Half Year 2026 Galfar Engineering and Contracting SAOG Earnings Call

September 22, 2026

Hamood Al Tobi: Right. I think we can start. I am Hamood Al Tobi, CEO of Galfar Engineering and Contracting Company, and I am joined in this session from my team by Mohammed Al Yahyaei, our Chief Financial Officer, and by Fazlin Anam, the company secretary. Good morning, ladies and gentlemen. On behalf of Galfar Engineering and Contracting, I would like to welcome our shareholders, investors, analysts, and all participants joining us in this session. Thank you for taking the time to participate. These sessions are important to us because they provide an opportunity not only to present our financial results, which has been already published as per Muscat Stock Exchange requirement, but also to communicate directly with the stakeholders, communities about where Galfar stands today, what we have achieved, the challenges we continue to manage, and importantly, where we see the company going forward, inshallah.

Speaker #1: Right, I think we can start. I am Hamoud Tobi, CEO of Galfar Engineering and Contracting Company. I am joined in this session by Mohamed Yahyahi, our Chief Financial Officer, and by Vaseline Anam, the company secretary.

Hamoud Al Tobi: I think we can start. I am Hamoud Al Tobi, CEO of Galfar Engineering and Contracting Company, and I am joined in this session from my team by Mohammed Al Yahyaei, our Chief Financial Officer, and by Fazlin Anam, the Company Secretary. Good morning, ladies and gentlemen. On behalf of Galfar Engineering and Contracting, I would like to welcome our shareholders, investors, analysts, and all participants joining us in this session. Thank you for taking the time to participate. These sessions are important to us because they provide an opportunity not only to present our financial results, which has been already published as per Muscat Stock Exchange requirement, but also to communicate directly with the stakeholders, communities about where Galfar stands today, what we have achieved, the challenges we continue to manage, and importantly, where we see the company going forward, inshallah.

Speaker #1: Good morning, ladies and gentlemen. On behalf of Galfar Engineering and Contracting, I would like to welcome our shareholders, investors, analysts, and all participants joining us in this session.

Speaker #1: Thank you for taking the time to participate, and these sessions are important to us because they provide an opportunity not only to present our financial results, which have already been published as a BRMSX requirement, but also to communicate directly with the stakeholders' communities about where Galfar stands today, what we have achieved, the challenges we continue to manage, and importantly, where we see the company going forward, inshallah.

Speaker #1: Today, I will take you through our performance for the first half—a very brief summary of the financial results for the first half of 2026—our strategic direction, and the outlook for the construction market in Oman and the opportunities we see ahead.

Hamood Al Tobi: Today, I will take you through our performance for the H1, a very brief summary of the financial results for the H1 2026, our strategic direction, and the outlook for the construction market in Oman and the opportunities we see ahead. Our objective from today's session is pretty straightforward. It is about transparency, it is about engagement and value creation. We want our shareholders and potential investors to have a clear understanding of Galfar performance, strategy, including both the progress we are making and the areas that continue to require management attention. Therefore, I will focus on today's session in four areas: the strategic progress, the financial performance, the market and order book outlook, and finally, the investment position for Galfar. After the presentation, there will definitely be a session to take your question and hear your perspective.

Hamoud Al Tobi: Today, I will take you through our performance for the H1, a very brief summary of the financial results for the H1 2026, our strategic direction, and the outlook for the construction market in Oman and the opportunities we see ahead. Our objective from today's session is pretty straightforward. It is about transparency, it is about engagement and value creation. We want our shareholders and potential investors to have a clear understanding of Galfar performance, strategy, including both the progress we are making and the areas that continue to require management attention. Therefore, I will focus on today's session in four areas: the strategic progress, the financial performance, the market and order book outlook, and finally, the investment position for Galfar. After the presentation, there will definitely be a session to take your question and hear your perspective.

Speaker #1: Our objective for today's session is British Straightforward. It's about transparency, engagement, and value creation. We want our shareholders and potential investors to have a clear understanding of Galfar's performance and strategy, including both the progress we are making and the areas that continue to require management attention.

Speaker #1: Therefore, I will focus on today’s session in four areas: the strategic progress, the financial performance, the market and order book outlook, and finally, the investment position for Galfar.

Speaker #1: After the presentation, there will definitely be a session to take your questions and hear your perspectives. Before discussing the results, allow me to briefly put Galfar into context: Galfar has been operating continuously since 1972, and today remains one of the largest, if not the largest, engineering and contracting companies in Oman.

Hamood Al Tobi: Before discussing the results, allow me to briefly put Galfar into context. Galfar has been operating continuously since 1972 and today remains one of the largest, if not the largest, engineering and contracting company in Oman. Our capability extends across various sectors. We operate in energy and industrial projects, infrastructure, civil, and environmental sectors. This diversification is very important because it means that Galfar is not dependent on a single sector or a client category. We have the technical capability, resources, and very importantly, the track record to participate across many of the major areas of investment that are taking place here in Oman. As a publicly listed company, our responsibility goes beyond delivering projects. We have a responsibility to create sustainable value for our shareholders and contribute in a meaningful way to the national economy.

Hamoud Al Tobi: Before discussing the results, allow me to briefly put Galfar into context. Galfar has been operating continuously since 1972 and today remains one of the largest, if not the largest, engineering and contracting company in Oman. Our capability extends across various sectors. We operate in energy and industrial projects, infrastructure, civil, and environmental sectors. This diversification is very important because it means that Galfar is not dependent on a single sector or a client category. We have the technical capability, resources, and very importantly, the track record to participate across many of the major areas of investment that are taking place here in Oman. As a publicly listed company, our responsibility goes beyond delivering projects. We have a responsibility to create sustainable value for our shareholders and contribute in a meaningful way to the national economy.

Speaker #1: Our capability extends across various sectors. We operate in energy and industrial projects, as well as infrastructure, civil, and environmental sectors. This diversification is very important, because it means that Galfar is not dependent on a single sector or a client category.

Speaker #1: We have the technical capability, resources, and very importantly, the track record to participate across many of the major areas of investment that are taking place here in Oman.

Speaker #1: And as a publicly listed company, our responsibility goes beyond delivering projects; we have a responsibility to create sustainable value for our shareholders and contribute in a meaningful way to the national economy.

Speaker #1: Our consolidated financial performance and position incorporates our 100% subsidiaries, such as Aspire, Readymix, Aspire Projects and Services, and other subsidiaries, associates, and joint ventures.

Hamood Al Tobi: Our consolidated financial performance and position incorporates our 100% subsidiaries such as Galfar Aspire Readymix LLC, Aspire Projects & Services SPC, and other subsidiaries and associates and joint ventures. It is worth to mention that our subsidiaries are also benefiting from Galfar transformation strategy and have shown noticeable improvements in their performance over the past years as well. Over the past few years, our focus has been primarily on transformation, and today we are moving into the next stage. Our theme for the next stage is Beyond Transformation: Growth to Profitability, and that spells clearly the direction in which we want to position Galfar moving forward. The distinction here is very important because transformation was necessarily to strengthen the foundation of the business, but by itself it is not the ultimate objective. The objective is to translate those improvements into stronger margins, better cash generation, and sustainable shareholder value.

Hamoud Al Tobi: Our consolidated financial performance and position incorporates our 100% subsidiaries such as Galfar Aspire Readymix LLC, Aspire Projects & Services SPC, and other subsidiaries and associates and joint ventures. It is worth to mention that our subsidiaries are also benefiting from Galfar transformation strategy and have shown noticeable improvements in their performance over the past years as well. Over the past few years, our focus has been primarily on transformation, and today we are moving into the next stage. Our theme for the next stage is Beyond Transformation: Growth to Profitability, and that spells clearly the direction in which we want to position Galfar moving forward. The distinction here is very important because transformation was necessarily to strengthen the foundation of the business, but by itself it is not the ultimate objective. The objective is to translate those improvements into stronger margins, better cash generation, and sustainable shareholder value.

Speaker #1: It is worth mentioning that our subsidiaries are also benefiting from Galfar's transformation strategy and have shown noticeable improvements in their performance over the past years as well.

Speaker #1: Over the past few years, our focus has been primarily on transformation, and today we are moving into the next stage. Our theme for the next stage is beyond transformation—growth to profitability.

Speaker #1: And that spells clearly the direction in which we want to position Galfar moving forward. The distinction here is very important, because transformation was necessary to strengthen the foundation of the business. But by itself, it is not the ultimate objective.

Speaker #1: The objective is to translate those improvements into stronger margins, better cash generation, and sustainable shareholder value. Our strategy continues to be built around five strategic priorities, which we reiterate in our quarterly disclosures and report.

Hamood Al Tobi: Our strategy continues to be built around five strategic priorities, which we reiterate in our quarterly disclosures and report. These five strategic priorities are people and culture, financial and liquidity, projects and operational excellence, sustainability and diversification, and technology and innovations. I am pleased to announce that we are making steady progress to achieve the initiatives and the performance indicators that have been prescribed for each of these strategic priorities. Across all the five pillars of our strategy, our emphasis is increasingly on measurable outcomes. We want to be better in our project selections, to have stronger estimation disciplines, improved execution, tighter cost controls, stronger working capital management, and ultimately better returns from every OMR of capital deployed. Our strategy is also closely aligned with the country's Oman Vision 2040.

Hamoud Al Tobi: Our strategy continues to be built around five strategic priorities, which we reiterate in our quarterly disclosures and report. These five strategic priorities are people and culture, financial and liquidity, projects and operational excellence, sustainability and diversification, and technology and innovations. I am pleased to announce that we are making steady progress to achieve the initiatives and the performance indicators that have been prescribed for each of these strategic priorities. Across all the five pillars of our strategy, our emphasis is increasingly on measurable outcomes. We want to be better in our project selections, to have stronger estimation disciplines, improved execution, tighter cost controls, stronger working capital management, and ultimately better returns from every OMR of capital deployed. Our strategy is also closely aligned with the country's Oman Vision 2040.

Speaker #1: These five strategic priorities are: people and culture; financial and liquidity; projects and operational excellence; sustainability and diversification; and technology and innovations. I am pleased to announce that we are making steady progress to achieve the initiatives and performance indicators that have been prescribed for each of these strategic priorities.

Speaker #1: And across all the five pillars of our strategy, our emphasis is increasingly on measurable outcomes. We want to better our project selections, we want to be better in our project selections, stronger to have stronger estimation disciplines, improved execution, tighter cost controls, stronger working capital management, and ultimately better returns from every rial of capital deployed.

Speaker #1: And our strategy is also closely aligned with the country's 2040 vision. Galfar participates directly in the development of the infrastructure required for economic diversification—from roads to utilities and water infrastructure, to energy, to industrial and urban development projects.

Hamood Al Tobi: Galfar participates directly in the development of the infrastructure required for economic diversification, from roads to utilities and water infrastructure, to energy, to industrial and urban development projects. Our contribution is broader than just physical infrastructure. We are developing Omani talent, creating sustainable employment, supporting local supply chains, local suppliers, vendors, and subcontractors, investing in technology and innovation, and increasingly incorporating sustainability into how we execute projects. For us as Galfar, Oman Vision 2040 is therefore not simply a national framework that we support. It is also creating many of the markets in which we expect the company to grow in the future. Let me now move to the business and financial performance highlights. Our revenues have progressively recovered from the levels we experienced several years ago, and our focus today is increasingly on the quality rather than simply the size of revenues.

