جلسات مناقشة علاقات المستثمرين

Shell Oman Marketing SAOG Investor Relations MSX Engagement Session March 2025

Title: Investor Relations, March 2025 Transcript

Duration: 1:02:34

Description:

Shell Oman Marketing SAOG – Investor Relations Session 2025

Shell Oman Marketing SAOG held its first Investor Relations session for 2025, where the Company provides a detailed review of its performance in 2024 and outlines its strategic growth plans for the year ahead. During the session, the team shares key financial and operational highlights from 2024, including revenue performance, market expansion, and progress on sustainability initiatives. They also discuss factors that influenced the Company’s performance over the past year, such as market trends, regulatory developments, and evolving customer demands.

The Company further presents its growth strategy, focusing on investment priorities, operational enhancements, and plans for digital transformation. The company also emphasizes its commitment to innovation and sustainability, aligning with Oman’s economic vision and industry advancements.

[Sequence: Shell Oman Marketing SAOG Team is present in a meeting room to present the Investor Relations Session. The session is conducted over a virtual meeting client, and present along with the team are members from investment companies]

[Text displays on screen]

HSSE at Home (slide)

Mahmoud Al Abri

GM – Corporate Relations, Investors Relations Officer
Assalamualaikum. Sabah Al Khair.

Mahmoud Al Abri
Good morning everyone.

Mahmoud Al Abri
Before I formally start the session, I just would like to know that people online can see us and hear us.

Mahmoud Al Abri

So my colleagues in Shell, can you please confirm if you can see us and hear us?

Mahmoud Al Abri

Confirmed.

Mahmoud Al Abri

We can see you and we can hear you.

Mahmoud Al Abri

Thank you.

Mahmoud Al Abri

And I would also like to... for people to put themselves on mute while we're actually going through the session.

Mahmoud Al Abri

So again, Ramadan Kareem.

Mahmoud Al Abri

Good morning everyone.

Mahmoud Al Abri

My name is Mahmoud Al Abri.

Mahmoud Al Abri

I'm the GM for Corporate Relations and Investor Relations Officers.

Mahmoud Al Abri  

I would like to formally welcome you to our first investor relations session for the year 2025.

Mahmoud Al Abri

We will discuss our performance and highlight for 2024 as well as we will shed some lights of our growth plans for 2025.

Mahmoud Al Abri

And before we start, I would like just to make sure that wherever you sit now, make sure you sit in a safe place.

Mahmoud Al Abri

Know your exits whenever there is an emergency plan.

Mahmoud Al Abri

I will quickly go through a very quick introduction from my colleagues and then I will request

Mahmoud Al Abri

Dr. Mohammed to set the scene for today's sessions.

Mahmoud Al Abri

So maybe over to you Ali.

Mahmoud Al Abri

Yeah.

Ali Al Amri

GM – Trading, Supply & Distribution
My name is Ali Al Amri.

[Text displays on screen]

Agenda

11:00 Introduction – 5 minutes

11:05 HSSE & Ground Rules – 5 minutes

11:10 Key Financial & Business Highlights – 20 minutes

11:30 Q&A and Closing – 30 minutes

Ali Al Amri

I'm the Trade and Supply GM for Shell Oman.

Lamees Al Lawati

Chief Financial Officer
Good morning everyone.

Lamees Al Lawati

Ramadan Barak Alaykum.

Lamees Al Lawati

This is Lamees Al Lawati, the Chief Financial Officer.

Abbas Al Lawati

Chief Internal Auditor
Abbas Al Lawati, the Chief Internal Auditor.

Said Al Rawahi

GM – Low Carbon Products
Said Al Rawahi, GM Low Carbon Products.

Suresh Nair

GM – Mobility & Convenience
Hi.

Suresh Nair

Suresh Nair, GM for Mobility and Convenience.

Sultan Al Shidi

GM – Human Resource
Sultan Al Shidi, GM of Human Resource,

Burair Al Lawati

General Manager - Strategy & Energy Transition
Burair Al Lawati, GM Strategy and Energy Transition.

Mohammed Al Balushi

Chief Executive Officer
Good morning everyone.

Mohammed Al Balushi

My name is Mohammed Al Balushi.

Mohammed Al Balushi

I'm the CEO of Shell Oman and Ramadan Mubarak to all of you and thanks for dialing in.

Mohammed Al Balushi

This is actually our first investor relations meeting for this year 2025.

Mohammed Al Balushi

And I want to basically again thank you all for dialing in.

Mohammed Al Balushi

We have around an hour where we will be sharing the business performance of the year 2024 as well as share some of the plans that we are actually having for this year.

Mohammed Al Balushi

Moving forward, we will be definitely welcoming all the questions and inquiries that will come from the people who dialed in.

Mohammed Al Balushi

So let's have a very interactive session where we can also learn from your insights.

Mohammed Al Balushi

Thank you very much.

Mahmoud Al Abri

Thank you doctor.

Mahmoud Al Abri

And as you said doctor, this is how the session agenda will look like.

Mahmoud Al Abri

So we'll have around 20 to 30 minutes on business downloads and then we will have the last 30 minutes for Q and A.

Mahmoud Al Abri

So whenever you have questions, please leave it to the last 30 minutes.

[Text displays on screen]

Health, Safety, Security, Environment (HSSE)

HIGHLIGHTS

• Ended the 2024 with Zero recordable incident.
• Health
• Health Risk assessment for company's COBs operations by Shell Health.
• Completed several activities as part of sports & adventures club in participation of employees:
• Wellness program.
• Employees participation in Oman Cancer Association for the 20th Annual Walkathon.
• Celebration World Mental Health Day.
• Various sports activities.
• Safety
• Completion of 2025 priorities were cascaded to all employees.
• Mobility Business completed ERP LOD2 audit with satisfactory results.
• Joint major drill with authorities in Dhofar and Dhank service stations.
• Safety Stand-Down - Industry Vehicle Rollover in Batinah Coastal Road.
• Monthly hauler Meeting HSSE and OPR.
• HEMP & HSSE MS Review for haulers, key contract and operation.
• MAF Mutual Aid Group (MAG) Meeting with PDO and OQ.
• Security
• Security Awareness session conducted by Shell security team.
• Cyber security awareness session conducted for all employees.
• Environment
• Completion of environmental assurance plan for 2025.

PLANS

• Maintain Goal Zero & Drive culture of care.
• Performance
• Enhancing Emergency Response: Robust testing & enhancing of emergency response effectiveness across all the businesses to ensure it readiness.
• Energy Transition Related Risk: Hydrogen & EV.
• Worker Welfare Enhancements: Strengthen worker welfare management & control across SOM class of businesses.
• Terminal Divestment: Emerging risk related to divestment of terminal, such as; road transport, and marine loading activities.
• Assurance & Implementation
• Industry Life Saving Rules: Living our LSR every day.
• Robust Asset Integrity Program.
• Consistent Environment Assurance and Line of Defense Check. (Internal Process Check).
• Risk Based HSSE Standard
• Using HSSE MS & Risk Visual.
• Simplify & Fit for Purpose Learning & Investigation Process (Tools).
• Robust Management of Change Process (MOC).

Mahmoud Al Abri

So let me start with our health, safety, security and environment.

Mahmoud Al Abri

The company has done remarkably well in 2024 with zero recorded incidents.

Mahmoud Al Abri

Additionally, the Company has achieved all the HSSE KPIs part of 2024 plan.

Mahmoud Al Abri

Also the Company has communicated and engaged all the employees around the 2025 priorities. And in terms of security, last year we have done a couple of security awareness sessions and cybersecurity sessions awareness to our employees as well as to our partners and contractors.

Mahmoud Al Abri

Finally on Environment, we have completed our Environment Assurance plan for 2024 to our key assets of the company.

Mahmoud Al Abri

As you can see there are numerous of initiatives that have been executed in 2024 when it comes to HSSE, which showcase the Company's commitment in safety as well as the leadership Shell Oman has in safety in the industry in total.

Mahmoud Al Abri

If I move also briefly to the plan, the Company will continue to maintain goal zero and drive the culture of CARE for its employees and partners.

Mahmoud Al Abri

In terms of performance, the Company will continue to manage risk on a daily basis but also put some more focus on emerging risk like the newly hydrogen service stations and the EP business as well.

Mahmoud Al Abri

In terms of worker welfare enhancement, the Company will focus on worker welfare enhancements across different class of businesses but also with our contractors.

Mahmoud Al Abri

In terms of assurances and implementations, the Company will put focus in terms of Robust Asset Integrity Program for 2025. And lastly, in terms of risk-based HSSE standards, the Company will put focus to Simplify & Fit for Purpose Learning and Investigation process in 2025 plan.

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Financial Summary

• FY 2024 Revenue was OMR 492.573 million, 5% lower than FY 2023 impacted by lower volumes mainly in B2C business. The decline was positively offset by the following:
  • Higher Other Income in FY 2024 of OMR 4.269 million, 2% higher than FY 2023 driven mainly by higher NFR and Fleet income.
  • Lower selling, distribution and administrative expenses in FY 2024 vs FY 2023 resulting from initiatives to contain operating costs.
• FY 2024 Net Income After Tax was OMR 3.740 million, 4% higher than FY 2023.
• Significant improvement in Cash Flow from Operations, 122% higher than FY 2023 and was the highest cash generated in the past 6 years, resulting from focused initiatives in working capital management.

{Screen also shows the financial summary with a table and three charts}

Mahmoud Al Abri

Let me move to Lamees.

Lamees Al Lawati

Yeah, thank you, Mahmoud.

Lamees Al Lawati

And like Mahmoud has mentioned earlier, we will start by sharing a quick overview on the financial performance and then I'll hand over to my colleagues around the table to share specific business updates and key performance indicators from the different business units.

Lamees Al Lawati

Now the financial overview that you see in front of you here is consistent with our post-board disclosure as audited by our external auditors and as endorsed by our shareholders in the AGM yesterday.

Lamees Al Lawati

So in 2024 our revenue stood at 492 million Omani Riyals, slightly lower than where we have exited the year 2023.

Lamees Al Lawati

But then managing the portfolio of products and the different lines of businesses that we have – maximizing the profitability from within – we managed to narrow that gap of 5% at the top line to 2% reduction versus the same period in 2023 at gross profit level, whilst maintaining our gross margin percentage at 7%.

Lamees Al Lawati

Other income... This is the income that we predominantly receive from the associated services in our service station; things like shops income, the co-locators, the brands that we tie up with.

Lamees Al Lawati

Income that we receive from car care services as well, in addition to the fees that we receive from site operatorship.

Lamees Al Lawati

So this has been a key focus area for us consistently like we have been mentioning to the investors last year, it's a key lever in our strategy of the company to grow other income.

Lamees Al Lawati

A lot of focus initiatives actually took place in the year 2024 to improve our performance in other income.

Lamees Al Lawati

So if you focus on the Select sector, we have, we have mentioned to the investors last year that we have acquired back the portfolio of Select stores.

Lamees Al Lawati

So we're focused on improving, enhancing the customer experience in these shops by upgrading the look and feel of these sites and adding more modern and appealing offers to our customers.

Lamees Al Lawati

So a lot of focused initiatives in addition to also a strategic tie-up that we have signed with Al Meera to improve and enhance again our customer experience and improve our supply chain, ensuring that we provide the same level of products or the same quality of products consistently across the shops that we have.

Lamees Al Lawati

Now all of these initiatives, in addition to other focused initiatives that we have done in that space, have actually grew our other income to around 2% in the year 2024 versus the year prior to that.

Lamees Al Lawati

OpEx was another key focus area for us in the year 2024 focusing on cost optimization.

Lamees Al Lawati

We have pulled a lot of focus initiatives to optimize OpEx, reduce cost, improve operational efficiency as well as set the organization for growth and sustainable growth going forward and improve its competitiveness.

Lamees Al Lawati

So a lot of initiatives were also introduced in that space, resulting in an overall decrease of around 10% in OpEx.

Lamees Al Lawati

The number that you see in front of you in the table here is including depreciation, which to a certain extent offsets the actual reduction that we had in operational expenses.

Lamees Al Lawati

Now most importantly, a lot of these initiatives that we have done in the OpEx space we had, we've governed them in a way to ensure that there is no compromise on our HSSE health safety security standards and practices as well as our asset integrity and self well being.

Lamees Al Lawati

The one point that I would also like to emphasize in here is working capital.

Lamees Al Lawati

So working capital efficiency was also another lever that had a lot of attention in the year 2024.

Lamees Al Lawati

So we wanted to reduce the limitations related to working capital management for an operational company like ours and as a result then reduce the borrowing need or dependency.

Lamees Al Lawati

Now a lot of focus initiatives were also done in that space to improve our collection of accounts receivable in the market.

Lamees Al Lawati

Focus initiatives to monitor and plan our inventory balances as well, which has resulted in really good performance in working capital management, boosting our cash flow position at year end like you can see in the bottom graph over there, reporting around 24 million Omani Riyal in cash flow from operations – the highest level since years.

Lamees Al Lawati

But then in addition to that, if we look at the borrowing costs, we've managed to maintain it at around the same level as a result of all of these initiatives that we have contributed in the working capital space despite all the pressure that we have seen in the market.

Mahmoud Al Abri

Thank you Lamees.

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Mobility

HIGHLIGHTS

• Maintained HSSE Goal-zero, no harm & no leak.
• Officially laid the foundation stone for the first Hydrogen site in the country.
• Strong Shell Select network of 51 shops.
• Open 1 NTI (Strategic Hydrogen site).
• The completion of 5 Select stores revamps located in premium sites.
• Refurbished and branded 6 car care centers in different location across the country.
• Announced and activated partnership with Al Meera Markets to enhance customer offering at Shell Select convenience stores.
• New and Improved Shell V-Power now available at 141 sites.
• Launched several marketing campaigns such as: Ramadhan campaign, Shell Millionaire campaign, BIG WIN Campaign with Shell GO+
• Increase in both registered user base and Total Active Customer Base of Shell GO+
• Improved Guest Experienced Assessment (GEA).
• Shell V-Power awarded as Top Premium Fuel at the prestigious Alam Al-Iktisaad Top Omani Brands awards.
• Shell Café CGI campaign received the Best Digital Advertising Video at the TOMI (The Oman Marketing Awards).

PLANS

• Maintain Goal Zero.
• Network Footprint – 5 new sites.
• Energy Transition - expansion of DC Super Fast Charging points to 20, adding 50 AC Chargers at destination locations, exploring further e-mobility initiatives.
• Differentiated Fuels - Expand SVP to 3 more sites.
• Accelerate NFR growth - 5 additional Select stores , 3 new car washes at premium locations, expand the partnership with existing partners (Al Meera, Dalilie, etc) and bring in new clip in/co-locator partners (Pharmacy and Juice brands).
• Loyalty - Maximize Shell GO+ value by increasing Total Active Customer.
• More B2B solutions – Launching Shell Online Payment Gateway.
• Campaigns targeting National Subsidy System customers and Premium Fuel Customers.

{Screen also shows a Shell fuel station}

Mahmoud Al Abri

Now let me move to Suresh [Nair]... Mobility.

Suresh Nair

Thank you.

Suresh Nair

So the theme for the mobility and convenience business will be centered around one of growth, both for 2024 and now moving into 2025 as well.

Suresh Nair

How we will do this is essentially around building our business, which is resilient, while future-proofing in as well.

Suresh Nair

The focus will be on simplification in terms of the areas where we choose to focus and give us maximum value.

Suresh Nair

But we'll also ensure that there is a tighter and focused attention around discipline of spending as well.

Suresh Nair

That's consistent with what our CFO has mentioned in terms of cost management efforts, which is starting to yield material results in terms of SOM (Shell Oman Marketing)'s bottom line performance.

Suresh Nair

Lastly, around the growth agenda, specifically for the mobility business, the focus will be around total customer value.

Suresh Nair

What is total customer value?

Suresh Nair

Essentially it means ensuring that we have a better grip on every customer, every time they come and interact with us at our fuel, our forecourt and our shop, to make sure that we are seeing better returns for each transaction, larger returns.

Suresh Nair

In layman's term, this would mean that our customers are coming to us, spending... spending a lot more and returning to us.

Suresh Nair

So the five areas of growth for Mobility which we'll be focusing on in the year 2025.

Suresh Nair

Let me start at the top in terms of new site entries.

Suresh Nair

Recently, we announced the official opening of our hydrogen site or aptly named Sustainable Oasis.

Suresh Nair

This is a testament to where we boldly are announcing our intent to grow.

Suresh Nair

Not only in the convenience fuel space, not only in the traditional fuel space, but also in the energy transition.

Suresh Nair

We expect to see up to five total new-to-industry stations this year, one of which has already officially be opened.

Suresh Nair

There will be a soft launch on the second in the coming four weeks and more to come.

Suresh Nair

So watch this space.

Suresh Nair

So that's in terms of NTI.

Suresh Nair

In terms of offerings, we have been talking very aggressively about our V-Power performance and we have seen a very – not only healthy but a sustainable growth – in this differentiated fuels offering.

Suresh Nair

But I'm also excited to announce that we have soft launch the Fuel Safe 91.

Suresh Nair

You would have seen some banners to this effect in our hydrogen station launch in the media a couple of weeks ago.

Suresh Nair

Watch this space, because this is also expected to be both another game changer in terms of differentiated offerings for Shell Oman, but one which is closely linked as well to the energy transition through a lower carbon fuels offering.

Suresh Nair

Now in the B2B space, we continue to be active and pursuing healthy, both organic and inorganic growth, by differentiating our services with that of the competitors, particularly in providing innovative payment services.

Suresh Nair

Also providing technological solutions like our Vehicle Recognition System, which is a key differentiator in terms of services from a fleet management perspective.

Suresh Nair

Area of growth number three is around our Convenience Retailing or the old name for it will be Non-Fuels Retailing.

Suresh Nair

We intend to add up to five additional new stores this year in its main look and feel, but we also intend to add further beyond that some modular designs.

Suresh Nair

So, the shop for example, which you see at our hydrogen station today is one such example of a modular design exposure.

Suresh Nair

Expect to see more of this.

Suresh Nair

You'll also see the convenience retailing business grown in the form of car washers and lubricants bay as well, much more actively.

Suresh Nair

The last segment which I would like to talk about is the energy transition in the mobility and convenience space.

Suresh Nair

A testament to that is the hydrogen side.

Suresh Nair

But I would also like to bring about the attention that if you pay close attention to the details of the construction and the operation of this site, we are looking at more energy efficient, lower and zero carbon solutions both in terms of how we operate the site, but also the product offering to the customer.

Suresh Nair

Although this is not-scale hydrogen, sold or scaled up to a commercial scale, this provides a platform both for the Sultanate and Shell to jointly learn how to produce, how to store and how to distribute or deliver hydrogen to vehicles in the Sultanate.

Suresh Nair

And that will put us in a better position to scale this up commercially in the future.

Suresh Nair

Lastly, in the energy transition you are going to see more active partnerships from Shell.

Suresh Nair

Do watch this space and the initial manifestation of where you will see this is in the form of EV charging points, which means expanding the number of charging points we have today in our existing stations to be bolder to include destination locations as well.

Suresh Nair

Thank you.

Suresh Nair

With that I pass it on back to my colleague Mahmoud.

Mahmoud Al Abri

Thank you Suresh.

[Text displays on screen]

Integrated Lubricants

HIGHLIGHTS

• Commercial Lubricants: Grew market share and maintained our market leadership position in the Lubricants across sectors in Sultanate of Oman as well as globally for the 18^th consecutive year.
• Export Market: Continue to expand operations and footprint in the export markets by signing new distribution agreements and introducing new consumer products.
• Lubricants Blending: Continued to operate with high HSSE standards. Introduced new products and SKUs in 2024 and achieved above the industry average in terms of product deliveries On-time in-full (OTIF), while increasing volumes and reducing unit operating costs vs 2023.
• Customer Operations: Continuing our Digitalization journey with enhancements to our Customer Portals, introduced a new user interface that enhances the customer experience and contributes to cost optimization and efficiency.
• PLANS
• Continue HSSE focus across the lubricants business operations.
• Achieve Business growth via exploring new revenue streams & increase market share.
• Digitization of the lubricants business across B2C and B2B segments to increase customer loyalty and enhance overall customer experience.

{Screen also shows Shell-branded lubricants and a Ferrari 458 Italia alloy wheel}

Mahmoud Al Abri

Now let me move to Mohamed ElFatatry for Lubes [Lubricants].

Mahmoud Al Abri

Mohammed.

Mohamed ElFatatry

GM – Lubricants, Supply Chain & Customer Operations
Yes. Hi Mahmoud.

Mohamed ElFatatry

Am I audible?

Mahmoud Al Abri

Yes.

Mohamed ElFatatry

Okay, great.

Mohamed ElFatatry

So, I think for lubricants, we had a great year in 2024.

Mohamed ElFatatry

I think at a local level we managed to grow our market share in 2024... bring also growth for our overall volume at integrated level by double digits for the second year. We maintained our leading position in the country, but we also leveraged our global leadership as Shell Lubricants for the 18th consecutive year.

Mohamed ElFatatry

I think one of the highlights last year as well was on the export markets.

Mohamed ElFatatry

So we have seen growth in terms of volume and consumption.

Mohamed ElFatatry

We've also added Yemen market... in adding two structured distributors, newly assigned, in the market of Yemen. We had good trajectory in terms of volume and we're seeing also continuation to that in 2025 given the numbers... of estimated numbers for Q1.

Mohamed ElFatatry

From blending plant perspective, again we have been promoting our 'Made in Oman' products that are blended in our blending plant in Mina Al Fahl. We added one more market in terms of export markets.

Mohamed ElFatatry

We introduced a lot of new products and SKUs in 2024, including Shell coolants in packs, and later in the year we also introduced coolants for the B2B sectors in drums.

Mohamed ElFatatry

While doing so, our production levels have increased.

Mohamed ElFatatry

We reduced our operating costs and OpEx, and we also maintained above-industry average OTIF which is 'On-Time In-Full' KPI for supply chain.

Mohamed ElFatatry

In fact our blending plant was the highest OTIF across all Shell blending plants in the EMEA region.

Mohamed ElFatatry

In terms of customer operations, we had a good year in 2024, in terms of serving our all downstream businesses in Shell Oman Marketing.

Mohamed ElFatatry

We've added also new digitization platforms. We shifted a lot of the manual work to digital portals for customer payments and we have also increased our customer satisfaction score by 0.2 points in 2024.

Mohamed ElFatatry

For 2025 our focus again remain on operating with high HSSE standards.

Mohamed ElFatatry

There is an aggressive growth agenda, I think presented again in the last two years of double-digit growth at integrated level. We are exploring new revenue streams that includes markets, products as well as maybe more detailed in terms of serving same products but in different packaging.

Mohamed ElFatatry

Hearing more customers in the B2B sector and we're trying to penetrate new industrial sectors in the Sultanate including mining.

Said Al Rawahi

We are also improving our digitization. So lately we launched our trade loyalty app –Share app – which is enabling the trade channel making their orders via a Shell application.

Said Al Rawahi

And we are also moving into more technical services in the B2B segments, which is also we're aiming at monetizing it, not just offer it for free.

Said Al Rawahi

In a nutshell that wraps up our 2024 and 2025 focus area [inaudible].

Said Al Rawahi

Ah, back to you.

Mahmoud Al Abri

Thank you Mohammed.

[Text displays on screen]

Low Carbon Products & Sectors

HIGHLIGHTS

• Close the year with a strong HSSE performance building on what was achieved in the past years.
• Signed bunkering license agreements locally to expand the business footprint across major ports in the Sultanate whilst remaining fully committed to the highest HSSE, Ethics & Compliance and operational excellence standards.
• Close the quarter with ZERO fulling delays in all airports despite the operation challenges.
• Implementing a new CVP for our commercial customers which is the Automated Fuel System Monitoring.
• Resuming the PSQ pipeline operation, which will support the Marine fuels segments in coming months helping to stabilize and enhance future volumes.
• Finalizing Salalah International Airport fuel farm recommissioning project in Q1 2025.

PLANS

In 2025 while we continue to focus on Goal Zero, E&C and Operational Excellence, while we will reduce complexity for sharper focus on:​

• Optimizing our Profitable core.
• Exploring new operations and financial opportunities.​
• Grow our profitability by expanding revenue streams​.
• Leading in Energy Transition.

{Screen also shows a woman filling an Oman Air aircraft, connecting the module to the ground fuel supply system}

Mahmoud Al Abri

Now let me move to Said Al Rawahi to talk about the low carbon product and sectors.

Said Al Rawahi

Thank you, Mahmoud. For Low Carbon Products 2024 we have seen growth compared to 2023.

Said Al Rawahi

We have closed the year with a strong HSC performance which was achieved in the past years.

Said Al Rawahi

Also we have zero fuel delay [across] all the airports when it comes to aviation business.

Said Al Rawahi

We have also implemented CVP's for commercial customers, which is also an automated fueling system to monitor fuel consumption on other customer sites.

Said Al Rawahi

We also started... we resumed our Port Sultan Qaboos pipeline operation when it comes to the marine business segment, which is been helping to safely enhance our volumes compared to 2023.

Said Al Rawahi

We [are] also planning this year to finalize the commissioning of fuel farm at Salalah Airport at the end of Q1.

Said Al Rawahi

Now the plans when we look at the plan for 2025... because we are focusing on the ethics and compliance and operational excellence. We're also looking at optimize our profitability core.

Said Al Rawahi

We are looking at the strengths of our branded proposition when it comes to market differentiation within Oman.

Said Al Rawahi

At the same time [we are] also looking at new operations and financial opportunities, which have new operating models that we are working on... different pricing strategies.

Said Al Rawahi

We also supply [inaudible] within the low carbon [inaudible] sector.

Said Al Rawahi

Also I'm looking at different revenue streams... [we are] introducing new services and products and we try to expand our new opportunities and footprint within Oman.

Said Al Rawahi

We're also focusing on engaging energy transition which is basically continuing engagement with the authorities in Oman for the upcoming opportunities around alternative fuels, similar to sustainable aviation fuels and differentiated fuel when it comes to commercial business.

Said Al Rawahi

Thank you.

Mahmoud Al Abri

Thank you, Said. Now I will move to Burair [inaudible] for energy transition and strategy.

[Text displays on screen]

Energy Transition & Strategy

HIGHLIGHTS

• Building on data from corporate GHG emissions and Corporate Carbon Footprint (CCF) analysis to develop comprehensive emission-reduction roadmaps across scopes 1, 2, and 3.
• Investing in digitalization for improved data gathering and analysis to enhance ESG reporting capabilities for 2025 and beyond.
• Significant decarbonization progress through solar power investments such as Rooftop and bifacial solar car parks (200+kWp) at Mina Al Fahal head office.
• Launching Oman’s first hydrogen and refueling service station: Part of the "Gift to the Nation" in collaboration with Oman Airports. Featuring partial solar power, EV chargers, Shell V-Power, and fuel save.
• Leading as the world’s largest supplier of lubricants: Carbon-neutral Shell Helix Ultra OW portfolio introduced in local and regional markets + Lubricants made using Shell's PurePlus Technology for enhanced engine performance and fuel efficiency.
• Emphasizing circular economy initiatives such as exploring innovative waste recycling and value-generation opportunities in the integrated waste management contract to minimality.
• Company's risk culture improved; contributes positively shareholder value and equity, and our Powering Progress strategy.
• PLANS
• Explore opportunities in biodiesel and Sustainable Aviation Fuel (SAF) as well as collaborating with stakeholders in public and private sector for strategic decarbonization partnerships and solutions.
• Expanding EV charging infrastructure with high-performance chargers across service stations and destinations.
• Strengthening position as a leader in cleaner mobility solutions:
  • Hydrogen and refueling service station integrating solar power, advanced fuels, and EV charging.
• Expanding high-performance lubricants and carbon-neutral solutions.
• Continuing circular economy initiatives to minimize waste and drive sustainability.

{Screen also shows an Omani man holding a Shell cup and a phone with his Tesla connected to the Shell EV charger}

Burair Al Lawati

So as you know [inaudible] strategies built to be aligned with strategy and Shell which focuses on enhancing shareholder value, respect for people, also net zero targets by 2050 and then the society [inaudible] and obviously respecting the environment.

Burair Al Lawati

All this time, while we have safety as our... [inaudible] and our values [inaudible]. Meanwhile, we look at how we can reduce our own [inaudible] in our own facilities.

Burair Al Lawati

My colleagues have already spoken about what they have done in... in... in... their class of businesses when it comes to the way that the sites operate but also the offerings that are there for the customers to help customers also reduce their targets and their [inaudible].

Burair Al Lawati

And within the next quarter we should be able to have a long-term plan in terms of addressing our step one, scope-two and scope-three carbon emissions.

Burair Al Lawati

That is something that we have been continuously building in the last few years when it comes to our digital capabilities. for ensuring that we have [inaudible] and at the same time training the team to be able to continue working on that project as we go forward.

Burair Al Lawati

The examples of things that we have done in terms of [inaudible] include our solar in the head office.

Burair Al Lawati

Obviously the high legislation that Suresh mentioned... the product differentiated products and even lubricants when it comes to PurePlus Technology that helps customers enhance their performance and efficiency.

Burair Al Lawati

That also goes to introducing circular economy initiatives such as exploring recycling of our waste and on top of effectively managing the petroleum waste... to reduce the waste and the impact of our operations in the environment.

Burair Al Lawati

We have been also working on enhancing what we call the risk [inaudible] in the company, which is a very positive direction in terms of governance that is aligned with the ESG expectations and in the same time it helps reinforce the shareholders value and equity, and another [inaudible] strategy.

Burair Al Lawati

As we go forward, we'll be exploring also new fuels that can help reduce the emissions such as [inaudible] and continue expanding as we mentioned earlier our EV presence, whether in our sites or in destinations... and do in engaging advocacy and discussions with stakeholders in the public and private sector so we can support Oman's vision [inaudible] in 2050.

Burair Al Lawati

The Net-Zero targets... Insha'Allah.

[Text displays on screen]

Corporate Social Responsibility

HIGHLIGHTS

• Key Initiatives and Programs: During 2024, the Company worked with multiple partners and associations through the planned programs within its strategy like: EV Pro with the Youth Center, Journey Partner with OBO, and the annual initiatives of supporting OCO, working with MoSD to help multiple NGOs, as well as supporting national level training programs by MoH.
• Social Outreach and Training: During 2024, we delivered HSSE trainings on Home Safety and First Aid to NGOs across the Sultanate, as well as raising road safety awareness through working with local bikers' club. 
• Environmental Commitment: the company collaborated with the Environment Authority and Muscat Municipality to distribute plants saplings to customers across Oman, promoting environmental awareness and increasing green spaces.
• From an in-country value (ICV) perspective, the Company continued to sustain a high level of Omanisation, with over 94% of the workforce comprising of high-caliber Omani talents and working with SMEs across its value chains.
• PLANS
• Focus on sustainable and long-term social impact across the Sultanate.
• Create business value for the Company through alignment of CSR activities with business needs & priorities.
• Maximize partnerships and optimize resources through collaboration with JVs and other partners.
• Align CSR activities with the company’s ESG and sustainability goals, and we are ready for compliance with the requirements in this area.
• Further incorporation of In-Country Value agenda within the CSR activities and across company’s supply chains.

