Muscat Gases Company SAOG ($MGMC)

Welcome to everybody. This is the MSX discussion session 01-2026 regarding the audited financial statement. So we'll introduce myself, Abdulsathar and my colleague, [indiscernible], we are from the accounts. And our acting CEO, Mohsin, he will address the meeting now. Mr. Mohsin, can you please start the meeting?

Welcome, everyone, in this meeting. My name is Mohsin Al Salmi. So today, we are going to show our results for 2025. And if you have any questions related for the business, for the company, we will be most welcome to answer all your questions or doubts. Can you please show the screen. Abdulsathar?

Yes.

Hello, everybody. Today, we're going to present our operating results for the year ending of 2025. First of all, we will present the consolidated results for ending -- December ending 2025. The total revenue was OMR 24.715 million and direct cost, it is OMR 23.372 million and the gross profit was OMR 1.342 million. Other revenue was OMR 58,630. And general and admin cost was OMR 1,774. Operating profit was coming minus OMR 373. Our finance income, it was OMR 23,000 -- around OMR 23,000. Finance cost, it was OMR 60,000. Profit before tax and restatement was minus OMR 410. Restatement was OMR 2.163 million and profit before tax after restatement was OMR 1.752 million minus the income tax OMR 255. Net profit after tax was OMR 1,497.

So if anybody is having any doubts, can you please ask the question?

So I will explain the parent's. Anyone have any question related to the consolidated result for MGC? So the next part, we're going to present the parent's company result. The revenue was OMR 22.506 million and the total direct cost was OMR 21.608 million. The gross profit was OMR 898. Other revenue was OMR 64,000 and general and admin cost was OMR 1.415 million. Operating profit was minus OMR 453,000. Finance income was OMR 23,000 and finance cost around OMR 57,000. Profit before tax and restatement was minus OMR 487,000. Restatement was OMR 2.163 million and income tax was OMR 248. The net profit after tax was OMR 1.428 million. In 2024, we have clarification by the auditors for the inventory, there was a restatement for the value of MGC export inventory for OMR 2.163 million and the result was affecting negatively in 2024, and that has been affected 2025 in positive way. But this profit has been corrected only in our account entries only. It's not affecting the profit. So if anyone of you have any question or it's welcome to answer them.

Yes. Thank you for the brief on the accounts. This is [ Shaul ] from Vision Capital. I just wanted to ask that we have seen the company not being profitable on an operating level since last some years. So what is actually happening? How are -- because if I understand it correctly, your model is to take LPG from the supplier and then distribute it in household and other customers, which includes both wholesale and the retail ones. So is there a cost-plus model? How do you guys operate? What is leading to this operating losses for these years?

Mohsin if you can reply.

Actually, it was not from 7 years to correct this. Muscat Gas, it was -- profit of company up to, I believe, I'm not mistaken, 2022. Only the last 3 years or 4 years, we start to have a loss view for the new lessons which is already given in the market for the high competition. And also in 2019 when we company sold the industrial gases, we only standalone with LPG. But within 4 years, the last 4 years, we start to expand our business due for -- from LPG to the energy. And currently, we are going to finalize projects, which is a part of the energy -- and what we expected that 2026 onwards, inshallah, we will have a profit. And this is our forecast to reduce what we lose in the last 3 years. The last 3 to 4 years, it was mostly to expand our business as we just only standalone with LPG. So that's the reason you know that LPG in Oman, it was subsided by government, the price is fixed. So you have many costs and it was increased by years and the price it was just fixed. So we already now expand with new our company in Oman for engineering solution, which is called Muscat Power Pioneer. And also, we opened our branch in Saudi, which is called Muscat Power Solution, which is already also looking for the engineering solution and in power. The expand of that, it will be effect and started to show the results affecting. So hopefully, inshallah from 2026 onwards, you will see the difference.

Okay. So we should not be expecting the gas business to coming back to profit anytime soon, but you are optimistic on the engineering, on the power engineering company's business. Is that correct?

It's not only us as LPG because now in many of the projects, it will need full solution. So most of gas today, we will be able to provide a full solution from the engineering, the solution, the installation and also supply the LPG because most of gas today, we are supplying LPG through cylinders also through bulk and now for the central gas also. And this is what has made us to move step by step also to the energy sector, not only in gas sector.

Right, inshallah, hopefully. And have you seen -- because 2026 has already started and the quarter has been passed, have you seen any positive results or any profit-generating results from this energy solutions that you mentioned?

Actually, we are closing now the Q1. And regarding for the energy projects, we already finalized the first project. And I believe the results of that it will take because the installation of that project sometimes takes 7 months to 1 year. And also, we have 2 to 3 tenders already applied with PDO, one of the main tender also already we applied. Also that's going to take at least 1 year to 1.5 years to -- if Muscat Gas win that tender also. So some results it's not showing in Q1 or at least immediately, but that is going to become in the next period. But what I believe -- and for Q1, I believe that it will be good, good and positive results. But still, we cannot finalize it unless we close all our financial books with the finance and accounting department. I think within next week or after that, we'll have a full picture for the Q1.

Right. Okay. And just for my own clarity, do you guys get LPG from IGC -- or is it from OPG? Or how does this work? How are you...