Hamoud Al Tobi: Galfar participates directly in the development of the infrastructure required for economic diversification, from roads to utilities and water infrastructure, to energy, to industrial and urban development projects. Our contribution is broader than just physical infrastructure. We are developing Omani talent, creating sustainable employment, supporting local supply chains, local suppliers, vendors, and subcontractors, investing in technology and innovation, and increasingly incorporating sustainability into how we execute projects. For us as Galfar, Oman Vision 2040 is therefore not simply a national framework that we support. It is also creating many of the markets in which we expect the company to grow in the future. Let me now move to the business and financial performance highlights. Our revenues have progressively recovered from the levels we experienced several years ago, and our focus today is increasingly on the quality rather than simply the size of revenues.

Speaker #1: But our contribution is broader than just physical infrastructure. We are developing Omani talent, creating sustainable employment, supporting local supply chains, suppliers, vendors, and subcontractors, investing in technology and innovation, and increasingly incorporating sustainability into how we execute projects.

Speaker #1: For us at Galfar, the Oman 2040 Vision is therefore not simply a national framework that we support; it is also creating many of the markets in which we expect the company to grow in the future.

Speaker #1: Let me now move to the business and financial performance highlights. Our revenues have progressively recovered from the levels we experienced several years ago, and our focus today is increasingly on the quality rather than simply the size of revenues.

Speaker #1: The same principle applies to our order book. We certainly want to grow the order book, but not at any cost. Our bidding strategy is becoming increasingly selective. We are looking carefully at contractual risks, margin potentials, client profiles, cash flow characteristics, and the execution capability before committing resources.

Hamood Al Tobi: The same principle applies to our order book. We certainly want to grow the order book, but not at any cost. Our bidding strategy is becoming increasingly selective. We are looking carefully at contractual risks, margin potentials, client profiles, cash flow characteristics, and the execution capability before committing resources. The objective is therefore not simply to build a large backlog. If you are into the contracting business, you would realize that something that is easy to achieve, simply building a large backlog is easy to achieve. Our focus and priority is to build quality, healthy, and ultimately profitable backlog that is capable of generating sustainable returns. In this slide, which is particularly important, it demonstrates the progress being made in the underlying performance of the company.

Hamoud Al Tobi: The same principle applies to our order book. We certainly want to grow the order book, but not at any cost. Our bidding strategy is becoming increasingly selective. We are looking carefully at contractual risks, margin potentials, client profiles, cash flow characteristics, and the execution capability before committing resources. The objective is therefore not simply to build a large backlog. If you are into the contracting business, you would realize that something that is easy to achieve, simply building a large backlog is easy to achieve. Our focus and priority is to build quality, healthy, and ultimately profitable backlog that is capable of generating sustainable returns. In this slide, which is particularly important, it demonstrates the progress being made in the underlying performance of the company.

Speaker #1: The objective is therefore not simply to build a large backlog, and if you are in the contracting business you would realize that's something that is easy to achieve.

Speaker #1: Simply building a large backlog is easy to achieve, but our focus and priority is to build a quality, healthy, and ultimately profitable backlog that is capable of generating sustainable returns.

Speaker #1: In this slide, which is particularly important, it demonstrates the progress being made in the underlying, you know, performance of the company. For the parent company, our first-half revenue reached approximately 137 million Omani Rial compared to 123 million Omani Rial in the same period last year.

Hamood Al Tobi: For the current company, our H1 revenue reached approximately OMR 137 million compared to OMR 123 million in the same period last year, demonstrating an increase of 11% in revenues. More importantly, a very critical indicator for us, EBITDA, is increased from approximately OMR 8 million in 2025, same period, to around OMR 12.5 million for the H1 of this year. Our EBITDA margin consequently improved from 6.5% to 9.1%. At the bottom line, our profit after tax increased from around OMR 200K in H1 in 2025 to around OMR 2 million in H1 in 2026. These are encouraging results, and what is particularly important to us is that the improvement is visible not only at the revenue level, but through gross profit, EBITDA, and net profitability. This indicates that the measures that have been implemented around project performance, cost management, and operational disciplines are beginning to translate into financial results.

Hamoud Al Tobi: For the current company, our H1 revenue reached approximately OMR 137 million compared to OMR 123 million in the same period last year, demonstrating an increase of 11% in revenues. More importantly, a very critical indicator for us, EBITDA, is increased from approximately OMR 8 million in 2025, same period, to around OMR 12.5 million for the H1 of this year. Our EBITDA margin consequently improved from 6.5% to 9.1%. At the bottom line, our profit after tax increased from around OMR 200K in H1 in 2025 to around OMR 2 million in H1 in 2026. These are encouraging results, and what is particularly important to us is that the improvement is visible not only at the revenue level, but through gross profit, EBITDA, and net profitability. This indicates that the measures that have been implemented around project performance, cost management, and operational disciplines are beginning to translate into financial results.

Speaker #1: Demonstrating an increase of 11% in revenues. More importantly, a very critical indicator for us—EBITDA—has increased from approximately $8 million in the same period of 2025 to around $12.5 million for the first half of this year.

Speaker #1: Our EBITDA margin consequently improved from 6.5% to 9.1%. At the bottom line, our profit after tax increased from around 200,000 in H1 2025 to around 2 million in H1 2026.

Speaker #1: These are encouraging results, and what is particularly important to us is that the improvement is visible not only at the revenue level but also through gross profit, EBITDA, and net profitability.

Speaker #1: This indicates that the measures that have been implemented around project performance, cost management, and operational disciplines are beginning to translate into financial results. We nevertheless recognize that our net margins remain modest, and improving profitability further remains a key management focus and priority.

Hamood Al Tobi: We nevertheless recognize that our net margins remain modest. Improving the profitability further remains a key management focus and priority. It's probably worth to note that in 2026, there is also the exceptional challenge of the geopolitical conflict and the impact this had on our business, particularly escalating material prices, affecting deliveries of materials, and impacting deliveries also over some of the project execution schedules. As management in Galfar, we remain vigilant to monitor the impact and mitigate to the maximum possible extent the impacts of the geopolitical conflict. Looking at our balance sheet indicators, the total parent company equity increased from approximately OMR 29.6 million at the end of December 2025 to around OMR 31.6 million at the end of June 2026.

Hamoud Al Tobi: We nevertheless recognize that our net margins remain modest. Improving the profitability further remains a key management focus and priority. It's probably worth to note that in 2026, there is also the exceptional challenge of the geopolitical conflict and the impact this had on our business, particularly escalating material prices, affecting deliveries of materials, and impacting deliveries also over some of the project execution schedules. As management in Galfar, we remain vigilant to monitor the impact and mitigate to the maximum possible extent the impacts of the geopolitical conflict. Looking at our balance sheet indicators, the total parent company equity increased from approximately OMR 29.6 million at the end of December 2025 to around OMR 31.6 million at the end of June 2026.

Speaker #1: It's probably worth noting that in 2026 there is also the exceptional challenge of the geopolitical conflict and the impact this had on our business, particularly escalating material prices affecting deliveries of materials and impacting some of the project execution schedules.

Speaker #1: As management in Galfar, we remain vigilant to monitor the impact and to mitigate to the maximum possible extent the impacts of the geopolitical conflict. Looking at our balance sheet indicators, the total parent company equity increased from approximately OMR 29.6 million at the end of December 2025 to around OMR 31.6 million at the end of June 2026.

Speaker #1: A key highlight that is worth mentioning is that, by the end of Q2 2026, the company exited the accumulated losses situation and started building retained earnings. It's a positive indicator that we are focused to sustain and continue to build on.

Hamood Al Tobi: A key highlight that is worth to mention is that also by the end of Q2 2026, the company exited the accumulated losses situation and started building retained earnings. It's a positive indicator that we are focused to sustain and continue to build on. The improvement in equity reflects the return to profitability and the gradual strengthening of the company's financial position. At the same time, net debt remains an area that we are actively managing. There has been delays in collections and receipt of some payments, but we continue to give collections of receivables, collections of payments, the attention and focus it requires at different levels of management. Of course, the nature of our industry is working capital intensive, therefore, as mentioned, improving collections and reducing the cash conversion cycle and maintaining discipline financing remains important priorities. Our objective is clear.

Hamoud Al Tobi: A key highlight that is worth to mention is that also by the end of Q2 2026, the company exited the accumulated losses situation and started building retained earnings. It's a positive indicator that we are focused to sustain and continue to build on. The improvement in equity reflects the return to profitability and the gradual strengthening of the company's financial position. At the same time, net debt remains an area that we are actively managing. There has been delays in collections and receipt of some payments, but we continue to give collections of receivables, collections of payments, the attention and focus it requires at different levels of management. Of course, the nature of our industry is working capital intensive, therefore, as mentioned, improving collections and reducing the cash conversion cycle and maintaining discipline financing remains important priorities. Our objective is clear.

Speaker #1: This improvement in equity reflects the return to profitability and the gradual strengthening of the company's financial position. At the same time, net debt remains an area that we are actively managing. There have been delays in collections and receipt of some payments, but we continue to give collections of receivables and collections of payments the attention and focus they require at different levels of management.

Speaker #1: Of course, the nature of our industry is working capital intensive, and therefore, as mentioned, improving collections, reducing the cash conversion cycle, and maintaining disciplined financing remain important priorities.

Speaker #1: Our objective is clear: as profitability improves, we also want that improvement to translate increasingly into stronger operating cash flow and a healthier balance sheet.

Hamood Al Tobi: As profitability improves, we also want that improvement to translate increasingly into stronger operating cash flow and a healthier balance sheet. Let me now turn from summary of financial performance to the market. Overall outlook for Oman remains supportive. The 2026 development allocation, together with the continuing investment across infrastructure, utilities, industrial development, and energy, provides meaningful pipeline of opportunities for us as Galfar. We see demand forming across four major areas, such as energy and industry, industrial projects, transportation and logistic, water and environment, and civil and social infrastructure, as well as urban residential development. There is, however, an important qualification that is worth to make. The opportunity pipeline is strong, but the timing of project awards remains uneven and sometimes challenging. There are many opportunities that we have eyed, many opportunities that we have bid on.

Hamoud Al Tobi: As profitability improves, we also want that improvement to translate increasingly into stronger operating cash flow and a healthier balance sheet. Let me now turn from summary of financial performance to the market. Overall outlook for Oman remains supportive. The 2026 development allocation, together with the continuing investment across infrastructure, utilities, industrial development, and energy, provides meaningful pipeline of opportunities for us as Galfar. We see demand forming across four major areas, such as energy and industry, industrial projects, transportation and logistic, water and environment, and civil and social infrastructure, as well as urban residential development. There is, however, an important qualification that is worth to make. The opportunity pipeline is strong, but the timing of project awards remains uneven and sometimes challenging. There are many opportunities that we have eyed, many opportunities that we have bid on.

Speaker #1: Let me now turn from the summary of financial performance to the market. The overall outlook for Oman remains supportive. The 2026 development allocation, together with continuing investment across infrastructure, utilities, industrial development, and energy, provides a meaningful pipeline of opportunities for us as Galfar.

Speaker #1: We see demand forming across four major areas, reflecting, you know, sectors such as energy and industry, industrial projects, transportation and logistics, water and environment, civil and social infrastructure, as well as urban residential development.

Speaker #1: There is, however, an important qualification that is worth making. The opportunity pipeline is strong, but the timing of project awards remains uneven and sometimes challenging.

Speaker #1: There are many opportunities that we have eyed, many opportunities that we have bid on. However, the timely award of these opportunities is a critical factor that affects not only Galfar, but the entire sector and economy in general.