{Screen also shows a child partaking in an activity with a laptop. Shell logo is present}

Mahmoud Al Abri

Okay, thank you very lastly on Corporate Social responsibility, being an Omani and responsible company, we have been leading in the CSR area... and in 2024, we have done key milestones and we have executed key initiatives and programs in collaborations with our partners in government and private sectors.

Mahmoud Al Abri

Also in terms of social outreach and training during 2024, we have reached different regions in Oman to deliver HSSE trainings on home safety and first aid across... as I said, different regions in Oman as well as actually we have executed Road Safety Awareness through working with local bikers in the City of Nizwa.

Mahmoud Al Abri

In terms of environmental commitment, we have collaborated with Environment Authority and Muscat Municipality to distribute lands across our different service stations last year.

Mahmoud Al Abri

From In-Country Value, the company continue to sustain high level of Omanization, with over 94% of the workforce, as well as actually, we have been working with many Omani SMEs across all the value chains.

Mahmoud Al Abri

In terms of lands, for CSR we will continue to focus on sustainable and long-term social impact across Oman.

Mahmoud Al Abri

We will continue to create business value for the Company through alignment of our CSR activities with business needs and priorities.

Mahmoud Al Abri

Also we will maximize partnership and optimize resources through collaborations with our partners as well as JVs.

Mahmoud Al Abri

Also we will align our activities with the Company's ESG and sustainability goals - and in a couple of weeks we will actually report [inaudible] sustainability and ESG report.

Mahmoud Al Abri

Finally we will further incorporate our In-Country Value agenda with our CSR activities and across the Company's supply chain.

Mahmoud Al Abri

I think this will come to the end of our business highlight for last year and focus on 2025. Now I want to open the space for any Q and A, but before that I just want to check again if our audio and the camera is working fine.

Mahmoud Al Abri

Can someone just confirm to me.

[Text displays on screen]

Q&A

Mahmoud Al Abri

Hello.

Al Busaidi

Shell Team (Title unknown)
The... We can see you but the audio is not 100% clear.

{Screen shows the Shell logo}

[Text displays on screen]

Q&A

Mahmoud Al Abri

Okay, so let's try again.

Mahmoud Al Abri

Do you hear us now?

Al Busaidi

Shell Team (Title unknown)
Yes, there's a slight improvement.

Mahmoud Al Abri

Okay, so let's open the space for Q and A.

{Screen shows all participants from the meeting}

Mahmoud Al Abri

[inaudible]

Al Busaidi

Shell Team (Title unknown)
Okay. [inaudible]

Manna Thomas

Equity Research Analyst, United Securities
Good morning.

Manna Thomas

Am I audible?

Mahmoud Al Abri

Yes, Manna Thomas... go ahead.

Manna Thomas

Okay, thank you for your presentation.

Manna Thomas

In the presentation you have mentioned that the revenues were lower mainly due to the lower volumes in the B2C business.

Manna Thomas

So can you provide insights into the volume trends at your fuel station?

Manna Thomas

Have you seen a decline in the throughput per station?

Suresh Nair

Good morning.

Suresh Nair

So the volume trending for 2024 we have seen a slight decline in terms of our volume trend, which we attribute to a combination of reasons.

Suresh Nair

Which includes what we notice that our customers using smaller engine sizes cars as compared to to the high times of about five to seven years ago.

Suresh Nair

We also see a returning of customers coming to us for smaller fuel sizes as opposed to larger fuel size.

Suresh Nair

And based on our network presence, as well, we are seeing trending of migrations in accordance to the population of Oman.

Suresh Nair

These three examples are being a combination [inaudible].

Suresh Nair

What we have done in terms of our response to that consistently over the past year and a half or so is to focus on choosing customer value instead of absolute volumes.

Suresh Nair

Why? Well, what we've noticed from the NCSI publicly available information... is [that] the volume growth for Oman in terms of absolute terms at best is about 2%.

Suresh Nair

That is consistent with the vehicular growth and also the population growth for that.

Suresh Nair

But [inaudible] what we're trying to focus is [inaudible] of the value and that would be in terms of our V-Power offerings, our non-fuels or convenience retail offerings, but that also includes the space of our lubricants and car care

Suresh Nair

I hope that answers the question.

Lamees Al Lawati

Maybe just to complement to what Suresh has just mentioned... and maybe to zoom out of Shell Oman Marketing, obviously we're not in a position to comment on behalf of the entire industry, but looking at the entire industry performance, we've also seen an overall reduction in the revenue top line number of the entire industry by about 1% in the 2024 versus 2023.

Lamees Al Lawati

So whilst we try to zoom in and understand the specific characteristics that could be related to us, we also understand that this could be a wider, sort of an overarching characteristic, of the industry that we operate in as well.

Mahmoud Al Abri

So just to confirm again Manna Thomas, did you hear the answers clearly.

Mahmoud Al Abri

Can you unmute yourself?

Mahmoud Al Abri

Just to check on the audience?

Mahmoud Al Abri

Can you unmute yourself?

Manna Thomas

Hello?

Mahmoud Al Abri

Yeah, did you hear the answers clearly?

Manna Thomas

Yes, but still the audio.

Manna Thomas

There is a disturbance.

Manna Thomas

It's the... [cut off]

Mahmoud Al Abri

Anyway, so we'll try to fix that.

Mahmoud Al Abri

Any other question?

Manna Thomas

Okay, just one more question is that on the fourth quarter there was a 15% decline in the NFR segment compared to the previous quarter.

Manna Thomas

So can you explain what caused this decline?

Manna Thomas

And also with the addition of five new Select stores and new car washes, what kind of revenue contribution is expected?

Lamees Al Lawati

[inaudible] A trend of seasonality that we would... [inaudible] We will generally see in the country.

Lamees Al Lawati

And I think the interesting comparison is usually between the last two quarters of the year, which is Q3 and Q4.

Lamees Al Lawati

Typically if you would zoom in into the quarterly performance, Q3 is the quarter where, you know, our variance boost in our associated revenue from the service stations would increase as well due to the seasonality that we see in the south area of... [inaudible] Oman.

Lamees Al Lawati

So to compare the two consecutive quarters, I think we don't see a specific concern in Q4.

Lamees Al Lawati

It's just, I would attribute it to the overall seasonality in Q4 being slightly lower than Q3.

Suresh Nair

Thank you Lamees.

Suresh Nair

So just confirming that. So... the quarter four traditional returns will be lower than quarter three, attributed due to seasonality.

Suresh Nair

But the other point specifically to the Mobility business, the reason our targeted investments are predominantly also in the convenience space is because this is where we are seeing higher bang for our buck and higher returns, both in terms of absolute returns but also in terms of the shorter gestation period we are seeing.

Suresh Nair

It takes us to bring a project from paper to life in less than 90 days in some cases.

Suresh Nair

And that's why we've been targeting our growth in this segment.

Suresh Nair

We expect to see further growth and that's represented in the five additional stores.

Suresh Nair

That represents about a 10% additional increase in our convenience retailing footprint without me necessarily going into the specific absolute increase for the NFR business.

Suresh Nair

But I revert back to what Lamees mentioned as a headline in terms of both seasonality but also our targeted growth in this segment.

Suresh Nair

Thank you Manna for the question.

Mahmoud Al Abri

So, thank you Manna.

Mahmoud Al Abri

Any other question from other team members?

Mahmoud Al Abri

Yes, Joice, go ahead.

Joice Mathew

Head – Equity Research, United Securities
Good afternoon team.

Joice Mathew

Thank you for the presentation and the answers so far.

Joice Mathew

Just a few questions on the other segments like the lubricants.

Joice Mathew

You, you mentioned that you your market share, domestic market share of lubricants has gone up and you have opened new markets everywhere else.

Joice Mathew

But at the same time what I'm seeing is your revenue has been relatively stable.

Joice Mathew

So does that mean the market was shrinking in Oman or was there a price pressure, pricing pressure on the lubricant side?

Mahmoud Al Abri

Yes.

Mohamed ElFatatry

Yes.

Mohamed ElFatatry

Hi Joice.

Mohamed ElFatatry

Are you referring to lubricants revenue or which lubricant line are you?

Joice Mathew

Lubricants... Lubricants.

Joice Mathew

Okay, so lubricants, you mentioned that 32 million revenue in 2023 and this year also same revenue.

Joice Mathew

But at the same time you're claiming that you have increased your market share in Oman.

Joice Mathew

And despite being, you know, new markets getting opened, I don't see the improvement in revenue for lubricants.

Joice Mathew

So just wanted to check what could be the reason of that.

Mohamed ElFatatry

So I think first of all, so definitely thank you for the question.

Mohamed ElFatatry

The main reason is mainly two things. One is the product mix. So as I mentioned, the Yemen market is a conventional market where the unit margins of the mainstream products are usually much lower, for example, than the products that we sell in Oman.

Mohamed ElFatatry

The other reason was related to the geopolitics situation.

Mohamed ElFatatry

So we had a huge spike in terms of shipping logistics, especially in Q1 and 2024.

Mohamed ElFatatry

I am sure you are aware those spikes reached sometimes to 20% higher compared to 2023.

Mohamed ElFatatry

The good news is that we've been able to mitigate this COGS spikes and we kind of offset it by the increase in volume which was both locally and also [in our] export businesses as I mentioned.

Mohamed ElFatatry

What we have seen also in 2024, that towards the end of the year those logistics costs lead time challenges.

Mohamed ElFatatry

In many cases we opted to air freight instead of sea freight, because of course we wanted to meet our commitments and supply security promises to customers.

Mohamed ElFatatry

So good news is, we did not lose business, yet we maintained our pricing levels. So we did not also pass this to our customers.

Mohamed ElFatatry

But we had to absorb that... I would say temporary spike in COGS.

Mohamed ElFatatry

But moving forward, I think now we're seeing things adjusting better as the geopolitical tension is easing now.

Mohamed ElFatatry

And hopefully we see a positive trend moving forward.

Mohamed ElFatatry

I hope that answers your question.

Joice Mathew

Yes, partly.

Joice Mathew

But you know, just to get an idea of, you know, how these things have affected, please share some, you know, insights on the volume trend.

Joice Mathew

You know, how much was it?

Joice Mathew

What was the change in volume during the, during 2024?

Mohamed ElFatatry

So I could, I could give you at high level, I have at high level.

Mohamed ElFatatry

So at integrated we, we grew double digit.

Mohamed ElFatatry

So let's say... I can say more than 10% in 2024.

Mohamed ElFatatry

I could also share with you that Yemen market in the last six months of 2024... because that's where our operation became full fledged... the volume that we sold in the last six months is projected to be sold in quarter one this year.

Mohamed ElFatatry

So we are moving aggressively in Yemen.

Mohamed ElFatatry

Of course in Oman, local market growth would be less than looking at the integrated view.

Mohamed ElFatatry

And the reason for that is that in Oman we hold more than 30% market share in Oman.

Mohamed ElFatatry

So our growth in Oman, I would say is less aggressive but more choices that we make of where to grow.

Mohamed ElFatatry

And as I mentioned to you, we're looking really at penetrating the industrial sector in Oman now to support not only the, I would say the growth of the industrial and manufacturing sector, but also we're trying to help these businesses decarbonize and utilize our carbon neutral range.

Joice Mathew

Got it, Got it.

Joice Mathew

I appreciate that, thank you.

Joice Mathew

And another question is a follow up question on the Mobility side.

Joice Mathew

You said you are focusing, you'll be focusing more on V-Power.

Joice Mathew

So could you please tell us how is the traction acceptance, market acceptance for V-Power in terms of volume – what's the volume growth in V-Power in 2024-23?

Mohammed Al Balushi

[inaudible] that we're not only focusing on VPower...

Suresh Nair

So two things, Joice – thanks for the question.

Suresh Nair

In absolute terms, we grew approximately 40% increase in terms of volumes for V-Power in 2024 as opposed to 2023.

Suresh Nair

And that's why we are very, very excited with the consumers belief in this premium product and recognizing that we are operating on a special additive, which no other player in the market has.

Suresh Nair

Secondly, just to recap my opening here Joice, in terms of our growth segment, it is basically five segments.

Suresh Nair

So it's fuel segment, it's V-Power plus the 91 fuel sales which I was mentioning earlier.

Suresh Nair

There are potentially more differentiated fuels which are coming.

Suresh Nair

Watch this space.

Suresh Nair

Our second growth segment is on new stations to Oman.

Suresh Nair

We have included one.

Suresh Nair

We are soft launching another one in four weeks and there will be up to three more sites added this year.

Suresh Nair

That's one piece that will move the needle hugely for Shell.

Suresh Nair

And this is a stark difference compared to say a year and a half ago where we were more conservative in terms of adding new stations.

Suresh Nair

The third piece on growth is on convenience retailing, which I mentioned and Manna had questions around that.

Suresh Nair

That is the other segment.

Suresh Nair

The fourth is around energy transition, alternate fuels or lower carbon fuels which my colleague mentioned.

Suresh Nair

And the fifth is around the B2B segment.

Suresh Nair

So just for posterity, the growth area is not only V-Power, it's also the four other segments which I mentioned.

Joice Mathew

Yes, I understand that.

Manna Thomas

Thank you for that clarification.

Joice Mathew

Just a follow-up on the NTI plans that you have.

Joice Mathew

What's the CapEx that we are looking at for adding these new five stations and what's the model?

Suresh Nair

Yeah, so as a general proxy, constructing a station can cost anywhere as low as 150,000 [Omani] Riyals and it can go up to as high as Sky's the limit.

Suresh Nair

Let me leave it that way.

Suresh Nair

In terms of the model which we choose to employ, Shell is employing a hybrid model which means that can be an ownership of the asset anywhere as low as 5% to shell owning 100% of the asset.

Suresh Nair

So we are not rigid in terms of our ownership model that will be subject to negotiation opportunities in the market.

Suresh Nair

But headlining all that, it'll be a function of wanting to grow, ultimately Joice.

Suresh Nair

So if we can find great opportunities in terms of land, in terms of active investors, in terms of operators and all of these three can line up, the operating model will be a result of of the negotiation. That's it.

Suresh Nair

Shell is flexible in terms of the model which we want to operate.

Suresh Nair

Two things which we will not compromise on is in terms of our license to operate, that's around safety.

Suresh Nair

That means we will only invest and participate in business models where we can operate these assets in a safe level which is up to Shell standards, and the other one which is in ethically compliant way as well.

Suresh Nair

I hope that answers the question, Joice.

Joice Mathew

Yes, yes, thank you.

Joice Mathew

But when you say 150,000, are you saying that this will be the CapEx for... or average CapEx per station for this year? Like maybe around 750,000 Riyals is what we are looking at for the [inaudible] stations.

Suresh Nair

So I won't, I won't be able to divulge that.

Suresh Nair

But suffice to say... And why... in transparency it is because as we are developing our capital investment model, we are also negotiating contracts, etc.

Suresh Nair

So the absolute sum on how much CapEx I invest is actually fluid.

Suresh Nair

As I'm speaking to you.

Joice Mathew

Yeah, got it, got it.

Joice Mathew

Thank you.

Joice Mathew

The next question is... [cut off]

Mohammed Al Balushi

Sorry, Joice, go ahead because I want to take you back to the first question about lubricants... but please go ahead and continue that.

Joice Mathew

You can clarify on that.

Joice Mathew

I'll wait.

Mohammed Al Balushi

No, no, no. We will have time, please.

Mohammed Al Balushi

I don't want to interrupt your question on the floor.

Joice Mathew

That's fine. [Laughs]

Joice Mathew

The next one is on the EV charging, the hydrogen stations that you are very positive about.

Joice Mathew

Could you throw some light on the revenue model that you are going to get from EV charging stations?

Joice Mathew

You are planning to add around AC charging stations of around 50 during this year and DC charging stations are going to 20.

Joice Mathew

So what's the number of stations that we have currently – and what's the number that you are anticipating by end of year and what's the revenue model there?

Joice Mathew

How much of revenue are we generating from these charging stations?

Suresh Nair

Right, thanks.

Suresh Nair

So I'll go through very quickly.

Suresh Nair

So the number, in terms of our ambition, to grow up to see, let's call it for proxy, 50 additional charge points hybrid between our current stations and growing, versus the existing footprint of about 15 charging points which we have north to south.

Suresh Nair

The model for revenue will be dependent on the partnerships which I was talking about a little while earlier.

Suresh Nair

So I will not be able to divulge what's either in the pipeline or some which has been signed at the moment.

Suresh Nair

So we need to go through the proper channels and await for SOM to actually announce them.

Suresh Nair

But suffice to say the intention to, let's say, monetize this particular segment will be highly dependent on the type of partnership deals which we sign with interested players which we currently have and are growing in the market.

Suresh Nair

And by the way, this will not necessarily only be confined to EV charging cars as well.

Suresh Nair

So we are also exploring other forms of e-mobility and that for example could include electric motorcycles, which is something you see done actively in the UAE as well.

Suresh Nair

So the reason I was trying my best to contain my excitement is because that's as much as I can reveal for now, Joice, but please watch this segment.

Suresh Nair

So EV for now when Shell refers to it is not only contained to four wheel vehicles, but it's also two wheelers as well.

Suresh Nair

And it can be, for example, let's hypothetically say, in the form of battery swapping. Yeah?

Suresh Nair

We are exploring all possible avenues.

Suresh Nair

Please wait for the announcements.

Suresh Nair

Hydrogen itself, this was part of Shell Group's 'Gift to the Nation' and this is done once, periodically, every three to four years from the Shell group.

Suresh Nair

So in full transparency, the current hydrogen unit which is at that station nearby the airport, is not intended, and never was intended to generate any revenue.

Suresh Nair

But aside from it being a gift to the Sultanate, it is also both Shell and the Sultanate's ambition to learn from this particular station.

Suresh Nair

First-of-its-kind for the Shell Group globally, where we are producing hydrogen on site. In other countries, for example, in Europe, hydrogen is produced off-site and then delivered to the station and it's commercially sold.

Suresh Nair

We are learning in that [unclear].

Suresh Nair

So I'd encourage the forum to actually follow through on the news coverage, including the Minister's ambition actually for this site and probably you'll be able to pick up a few more nuggets. Ideally, at the end of this project, which is maybe in a four to five year horizon.

Suresh Nair

Somewhere between that time or after, we are in a better space to say, okay, this can be commercially scalable, we want to roll it out whether it's in the form of green or blue hydrogen to the Sultanate.

Suresh Nair

And that has to be also done lastly in tandem with OEMs as well, which we are yet to approach the subject in terms of scale.

Suresh Nair

Joice – trust that answers your question.

Joice Mathew

Thank you, Suresh, thank you very much for that clarification on hydrogen.

Joice Mathew

And on, just continuing on this EV charging stations, will it be possible for you to share what kind of a revenue contribution are we looking at?

Joice Mathew

Maybe three years down the line or even five years down the line.

Mohammed Al Balushi

Let me take that, Suresh.

Mohammed Al Balushi

Thanks. Thanks Joice.

Mohammed Al Balushi

I think it's well... let's establish the facts.

Mohammed Al Balushi

Today EV is offered for free.

Mohammed Al Balushi

Yeah, our motorists who basically drive EV vehicles are charging their vehicles at our stations or charging points for free.

Mohammed Al Balushi

Now, it has been honestly an area that most of the stakeholders here in Oman have been trying to look into... to address it in the right way. From one side, entice the customers to go on for EV and at the same time encourage also the service providers to bring in equipment or invest in CapEx that will give them the return on capital employed.

Mohammed Al Balushi

Now it's always, you know, when you bring in a new product or a new initiative to the market, it's always the chicken and egg.

Mohammed Al Balushi

And I think I noticed that you are trying to arrive to where, when basically or the business model that we have.

Mohammed Al Balushi

Today, we're actually looking at EV as enablers for our customers to come and experience it, try it out for free and actually be encouraged.

Mohammed Al Balushi

And hence we would be sort of encouraging the growth of this segment from motorist perspective.

Mohammed Al Balushi

But it's also an opportunity for us to grab more sort of income through the non-fuel retailing when those customers come and pass by our sites.

Mohammed Al Balushi

Now, is this bulk model sustainable?

Mohammed Al Balushi

 I doubt, because there will be a specific time where any investment companies would say, you know what, I cannot go beyond that, I can try it out for some time, but then I cannot go beyond that.

Mohammed Al Balushi

It has to make a commercial sense.

Mohammed Al Balushi

The question is when and how. We are watching this space and see how the growth is taking or shaping in the market, and accordingly, also we are in touch with the authorities to basically come to... basically... a model where it makes good sense and still encourage our customers or motorists in Oman to go for electric vehicles and at the same time encourage us and other business partners to keep on investing and grow this in parallel.

Mohammed Al Balushi

I think the business model that we have were able to arrive to is delivering those charges through our business partners, which has been really successful.

Mohammed Al Balushi

So I think, I hope that answers your question, Joice.

Joice Mathew

That's very clear. Dr. Mohammed, thank you very much.

Mohammed Al Balushi

And you wanted... You were talking about some clarification on the lubricant business itself.

Mohammed Al Balushi

Yeah, I somehow missed your first question about, you know, we haven't despite growing in volume, we haven't grown in profitability.

Mohammed Al Balushi

Was that your question?

Joice Mathew

Revenue side? It was on the revenue side.

Joice Mathew

You were saying that the market share has increased and new markets... (sic.) were started selling to new markets.

Joice Mathew

But at the same time the revenue has been very stagnant during the year.

Joice Mathew

So, I just wanted to check now whether the market is shrunk or was it a price issue, Pricing realization...

Mohammed Al Balushi

I think in addition to what Mohammed said. So, first let's clarify.

Mohammed Al Balushi

We have grown double digit in volume.

Mohammed Al Balushi

We also have grown double digit in gross profit of that specific business.

Mohammed Al Balushi

Actually the lubricant business is growing.

Mohammed Al Balushi

Yes, it could have attributed more to Shell Oman Marketing's overall picture if it wasn't for the geopolitical delays and price hikes that happened. And it was impacting not only the region but the entire globe.

Mohammed Al Balushi

So just for clarification, we have grown in the profitability of the business itself, but the contribution could have been much higher if it wasn't for those scenarios.

Mohammed Al Balushi

And that's what I wanted to highlight.

Burair Al Lawati

Here if you allow me, Doctor [Mohammed Al Balushi] just to add to that.

Burair Al Lawati

I think the number that you're looking at in terms of revenue covers our lubricant business as full.

Burair Al Lawati

So we have volumes that are for local markets and we have those that are for export.

Burair Al Lawati

So what you are seeing is without breakdown.

Burair Al Lawati

Basically you talked about not seeing much difference between year-on-year.

Burair Al Lawati

But what Mohammed was talking about is that the increase in volumes has been in particular some segments... like he mentioned, for example Yemen... where the margin structure is different to the local market and the prices are a bit different.

Burair Al Lawati

So you might see increase in market shares in certain markets, while not in others.

Burair Al Lawati

And but you that will not show in the top line.

Joice Mathew

Yes, I got it. Thank you very much for that clarification.

Mohammed Al Balushi

Thanks.

Joice Mathew

On the aviation side, are there any other, any ATF supply contracts that are coming in for renewal in 2025 – and also if you can touch upon what are the opportunities that you see in the aviation side... That would be much appreciated.

Said Al Rawahi

Yes, thank you Joice, for this. We have currently Oman Air tender that is out right now. We still don't know the outcomes. So that is one thing.

Said Al Rawahi

SalamAir will be coming by end of the year.

Said Al Rawahi

These are the two local tenders, and then we have the international that are keeps coming on a monthly basis or every six months.

Said Al Rawahi

So we have Emirates every six months.

Said Al Rawahi

So the different airlines, different strategies they have and we are participating in all those tenders that come out.

Said Al Rawahi

But Oman Air and SalamAir, the two major tenders that are coming out this year.

Joice Mathew

Yeah, thank you.

Joice Mathew

And Oman Air is a three year contract if I'm not mistaken.

Said Al Rawahi

It's a two year contract.

Joice Mathew

Two year contract.

Joice Mathew

And SalamAir also... [cut off]

Mohammed Al Balushi

They keep on changing it.

Said Al Rawahi

But currently it is... [cut off]

Mohammed Al Balushi

It used to be three years, Joice.

Mohammed Al Balushi

They keep on [changing it]. It's up to them.

Mohammed Al Balushi

Of course they sometimes make it two months, sometimes make it three.

Joice Mathew

Okay, got it, got it.

Joice Mathew

See the next one is my last question.

Joice Mathew

That's on your last year announcement of sale of assets.

Joice Mathew

You're selling your oil, some logistics assets and now looking at the value of those assets, you have ring fenced almost 4.6 million [Omani Riyals] worth of assets in the balance sheet.

Joice Mathew

But at the same time in the notes, when I looked at it, you know, I'm seeing a 9 million [Omani] Riyals depreciation reversal as well.

Joice Mathew

So the total value of the assets, what we are taking is around 14 million or you know, between 14 to 15 million [Omani] Riyals.

Joice Mathew

So I just want to know, I was just trying to arrive at a possible potential sale price that you know, you probably Shell, will be able to get from sale of these assets and the potential capital gain that you might record during the course of this year.

Joice Mathew

Can you please throw some color on that?

Joice Mathew

And what's the kind of revenue are these assets currently generating any revenue?

Joice Mathew

What are the reasons that you are, what are the reasons that you are you're going for a sale of this asset?

Joice Mathew

Some details on that would be much appreciated.

Mohammed Al Balushi

Sure.

Mohammed Al Balushi

Thanks, Joice.

Mohammed Al Balushi

I'll probably just cover it in a high level and then I'll ask Lamees to share more details.

Mohammed Al Balushi

So the 9 million [Omani Riyals] you're talking about is actually covering the entire business, not only the assets.

Mohammed Al Balushi

So that's number one. The reason we decided to actually sell off the assets... mainly because post 2016 or prior to 2016, these assets used to serve the entire country from being the source of supply or the depot for the country and we used to rent them out to the refinery.

Mohammed Al Balushi

Post 2016, when the depot has moved to Al Jafnayn, we started actually looking at two opportunities on how we can capitalize on these assets and maximize them for the best interest of some.

Mohammed Al Balushi

There were ad hoc contracts here and there, while at the same time the cost of operating and maintaining these assets were actually becoming heavier year-on-year.

Mohammed Al Balushi

We tried also to look at the import-export aspects of it and that was before the Russia-Ukraine challenges. We tried it for a couple of quarters and then that issue, the political issue, got triggered between the two countries and that made lots of added more complexity in terms of import-export aspects.

Mohammed Al Balushi

The last few months we have been, or actually the last couple of years, to be honest, we have been actively looking in terms of how we can best sell these assets.

Mohammed Al Balushi

And recently we came into signing an SPA for the sale of these assets.

Mohammed Al Balushi

It's of course conditional, subject to approval of the authorities, which we are still in that phase if you like.

Mohammed Al Balushi

So that's the reason mainly the assets was creating a cost element without necessarily a sustainable source of income.

Mohammed Al Balushi

And for us, we can't just keep assets with all the costs associated with it, whether it's rent, whether it's maintenance, whether it's people, whether it's asset integrity, while actually having just ad hoc contracts in place.

Mohammed Al Balushi

Hence that idea or that decision was endorsed by the board of directors to actually go ahead and sell those assets.

Lamees Al Lawati

Maybe just to complement Mohammed. So we say our guiding principle is to grow in profitability.

Lamees Al Lawati

But then internally within the organization, that's not the only lever that we want to focus on.

Lamees Al Lawati

We also focus on [unclear] and [unclear] improvement.

Lamees Al Lawati

So our return on average capital employed is tied up with how much revenue or how much profitability do we actually get from the existing portfolio of assets that we have.

Lamees Al Lawati

If we look at this particular terminal, like you've correctly mentioned, it's around 4.6 million Omani Riyals.

Lamees Al Lawati

It constitutes around 8% today of my overall PP&E.

Lamees Al Lawati

And tying it with everything that Mohammed has just mentioned in terms of the revenue that we are getting out of it, the income that we get in addition to the operational cost.

Lamees Al Lawati

The overall equation was not stacking for us.

Lamees Al Lawati

So it's just a way, you know, from the organization to liberate ourselves from that 8% of assets that are sitting on the balance sheet today from our PP&E that are not the returns that we are looking for, hence the decision to dispose them off or to divest them.

Mohammed Al Balushi

And Joice, if I may add, I think this was also has been looked at as a great opportunity to basically invest in the activities and the growth plans that we have for the Company for the next few years.

Mohammed Al Balushi

So ideally we're trying to convert a none or basically a sleeping asset, if I may use this term, into active investments that will help us in the other, other activities or other classes of businesses that we do see a lot of areas to improve and grow in.

Mahmoud Al Abri

I think we're exactly on time.

Joice Mathew

Yeah.

Joice Mathew

One follow up on this just to make sure.

Joice Mathew

So the total consideration is 14 million [Omani] Riyals and we are likely to book a pre tax profit of around 9 million [Omani] Riyals.

Joice Mathew

Is that right?

Burair Al Lawati

No, actually due to compliance and competitive and regulatory reasons, we cannot really now comment on the value of this transaction.

Burair Al Lawati

The discussions are still ongoing, negotiation is still ongoing.

Burair Al Lawati

So, you know, we are public listed companies so we might not be able to comment on that part right now.

Burair Al Lawati

But watch out for the disclosures soon, Insha'Allah.

Joice Mathew

Sure.

Joice Mathew

And will this money will be distributed to the shareholders or will you keep it for the growth projects?

Mohammed Al Balushi

That will be subject to a discussion that we will have.

Mohammed Al Balushi

But definitely, you know, we will share the outcome of this at the right time.

Mohammed Al Balushi

As Burair said, there are a number of, you know, protocols that we need to hold around this time and it's basically... wait for the transaction to be completed.

Mohammed Al Balushi

We do have a few scenarios that we will discuss with the board of directors on how to basically utilize these funds.

Mohammed Al Balushi

But one of them would be, or it could be a mix of options on how we can utilize these.

Joice Mathew

Yeah. Thank you.

Mahmoud Al Abri

Thank you, doctor.

Mahmoud Al Abri

Thank you, Joyce.

Mahmoud Al Abri

I know you have additional good questions and the team members as well who did not have chance to ask.

Mahmoud Al Abri

You can always drop your questions to my email in our website in the investor relations page.

Mahmoud Al Abri

And we are happy actually to attend to your questions.

Mahmoud Al Abri

But I think we have come to the end of our investor relations sessions.

Mahmoud Al Abri

I would like to thank you again for the time and for the good engagement and the good questions, as I said.

Mahmoud Al Abri

And we look forward to host you again in Q3 for our second investor relations sessions.

Mahmoud Al Abri

So thank you and have a good day.

Mohammed Al Balushi

Thank you.

{Shell outro music plays}

{Screen shows Shell outro}

Shell Oman Marketing SAOG Investor Relations - MSX Engagement Session

August 2024

Duration: 00:54:17

0:00 – Audio begins at 0:01

00:00:01 Burair Al Lawati
Great. So we'll start in one minute. We'll just give people enough time to enter and we'll start in one minute. That's what it didn’t cause any… yeah.

00:00:13
[Audio Muted]

00:00:36 Lamees Al Lawati
[Audio Unclear]

00:00:41 Burair Al Lawati
All right. So shall we start?

00:00:44 Burair Al Lawati
Bismillahir Rahmanir Raheem. Asalamualaikum. Just to check the sound, if you can hear me online – can you just show us?