For IGC is a natural gas, not LPG. As Muscat Gas, we are working with LPG, liquid petroleum gas, which we got it from OQ refinery. And -- but for IGC or OQ gas, this is only for natural gas, which they are supplying direct through the pipe to the industrial areas.

Right. Okay. That makes sense. And from OQ Refinery, when you get it, is it on the market prices? Because obviously, as you mentioned that the selling price in Oman for LPG is fixed, you guys can't go beyond a certain limit. So does that apply on your supplier as well? Or are they free to charge you on market prices?

For the cylinder, it's fixed price, but for the bulk, it's not fixed price as a bulk as per the competition, as per the project, as per the business what we enter, for example, if we have industrials, we have also commercials. So all this sector is different. So here it is not fixed price. But our main business, it was only cylinders. We have 9 stations around Oman for refilling cylinders. So today, we start to expand on installation and also to supply as a bulk.

Okay. It makes sense. Now when you say that there is competition, I believe that the competition would also be taking gas from OQ refinery, right? I mean there is no other source of LPG in Oman because obviously, we produce our own gas and then we refine it in our own refineries. So I don't feel there are any imports coming in or you face any competition from imports or do you? But if you don't, my question is that wouldn't your conditions be same for the competitor because you both are buying from the same source and then selling to the same market, which is capped. So how does competition come into play in this? Or are they also not able to generate profit on an operating level?

I believe also you can check our -- there is one competitor also in MSX, you can see the results also. So I believe you will see our results is better than their results. They have a minus of, I believe, OMR 700,000 for 2025, if I'm not mistaken. And the remaining companies, all of these companies is [ LLC ] company, so they will not show the results. But as our knowledge, because the issue that for the last -- from 2019 onwards, it was many licenses given to the market, which has increased the competition from 13 companies to 24 companies. So all of the new player in the market, they need to take market share and how they're going to take market share. So they need to give offers the price lower and to get the customers. So that's the reason we face the challenge that to protect our customer also to get the new projects or new customer, it was that the main issue in the market.

Okay. And my last probably question would be the Energy Solutions that you mentioned that the company is now expanding into or having expansions to obviously diversify your product base. You mentioned that we should see some good results this year from that. By good, do you mean that the loss that would be generated from the gas business would be more than offsetted by those? Or would we still see on a consolidated a red bottom number in 2026?

As I told you, either I expect Q1 to be positive figures because already we start now to get the results of what we did for the previous list, either in the gas sector because now in the gas sector, we are not just sell because we want to sell the quantity, either now we are choosing the project to be also profit projects. Regarding for the energy sector, as I told you, we already signed the first contract and that contract be done or we can go live maybe in Q3, if I'm not mistake. So that it will be added value for us. And for the other projects, it will take a little time maybe to next year and that it will change also our figures and our numbers as a Muscat Gas.

Could you give us a number, a ballpark number of how big this contract is that would be implemented in Q3? Would it be possible for you?

I think that if you want, you are most welcome to visit us here, and we can share with you and we can explain more in details about the project because at least the project is not finished and done, we cannot announce it, I think. I'm not sure about this part.

Yes. Sure, sure. It makes sense. My next question is from the accounts team. The restatement that you guys have mentioned in the company report this year as well and in the presentation as well, what actually is this restatement? And would we see the effects of this in the coming years as well? Or what has changed? Because we have seen a big loss converted to a big profit. So what actually is this? And how would this impact the upcoming years?

For upcoming years -- Abdulsathar, go ahead.

Yes. This actually related to inventory, the qualification, it was in 2024. So that qualification has been removed in 2025 because this is mainly because of the export inventory. So that qualification is removed and that problem has been solved, and this will not be there in 2026. So that is why you can see that there is comparatively that 2024, it was negatively it is affected. And same thing, it is positively affected in 2025 also. So it is a contra and this is nothing to be repeated in 2026.

So the cash flows are not changed. It's just the accounting entries. Is that correct?

Yes, it's only an accounting entry. It's like an IFRS standard. It was not fulfilled. And that was the qualification. It was made by the auditors in 2024. Then in 2025, that problem has been solved, and this has been restated and that qualification has been removed.

Okay. So the expense that you booked in 2024, that has been reversed. So how does that affect? Is it a payable towards the supplier? Or is it a receivable from a customer? How does this -- I mean, I'm trying to gauge the net impact.

It is affected in the cost of sales and the inventory.

So there are no cash payments to be given or to be received.

No, no, no, nothing.

It's just account entries.

It is only affected in cost of sales as well as in the inventory.

Okay. And if not for this number, the 2024 numbers would have more or less be a breakeven, right?

Yes, yes, correct. Anybody is having any other questions? Anybody is having questions? So we will wait another 5 minutes. So if there is no question, we will conclude this meeting. So we hope there is no other question from anybody. So we will close this meeting, and thank you, everybody, for attending this meeting. Mohsin, you can conclude the meeting. This is because nobody is having any question, I think.

Okay, Abdulsathar, thank you. Thank you, everyone. So I hope that we clarified all your doubts and questions. And if you have any later questions, we will be always free to answer anyone. Thank you so much.

Thank you, sir. Thank you, everybody.