Hamood Al Tobi: However, the timely awards of these opportunities is a critical factor that affects not only Galfar, but the entire sector and economy in general. We are seeing extended evaluation periods in the market, sometimes longer bid validity periods, and in some cases, delays between tendering and the actual award. As explained, this has implications for contractors and is one of the reasons we are maintaining discipline in resource planning and tender selection. Looking further ahead, our assessment indicates that Galfar addressable market could increase by approximately 29% moving forward. Energy and industrial project is expected to be among the largest growth or the largest growth engine, representing around 44% of the identified opportunities by 2028. We also see significant opportunities in infrastructure and civil and environmental projects. The important point for our esteemed shareholder is that Galfar does not need to capture a disproportionate share of this market.

Hamoud Al Tobi: However, the timely awards of these opportunities is a critical factor that affects not only Galfar, but the entire sector and economy in general. We are seeing extended evaluation periods in the market, sometimes longer bid validity periods, and in some cases, delays between tendering and the actual award. As explained, this has implications for contractors and is one of the reasons we are maintaining discipline in resource planning and tender selection. Looking further ahead, our assessment indicates that Galfar addressable market could increase by approximately 29% moving forward. Energy and industrial project is expected to be among the largest growth or the largest growth engine, representing around 44% of the identified opportunities by 2028. We also see significant opportunities in infrastructure and civil and environmental projects. The important point for our esteemed shareholder is that Galfar does not need to capture a disproportionate share of this market.

Speaker #1: We are seeing extended evaluation periods in the market, sometimes longer bid validity periods, and in some cases, delays between tendering and the actual award.

Speaker #1: As explained, this has implications for contractors and is one of the reasons we are maintaining discipline in resource planning and tender selection. Looking further ahead, our assessment indicates that Galfar's addressable market could increase by approximately 29% moving forward.

Speaker #1: Energy and industrial project is expected to be a more among the largest growth or the largest growth engine representing around 44% of the identified opportunities by 2028.

Speaker #1: But we also see significant opportunities in infrastructure, and civil and environmental projects, and the important point for our esteemed shareholder is that Galfar does not need to capture a disproportionate share of this market.

Speaker #1: Our objective is selective conversion. We want to target projects where Galfar has a competitive advantage and where the risk and return profile, you know, meets our internal requirements.

Hamood Al Tobi: Our objective is selective conversion. We want to target projects where Galfar has a competitive advantage and where the risk and return profile meets our internal requirements. This brings me to an area that I expect will be of particular interest to you, which is the company's order book. We entered 2026 with an order book of approximately OMR 745 million, and at the end of Q2 this year, our order book stood at approximately OMR 635 million, which is still solid and substantial and gives reasonable visibility into future revenues. However, we recognize that the reduction and rebuilding the order book is one of our immediate priorities, and it is important to look at this together with the opportunity pipeline.

Hamoud Al Tobi: Our objective is selective conversion. We want to target projects where Galfar has a competitive advantage and where the risk and return profile meets our internal requirements. This brings me to an area that I expect will be of particular interest to you, which is the company's order book. We entered 2026 with an order book of approximately OMR 745 million, and at the end of Q2 this year, our order book stood at approximately OMR 635 million, which is still solid and substantial and gives reasonable visibility into future revenues. However, we recognize that the reduction and rebuilding the order book is one of our immediate priorities, and it is important to look at this together with the opportunity pipeline.

Speaker #1: So this brings me to an area that I expect will be of particular interest to you, which is the company's order book.

Speaker #1: We entered 2026 with an order book of approximately 745 million and at the end of quarter two this year our order 635 million Omani riyal.

Speaker #1: Which is still solid and substantial and gives reasonable visibility into future revenues. However, we recognize that the reduction and rebuilding of the order book is one of our immediate priorities, and it is important to look at this together with the opportunity pipeline.

Speaker #1: At the end of Q2, we had approximately $2.1 billion worth of active opportunities, which comprises around $1 billion under evaluation—tenders that we have participated in and are under evaluation—and approximately another $1 billion of tenders and projects under preparation.

Hamood Al Tobi: At the end of Q2, we had approximately OMR 2.1 billion worth of active opportunities, which compromises around OMR 1 billion under evaluation tenders that we have participated in and are under evaluation, and approximately another OMR 1 billion of tenders and projects under preparation. Our target is to move the order book to more than OMR 800 million to OMR 1 billion. Achieving that target does not require us to win every tender. Our strategy assumes, as mentioned previously, selective conversion of the available opportunities while protecting margin and contractual quality. We are broadening the types of opportunities we pursue and the joint venture structures that we are willing to participate in, as well as not only focusing onto EPC construction type of projects, but operate and maintain service type of contracts remains among our highest priorities.

Hamoud Al Tobi: At the end of Q2, we had approximately OMR 2.1 billion worth of active opportunities, which compromises around OMR 1 billion under evaluation tenders that we have participated in and are under evaluation, and approximately another OMR 1 billion of tenders and projects under preparation. Our target is to move the order book to more than OMR 800 million to OMR 1 billion. Achieving that target does not require us to win every tender. Our strategy assumes, as mentioned previously, selective conversion of the available opportunities while protecting margin and contractual quality. We are broadening the types of opportunities we pursue and the joint venture structures that we are willing to participate in, as well as not only focusing onto EPC construction type of projects, but operate and maintain service type of contracts remains among our highest priorities.

Speaker #1: Our target is to move the order book to more than 800 million to 1 billion Omani Riyal. Achieving that target does not require us to win every tender. Our strategy assumes, as mentioned previously, selective conversion of the available opportunities while protecting margin and contractual quality.

Speaker #1: We are broadening the types of opportunities we pursue and the joint venture structures that we are willing to participate in, as well as not only focusing on EBC construction-type projects, but also operating and maintaining service-type contracts, which remains among our highest priorities.

Speaker #1: This should gradually diversify the business beyond the traditional EBC model and create greater potential for reoccurring revenues. So while there is a reduction in the order book from where we've started the year and where we ended in Q2 however the pipeline of opportunities as explained either opportunities in which we have already submitted a bid and they are under evaluation or opportunities in which we are preparing bids remains very substantial and a reasonable success rate or win rate will lead us to refurbish and rebuild our order book to the levels that we aspire to keep it.

Hamood Al Tobi: This should gradually diversify the business beyond the traditional EPC model and create greater potential for reoccurring revenues. While there is a reduction in the order book from where we started the year and where we ended in Q2, however, the pipeline of opportunities, as explained, either opportunities in which we have already submitted a bid and they are under evaluation, or opportunities in which we are preparing bids, remains very substantial, and a reasonable success rate or win rate will lead us to refurbish and rebuild our order book to the levels that we aspire to keep it. I would like to touch base also on another important part of the Galfar story, which is the overall contribution to Oman and the country. Galfar is the largest employer of Omanis in the private sector or non-government private sector, if I may describe it in that way.

Hamoud Al Tobi: This should gradually diversify the business beyond the traditional EPC model and create greater potential for reoccurring revenues. While there is a reduction in the order book from where we started the year and where we ended in Q2, however, the pipeline of opportunities, as explained, either opportunities in which we have already submitted a bid and they are under evaluation, or opportunities in which we are preparing bids, remains very substantial, and a reasonable success rate or win rate will lead us to refurbish and rebuild our order book to the levels that we aspire to keep it. I would like to touch base also on another important part of the Galfar story, which is the overall contribution to Oman and the country. Galfar is the largest employer of Omanis in the private sector or non-government private sector, if I may describe it in that way.

Speaker #1: I would like to touch base also on another important part of the Galfar story, which is the overall contribution to Oman and the country.

Speaker #1: Galfar is one of the—if it is really Galfar—is the largest employer of Omanis in the private sector, or non-government private sector, if I may describe it in that way.

Speaker #1: With close to 5,000 Omani employees proudly working in our large workforce, we also engage close to 1,400 Omani suppliers, including SMEs, subcontractors, and vendors.

Hamood Al Tobi: With close to 5,000 Omanis employees proudly working in our large workforce. We also engage close to 1,400 Omani suppliers, including SMEs and subcontractors and vendors. Galfar stands today as a big enabler of the local supply chain. We also have more than 3,700 shareholders, which means that the value we create is distributed across a broad shareholder base. In addition, we continue to invest in structured CSR programs and community initiatives. For us, therefore, our in-country value, our ICV, is not simply a tender requirement. It is embedded in the way Galfar operates. Our scale allows us to create employment, develop national capabilities, support SMEs and local suppliers, and also retain a significant proportion of project expenditures within the Omani economy. Bringing all of this together, what is the Galfar investment proposition today? First, the company returned to profitability, and H1 2026 demonstrates continued improvement.

Hamoud Al Tobi: With close to 5,000 Omanis employees proudly working in our large workforce. We also engage close to 1,400 Omani suppliers, including SMEs and subcontractors and vendors. Galfar stands today as a big enabler of the local supply chain. We also have more than 3,700 shareholders, which means that the value we create is distributed across a broad shareholder base. In addition, we continue to invest in structured CSR programs and community initiatives. For us, therefore, our in-country value, our ICV, is not simply a tender requirement. It is embedded in the way Galfar operates. Our scale allows us to create employment, develop national capabilities, support SMEs and local suppliers, and also retain a significant proportion of project expenditures within the Omani economy. Bringing all of this together, what is the Galfar investment proposition today? First, the company returned to profitability, and H1 2026 demonstrates continued improvement.

Speaker #1: So, Galfar stands today as the big enabler of the local supply chain. We also have more than 3,700 shareholders, which means that the value we create is distributed across a broad shareholder base.

Speaker #1: In addition, we continue to invest in structured CSR programs and community initiatives. For us, therefore, our in-country value—our ICV—is not simply a tender requirement; it's embedded in the way Galfar operates, and our scale allows us to create employment, develop national capabilities, and support SMEs and local suppliers.

Speaker #1: And also retain a significant proportion of project expenditures within the Omani economy. So, bringing all of this together, what is the Galfar investment proposition today? First, the company’s return to profitability in the first half of 2026 demonstrates continued improvement.

Speaker #1: Secondly, our EBITDA and operating efficiency margins are recovering, indicating stronger underlying operating performance. Thirdly, our equity position is also strengthening, and as mentioned, by the end of Q2 Galfar moved from accumulated losses to a retained profit earnings position.

Hamood Al Tobi: Secondly, our EBITDA and operating efficiency margins are recovering, indicating stronger underlying operating performance. Thirdly, our equity position is also strengthening, and as mentioned that by end of Q2, Galfar moved from accumulated losses to retained profit earnings positions. Fourth, although we need to replenish the order book, as explained, we have a substantial and diversified pipeline of opportunities in front of us. Fifth, our capabilities are closely aligned with the sector receiving significant investments under the Oman Vision 2040 directions. Finally, Galfar has something that is difficult to replicate quickly. More than five decades of experience, established client relationships, a substantial national workforce, extensive engineering and execution capabilities, and the capacity to deliver large and complex projects. Over the past five decades, there is not a single project that Galfar could not conclude or could not deliver.