00:00:58 Burair Al Lawati
Can you go back to that [inaudible] please?

00:01:13 Burair Al Lawati
Can you just confirm that you can hear us please?

00:01:16 [UNKNOWN]
Yes.

00:01:17 Burair Al Lawati
OK, excellent. Thank you very much.

00:01:20 Burair Al Lawati
OK. Asalamualaikum, ladies and gentlemen. Thank you all for attending our fifth session with the Muscat Stock Exchange investors community.

00:01:31 Burair Al Lawati
Following the invite from Shell Oman Marketing Company that was published on 8th of August 2024, which was addressing the investors and the financial analysts… inviting them to this virtual session held in compliance with the resolution number E 1/09/2022 by FSA.

00:01:52 Burair Al Lawati
And it is… the… the main aim of this session is to discuss the Shell Oman Marketing Company's first half unaudited financial results for the first six months and the agenda of the day, I'll share them on the screen now.

00:02:07 Burair Al Lawati
Just the agenda.

00:02:09 Burair Al Lawati
As you can see, we will be… obviously… going through 5 minutes of introduction initially and then HSE and ground rules.

00:02:18 Burair Al Lawati
Then we'll discuss the key financial business highlights before the Q&A session at the end.

00:02:24 Burair Al Lawati
To manage time, what would be appreciated is that obviously, we'll have enough time for all the questions, as you can see. But if there are people waiting to ask, we'll limit initially 2 questions per person and we move on. And then we'll come back to the persons to take more questions.

00:02:39 Burair Al Lawati
Before I go forward, I'll introduce myself.

00:02:41 Burair Al Lawati
My name is Burair Al Lawati, I'm the General Manager for Strategy and Energy Transition.

00:02:46 Burair Al Lawati
I'm stepping in for my colleague Mahmoud Al Abri, who's the Investor Relations Officer and GM of Corporate Relations.

00:02:53 Burair Al Lawati
He's on his annual leave and I have here also a panel with me.

00:02:56 Burair Al Lawati
I will start to… Dr. Mohammed… if you can introduce yourself…

00:03:00 Mohammed Al Balushi
Good morning, everyone.

00:03:01 Mohammed Al Balushi
I'm Mohammed Al Balushi. I'm the CEO of Shell Oman Marketing Company.

00:03:05 Burair Al Lawati
[Inaudible]

00:03:06 Lamees Al Lawati
And hi, everyone, Asalamualaikum.

00:03:08 Lamees Al Lawati
Thank you for joining us in the fifth session and the second one for this year.

00:03:11 Lamees Al Lawati
I am Lamees Al Lawati, the Chief Financial Officer of Shell Oman Marketing Company.

00:03:14 Burair Al Lawati
Then we have Suresh.

00:03:16 Suresh Nair
Good morning, everyone.

00:03:17 Suresh Nair
[I am] Suresh Nair, GM for Mobility.

00:03:20 Suresh Nair
Excellent. Now, Said.

00:03:21 Said Al Rawahi
Asalamualaikum, and good morning Said Al Rawahi, GM Low-Carbon Products and Sectors.

00:03:26 Burair Al Lawati
Thank you, gentlemen, ladies.

00:03:28 Mohammed Al Balushi
And we have Sabry on the line.

00:03:30 Burair Al Lawati
We have also some team members online as well and who are also listening to this in case they will have to step in, in case of any questions related to their businesses.

00:03:40 Mohammed Al Balushi
Can Sabry introduce himself?

00:03:42 Burair Al Lawati
Sabry, can you unmute yourself please?

00:03:44 Mohammed Sabry
Yeah.

00:03:45 Mohammed Sabry
Good morning, Asalamualaikum, This is Mohammed Sabry.

00:03:48 Mohammed Sabry
I'm the Lubricant Supply Chain Manager.

00:03:51 Burair Al Lawati
Great. Thank you, Sabry.

00:03:54 Burair Al Lawati
And so let's start with the HSE brief.

00:03:58 Burair Al Lawati
As you can see, we'd like… we'd like you to be careful of as you join our session, be aware of the alarms and the exits.

00:04:05 Burair Al Lawati
If there are any emergency, just leave safely and [be] careful about any liquids or any hot drinks that may [be] around you while you're operating.

00:04:19 Burair Al Lawati
Of course, this session is recorded.

00:04:22 Burair Al Lawati
So we're letting you know as a respect for your privacy and… and as mandated by the law, and we shall continue now to present our business performance.

00:04:34 Burair Al Lawati
Let's go to the HSE… please… page.

00:04:37 Burair Al Lawati
So let's start with the HSE brief… the first half or Q2 of the… of the year of 2024 ended without any loss time injuries [LTI] or any spills.

00:04:48 Burair Al Lawati
So we maintained our goal zero and we would like to continue doing the same, as we go forward. In terms of focus and highlights that we had… in the first… in the second quarter in terms of health, we introduced… health stress… heat stress management campaign.

00:05:09 Burair Al Lawati
Obviously summer months, so that's something that's very important for us.

00:05:11 Burair Al Lawati
We also conducted contractor safety in hydrogen emergency response drills and workshops.

00:05:19 Burair Al Lawati
We also completed the overall emergency response plan drill with the relevant authorities, and we had also some workshops and trainings related to EV for the first line of defense assurance and road safety refreshes.

00:05:34 Burair Al Lawati
When it comes to security, we had a training program for the security team who completed the first line of defense security assessment. And we also had internal clean desk policy awareness program to raise the importance about data management as we even mentioned earlier.

00:05:52 Burair Al Lawati
Environmentally, we conducted our annual environmental assessments and we had drill… drilled monitoring wells and renewed environmental permits for aviation operations.

00:06:03 Burair Al Lawati
As we go forward, we will continue to maintain our goal zero commitment – to maintain our goal zero – and we will also introduce a revamped contractor safety manual, as well as worker welfare gap assessment to address any gaps that are in this area.

00:06:23 Burair Al Lawati
(Sic.) We also have certain priorities that come to psychological health, safety visual… that where we would like our leadership to be as visible and to contribute to the assurance in the Company. We will conduct certain environmental assurance activities in the… that are related also to the typical of the traditional risk, especially when it comes to road traffic, fuel delivery and on-site traffic risks. (sic.)

00:06:53 Burair Al Lawati
Now we also understand there are emerging risks associated with the new renewables and other low-carbon-related products and services and as a result we are also introducing safety and asset integrity programs in that area.

00:07:12 Burair Al Lawati
Let's move on to the financials – and I'll leave you with our CFO.

00:07:16 Lamees Al Lawati
Thank you, Burair.

00:07:17 Lamees Al Lawati
So, picking from the introduction of Burair, the remainder of the session will be structured as follows: to an overview of the financial performance of the first half of 2024, and then supplemented by key achievements and key performance indicators of every business unit… that would be shared by my colleagues.

00:07:35 Lamees Al Lawati
The financial overview here is consistent with the disclosure that we had in the Muscat Stock Exchange platform.

00:07:42 Lamees Al Lawati
So the detailed financials are available there and they were posted right after our board meeting in the end of July.

00:07:50 Lamees Al Lawati
So in the first half of 2024, our revenue was a 3% lower than the same period last year, reflecting and driven by lower demand that we have witnessed in the B2C segment.

00:08:01 Lamees Al Lawati
Now also in addition to that, we had disruptions, and logistic and supply chain issues in the regions.

00:08:08 Lamees Al Lawati
We have imposed (sic.) challenges on us in sourcing base oil and delivering the final product in certain lubricant export markets that we have.

00:08:16 Lamees Al Lawati
The 3% revenue that we have seen in the revenue… in the revenue… line has actually also reflected in the same percentage movement at a gross profit level.

00:08:25 Lamees Al Lawati
But despite that, we have maintained our gross profit margin percentage at 7%, which is the highest in the industry.

00:08:31 Lamees Al Lawati
We have consistently kept that despite the challenges that we have faced in the first half of the year.

00:08:38 Lamees Al Lawati
Now, this clearly reflects the strong margin composition that we have as a company, and the strong portfolio of products and customers that we have.

00:08:47 Lamees Al Lawati
Our other revenue, which is predominantly the income that we received from the associated services that we offer in our forecourts; things like shops income, car care products and car care services that we offer, in addition to the co-locators.

00:09:01 Lamees Al Lawati
So the tie-ups that we have with other brands inside our forecourts, as well as cards income, have actually reflected the 4% growth versus the same period last year.

00:09:12 Lamees Al Lawati
Now, other income continues to be an important lever part of our strategy, and the growth that you see in front of you is actually reflecting a lot of the initiatives that we have been focusing on… in the… in the… space, reflected in upgrading the portfolio of shops that we have.

00:09:33 Lamees Al Lawati
Last year we have shared with all of you that we have converted the shops back to our in-house Shell Select brand.

00:09:40 Lamees Al Lawati
And during the year, we have actually upgraded a certain number of these shops to a new look and feel, in addition to offering new food, services, and products within these shops. In early July – and perhaps, Suresh, you can complement this later in your part – we also signed a strategic agreement with Al Meera Markets, improving the customer value proposition and improving our retail value proposition as well by offering exclusive products in our shops and tying up with Al Meera… optimizing the supply chain as well as utilizing the marketing space with many joint initiatives that we will do there.

00:10:22 Lamees Al Lawati
On the cost space, and aligned with our previous messaging and narrative on cost, like we've shared with you previously, office cost management has been a priority for us as a company in 2024.

00:10:32 Lamees Al Lawati
Several work streams were deployed, targeting cost reduction, to ensure operational efficiency and position the company for sustainable growth in the future.

00:10:44 Lamees Al Lawati
Our cost of optimization strategy started yielding results.

00:10:47 Lamees Al Lawati
Although the percentage movement that we see over here is 1%, but the underlying reduction that we have seen in OpEx was actually 5%.

00:10:55 Lamees Al Lawati
So a sizeable reduction in comparison to the same period last year.

00:10:59 Lamees Al Lawati
The 1% is diluted with the depreciation increase that we have seen, obviously referring to a higher asset base year on year.

00:11:11 Lamees Al Lawati
So, on the financing space, the value that you see over here is a combination of the financing element of the Right of Use of Asset related to our lease as well as the actual borrowing cost.

00:11:24 Lamees Al Lawati
It has reflected an 85,000 growth [sic.] versus the same period… we have seen increase in the borrowing costs externally in the market and obviously looking at the bigger portfolio of assets that we have, and the Right of Use of Assets, we have seen a proportionate increase related to the financing cost of leases as well.

00:11:42 Lamees Al Lawati
On cash flow from operations for the period was significantly better than the position that we had in H1/2023, reflecting again on working capital management – an initiative that we have started from last year, but continues to be a focus area for us, managing our inventory balances, managing our credit balances in the market.

00:12:01 Lamees Al Lawati
Our credit performance has been exceptionally well in the first half of 2024… we didn't have any build-up of provision… which again reflects on credit excellence and the operational integrity of our credit operations.

00:12:16 Lamees Al Lawati
That's it on a high level of the financial performance and handing over to Suresh.

00:12:22 Suresh Nair
Good morning.

00:12:24 Suresh Nair
So, on the safety front, we have maintained our HSE and Goal Zero performance across our 211 sites in the country.

00:12:32 Suresh Nair
We currently have a platform of 55 shops.

00:12:35 Suresh Nair
And as my colleague Lamees touched upon – by the end of the second quarter – the [inaudible] already completed the revamped… in terms of the new look and feel… for three of these Select stores and there's actually more to come. We anticipate 6 more to be converted or upgraded by the end of this year.

00:12:54 Suresh Nair
We're excited to report the new partnership with Al Meera markets – and you'll see this being manifested externally from the change in the facade for our shops.

00:13:08 Suresh Nair
Currently there's four in the Sultanate carrying the brand and these facades will be upgraded progressively over the course of time to reflect that joint partnership across the 55 shops.

00:13:22 Suresh Nair
With these partnerships, we are expecting to improve the array of products which we offer in the Select Al Meera outlets, as well as be able to offer more competitive pricing as a choice point for our customers to service their mobility needs.

00:13:41 Suresh Nair
V-Power is now available at 112 sites across the country.

00:13:46 Suresh Nair
And we are also happy to report out that we are seeing an exciting new pickup of customers choosing V-Power over regular grades of fuel, especially after we launched our renewed formula, which came after five years, at the beginning of this year.

00:14:05 Suresh Nair
More, more to come in that space, but we're already seeing very promising signs this year.

00:14:10 Suresh Nair
In terms of our customer interface and touch points, we're improving Shell Go+, our digital platform.

00:14:19 Suresh Nair
We've tied up additional partnerships with six players on this Go+ platforms, and essentially this provides platforms for customers to be able to utilize their loyalty points together with the partners which have developed in this platform.

00:14:36 Suresh Nair
Our Guest Experienced Assessment (GEA) are telling us that the customers are happy with our service level as well as giving us very specific improvement points in our touch points with the customer in our locations, but we remain in the top quartile position when it comes to this independently assessed guest experience scores.

00:14:57 Suresh Nair
Lastly, we are currently undergoing an exciting period of business in the Khareef season – and we are seeing an improved performance in terms of customers’ preferring to choosing our sites for the Khareef [inaudible].

00:15:16 Suresh Nair
With that I'll conclude the coverage on Mobility – and will take questions later on. Thanks, Burair, back to you.

00:15:22 Burair Al Lawati
Thank you, Suresh.

00:15:23 Burair Al Lawati
So now we move on to Lubricants sector. What we saw in H1 and we're glad to report that we have grown in volume year-on-year because of the performance of the team and the quality of the products that we offer.

00:15:40 Burair Al Lawati
We have regained our leading position in the passenger cars motor oil segment and maintained our leadership position in Oman market.

00:15:50 Burair Al Lawati
But also for the 17th year, we are the number one global lubricants brand for… 17 years consecutively… which is a testament to the quality and the reliability of our products in this area.

00:16:02 Burair Al Lawati
Our export market has also grew (sic.).

00:16:05 Burair Al Lawati
So, we take our Made-in-Oman lubricants which are produced in our Mina Fahal lubricant blending plant, to many countries in the region.

00:16:13 Burair Al Lawati
But we also… there are key markets where we signed a new offshore B2C distributor and we are already saw improvements in the number as a result of that.

00:16:25 Burair Al Lawati
And operationally, we have achieved above the industry average in terms of on-time in-full (OTIF) product deliveries by the lubricant plant.

00:16:33 Burair Al Lawati
And our customer operations has continued to introduce efficiency and cost optimization programs and initiatives, which are there to improve customers interface as well as their experience, but also contribute to the digitalization journey of the company in this particular area as well.

00:16:55 Burair Al Lawati
We as we go forward, we'll continue focus on HSE, growing our premium portfolio and in exploring new revenue streams as we explore how we can continue improving our market share – and in the same time focus on digitalization and cost optimization initiatives [that] will also be part of our DNA as we go forward.

00:17:17 Burair Al Lawati
Let's move down to low-carbon products and sectors.

00:17:20 Said Al Rawahi
OK.

00:17:21 Said Al Rawahi
About low carbon products, we have signed bunkering license agreements to expand our marine business across Oman.

00:17:30 Said Al Rawahi
At the same time also we continue to retain and win new businesses in different sectors when it comes to bulk fuel.

00:17:37 Said Al Rawahi

And also we are looking at cost of optimization and efficiency solutions when it comes to improve profitability and to serve customers, and also looking at partnerships with firm oil companies to supply fuel, explore also new low carbon solutions.

00:17:57 Said Al Rawahi

Now going forward, focusing on HSSE also we're looking at optimizing profits and also exploring new opportunities and financial…, newer operations and financial opportunities –and also looking at growth when it comes to expanding revenue streams.

00:18:13 Said Al Rawahi
And also we're trying to lead in the energy transition in the second-half of the year.

00:18:20 Burair Al Lawati
Thank you, Said.

00:18:21 Burair Al Lawati
Now in terms of energy transition strategy, as you know we continue to be advocate… advocating for the energy transition agenda of the Company, in line with Oman Vision 2040, and net-zero targets by 2050.

00:18:38 Burair Al Lawati
We make our opinions, and our expertise and knowledge reference from our global network available to the country into the market – and we continue our discussions in various areas.

00:18:51 Burair Al Lawati
In terms of EV, our network has so far 15 charging points, but we have a plan to strategically grow that network in the next two quarters.

00:19:02 Burair Al Lawati
And as we go forward, we are tying up with a number of partners who are collaborating to enable this growth and to make it strategically feasible for the market and for the Company – and that creates shareholder value.

00:19:20 Burair Al Lawati
In the same time, we are looking at how we can unlock opportunities from circular economic models in waste management, for example, when it comes to lubricants and other petroleum waste.

00:19:33 Burair Al Lawati
And that will contribute not only to decarbonisation, but also added in-country value for the country.

00:19:41 Burair Al Lawati
Meanwhile, we have completed a comprehensive review of our 2030 Strategy that will enable business growth in line with our ‘Powering Progress’ strategy of Shell.

00:19:55 Burair Al Lawati
You were (sic.) pleased to also probably… you've already heard about the… that the engineering work has already commenced in… on site in Muscat near the airport for the first hydrogen service station, in the Sultanate but also in the entire Middle East.

00:20:11 Burair Al Lawati
And the idea is to have that site as green as possible when it comes to sustainability solutions such as EV, solar panels, vapor capacities, and other components.

00:20:25 Burair Al Lawati
Now as we go forward, as we said, advocacy remains a big part of what we do here.

00:20:30 Burair Al Lawati
So we are exploring the opportunities in biodiesel and sustainable aviation fuel in, collaboration with the various stakeholders in the public and private sector.

00:20:39 Burair Al Lawati
And also, we will be finalizing the overall SOM decarbonation… Shell Oman Marketing Company… decarbonisation strategy and milestones towards our 2050 targets, and continue building and enhancing the risk culture that will reinforce shareholder value and equity, but also support our ‘Powering Progress’ strategy.

00:21:03 Burair Al Lawati
Finally, we move to the CSR aspect… Corporate Social Responsibility. We've been focused on… we've revisited our CSR strategy… and we have enhanced it to make sure that our social impact is directly related to our business activities.

00:21:20 Burair Al Lawati
So you can see that a number of initiatives that happened in Q2 were related to, for example, to training on EV in collaboration with the Youth Centre and also the number of SMEs and car enthusiasts.

00:21:34 Burair Al Lawati
We also introduced some HSE trainings on home safety and first-aid to NGOs, especially in Sharqiyah North region in collaboration with Knowledge Grid Academy.

00:21:44 Burair Al Lawati
And in celebration of World Environment Day, we collaborated with the Environment Authority and Muscat Municipality to distribute saplings of small plants to customers across Oman so as to raise awareness about environment, but also increasing the green spaces.

00:22:03 Burair Al Lawati
From an in-country value point of view, we are proud to have very high… above, you know requirements, organization need of 94%. And we continue to work with all money SMEs across our value chains.

00:22:18 Burair Al Lawati
And the plan is to continue focusing on the on in-country value, creating a direct and indirect job opportunities, and maximizing the partnerships with our JVs and other partners in this sector to help the growth of the economy and Oman and also the betterment of the community.

00:22:37 Burair Al Lawati
So with that, we'll come to the conclusion with the presentation.

00:22:41 Burair Al Lawati
We'll move to our Q&A session. As we said, we are… we'll open the floor now for your questions.

00:22:48 Burair Al Lawati
So, please unmute yourself and introduce yourself. And then please go ahead and ask your questions.

00:22:55 Burair Al Lawati
If you prefer to type in your questions, feel free to do that in the chat box.

00:23:03 Burair Al Lawati
Anyone has any questions, please, everyone's on mute.

00:23:16 Burair Al Lawati
So, I'm just going to wait for a few minutes and then to see if there are any questions.

00:23:33 Burair Al Lawati
OK, go ahead, Joice, please unmute yourself and go ahead.

00:23:40 Burair Al Lawati
[Inaudible]

00:23:48 Lamees Al Lawati
You can type your question, perhaps?

00:23:49 Mohammed Al Balushi
You can type your question, Joice.

[Silence ensues]

00:23:55 Burair Al Lawati
Can you elaborate?

00:23:57 Burair Al Lawati
OK, so there is a question from Deepak that says, “Can you elaborate on your future proofing strategy – how will EV be a game changer or will it replace few revenue and what are the realization?”

00:24:10 Burair Al Lawati
So, if it's OK Suresh, I'll take that question?

00:24:13 Suresh Nair
Yeah.

00:24:14 Burair Al Lawati
So, you know, when it comes to EV, it's still very much early journey of the whole electrification of Mobility.

00:24:24 Burair Al Lawati
Today in Oman, we have less than 1,000 cars that are officially registered as EV cars in Oman.

00:24:31 Burair Al Lawati
And while the expectations that the number of cars will grow in the next five years until 2027… until 2030… where the relevant authorities have declared that 70% of the new purchase cars will be EV.

00:24:47 Burair Al Lawati
It remains to be seen, but also there is a lot of infrastructural work that needs to be done, a lot of collaboration that needs to happen across various industries and sectors, to enable that, and in fact push for that.

00:25:01 Burair Al Lawati
What we know for the time being is that the relevant authorities have come together and we're actually very proud of the kind of work that has been happening between all the authorities in putting the regulations and putting in the agenda forward… targets forward.

00:25:22 Burair Al Lawati
But there are various things that remains to be addressed before we see that spike.

00:25:28 Burair Al Lawati
So for example, consumer behaviour, affordability of ownership, affordability of even understanding the awareness on in terms of carbon emissions, but also the cost of them that is associated with owning EV by consumers.

00:25:47 Burair Al Lawati
And there is a lot of technical issues related to the grids and other infrastructure that need to be addressed before we can see a sustainable and feasible kind of growth.

00:26:01 Burair Al Lawati
However, we also know that when we, for example, started already two or three years ago by putting the first charger… EV charger in Oman… it was done to do our part in supporting these efforts.

00:26:16 Burair Al Lawati
And we do continue to have dialogues and investing, as we said, in my presentation, it has to be on a sustainable base, it has to be commercially viable.

00:26:27 Burair Al Lawati
We can see that happening.

00:26:30 Burair Al Lawati
And obviously it's not going to replace fuel anytime short.

00:26:36 Burair Al Lawati
It is energy transition, it's not energy replacement journey.

00:26:40 Burair Al Lawati
So, it's going to be a blend of both, and it is always good to find ways how we address the long-term carbon emissions challenges, but in the same time do it in a sustainable and feasible way and we'll do our part in this area.

00:26:58 Burair Al Lawati
Is there… there is another question here which says what could be the reason for marginal decline in volume during this year?

00:27:07 Burair Al Lawati
Maybe Lamees you can answer?

00:27:08 Lamees Al Lawati
I can take that question and perhaps my colleagues can compliment on the answer, on the answer later.

00:27:13 Lamees Al Lawati
Thank you, Joice for the question.

00:27:15 Lamees Al Lawati
I think it goes beyond Shell Oman Marketing Company. If you have been following the industry performance, the entire oil and downstream oil industry in Oman has actually reported a decline.

00:27:27 Lamees Al Lawati
We don't have access to the volume numbers, but following the revenue trends, you could, you could tell that this is a feature in the market that we operate in.

00:27:37 Lamees Al Lawati
Now. If we look at Shell Oman Marketing, I have mentioned on a high level in the financial section earlier that depending on the portfolio and mixes of products that you have… now obviously our operations are not only contained in Oman… we have a sizeable part of our business which is linked to export operations.

00:27:57 Lamees Al Lawati
And due to the geopolitical tension, the factors that we have seen in the region over the last few months, we actually have faced supply-chain disruptions, logistic disruptions, which has impacted our volume to a certain extent in the export segment.

00:28:12 Lamees Al Lawati
Now when it comes again to the local market in Oman, a key feature of the downstream industry in Oman is that it's very much dependent on consumers – and we haven't seen major announcements on infrastructure development projects, and you know, otherwise development projects in country.

00:28:29 Lamees Al Lawati
Certain projects that we had or the other oil to marketing companies perhaps have had have reached a maturity, have reached to an end.

00:28:37 Lamees Al Lawati
And you know with these projects reaching completion stage, the business would very… would be very… much dependent also on new announcements in the market.

00:28:47 Lamees Al Lawati
So on a high level, I would attribute the marginal drop to volume to the two factors that we have mentioned, demand-in-country as well as geopolitical factors.

00:29:00 Burair Al Lawati
I think Suresh, there is a question probably in your area which is… you have added about nine stations in the last two year and a half, but fuel revenues has not grown as much. Are you seeing lower throughput or market saturation? How are the new stations performing? Any guidance on station additions going forward?

00:29:18 Suresh Nair
Yeah.

00:29:19 Suresh Nair
So in addition to what my colleague Lamees has mentioned which also underlies the response to this, we continue our focus looking at our portfolio and ensuring that our investments are giving the desired returns.

00:29:37 Suresh Nair
What we are… what we are seeing and learning as we are going along is our expected returns, at least from our new stations this present.

00:29:48 Suresh Nair
But what we are also learning as we are going along is that we continue to not focus on the number of sites, but more on integrated value end-to-end which we are, which we are getting from the customer.

00:30:01 Suresh Nair
This means that we will not – we never have been – and we will not be focusing on increasing site counts arbitrarily every year, but more interested in ensuring that each investment that we do, we're getting the maximum return from… for each of our CapEx or OpEx Dollar from that sets.

00:30:22 Suresh Nair
Lastly, in terms of market saturation etcetera from Shell, how we look at it is, for each of our sites we attribute an efficiency index to them.

00:30:33 Suresh Nair
And this efficiency index is then therefore applied across the market or the coverage area which the station is operating.

00:30:41 Suresh Nair
Quite simply put, we are focused on making sure that each station which we put in a particular location, even relative to our competitor site, that we are throughput-ting an additional amount in terms of percentage of oil for that station relative to our competition.

00:31:00 Suresh Nair
We frequently benchmark ourselves in that way to make sure that we are not going after a site count or inorganically chasing the wrong things, but so that we are focused on performance and each side count addition will be focused on that particular metric.

00:31:18 Suresh Nair
Thanks.

00:31:19 Burair Al Lawati
Great. Thanks, Suresh.

00:31:20 Burair Al Lawati
There's a question: are there any plans for NTI stations this year?

00:31:25 Suresh Nair
Yes. And that will be the hydrogen site, which my colleague Burair mentioned at the moment. Selectively, we may be still making a choice, but that is still subject to review.

00:31:35 Suresh Nair
Thank you all.

00:31:36 Burair Al Lawati
Right. I think Shaheen, if you can unmute yourself, please go ahead and ask your question.

00:31:45 Shaheen Biran
Hi, good morning team – and thank you for taking my question.

00:31:50 Shaheen Biran
My name is Shaheen Biran. I'm from United Securities.

00:31:54 Shaheen Biran
In your management report, you've also mentioned opportunities or potential opportunities for waste management and recycling. Could you just talk a little bit more on that point please?

00:32:09 Burair Al Lawati
Sure.

00:32:09 Burair Al Lawati
So, when it comes to lubricants… actually globally… there is a direction in Shell to want to address the waste management aspect of it and reduce waste in our operations.

00:32:23 Burair Al Lawati
But also to see if there's added value that can be offered to the customers and the partners, and help in the decarbonisation initiative to collect these lubricants waste and refine them into recycled kind of base oil.

00:32:43 Burair Al Lawati
In fact, there are long-term mandates in… in Shell and even as some other brands, about the percentage of how much recycled base oil should be making up your… our lubricants portfolio.

00:33:01 Burair Al Lawati
We are in the early stages in Oman to actually give you any percentages.

00:33:06 Burair Al Lawati
But what we are glad [about] is that we have of our own lubricants blending plant in Mina Fahal, which is producing lubricants for the local market and for exports.

00:33:18 Burair Al Lawati
And so what we are working on with certain partners, who are our customers, is to see if we can build a network in our… and extend an extension of our current supply chain to include collection of the waste oil and work with an Omani SME, which we already signed an agreement with for petroleum waste management a year and a half ago to recycle that waste oil.

00:33:43 Burair Al Lawati
And if the quality of the recycled waste oil is up to the par, we can look at the various opportunities that can arise. Nothing to be committed right now, but it is something that we are taking it as even part of our R&D and also business development.

00:33:59 Burair Al Lawati
So we'll be providing more information as we go forward.

00:34:04 Shaheen Biran
Thank you so much. One more question from my end… and this is related with your hydrogen filling stations. Now this is just for my understanding as to how, how does this works? Is this on a commercial basis and who would be your, who would be your customers?

00:34:24 Burair Al Lawati
I leave this to maybe Suresh. You want to address this for Shaheen?
00:34:27 Suresh Nair
Yeah. So this hydrogen station for starters is a part of Shell Oman Marketing’s ‘Gift to the Nation’ project.

00:34:35 Suresh Nair
So this is in the preliminary stage. It is designed or the launch this year. It will be designed to cater to a very finite number of cars which will belong to the government and it's specifically catered to fuel this particular cars – and it will not be commercialized yet subject to further decisions.

00:34:57 Lamees Al Lawati
That's the hydrogen side of it, but it's a comprehensive site as well… offering the conventional fuel offerings [and] offering NFRs. So it will be a standard mobility site in addition to the hydrogen mixing, and you know, distribution facility.

00:35:17 Burair Al Lawati
Thank you, Shaheen. I think Deepak, you are typing a question. Please feel free if you want to unmute yourself and ask your question.

00:35:23 Burair Al Lawati
OK, Since you look at the profitability per station, do you see that number improving or has it improved? Also, how does that explain the flattish revenue despite new station addition? Would be great if you could elaborate?

00:35:37 Burair Al Lawati
In a way, this was addressed a little bit before, but Suresh, I think maybe you can.

00:35:41 Suresh Nair
Yeah. So maybe I'll complement what we mentioned earlier. Thanks Deepak.

00:35:47 Suresh Nair
On the second part, we continue to refresh our portfolio of existing sites, which means we review… review profitability at a site level as you've quoted over there.

00:35:59 Suresh Nair
And we make sure that with the dynamic circumstances in the market, that includes an aggregate of fuels performance, the non-fuels performing segment, the changing customer portfolio and their needs, as well as market dynamics which can which can factor into things for example like land rental and leases.

00:36:23 Suresh Nair
We take all of this into an aggregate view of our site review by portfolios, and we do make that dynamic decisions on whether – for example – we keep a site, we invest to expand the site, we retain the site as is, or we may make decisions to shut down sites as well. Thanks.

00:36:44 Burair Al Lawati
Thanks Suresh.

00:36:45 Burair Al Lawati
OK, anyone else has any questions, again, feel free to unmute yourself and ask us.

00:36:54 Mohammed K (full name not mentioned)
Hi, I'm sorry I've joined a bit late… just now. Just wanted to ask you if you can share your volumes for the quarter and your market share as well?

00:37:08 Burair Al Lawati
OK, so Mohammad, you are from where… just if you could introduce yourself, Yeah.

00:37:11 Mohammed K
Sure, sure, sure. I'm from Oman National investments [Oman National Investments Development Company], Tanmia.

00:37:15 Burair Al Lawati
OK, thank you.

00:37:18 Burair Al Lawati
I think, usually, we do not share absolute volumes, but let me pass this onto the CFO and see what we can...

00:37:24 Lamees Al Lawati
You know, so we understand this is a repeated question in most of the IR sessions and we have made the stand in the past, sharing with the investors, that we understand the drive for asking for such information.

