience. He was previously Consumer Commercial Director of Orange UK, which achieved the fastest growth of any operator launching fourth to market. Most recently he was Managing Director for Small and Medium Enterprises with Everything Everywhere (the joint venture between Orange and T Mobile). Martin is a member of the Institute of Chartered Accountants of England and Wales. He holds a BA (Hons) in Economics and Business Studies from Leeds University (UK).

James MaxwellGeneral CounselJames joined Nawras in 2007 and has over 15 years’ experience in providing legal and regulatory advice to leading corporates, with 10 years working exclusively in telecommunications. His past roles include working in M&A and securities at Linklaters in the UK and Minter Ellison in Australia, and as an in-house Corporate Counsel at Vodafone UK and more recently SingTel Optus in Australia. James holds a Bachelor of Laws (LLB Hons) from Melbourne University (Australia).

Hussain Al-LawatiChief Government Relations Officer Hussain joined Nawras in 2004 as a Section Head – Key Account Manager – Business Sales Head. Prior to Nawras he served as a Product Manager in Oman National Dairy Products, as Commercial Sales Executive and Fuel Card Section Head in British Petroleum Oman, and as Sales & Marketing Manager in Mehdi Foods. Hussain holds a Bachelor’s degree in Business Administration from Camden University (USA).

Sean CaseyChief of Sales and DistributionSean joined Nawras in 2012. He has over 15 years’ sales and managerial experience in the telecommunications sector in Australia, Saudi Arabia and now Oman. Sean has managed and led multiple national sales functions in both the consumer and business segments, and has experience with Telstra, Vodafone, VHA, Sale-Co and STC.

Kumail Al-MoosawiDirector of PeopleKumail has been with Nawras since 2004 and brings over 13 years’ experience in numerous business functions that include retail, operations, finance, customer service, audit, and human resources management. Kumail completed his undergraduate education at Florida Atlantic University in the United States, majoring in Finance. He is also a continuing member of the Chartered Institute of Personnel and Development (CIPD) and an active member of the GCC HR Forum.

Channels and methods of communication with shareholders and investorsThe Nawras website has a comprehensive Investor Relations section where shareholders can view the Company’s quarterly financial information, disclosure policy, and frequently asked questions. They can also register to receive financial news alerts and contact the Investor Relations Manager by email.

Quarterly conference sessions with analysts are planned throughout the year, and quarterly financial statements are published in national newspapers within five days of being presented on the Muscat Securities Market website.

The ‘Management Review’ section of the Nawras annual report contains detailed management discussion and analysis.



Qtel is the only shareholder that holds more than 10 per cent of Nawras’ issued shares. The Company does not have any securities or financial instruments convertible to shares.

Table 10: Nawras share trading throughout 2012

Month Volume Turnover Trades High price Low priceClosing

pricePrevious

closeDifference

%Difference

(OMR) Last priceSecurity Cap

(OMR)

January 5,152,607 3,304,698 863 0.655 0.627 0.632 0.650 -2.8 -0.018 0.627 411,396,753February 9,346,404 5,826,197 1,598 0.639 0.610 0.629 0.632 -0.5 -0.003 0.630 409,443,921March 11,054,056 6,915,339 1,024 0.636 0.595 0.599 0.629 -4.8 -0.030 0.596 389,915,594April 4,608,831 2,719,970 875 0.606 0.549 0.551 0.599 -8.0 -0.048 0.549 358,670,271May 4,614,885 2,377,513 765 0.550 0.491 0.518 0.551 -6.0 -0.033 0.525 337,189,111June 4,298,192 2,196,191 335 0.523 0.501 0.509 0.518 -1.7 -0.009 0.508 331,330,613July 1,941,251 955,419 387 0.510 0.469 0.470 0.509 -7.7 -0.039 0.470 305,943,788August 3,201,420 1,497,071 333 0.475 0.461 0.469 0.470 -0.2 -0.001 0.470 305,292,844September 12,274,859 5,909,948 1,138 0.517 0.429 0.501 0.469 6.8 0.032 0.505 326,123,059October 9,558,267 4,856,120 1,026 0.552 0.483 0.488 0.501 -2.6 -0.013 0.486 317,660,784November 3,675,919 1,783,059 498 0.495 0.469 0.470 0.488 -3.7 -0.018 0.470 305,943,788December 8,081,400 3,793,603 881 0.484 0.456 0.461 0.470 -1.9 -0.009 0.457 300,085,290