Hamoud Al Tobi: Secondly, our EBITDA and operating efficiency margins are recovering, indicating stronger underlying operating performance. Thirdly, our equity position is also strengthening, and as mentioned that by end of Q2, Galfar moved from accumulated losses to retained profit earnings positions. Fourth, although we need to replenish the order book, as explained, we have a substantial and diversified pipeline of opportunities in front of us. Fifth, our capabilities are closely aligned with the sector receiving significant investments under the Oman Vision 2040 directions. Finally, Galfar has something that is difficult to replicate quickly. More than five decades of experience, established client relationships, a substantial national workforce, extensive engineering and execution capabilities, and the capacity to deliver large and complex projects. Over the past five decades, there is not a single project that Galfar could not conclude or could not deliver.

Speaker #1: Fourth, although we need to replenish the order book as explained, we have a substantial and diversified pipeline of opportunities in front of us.

Speaker #1: Fifth, our capabilities are closely aligned with the sector, receiving significant investments and the Oman 2040 Vision directions. And finally, Galfar has something that is difficult to replicate quickly: more than five decades of experience, established client relationships, a substantial national workforce, extensive engineering and execution capabilities, and the capacity to deliver large and complex projects.

Speaker #1: Over the past five decades, there is not a single project that Galfar could not conclude or could not deliver, and this is a big testimony to the capability and confidence that Galfar enjoys in the Omani market in project delivery.

Hamood Al Tobi: This is a big testimony to the capability and confidence that Galfar enjoys in the Omani market in project delivery. Our task as management is to convert those strengths into sustainable profitability and ultimately greater shareholder values. Ladies and gentlemen, if I were to summarize our position today in a few words, I would like to say that Galfar has moved from recovery into a phase of disciplined growth. The improvement in H1 2026 is encouraging, but we are not complacent. We are not slowing down. There is still considerable work ahead of us. We are mindful of the market circumstances, the changes in the market, the impacts of the geopolitical conflict, and if there are prolongation in these conflicts, the impact that this could have on the wider economy and in our business specifically.

Hamoud Al Tobi: This is a big testimony to the capability and confidence that Galfar enjoys in the Omani market in project delivery. Our task as management is to convert those strengths into sustainable profitability and ultimately greater shareholder values. Ladies and gentlemen, if I were to summarize our position today in a few words, I would like to say that Galfar has moved from recovery into a phase of disciplined growth. The improvement in H1 2026 is encouraging, but we are not complacent. We are not slowing down. There is still considerable work ahead of us. We are mindful of the market circumstances, the changes in the market, the impacts of the geopolitical conflict, and if there are prolongation in these conflicts, the impact that this could have on the wider economy and in our business specifically.

Speaker #1: Our task as management is to convert those strengths into sustainable profitability and ultimately greater shareholder value. Ladies and gentlemen, if I were to summarize our position today in a few words, I would like to say that Galfar has moved from recovery into a phase of disciplined growth. The improvement in H1 2026 is encouraging, but we are not complacent, we are not slowing down. There is still considerable work ahead of us. We are mindful of the market circumstances, the changes in the market, the impacts of the geopolitical conflict, and the prolongation of this conflict. If there is prolongation of these conflicts, the impact that this could have on the wider economy and in our business specifically.

Speaker #1: And our priorities for the remainder of 2026 are clear: continue improving project profitability, strengthen cash flow and working capital management, replenish the order book with quality projects, maintain strict bidding and contractual discipline, and continue developing new areas for growth.

Hamood Al Tobi: Our priorities for the remainder of 2026 are clear: continue improving the project profitability, strengthen cash flow and working capital management, replenish the order book with quality projects, maintain strict bidding and contractual discipline, and we will continue developing new areas for growth. The market opportunity in Oman is significant. Galfar has the scale, experience, people, and the capability to participate meaningfully in the available pipeline of opportunities. Our focus will remain on profitable growth rather than growth for its own sake. Ultimately, our ambition is to build stronger Galfar, one that delivers consistently for its clients, contributes meaningfully to Oman, provides opportunities for its people, and generates sustainable value for its shareholders. Thank you once again for joining us today in this engagement session, and for your continued interest and confidence in Galfar. My colleagues and myself will now be pleased to take your comments, questions, clarifications.

Hamoud Al Tobi: Our priorities for the remainder of 2026 are clear: continue improving the project profitability, strengthen cash flow and working capital management, replenish the order book with quality projects, maintain strict bidding and contractual discipline, and we will continue developing new areas for growth. The market opportunity in Oman is significant. Galfar has the scale, experience, people, and the capability to participate meaningfully in the available pipeline of opportunities. Our focus will remain on profitable growth rather than growth for its own sake. Ultimately, our ambition is to build stronger Galfar, one that delivers consistently for its clients, contributes meaningfully to Oman, provides opportunities for its people, and generates sustainable value for its shareholders. Thank you once again for joining us today in this engagement session, and for your continued interest and confidence in Galfar. My colleagues and myself will now be pleased to take your comments, questions, clarifications.

Speaker #1: The market opportunity in Oman is significant. Galfar has the scale, experience, people, and the capability to participate meaningfully in the available pipeline of opportunities. But our focus will remain on profitable growth rather than growth for its own sake.

Speaker #1: And ultimately, our ambition is to build a stronger Galfar—one that delivers consistently for its clients, contributes meaningfully to Oman, provides opportunities for its people, and generates sustainable value for its shareholder.

Speaker #1: Thank you once again for joining us today in this engagement session and for your continued interest and confidence in Galfar. My colleagues and I will now be pleased to take your comments, questions, and clarifications. So, the floor is open. Thank you very much.

Hamood Al Tobi: The floor is open. Thank you very much. Okay, I see Azul raised hand. You can go ahead, please.

Hamoud Al Tobi: The floor is open. Thank you very much. Okay, I see Azul raised hand. You can go ahead, please.

Speaker #1: Okay, so I see Azul raised their hand. Yeah, you can go ahead, please.

Speaker #2: Thank you. Thank you, Mr. Hamud, for the presentation. I have a couple of questions. One is, in terms of your order book on an annual basis, what seems to be the reasonable new projects win, basically per annum, that you're looking at?

[Analyst]: Sure. Thank you, Mr. Hamood, for the presentation. I have a couple of questions. One is in terms of your order book. On the annual basis, what seems to be the reasonable new projects win, basically per annum, that you are looking at?

[Analyst]: Sure. Thank you, Mr. Hamoud, for the presentation. I have a couple of questions. One is in terms of your order book. On the annual basis, what seems to be the reasonable new projects win, basically per annum, that you are looking at?

Speaker #1: Yeah, thank you, Azul. Our target is between 250 to 300 million Omani Riyals worth of new projects to be backed. But as really selective bidding in this type of business, it is not that complicated to build a large order book and build it very quickly. Okay, simply bid cheap in every tender and then you are positioned very, you know, strongly to build your order book. But that's not our strategy as Galfar.

Hamood Al Tobi: Yeah. Thank you, Azul. Our target is between 250 to 300 million OMR worth of new projects to be bagged. But as we explained, our focus is really selective bidding.

Hamoud Al Tobi: Yeah. Thank you, Azul. Our target is between 250 to 300 million OMR worth of new projects to be bagged. But as we explained, our focus is really selective bidding. In this type of business, it is not that complicated to build large order book and build it very quickly. Okay? Simply bid cheap in every tender and then you have a position very strongly to build your order book. But that is not our strategy as Galfar. While we understand that the order book, the strength of the order book, the size of the order book is critical and important, our strategy is selective quality orders, and we are confident we can achieve this

Hamood Al Tobi: In this type of business, it is not that complicated to build large order book and build it very quickly.

Hamood Al Tobi: Okay? Simply bid cheap in every tender and then you have a position very strongly to build your order book. But that is not our strategy as Galfar.

Speaker #1: While we understand that the order book—the strength of the order book and the size of the order book—is critical and important, our strategy is selective quality ordering, and we are confident we can achieve this.

Hamood Al Tobi: While we understand that the order book, the strength of the order book, the size of the order book is critical and important, our strategy is selective quality orders, and we are confident we can achieve this

Speaker #2: Okay, sure. And excluding the real project that you have currently, what is the average duration of the order book, and also the margin profile?

[Analyst]: Okay

Hamood Al Tobi: moving forward, inshallah.

Hamoud Al Tobi: moving forward, inshallah.

[Analyst]: And excluding the real project that you have currently, what is the average duration of the order book and also the margin profile?

Speaker #1: So, the average duration of the order book, I think, gives visibility for around three years on revenues. But of course, there are contracts that have longer terms than the three years, but this is on average.

Hamood Al Tobi: The average duration of the order book, I think, gives a visibility for around three years.

Hamoud Al Tobi: The average duration of the order book, I think, gives a visibility for around three years. On revenues. But of course, there are contracts that's got longer term than the 3 years, but this is on average.

Hamood Al Tobi: on revenues. But of course, there are contracts that's got longer term

Hamood Al Tobi: than the 3 years, but this is on average.

Speaker #2: Okay. And the margin profile for the current order book?

[Analyst]: Okay. And the margin profile for current order book?

Speaker #1: Our focus is, of course, to maximize, as explained, the margin profiles, and we have seen the improvements in our EBITDA margins, in our net profit margins, and we will continue to focus as a management, as a company, to improve and, you know, increase these margins from our projects.

Hamood Al Tobi: Our focus is, of course, to maximize, as explained

Hamoud Al Tobi: Our focus is, of course, to maximize, as explained the margin profiles. We have seen the improvements in our EBITDA margins, in our net profit margins. We will continue focus as a management, as a company, to improve and increase these margins from our projects.

Hamood Al Tobi: the margin profiles.

Hamood Al Tobi: We have seen the improvements in our EBITDA margins, in our net profit margins.

Hamood Al Tobi: We will continue focus as a management, as a company, to improve and increase these margins from our projects.

Speaker #2: Okay. And in terms of impairment, can you provide some guidance or color on how much impairment you expect on an annual basis?

[Analyst]: Okay. In terms of impairment, can you provide some guidance or colors on how much of impairment do you expect on the annual basis?

Speaker #1: Of course impairments is this is a routine exercise impairment assessments be it impairment on receivables or others as part of our financial and accounting processes and as I have a rest requirements there is quarterly and annual assessments of all impairment requirements.

Hamood Al Tobi: Of course, impairments, this is a routine exercise. Impairment assessments, be it impairment on receivables or others. As part of our financial and accounting processes and as per IFRS requirements, there is quarterly and annual assessments of all impairment requirements. Mohammed, CFO, if you would like to add something to that.

Hamoud Al Tobi: Of course, impairments, this is a routine exercise. Impairment assessments, be it impairment on receivables or others. As part of our financial and accounting processes and as per IFRS requirements, there is quarterly and annual assessments of all impairment requirements. Mohammed, CFO, if you would like to add something to that.

Speaker #1: Mohammed, CFO, if you would like to add something to that.

Speaker #2: Yes of course we as Dr. Hamud mentioned we do follow the accounting standard IFRS 9 and we have have our own ECL methodology that's been of course audited agreed by the external auditor PWC and of course that's fixed since two years almost and we have so far there is a provisions more than almost provided more than 12 million as on date.

Mohammed Al Yahyaei: Yes, of course. As Dr. Khalid mentioned, we do follow the accounting standard, IFRS 9, and we have our own ECL methodology that has been, of course, audited, agreed by the external auditor, PwC. That is fixed since two years almost, and we have so far, there is a provisions almost provided more than OMR 12 million as on date.

Speaker #2: Okay, all right. Thank you very much.

[Analyst]: Okay. All right. Thank you very much.

Speaker #1: Okay, Abbas, you have your hand up; would you like to go through, please?

Hamood Al Tobi: Okay. Abbas, you have your hand up. Like to go through, please?