00:37:35 Lamees Al Lawati
But then given the limited players in the market and the limited market space as well, we have taken a conscious call of not to share or elaborate on the segmented profitability.

00:37:45 Lamees Al Lawati
But if it helps, we have shared that we have exceeded 1 billion litres in the first half of 2024.

00:37:54 Lamees Al Lawati
What we usually provide in the financial statements is a high level split of the revenue per line of business and consistent with that information that we've been providing in the past. I would mention that 70% of that revenue that we have reported for the period, which is around 243 million Omani Riyals comes from the Mobility segments.

00:38:14 Lamees Al Lawati
Around 7% of that comes from the lubricant segment and around 9% of that comes from the aviation segment, if it helps.

00:38:22 Burair Al Lawati
Thanks, Lamees. All right, any other questions?

00:38:32 Burair Al Lawati
OK, I'll think when… I think I'll leave, maybe one more minute.

00:38:38 Burair Al Lawati
If we don't get any more questions then we will sign off.

00:38:42 Burair Al Lawati
So please feel free to meet yourself or type in your questions.

00:38:52 Mohammed K
All right.

00:38:52 Mohammed K
One more thing, One more thing if I may, please. Sorry.

00:38:56 Burair Al Lawati
Of Course.

00:38:57 Mohammed K
Just wanted to know your opinion on the industry growth. How do you see that in the next 3-4 years versus the past two years post-COVID with regards to retail fuels and lubricants both?

00:39:16 Burair Al Lawati
Alright, Doctor, do you want to take this question or?

00:39:19 Burair Al Lawati
Yeah.

00:39:20 Mohammed Al Balushi
Thank you, Mohammed.

00:39:21 Mohammed Al Balushi
I think you know probably to understand the market, we need to go back to the fundamentals of this market.

00:39:29 Mohammed Al Balushi
So we are talking about oil marketing companies – and the facts are as follows.

00:39:39 Mohammed Al Balushi
This is a regulated market, so the best way to grow is through volume, not through margins.

00:39:48 Mohammed Al Balushi
Yeah, so that's fact number one.

00:39:51 Mohammed Al Balushi
And then fact #2 let's, you know, split the businesses into B2C and B2B, because these are the main segments of the three marketing companies that they are working in Oman.

00:40:04 Mohammed Al Balushi
The growth aspects of each segment are as follows.

00:40:11 Mohammed Al Balushi
If you are looking at B2C, you are mainly driven by one population growth; and #2 disposable income. Yeah?

00:40:23 Mohammed Al Balushi
Now we have seen or witnessed a population decline during 2020, during COVID time.

00:40:31 Mohammed Al Balushi
And then immediately after that, it started picking up. And I'm here… I'm not talking only about the locals, and I'm talking about the entire population in the Sultanate which includes both Omanis and, and, and non-Omanis. Yeah.

00:40:45 Mohammed Al Balushi
On the other hand, disposable income relates into couple of aspects as well. Yeah.

00:40:50 Mohammed Al Balushi
Job securities, unemployment rates, as well as… also the other side of it, which is how the economy is booming and that takes us to B2B segment.

00:41:05 Mohammed Al Balushi
The B2B sector is actually driven mainly by projects that are initiated and executed by the government.

00:41:15 Mohammed Al Balushi
This is how… this is the market reality.

00:41:18 Mohammed Al Balushi
And the last 4-5 years, the government have been, you know, sort of slowing down in terms of infrastructure projects, in order to basically serve debts, enhance existing facilities and so on.

00:41:36 Mohammed Al Balushi
That has created… a sort of, you know… I would say a pause in the, in the market growth aspects.

00:41:46 Mohammed Al Balushi
And that's basically takes us back to the point that Suresh has just mentioned that… or maybe in one of the questions that was raised, if I'm not mistaken by one of the colleagues here, Deepak, if I'm not mistaken. It's about the, you know, adding a number of sites over the last one-and-a-half years, but the profitability wasn't that great. It was mainly attributed to this.

00:42:09 Mohammed Al Balushi
We cannot as an industry isolate ourselves from what happens within the country because we are mainly operating here in Oman.

00:42:16 Mohammed Al Balushi
Yes, there is a segment to our business that leads to or has to do with export, but we're mainly driven by this market.

00:42:26 Mohammed Al Balushi
So, these are these are basically some of the factors that we really need to look into to understand how Shell Oman Marketing is operating and what are the circumstances around our business.

00:42:39 Mohammed Al Balushi
And let's not forget that while these aspects remain a challenge, the other side also is that operating costs are going up. Yeah.

00:42:48 Mohammed Al Balushi
So, that really you know sort of brings in an additional challenge where you're, you know, you are working in a, in a, in a sort of a fixed margin market while the operating costs, the you know, the logistics, distribution, etcetera are going up.

00:43:11 Mohammed Al Balushi
Now how do we visualize this market growth?

00:43:14 Mohammed Al Balushi
I think market is bringing in a lot of challenges, but also bringing in a lot of opportunities and the opportunities that we see are; one, in the non-fuel retailing space – that is a great opportunity for us to grow in.

00:43:33 Mohammed Al Balushi
We have we are making decision to review our portfolios.

00:43:37 Mohammed Al Balushi
So meaning that, we might decide to close a site in a specific location… that doesn't make sense anymore and open in another location, which makes absolute sense for us and not forgetting the opportunities that the, you know, energy transition space are bringing in.

00:43:55 Mohammed Al Balushi
Yeah, there was some question about EV, there was a question about the hydrogen.

00:44:00 Mohammed Al Balushi
These are the future and it's inevitable, the world including Oman would be going towards that.

00:44:06 Mohammed Al Balushi
I think the question is how fast… and that takes us to Burair’s answer… that there will be so many elements within the country, not only the industry, that has to be there for us to move or determine the speed that we will be going towards that.

00:44:22 Mohammed Al Balushi
So, I think in a nutshell, the good news about or the comfort that I have here is that we are as an organization, you know, adopting to whatever or adapting to whatever changes are, are, are happening in the market… keeping an eye on the future.

00:44:43 Mohammed Al Balushi
But however, making decisions that makes sense today without actually making it very expensive for us moving forward.

00:44:50 Mohammed Al Balushi
So that's probably in summary that I would probably, you know, summarize the way we are moving right now and, and also explain the sort of the challenges… or the sort of challenges that we are going through recently.

00:45:04 Mohammed Al Balushi
I hope that that answer your question.

00:45:07 Mohammed K
Yes, thank you. Appreciate it for a detailed response.

00:45:11 Mohammed K
And what I infer from your commentary is that the future looks a bit challenging than what has been the past, if I'm, if I'm not mistaken, certainly…

00:45:25 Mohammed Al Balushi
Let me… [inaudible] challenges have always been there. They have been in the past, they are there now, and they're going to be in the future.

00:45:34 Mohammed Al Balushi
I think what I'm trying to say here is that we have always – over the last 60 plus years operating in Oman – we have been always able… through focusing on the right team, the right investments, the right strategies, and of course the right, you know, systems to be able to overcome these kind of challenges… by being creative, being able to look at the opportunities as well.

00:46:03 Mohammed Al Balushi
And so, so don't get me wrong, I'm not saying or at any way indicating that it's a dark future that the industry is going through.

00:46:11 Mohammed Al Balushi
Not at all.

00:46:12 Mohammed Al Balushi
I said there are challenges, but there are opportunities.

00:46:15 Mohammed Al Balushi
Those opportunities suggest that we change our business model, for instance, and that's something we are looking at right now.

00:46:22 Mohammed Al Balushi
So, so all of this would come and you will see Shell Oman Marketing has… I mean has always been actually evolving towards a different organization from the way we serve and operate. Without, of course, compromising our core values.

00:46:41 Mohammed K
Well understood. Understood. By the way… You mean like (sic.) what I meant to say challenges was that like you may have done very, very good and you may have been trying to overcome the challenges, but the financial metrics actually do not, you know, depict those like the profitability metrics, the return metrics that we assess… have not been up to the mark that it used that Shell used to be maybe before the virus and the COVID and things have not been looking so bright recently.

00:47:15 Mohammed K
So I'm just trying to… it's a time frame. (sic.)

00:47:18 Mohammed Al Balushi
Absolutely, absolutely.

00:47:19 Mohammed Al Balushi
And, and I can't agree more.

00:47:20 Mohammed Al Balushi
And, and, and, and as Lamees said… the CFO… this is not a, this is not a Shell sort of symptom.

00:47:30 Mohammed Al Balushi
Yeah, this whole eight years ago… we were talking about a completely different industry [and] NIAT.

00:47:37 Mohammed Al Balushi
Today the industry is not even close to where we were before.

00:47:44 Mohammed Al Balushi
Yeah, probably the industry’s NIAT today is equivalent to a NIAT of one of the oil marketing companies eight years ago.

00:47:54 Mohammed Al Balushi
So… and that's why I had to explain the circumstances that the oil marketing companies are working within. Yeah.

00:48:01 Mohammed Al Balushi
That that, that we haven't really witnessed a huge infrastructure project over the last five years.

00:48:07 Mohammed Al Balushi
They haven't been those kind of investments from 2018 onwards. That has really there been one or two here.

00:48:16 Mohammed Al Balushi
But before that, there have been projects all across Oman.

00:48:20 Mohammed Al Balushi
And #2 in 2016, the government introduced lifting the subsidy – and that has really, without of course, changing the the pricing structure, in terms of, you know, how much we sell or as a pump price. These all elements have changed.

00:48:39 Mohammed Al Balushi
So, so it's not fair to look at the market today and say this company is actually not doing well versus 8 years ago based on the, on the current circumstances, because the entire industry has been witnessing a decline.

00:48:53 Mohammed Al Balushi
And as I said, I think from an investor's point of view, I would look at how… you know, you know, proactive this organization is and how reactive it is towards issues.

00:49:11 Mohammed Al Balushi
During COVID in 2020, there were hardly any movements happening, hardly any movements.

00:49:18 Mohammed Al Balushi
Airports were shut down, there were curfews, hardly any business, any business was happening.

00:49:25 Mohammed Al Balushi
And yet I remember, we did extremely well versus the industry. The last few years have been witnessing a decline in the industry NIAT, but it doesn't really you know can be attributed to one company or the other.

00:49:43 Mohammed Al Balushi
It is the entire industry symptom if you like.

00:49:47 Mohammed K
Yeah, you're absolutely right.

00:49:48 Mohammed K
It's not about, it's not about the company, it's about the industry.

00:49:51 Mohammed K
And that's why I asked you… like what, how do you see the future, the 3,4 or 5 years that are coming? Where do you see the infrastructure projects – do they, do you see them coming?

00:50:00 Mohammed K
And that's one thing. The second thing is that, you know, to restore investor confidence and things like that, we need to have numbers, right? But again, you just said that it's your policy not to share numbers.

00:50:12 Mohammed K
So it becomes a bit difficult for us to, you know, to align those things like, so that's where things become a bit tricky – and that's why probably you see very less investor interest in not just in Shell, but in oil marketing companies.

00:50:29 Mohammed K
So I think it should be a strategy.

00:50:31 Mohammed K
Just my view that sharing… [inaudible]

00:50:35 Mohammed K
Beneficial for not just you, the entire industry.

00:50:38 Mohammed Al Balushi
Clear and just quickly on, on your first point. I'll leave the second point to Lamees.

00:50:42 Mohammed Al Balushi
Let me quickly the first point on, on how do we see the market in the next 4-5 years?

00:50:46 Mohammed Al Balushi
I think, you know, observing what's happening over the last couple of years, there are more job opportunities being created by the government.

00:50:54 Mohammed Al Balushi
They're more focused on the government.

00:50:56 Mohammed Al Balushi
So that will help a lot in the B2C segment and also on the B2B side. The growth in the airline industry, in the aviation business as well as witnessing the, the budgets of the country over the last couple of years.

00:51:21 Mohammed Al Balushi
You do realize that there are, you know, we are recovering as a country from, from both macro- and micro-levels versus 2018 for instance.

00:51:32 Mohammed Al Balushi
And these are all great indications.

00:51:34 Mohammed Al Balushi
There have been recently some announcement by the government on a few mega projects, Sultan Haitham City, for instance, the Boulevard, these are all projects that really gives us indication that they, you know, the future would witness a growth for sure.

00:51:55 Burair Al Lawati
Thank you.

00:51:59 Lamees Al Lawati
So on the share price movement, we absolutely understand any concerns that the investors might be having on the limited movement in the share price and all.

00:52:07 Lamees Al Lawati
But if you actually look at the composition of our shares as a company, our shares are largely held by big institutions that have invested in our company for the long-term dividend yield, which we have been striving to give back to our shareholders.

00:52:21 Lamees Al Lawati
Now it's difficult and probably unfair to compare our company to other more highly liquid shares in the market.

00:52:29 Lamees Al Lawati
But then, going back to everything that we have mentioned on our strategy, we remain confident and committed to give our shareholders the maximum return that we can.

00:52:37 Lamees Al Lawati
And obviously looking at all the characteristics that we just displayed on, you know, on the market, the dynamics that we operate and so on.

00:52:45 Lamees Al Lawati
But it's also worth having in mind the age, the maturity of the company and the market, as well as the composition of the shareholders to, you know, draw any conclusions on share price movements.

00:52:58 Burair Al Lawati
All right, So thanks Lamees.

00:52:59 Burair Al Lawati
Let me thank you, Dr. Mohammed.

00:53:01 Burair Al Lawati
Mohammed, thanks for your questions.

00:53:03 Burair Al Lawati
I think we are approaching the end of the session.

00:53:07 Burair Al Lawati
We have only 5 minutes to go.

00:53:10 Burair Al Lawati
If there are no other questions, I think we will sign off.

00:53:14 Burair Al Lawati
Just any final thoughts, all right.

00:53:20 Mohammed Al Balushi
So, thank you.

00:53:20 Mohammed Al Balushi
I think I want to also thank you know, thank you ladies and gentlemen for your time.

00:53:27 Mohammed Al Balushi
Please attend the next sessions where we will have such conversation, share results for the next, you know, cycle.

00:53:37 Mohammed Al Balushi
But thanks also for trusting or having the confidence in us and having this kind of conversation that will always be helpful to have that that kind of communication between us and the investor relations team.

00:53:53 Burair Al Lawati
Thank you and yes, thank you again.

00:53:56 Burair Al Lawati
As you know, this whole recorded session will be published on our website and also MSX will have a link that will direct you towards it.

00:54:06 Burair Al Lawati
Looking forward to the next engagement and until then take care and stay safe.

00:54:11 Burair Al Lawati
Bye.

[SESSION ENDS]

Shell Oman Marketing SAOG Investor Relations - MSX Engagement Session

March 2024

Duration: 1:00:30

0:00 – Audio begins at 0:01

00:00:01

Mahmoud Al Abri
I think we are good to start.

00:00:05

Mahmoud Al Abri
So Asalamualaikum and good morning everyone. And we'd like to welcome everyone to Shell Oman Marketing Investor Relations Session for the year 2023.

00:00:17

Mahmoud Al Abri
Thank you for attending our first virtual session in 2024, which is in compliance with the decision number E 109 by 2022 as the executive regulations of the Capital Market Authority…   law issued on 13th of July 2022.

00:00:33

Mahmoud Al Abri
My name is Mahmoud Al Abri, I'm the Investor Relation Officer for Shell Oman Marketing as well as the GM for Corporate Relations.

00:00:40

Mahmoud Al Abri
Before we start, actually I would like to introduce the the panel here.

00:00:45

Mahmoud Al Abri
In (sic.) Online, we have our CEO, Dr. Mohammed Al Balushi joining us.

00:00:50

Mahmoud Al Abri
But I want to give the chance to the team quickly to introduce themselves as well.

00:00:53

Mahmoud Al Abri
So I'll start with you Lamees.

00:00:55

Lamees Al Lawati
Asalamualaikum, everyone and Sabah Al Khair. Ramadan Mubarak Alaikum Jameyan… (greetings in Arabic)

00:01:01

Lamees Al Lawati
This is Lamees Al Lawati, the Chief Financial Officer of the Company.

00:01:07

Sultan Al Shidi
Asalamualaikum and Sabalalkhair Jameyan, Sultan Al Shidi, GM of HR and Real Estate.

00:01:14

Suresh Nair
Hi, Asalamualaikum and good morning, my name is Suresh Nair, the GM for Mobility.

00:01:21

Said Al Rawahi
Asalamualaikum and good morning, Said Al Rawahi, GM of Low Carbon Products & Sectors

00:01:26

Mahmoud Al Abri
So, thank you team for the quick introduction and again welcome everyone.

00:01:31

Mahmoud Al Abri
Just before we start in terms of Q&A, we will have time at the end of the session to allow people to ask any questions.

00:01:39

Mahmoud Al Abri
My kind request, firstly, is to make sure we stick to the agenda and the content of the session.

00:01:45

Mahmoud Al Abri
And also please try to present your company and also introduce your name. On HSSE… nothing is more important than your health and well-being.

00:01:58

Mahmoud Al Abri
So if you… if you at any point of time you feel you are compromised, please make sure you sign out immediately and ensure that you follow the good practices so that you are… you are always safe.

00:02:14

Mahmoud Al Abri
And we'll start with our HSSE journey and here I shall hand over to our CEO Dr. Mohammed [Al Balushi].

00:02:20

Mahmoud Al Abri
Over to you, Doctor.

00:02:22

Mohammed Al Balushi
Thank you, Mahmoud.

00:02:23

Mohammed Al Balushi
Good morning, everyone and Ramadan Kareem. I think I want to start by saying 2023 has been very, you know, I would say remarkable when it comes to our pillars of working safely and correctly.

00:02:46

Mohammed Al Balushi
And as you most of you are aware, as a company, these are the main 2 pillars that we work and ensure that they are in place where we operate at a very high standards… when it comes to those to ensure that we operate in a safe manner and in a compliant manner.

00:03:10

Mohammed Al Balushi
The the year 2023, despite the different operational challenges, the number of activities we had… actually 0 incidents or recordable incidents, 0 harm and zero leak.

00:03:31

Mohammed Al Balushi
This is a, this is, I have to say, a very impressive result looking at the kind of operation and the kind of industry we operate with them.

00:03:42

Mohammed Al Balushi
We had throughout the year, multiple successful projects that were completed mainly aiming to increase you know our readiness, our awareness, our learning when it comes to people's safety, process safety, and of course, asset safety.

00:04:04

Mohammed Al Balushi
And when I talk about people's safety, it wasn't only the the the physical safety that we have been, you know, addressing but also emotional safety of people where they are encouraged always to speak up their… their, you know their mind, share any, you know, issues they have when it comes to the workloads, stress level etcetera.

00:04:31

Mohammed Al Balushi
And as I said, you know, we continued the the journey of… of care competency, care competence and… and compliance, tackling… tackling all those…

00:04:46

Mohammed Al Balushi
Within that, we also continued working with different stakeholders in the Government, in the industry, to ensure that this is an area that actually, I mean, when it comes to the industry, it's an area that we we complement each other and not compete in.

00:05:04

Mohammed Al Balushi
And of course with the… with the different stakeholders in in the Government and the private sector to ensure that this is, you know, safety of of people of operation actually handles or… or… or… tackles everyone.

00:05:18

Mohammed Al Balushi
And hence getting the support from different authorities like, you know, Civil Service… sorry… what do you call it… Civil defence, Ministry of Labour, Ministry of Health, etcetera, where we have, we have worked closely with them in so many drills throughout the year.

00:05:41

Mohammed Al Balushi
And that's probably a summary of… of what we have been doing or what we have done 2023, which is a continuation of what we have been doing – and we'll continue even more in this year.

00:05:54

Mohammed Al Balushi
So do we take questions at every slide, Mahmoud – or no?

00:05:56

Mahmoud Al Abri
No, we will have actually Q&A session at the end of the [presentation]. Thank you, Doctor.

00:06:02

Mahmoud Al Abri
I think now we‘ll move to Lamees for the financial summary.

00:06:06

Lamees Al Lawati
Yeah.

00:06:07

Lamees Al Lawati
Good morning again everyone – and thank you for joining us virtually.

00:06:11
Lamees Al Lawati

Part of the agenda today is an overview of the financial performance of the Company for the Year Ended 2023, followed by an individual overview of business achievements and key performance indicators of the different business units.

00:06:23

Lamees Al Lawati
The financial overview that you see in front of you is consistent with the… with our post board disclosure and publication, and as audited by our external auditors and endorsed by… by the shareholders in our AGM last week.

00:06:36

Lamees Al Lawati
In 2023, like you see in front of you, we have reported headline revenue growth of 4% versus the same period last year underpinned by 5% volume growth across the different businesses.

00:06:47

Lamees Al Lawati
Now my colleagues in a bit will share brief updates about the business performance, but on a high level, we've actually opened six service stations in strategically located locations across… across the country, bringing the total number of stations up to 211, which… which has reflected in part of the revenue growth that we have reported.

00:07:08

Lamees Al Lawati
We have also expanded our footprint in the aviation business, reporting over 180% growth in that segment across the different locations that we operate in.

00:07:18

Lamees Al Lawati
In the other B2B segments like Fleet and Home base, we have also acquired new contracts – and all in all – we have… this is boosted the volume growth between the two years by 5% and… and 4% in the headline revenue like you see.

00:07:31

Lamees Al Lawati
Now, on a gross profit basis, although and despite the growth that we have reported of 4% at revenue line, our gross profit was maintained flat in comparison to the 2022 exit level.

00:07:46

Lamees Al Lawati
This was mainly driven by the stock revaluation impact. So in 2022, we had a sizeable impact, or again, that we have reported in the numbers in the financials of the Company as a result of price exposure.

00:08:00

Lamees Al Lawati
This was not the case in the… in the year 2023.

00:08:02

Lamees Al Lawati
Now usually the swing that we see in… in price exposure and in stock valuation can cause a swing in the financial performance which is… which might not necessarily be an indicative of the underlying business performance, which in our case have actually shown a growth year-on-year.

00:08:21

Lamees Al Lawati
On other income we have reported slightly ahead of 4.1 million of Omani Riyal.

00:08:26
Lamees Al Lawati

Other income continues to be a strong pillar in our financial performance… in our strategic direction of the Company.

00:08:33

Lamees Al Lawati
So, this is the income that we that we report or we gain out of the associated services that we offer across our service stations.

00:08:40

Lamees Al Lawati
So, things like shop income, car care, the tie-ups that we have with… with you know with certain brands, that we call co-locators, as well as cards income.

00:08:52

Lamees Al Lawati
So, we have actually reported a 1% growth there.

00:08:55

Lamees Al Lawati
We've taken a number of measures during the year, the biggest of which was actually converting 21 CR stores, so Convenience Retail stores that were previously running under the Shoppers Express brand to our Shell Select brand portfolio, bringing the total number of shops that we have under the Shell Select brand to to 57 shops by year end.

00:09:19

Lamees Al Lawati
Our operating expenses and OpEx in general has reported a 7%, or reflected, 7% growth year-on-year.

00:09:27

Lamees Al Lawati
Now this could be considered sizable in comparison to the headline revenue of 4% that we have reported in the year. But these are mainly costs that we have consciously decided to spend on, to spend as an organization.

00:09:41

Lamees Al Lawati
There are various cost areas that we have… we have supported during the year, but if I am to categorize them into three or four main buckets, we've actually invested much more in maintenance in the year 2023.

00:09:53

Lamees Al Lawati
Now obviously, we were exiting out of COVID in the years 2020-2021 where we have consciously decided to keep maintenance costs at… at minimum, as a drive of our cost consciousness and cost optimization.

00:10:06

Lamees Al Lawati
And then we have started gradually picking up on maintenance costs in 2022 and then spending much more in 2023.

00:10:13
Lamees Al Lawati

And mainly to support maintenance and upgrade of certain equipments that we have across our network of service stations as well as certain costs that we have to incur for commissioning the fuel farm at Muscat Airport where we have a sole operatorship.

00:10:29

Lamees Al Lawati
In addition to that, obviously, as your headline revenue grows by 4%, your volume grows.

00:10:35

Lamees Al Lawati
So all the costs that are associated with servicing volume, so operational costs like logistics, operational costs associated directly with volume or linked with volume, like licenses and so on, would grow higher.

00:10:47

Lamees Al Lawati
So with that 4% growth you would expect to see an equivalent increase in your in your cost base.

00:10:55

Lamees Al Lawati
And, now a third area that we've actually reflected high cost in is we have taken a prudent call to increase our provision in certain segment… mainly related to export sales that we have done in the region and in reflection to the… to the changing geopolitical landscape that we see around us, around us in the region.

00:11:15

Lamees Al Lawati
So, we continue as an organization to put all measures to recover these outstanding accounts receivable balances.

00:11:24

Lamees Al Lawati
But, out of prudence and in compliance with accounting standards, we have decided that we take the provision head this year… was we do all the measures in 2024 to recover these amounts.

00:11:35

Lamees Al Lawati
So, these are the main cost components that we have incurred in, in in the year 2023.

00:11:42

Lamees Al Lawati
And then in addition to that, our financing cost has reflected an increase as you can… as you can see and our financing cost has two elements or two dimensions, so part of which is actually related to the lease interest cost of our investments, so the right of use of assets.

00:11:56

Lamees Al Lawati
But then on top of that, we have seen a general increase in financing cost in the local market and reflection to the increase that we have seen generally in borrowing costs globally. Now as an organization, as our business expense… as our revenue expense, the credit pressure on our sales expense as well.

00:12:13

Lamees Al Lawati
So, to bridge the cash flow cycle gaps that we have between our receivables and our payables, we usually lean on a basket of credit facilities that we have secured from the market on a need basis and also on a competitive basis.

00:12:28

Lamees Al Lawati
But, then as the interest rates globally have gone up, the value of the financing costs have gone up this year as well.

00:12:37

Lamees Al Lawati
Our profit for the period was 3.6 million Omani Riyals – it was 37% lower than 2022 for all the reasons that we have mentioned.

00:12:46

Lamees Al Lawati
Also worth mentioning that on a revenue basis, so the first graph that we see on the top corner… on the top right corner of the chart in front of you, or the slide in front of you… we've actually reported a decent revenue growth year-on-year.

00:12:59

Lamees Al Lawati

The hike that we see in the year 2022 is just a reflection of the business picking up and the business opening post-COVID.

00:13:08

Lamees Al Lawati
So it was not necessarily in line with the average annual growth that the market sees year-on-year – but we have maintained our revenue growth at 4% in the year 2023, and much ahead, in fact, of the industry and revenue growth that we have seen.

00:13:23

Lamees Al Lawati
Our gross margin for the period was 35 million Omani Riyals. Our gross margin percentage was maintained at 7% despite the pressure that we have seen in the… in the changing landscape of the product valuation… the stock valuation that we have set.

00:13:39

Lamees Al Lawati
Our EBITDA for the period was 16 million Omani Riyals, so around 2 million Omani Riyals lower than the year prior to that, reflecting the the higher operating expenditures and higher borrowing cost.

00:13:54

Lamees Al Lawati
So, that's the financial overview.

00:13:56

Mahmoud Al Abri
OK, thank you, Lamees. Thanks for that.

00:13:58

Mahmoud Al Abri
So now let me move to Suresh, our Mobility GM.

00:14:02

Suresh Nair
Thank you.

00:14:04

Suresh Nair
Let me start with, let me start with safety.

00:14:06

Suresh Nair
Safety has continued to be our front and central focus at our forecourt whilst we service our customers and enable them to move throughout the Sultanate.

00:14:17
Suresh Nair

What we are seeing is an improved track record on safety, but our vigilance continues because with servicing hundreds and thousands of customers a day, we continue to face different challenges with regards to the nuances that come with servicing the customer safely and in a manner which they expect; at the highest level in a Shell Service Station.

00:14:39

Suresh Nair
We have moved throughout the year celebrating our biggest pride moment, which is being awarded Oman's Most Trusted Brand award for 2023 in the fuel station category.

00:14:53

Suresh Nair
This is a testament to the services, to the offerings, to the high level of commitment we have pledged to give our customers in making sure their life journeys are better.

00:15:06

Suresh Nair
That's reflected in a constant high level and top quarter performance in independent surveys, which we run and you'll see that reflected on the slide under the Guest Experience Assessment or GEA, where our current scores sit at 83%.

00:15:24

Suresh Nair
This is an independent survey through anonymous visitors and customers at the station, to ensure that we get consistent feedback on the quality and performance of our frontline service champions…

00:15:40

Suresh Nair
…and what we aim to improve is our level of consistency in these offerings across our 211 stations, across the Sultanate.

00:15:50

Suresh Nair
In our NFR non-fuels retailing segment of the business, we are currently focusing on improving out the look and feel of our shops in the country… the offerings which we offer to cater to the latest tastes and nuances to the customers of of today, and more importantly making them feel like that's a place that they want to visit the minute they set their eyes once they come in to fill their car at the service stations.

00:16:20

Suresh Nair
We intend to grow the amount of offerings we have at this and this is also coupled together or with the ancillary offerings which my colleague Lamees mentioned.

00:16:32

Suresh Nair
And this would namely be in the Shop+ category where their service stations are equipped with with shops available to service one customer's cars and do it in a safe and reliable and a price competitive manner… most importantly with the Shell brand tied to it.

00:16:52

Suresh Nair
The other ancillary offers are offers for local-made products and also co-located [in] our shops with our business partners as well to ensure that the service station can be a one-stop centre for one's mobility needs.

00:17:12

Suresh Nair
We are actively increasing our target and our focus in terms of differentiated fuels, and as a testament to that, we recently launched our new and improved V-Power offering in the Sultanate.

00:17:28

Suresh Nair
This is something which has been years in the making, five to be exact, in partnership with Ferrari and our group research – and it was launched recently, and we are receiving actually overwhelming response from the market.

00:17:47

Suresh Nair
We have rolled this out, now today as we speak, to about… close to 50 service stations and this will be managed in a [inaudible] manner to ensure that all sites which we have V-Power offerings today is equipped with the new V-Power offering.

00:18:05

Suresh Nair

The main, the main excitement we have around this product offering is the brand claims around cleaning the engine.

00:18:16
Suresh Nair

This is something which has been a point of attention and focus to the more vigilant customer, and we believe this is something that is sorely needed within the Sultanate and Shell is proud to introduce this upgraded fuels to the market.

00:18:33

Suresh Nair
Lastly, our focus will be on uplifting our Select stores, but also our network of 211 stations across the Sultanate, while making conscious decisions on selective investments across the across the country.

00:18:51

Suresh Nair
So, stay tuned and watch out this space.

00:18:54

Suresh Nair
Thank you, Mahmoud. I'll hand it over to you.

00:18:55

Mahmoud Al Abri
Thank you, Suresh. I think now I will move to Said – our GM of Low Carbon Products & Sectors. Thank you.

00:19:01

Said Al Rawahi
Thank you, Mahmoud.

00:19:24

Said Al Rawahi
Looking at 2023, I think we had a major signing for when it comes to marine fuel… I’ll start with that.

00:19:10

Said Al Rawahi
We have signed the banking license agreements with the major ports.

00:19:16

Said Al Rawahi
At the same time also, supplying lubricant, marine lubricants to the same ports. We had also… we had one government marine supply project for three years in 2023.

00:19:28

Said Al Rawahi
So, that we're gonna retain for the next three years.

