Muscat Gases Company SAOG (MGMC) Earnings Call Transcript & Summary

Hello, everyone. Welcome to our meeting. It's the first meeting for the year 2025. We're going to present the results of Muscat Gas for the year 2024. Is everyone hearing me? Hello. Can you hear me?

Yes, we can hear you. Please go ahead.

Okay. So the results summary for the year, Muscat Gas incurred OMR 170,000 losses in 2024 that was mainly due to the decrease in sales and profitability in the export business, where its gross profit decreased OMR 480,000 year-over-year. Also the company has incurred hiring costs that exceeded budget by OMR 111,000, mainly from marketing events and business trip. Moreover, UMS incurred a loss of OMR 12,000 and MPS incurred a loss OMR 130,000, while MPP generated OMR 24,000 in profit, which led the group to a loss of OMR 300,000 in 2024. Going forward to 2025, MGC started the year by supplying [ Imarat ] around 5,000 tonnes on a monthly basis, which in January and is expected to improve its export sales and profitability for the year 2025 and to clear the losses of 2024. Also, one of the main provisions was taken for a customer Monster. It's above OMR 250,000 that has been bought recently, and management will place a good effort in negotiating with the new buyer to clear its receivable and reverse the provision. Moreover, the management also purchased the [ eco-pell ] in January and expected to start sales soon to add a new stream for the company profitability.

One minute, Mr. Sami, we need to clarify something here that Muscat Gas during the 2024 has been preparing themselves for an investment in Saudi Arabia.

Sorry, but we cannot hear anything. Maybe…

Can you hear me now?

No, I can't hear you. I can just read the text below.

The other attendees are hearing us.

We can hear you, actually. I can hear you.

Yes, you need to open your speaker. You cannot -- you're not hearing us because perhaps you're on mute. You're putting the speaker.

Two of my member colleagues are also not hearing you.

Yes, but everyone else is hearing. So I believe you have an issue with the speaker, right?

Sami, tell her the other people are hearing us. So can you please...

Yes, everyone is hearing us. So you have an issue with your speaker, I believe.

Ask her, if she can be joined again, please. Can you hear us now? So, [indiscernible] I believe you need to check the computer because everyone is confirming they are hearing us. Okay. So from our side, we need to confirm that in 2024, we've been doing a lot of efforts for the new business in Saudi Arabia. They exceed budget for the marketing events and business trip due to our -- we went through the biggest events in Saudi Arabia regarding gas and oil. And due to Muscat Gas are shortlisted to be part of the new business line for Saudi Arabia for the filling station and the gas delivery, which is announced by the government last year, and we already applied for our tender and waiting for the results, which should be, I believe, in April. So this is part of the business we started on, and we spend a lot to be sure that we are going on the right direction. By this year and beginning of the year, we signed a very specific contract to sell our export to one of the reputable business entity in Emirates. And we are securing the export business with this new contract. This contract, it will go like 3 years from now. And we hope this will be securing the business and the profit for the 3 years coming. I believe now, Mr. Sami and also, we have like 2 or 3 new projects coming in the pipeline regarding our new product like the carbon capturing and flare recovery business and plus the gas generators, where we do have now some projects in the pipeline waiting to be signed and announced later on when it will be signed. So please, Mr. Sami, let's go with the numbers. Before you go if there is any question, if there is anyone would like to ask anything. Okay, Sami, can go ahead.