Hamoud Al Tobi: Okay. Abbas, you have your hand up. Like to go through, please?

Speaker #3: Yes, thank you, Dr. Toby. Thank you, Mr. Yahya. I have a few questions, but before that, I have a comment. I think I've been tracking Galfar and the Omani market.

Abbas Ali Al Musalmi: Yes. Thank you, Dr. Toby. Thank you, Mr. Yahyaei. I have a few questions, but before that, I have a comment. I think I've been tracking Galfar and the Omani market

Speaker #1: If you don't mind, could you please introduce yourself? Anyone, if you could introduce yourself.

Hamood Al Tobi: If you don't mind, if you could introduce yourself, please. Anyone, if you could introduce yourself.

Hamoud Al Tobi: If you don't mind, if you could introduce yourself, please. Anyone, if you could introduce yourself.

Speaker #3: Yes. So my organization you represent. Yes. My name is yes my name is Abbas Muslemi. I'm I'm the CIO of Ubar Capital and I've been tracking Galfar and Omani markets from 2008.

Abbas Ali Al Musalmi: Yes. So my

Hamood Al Tobi: And the organization you represent.

Hamoud Al Tobi: And the organization you represent.

Abbas Ali Al Musalmi: Yes. My name is Abbas Ali Al Musalmi. I am the CIO of Ubhar Capital, and I have been tracking Galfar and Omani markets from 2008. I think the comment that I had was, the progress that I have seen Galfar make under yours and Mr. Yahyaei's leadership is real. Both in terms of discipline when it comes to tendering, discipline of executing, discipline of budgeting, and that is not lost on the markets. We know that the company went through a challenging time, but I can see the numbers, I can see the cash flows inch up. I just wanted to put it on the record in terms of someone who has looked at the company for many years. I have seen the progress that the company has made under yours and Mr. Yahyaei's leadership. That is the comment.

Speaker #3: So, I think the comment that I had was: you know, the progress that I've seen Galfar make under yours and Mr. Yahya's leadership is real.

Speaker #3: You know, both in terms of, you know, discipline when it comes to tendering, discipline of executing, discipline of budgeting, and you know, that is not lost on the markets.

Speaker #3: You know, we know that the company went through a challenging time, but I can see the numbers, I can see the cash flows in shape, and you know, I just wanted to sort of put it on the record, in terms of someone who has looked at the company for many years.

Speaker #3: I've seen the progress that the company has made under your and Dr. Mr. Yahya's leadership. So that's the comment. The question that I—yes, sir.

Hamood Al Tobi: Thank you. Thank you.

Hamoud Al Tobi: Thank you. Thank you.

Abbas Ali Al Musalmi: The question that I have. Yes, sir. The question I have is, I have multiple questions. Of course, one of the key challenges you face is the working capital-intensive nature of the business and of course, the high leverage which historically you guys inherited. There has been some talk about capital raise over the last couple of years, but nothing has come through. I was looking at ALEC as a model in UAE. Similar company, what Galfar is. Galfar is not just important to the constructions industry, it is important to Oman. Biggest employer of Omanis in the private sector. Almost the growth of Oman, in some part, Galfar has played a big role in the infrastructure growth. Why is the company not discussing with the government taking a private placement or a stake? Because Galfar is so strategic to this country. What are your thoughts on that, actually?

Speaker #3: The the question I have is you know I have multiple questions. Of course one of the key challenges you face is you know the working capital intensive nature of the business and of course you know the high leverage historically you guys inherited.

Speaker #3: Now, there has been some talk about capital raise over the last couple of years, but nothing has come through. Now, I was looking at Alec as a model in the UAE, you know, a similar company. You know what Galfar is. Galfar is not just important to the construction industry, it's important to Oman. You know, it's the biggest employer of Omanis in the private sector—almost the growth of Oman, you know, in some part, Galfar has played a big role in the infrastructure growth.

Speaker #3: Why is the company not discussing with the government taking a private placement or a stake? Because Galfar is so strategic to this country, so what are your thoughts on that actually, you know?

Speaker #3: That the government becomes a shareholder.

Abbas Ali Al Musalmi: That the government becomes a shareholder.

Speaker #1: Thank you for sharing that comment and clarification, Abbas. As Galfar, of course, we have recently also engaged strategic financial advisory, which is to review, you know, the potential and possibility for us with regards to capital raising and what are the available options, etc.

Hamood Al Tobi: Thank you for sharing that comment and clarification, Abbas. As Galfar, of course, we have recently also engaged strategic financial advisory, which is to review the potential and possibility for us with regards to capital raising and what are the available options, et cetera. This strategic financial study is under deliberation by the management and the board, and once it is concluded and there are appropriate disclosures to be made, definitely we would share some of the outcome of this strategic financial advisory reviews that we are undertaking. With regard to the second part you have mentioned, for government to be part in a contracting company like Galfar with particularly national importance to the country in terms of our local Omani capabilities, track records, largest employer of Omanis in the private sector or non-government private sectors.

Hamoud Al Tobi: Thank you for sharing that comment and clarification, Abbas. As Galfar, of course, we have recently also engaged strategic financial advisory, which is to review the potential and possibility for us with regards to capital raising and what are the available options, et cetera. This strategic financial study is under deliberation by the management and the board, and once it is concluded and there are appropriate disclosures to be made, definitely we would share some of the outcome of this strategic financial advisory reviews that we are undertaking. With regard to the second part you have mentioned, for government to be part in a contracting company like Galfar with particularly national importance to the country in terms of our local Omani capabilities, track records, largest employer of Omanis in the private sector or non-government private sectors.

Speaker #1: This strategic financial study is under deliberation by the management and the board, and once it is concluded and there are appropriate disclosures to be made, we will definitely share some of the outcomes of these strategic financial advisory reviews that we are undertaking.

Speaker #1: With regard to the second part you have mentioned for government to be part in you know contracting company like Galfar with particularly national importance to the country in terms of you know local Omani capabilities track records largest employer of Omanis in the private sector or non-government private sectors you know the the the the importance of such technical capabilities that Galfar has to the delivery of the Oman 2040 visions it is it is not uncommon and we have seen examples like you said in the region nearby markets where government investment buddies do it as a stakeholders or inject capital infuse capital into similar engineering and contracting companies.

Hamood Al Tobi: The importance of such technical capabilities that Galfar has to the delivery of the Oman Vision 2040. It is not uncommon, and we have seen examples, like you said, in the region, nearby markets where government investment bodies do enter as stakeholders or inject capital, infuse capital into similar engineering and contracting companies. Here, for us as Galfar, we would welcome such an opportunity, if it exists. Definitely, we would welcome such an opportunity.

Hamoud Al Tobi: The importance of such technical capabilities that Galfar has to the delivery of the Oman Vision 2040. It is not uncommon, and we have seen examples, like you said, in the region, nearby markets where government investment bodies do enter as stakeholders or inject capital, infuse capital into similar engineering and contracting companies. Here, for us as Galfar, we would welcome such an opportunity, if it exists. Definitely, we would welcome such an opportunity.

Speaker #1: Here, for us at Galfar, we welcome such an opportunity. If it exists, definitely we would welcome such an opportunity.

Speaker #3: Okay, thank you for those comments. You know, the second question I had is, you know, variation orders, overruns, timeline—you know, part and parcel of the business.

Abbas Ali Al Musalmi: Okay. Thank you for those comments. Second question I had is variation orders, overrun timelines are part and parcel of the business. Is there any big current litigation or arbitration that is going on that you can comment on, which has a material impact either on the profitability or actually on the cash flows of the company? Can you comment on Because we have been hearing from the grapevine some projects are overrun, some projects have been loss-making, and sometimes it is important to hear from the management than from the grapevine in the market.

Speaker #3: But is there any big current litigation or arbitration that's going on that you can comment on, which has a material impact either on the profitability or actually on the cash flows of the company?

Speaker #3: Can you comment on this? Because, you know, we've been hearing from the grapevine that some projects are overrun, some projects have been loss-making, and sometimes it's important to hear from the management and from the grapevine in the market.

Speaker #1: Yeah, like you said, variations and claims are, you know, part of this business. Okay. And you cannot have a project without some challenges. Okay.

Hamood Al Tobi: Yeah. Like you said, variations, claims are part of this business. Okay? You cannot have a project without some challenges, okay, and some discussions about variations and claims. With regards to ongoing arbitrations, I think information about we have two ongoing arbitration cases with international EPC companies. Information about this are also provided in our disclosed financial statements and the notes to the financial statements. We do expect that the award from these arbitrations should come any time soon in the future. We are hoping that the awards could be received. According to our, of course, legal assessments and advices, we are optimistic, but we need to wait and see the outcome of the arbitration awards.

Hamoud Al Tobi: Yeah. Like you said, variations, claims are part of this business. Okay? You cannot have a project without some challenges, okay, and some discussions about variations and claims. With regards to ongoing arbitrations, I think information about we have two ongoing arbitration cases with international EPC companies. Information about this are also provided in our disclosed financial statements and the notes to the financial statements. We do expect that the award from these arbitrations should come any time soon in the future. We are hoping that the awards could be received. According to our, of course, legal assessments and advices, we are optimistic, but we need to wait and see the outcome of the arbitration awards.

Speaker #1: And some discussions about variations and claims. With regards to ongoing arbitrations I think information about we have two ongoing arbitration cases with the international EPCs EPC companies and these are information about these are also provided in our financial disclosed financial statements and the notes to the financial statements and we do expect that the award from these arbitrations you know should come you know anytime soon in the future.

Speaker #1: We are hoping that the awards could be received. And according to our, of course, legal assessments and advice, we are optimistic, but we need to wait and see the outcome of the arbitration awards.

Speaker #3: What could be the potential size on the P&L or the cash flow, sir?

Abbas Ali Al Musalmi: What could be the potential size on the P&L or the cash flow, sir?

Speaker #1: This cannot be disclosed now, Abbas, okay? Because until the arbitration proceedings are formally concluded, etc. Once it is formally concluded, and if the outcome warrants disclosures, this will definitely be made available to the market.

Hamood Al Tobi: This cannot be disclosed now, Abbas, okay? Because until the arbitration proceedings are formally concluded, et cetera. Once it is formally concluded and if the outcome warrants disclosures, this will definitely be made available to the market.

Hamoud Al Tobi: This cannot be disclosed now, Abbas, okay? Because until the arbitration proceedings are formally concluded, et cetera. Once it is formally concluded and if the outcome warrants disclosures, this will definitely be made available to the market.

Speaker #3: Thank you. I had another question. You patiently explained the order book situation and the rundown of it, as well as the projects that are under consideration.

Abbas Ali Al Musalmi: Thank you. I had another question. You went through very patiently explaining the order book situation and the rundown of it and the projects that are under consideration. Now, I have another view on this. The fact that you have exercised discretion and good judgment when it comes to budgeting. I have seen some of the L1s versus your bids, and the gap is wide. Part of that is flowing through when Galfar is not winning order book. Now, that is a good thing, but the bad thing is that you have all these huge costs based, both in terms of employees and in terms of infrastructure. Now, why do you think things are going to change? Because my point is, for the last two years, you have not been able to secure big orders because of the, at least in my opinion, the discipline that you have shown to budgeting and tendering.

Speaker #3: Now I have another view on this. You know, the fact that you have exercised discretion and good judgment when it comes to budgeting.

Speaker #3: You know, I've seen some of the L1s versus your bids, and the gap is wide. And part of that is flowing through when Galfar is not winning the order book.