00:19:33

Said Al Rawahi
At the same time, we have also when it comes to home-base, really the commercial fuel sites… the market was very, very competitive.

00:19:40

Said Al Rawahi
However, we managed to retain our existing customers and winning new strategic customers when it comes to commercial… commercial fuel business.

00:19:51

Said Al Rawahi
And when it comes to the oil and gas sector, we have one also… a big project for the next five years to supply fuel to one of the major companies in the oil and gas sector. And supplies have already started early in January this year. Also, we have… when it comes to aviation it was very competitive. However, we managed to retain our existing customers and we need, we need, we need new customers at the same time.

00:20:21

Said Al Rawahi
We still control… I mean we still have growth in Salalah and Muscat airports, but we are still planning to grow further in 2024.

00:20:32

Said Al Rawahi
We have also signed a serious technical agreement with PDO when it comes to recommissioning of Fahud Airport and this should start sometime in 2024… probably expecting by mid of 2024.

00:20:47

Said Al Rawahi
I've seen substantial growth when it comes to the commercial fuels and marine business in the country.

00:20:53

Said Al Rawahi
There are business growth coming up and we expect more to… to happen in this year.

00:20:58

Said Al Rawahi
Our plan is also to focus on Goal Zero and ethics and compliance, however also optimizing your profitable core.

00:21:05

Said Al Rawahi
We are looking at new opportunities. We are trying to to bring new businesses, new, new type of opportunities in the country. At the same time we are trying to lead the energy transition.

00:21:15
Said Al Rawahi

So, there are major projects that we are working currently with, with some business partners in Oman for 2024. That [we are] still under currently looking into it and hopefully we should be a major shift into the business core business in Oman. Thank you.

00:21:34

Mahmoud Al Abri
Thank you, Said.

00:21:35

Mahmoud Al Abri
I think now we are moving to lubricants, and I will take this part.

00:21:40

Mahmoud Al Abri
In terms of commercial lubricants, the business actually maintained its market leadership in Oman – but not only in the country… [but also] globally. For the 17th consecutive year, lubricant has been actually leading this industry.

00:21:55

Mahmoud Al Abri
In addition to that, the business has managed to convert new customers across B2B and B2C sectors in Oman, and also re-entered new markets via export model in the region.

00:22:08

Mahmoud Al Abri
In terms of product portfolio, in 2023, the lubricant business managed to launch new products specifically Shell Coolants in the B2C segment – and the business has actually communicated and engaged different type of customers around launching this product.

00:22:28

Mahmoud Al Abri
This road actually is offering customers high quality coolants, technically to prevent cooling system corrosion and and overheating.

00:22:35

Mahmoud Al Abri
In terms of the lubricant blending plant, the business has renewed all the ISO-certifications 45001 as well as 14001, and also has done quality audits and no major compromises.

00:22:51

Mahmoud Al Abri
And the business continued to promote In-Country Value being the only ISO [certified] lubricant plant in Oman, and has also managed to fill not only the demand of lubricants in Oman, but also the export market.

00:23:04

Mahmoud Al Abri
In terms of energy transitions, lubricant business achieved growth in premium lubricants, especially in the carbon-neutrals and Made in Oman products, which also showcase the Company's commitments to carbon reductions and respect for nature.

00:23:20

Mahmoud Al Abri
This was the highlights of lubricant business in 2023.

00:23:23

Mahmoud Al Abri
But if we look also at the plan [for] 2024 and beyond, lubricant business will continue to drive HSSE focus across the lubricant blending plant – and in terms of growth the business will continue to explore new revenue streams and increase market shares locally as well as regionally.

00:23:41

Mahmoud Al Abri
Definitely the business will continue to put effort and time in terms of cost reduction initiatives across all the lubricants value chain.

00:23:52

Mahmoud Al Abri
With this, I think I'll be moving to Burair Al Lawati who is our [General Manager of] Strategy and Energy Transitions.

00:24:01

Mahmoud Al Abri
Thank you.

00:24:02

Burair Al Lawati
Thank you, Mahmoud.

00:24:03

Burair Al Lawati
So, I would like to here just quickly go over our energy transition strategy agenda.

00:24:08

Burair Al Lawati
As we know our strategy of Power and Progress has already been covered by the business [inaudible] that were mentioned.

00:24:18

Burair Al Lawati
They all focussed on main pillars for which are Net-Zero, respecting nature, powering lives and creating shareholder value, while maintaining focus on our core values of honesty, integrity and respect for people. As well as for safety throughout our operations and strategy as we continue with our energy transition journey

00:24:40

Burair Al Lawati

This is obviously aligned with the commitment to net-zero emission targets by 2050, in line with the society and the shareholders, and customers expectations.

00:24:53

Burair Al Lawati
Which is also aligned with Oman Vision 2040 and the royal directions… that directives… that came regarding net-zero emissions for Oman.

00:25:04

Burair Al Lawati
So what is our energy transition agenda basically about?

00:25:10

Burair Al Lawati
Identify… they were… (sic.)

00:25:11

Burair Al Lawati
They started in 2023 by identifying and tracking, and benchmarking our corporate greenhouse gas emissions, and that is the project that we completed in Q2/2023.

00:25:23

Burair Al Lawati
So we know where we were and after that we started to strategize our decarbonisation initiatives, which included upskilling and training of our specialists and obviously trying areas where we can avoid emissions, reduce emissions, but obviously in the long run, we can also look at compensation for these emissions through nature-based solutions.

00:25:53

Burair Al Lawati
This year we installed…

00:25:54

Burair Al Lawati
…or in 2023, we installed solar panels in some of our assets, EV chargers or electric vehicle charging points and vapour recovery system as well as other sustainable business development ideas which I'll go next in the next slides.

00:26:10

Burair Al Lawati
But basically the whole idea was about collaboration with partnerships with various stakeholders including with the government entities and private sector, and other partners to join efforts in our energy transition projects.

00:26:26

Burair Al Lawati
And the next slide, I'd like to just talk about just quickly about… maybe… energy transition initiatives.

00:26:38

Burair Al Lawati
So, we have installed 15 charging points across our network and we are exploring the [inaudible] agenda in the strategy as we go forward with that.

00:26:48

Burair Al Lawati
Also, last year the hydrogen service station… that's going to be the first-of-its-kind in Oman went through a signing ceremony [as] part of Oman Shell’s Gift to the Nation initiatives – and it's and expected to be hopefully in this year.

00:27:07

Burair Al Lawati
And, also as mentioned in the lubricants business about the introduction of carbon-neutral product portfolio, which provides consumers and industrial customers with improved engine performance as well as enhanced fuel efficiencies.

00:27:22

Burair Al Lawati

And we did also sign a number of partnerships, but I'd like to highlight one regarding sustainable waste management, which was with an Omani SME for waste management, including exploring added value from recycling waste to basically contribute to shareholders and In-Country Value across our businesses.

00:27:44

Burair Al Lawati
So this is what we had in 2023.

00:27:47

Burair Al Lawati
But as we go forward, the idea is to have a short-to-medium-term plan on milestone to reduce our carbon emissions and in the same time roll out a number of initiatives across different classes of businesses…

00:28:02

Burair Al Lawati

…whether it is about introducing products and services and solutions that help our customers reduce their emissions, as well as including initiatives within our value chain in Shell, where we can also address our scope 1 and scope 2 emissions.

00:28:18

Burair Al Lawati
Back to you, Mahmoud.

00:28:20

Mahmoud Al Abri
Thank you, Burair.

00:28:22

Mahmoud Al Abri
This is the last slide in our back (sic.).

00:28:25

Mahmoud Al Abri
So, being actually a local Omani company as well as responsible company in terms of CSR, we have delivered our annual social investments, in collaboration with our stakeholders and partners, namely Oman Charitable Organisation, Outward Bound Oman, Ministry of Social Development, Childcare Centre and Al Wafa Centre and Youth Centre.

00:28:46

Mahmoud Al Abri
We have delivered different initiatives to ensure that we actually attend to different needs of from the society.

00:28:53

Mahmoud Al Abri
We have also started our new social investment strategy update in 2023 and there's something actually we are rolling out in 2024 and beyond.

00:29:05

Mahmoud Al Abri
We have also attracted student as well as job seekers in different and various internship programmes during 2023. And from In-Country Value, we are proud to actually… being a local and Omani company… sustain a high level of Omanization – around 95% of the workforce, comprising of high-caliber Omani talents.

00:29:28

Mahmoud Al Abri
That was the highlights of CSR.

00:29:30

Mahmoud Al Abri
But if I look at the plans, we will continue to focus on sustainable and long-term social impact across the Sultanate in line with Oman Vision 2040.

00:29:40

Mahmoud Al Abri
We will also create business value for the company through alignment of CSR initiatives with different business needs and priorities.

00:29:48

Mahmoud Al Abri
We will continue to maximise our partnerships and optimise resources through collaborations with JVs and other partners in the Sultanate.

00:29:56

Mahmoud Al Abri
We will also align our CSR activity with the company's ESG and sustainability goals in 2024, and we will further incorporate the In-Country Value agenda within our CSR activity and across the business supply-chain moving forward.

00:30:11

Mahmoud Al Abri

I think this is coming to the end of our back (sic.).

00:30:13

Mahmoud Al Abri
Now, we want to give the audience time for Q&A.

00:30:20

Mahmoud Al Abri
So please mention your name and the company you work for and go ahead and choose your question.

00:30:33

Mahmoud Al Abri
Yeah.

00:30:38

Mahmoud Al Abri
So anyone want to start?

00:30:52

Joice Mathew
Hello, Can you hear us?

00:30:54

Mahmoud Al Abri
Yeah.

00:30:55

Mahmoud Al Abri
Please go ahead.

00:30:57

Joice Mathew
Hi, this is Joice… Joice Mathew from United Securities.

00:31:02

Joice Mathew
I have... I'm, I'm looking for some operational data, KPI data related to your volume or revenue in different segments.

00:31:12

Joice Mathew
It's not mentioned in the auditor… the director's report or in the management discussion.

00:31:18

Joice Mathew
So, can you please provide some data for different segments. Data such as, let's say, maybe the throughput session for the retail segment and you know maybe how much is the volume that is… that has… increased in the aviation segment, marine segment and what's the contribution to revenue from different sectors?

00:31:47

Lamees Al Lawati
Hi, Joice.

00:31:48

Lamees Al Lawati
Thank you for the question.

00:31:50

Lamees Al Lawati
I think we made it.

00:31:52

Lamees Al Lawati
We made our stand of sharing… historically… as well with our investor community that we don't really share segmented information.

00:31:58

Lamees Al Lawati
So, the information is available in the annual report of the company on a high-level basis, considering the very limited market that we operate in terms of the players out there, the confidentiality of this information and the competitive nature of this information.

00:32:15

Lamees Al Lawati
As far as your question on mobility is concerned, so there was a question about the average throughput.

00:32:21

Lamees Al Lawati
It really varies across the 211 stations that we have across the country.

00:32:28

Lamees Al Lawati
And then I think if we can give you a scale, it, it varies between 5 million litres in a station all the way up to 12 million litres in a station.

00:32:38

Lamees Al Lawati
The size of the station, the location of the station are key factors in determining the actual throughput in every area and in every site that we operate in.

00:32:47

Lamees Al Lawati

In the aviation business on a high level, we've mentioned that we have (sic.) our volume has increased by about 180% in comparison to the same period last year.

00:32:55

Lamees Al Lawati
This was mainly reflective of new contracts that we have acquired particularly starting Q2 this year.

00:33:02

Lamees Al Lawati
Our operations in aviation currently are are done or are managed and conducted in two main locations, which is Muscat International Airport and Salalah International Airport.

00:33:14

Lamees Al Lawati
Now proportionately, Muscat Airport is significantly bigger considering the, you know the strategic location of this airport in the capital of the country.

00:33:25

Lamees Al Lawati
So, hence our volume has exceeded over 100 million litres there. In Salalah Airport, it’s significantly lower and it's largely driven by the seasonality that we see in the in the environment and the market.

00:33:41

Joice Mathew
OK. I appreciate the answer.

00:33:43

Joice Mathew
So what's the average throughput per session, you mentioned about 5 million to 12 million as the range.

00:33:49

Joice Mathew
So, if we look at it on an average basis what would be the the figure?

00:33:56

Lamees Al Lawati
So, we have sold over… 

00:34:00

Mohammed Al Balushi
Joice, I think… I think the answer from the CFO is, is really clear.

00:34:05

Mohammed Al Balushi
You know, while I do appreciate you trying to get… to get a clear answer on the average throughput…

00:34:12

Mohammed Al Balushi
…it again depends as I said on the location.

00:34:15

Mohammed Al Balushi
It depends on the density of of the sites in every specific region, the number of pumps, the number of islands, the… you know… population in that… in that village or in that area.

00:34:30

Mohammed Al Balushi
And hence, you know we we do have some standards when it comes to minimum volume throughput that we expect from a site before we get into and and invest in it.

00:34:42

Mohammed Al Balushi
I think ideally from an investor's point of view, what we need to know is that we don't… you know invest in a site unless it's profitable, and that profitability is, of course, forecast before we build the site based on our experience and the market understanding we have in that specific region.

00:35:04

Mohammed Al Balushi
So when, when, when our CFO did highlight that it's… you know… somewhere within 5 and 12 [million liters], these are more or less some ranges that we have. But they will decide that this would be above 12 million and hence it would be… you know… the answer to your question would be very close to us breaking it into different areas, different regions and different Governorates.

00:35:34

Joice Mathew
Thank you for the answer. Mr. Mohammed.

00:35:36

Joice Mathew
But see as someone, someone who's looking looking at Shell Oman, and who's looking at from an analytical… analytical point of view, it's very imperative that… you know… we should have, we should get some information related to your operational performance, key operational performance – and these are the very basic key operational performance (sic.).

00:35:55

Joice Mathew
If you look at any of the the fuel retailers in the region or across the globe, they all provide this kind of information.

00:36:02

Joice Mathew
So it's very unfortunate… that it's very unfortunate that you are not giving the information.

00:36:03

Mohammed Al Balushi

Not in this market.

00:36:09

Joice Mathew
It's OK. Let's move on.

00:36:11

Joice Mathew
And the next question that I have is… you you have mentioned your revenue has increased by around 4%, but what I'm seeing is this is primarily due to the increase or 180% volume increase in the aviation segment, but at the same time your mobility revenue has come down.

00:36:33

Joice Mathew
So, what are the reasons that has contributed to this?

00:36:42

Mohammed Al Balushi
Suresh, you want to pick that up or, Lamees?

00:36:48

Lamees Al Lawati
So… so we have indicated indeed an overall volume or revenue growth of 4% and we said it was consistent across the different segments.

00:36:57

Lamees Al Lawati
Now, when we say that aviation volume have grown by 180%, proportionately, the aviation segment is significantly lesser than than mobility.

00:37:06

Lamees Al Lawati
So, on the face value of of it, it might appear that the growth that we have reported is mainly driven by the aviation segment, which is true to a certain extent.

00:37:17

Lamees Al Lawati
But, then if you actually look at the wider scale of the operations that we operate in… and if you follow actually the note in our financials…

00:37:25
Lamees Al Lawati

…so out of the 519 million that we have reported this year, 435,000 of that was actually driven and generated from the mobility business.

00:37:36

Lamees Al Lawati
Yes, it has shown slight decline versus last year.

00:37:41

Lamees Al Lawati
Now, obviously we were… there are so many factors that could… that could influence this including even the expansion that we had during the year… and the growth that… or the focus area that we had on other segments.

00:37:57

Lamees Al Lawati
But then in general, the business… if you look at an average of the last three or four years… we have been consistently growing year-on-year.

00:38:06

Lamees Al Lawati
They're naturally in any downstream organization or business that we operate in.

00:38:11

Lamees Al Lawati
There might be a few swings in certain years, but then we are… we retain our confidence in our growth and in moving the business into into higher levels in the future.

00:38:23

Mahmoud Al Abri
Suresh anything you want to…

00:38:24

Suresh Nair
Yeah. Thanks Lamees, and just a couple of points to add on… add on today… specifically in the mobility segment and I, I think I spoke about this during the last engagement as well.

00:38:36

Suresh Nair
One is a piece around automotive technology and efficiency as well. What we're seeing is an increase and an improved trend in terms of fuel consumption and not only in Oman, but also regionally and and globally.

00:38:52
Suresh Nair

This is affecting the overall consumption of the utilization of fuel, for even in the technology improvement over the five years… like for… like comparison for an average sedan car is showing an improvement in fuel consumption of at least 5 to 8%.

00:39:10

Suresh Nair
Yeah. and as as a as a snowball, a snowball effect, this directly in impacts any traditional mobility business in the… in the fuels segment.

00:39:23

Suresh Nair
The other one also we touched on, we touched on briefly as well during the during the last segment which was a question by you as well Joice… was around the regulated segment, and this is a regulated segment, and I mean part of our fuels in terms of margin is a regulated component.

00:39:45

Suresh Nair
So the the levers for us to really optimize then essentially is on cost.

00:39:49
Suresh Nair

Thanks [inaudible].

00:39:50

Mahmoud Al Abri
Thank you, Suresh, and thank you Joice.

00:39:51

Mahmoud Al Abri
Actually, I want to give another participant opportunity to ask… as well.

00:39:57

Mahmoud Al Abri
Any other question from any other participant?

00:40:10

[Incomprehensible]
[inaudible]

00:40:12

Mahmoud Al Abri
Yes, can you please go ahead?

00:40:14

Bishen Balla
Hello.

00:40:15

Mahmoud Al Abri
Yes. So, can you just introduce where you're from, which company you work for?

00:40:20

Bishen Balla
This is Bishen.

00:40:22
Bishen Balla

Yes.

00:40:23

Bishen Balla
This is Bishen Bhalla from Vision Capital.

00:40:25

Bishen Balla
Thank you for the presentation and for this forum.

00:40:29

Bishen Balla
I wanted to, you know, just inquire regarding your overall margins.

00:40:34

Bishen Balla
If I look at sort of the gross margins as well as… you know… margins right through the bottom line, we've seen a steady decline over the years.

00:40:42

Bishen Balla
And whilst we understand there's been a change in the regulatory environment, sort of, if I look at 2019 as a base where… you know… the company [inaudible] a net profit margin of 2% and a gross margin of 7%.

00:40:55

Bishen Balla
So we're close to the gross profit margin – but when it comes to the net profit margin we're way off.

00:41:02

Bishen Balla
So. in terms of… is that a number [that] one can still peg the company to or the Sector to or has that drastically changed? Just to understand, overall, you know, the operating environment?

00:41:13

Lamees Al Lawati
Yeah.

00:41:14

Lamees Al Lawati

Thank you for the question, Balla.

00:41:16

Lamees Al Lawati
To your comment earlier on the Company's performance declining year-on-year, I think the correct statement is that the Company has been reporting a steady growth in bottom line in the years between 2020 all the way to 2022.

00:41:32

Lamees Al Lawati
So, we have our EBITDA has actually increased from 14 million Omani Riyals to 15 million Omani Riyals… to 18 million Omani Riyals in 2022.

00:41:40

Lamees Al Lawati

Yes, we have seen a decline in the… in the year, but it has not been a consistent decline that we have seen over the span of the last four years.

00:41:49

Lamees Al Lawati
The difference that we see between our gross margin or our headline growth and our bottom line movements is predominantly driven by the increase in costs.

00:42:01

Lamees Al Lawati
So, if we go back to the earlier statement that I had mentioned, yes, we have taken certain investments and certain costs consciously as an organization to reposition our company for future growth.

00:42:13

Lamees Al Lawati
Part of which, we have done organizational restructuring in the year 2023 and we have stepped up our investments as well.

00:42:20

Lamees Al Lawati
So, from the range of 7 million and 6 million, and no investments in the years of COVID, all the way to 8.7 million Omani Riyals that we have injected in the year 2023.

00:42:29

Lamees Al Lawati
Now obviously, with the highest level of investment there is… you know… usually a gap in the time that you actually realise the benefit of these investments for which you have to incur the financing cost.

00:42:42

Lamees Al Lawati
And it's unfortunate that during the year where we have actually stopped and stepped up our capital investments for all the good reasons and all the business cases that we have validated and vetted; the external borrowing cost was not in our favour.

00:42:55

Lamees Al Lawati
So, financing cost has grown up, organizational OpEx cost has grown up in the year.

00:43:01

Lamees Al Lawati
This should not be taken as a static trend for the organization on an ongoing basis, but then there are certain costs that we have to incur at a point in time in the growth journey of this organization for us to position the company for growth going forward.

00:43:15

Lamees Al Lawati
We don't expect that trend of OpEx to continue growing at the same trend and level going forward.

00:43:21

Lamees Al Lawati
We are very conscious about cost and we have introduced a lot of cost optimization initiatives and focus areas within the organization to contain the impact, of course, going forward.

00:43:34

Bishen Balla
Interesting.

00:44:34

Bishen Balla
Yeah. Thank you for that answer.

00:43:35

Bishen Balla
Makes perfect sense.

00:43:36

Bishen Balla
And I completely understand your interest costs and debt both increase at the same time.

00:43:40
Bishen Balla

So when we see a reversal in that Insha‘Allah we will see those costs also going down.

00:43:45

Bishen Balla
The next question will be in regards to a comment you made on the performance where you said there were certain receivables that… you know… there was some impairment adjustments towards some large trade receivables.

00:43:55
Bishen Balla

And if I'm not mistaken, please correct me if I'm wrong… you mentioned during the presentation that some of these are from regional… sort of parties, is that correct?

00:44:03

Lamees Al Lawati
Yes, that's correct.

00:44:08

Lamees Al Lawati
Yeah, yes, I was just going to comment on that.

00:44:12

Lamees Al Lawati
A big proportion of our sales are actually done on export basis, and we have all seen recent geopolitical tension in the region and some of the neighbouring markets that we have been operating in.

00:44:25

Lamees Al Lawati
So, we have seen a slowness generally in receiving certain receivables from the segments that we have exported products to in the last one year or two years.

00:44:34

Lamees Al Lawati
Now, given the aging and given the provisioning policy and the framework that we have adopted as an organization, we have decided and obviously with a full knowledge and support and endorsement of the Board of Directors, the Audit Committee and the Auditors as well… that it's more prudent for us, and out of transparency, that we take the provision hit on this during the year.

00:44:58

Lamees Al Lawati
This by no means indicate that these debts are completely bad in nature.

00:45:03

Lamees Al Lawati
So, they have not been written off and unlike I said earlier, we continue to to take all the measures that are required for us to be able to recover these debts from the market.

00:45:13

Bishen Balla
So, you’ve basically taken the provision and if you were to collect these amount this will flow through back to the PnL or would it be told purely on the balance?

00:45:21
Lamees Al Lawati

Yes, that's correct.

00:45:21

Bishen Balla
OK, OK.

00:45:25

Bishen Balla
OK. Interesting. And what would be this amount, approximately?

00:45:29

Lamees Al Lawati
So, I wouldn't really go to the specific values, but if you follow the balance sheet numbers that we have disclosed which are available in the notes for the financials, you would see that our bad debt values have increased in the range of 500 to 600 thousand Omani Riyals in total.

00:45:46

Bishen Balla
Got it. OK. Sure.

00:45:48

Bishen Balla
And… and now just to understand as a business policy, I mean you're the experts in this field, but as a business policy when you do export sales, aren't against sort of some guaranteed payments from a banking channel or how does it work? I'm just trying to get a better grip on how export sales work as a sort of payment, you know, from a payment perspective.

00:46:06

Lamees Al Lawati
Depending on the market that we sell to and depending on the creditworthiness of the customer, there are various credit securities that we acquire from the customers, some of which could be in the form of letters of credit, some of them could be in the form of post-dated checks or guarantees that we get from the customers.

00:46:24

Lamees Al Lawati
So they really… they, they… vary in nature and then you know given the nature and the type of operations that we manage, there will always be certain exposure to credit risk in the market that we operate in.

00:46:38

Lamees Al Lawati
So, for us to be able to grow, you know, the organization has to take a certain extent credit risk.

00:46:45

Lamees Al Lawati
So, not all of the sales that we do are 100% secured.

00:46:48
Lamees Al Lawati

We try to do that to the max possible extent, but then when… whenever not feasible, you know there are deviations to the process.

00:46:58

Bishen Balla
Noted noted. That makes sense.

00:47:00 

Mohammed Al Balushi
Thanks.

00:47:01

Mohammed Al Balushi
I think they're... [inaudible]

00:47:02

Bishen Balla
Sure, sure. I'll, I'll, I'll bring it back into it.

00:47:04

Mohammed Al Balushi
Bishen, if you… if you, I mean… I'm, I'm happy with those questions.

00:47:08
Mohammed Al Balushi

But also, I think Deepak has written a couple of questions and if we have time we'll get back to you.

00:47:14
Mohammed Al Balushi

So there are a couple of questions to move to if...

00:47:16

Bishen Balla
Thank you and wish you all the best.

00:47:18

Mohammed Al Balushi
Thanks.

00:47:18

Mohammed Al Balushi
Thanks, Bishen.

00:47:21

Mohammed Al Balushi
Suresh, you want to take those or shall I take them?

00:47:24

Lamees Al Lawati
Can we open the chat?

00:47:25

Suresh Nair
Hold on… we can't view them yet.

00:47:26 

Mahmoud Al Abri
Let me open the chat box.

00:47:33

Mahmoud Al Abri
Can you provide guidance on the fuel stations for the next few years?

00:47:39

Mahmoud Al Abri
I assume [inaudible]…

00:47:39

Mohammed Al Balushi
I think the second question [is] probably more of an elaborate question.

00:47:44

Mahmoud Al Abri
So, what are… what are the steps taken to future-proofing (sic.) your Company? Most fuel retailers, including Shell Global, are cutting down the number of stations. Your comment?

00:47:55

Suresh Nair
Yeah. Thanks Deepak for the for the question.

00:47:57

Suresh Nair
Maybe let me let me take a swing at it.

00:47:59

Suresh Nair
So, directionally what we're doing is to ensure that Shell in Oman continues being a world-class business case… business investment case.

00:48:12

Suresh Nair
So what, what does that mean? In overlay with the current context, is we are being extremely careful and prudent for every capital dollar which you're spending.

00:48:22

Suresh Nair
Internally, we are trying to make sure that gives us the maximum amount of returns possible.

00:48:29

Suresh Nair
So, that being said, the answer to your first and second-half of the second question is… they're not into a game of adding on 10 to 15 to 20 mobility sites.

00:48:41

Suresh Nair
So, we're not chasing after a specific site count number.

00:48:45
Suresh Nair

What we're looking closer at is ensuring… for starters… with the 211 sites which we have, making sure that we are having the best possible efficiency index i.e. that each station is realising or coming close to realising its full maximum value.

00:49:04

Suresh Nair
For new investments this year, my colleague Burair has mentioned one mobility site, which we're targeting which we [will be] primarily be servicing hydrogen but they will have a fuel offering.

00:49:20

Suresh Nair
But, beyond that we will be very selective in terms of the number of stations we want to employ without me putting a specific number to it.

00:49:29

Suresh Nair
But we'll be guided by the principle on maximizing the investment.

00:49:33

Suresh Nair
Lastly, on the… on the future-proofing part, we are in the mobility business and in that space it's about providing mobility solutions to the customers.

00:49:47

Suresh Nair
That may be a combination of traditional fuels which you see in the service stations… and in the story… in the comment that you made that Shell globally are cutting down on the service stations.

00:49:59

Suresh Nair
Let me maybe rephrase that to give an accurate reflection.

00:50:03

Suresh Nair
What we're looking at… this is similar with everywhere else in the region and globally is… playing with the different energy mixes as well. (sic.)

00:50:12

Suresh Nair
That is why we have introduced the charging points at our station.

00:50:17

Suresh Nair
That is why we are exploring in the space of hydrogen – and we will continue to evolve the energy mix as we go along.

00:50:28
Suresh Nair

For the Sultanate, that's to realize the Vision 2040 and globally for Shell that is aligned with Vision 2050 to be a net-zero energy company.

00:50:39

Suresh Nair
The solutions will be a mix of the options I just mentioned.

00:50:45
Suresh Nair

Hope that answers your question, Deepak.

00:50:51

Mahmoud Al Abri
Thank you, Suresh. I think we are…

00:50:54

Mahmoud Al Abri
Yeah. Thanks. Thanks for [the] confirmation.

00:50:56
Mahmoud Al Abri

I think we are coming to the end of the session, unless there is one final question.

00:51:00

Joice Mathew
I have a few more follow up questions, if you can take that.

00:51:05

Mahmoud Al Abri
Can we take one final question?

00:51:08

Mohammed Al Balushi
Go ahead, go ahead.

00:51:10

Joice Mathew
No, it won't stop at one. No, I'm passing it. Thank you.

00:51:23

Mahmoud Al Abri
Joice, are you going to ask?

00:51:28

Joice Mathew
I have. I have more than one question.

00:51:30

Joice Mathew
So, you know, just with just one question, it won't be sufficient for me to, you know, get an idea of what's happening.

00:51:37

Mahmoud Al Abri
I'm just looking at the time. We have 6 minutes but…

00:51:39

Mahmoud Al Abri
But go ahead, start with the first question.

00:51:41

Mohammed Al Balushi
Please go ahead. Please go ahead.

00:51:44

Joice Mathew
Yeah, this is with regards. This is a follow-up question to my earlier question on your segmental revenue, you know 2% decline in mobility, and you know, more than 100% increase in the aviation segment.

00:51:57

Joice Mathew
Could you please give me an idea about, you know, what… which all segments [are] contain[ed] in the mobility [segment] and which are coming in the others, because aviation is very clear, it's clearly mentioned.

00:52:08

Joice Mathew
So, mobility incorporates which all segments, and the others are, you know, which all other revenue streams are coming in the others?

00:52:18

Lamees Al Lawati
So, mobility is basically the B2C sector that we have, and together with Fleet Park. So, all the actual transactions that happen in our four-part [inaudible] service stations are actually reported as mobility revenues.

00:52:34
Lamees Al Lawati

The others would be the other smaller segments that we have, including marine fuels, marine lubricants, as well as lubricants.

00:52:44

Joice Mathew
OK… OK… Fine – thank you.  

00:52:46

Joice Mathew
And, you mentioned your NFR remained very strong during the year. Will it be possible for you to discuss the NFR revenue? What proportion is the contribution in this NFR revenue – and what's your strategy for this segment?

00:53:10

Lamees Al Lawati
So, over 50% of the other revenue that we have reported actually comes from the NFR business stream. And maybe on the strategy, Suresh would like to…

00:53:21

Suresh Nair
Yeah, sure.

00:53:21

Joice Mathew
The other… other segment or other… other income?

00:53:24

Lamees Al Lawati
Other income.

00:53:25

Joice Mathew

Other income, the 4 million. So, it's around probably around 2 million Omani Riyals.

00:53:30

Suresh Nair
So, so the strategy, the strategy is Joice, part one of it in 2023, was around acquiring and then improving the look and feel of the shops.

00:53:44

Suresh Nair
Ultimately the main, the main aim, ideal solution will be to have as many service stations with an integrated offering of fuels and NFR as possible in within the Sultanate.

00:53:58

Suresh Nair
Currently we are setting at 50 plus.

00:54:00

Suresh Nair
You'll start to potentially see a growth more and more in, in this area that's that's in terms of pure count.

00:54:09

Suresh Nair
I talked a little bit earlier about the quality of the offerings or the extended offerings in the NFR space as well.