Total 77,808,091 42,135,131 9,723

Table 12: Nawras Share Distribution (in terms of ownership)

Month Omani Non Omani GCC (Non Omani) Arab (Non Omani) Foreigner

January 35.3% 64.7% 61.8% 0.1% 2.9%February 35.6% 64.4% 61.9% 0.1% 2.4%March 35.6% 64.4% 62.2% 0.1% 2.1%April 35.6% 64.4% 62.1% 0.1% 2.2%May 35.7% 64.3% 62.1% 0.1% 2.1%June 35.7% 64.3% 62.4% 0.2% 1.8%July 35.8% 64.2% 62.3% 0.2% 1.8%August 35.7% 64.3% 62.4% 0.2% 1.7%September 35.4% 64.6% 62.7% 0.2% 1.8%October 35.4% 64.6% 62.7% 0.2% 1.8%November 35.4% 64.6% 62.7% 0.2% 1.8%December 35.2% 64.8% 63.0% 0.2% 1.7%

Table 11: Nawras share price compared to MSM30 index throughout 2012

6,300

6,100

5,900

5,700

5,500

5,300

0.700

0.600

0.500

0.400

0.300

0.200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMSM30 Share Price

MSM 30Nawras


Nawras has established an organisation that ensures risk management is an essential part of the Company’s culture and strategic decision-making through an Enterprise Risk Management (ERM) function.

Nawras share trading detailsNawras shares traded on the Muscat Securities Market during 2012 as shown in table 10 (page 41). Nawras’ share price compared to the MSM30 index throughout 2012 is shown in table 11 (page 41). Nawras’ share distribution in 2012 is shown in table 12 (page 41).

Qtel is the only shareholder that holds more than 10 per cent of Nawras’ issued shares. The Company does not have any securities or financial instruments convertible to shares.

Details of non-compliance by the CompanyNawras, as a regulated telecommunications operator, is subject to oversight by the Telecommunications Regulatory Authority (TRA). From time to time, Nawras has been subject to regulatory action by the TRA related to compliance with the terms of its licences and the Telecommunications Regulatory Act. Nawras has an excellent relationship with the TRA and has worked with it to remedy any concerns raised.

Below is a summary of the material regulatory decisions that relate to Nawras made by the TRA during 2012:

• Frequencypenalties–in2012theCompanyworkedwiththeTRA to perform a reconciliation of certain Nawras information against the corresponding information held by the TRA. One outcome of the process was that it was determined that Nawras was in breach of certain obligations relating to the frequencies utilised by Nawras. The TRA penalised Nawras in an amount of OMR 10,782.56 in respect of the breaches. The penalty was paid during 2012.

• WiMAXviolation–theTRAissuedNawraswithaviolationnotice for making WiMAX modem installation service mandatory. This was against the TRA’s approval for the service, in which it requested Nawras to make the installation service optional. No fine was issued and the matter was closed with Nawras changing its process.

• WiMAXviolation–inNovember2012,theTRAissuedNawras with a violation notice for differentiating outdoor and indoor WiMAX modem prices. The TRA’s approval was subject to non-differentiation in modem prices regardless of coverage strength. Nawras was requested to propose remedies for this violation. A penalty has not yet been determined and the issue is on-going.

Apart from the above regulatory non-compliance, Nawras has no material legal or regulatory non-compliance to disclose.

Disclosure policyNawras rigorously applies its disclosure policy so as to develop and maintain reasonable market expectations of the Company’s current and future trading prospects. This is achieved by making disclosure on a widely disseminated basis, through a realistic understanding of prospects for future performance, and by ensuring that information does not intentionally or unintentionally mislead investors.

Managing riskNawras has established an organisation that ensures risk management is an essential part of the Company’s culture and strategic decision-making through an Enterprise Risk Management (ERM) function. The ERM’s strategic objectives bring a systematic approach to assessing, evaluating, managing and controlling the overall enterprise risk. It also assists in providing practical and cost-effective solutions to manage and mitigate risk.

Enterprise Risk Management is called for under the Nawras corporate governance framework. The Company is required to present the status of internal control and arrangements for risk management to its senior management and report the same to the Board of Directors on a quarterly basis.

External auditor The Company’s external auditors in respect of 2012 were Deloitte & Touche. The total fees for audit and related services paid to the auditors in respect of 2012 were OMR 49,576.