Speaker #3: Now, that's a good thing, but the bad thing is that you have all these huge costs based, you know, both in terms of employees and in terms of infrastructure.

Speaker #3: Now, why do you think things are going to change? Because my point is, for the last two years, you've not been able to secure big orders because of, at least in my opinion, the discipline that you've shown to budgeting and tendering.

Speaker #3: Now the market is still very competitive. You know, government tends to pick the L1 most times, so then what changes? You know, because for me, the big worry now is, you know, as an investor, of course I want margins, but there'll be no margins if there are no projects, you know.

Abbas Ali Al Musalmi: The market is still very competitive. Government tends to pick the L1 most times. What changes? Because for me, the big worry now is, as an investor, of course, I want margins, but there will be no margins if there are no projects. How would you address an investor's concern like mine, who is complimenting you for the work you have done, but who is also worried that the engine that is Galfar needs a lot of fuel, which is orders, and you do not seem to be securing that.

Speaker #3: So how would you address an investor's concern like mine, who's complimenting you for the work you've done but who's also worried that the engine that is Galfar needs a lot of fuel—which is orders—and you don't seem to be securing that?

Speaker #1: This is a spot on comment Abbas and as mentioned the pipeline of opportunities is large and however and maybe attributed to the ongoing geopolitical situation okay the time of awards kind of prolonged the award decisions of projects are taking longer and but we believe as Galfar we have competitive advantages and our order book remains strong and we are there are couple of opportunities that we believe we are strongly positioned in and we are waiting for the award decision to be issued by the project owners once those award decisions are issued there will definitely be the relevant market disclosures.

Hamood Al Tobi: This is a spot on comment, Abbas. As mentioned, the pipeline of opportunities is large. However, and may be attributed to the ongoing geopolitical situation, the time of awards kind of prolonged. The award decisions of projects are taking longer. What we believe as Galfar, we have competitive advantages, and our order book remains strong. There are a couple of opportunities that we believe we are strongly positioned in, and we are waiting for the award decision to be issued by the project owners. Once those award decisions are issued, there will definitely be the relevant market disclosures. So we are not talking or we are not concerned that there is a systematic issue in Galfar winning more projects. There are opportunities we know we are positioned strong in. We are just waiting for the awards. There are opportunities that are under evaluation.

Hamoud Al Tobi: This is a spot on comment, Abbas. As mentioned, the pipeline of opportunities is large. However, and may be attributed to the ongoing geopolitical situation, the time of awards kind of prolonged. The award decisions of projects are taking longer. What we believe as Galfar, we have competitive advantages, and our order book remains strong. There are a couple of opportunities that we believe we are strongly positioned in, and we are waiting for the award decision to be issued by the project owners. Once those award decisions are issued, there will definitely be the relevant market disclosures. So we are not talking or we are not concerned that there is a systematic issue in Galfar winning more projects. There are opportunities we know we are positioned strong in. We are just waiting for the awards. There are opportunities that are under evaluation.

Speaker #1: So, we are not talking or we are not concerned that there is a systemic issue in Galfar winning more projects. There are opportunities we know we are positioned strong in; we're just waiting for the awards. There are opportunities that are under evaluation, there are opportunities that are under preparations, and as explained in the slides, the pipeline of opportunities is very substantial. For us, we have a reasonable win rate or tender success rate, so we would be able to replenish our order book to the levels that we set as a target.

Hamood Al Tobi: There are opportunities that are under preparations. As explained in the slides, the pipeline of opportunities is very substantial. For us, with a reasonable win rate or tender success rates, we would be able to replenish our order book to the levels that we set as a target. But the size of our order book today remains reasonably strong as well.

Hamoud Al Tobi: There are opportunities that are under preparations. As explained in the slides, the pipeline of opportunities is very substantial. For us, with a reasonable win rate or tender success rates, we would be able to replenish our order book to the levels that we set as a target. But the size of our order book today remains reasonably strong as well.

Speaker #1: But the size of our order book today remains reasonably strong as well.

Speaker #3: Thank you sir.

Speaker #1: There is another—maybe if we can diversify, I don't know—there's another, and I'll come back. So, Koshal, I saw you have your hand up.

Abbas Ali Al Musalmi: Thank you, sir.

Hamood Al Tobi: There is another, maybe if we can diversify. I do not know. There is another.

Hamoud Al Tobi: There is another, maybe if we can diversify. I do not know. There is another.

Abbas Ali Al Musalmi: Yes. I will come back.

Hamood Al Tobi: Kushal, I saw you have your hands up.

Speaker #3: Yeah, I hope I'm audible. This is Kushal here from Decimal Point Analytics. I have two questions from my side. The first is regarding the NNGTJV, so correct me if I'm wrong.

Hamoud Al Tobi: Kushal, I saw you have your hands up.

[Analyst] (Decimal Point Analytics): Yeah. I hope I am audible. This side, Kushal here from Decimal Point Analytics. I have two questions from my side. The first regarding the NNGT JV. Correct me if I am wrong. We are consolidating the NNGT revenue and every line item in our IS as line by line. Could you provide some colors on the NNGT revenue going forward and the guidance or the margins profile for NNGT JV first?

Kushal Suryavanshi: Yeah. I hope I am audible. This side, Kushal here from Decimal Point Analytics. I have two questions from my side. The first regarding the NNGT JV. Correct me if I am wrong. We are consolidating the NNGT revenue and every line item in our IS as line by line. Could you provide some colors on the NNGT revenue going forward and the guidance or the margins profile for NNGT JV first?

Speaker #3: So we are consolidating the NNGT revenue and every line item in our IS as line line by line. So could you provide some colors on the NNGT revenue going forward and the guidance or the the margins profile for NNGTJV?

Speaker #1: Muhammad, can you respond to that, please?

Hamood Al Tobi: Mohammed, can you respond to that, please?

Hamoud Al Tobi: Mohammed, can you respond to that, please?

Speaker #2: Yes, NNGT is part of the Hafeet project, as you know. It has been formed to execute the Hafeet project from UAE to Abu Dhabi, to Sahara.

Mohammed Al Yahyaei: Yes. NNGT is part of the Hafeet project, as you know. It has been formed to execute the Hafeet project from UAE to Abu Dhabi to Sohar. Each one has got his own package, but there is a common package which is being exercised or executed by all the partners. Yes, we do consolidate our financials line by line, the income, the profit, everything, and the balance sheet as well, to our shares, which is 26%. That is the methodology we follow, and that we have started last year after discussing with PwC and different, taking the legal view as well on it. That is the way, methodology we started to follow. Is there any particular question you would like to know about it?

Speaker #2: And then each one has got his own package, but there is a common package which has been exercised or executed by the three, or by the partners.

Speaker #2: Yes we do consolidate our financials line by line the income the profit everything and the balance sheet as well. To our shares which is 26% so that's the the the methodology we follow and that's we have started last year by after discussing with PWC and different taking the legal view as well on it and that's the way methodology we we started to follow.

Speaker #2: Are there any particular questions you would like to know about it?

Speaker #3: Yeah, I'm in the timeline for the project and the margin profile going forward. So we can, I mean, use it for modeling purposes.

[Analyst] (Decimal Point Analytics): Yeah. I mean, the timeline for the project and the margin profile going forward, so we can, I mean, use in the modeling purpose.

Kushal Suryavanshi: Yeah. I mean, the timeline for the project and the margin profile going forward, so we can, I mean, use in the modeling purpose.

Speaker #2: Yes, timeline may be seen for the project.

Mohammed Al Yahyaei: Yes, timeline maybe to-

Speaker #1: It is progressing well and has reached a substantial completion status. So, as it is, the project is progressing. Of course, the anticipated profit margins in each project—this is not information that can be made publicly available. Okay, and I'm sure you would appreciate and understand that.

Hamood Al Tobi: The project is progressing well and reached a substantial completion status. So it really is progressing. Of course, the anticipated profit margins in each project, it is not an information that could be made publicly available. I am sure you would appreciate and understand that. However, like we said, our focus is from every, of course, project and from the total operations of Galfar, our focus is to continuously enhance our returns from all projects, not only the railway project. For the timeline, it is as it was announced initially with the disclosure at the time of the project award. The project was for around, I think, four years. However, that is not considering any variations or changes or geopolitical situation impacts, et cetera. Importantly, the project is progressing at a good pace, and there is close monitoring on the execution and delivery of this project.

Hamoud Al Tobi: The project is progressing well and reached a substantial completion status. So it really is progressing. Of course, the anticipated profit margins in each project, it is not an information that could be made publicly available. I am sure you would appreciate and understand that. However, like we said, our focus is from every, of course, project and from the total operations of Galfar, our focus is to continuously enhance our returns from all projects, not only the railway project. For the timeline, it is as it was announced initially with the disclosure at the time of the project award. The project was for around, I think, four years. However, that is not considering any variations or changes or geopolitical situation impacts, et cetera. Importantly, the project is progressing at a good pace, and there is close monitoring on the execution and delivery of this project.

Speaker #1: However, like we said, our focus is from every project, of course, and from the total operations of Galfar. Our focus is to continuously enhance our returns from all projects.

Speaker #1: Not only the railway project. And for the timeline it is as it was announced initially with the disclosure of the time of the the the project award the project was for around I think four years and however that is not considering any variations or changes or you know geopolitical situation impacts etc etc.

Speaker #1: Importantly, the project is progressing at a good pace, and there is close monitoring of the execution and delivery of this project.

Speaker #1: It's one of the significant projects that Galfar is delivering, and we are very proud to be the first Omani construction company to participate in a strategic project.

Hamood Al Tobi: It's one of the significant projects that Galfar is delivering, and we are very proud to be the first Omani construction company actually to participate in a strategic project and a railway project.

Hamoud Al Tobi: It's one of the significant projects that Galfar is delivering, and we are very proud to be the first Omani construction company actually to participate in a strategic project and a railway project.

Speaker #3: Okay, thank you. The second question is about the last couple of quarters where we have seen significant improvement in the gross profit margins.

[Analyst] (Decimal Point Analytics): Okay. Thank you. The second question is about from last couple of quarters, we have seen very much improvement in the gross profit margins. My question is, does Galfar is considering the higher margin projects in his order book? Or the NNGT revenue is consolidated line by line, that's why we have seen the last couple of quarters good gross profit margins. Quick follow-up then, can we sustain those margin going forward, if possible?

Kushal Suryavanshi: Okay. Thank you. The second question is about from last couple of quarters, we have seen very much improvement in the gross profit margins. My question is, does Galfar is considering the higher margin projects in his order book? Or the NNGT revenue is consolidated line by line, that's why we have seen the last couple of quarters good gross profit margins. Quick follow-up then, can we sustain those margin going forward, if possible?

Speaker #3: So, I mean, my question is just—Galfar is, I mean, considering the higher-margin projects in its order book, or is the NNGT revenue consolidated line by line? That's why we have seen, in the last couple of quarters, good gross profit margins. And a quick follow-up, then.

Speaker #3: So, can we sustain those margins going forward? I mean, if possible.

Speaker #1: Definitely, our focus as management and as a company, as mentioned, is to sustain and improve the profit margin. It is difficult to say there will not be challenges or conditions that would affect project progress.

Hamood Al Tobi: Definitely our focus as management, as a company, and as mentioned, is to sustain and improve the profit margin. It is difficult to say there will not be challenges or conditions that would affect project progress. Importantly, is that we are prepared and have the capabilities to mitigate the challenges, and we'll continue our focus, and our aim is to sustain and improve. That's our aim and our focus as a management.