00:54:17

Suresh Nair
Yeah. And I also talked about the ancillary offerings. For example, a place where a customer can go have a coffee, get their car service and enjoy all other facilities within the station, aside from just refuelling their car or charging their car at one of our… one of our charge points.

00:54:40

Suresh Nair

We envisage the contact time at which a regular customer will spend at a service station… with this NFR offerings which will go up as well… which is why it goes back to one of the primary focus I have – for me – is to improve the look and feel of these locations.

00:55:01

Joice Mathew
So, are you monitoring the footfall in this NFR sites or what's the KPIs that you will be looking at?

00:55:08

Suresh Nair
Yes, we do.

00:55:10

Suresh Nair
So, we measure the footfalls to transactions and everything else in between – and Joice, quite frankly speaking, the reason… the reason we do that also is… we are adjusting along the way because it’s an extremely dynamic business.

00:55:28

Suresh Nair
The offerings, for example, you will notice in the fasting month what we're offering in our service stations vary from what you see just a day before.

00:55:36

Suresh Nair
You will see it change and evolve in the upcoming months of Khareef, and it goes down even to the level of customizing different drink offerings in our Shell Cafe within the shop.

00:55:50

Suresh Nair
So, high level answer to your point, do we monitor the footfall?

00:55:54
Suresh Nair

Yes, but a lot more, a lot more in between to make sure we can almost customize and then differentiate our services from, from what's available in the market… almost on a daily basis sometimes.

00:56:10

Joice Mathew
Next question that I have...

00:56:11

Mohammed Al Balushi
Thank you guys, I think, Mahmoud, what about the timing?

00:56:15

Mahmoud Al Abri
We… we just have less than two minutes… team… I think.

00:56:21

Mahmoud Al Abri
I think with that we can end the session.

00:56:25

Mahmoud Al Abri
Is everyone aligned?

00:56:27

Mohammed Al Balushi
I mean, I was just wondering if there are any… any other questions in the next one or two minutes?

00:56:33

Mahmoud Al Abri
Can we take final questions – then one final question looking at the time?

00:56:37

Mohammed Al Balushi
Joice, one more question if you have before we end the call.

00:56:42

Joice Mathew
Mr. Mohammad, I have more than one question, but you know the… the question that I have, you know, is on the CapEx…

00:56:52

Joice Mathew

I'm seeing that your CapEx has been increasing from 2020 to 2023 – and it has reached, it has been stable… stable before that, and then from 2.6 million it has reached up to 8.8 million in last year.

00:57:06

Joice Mathew
So, where is this CapEx goes (sic.) into primarily? Because we are not adding too much of any stations, we are adding only if we have added only (sic.) six stations.

00:57:16

Joice Mathew
So, what kind of CapEx should we be looking at?

00:57:18

Mohammed Al Balushi
Sure, sure, sure. I think…

00:57:20

Joice Mathew

[Inaudible]

00:57:22

Mohammed Al Balushi
Let me answer that… just for the sake of, we have less than one minute… and let me try to cover that please Joice.

00:57:30

Mohammed Al Balushi
Now, I think it's very important to highlight that many of this CapEx actually goes into ensuring our existing assets function in a way that is… allows us… first of all of course in a safe manner, and then allows us to continue operating these locations. And that includes the existing stations, yes (?)

00:57:56

Mohammed Al Balushi
So, there have been a number of KDR projects knocked down and rebuild that has been put in place or in action over the last two to three years.

00:58:06

Mohammed Al Balushi
In addition, of course, there have been a lot of, you know, the, you know, the project that we have taken last year of converting our existing Select or existing convenience stores and rebranding them.

00:58:18

Mohammed Al Balushi
It took a lot of a lot of CapEx from us because we had to build them and redesign them the same way that we run the C-store under the select brand name internationally.

00:58:29

Mohammed Al Balushi
And then of course, there have been a huge CapEx related to shifting to a new building. Our head office got shifted to a new building and that was a huge CapEx that we had to invest in; demolish the old building, move to a new building, build a new car park, etcetera.

00:58:50

Mohammed Al Balushi
And that also included refurbishing our other offices nearby, the head office like the lubricant blending plant, as well as the trading and supply and our also colleagues in aviation.

00:59:04

Mohammed Al Balushi
Now, with all that also there have been a huge asset integrity CapEx that we have been always investing. As I said, the idea was to ensure that we we operate in a very safe manner.

00:59:18
Mohammed Al Balushi

So, so yes, your… your… your observation is correct.

00:59:22

Mohammed Al Balushi
There has been huge CapEx invested, not necessarily on building new stations, but one - to ensure that we operate safely; two – to ensure that we actually have the the existing assets serving us for future years, and also expanding on existing assets, building the NFR which we have been focusing on.

00:59:49

Mohammed Al Balushi
That took also a lot of CapEx in terms of rather than investing it in an (sic.) existing assets, but how we can improve our… sorry… investing it in a new asset or a new site on… on but… on how we can really invest and improve our existing sites.

01:00:05

Mohammed Al Balushi
Hope that answer your question Joice.

01:00:08

Mohammed Al Balushi
It was great speaking to you. And Mahmoud for you to...

01:00:12

Mahmoud Al Abri

No. Thank you…

01:00:13

Mahmoud Al Abri
Thank you, Doctor.

01:00:14

Mahmoud Al Abri

And, I want to thank everyone for joining the session today and looking forward (sic.) to have you again in our upcoming sessions in future. Ramadan Kareem and goodbye.

01:00:26

Mohammed Al Balushi
Thank you Mahmoud and the team.

Shell Oman Marketing SAOG – Investor Relations Session Q3 2023

Duration: 57 minutes and 10 seconds

00:00:33
Mahmoud Al Abri
Good morning, everyone.

00:00:34
Mahmoud Al Abri
We would like to welcome all of you to our Investor Relations session for Q3, 2023.

00:00:41
Mahmoud Al Abri
We will give a minute or so for more people to join and then we will start shortly.

00:00:46
Mahmoud Al Abri
Thanks for joining.

00:01:58
Burair Al-Lawati
Mahmoud, better to admit [inaudible].

[Silence Ensues]

00:02:52
Mahmoud Al Abri
Good morning, everyone.

00:03:01
Mahmoud Al Abri
So welcome all to our Q3 Investor Relations session for 2023.

00:03:07
Mahmoud Al Abri
I would like to thank you all for attending this.

00:03:10
Shurooq Al Saleh
You're on mute.

00:03:13
Mahmoud Al Abri
Hello, can you hear us?

00:03:17
Burair Al Lawati
I can hear you, Mahmoud.

00:03:19
Mahmoud Al Abri
Can you see us?

00:03:21
Sultan Al Shidi
I can hear you and see you.

00:03:22
Mahmoud Al Abri
Yes, fantastic.

00:03:24
Mahmoud Al Abri
So this is a virtual session which is in compliance with the Decision No. 109/2023 as per the executive regulation of the capital market authority law issued in 13th of July 2022.

00:03:39
Mahmoud Al Abri
My name is Mahmoud Al Abri, I'm the Investor Relation Officer for Shell Oman Marketing and the Corporate Relations GM.

00:03:46
Mahmoud Al Abri
I think before we get into the agenda and I will also present the panel, it's important to talk about safety.

00:03:55
Mahmoud Al Abri
So let me share also my screen and please team let me know when you can see the screen.

00:04:11
Burair Al Lawati
Yes.

00:04:11 [simultaneously]
Mahmoud Al Abri
Can you all see the screen?

00:04:14
Mahmoud Al Abri
So very briefly on safety. So whether you're taking this call from home or work, please make sure you don't take this call if you are driving.

00:04:22
Mahmoud Al Abri
Please know where are the fire exits and where are the alarm… sounds as well. Make sure you're in a safe place while taking this call in general.

00:04:37
Mahmoud Al Abri
So before I go into the agenda, let me introduce the panel for the IR session today.

00:04:44
Mahmoud Al Abri
So Doctor Mohammed [Dr. Mohammed Al Balushi] is our Chief Executive Officer and also we have our CFO, Lamees Al Lawati.

00:04:52
Mahmoud Al Abri
We have Suresh Nair, our GM mobility… as well as on the call we have Burair Al Lawati, who is our GM for strategy and energy transition.

00:05:01
Mahmoud Al Abri
The agenda of today, we will utilize around 20 to 30 minutes taking you through the companies and different business highlights.

00:05:10
Mahmoud Al Abri
In the meantime, actually you can ask questions using the chat box.

00:05:15
Mahmoud Al Abri
We will make sure we will attend the questions during the Q&A. But we will have a dedicated session for Q&A towards the end of the session.

00:05:28
Mahmoud Al Abri
So, if I start with the HSSE journey or highlights for the first nine months, the Company has scored strong performance in terms of no harm and no leak over the last nine months.

00:05:39
Mahmoud Al Abri
This is done actually with the focus on what we call Triple C: Care, Competency, and Compliance.

00:05:46
Mahmoud Al Abri
The HSSE team managed to execute various projects in HSSE.

00:05:52
Mahmoud Al Abri
In terms of compliance, the team has executed 6 emergency responses exercise, in collaboration with the relevant authorities and wider community.

00:06:01
Mahmoud Al Abri
This is actually to test our emergency response in any situations.

00:06:07
Mahmoud Al Abri
In terms of compliance as well… the team has done assurance reviews to focus on retail, on trucks, security, risk management and contractor safety.

00:06:19
Mahmoud Al Abri
Another important milestone was actually [we] conducted several refresher sessions focused on health and well-being, defensive driving, safety passport, permit to work and other mandatory HSSE courses, not only for the wider community of some staff but also with our partners and contractors.

00:06:37
Mahmoud Al Abri
In internal as well, there was blood donation drives, basic health check-ups and nutritional awareness that has been actually carried over the last nine months for the staff of Shell Oman Marketing.

00:06:47
Mahmoud Al Abri
With the emergence of cybersecurity, it was actually a requirement to make sure that we conduct some awareness session in terms of cybersecurity challenge.

00:07:01
Mahmoud Al Abri
With this, I will hand over to Doctor Mohammed to take us through the Company's highlights over the last five months and overall some journey in Oman.

00:07:10
Dr. Mohammed Al Balushi
Thanks, Mahmoud.

00:07:11
Dr. Mohammed Al Balushi
Good morning, everyone.

00:07:12
Dr. Mohammed Al Balushi
I'll just be very brief highlighting a few… sort of key numbers that you know… represent the journey of Shell Oman over the last 65 years.

00:07:26
Dr. Mohammed Al Balushi
I have to definitely emphasize that this is an Omani publicly listed company that is carrying an international brand, which gives us a lot of… I would say… competitive edge to bring in that kind of international exposure that we have with the, you know, international backing and best practices.

00:07:56
Dr. Mohammed Al Balushi
Today, Shell Oman has 211 Mobility Service Stations, 52 Select stores and a number of, you know, activities, products and services that are serving our growing, you know, customer or base of customers throughout you know the Sultanate of Oman.

00:08:26
Dr. Mohammed Al Balushi
We are also blessed to have the first and only ISO-certified Blending Plant that actually produces proudly ‘Made in Oman’ lubricant products that serves not only the local market but also… around more than 12 markets, you know, regionally and overseas.

00:08:55
Dr. Mohammed Al Balushi
We're serving and working in four Airports, two ports… through our basically different products and services, whether it's aviation or bunkering marine products.

00:09:10
Dr. Mohammed Al Balushi
The organization is proudly, as I said, being an Omani Company… proudly managed by an Omani management team.

00:09:22
Dr. Mohammed Al Balushi
There is 94% Omanization rate as we speak today – and actually most of the shareholders [sic.] are owned by Omani institutions and individuals.

00:09:37
Dr. Mohammed Al Balushi
On top of that, through the extension of our services, we do have 130 Omani SMEs, who are serving and working for us as retailers and basically sort of distributors to our products and services.

00:10:03
Dr. Mohammed Al Balushi
Over the last 65 years, we're proud to be Number 1 or being the first in launching new initiatives and programmes in the market.

00:10:15
Dr. Mohammed Al Balushi
For instance, back in 1997, we were the first to actually introduce 24 hours convenience retailing in Oman and I'm not here talking about the concept of convenience retailing within the mobility filling stations.

00:10:31
Dr. Mohammed Al Balushi
We're actually… We were the one to introduce the concept of 24 hours shopping or convenience storing in Oman. Period.

00:10:42
Dr. Mohammed Al Balushi
We were the first to launch the solar-powered service station, first to differentiate… to launch differentiated fuel, first to launch fuel cards, first to launch VRS fleet Solution, and so on and so forth.

00:10:58
Dr. Mohammed Al Balushi
So, the point that I'm trying to make here is that, you know not only being limited to our products and services in terms of fuel and lubricants. The Company, throughout its history in Oman, has been a pioneer in terms of introducing new products and services, and systems that actually has improved the market and the industry over the last, you know, a number of years. And that I think… would probably [be] just a brief about Shell Oman Marketing Company.

00:11:38
Dr. Mohammed Al Balushi
And I'll probably leave it to the financials later on to talk about more details.

00:11:44
Mahmoud Al Abri
Yeah, thank you, Doctor. Over to you, Lamees.

00:11:46
Lamees Al Lawati
Yep.

00:11:46
Lamees Al Lawati
Thank you, Mahmoud and Dr. Mohammed.

00:11:51
Lamees Al Lawati
An overview of the financial performance for the first nine months.

00:11:53
Lamees Al Lawati
We're just trying to get this slide on screen.

00:11:56
Dr. Mohammed Al Balushi
Are there any questions raised, because I saw some things happening.

00:12:08
Mahmoud Al Abri
So, team… sorry… You can still type your question on the chat box. We will make sure we attend to them during the Q&A sessions.

00:12:15
Lamees Al Lawati
So [this is] just a snapshot and an overview of our financial performance in the first nine months of 2023 and consistent with our post-board disclosure and publication. In 2023, we have reported headline revenue growth of 4% versus the same period last year, which was the 1st three quarters of 2022.

00:12:35
Lamees Al Lawati
This 4% growth in the headline revenue was underpinned by an overall 6% growth in volume across the different businesses.

00:12:44
Lamees Al Lawati
Now my colleagues in separate briefs will share more insights and details about the business deliverables in the first nine months.

00:12:50 
Lamees Al Lawati
But on a high level, just speaking about the volume and to explain a bit of the drivers for the 6% volume growth and the 4% revenue growth, we have introduced 6 new service stations in the first nine months of the year in important and strategic locations across the country.

00:13:07
Lamees Al Lawati
We have expanded our footprint in the aviation business, reporting over 170% growth in that segment and majority of that volume… we've seen that shift coming to the business from Q2 onwards, linked to some of the contracts that we have won during the period.

00:13:25
Lamees Al Lawati
We have also acquired new contracts in the fleet business and in the [inaudible “home-based”] businesses.

00:13:31
Lamees Al Lawati
Our gross profit for the period was 2% higher than the same period last year.

00:13:36
Lamees Al Lawati
Now the difference between the 4% growth that we have reported in revenue for the period and the 2% growth in gross profit is mainly related or attributed to the product-price valuation.

00:13:47
Lamees Al Lawati
Last year's results were inclusive of a sizable stock gain from price exposure. We had stock gain that we have reported this year as well in this year's financials, but it was not the same extent that we have reported in 2022.

00:14:03
Lamees Al Lawati
Now with such fluctuations or you know differences that might come from priced exposures or valuations related to the stock in inventory that we have in hand, the picture might not be as clear as to how much growth was actually coming and resulting from the underlying business performance, which has been actually reporting a very healthy growth in 2023.

00:14:30
Lamees Al Lawati
Our other income which is predominantly the income that we receive from the services across our service stations… so things like the income we receive from the C-stores income that we received from co-locators, the tie-ups that we have with other brands, as well as streams like our car wash services and others have reported a growth of 5% this year versus the same period last year.

00:14:56
Lamees Al Lawati
Now, other income is a very important stream that we are focusing on and non-fuel retail - NFR - is an important strategic lever for us that we are focusing on in this organization.

00:15:08
Lamees Al Lawati
We have taken a number of measures this year to expand our Shell Select footprint, particularly as a brand, and we've done that by acquiring 21 select stores from the previous operator and opening new sites as well, bringing the total number of Select stores this year to 52 in Country, in addition to obviously bringing new services and enhancing the customer experience in our Select stores and in our forecourt services in general.

00:15:35
Lamees Al Lawati
Our cost has reported 7% growth versus the same period last year. Now when we look at cost, there are two big buckets that we attribute the increase to.

00:15:47
Lamees Al Lawati
The first one is any cost that is directly linked to volume.

00:15:52
Lamees Al Lawati
So, as your volume grows in the organization, things like logistics cost, transportation cost, throughput fees, licences and others would always go higher hand-in-hand with volume.

00:16:03
Lamees Al Lawati
So we have seen growth that is in cost that is directly related to our volume growing and our business expanding.

00:16:11
Lamees Al Lawati
On the other side, we have also worked on a number of maintenance activities across the portfolio of the service stations that we have.

00:16:20
Lamees Al Lawati
In addition obviously to some of our in house facilities, so the lubricant blending plant and the tanks that we have here.

00:16:28
Lamees Al Lawati
Majority of that maintenance cost that we have carried was actually preventive and proactive maintenance that we have consciously planned for this year.

00:16:35
Lamees Al Lawati
And we prioritise always to ensure the integrity of our assets and our operational excellence at all times.

00:16:44
Lamees Al Lawati
About 22% of the growth, of that 7% that we have seen in that, was actually attributed to that maintenance cost increase.

00:16:53
Lamees Al Lawati
Also, consistent with what we have been sharing with the investors, we have invested on upgrading our IT platform to improve the efficiency and the connectivity across the service stations.

00:17:06
Lamees Al Lawati
And also to enable us to introduce new services, we had mentioned our Shell GO Plus loyalty application that we have introduced this year. And for that we had to invest on our infrastructure and on improving our cybersecurity platforms.

00:17:19
Lamees Al Lawati
So some of the cost increase that we have incurred this year was directly related to investments and growth in the facilities and in the infrastructure… in the infrastructure… that we have to enable us not only for today to capture volume but also to position us right in the digitalization journey that we want to embark on.

00:17:38
Lamees Al Lawati
And finally one last big chunk of the cost increase that we have seen here is also related to rental. So the plots that we construct our service stations and obviously with the introduction of a number of filling stations last year or service stations last year and six new service stations this year, the cost of renting these plots would be reflected as higher operating cost in our financials.

00:18:03
Lamees Al Lawati
And then our financing cost has reported a 14% increase in the nine months our business has gone and obviously the working capital elements associated with us managing a bigger business today, in the form of inventory balances that we've got to maintain at hand, account receivable balances growing as line in line with our increase in sales.

00:18:28
Lamees Al Lawati
So for that and to manage the working capital, we had to ensure that we have enough liquidity at all points in time.

00:18:35
Lamees Al Lawati
And with that and reflecting on the high interest rate that we have seen in the market… it's a global trend that has impacted us locally as well.

00:18:44
Lamees Al Lawati 
Here we have seen the interest rate growing significantly over the span of the nine months of 2023 and that has been reflected as a higher financing cost in our financials.

00:18:56
Lamees Al Lawati
Our profit for the period was 3.79 million Oman Riyals – it was 1.2… roughly around… 1.2 million lower than the same period last year supported by all the factors that we've explained just now.

00:19:08
Mahmoud Al Abri
Now let's move to Suresh [Nair].

00:19:15
Suresh Nair
Thank you and good morning.

00:19:16
Suresh Nair
So [inaudible] for the Mobility, we've continued our green initiatives across our Shell service nations and this is in the form of solar panels, LED lights and also power-saving chillers, which is in our Select shops.

00:19:30
Suresh Nair
We've expanded as the CEO has touched upon in the first slide, our electric charging points – and this will continue to be our direction moving forward as well in strategic locations across the southern end. We've completed the commissioning of 6 new service stations this year and that brings our total to 211.

00:19:50
Suresh Nair
And we continue to want to expand our network of Shell Select, which currently stands at 52 for the year.

00:19:58
Suresh Nair
The focus within our operations will be around the following areas as well, which is focusing on creating employment and business opportunities with the local SMEs.

00:20:09
Suresh Nair
There there's been efforts around improving our focus in the environmental space. You can see now at some of our sites where we have plastic reversing vending machines, we are looking at better and more eco-friendly packaging services within our Shell Cafe and Select locations – and this is an area which we'll continue to pay more attention to with technology advancements as well.

00:20:37
Suresh Nair
We are seeing a good growth pattern in our Shell V-Power or differentiator fuels segment as well as the focus around fleet card customer sign-ups as well.

00:20:50
Suresh Nair
We are also seeing an active and increased number of registrations in our loyalty programme which is Shell Go Plus – and as moving forward for future plans, we have seven more Shell Select shops in the pipeline for this year.

00:21:05
Suresh Nair
We will be focusing as well on increased alliances and partnerships where it makes commercial sense, we will be looking at Shell Helix, Oil Change centers, and car wash to improve our offerings in the customer care segment as well as also an increased focus around the National Subsidy System customers in the 91 [M91 fuel] offering space.

00:21:31
Suresh Nair
The V-Power or differentiated fuels continues to be an attractive propositions for our customers and we'll be looking at how we can expand our promotions and encouragement in this segment as well.

00:21:47
Suresh Nair
Thank you.

00:21:48
Mahmoud Al Abri
Thank you, Suresh.

00:21:49
Mahmoud Al Abri
So the lubricant business remains a significant pillar and stream of revenue for the Company and over years the lubricant remained a market leader in the Sultanate of Oman. It continued to lead the market in the industry and that's done actually through achieving new customer wins in different sectors as well as increasing the share of wallets with big existing B2B customers across different sectors like oil and gas, power and automotive.

00:22:19
Mahmoud Al Abri
The business has also enhanced the product portfolio last… this year actually… new revenue stream has been launched in the business, which is Shell coolant specifically with the distributors and in the B2C segment. This will offer customers a different or additional variety of choices.

00:22:41
Mahmoud Al Abri
In terms of lubricant blending plant – this is the only Shell-operated lubricant blending plant in the region, the only ISO certificates in the region and it's continued to promote in-country value for Oman.

00:22:52
Mahmoud Al Abri
Not only actually does it cater to the local market, but it also exports to more than 12 countries across the region.

00:22:58
Mahmoud Al Abri
In terms of energy transitions, the business continued to promote top-tier products ‘Made in Oman’ product, namely Shell Helix Ultra Carbon-Neutral, which showcases the company's commitment to carbon reduction and respect for nature.

00:23:15
Mahmoud Al Abri
In terms of plans, the first plan is actually to continue driving and enhancing the HSSE culture and focus across the lubricant blending plant.

00:23:25
Mahmoud Al Abri
Secondly, in terms of cost reduction initiatives across the entire value chain of lubricants.

00:23:30
Mahmoud Al Abri
And thirdly, always look for business growth to explore not only in the country but also across the border.

00:23:37
Mahmoud Al Abri
Now let me move to Burair [Al Lawati].

00:23:40
Burair Al Lawati
Thank you, Mahmoud.

00:23:41
Burair Al Lawati
Good morning, everyone.

00:23:43
Burair Al Lawati
I'd like to present the energy transition highlights and plans. As you can refer to what has been already discussed regarding power and progress.

00:23:53
Burair Al Lawati
It's actually a strategy that highlights the transition of our business to net-zero emissions while creating added-value for the shareholders, the customers and the wider society.

00:24:03
Burair Al Lawati
The four main goals of the strategy supports our purpose, which is to power progress together with more and cleaner energy and solutions.

00:24:10
Burair Al Lawati
It is also underpinned by our core values of respect – and also with our focus on safety.

00:24:20
Burair Al Lawati
The company's values, goals and strategy are aligned with the Oman Vision 2040, including and not limited to the net-zero emissions target by 2050, which has been recently announced by the government in step with the society.

00:24:33
Burair Al Lawati
And if you look at the recent highlights that has been shared by my colleagues, but also what I'm going to talk about, it's also plays along these lines.

00:24:43
Burair Al Lawati
So, this year we and in this quarter we have completed the corporate greenhouse gas emissions exercise, which is meant to determine our baseline for the emissions from the Company and to incorporate the data into our plans to develop a comprehensive approach to emission reduction road maps and initiatives for our operated facilities, assets and also which has already started with the upskilling and training of our specialists in the Company for data gathering analysis. We have also signed the contract to design and develop and install Oman's first hydrogen and refueling service station.

00:25:21
Burair Al Lawati
The service station is expected to be operational by 2024.

00:25:25
Burair Al Lawati
The total number of EV charging points has reached 15, which is also in support of all the stakeholders, especially the government to decarbonize the mobility sector and help with the 2050 targets.

00:25:43
Burair Al Lawati
A contract has been signed with the Omani SME for petroleum waste management services – and it provides petroleum waste management services and explores added value that can be generated from recycling waste.

00:25:59
Burair Al Lawati
We move now to low carbon products and sectors.

00:26:03
Burair Al Lawati
So this sector has been delivering successful and strong HSE performance. We have zero fuelling delays in all airports, in terms of aviation fuel despite the operational challenges.

00:26:15
Burair Al Lawati
And we have completed that audit conducted by various airline companies with zero findings. Securing and signing of new contracts in the power and construction industries has been our focus when it comes to bulk volume.

00:26:28
Burair Al Lawati
And we have renewed existing contracts with the airline companies in both Muscat and Salalah Airports.

00:26:35|
Burair Al Lawati
Our plans will be to continue our strong HSE performance and building on our zero tolerance to any type of compromise.

00:26:43
Burair Al Lawati
We are also working on securing new long term government contracts through upcoming tenders and we'll work on expanding our bunker activities in multiple ports in the Sultanate.

00:26:54
Burair Al Lawati
Back to you, Mahmoud.

00:26:56
Mahmoud Al Abri
Thank you, Burair.

00:26:57
Mahmoud Al Abri
In terms of Corporate Social Responsibility, as being a responsible Company as always, we are assigning a yearly budget for CSR as well as for donation activities.

00:27:07
Mahmoud Al Abri
And our strategy is always to attend to the community needs as well as to look for the priority of the nation in terms of Oman Vision 2040 as well as for Powering Progress as a Shell strategy.

00:27:19
Mahmoud Al Abri
And over the last couple or number of months, there were some highlight in terms of CSR activities. We have been continuously supporting the Oman Charitable Organization in terms of donations, we have signed a couple of MOUs with Outward Bound Oman to enhance the capacity of youth in Oman in general.

00:27:41
Mahmoud Al Abri
Also, we have a partnership with the Ministry of Social Development to support different NGOs in Oman.

00:27:48
Mahmoud Al Abri
We have continued our effort in terms of training and internship opportunities to students and graduates in the Sultanate.

00:27:56
Mahmoud Al Abri
Also we have a partnership with Onsor for donating different laptops to childhood centre, specifically at the Al WAFA Centre.

00:28:05
Mahmoud Al Abri
And finally, we have installed the VRS power recovery system in some Shell service stations to mitigate environmental impact.

00:28:15
Mahmoud Al Abri
I think with this we have covered almost 27-28 minutes of highlighting the different initiatives, different milestones of different businesses of some as well as the plans.

00:28:26
Mahmoud Al Abri
Now we'll open the window for any for any question from the team.

00:28:45
Mahmoud Al Abri
So team, you can ask questions, please.

00:28:47
Mahmoud Al Abri
You can unmute yourself, introduce yourself and you can ask the question.

00:28:59
Bishen Bhalla
Hello.

00:29:00
Mahmoud Al Abri
Yeah, we can hear you. Go ahead.

00:29:02
Bishen Bhalla
Hi, good morning team. Thank you for the presentation.

00:29:06
Bishen Bhalla
This is Bishen Bhalla from Vision Capital.

00:29:09
Bishen Bhalla
You know you had, you had mentioned in one of the slides… let me just exactly refer to which slide you're talking about… sort of these one off course that you know you had associated with adding new stations et cetera, licensing cost and I think you mentioned that for the 7% increase in cost, 22% is attributed to one-off cost, right. Is that is that a correct assessment?

00:29:35|
Lamees Al Lawati 
So we said a big chunk of the cost, so 22% was related to maintenance activities and although they might be one-off for the scope of the assets that we have implemented them on.

00:29:48
Lamees Al Lawati
But then we have an a road map for maintenance and a kind of you know a multi-year plan to cover different span of assets, services and facilities that we have.

00:30:00
Lamees Al Lawati
So although for this particular asset it might be viewed as one-off sort of cost, but then you know starting next year we will be rolling over the same scope and span on other facilities as well.

00:30:13
Lamees Al Lawati
And we have also mentioned that maintenance is a core cost category for us not only on a reactive basis but on a preventive and proactive basis as well.

00:30:25
Lamees Al Lawati
So we do have a multi-year plan to cover you know the entire asset base that we have.

00:30:32
Bishen Bhalla
Understood, understood. You know where I am coming from is you know we've seen an improvement in sort of margins for the for the company this year compared to in the first two quarters. There's a significant improvement – and I'm just trying to understand you know with the reality where things stand. What sort of margins do you think the company can generate on a sustainable basis on a net-profit level like you said… you know there's some maintenance of course they may be seen as one-off but it's something you’ll continue doing going forward as well?

00:31:01
Bishen Bhalla
So I'm just trying to get a sense of what margins the company can do, you know removing all sort of one-off cost or one-off activities on either side on the income side as well as on the cost side. So like you mentioned you know you had some stocking last year the same, which was lower this year and you had some proactive maintenance this year. So I'm just trying to get a sense of what kind of margins or what sort of bottom line the company gets to generate on a sustainable basis for the foreseeable future. That's where I'm coming from.

00:31:30
Lamees Al Lawati
Yeah.

00:31:31
Lamees Al Lawati
So, let me let me address this question by perhaps tackling two different dimensions.

00:31:37
Lamees Al Lawati
So, the cost element is one and then probably the margin is another one.

00:31:41
Lamees Al Lawati
And now whilst we acknowledge obviously that the impact of the cost increases, we are also confident in our ability to manage the business and our cost effectively to ensure the profitability of this company going forward. We are continuously looking at our cost base and we are you know, finding optimization opportunities across the value chain, whether it's from the product supply perspective or from managing operating expenses as well.

00:32:08
Lamees Al Lawati
And once we are committed on maintaining our growth trajectory and on taking this business into new heights. So the cost story is acknowledged. We will continue to invest in cost where we deem appropriate and where we feel it's beneficial for the business.

00:32:23
Lamees Al Lawati
We might need to incur some cost at an early stage for us to shape the path, you know, for our growth going forward and we will continue to do that. When it comes to the margin aspect, you're aware that the downstream businesses in Oman operate in a regulated business.

00:32:43
Lamees Al Lawati
So, majority of the volume that we sell about perhaps 2 billion or more of the volume that we sell is actually coming from the business line which is which is a regulated market.

00:32:53
Lamees Al Lawati
So to manage the profitability in that segment is not necessarily in the hands of the oil marketing companies.

00:33:01
Lamees Al Lawati
And what we can work on obviously and what matters at the end of the day is the bottom line impact and hence our, you know, focus on expanding the revenue streams, on expanding our B2B presence whilst the majority of the B2C segment remains to be somehow tied up with the regulated market.

00:33:19
Lamees Al Lawati
So our focus would be to expand our footprint on the B2B segment as one, whilst focusing as well on our other revenue stream, which is a big, big focus area for us this year and as well as an integrated pillar in our strategy.

