Oman Flour Mills Company SAOG (OFMI) Earnings Call Transcript & Summary

Hello, everyone. Good afternoon. Today, we will talk in this discussion session [indiscernible] the partners of Sohar Flour Mills Company. First, we will present a brief overview of the topic in Arabic. Then we will open the floor for discussion and welcome the participants' views and contribution or any questions. [Foreign Language]. Just for our English-speaking guests and investors, I will do just a quick summary of what was discussed in Arabic. We started a company, Sohar Flour Mills, which we own 60% and local -- initially, a foreign investor was owning 40%. Foreign investor sold the 40% to a local Omani business man. There was an issue in terms of running the company. We had a dispute with the shareholder, which was prolonged for a long period of time and in view of that resulted in the financial losses over the years in Sohar Flour Mills, as you may have read in our earlier reports. We tried our best to achieve an amicable solution for both parties to operate. One of the options -- scenarios was to split the assets so the local partner will take the silos and Atyab Investment, which is owned by Oman Flour Mills, will take the flour mill. Unfortunately, this requires a government approval since we are tied with a contract with government [indiscernible] assets we are holding has to have a prior written approval. In the process, since the whole discussion took a lot [indiscernible] Oman Flour Mills felt that as a backup plan, we should file for liquidation to avoid further continuity into the losses. In November of 2025 -- we filed a case in January of 2025 for liquidation. In November 2025, we have received the green light for the split of assets from the shareholders. In January 2026, specifically on the 25th of January, the court ruling came for bankruptcy, which was away from the request that the Atyab Investment has requested in the initial case. However, as many of you know that bankruptcy is a phase that comes prior to the liquidation. The whole objective is to ensure that if the company can continue prior to going into liquidation. So it's a task that is done prior to the liquidation. Having said that, we are very close to reaching a final agreement with the partners, in which we anticipate that the split will take place, and we'll be announcing that in due course. This is a brief summary. And we are, of course, appealing the court decision and requesting for an injection of the court order. So we open the floor for any questions. We'll be more than happy to address.

Thank you very much for the brief. I understand so we own 60% of this company, so it's a subsidiary. What is the value of it currently in the books? And have you booked any provisions before?

Okay. So -- and the value of Sohar Flour Mills in our book is actually negative. I mean, the entire investment was eroded a long time ago, but we continued building provisions, I mean, for the losses. So technically speaking, the value is now minus, yes.

Okay. So no further provisions needs to be taken?

No, not at this stage.

I have a quick question. How would this affect the day-to-day operation, especially in terms of production capacity?

Well, Sohar Flour Mills, I mean, it's been quite some time. The company is running below optimum capacity. So no -- I mean, the decision will not have any impact in the near future. The day-to-day activities will continue, and it continued in the past also.

Actually, I have a question on the appeal. It mentioned in the announcement that was circulated by Oman Flour Mills that you might be appealing the court decision regarding the bankruptcy or liquidation. Is that correct?

We are in the process of filing the appeal.

Okay. Is it true that the requirement is within 15 days? Do you think you will make the appeal within the next 15 days because that's the time frame that you have to present it, correct?

Yes, correct. And we already started the process, and we will meet the deadline.

Okay. Now once you file the appeal, are there any chances that the court might come back by rejecting it? Are there sort of a Plan B or Plan C for the company moving forward?

Based on our analysis, we don't believe that the court will reject our request because the proposal that we are taking, it's in the best interest of all parties, especially the creditors.

Okay. What are the outstanding towards the creditors?

I cannot disclose that number right now, I mean, because of confidentiality.

Okay. Fair enough. Sorry, Haitham, I have one more question. Initially, you had mentioned that the government's approval was required for splitting of the assets. Now while you work on the appeal to the court and all of this, has the government now approved? Will we be moving forward with splitting of the assets or...

Yes. I mean, as mentioned by the CEO, I mean, we already have the approval from the government to proceed with the split. Anyone else with questions? [Foreign Language]. If not, thank you very much, everyone. I appreciate your time. I hope we were clear with all the information that we have provided.

Haitham, I'm sorry, I have a last question. When will we receive an update after all of this? How often will we be updated? Do you -- can you inform us that or it's hard to tell now?

To be honest, I think the earliest update will be in a couple of weeks, yes. [indiscernible] before the end of the month, yes.

[Operator Instructions]. So the question is, any financial impact anticipated in the near future for Oman Flour Mills and what are they? Now if we manage to basically appeal the decision and the court accepts our appeal, then we don't foresee any major financial impact, as I mentioned before. So again, if the appeal is not accepted, there will be a couple of available scenarios. We basically, I mean, analyze the situation. Now even if the court does not accept the appeal, we have another plan, which is basically Oman Flour Mills will propose a solution to the court, where we will be taking care of the liabilities, and that will basically enable us to run the company as going concern. And there will be no requirement for any further provisioning or impairment in this case. Anyone else with any questions. Okay. Great. Thank you very much, everyone. [Foreign Language].