Hamoud Al Tobi: Definitely our focus as management, as a company, and as mentioned, is to sustain and improve the profit margin. It is difficult to say there will not be challenges or conditions that would affect project progress. Importantly, is that we are prepared and have the capabilities to mitigate the challenges, and we'll continue our focus, and our aim is to sustain and improve. That's our aim and our focus as a management.

Speaker #1: Importantly, we are prepared and have the capabilities to mitigate the challenges. We will continue our focus, and our aim is to sustain and improve.

Speaker #1: That's our aim and our focus as management. Thank you, Koshal. Thank you, Koshal. Any other questions? Yes, I see Shaur. You can go ahead, please.

[Analyst] (Decimal Point Analytics): Thank you.

Kushal Suryavanshi: Thank you.

Hamood Al Tobi: Thank you, Kushal. Any other questions? Yes, I see Shahur. You can go ahead, please.

Hamoud Al Tobi: Thank you, Kushal. Any other questions? Yes, I see Shahur. You can go ahead, please.

Speaker #3: Yes, hi. Good morning. This is Shaur from Vision Capital. I have a couple of questions, and to begin with, a follow-up on what you have been commenting regarding the order book.

[Analyst] (Vision Capital): Yes. Hi. Good morning.

Shaoor Turabee: Yes. Hi. Good morning.

Hamood Al Tobi: Good morning.

Hamoud Al Tobi: Good morning.

[Analyst] (Vision Capital): This is Shahur from Vision Capital. I have a couple of questions. To begin with, a follow-up on what you have been commenting on the order book. Obviously the order book is sizable, and you mentioned that on average it is a three-year revenue. My question is, because we have seen some serious increase in the costs because of the ongoing conflict in the region. How are your contracts? Our understanding is that the contracts with the government are sort of fixed. How much of a pass-through can you manage of this increase in costs? Or should we expect this increase in the raw materials and the freights to directly dent your margins and you cannot pass this through?

Shaoor Turabee: This is Shahur from Vision Capital. I have a couple of questions. To begin with, a follow-up on what you have been commenting on the order book. Obviously the order book is sizable, and you mentioned that on average it is a three-year revenue. My question is, because we have seen some serious increase in the costs because of the ongoing conflict in the region. How are your contracts? Our understanding is that the contracts with the government are sort of fixed. How much of a pass-through can you manage of this increase in costs? Or should we expect this increase in the raw materials and the freights to directly dent your margins and you cannot pass this through?

Speaker #3: So obviously, the order book is sizable, and you mentioned that, on average, it's three years' revenue. My question is because we have seen some, you know, serious increase in the costs due to the ongoing conflict in the region.

Speaker #3: So how are your contracts because our understanding is that you know the contracts with the government are sort of fixed. So how much of a of a pass through can you manage of this increase in costs or should we expect this increase in you know the the raw materials and the freights to directly dent your margins and you cannot pass this through?

Speaker #1: That's a very good question, Shaur, and there is an element of uncertainty because the impact will depend on how long this conflict lasts, really.

Hamood Al Tobi: That is a very good question, Shahur, and there is an element of uncertainty because the impact will depend on how long this conflict lasts, really. The uncertainty on how long this conflict could last, disrupting the global supply chains, escalating material prices, is an uncertainty factor. How long could it last? The longer it lasts, of course, the more impact it will have, not only on Galfar as a business, but on the wider economy and other businesses as well. As I mentioned previously, this is the situation we continue to monitor very closely and continuously assess and update our assessment of the impact of the ongoing conflict on the project that Galfar is executing.

Hamoud Al Tobi: That is a very good question, Shahur, and there is an element of uncertainty because the impact will depend on how long this conflict lasts, really. The uncertainty on how long this conflict could last, disrupting the global supply chains, escalating material prices, is an uncertainty factor. How long could it last? The longer it lasts, of course, the more impact it will have, not only on Galfar as a business, but on the wider economy and other businesses as well. As I mentioned previously, this is the situation we continue to monitor very closely and continuously assess and update our assessment of the impact of the ongoing conflict on the project that Galfar is executing.

Speaker #1: So, the uncertainty on how long this conflict could last, disrupting the global supply chains and escalating material prices, is an uncertainty factor. How long could it last?

Speaker #1: The longer it lasts, of course, the more impacts it will have, not only on Galfar as a business, but on the wider economy and other businesses as well.

Speaker #1: As mentioned previously, this is a situation we continue to monitor very closely. We continuously assess and update our evaluation of the impact of the ongoing conflict on the projects that Galfar is executing.

Speaker #3: All right. Okay. Okay. My next question is on the impairment charge. As mentioned, the quarter's numbers are exceptionally good. The management has, you know, been very commendable and able to turn the company around.

[Analyst] (Vision Capital): All right. Okay. My next question is on the impairment charge. As mentioned, the quarter's numbers are exceptionally good. The management has been very commendable and able to turn the company around. The margins improvement that we are seeing is very good. But the thing that is denting your profitability is your impairment of receivables. Obviously, you mentioned that there is a model in accordance with IFRS 9. My question is there a ballpark number or something that we can estimate going forward what sort of the trend of this impairment charge would be? Because from Q1 to Q2, the increase is massive.

Shaoor Turabee: All right. Okay. My next question is on the impairment charge. As mentioned, the quarter's numbers are exceptionally good. The management has been very commendable and able to turn the company around. The margins improvement that we are seeing is very good. But the thing that is denting your profitability is your impairment of receivables. Obviously, you mentioned that there is a model in accordance with IFRS 9. My question is there a ballpark number or something that we can estimate going forward what sort of the trend of this impairment charge would be? Because from Q1 to Q2, the increase is massive.

Speaker #3: The margins improvement that we are seeing is very good, but the thing that is denting your profitability is your impairment of receivables. Now, obviously, you mentioned that there is a model in accordance with IFRS 9.

Speaker #3: So my question is, is there, you know, a ballpark number or something that we can estimate going forward—what sort of the trend of this impairment charge would be? Because from the first quarter to the second quarter, the increase is massive.

Speaker #1: Yes, I will comment on this. It is true that it has been increased, but because there was a bit of slowdown in some recovery of some old outstanding amounts, our meeting some of the milestones or finalizing of the accounts with some of the completed projects with the clients.

Mohammed Al Yahyaei: Yes, I will comment on this. It is true that it has been increased, but because there was a bit slowdown of some recovery of some old outstanding, or meeting some of the even milestone, or finalizing of the accounts with some of the completed project with the clients. We do classify our, of course, revenue into billed and unbilled, certified and uncertified. Each has got, of course, different impact. Of course, based on age and other factors, as you know. Then we measure our how much provisions. We believe, ongoing, we are working as management and the board as well to make sure that we get to recover our monies from the clients, especially the old one. We had in the past, of course, we could recover some of the amounts, which has positive impact on the financials.

Speaker #1: So and we do classify our of course revenue into build and build certified and certified and each has got different of course different impact and of course based on age and other factors as you know.

Speaker #1: So then we measure how much provisions we believe are ongoing. We are working as management and the Board as well to make sure that we recover our monies from the clients, especially the old ones. In the past, of course, we could recover some of the amounts, which has had a positive impact on the financials, and we do believe ongoing there is some amount expected as well, maybe to have a positive impact if we are able to recover from the clients.

Mohammed Al Yahyaei: We do believe ongoing, there is some amount expected as well maybe to have positive impact if we are able to recover from the clients. Sometimes it is a fine-tune or some challenges that we need to conclude with the clients, and it takes longer time. As you know, the claims, variations, still takes longer time than we are expecting. But we are recovering. We reach to conclusions in some of them. But again, to get approval in the governments, even if you agree with the clients, it takes longer time. We have mandatory to provide the provisions. But we do believe that will improve with time. Should improve. But the rest

Speaker #1: It's sometimes it's fine tune or some challenges that we need to conclude with the clients and it takes longer time as you know the claims variations still takes longer time than we we are expecting but we are recovering we reach to conclusions in some of them but again to get the proof in the government you know even if you agree with the clients it takes longer time and we have mandatory to provide the provisions but we do believe that will improve with time.

Speaker #1: Should improve. But and to add to what Mohammed has said really we we have a structured place to assess and determine our you know structured model to assess and determine you know receivables impairments and other provisioning requirements however also these provisions or impairments that are taken they becomes also opportunities for future example the point of dispute is concluded and the final account is agreed and then you receive this money then you will have an opportunity to reverse this provisions and it comes back to the bottom line of the company.

Hamood Al Tobi: To add to what Mohammed has said, really, we have a structured place to assess and determine our structured model to assess and determine our receivables, impairments, and other provisioning requirements. However, also these provisions or impairments that are taken, they become opportunities for future reversals. Once the, for example, the point of dispute is concluded and the final account is agreed, then you receive this money, then you will have an opportunity to reverse these provisions, and it comes back to the bottom line of the company. We look at it not as revenue gone or revenue to be wiped off, but as a revenue back to be brought back in and flown into the bottom line of the company. That is very important. If I really consider, for example, the Q2 performance, which we know it's better than same period last year.

Hamoud Al Tobi: To add to what Mohammed has said, really, we have a structured place to assess and determine our structured model to assess and determine our receivables, impairments, and other provisioning requirements. However, also these provisions or impairments that are taken, they become opportunities for future reversals. Once the, for example, the point of dispute is concluded and the final account is agreed, then you receive this money, then you will have an opportunity to reverse these provisions, and it comes back to the bottom line of the company. We look at it not as revenue gone or revenue to be wiped off, but as a revenue back to be brought back in and flown into the bottom line of the company. That is very important. If I really consider, for example, the Q2 performance, which we know it's better than same period last year.

Speaker #1: So we look at it not as revenue gone or revenue to be wiped off, but as revenue back to be brought in and flown into the bottom line of the company.

Speaker #1: That is very, very important, and if I really consider, for example, the Q2 performance—which we know is better than the same period last year—but this Q2 performance has been after impacting almost 2 million rial worth of receivable provisions. Correct, Mohammed? Around 2 million rial by the end of Q2 in receivable provisions, and also after impacting the actual effects of material price escalations due to the geopolitical complexities.

Hamood Al Tobi: But this Q2 performance has been after impacting almost OMR 2 million worth of receivable provisions. Correct, Mohammed? Around OMR 2 million by end of Q2 of receivable provisions, and also after impacting the actual impacts of material price escalations due to the geopolitical complex.

Hamoud Al Tobi: But this Q2 performance has been after impacting almost OMR 2 million worth of receivable provisions. Correct, Mohammed? Around OMR 2 million by end of Q2 of receivable provisions, and also after impacting the actual impacts of material price escalations due to the geopolitical complex.

Speaker #3: Right. So just to follow up on that, the Q2 number for impairment has spiked, and we should not anchor to this number going forward, right?

[Analyst] (Vision Capital): Right. Just to follow up on that, the Q2 number for impairment is spiked, and we should not anchor probably this number going forward, right? It should normalize from the Q3 onwards.

Shaoor Turabee: Right. Just to follow up on that, the Q2 number for impairment is spiked, and we should not anchor probably this number going forward, right? It should normalize from the Q3 onwards.

Speaker #3: It should normalize from the third quarter onwards.

Speaker #1: That will depend on the model, I would presume, that we are following and IFRS requirements for determining the provisioning requirements.