00:33:38
Dr. Mohammed Al Balushi
And if I may add, Bishen. So thanks for the question on it. I think it's a very good one.

00:33:44
Dr. Mohammed Al Balushi
I think in addition to what Lamees has said and the realities in this market which is mainly regulated.

00:33:50
Dr. Mohammed Al Balushi
I think one element that Suresh and the team are actually working on is, is basically to increase our non-fuel retailing business, which will not only add more offers to the customers who are coming to our mobility station, but also going back to your question will enable us to make more basically businesses and margins from every customer's visit here. In addition to ensuring that we work on the efficiency aspects when it comes not only from a cost element in terms of reducing our operating cost, but also optimising the resources that we have – and enhancing the offers that we have in the B2B segment, which would allow us of course to get good businesses, which unfortunately due to COVID and the tight sort of liquidation in the market, has become a challenge in terms of customers… it's natural [they] would love to get a very reduced kind of offers for the fuel businesses that they have from B2B and for us how we do that in a sustainable manner… that will ensure that we provide the customer value proposition in a way that will allow us to do a sustainable and a profitable business. (sic.)

00:35:22
Dr. Mohammed Al Balushi
So all these pockets are being looked into and they're definitely part of our strategy and our [inaudible] you know regardless of one of items that comes here and there.

00:35:35
Bishen Bhalla
[Audio Levels Low] Noted team, thank you for that answer. The next question is in regards to your… let's say… market share or your presence across the country. You know we've seen over the last at least 3-4 years sort of muted growth in number of stations, whereas you know your peers have sort of been a bit more aggressive in opening new stations. Going forward, do you sort of see a more aggressive approach towards that or is it sort of cost benefit analysis where you would prefer opening stations where it makes economic sense from a profitably [inaudible] station or sort of investment per station perspective?

00:36:13
Bishen Bhalla
[Audio Levels Low] Or would it be that there are some areas that you just happen to [inaudible] irrespective of sort of the financial metrics?

00:36:19
Dr. Mohammed Al Balushi
Yeah, with your views on that. Thanks again, another very good question. Probably would leave a few minutes for Suresh to also comment, but the focus has always been on the quality of the size rather than the number of the size or the quantity. Yeah (?) We would love to invest in areas where basically it's required investment. But going back to the point that Lamees was mentioning a while ago – a lot of our OPEX actually goes in terms of enhancing and improving our existing sites and make even more of offerings into them.

00:37:01
Dr. Mohammed Al Balushi
So, it has always been trying to have both, but I think as a rule of thumb we haven't been behind network share as such, but more of a quality locations, quality offerings and quality number of sites.

00:37:19
Dr. Mohammed Al Balushi
So, hence we haven't been really going into… “OK, how many sites” or “the more sites we deliver at the end of the year is better for us”.

00:37:27
Dr. Mohammed Al Balushi
It has always been what kind of you know return on capital or return on investments that those sites would provide to the to the shareholders at the end of the day. Suresh…

00:37:43
Suresh Nair
Yeah, a couple more points to add, Bishen. So one - the focus moving forward and it always has been as well [sic.], but more so necessary in this environment where organic growth is slow will be around our operational excellence.

00:37:57
Suresh Nair
So this effectively is… you are asking whether it's the former or the latter later… the answer is the latter.

00:38:03
Suresh Nair
So, it's about trying to maximize the delivery potential for each one of our 211 sites. Inorganically as and when opportunity does present itself, we will weigh it. And in both cases whether organic or inorganic, we will weigh basically on, on the estimated returns based on our best knowledge at the time.

00:38:27
Suresh Nair
Lastly on the building of new sites, actually even in the nearer term, we are actively re-looking at our investments and the track record of delivery.

00:38:42
Suresh Nair
But more importantly what have we learnt from the location, the estimates, the actual delivery and so [is that] essentially we can be sharper and maximize on our returns and apply those learnings quicker every time we build a new, a new site.

00:39:00
Suresh Nair
So what we're not trying to do is look back at maybe the last 50 investments and try to broad brush and calibrate our adjustments moving forward, but on an every site basis… so I mentioned in the start we built 6… we are taking our recent station, seeing quickly what we can learn and making sure that the very next station that we do build, we implement those learnings as quick as possible… and can… and not be ashamed of calibrating in almost real time.

00:39:29
Bishen Bhalla
Thank you. Thank you for that answer gentlemen. And if someone else is, I can always come back and wait in queue, but if not I'll just go ahead and ask.

00:39:41
Burair Al Lawati
You know, I think there is there is a hand there.

00:39:43
Mahmoud Al Abri
Yeah, there is Mohammed. Bishen, we will come back to you once we… yeah. Go ahead.

00:39:52
Muhammad Daniyal Kanani
Thank you. I'll tell you before taking this, there are two questions from my side.

00:39:58
Muhammad Daniyal Kanani
The first one pertains to fuel consumption patterns in in the country, how do you see that going forward in 2024 and 2025… like what, what are the drivers, what radical changes are you seeing in the consumption going into the first, sorry, I mean first quarter of 2024 and then going forward. So that's my first question.

00:40:22
Muhammad Daniyal Kanani
And the second question is more like a structural thing. So could you like briefly go through the dynamics, the regulatory mechanism, the dynamics of pricing and margin, like just briefly go through, how much do you get on? Is it like on a per liter basis or a gallon basis or how much, how does it work? Thank you so much.

00:40:44
Lamees Al Lawati
The first question was on the fuel consumption and how what is our prediction our… [cut off by Muhammad Daniyal Kanani]

00:40:54
Muhammad Daniyal Kanani, Mahmoud Al Abri
First question is about the fuel forecast… [Cut off by Mahmoud Al Abri]
Did I get your question correct, Kanani? That you your question is more about how do we foresee [Cut off by Muhammad Daniyal Kanani] 
Yes, exactly. Not exactly fourth quarter, I'm just talking about like 2024 in general. How do you see the factor? What are the main trends?

00:41:16
[Unidentified Speaker from Main Panel]
Do you want me to?

00:41:18
Lamees Al Lawati
Yeah. No, let me start with [inaudible] and you can chip in. Thank you for the question.

00:41:23
Lamees Al Lawati
So the assumptions that we build our plan and our, you know, growth on are largely correlated with the, you know, with the macroeconomic indicators that we see from the market outside.

00:41:38
Lamees Al Lawati
In general, a rule of thumb obviously we have seen a bit of a shift in that in the years of COVID and post that.

00:41:44
Lamees Al Lawati
A bit of a slower start and slower recovery in the first year post-COVID, but then we are seeing different segments across different businesses are expanding and are growing.

00:41:55
Lamees Al Lawati
Our assumptions around the growth are very much linked to the GDP growth in country, the power of consumption. But there are certain other factors that we take into account as well.

00:42:07
Lamees Al Lawati
Population increase in country. Although we have always assumed that population in country was in the range to of 4 to 4.5 million in Oman, we have seen the drastic shift during the years of COVID, half a million reduction in [the] country. That percentage of them picking up and increasing gradually and looking forward, we base a lot of our indications and our assumptions on the, you know, publicly available statistics that are shared by the government, either NCSI or IMF.

00:42:36
Lamees Al Lawati
So that's the… you know… main assumptions that we apply; GDP growth population in country and then we obviously look at it from segment to segment. So the growth assumption that we apply in B2C is different than the growth assumptions that we factor in for B2B segments which are largely driven by the investments that we see in the country and government spending.

00:43:00
Lamees Al Lawati
So all the assumptions that we apply are, you know, largely driven and based from the assumptions that we see from the wider economic factors in the country.

00:43:09
Muhammad Daniyal Kanani
Alright great. So I mean do you like think that 2024 is going to be a conducive environment for fuel consumption given that the return of expats, more increase in population, GDP growth is going to be like decent?

00:43:26
Muhammad Daniyal Kanani
So and if there are any risk factors that you can identify like these could be the major risks in consumption.

00:43:33
Lamees Al Lawati
You know what – I can comment on it. It is a positive landscape indeed. We are looking at the period that looks, you know, good in terms of growth, in terms of the assumptions that we can apply… which serve as a base as well for us to continue investing going forward.

00:43:51
Lamees Al Lawati
And then again, the question whether we want to invest in number or we want to enhance the quality… and you know the operational excellence elements across our facilities and our service stations.

00:44:03
Lamees Al Lawati
So, we expect the growth assumptions to continue. We expect the landscape to continue being positive going forward – and we will continue to leverage all the opportunities that will be associated with that.

00:44:15
Lamees Al Lawati
The risk element… obviously operating in a downstream company, we will always be largely depend dependent on consumer demand. So any factors that might influence consumer demand will have a direct impact on us, whether you know it's any shift that we would see in employment rate and inflation in country as well as the purchasing power in general.

00:44:39
Suresh Nair
Daniyal, if I may add also to Lamees. One aspect moving forward which will be always there is the advancement in technology as well. So with the introduction of newer and more modern vehicles as well, we are seeing a pattern technologically in terms of improved fuel consumption.

00:45:03
Suresh Nair
So that that's another element taken into account when we, when we analyze or look at the at the future prospects. And that being said, we are in the mobility business and this was rebranded from being just the traditional fuel business. So we'll continue to position ourselves in terms of meeting the societies mobility needs, and that's where in this case as well, NFR plays a key part.

00:45:35
Lamees Al Lawati
And I think in addition to what Suresh has mentioned on the other non-conventional fuel lines. We are now embarking into a new journey into energy transition. So, as the new streams are, you know, being defined being opened, we will continue to position ourselves at the forefront of how we want to be part of this energy transition journey of the country. Burair has mentioned earlier that we have already started investments in certain areas. So we have 15 charging points already across these service stations.

00:46:05
Lamees Al Lawati
We continue to advocate and continue to have the dialogue very closely with the, with the authority and with the regulations on how we can be part of this journey and how we can together shape the future of energy transition in the country.

00:46:23
Muhammad Daniyal Kanani
Thank you so much.

00:46:23
Muhammad Daniyal Kanani
And then then second question regarding regulatory mechanism and the margins on per later basis or based on a percentage basis – how does that work?

00:46:36
Suresh Nair
Yeah, you're talking about the regulated margins?

00:46:39
Mahmoud Al Abri
Prices and margins.

00:46:41
Dr. Mohammed Al Balushi
So what's, what's the question? Sorry, do I call you Daniyal or Kanani? 

00:46:41
Muhammad Daniyal Kanani
Ha ha ha. Whatever, Whatever you like.

00:46:49
Dr. Mohammed Al Balushi
Ha ha ha.

00:46:49
Dr. Mohammed Al Balushi
Sorry, I missed… you know… you're talking about the margin and the regulation, but what's the question, I didn't get that.

00:46:56
Muhammad Daniyal Kanani
OK. So in particular I'm asking about how does the regulatory mechanism work in Oman? Are the margins based on per liter basis, per gallon basis or do you get like some percentage of the price at which the fuel is sold? How does that work here? Or is it like an unregulated market… that you can sell at whatever price you want?

00:47:16
Dr. Mohammed Al Balushi
Well, probably, I would say it's straightforward here. So pump prices are regulated. So whatever prices are being sold at the pump level, they're regulated by the government. They set the price every month.

00:47:36
Dr. Mohammed Al Balushi
There is a pricing committee… government pricing committee… that actually identify or list the prices. They meet before the end of every month and they set the price for the next month.

00:47:48
Dr. Mohammed Al Balushi
We haven't seen a change in the price for the last few months now. It has been fixed but whatever is there, it gets fixed by, it gets regulated by the government. The other bit is the margin. So regardless of the price, the pump price, whether it's 250 baisa or 120 baisa or even 1 Riyal – God forbid.

00:48:21
Dr. Mohammed Al Balushi
The margin for the oil marketing company is fixed and the margin for the operator is fixed. So that's how the equation of the regulated margin is done here.

00:48:34
Muhammad Daniyal Kanani
Would you be able to share that fixed margin?

00:48:38
Dr. Mohammed Al Balushi
Yes, of course. There is no… basically the margins for the oil marketing companies are on average of basically six-and-a-half baisa and it's about, it's not about (sic.) it's on average of seven baisa for the for the operator.

00:49:01
Muhammad Daniyal Kanani
Perfect. Thank you so much.

00:49:05
Mahmoud Al Abri
Thank you, Muhammad.

00:49:09
Mahmoud Al Abri
Anyone else’s team would like to ask? Bishen, you were actually… I think you were having another question before we move to Muhammad? You are on mute.

00:49:34
Mahmoud Al Abri
[No response] OK. Anyone else?

00:49:41
Burair Al Lawati
No, no more questions I think.

00:49:50
Mahmoud Al Abri
Great. So team, if there is no more question, I think we will come to a closure for this session. We would like to thank you again for attending participating. It was very engaging sessions and I'm looking forward to again see you next year Insha’Allah with our next IR session 2024 for that.

00:50:12
Mahmoud Al Abri
Thanks for that. Have a good day.

00:50:14
Dr. Mohammed Al Balushi
Thank you.

00:50:16
Burair Al Lawati
Thank you.

00:50:17
Suresh Nair
You thank you guys.

00:50:19
Mahmoud Al Abri
Thank you very much.

00:50:21
Mahmoud Al Abri
Bye.

Shell Oman Marketing SAOG Q4 Investor Relations - MSX Engagement Session

Duration: 59.48

0:00 – The video starts with a welcome screen. Audio begins at 0:20

0:20
[Burair Al Lawati]
Bismillah Rahman Rahim, Asalamualaikum, welcome everyone to our quarterly event

0.30
[Burair Al Lawati]
Thank you for attending our second session with the Muscat Stock Exchange.

0.43
[Burair Al Lawati]
Addressing the investors and the financial analysts and inviting you to participate in this virtual session,

0.50
[Burair Al Lawati]
which is held in compliance with resolution number E/109/2022 by CMA.

0.57
[Burair Al Lawati]
The main aim of this session is to discuss Shell Oman Marketing Company’s financial results for the 12 months ended 31st December 2022.

1:07
[Burair Al Lawati]

As you know the results were disclosed in MSX on 15th of February and subsequently published following the board's meeting by the end of the last month.

1.15
[Burair Al Lawati]

This was also discussed in our AGM that was held on March 9th which will be
highlighted by our CFO.

1.22
[Burair Al Lawati]

The financial statements and annual report have been uploaded on MSX and Shell Oman website last week, and our financial reports and directory reports were also published in the newspapers.

1.34
[Burair Al Lawati]

The agenda for the day is at on the screen, we will start with introducing the presentation from the company so if you can go please, Lamees.

1.43
[Lamees Al Lawati]

Hi everyone, Asalamualaikum and thank you so much for joining our second investors relations session.

1.49
[Lamees Al Lawati]

I am Lamees Al Lawati and I'm the Chief Financial Officer of Shell Oman marketing.

1.54
[Sultan Al Shidi]

Hi everybody thank you for your attendance as well, am Sultan Al Shidi, am incharge of people agenda HR facilities…facilities and services as well, in the capacity of a GM.

2.06
[Burair Al Lawati]

Thank you, thank you Sultan. So if we go next to our HSSE brief, as you know HSSE is our number one priority in Shell.

2.15
[Burair Al Lawati]

That is why we request you to make sure that you are safe and secure throughout this session and you can hear any potential alarms around you and evacuate if that happens.

2.25
[Burair Al Lawati]

Please get familiar with your surroundings and including the emergency exits, assembly points and be careful about any hot drinks around you…

2.33
[Burair Al Lawati]

…that may damage your laptop in case of a spill or can be hazardous to you.

2.38
[Burair Al Lawati]

We would also like to request all the audience to wait until the Q and A session, to present their questions…

2.44
[Burair Al Lawati]

…if you think of one during the session please feel free to target in the chat box and we'll come back to it in the Q and A time frame.

2.51
[Burair Al Lawati]

We request everyone to be on mute obviously, unless in the Q and A session when we'll go around the audience to take questions.

2.59
[Burair Al Lawati]

Everyone is welcome to share their questions and feedback.

3.03
[Burair Al Lawati]

But also we likely to request you actually to stick to the agenda of the day…

3.08
[Burair Al Lawati]

…in case of questions that are not relevant to the agenda items to them we will note them down and get back to you as soon as we have the answers.

3.16
[Burair Al Lawati]

Thank you and now let's start with the HSSE results for 2022.

3.22
[Burair Al Lawati]

As you can see Shell Oman Marketing Company ended 2022 with 365 days without loss of primary containment and 314 days without harm…

3.33
[Burair Al Lawati]

…which reflects about continued commitment which is strong to HSSE.

3.38
[Burair Al Lawati]

Unfortunately, we had one incident of lost time injury earlier in 2022 as shown in the screen.

3.45
[Burair Al Lawati]

The company invested in various initiatives to ensure HSSE Readiness…

3.49
[Burair Al Lawati]

…including emergency drills, seminars on worker’s well-being, security and process safety environmental Management, Health, road safety…

3.59
[Burair Al Lawati]

…and many other areas of HSSE that strengthen our culture of safety…

4.05
[Burair Al Lawati]

…and also continue to improve our leadership as a HSSE partner in the society.

4.13
[Burair Al Lawati]

Now let's move to my colleague, let me switch to Lamees, who is the CFO but also today as the Acting CEO to present the AGM and the financials from here.

4.23
[Lamees Al Lawati]

Sure, thank you Burair. Taking from Burair, just a confirmation to the investors who were able to attend and for the ones who are not able to…

4.31
[Lamees Al Lawati]

…so just quickly run through the AGM that was held on the 9th of March, in the Intercontinental Hotel…

4.37
[Lamees Al Lawati]

…and also virtually through the MCD's electronic platform to consider an approved agenda items.

4.43
[Lamees Al Lawati]

Now the summary announced that all the agenda items were approved including the board of directors report regarding the company's activities and financial position.

4.51
[Lamees Al Lawati]

The corporate governance report for the year, the Auditors report including financial statements as well for the financial year and the 31st of December 2022.

5:00
[Lamees Al Lawati]

In addition to that the proposed cash dividend of 57 baiza per share was approved and supported by the shareholders,

5.06
[Lamees Al Lawati]

As well as the sitting fees remunerations of the directors for the year ended 31st of December 2022, as well as the proposed remuneration fees for the upcoming year.

5:16
[Lamees Al Lawati]

The related party transactions and expenditures in support of Social Services are also considered by the shareholders and supporters.

5.24
[Lamees Al Lawati]

Finally the shareholders elected two board members to fill in the back room seats who are Ms. Asma Al Ghabshi and Mr Moosa Al Sharyani.

5.33
[Lamees Al Lawati]

Both are seasoned professionals who are part of the wider Shell Group organization and who come and join our board…

5.39
[Lamees Al Lawati]

…with a wealth of experience in the areas of Human Resources, Talent Development, as well as Contracting and procurement and business Improvement.

5:50
[Lamees Al Lawati]

The disclosures related to the resolutions that were approved by the shareholders during the AGM were immediately published on the MSX website following the AGM.

6:03
[Lamees Al Lawati]

Now, if we go through the financial performance of the company for the… for the last Financial year, and as Burair has mentioned…

6.12
[Lamees Al Lawati]

…the financial results were actually published and are available the detailed financials are available in our website as well as in the MSX platform.

6.20
[Lamees Al Lawati]

And the financial performance for the ones who had an opportunity to go through them have actually reflected growth…

6.26
[Lamees Al Lawati]

…like you have seen in the numbers in comparison to the same period last year influenced by the overall recovery that we have seen in the market in… in 2022.

6:35
[Lamees Al Lawati]

Now, our Top Line has reflected a growth of 25 per cent and our gross profit at 35.3 million riyals, was 18 per cent higher than the same period last year.

6.46
[Lamees Al Lawati]

We saw the volume growing gradually and towards the end of the year we had reported volume growth of about 16 percent.

6.53
[Lamees Al Lawati]

We have started slightly slower than expectation at the beginning of the year as the market was adjusting and was recovering post the pandemic…

7.00
[Lamees Al Lawati]

…but then we have seen gradual uplift and picking in a volume as the [inaudible] progress with a high speed reported in the third quarter of the year…

7.07
[Lamees Al Lawati]

…and afterwards in Q4 we have seen the volume and the market slightly flat I think.

7:12
[Lamees Al Lawati]

We have seen the demand picking in… in both segments of the business and the B2C and the B2B segments as well at different scales.

7.21
[Lamees Al Lawati]

we have supported the growth that we have seen in the B2C segment through investing in across the various segments that we are operating in…

7.30
[Lamees Al Lawati]

…a nd we have invested in six service stations six new service stations in strategic locations in the country during the year.

7:38
[Lamees Al Lawati]

And obviously these service stations contributed positively and to the growth of the business and to the higher volume that we have reported during the year.

7.48
[Lamees Al Lawati]

Now as… as the obviously the business picks and as the profitability fixed we obviously would expect classically for the cost to be picking as well.

7.59
[Lamees Al Lawati]

So we continued investing in… in good costs that are part of the overall strategic growth direction of the company,

8.06
[Lamees Al Lawati]

You would see costs like manpower have gone probably higher this year and consciously by the organization.

8.12
[Lamees Al Lawati]

Costs that are directly related to supplying and servicing the volumes that we have delivered during the year have also gone higher…

8.17
[Lamees Al Lawati]

So, things like operational costs, Logistics, Transportation costs and we have consciously also invested or picked up our marketing activities and our promotion and activities during the year.

8.28
[Lamees Al Lawati]

Now the cost of financing have also gone higher, part of it reflects the interest element related to the long-term leases that we're reporting on in our balance sheet.

8.39
[Lamees Al Lawati]

So, a significant amount of the interest of financing costs that we have reported during the year is actually related to that.

8.46
[Lamees Al Lawati]

But we have also seen the interest cost picking for borrowing like we have seen probably and like you have noticed in the industry in general.

8:54
[Lamees Al Lawati]

We have reported a net income of 5.7 million Omani Riyal and that was 58 percent higher than the same period last year.

9:03
[Lamees Al Lawati]

Now, Shell has the highest brand awareness and capability as a brand to the community in Oman through interactions…

9.08
[Lamees Al Lawati]

…with hundreds of thousands of customers and a network of over 200 branded sites with the material turnover and consistently profitable business performance,

9.16
[Lamees Al Lawati]

Some also contributes to the National economy through dividends, paying taxes, fees and loyalty while continuously investing for growth…

9.24
[Lamees Al Lawati]

…and help to create jobs as well as business opportunities and the value chain of the company.

9:30
[Lamees Al Lawati]

We also realized that the industry is now rapidly transforming through digitalization and new business models…

9:36
[Lamees Al Lawati]

…and that has also reflected in a lot of investments that we have done across the different segments uplifting the… the…

9:42
[Lamees Al Lawati]

…technological platforms that we're operating in and creating value propositions for our customers across…

9:48
[Lamees Al Lawati]

…the value chain we'll cover part of that during our business update later today and the company obviously remains…

9:53
[Lamees Al Lawati]

…committed to pursuing all opportunities within you to maintaining the company's growth and enhancing shareholder’s value at all times.

10.00
[Burair Al Lawati]

Thank you, thank you Lamees and now we'll move to Sultan for the people in part and the HR updates

10.06
[Sultan Al Shidi]

Thank you, Burair.

10.08
[Sultan Al Shidi]

So, honestly one of the critical changes we brought last year is to restructure our company that was successfully managed and delivered so…

10.18
[Sultan Al Shidi]

…we welcome our new management team.

10:22
[Sultan Al Shidi]

The objective of that restructuring was the matter of the global structure we were we are similar linear with the customer-first mindset so it's not only

10:33
[Sultan Al Shidi]

For just the existing business but to create new business and approaches which is competitive and agile from the outset…

10.42
[Sultan Al Shidi]

…as well we were we are like willing to deliver the world-class asset management and the most integrated value for some so honestly we would like to make sure…

10:53
[Sultan Al Shidi]

…that we make the best of the core capabilities and create and integrated teams with clear accountabilities enable quick decision making,

11.02
[Sultan Al Shidi]

We would use the overlap and simplify and improve… simplify and improve the support so and…

11:10
[Sultan Al Shidi]

…even we are like distributing the profit centre in a more spread manner at the
profit centre and…

11.18
[Sultan Al Shidi]

…we are managing cost because this is one of the main objective is it's a one about sustainability using the operating expansion…

11.27
[Sultan Al Shidi]

…and the combination of simplifying your organizational ways of working,

11.31
[Sultan Al Shidi]

So, on top of the restructuring as well we managed to Resource all those capabilities that we are looking for…

11.38
[Sultan Al Shidi]

…and willing to ensure that those capabilities are developed and are ready for the future.

11.44 - 11.53 (INAUDIBLE)

11:53
(Sultan Al Shidi)

As when the company has demonstrated its commitment to maintaining a value proposition and attraction retains the best talent…

11.59
(Sultan Al Shidi)

Providing them with the meaningful challenging rewarding roles and grooming them to become future leaders.

12:05
[Sultan Al Shidi]

Number of staff is 232 as of today and, we crossed the year with an Omanisation rate of above 96,

12.15
[Sultan Al Shidi]

There was a very healthy staff turnover rate and 2022, as well we inaugurated the new head office…

12:24
[Sultan Al Shidi]

…in a… from a sustainability view the new building has been designed taken to consideration the building research establishment environment assessment method.

12.34
[Sultan Al Shidi]

It's an international certification requirements with an approach to energy and efficient design following mean lean green structure.

12:42
[Sultan Al Shidi]

Other energy saving and sustainable measures considered during the construction phase as well including…

12.49
[Sultan Al Shidi]

…sourcing thicker materials, recycle- recyclable material made carpets, electric car charge points and solar power.

13.02
[Sultan Al Shidi]

Further investment were made in upgrading our parking with the solar… solar panel to reduce carbon emissions from our operations…

13.09
[Sultan Al Shidi]

…and reduce our power winds creating long… long-term added value for our shareholders.

13.15
[Sultan Al Shidi]

On top of that 23 tonnes of waste from the old building were recycled and they were given to make different boxes.

13.25
[Sultan Al Shidi]

In addition, we worked in introducing recycled and waste protection initiatives in our facilities and when it comes to powering lives…

13:36
[Sultan Al Shidi]

We introduce a comprehensive insurance and healthy support by creating to the needs of the diverse workforce…

13.43
[Sultan Al Shidi]

…ensuring care well-being and inclusion is admitted in everything we do.

13.48
[Sultan Al Shidi]

Finally, we are like allowing the opportunities to our use job-seekers students from colleges to come and join us on this journey of success.

14.00
[Sultan Al Shidi]

Therefore, we boarded seven adult interns, 33 Summer interns and all of them were like given the opportunity to learn and contribute to our agenda.

14:12
[Burair Al Lawati]

Thank you, Sultan for the HR updates and now let's move to the business update which will be covered by me.

14:20
[Burair Al Lawati]

So, in terms of Mobility the business continued to its commitment to offer world-class customer experience and operational excellence.

14.27
[Burair Al Lawati]

With at most commitment to HSSE being the core Focus in term as Lamees mentioned earlier,

14:33
[Burair Al Lawati]

The company invested in increasing its Network by adding six new service stations in… including in the Batinah Expressway as you may have might have seen.

14.42
[Burair Al Lawati]

Which brings the total service stations to 206. In the same time we continue to focus on our differentiated fuels which is the Shell V-Power or unbeatable clean performance fuel…

14:53
[Burair Al Lawati]

…and introduced also night shops in 2022, as well as converting three other shops to Shell Select brands.

15.03
[Burair Al Lawati]

In… in addition we continue to leverage our partnership in contract management to maximize the return from our integrated and diverse offering across our network.

15:13
[Burair Al Lawati]

As for energy transition we have already as a business into Mobility we have already started embarking that journey a while ago.

15:21
[Burair Al Lawati]

Including through Innovative and Sustainable Solutions to reduce carbon footprint in our substations.

15.29
[Burair Al Lawati]

This has been also showcased through the introduction of EV chargers for our E-mobility investments…

15.36
[Burair Al Lawati]

…and earlier in… in 2022 we also launched a number of or installed a number of solar panels, LED lights and high efficient appliances that help upgrading the efficiency of our sites.

15.51
[Burair Al Lawati]

From the fleet solution point of view it is focusing on increasing customer portfolio and strengthening its customer value proposition through digitalization and operational excellence.

16.01
[Burair Al Lawati]

It's worth mentioning that this is the actual 25th… 25th anniversary of the Shell Fuel Cards in Oman.

16.08
[Burair Al Lawati]

So, Shell Oman was the first to launch Fuel Cards in Oman back in the in those days. We were also the first to launch a vehicle recognition system a few years ago.

16:18
[Burair Al Lawati]

And we have a number of exciting plans in this area to enhance our customer’s experience make it more secure more efficient and contribute to their Fleet Management efficiency…

16:32
[Burair Al Lawati]

…as was as well as profitability, you may notice also some of them will be crossover into the B2C sector in a SME sector as well.

16.41
[Burair Al Lawati]

From lubricants point of view, the business witnessed positive recovery in the overall market of… in terms of demand despite the ongoing supply chain constraints and logistical challenges…

16:52
[Burair Al Lawati]

…which had impacted our overall cost in the finished lubricants and its profitability however the commercial lubricant segments not maintain its Market leadership…

17:03
[Burair Al Lawati]

…And grew volumes by winning extra market share with B2B customers as well as growing its B2C distributors volumes…

17.11
[Burair Al Lawati]

…and maintain strong footprints in the oil and gas sector and renewed this long-term partnership with valuable existing accounts.

17.19
[Burair Al Lawati]

In terms of export, we have increased our volumes in export market compared to their previous year…

17.26
[Burair Al Lawati]

…and we continue to leverage our ISO:9001 Certified Shell Lubricants blending plants (Inaudible)

17.33
[Burair Al Lawati]

… the only… actually it's the only ISO-certified lubricant blending plant of its kind in Oman.

17.38
[Burair Al Lawati]

So we promote ICV – In-Country Value through meeting the local demands, the needs of the local demands as well as exports and increasing our production for both markets.

17.52
[Burair Al Lawati]

Shell lubricants has also retained number one position globally as the leading supplier of automotive and industrial lubricants for 16 years.

18.02
[Burair Al Lawati]

And in terms of energy transition we have introduced a comprehensive Waste Management solution…

18.06
[Burair Al Lawati]

…that offers customers ability to treat waste in the most efficient and compliant manner legally and HSSE wise and also offer potential recycling ability.

18:15
[Burair Al Lawati]

In addition to carbon-neutral products we introduced to recycle plastic in our bottles which also helps our carbon footprint and respect for nature aspirations.

18.29
[Burair Al Lawati]

From Trade and supply point of view, HSE as well… continue to be a top priority with a focus on road transport safety and process safety to ensure goal zero.

18.41
[Burair Al Lawati]

To improve and Road Transport standards, artificial intelligence has been used…

18.46
[Burair Al Lawati]

…which in the system is called fatigue detection devices which were installed in our fleets of tankers, contracted fleets.

18.55
[Burair Al Lawati]

We have also worked with our partners to introduce a new Fleet of trucks that feature aluminium tankers and that helps the weight of the trucks…

19.02
[Burair Al Lawati]

…and as a result increase fuel efficiency and reduce both cost and carbon footprint.

19.07
[Burair Al Lawati]

We were able to achieve 12 percent increase in fuel efficiency leading to reduction fuel consumption and carbon footprint.