Okay. So for the concept result for the period ended 31 December 2024, Muscat Gas revenue was OMR 17.402 million, total cost of goods sold OMR 14.6 million, gross profit OMR 2.7 million, 16% of the total revenue. Total other revenue was OMR 60,180; total operating cost, OMR 1.943 million. The operating profit OMR 835,000, 5% of the total revenue; admin cost OMR 1.012 million, net loss before tax OMR 177,000, minus 1% of the total revenue. For [ Laman ], total revenue OMR 667,000; total cost of goods sold OMR 664,000; gross profit [ OMR 2,723 ]; admin cost [ OMR 1,221 ] and profit before tax [ OMR 1,502 ]. MPP our engineering company in Oman, total revenue OMR 787,000; cost of goods sold OMR 458,000 gross profit OMR 329,000, 42% of the total revenue. The operating cost was OMR 249,000 and the operating profit OMR 79,000, 10% of the total revenue. Admin cost OMR 48,799; and net profit before tax OMR 30,840, 4% of the revenue. For MPS, our engineering company in Saudi Arabia, the total revenue OMR 449,000, total cost of goods sold OMR 282,000; gross profit OMR 167,00, 37% from the revenue. Total operating cost OMR 82,451; operating profit OMR 85,202, 19% of the total revenue. [Technical Difficulty]

If there is any other question from any party, please?

Am I audible?

Yes, your name, please, and which entity you are presenting?

This is [ Shaur ]. I'm from Vision Capital. I just have a couple of questions. Firstly, on the presentation, the slide that's currently on the numbers for cost of goods sold and gross profit, these are not really matching to the ones that we have on your income statement that you uploaded to the NSX. So on there, your gross margins are 5%, but here, if you are showing your gross margins to be 17% on a consolidated level, where the difference is coming from really the sales numbers are also different?

So let me please reply to your question. The presentation is different between the management, how they are presenting the financials and how we're presenting it in the audited financial statement. It's only the grouping of the expenses and of -- between cost of goods sold and between operating cost and admin cost, which is different between what you're seeing here and what you're seeing in the financial statement.

Okay. So what you're saying is that some of the operating costs are in cost of sales in the financial statements that I'm saying, while you have taken it down to the total operating cost level?

Correct.

Sorry, just to continue on that, the bottom line is also different actually.

For the bottom line..

Even if execution.

The only difference is the taxation. So for the taxation, we have some claim back, and these are the differences. But the net profit before tax is same.

But if you have a claim back, then it should be reflected in your financials, right? Why would you use the differences?

Right, right. But we're still confirming all these with the tax consultant. That's why it was not reflected in this presentation. But yes, you're right. The difference is coming from the taxation.

Right. Okay. Well, it would help us if the numbers are similar, so we can draw a like-to-like comparison. Now secondly, on the projects that you mentioned, obviously, you mentioned that you've applied for a tender in Saudi Arabia, which you guys will get hopefully. And then there's a contract signed to export to Emirates for 3 years. What sort of contribution do you expect from these contracts? Do you expect the company to better -- to make better margins than the current run rate is?

Sorry, Sami, I didn't get the question. Can you explain to me? It was a little bit not clear the voice.

He is requesting regarding the contract we are signing in Emirates for coming 3 years and the effects on the financial statement. Will it increase our margin? Will it make more profit for the company?

As I mentioned before, it will secure the profit and it will secure the operation. This is the most important. And now we are working with the new items, which is the carbon capture flare recovery, eco-pell for the saving the carbon from the engines and the FMT product, which is the new generator working on LPG. All these new items, it's mainly to increase the profitability of the company by a good percentage, which is going to be announced by quarter 2 after we finalize the final negotiation and signing the contract during this period. Before that, kindly, Mr. David, can you please explain to us which company you are representing? And are you a shareholders? Because we asked this question 3 times before and no answer yet before. So can you please explain to us, are you representing any of the Omani companies or you are a shareholder?

Yes. I assume you're talking to me. Yes, I did reply before as well. I'm from Vision Securities.

No, no, no. I'm talking about -- I'm talking to Mr. [ David Yahuda ]. I'm sorry, not to you, sir. You already did. Thank you so much. Everyone actually did. So just we need to know the attendees with us to clarify who is unverified in the session. Unfortunately, if I don't have an answer, I will remove the name from the list. Okay. Thank you for no answers. Okay. We can continue any questions. there is any answers -- if there is any question, sorry. Also, we have Mr. Sam Jones. It's unverified, and we would like to know who you are representing, please. Okay.