Hamood Al Tobi: That will depend on the model. I would presume that we are following an IFRS requirements for determining the provisioning requirements.

Hamoud Al Tobi: That will depend on the model. I would presume that we are following an IFRS requirements for determining the provisioning requirements.

Speaker #3: Okay. All right. And my final question would be if you allow obviously assuming that you know the the the things continue to do well and the company is able to secure high margins on and you know things don't escalate as you mentioned you you guys have been successful in in turning around your accumulated losses and obviously the the actual decision for payout depends on the board and the shareholders but my question is the company's capacity to pay the dividends you know so when should we expect the company you know to have sufficient buffer liquidity cover or when does the management when would the management feel comfortable in in you know their capacity to declare dividends.

[Analyst] (Vision Capital): Okay. All right. My final question would be, if you allow, obviously assuming that the things continue to do well and the company is able to secure high margins and the things don't escalate. As you mentioned, you guys have been successful in turning around your accumulated losses. Obviously the actual decision for payout depends on the board and the shareholders. My question is, the company's capacity to pay the dividends. So when should we expect the company to have sufficient buffer liquidity cover? Or when would the management feel comfortable in their capacity to declare dividends?

Shaoor Turabee: Okay. All right. My final question would be, if you allow, obviously assuming that the things continue to do well and the company is able to secure high margins and the things don't escalate. As you mentioned, you guys have been successful in turning around your accumulated losses. Obviously the actual decision for payout depends on the board and the shareholders. My question is, the company's capacity to pay the dividends. So when should we expect the company to have sufficient buffer liquidity cover? Or when would the management feel comfortable in their capacity to declare dividends?

Speaker #1: Ultimately the company will definitely like to pay back returns to its esteemed shareholders but as you've mentioned Sahur as any decisions for dividends payout will you know take place after extensive deliberations within the management and the board of the company and we'll look at various aspects in terms of you know cash availability and future investment requirements reinvestments requirements and many other strategic aspects but it is something that as the company you know enhances and inshallah the company will continue to enhance and you know sustains it build on its returned earnings the position for dividends payout becomes stronger and stronger as our returned earnings grows the position and working capital improves you know the position for dividends payouts will become stronger and stronger.

Hamood Al Tobi: Ultimately, the company will definitely like to pay back returns to its esteemed shareholders. As you've mentioned, Shahur, any decisions for dividends payout will take place after extensive deliberations within the management and the board of the company. We look at various aspects in terms of cash availability and future investment requirements, reinvestments requirements, and many other strategic aspects. But it is something that as the company enhances, inshallah, the company will continue to enhance and sustain it, build on its retained earnings. The position for dividends payout becomes stronger and stronger. As our retained earnings grows, the position and working capital improves, the position for dividends payouts will become stronger and stronger.

Hamoud Al Tobi: Ultimately, the company will definitely like to pay back returns to its esteemed shareholders. As you've mentioned, Shahur, any decisions for dividends payout will take place after extensive deliberations within the management and the board of the company. We look at various aspects in terms of cash availability and future investment requirements, reinvestments requirements, and many other strategic aspects. But it is something that as the company enhances, inshallah, the company will continue to enhance and sustain it, build on its retained earnings. The position for dividends payout becomes stronger and stronger. As our retained earnings grows, the position and working capital improves, the position for dividends payouts will become stronger and stronger.

Speaker #3: Perfect. Thank you. Thank you for the answers. That's all from my side.

Speaker #1: Thank you. Thank you for your valuable questions. Thank you. Any more? Abbas, you have your hand raised again.

[Analyst] (Vision Capital): Perfect. Thank you. Thank you for the answers. That's all from my side.

Shaoor Turabee: Perfect. Thank you. Thank you for the answers. That's all from my side.

Hamood Al Tobi: Thank you. Thank you for your valuable questions. Thank you. Any more? Abbas, you had your hand risen up again.

Hamoud Al Tobi: Thank you. Thank you for your valuable questions. Thank you. Any more? Abbas, you had your hand risen up again.

Speaker #2: Couple of questions. This is a related party transaction that you announced yesterday. Can you talk about the logic and the size of the transaction, please?

Abbas Ali Al Musalmi: Yeah, a couple of questions. This related party transaction that you announced yesterday.

Speaker #2: What are we looking at in terms of the P&L impact, the cash flow impact, and why did you think it's the right time to sell?

Hamood Al Tobi: Yes.

Hamoud Al Tobi: Yes.

Abbas Ali Al Musalmi: Can you talk about the logic and the size of the transaction, please? What are we looking in terms of the P&L impact, the cash flow impact, and why did you think it is the right time to sell?

Speaker #1: Yeah. Yes. This is the disclosure was placed in the market for an ordinarily general assembly meeting which is planned for next week. As announced and the objective there has been an explanatory note also as part of the disclosure and the objective is that for that Galfar has strategically decided to divest its 52% share in Al Khalij heavy equipment and machinery and this has been taken considering you know the many strategic aspects such as the value that the the Al Khalij has been insignificant really in Galfar overall grant of scheme and we want also Galfar to focus on core businesses and focus on growing the subsidiaries that directly complement and give strength to Galfar core business.

Hamood Al Tobi: Yes, the disclosure was placed in the market for an ordinary general assembly meeting, which is planned for next week, as announced. The objective, there has been an explanatory note also as part of the disclosure, and the objective is that Galfar has strategically decided to divest its 52% share in Al Khalij Heavy Equipment and Machinery. This has been taken considering the many strategic aspects, such as that Al Khalij has been insignificant, really, in Galfar overall grand scheme. We want also Galfar to focus on core businesses and focus on growing the subsidiaries that directly complement and give strength to Galfar core business. The size of the transaction is as disclosed. The valuation of Al Khalij is around OMR 1.6 million, if I remember correctly now. Galfar share is around OMR 800,000 out of that for the 52% stake in Al Khalij.

Hamoud Al Tobi: Yes, the disclosure was placed in the market for an ordinary general assembly meeting, which is planned for next week, as announced. The objective, there has been an explanatory note also as part of the disclosure, and the objective is that Galfar has strategically decided to divest its 52% share in Al Khalij Heavy Equipment and Machinery. This has been taken considering the many strategic aspects, such as that Al Khalij has been insignificant, really, in Galfar overall grand scheme. We want also Galfar to focus on core businesses and focus on growing the subsidiaries that directly complement and give strength to Galfar core business. The size of the transaction is as disclosed. The valuation of Al Khalij is around OMR 1.6 million, if I remember correctly now. Galfar share is around OMR 800,000 out of that for the 52% stake in Al Khalij.

Speaker #1: The size of the transaction is as disclosed. You know, the valuation of Al Khalij is around $1.6 billion, if I remember correctly. Now, Galfar’s share is around $800,000 out of that, for the 52% stake in Al Khalij. All of this information, and the numbers and details, has been furnished in the explanatory note that accompanied the disclosure for the AGM.

Hamood Al Tobi: All of this information and the numbers and details have been furnished in the explanatory note accompanying the disclosure for the AGM.

Hamoud Al Tobi: All of this information and the numbers and details have been furnished in the explanatory note accompanying the disclosure for the AGM.

Speaker #2: Thank you. Thank you very much. And and the final question is you know Oman has been a beneficiary of the crisis you know we've been able to export oil you know Alhamdulillah we've been you know insulated from you know what's happened in the region.

Abbas Ali Al Musalmi: Thank you. Thank you very much. The final question is, Oman has been a beneficiary of the crisis. We have been able to export oil. Alhamdulillah, we have been insulated from what has happened in the region. Are you seeing any sort of big project discussions, expansion on the railway project, maybe investments in ports, other logistical infrastructure? Is it too early? When do you see us actually start building out and start bidding for these expected sort of projects, right? Because I am trying to understand Galfar from a three-year perspective now. You guys have done a phenomenal job, as I said, turning around the company. What kind of KPIs are you setting for yourself and the team when it comes to cash flow generation, margin, sustainability over the next, let us say, three years?

Speaker #2: Are you seeing any sort of big project discussions you know expansion on the railway project maybe investments in ports you know other logistical infrastructure is it too early when do you see us actually you know start building out and start bidding for these expected sort of projects right because I'm trying to understand Galfar from a three year perspective now you guys have done a phenomenal job as I said turning around the company but like what kind of KPIs are you setting for yourself and the team when it comes to cash flow generation margins sustainability over the next let's say three years and do you think this Oman's geographic location and what happened with the crisis can help us get there in an easier and faster way and that's my last question and again compliments to you and the team you know fantastic job sir.

Abbas Ali Al Musalmi: Do you think this Oman's geographic location and what happened with the crisis can help us get there in an easier and faster way? That is my last question, and again, compliments to you and the team. Fantastic job, sir.

Speaker #1: Yeah. Thank you. Abbas and from our understanding and you know assessment of what's going they say that there are always opportunities come out of challenges so yes the geopolitical conflict is you know bringing a challenging situations and some difficulties that the entire region need to deal with but also we have seen there are discussions and strategic you know logistics and and you know some countries are looking to for opening up you know other gateways for their exports and if capitalized on probably this could bring in more infrastructure projects to Oman and if more infrastructure prospects come more infrastructure project prospects come to Oman this is definitely something that makes us as Galfar heavy our core business is building infrastructure and we will definitely be looking at any strategic energy projects railway projects other road projects connectivity projects you know that the country would be capitalizing on from the ongoing geopolitical conflict.

Hamood Al Tobi: Yeah. Thank you, Abbas. From our understanding and assessment of what is going, they say that there are always opportunities come out of challenges. Yes, the geopolitical conflict is bringing challenging situations and some difficulties that the entire region need to deal with. Also, we have seen there are discussions and strategic logistics and some countries are looking for opening up other gateways for their exports. If capitalized on properly, this could bring in more infrastructure projects to Oman. If more infrastructure project prospects come to Oman, this is definitely something that makes us in Galfar happy. Our core business is building infrastructure, and we will definitely be looking at any strategic energy projects, railway projects, other road projects, connectivity projects, that the country would be capitalizing on from the ongoing geopolitical conflict.

Hamoud Al Tobi: Yeah. Thank you, Abbas. From our understanding and assessment of what is going, they say that there are always opportunities come out of challenges. Yes, the geopolitical conflict is bringing challenging situations and some difficulties that the entire region need to deal with. Also, we have seen there are discussions and strategic logistics and some countries are looking for opening up other gateways for their exports. If capitalized on properly, this could bring in more infrastructure projects to Oman. If more infrastructure project prospects come to Oman, this is definitely something that makes us in Galfar happy. Our core business is building infrastructure, and we will definitely be looking at any strategic energy projects, railway projects, other road projects, connectivity projects, that the country would be capitalizing on from the ongoing geopolitical conflict.

Speaker #1: Thank you very much. Thank you. Thank you, Abbas. I think we are coming to the end of our session. Thank you very much for these interactions and queries, and thank you for making the time to join us. Have a good day.

Abbas Ali Al Musalmi: Thank you very much.

Hamood Al Tobi: Thank you. Thank you, Abbas. I think we are coming to the end of our session. Thank you very much for this interactions and queries, and thank you for making the time to join us, and have a good day. Thank you.

Hamoud Al Tobi: Thank you. Thank you, Abbas. I think we are coming to the end of our session. Thank you very much for this interactions and queries, and thank you for making the time to join us, and have a good day. Thank you.

Browse all earnings call transcripts

Half Year 2026 Galfar Engineering and Contracting SAOG Earnings Call

Request TrialDemo

Galfar

Earnings