Board declarationThe Board of Directors acknowledges that:

• Nawrashasallitssystemsandproceduresformallydocumented and in place. The Company’s internal regulations comply with relevant regulatory requirements and have been formalised, reviewed and approved by the Board of Directors.

• TheBoardofDirectorsisresponsibleforensuringthatthefinancialstatements are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), the requirements of the Commercial Companies Law of the Sultanate of Oman 1974 (as amended), and the rules for disclosure requirements prescribed by the Capital Market Authority.

• NomaterialeventsaffectthecontinuationofNawrasanditsoperations during the next financial year.



TO THE SHAREHOLDERS OF OMANI QATARI TELECOMMUNICATIONS COMPANY SAOG (NAWRAS)We have performed the procedures prescribed in Capital Market Authority (CMA) Circular No. 16/2003 dated 29 December 2003 with respect to the accompanying corporate governance report of Omani Qatari Telecommunications Company SAOG (NAWRAS) and its application of corporate governance practices in accordance with CMA Code of Corporate Governance issued under circular No. 11/2002 dated 3 June 2002 as supplemented by the Rules and Guidelines on Disclosure by Issuers of Securities and Insider Trading approved by Administrative Decisions no. 5/2007 dated 27 June 2007 and the Executive Regulation of the Capital Market Law issued under the Decision No. 1/2009 dated 18 March 2009 (collectively the Code and additional regulations and disclosures). Our engagement was undertaken in accordance with the International Standards on Related Services applicable to agreed-upon procedures engagements. The procedures were performed solely to assist you in evaluating the Company’s compliance with the code as issued by the CMA.

We report our findings as below:We found that the Company’s corporate governance report fairly reflects the Company’s application of the provisions of the Code and is free from any material misrepresentation.

Because the above procedures do not constitute either an audit or a review made in accordance with International Standards on Auditing or International Standards on Review Engagements, we do not express any assurance on the corporate governance report.

Had we performed additional procedures or had we performed an audit or review of the corporate governance report in accordance with International Standards on Auditing or International Standards on Review Engagements, other matters might have come to our attention that would have been reported to you.

Our report is solely for the purpose set forth in the first paragraph of this report and for your information and is not to be used for any other purpose. This report relates only to the accompanying corporate governance report of Omani Qatari Telecommunications Company SAOG (NAWRAS) to be included in its annual report for the year ended 31 December 2012 and does not extend to any financial statements of Omani Qatari Telecommunications Company SAOG (NAWRAS), taken as a whole.

Deloitte & Touche (M.E.) & Co. LLCMuscat, Sultanate of Oman20 February 2013

Mark DunnPartner

Deloitte & Touche (M.E.) & Co. LLCMuscat International CentreLocation: MBD AreaP.O. Box 258, Ruwi, Postal Code 112Sultanate of Oman

Tel: +968 2481 7775, Fax: +968 2481 5581www.deloitte.com


INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF OMANI QATARI TELECOMMUNICATIONS COMPANY SAOG

Report on the financial statementsWe have audited the accompanying financial statements of Omani Qatari Telecommunications Company SAOG (the “Company”) which comprise the statement of financial position as of 31 December 2012, and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 51 to 74.

Board of Directors’ responsibility for the financial statementsThe Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, the relevant disclosure requirements of the Commercial Companies Law of 1974, as amended, of the Sultanate of Oman and the Rules and Guidelines on disclosure issued by the Capital Market Authority, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur 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 ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from 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 the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of 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 audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2012, and of 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 requirementsIn our opinion, the financial statements comply, in all material respects, with the relevant disclosure requirements of the Commercial Companies Law of 1974, as amended and the Rules and Guidelines on disclosure issued by the Capital Market Authority.

Deloitte & Touche (M.E.) & Co. LLCMuscat, Sultanate of Oman20 February 2013

Mark DunnPartner

Deloitte & Touche (M.E.) & Co. LLCMuscat International CentreLocation: MBD AreaP.O. Box 258, Ruwi, Postal Code 112Sultanate of Oman

Tel: +968 2481 7775, Fax: +968 2481 5581www.deloitte.com


Documents

Annual Report 2012 · Leadership Award at 2011 Global HR Excellence Awards. Nawras listing named Best IPO in the Middle East 2010 by EMEA Finance magazine. ISO IEC 27001:2005 certification