19:14
[Burair Al Lawati]

In terms of respect in nature and shareholder value we have worked to reduce waste by recycling products instead of disposing…

19.20
[Burair Al Lawati]

…which helped recovery of course and recycled also Old Stock to high standards of products which created additional savings.

19.31
[Burair Al Lawati]

You might have noticed from the structure that was presented by HR that there is a new business GM called low-carbon products and sectors.

19.39
[Burair Al Lawati]

This has been introduced as explained by a chart before to help our customers find ways to reduce their overall carbon footprint including in sectors that are difficult to decarbonize such as aviation, shipping or both freight and industry.

19.53
[Burair Al Lawati]

To help accelerate the transition to net-zero emissions, we built our own existing relationship with our stakeholders…

20:00
[Burair Al Lawati]

… such as energy suppliers, policy makers, infrastructure owners and consumers to support a sector-based approach.

20.09
[Burair Al Lawati]

This may have started with us little as going green in terms of paper use, invoicing and digitalization but also building on the existing businesses,

20:18
[Burair Al Lawati]

So in commercial views business experience growth in volumes despite challenging B2B Market environment and…

20:23
[Burair Al Lawati]

…marine business committed continue to commit to HSE and operation excellence and leveraging Global expertise to provide bunkering solutions to local and International customers.

20.33
[Burair Al Lawati]

We are also leveraging our retracted vessel which is also serving our customers in various ports in Oman…

20:43
[Burair Al Lawati]

In aviation business, compared to the last two years, the global Aviation and tourism sector experience increase in air travel.

20.50
[Burair Al Lawati]

The Company focused on retaining key contracts on Muscat International Airport and Salalah Airport who are continuing to apply efficiency and cost optimization solutions to its operation

21.00
[Burair Al Lawati]

To improve its profitability and continue to serving customers safely and reliably.

21:05
[Burair Al Lawati]

You remember that we had the disclosure back in November about Muscat International Airport but recently maybe two weeks ago only we disclosed the fact that…

21:16
[Burair Al Lawati]

…we won 33 percent of Oman Air volumes in this in Muscat International Airport which shows the positive trajectory in the business and the value we are bringing to our shareholders and customers.

21:28
[Burair Al Lawati]

And finally I'd like to talk about CSR.

21.33
[Burair Al Lawati]

The Company is actually in the process of updating CSR strategy and alignment with this vision and public strategy.

21.39
[Burair Al Lawati]

Taking into account consideration that are related to the pillars and directives of Oman Vision 2040 and the…

21:47
[Burair Al Lawati]

…local community requirements as well as the 2030 United Nations sustainable development goals (SDG).

21.54
[Burair Al Lawati]

The new CSR strategic themes would be Community Systems and Enterprise development, environment and energy transition, and people well-being.

22.02
[Burair Al Lawati]

As approved by AGM this year for 2023 we have earmarked 75000 Omani Riyals towards supporting social services.

22.11
[Burair Al Lawati]

And you can see in 2022 what we have spent our CSR Budget.

22.18
[Burair Al Lawati]

Alright so with this we end our actual presentation for in terms of what we have to present here, but we are ready to take questions…

22.30
[Burair Al Lawati]

...please feel free to post them in the chat box so if you want to raise the hand and we will unmute you to ask your questions

(SILENT ENSUES)

22:46
[Burair Al Lawati]

Okay… okay we have one question here it's…

22:49
[Burair Al Lawati]

…can you scroll up, yeah that's right okay, so let me read.

22:54
[Burair Al Lawati]

Shell Global has declared that they have reached Peak production to 2019 the world production reduced by one to two percent to 2030. They've also guided you know and then in addition to fill in filling stations… (inaudible)… more aggressive it is a valid observation so what would be your guidance thoughts on… on the way forward?

23.17
[Burair Al Lawati]

Okay, so I think this question just to, it's on the chatbox from… is it from Deepak?

23:27
[Burair Al Lawati]

From Deepak, Yes.

23.28
[Burair Al Lawati]

So, I would...what I would say is that while some of the… the notes that have been shared there is to do with the Upstream business.

23.36
[Burair Al Lawati]

So, obviously Shell Oman marketing company is a player in the downstream business and you know leave any question to do with upstream…

23:45
[Burair Al Lawati]

…to them and upstream to them. In Upstream you can reach out to Shell Development Oman. But what we have in downstream is that we…

23:53
[Burair Al Lawati]

…have a long-term investment plan to increase our expansion and network of service stations as you can see from our presentation…

24.00
[Burair Al Lawati]

…in 2022 we increased the number of service stations to 206. and these are in fact a very strategic locations

24:10
[Burair Al Lawati]

Batinah expressway and many other in fact even in one location in Muscat and others so…

24:15
[Burair Al Lawati]

that...that is a demonstration to our commitment to continue investing and expanding our Network what… what matters

24:23
[Burair Al Lawati]

is that we continue being profitable, feasible with I don't know the long-term shareholder value that we can create

21.31
[Burair Al Lawati]

and also with the kind of integrated model that also answers to future needs of Motors so it's not only fuels that we focus on there's what we

24:41
[Burair Al Lawati]

Call non-fuel retail, there's also the EV charging capabilities in network that we want to integrate in the sustainable mobility of the world…

24.51
[Burair Al Lawati]

…if we would like to talk about it so some of our…our commitment to Oman and to expanding and investing Oman

25.00
[Burair Al Lawati]

Has not gone anywhere lower than before in fact we are more committed to it than ever to this area.

25.09
[Burair Al Lawati]

So, let's take another question here, any other question please feel free to raise the hands…

25.17
[Burair Al Lawati]

Can we (inaudible)…

(INAUDIBLE)

25.31
[Burair Al Lawati]

Joice Mathew, Can you hear us?

25:38
[Burair Al Lawati]

Can you unmute yourself please?

(INAUDIBLE)

25:46
[Lamees Al Lawati]

Perhaps you can type the question in the chat box if there is there are audio issues

(INAUDIBLE)

26:03
[Joice Mathew]

Hello…hello, am I audible?

26.08
[Burair Al Lawati]

Can you hear us Joice?

26.10
[Joice Mathew]

Yes

26.11
[Burair Al Lawati]

Yes, go ahead.

26.13
[Joice Mathew]

Thank you very much for the presentation.

26:17
[Joice Mathew]

I have a few questions now primarily the first… first ones are related to your operational aspects.

26.25
[Joice Mathew]

could you share some details about what's your average throughput persuasion on the retail side,

26.31
[Joice Mathew]

The capacity of your blending Plant, your number of COCO CODO DODO split up of the sites these things…

26.40
[Joice Mathew]

…basically, an overview of the business that Shell is doing and what's the volume that we are delivering right now?

26.50
[Burair Al Lawati]

Oh the last one being what sorry?

26.53
[Joice Mathew]

The volume that we are delivering on different … different segments.

27:02
[Burair Al Lawati]

Okay, thanks Joice for the question but I think you may probably understand that while these questions are important in terms of volume to us…

27.13
[Burair Al Lawati]

…but these are actually very classified numbers because they would be putting our company in a… in a competitively disadvantage way.

27.23
[Burair Al Lawati]

However what I can say to you is that currently what we…we… we wouldn't build any stations

27.32
[Burair Al Lawati]

Without having a long-term plan and feasibility that meets our expectations.

27.37
[Burair Al Lawati]

There are things that are to do with volumes but also to do with what we call non-fuel retail so…

27:42
[Burair Al Lawati]

…including our the Select shop, the convenience retailing, Car Wash, lubricant sales and… and other incomes so… so…

27:51
[Burair Al Lawati]

…average throughput per site may not be indicative of you know how well the site is doing and that's why we wouldn't want to put it there out without context

28.01
[Burair Al Lawati]

the other thing is the COCO CODO DODO (sic.) model is not something that the two options that we have in our business being in shell company we have different ways of

28:09
[Burair Al Lawati]

operating and again uh… very internal and that's subject to a lot of confidential contracts with the landlords…

28.16
[Burair Al Lawati]

…but what we have been working lately what I'd like to give you is that late in the last year or so we have been looking at

28.25
[Burair Al Lawati]

integrating our business model more than ever so that means you know we look as I said earlier looking at one side integrated (ly)

28:33
[Burair Al Lawati]

In terms of the income in terms of source of income and linking it to the experience of the motorists…

28.41
[Burair Al Lawati]

….and through the apps through the offerings that we have rather than having separate operators…

28:46
[Burair Al Lawati]

…in each site and for in terms of overall volume and each business as I said earlier that you know there are…there are

28.56
[Burair Al Lawati]

agencies in the market that would charge millions to give that those but unfortunately we are also restricted by the regulators…

29.04
[Burair Al Lawati]

…and what we can provide so I would… I would refer you to ORPIC and National… also in a statistics Centre…

29:10
[Burair Al Lawati]

…that gives the overall volumes in each sector rather than a business for each company which I understand would be very difficult to share publicly.

29.20
[Lamees Al Lawati]

And I think Burair on what you have just answered regarding the split or the volume contribution by the line of business it's commercially sensitive

29:29
[Lamees Al Lawati]

information so you would notice that in a lot of our publications and a lot of our press conferences and all we don't

29:35
[Lamees Al Lawati]

actually go into the actual number per litre but then if it helps in our financial statements

29.42
[Lamees Al Lawati]

in node number 19 we provide a bit more of a narrative and a disclosure on the actual revenue split across the two big sectors that we have

29.51
[Lamees Al Lawati]

and you know you could… you could refer to that if it helps so out of the 499 million revenue that we have reported we have declared at 441 million…

30:00
[Lamees Al Lawati]

…out of that was related to the mobility segment and you know if it helps build some sort of a context that on the numbers I think

30:06
[Lamees Al Lawati]

there was a question about the lubricants blending plant capacity as well

30.10
[Burair Al Lawati]

Yes, a capacity of throughput in both cases I think we wouldn't be able to share the volumes as well. I think that's also sensitive, right?

30:21
[Lamees Al Lawati]

We might not necessarily quote actual numbers in here but just to provide a bit of context on where do we supply the lubricants,

30.29
[Lamees Al Lawati]

so majority of our lubricant supplies are actually blended and lubricants blending plants – the only one that we have in the country…

30.35
[Lamees Al Lawati]
…and the one that is next doors here Mina Fahal the… the supplies and the production of that lubricants blending plant is…

30:43
[Lamees Al Lawati]

…serving the local market at 40 percent split and 60 percent of that goes to the export market so it covers the regional demand in neighbouring countries as well.

30.53
[Burair Al Lawati]

And just for your information also so in addition to retaining number one brand positioning as a lubricant supplier or producing company

31:03
[Burair Al Lawati]

We also believe that we have the market leadership in terms of lubricants so that helps.

31.10
[Burair Al Lawati]

I hope that answers your questions.

31:13
[Burair Al Lawati]

Anyone else or Joice do you have any other questions or anyone else would like to ask any other questions, please feel free?

31:19
[Joice Mathew]

Yes I have a follow-up question, you just said see one… one comment that I have…

31:25
[Joice Mathew]

…is it's only in the last three to five years that shell has… has not been disclosing these numbers if you refer

31:32
[Joice Mathew]

your earlier financial statements and your annual reports or even your quarterly statements

31.38
[Joice Mathew]

all these numbers were given very clearly and in a detailed manner

31.42
[Burair Al Lawati]

Yeah.

31.43
[Joice Mathew]

…so… so now I don't know how when… when this has been started you know
this has been classified…

31.50
[Joice Mathew]

…and all these things because as you as you've mentioned the NC size statistics give
the total numbers…

31.57
[Joice Mathew]

…but there are only three players and it's a very open market it's only it's not open to The Outsiders but it's open internally for all the players,

32.08
[Joice Mathew]

So my… my take on that is you know it's not so much classified an information but it's up to you know to decide whether to give it or not…

32:20
[Joice Mathew]

…and if you're being an, Shell being a you have a parentage of Shell Global Royal Dutch Shell and that company gives a lot of information to…

32:31
[Joice Mathew]

…the public shareholders and I would appreciate if you can follow the same you know the same culture in… in terms of addressing the shareholder request.

32.44
[Joice Mathew]

So that’s…that’s just a comment and my follow up question is now you have said that there is no COCO or DODO.

32:52
[Joice Mathew]

So am I to understand that DOCO is the only model that you're following?

32.58
[Burair Al Lawati]

Well, see what I would say is that first of all thanks for your feedback and we'll take it into account and see how that goes.

33.04
[Burair Al Lawati]

But I would like to correct one thing is that the Royal Dutch Shell is no longer there it's called the… in fact, it’s referred to as… Group Shell…

33.12
[Burair Al Lawati]

…because it moved its headquarter to the UK for… for over a year now but anyways, in terms of the business model…

33.24
[Burair Al Lawati]

…we are as I said in the last year or a little bit more started to look at revising some of our contracts with… with a number of landlords…

33.33
[Burair Al Lawati]

…and operators to make it more integrated now whether that is called COCO or CODO or otherwise and

33:40
[Burair Al Lawati]

probably we are looking at new ways of doing business models especially with the new realities in the market

33:45
[Burair Al Lawati]

whether it's things to do with real estate or to do with the new… new business income or revenue streams

33:53
[Burair Al Lawati]

From non-fuel retail or to do with even EV going forward and any others so I …I

33:58
[Burair Al Lawati]

think calling it COCO or CODO now externally would be undermining the actual reality so I will, what we… what we do is that we like to take this note

34:10
[Burair Al Lawati]

and maybe in the next session share with you what is it that we are talking about a little bit more

34:16
[Burair Al Lawati]

as you as we just as I said started embarking that journey and the integrated way of doing business but uh let me (inaudible)

34.27
[Burair Al Lawati]

excellent thank you Joice but thanks for your feedback and as I said we'll look into it yeah.

34.32
[Joice Mathew]

yeah ,sure can I…can I ask a few more questions

34.35
[Burair Al Lawati]

Sure… sure, shoot it…

34.36
[Joice Mathew]

Yeah …yeah fine thank you uh so Lamees just mentioned about this segmental breakup

34.44
[Joice Mathew]

is that the only thing that you can provide or will you be able to provide us the revenue breakup for retail, commercial, lubricant, marine business and NFRs.

34:54
[Lamees Al Lawati]

So if you if you are referring to the node that I just mentioned – node number 19 of the financials…

35.01
[Lamees Al Lawati]

… you would see those that a majority of the revenue breakdown is you know already provided as a split so we've provided Aviation and Mobility

35.09
[Lamees Al Lawati]

which together I think make more than 90 or 95 percent of the revenue breakdown
the other businesses that you have mentioned

35.16
[Lamees Al Lawati]

are much smaller relatively and you know if you would observe the …the reporting that we have followed it's consistent with the industry reporting

35.23
[Lamees Al Lawati]

and it's aligned with the competition as well you've also mentioned that Shell Group probably provides much more disclosure.

35.29
[Lamees Al Lawati]

Now shell adopts different approaches in the different markets than they operate in

35.33
[Lamees Al Lawati]

So we observe and we see what other markets are doing but we make or

35:37
[Lamees Al Lawati]

we adopt what makes sense here for us locally in a way that doesn't jeopardize our competitive position.

35:44
[Joice Mathew]

Yeah I understand… I understand so you have a classification called others…other Revenue 35 million so what …what are those items including

35.53
[Joice Mathew]

Is it only NFRs or is it something else or

35:57
[Joice Mathew]

Does it include the marine or commercial business or lubricant business?

36.01
[Lamees Al Lawati]

So NFRs as a revenue stream is classified as other income, it's not reported as Revenue as a headline number.

36.09
[Lamees Al Lawati]

The others that you see as part of the classification largely relates to the businesses that you have mentioned.

36.14
[Lamees Al Lawati]

So, it's marine, fuel Marine lubricants, the lubricant segment itself as well as any other smaller businesses that we might be having.

36:22
[Joice Mathew]

Okay… okay thank you and would you be able to give us some you know indication on what the margins that you

36:28
[Joice Mathew]

are getting on the retail side for let's say the… the normal fuel, the super the V-Power and Diesel?

36.37
[Joice Mathew]

If I understand, earlier I had some retail margins like 17… 17 Baizas for the M91 and for Super the same and then for diesel around 13 Baizas per liter

36.50
[Joice Mathew]

So are they the same or is there are there any changes in… in the margins?

36.57
[Lamees Al Lawati]

There hasn't been any change in the margins and the margins, you know Joice, are regulated by the government

37.03
[Lamees Al Lawati]

they are set by the authorities, they're not determined by the company.

37:07
[Lamees Al Lawati]

For majority of the fuel grades that we supply except for the differentiated fuel that we have Shell V-Power

37:13
[Lamees Al Lawati]

Which is set by company, but a majority of the… of the grades that you have mentioned follow the government guidelines in that regard

37:19
[Lamees Al Lawati]

and they have been the same like you know we have followed or the approach or
the structure that has been mandated by the government.

37.30
[Joice Mathew]

is there any… any plans for of Shell

(PHONE RINGS)

37.34
[Joice Mathew]

or the oil marketing companies of for the oil marketing companies all from the… the refineries the

37:42
[Joice Mathew]

Authorities, that there could… be there could be any changes in the fuel margins in the future

37:48
[Joice Mathew]

is that something that you have ever thought about?

37.53
[Burair Al Lawati]

Actually I think even last meeting we had, there was a question of such and as we said you know

38.00
[Burair Al Lawati]

since we don't really control the margins really, we operate according to the regulations and the laws in the country

38.07
[Burair Al Lawati]

And… but we make sure that we do share our views on this topic and others

38.15
[Burair Al Lawati]

transparently and openly through the right channels about our belief and how we would like to see in terms of

38:23
[Burair Al Lawati]

advocacy and policy making to grow together this sector and this business, not just for our shareholders benefit

38.34
[Burair Al Lawati]

but also for the overall society in the country so the so our channel… channels of communications will be relevant

38:42
[Burair Al Lawati]

stakeholders are always open and very transparent… transparent in the most ethical way.

38:48
[Burair Al Lawati]

Yeah, but I wouldn't go into particulars about what… what really believe should the margins be on what

38:55
[Burair Al Lawati]

should there should be higher or lesser the answer is really left to be regulators to decide and we…we just you know operate as per the law.

39.04
[Joice Mathew]

Okay thank you and coming to… coming to…coming to your margins I've seen that now this year 2022 has been the lowest

39:12
[Joice Mathew]

in terms of EBITDA margins which you have reported and we haven't I agree that you know we haven't come out of

39:19
[Joice Mathew]

this COVID issues but even during the COVID days we had higher margins and
even pre-covid we had better margins

39.27
[Joice Mathew]

but this 2022 despite the revenue you know reaching very close to the pre-covid levels almost 90 percent we have recovered,

39.37
[Joice Mathew]

still the margins, the EBITDA margins are still at 3.5 per cent what are the reasons for this erosion in margins that you have that we

39:47
[Joice Mathew]

are seeing and what's our margin outlook as a management what are your actions that you have taken

39.54
[Joice Mathew]

to protect the margins for the shareholders

39.57
[Burair Al Lawati]

Okay… okay Joice, as much as I enjoy the interview here okay but this will be the last question if you don't mind, I'm going to let the CFO for answer this and then…

40:06
[Burair Al Lawati]

… give answer please yeah so Lamees please feel free to answer.

40:10
[Lamees Al Lawati]

Yes, absolutely.

40.12
[Lamees Al Lawati]

So the question around margins Joice and you probably have passionately been following our financial results

40:18
[Lamees Al Lawati]

And you've actually quoted numbers and Trends which is great and fantastic

40.21
[Lamees Al Lawati]

but then if although we are referring to 2022 as a year of you know after COVID, we are still absorbing some of the

40:30
[Lamees Al Lawati]

aftermath related to the pandemic and you know for us to be able to gain our position again we had to take certain

40:37
[Lamees Al Lawati]

calls to revise the…the margin across all in certain segments for us to be able to you know capture our position

40:43
[Lamees Al Lawati]

again to grow our Network share the volume share. In addition to that you might have also closely

40:49
[Lamees Al Lawati]

monitored the volatility that we have seen at the base oil prices so it's not only a fuel marketing company,

40.56
[Lamees Al Lawati]

a big segment that we operate with is actually or operate and is lubricants as well. Now the lubricant supply chain has absorbed a big hit

41:03
[Lamees Al Lawati]

especially towards the beginning of the year when the base oil prices were reporting a continuous increase

41:09
[Lamees Al Lawati]

Now that volatility has impacted us proportionately and you know that impact has been absorbed within the

41:14
[Lamees Al Lawati]

Gross Margin numbers that you have seen. Now as the year progressed and as the base oil prices stabilize to a certain extent,

41:21
[Lamees Al Lawati]

we were able to improve our gross margin outlook as they get progressed but

41:25
[Lamees Al Lawati]

that hit from the first quarter was… was something that we have accounted for.

41.30
[Lamees Al Lawati]

Now in the aviation segment you would also understand that you know… for a segment like that that is based or the

41:38
[Lamees Al Lawati]

the hydrocarbon off is actually monitoring and reflecting and absorbing the international movement in prices

41:46
[Lamees Al Lawati]

In certain parts of the year we have also reported negative price exposure related to the stock that we were holding in hand at that point in time

41.55
[Lamees Al Lawati]

It wasn't… it wasn't significant or material in terms of value but important to share for… for completeness, yeah.

42:04
[Burair Al Lawati]

Thank you, Lamees.

42.05
[Burair Al Lawati]

If I can go to and, thanks Joice again for your really interesting questions.

42.11
[Burair Al Lawati]

It will help us prepare later so thanks for that.

(INAUDIBLE)

42:15
[Joice Mathew]

I will …I will take… I'll take you know exit the queue and go back side so no so that
others will also will be asking then I'll come back, Thank you.

42.24
[Burair Al Lawati]

Thank you Joice.

42.25
[Burair Al Lawati]

So, we have questions from Shaheen here in the chat box.

42.28
[Burair Al Lawati]

Oman has target… targeted 79 percent EVs on the road by 2035, how's your retail expansion strategy changed, with this objective could you expand?

42.39
[Burair Al Lawati]

Okay so in terms of EV charging actually as you may know the Group Shell has already embarked on a very ambitious

42:46
[Burair Al Lawati]

Strategy expanding the number of EV charging points across the world.

42:52
[Burair Al Lawati]

There are targets by 2030… there are targets by 2025… and targets by 2030.

42:59
[Burair Al Lawati]

In…in terms of numbers of millions – yeah – here globally speaking however locally we have already started that journey as you

43:06
[Burair Al Lawati]

may have already done some research to see that we've already put a number of charging points so far in… in a few stations.

43:15
[Burair Al Lawati]

This year also we have a plan to expand that number but the difference is that we are doing it in a very strategic way rather than

43:26
[Burair Al Lawati]
just you know… you know just putting it there for the sake of EV we are… we
are studying the markets

43.33
[Burair Al Lawati]

We are talking to customers, we are talking to OEMs, talking to Partners in the government and non-government sectors as well

43:42
[Burair Al Lawati]

To see how we can build and support the infrastructure of EV in Oman and also how can we integrate that into our retail business

43:51
[Burair Al Lawati]

To be able to create value for the consumer as well as for the shareholder we also are looking at the best

43:59
[Burair Al Lawati]

practices in the group and Shell to see what are the things that are working in other markets whether it's in Europe…

44:06
[Burair Al Lawati]

…or Asia in America and other markets to see how can we make it most cost-effective model for this business

44.16
[Burair Al Lawati]

and also to see how we can still create In-Country Value and support for our partners in Oman… maybe if you're working

44:24
[Burair Al Lawati]

with Omani SMEs or by bringing some of the technologies locally but we are exploring all these options

44.33
[Burair Al Lawati]

and… and one of the reasons what you may see actually why I'm currently as… talking to you as GM of Strategy and Energy Transition

44.45
[Burair Al Lawati]

while last time I was your GM of Public Relations and Business Development

44.49
[Burair Al Lawati]

So there will change in the structure of the company as well to you know to proactively

44.58
[Burair Al Lawati]

address these changes yes, so EV is one of them but even other energy transition related topics as well.

45.06
[Burair Al Lawati]

Okay, any other questions?

45.10
[Burair Al Lawati]

Okay so, Shaheen also… are you looking at the costs of capital increases this is likely to affect your dividend payout

45:16
[Burair Al Lawati]

strategy or fuel station expansion going forward also are you considering expansion in the region?

45.25
[Burair Al Lawati]

Lamees?

45.26
[Lamees Al Lawati]

Yeah and thank you for the question Shaheen and obviously we see dividend distribution as an important

45: 32
[Lamees Al Lawati]

value proposition for our investors, as we have demonstrated throughout the you know the dividend distribution history we had

45.42
[Lamees Al Lawati]

Now we cannot provide an accurate assumption on the direction of the company because the dividend the decision

45.46
[Lamees Al Lawati]

is based on a number of factors including the profitability of the company and the current financial year the cash requirements for operation and purposes

45.54
[Lamees Al Lawati]

as well as the long-term growth of strategy that we have as a company we… we tend to look at all of these

46:02
[Lamees Al Lawati]

different components together to arrive at Define and Dividend Decision for the year which will obviously go to the

46:08
[Lamees Al Lawati]

boards for approval and then the… the shareholders through the AGM. So it's too soon to make any conclusions depending

46:15
[Lamees Al Lawati]

on how this financial year would be ended, how do we really prioritize our investments and we also observe what

46:21
[Lamees Al Lawati]

sort of regulations and how the market moves around competitively as well for us to arrive with the final dividend decisions

46.28
[Lamees Al Lawati]

or we find an investment decisions that we would like to adopt in any particular year.

46.33
[Lamees Al Lawati]

so just to answer the questions I think it's too soon to make any conclusions out of that but you know

46:38
[Lamees Al Lawati]

they go hand in hand any Dividend Decision that we'll make will take into considerations all the factors that I've mentioned

40.43
[Lamees Al Lawati]

including the capital...Capital Department as well.

46.47
[Burair Al Lawati]

Ok, Thank you Lamees,

46.48
[Lamees Al Lawati]

I think there was a second part of the question, whether we are considering expansion in the region?

46.53
[Burair Al Lawati]

Okay so actually you know, Shell Oman Marketing Company is licensed to operate in Oman but that doesn't mean

46.59
[Burair Al Lawati]

that we don't really have business in the region through our exports of products and services so in that sense

47.08
[Burair Al Lawati]

if you're talking about the retail business of Mobility itself we're not really licensed to be playing in the region at the moment

47.18
[Burair Al Lawati]

nor that we are exploring that but we have already for many, many years been exporting our lubricants from our blending plant in Mina Al Fahal

47.28
[Burair Al Lawati]

to many Regional markets, 16 different countries…

47.32
[Burair Al Lawati]

…including markets in the GCC and others and we are always exploring ways to increase the and grow that segments

47.40
[Burair Al Lawati]

and our that will be revenue stream.

47.43
[Burair Al Lawati]

Okay any other ones?

47:49
[Joice Mathew]

Can I come again?

47.51
[Burair Al Lawati]

Joyce, yeah sure.

47.52
[Joice Mathew]

Yeah… yeah okay thank you and you know as a follow-up to your answer for the decline in margin…

47.58
[Joice Mathew]

See we are contributing only the… the things that you have mentioned the lubricants and the NFRs and Aviation.

48.08
[Joice Mathew]

These are contributing a total of only 11 percent of the total sales. So you know are we seeing

48.13
[Joice Mathew]

that there's a significant erosion in margin

48:17
[Joice Mathew]

because you know as your gross contributions in the retail segment

48:23
[Joice Mathew]

the fuel segment is almost stable

48.26
[Joice Mathew]

so does that mean that 2022 so significant volatility in… in… in the aviation prices and…and also on the lubricant side?

48.39
[Lamees Al Lawati]

Yeah thank you for the follow-up question Joice.

48.42
[Lamees Al Lawati]

It might not necessarily be proportionate and I've also mentioned in my… in my response earlier

48.49
[Lamees Al Lawati]

that we have taken conscious calls as well to revise the margins in certain segments now when we say Mobility

48.54
[Lamees Al Lawati]

it's not necessarily only the B2C segment that we have which is the filling station.

48.58
[Lamees Al Lawati]

similarity is much broader in the definition of shell to include the fleet card business for example the home-based business

49.04
[Lamees Al Lawati]

was part of the mobility segment as well in the year 2022 before it got reclassified this year as part of our low-carbon products and segments.

49.14
[Lamees Al Lawati]

So in these other business areas it was a conscious goal that the company

49.19
[Lamees Al Lawati]

has decided to you know it's a trade-off between actual volume, market share, market position as well

49.24
[Lamees Al Lawati]

as the margin that you'd like to retain within the organization. So, I think it's the combination of factors

49:29
[Lamees Al Lawati]

Including the ones I have mentioned in lubricants so although lubricants might not be so big in terms

49.34
[Lamees Al Lawati]

of the actual contribution to the revenue number but profitability wise the… the business is you know a big contributor as well.

49.44
[Joice Mathew]

Okay…okay all right thanks and I have another question on your market share

49.50
[Joice Mathew]

your market share is continuously dropping. Earlier Shell used to be very aggressive in the market

49.55
[Joice Mathew]

and you know your market share was growing but recently we are seeing here market share is coming down

50.02
[Joice Mathew]

even though your (inaudible) increasing but and the total number of stations are increasing

50.07
[Joice Mathew]

but essentially we are seeing the market share dropping and that's… that's not a very favourable situation that we would anticipate as shareholders.

50:18
[Joice Mathew]

so what's… what's your call on the market share but will you be looking at the market share retention or will you

50:25
[Joice Mathew]

be looking at them at you know growing at this at the current pace and maintaining the current margins?

50.33
[Burair Al Lawati]

Okay so Joice, in terms of market share…

50:36
[Burair Al Lawati]

…obviously, a sector by sector to be a different kind of situation and really there are sometimes strategic

50.44
[Burair Al Lawati]

kind of approach to whether to go for the volume or whether to go for the bigger margins, right?

50.49
[Burair Al Lawati]

So depending on the business that we talk about and you know – and accordingly historically as we said historically,

50.55
[Burair Al Lawati]

until the COVID years… although I don't want to go into details of that but you would say how as you said

51.01
[Burair Al Lawati]

we…we the market leadership was always on the side of Shell. Now when business realities change

51.08
[Burair Al Lawati]

and when you go through business transformation as we mentioned a lot new Investments

51.13
[Burair Al Lawati]

new digital… digitalization while also taking into account that in order to with our business continuity throughout

51.21
[Burair Al Lawati]

the last two and a half years or three years with the pandemic, there were kind of reprioritization of what to go for

51.32
[Burair Al Lawati]

and what you're saying is that us taken a little bit I would say kind of a small… a small pause to… to re-strategize and go for the bigger picture

51.45
[Burair Al Lawati]

which is not about only tomorrow no we talk about a very long term

51:49
[Burair Al Lawati]

commitment to this to the shareholders, to the country, to the society so you see us now talking like

51:55
[Burair Al Lawati]

you can see our… our language has also changed while you know in the in

52:00
[Burair Al Lawati]

generally speaking in the market it would be focused on you know bottom line, we talk about

52:08
[Burair Al Lawati]

our energy transition explanations, net-zero carbon emissions, supporting decarbonization

52.15
[Burair Al Lawati]

and we see the value in investing in these long-term approaches

52:18
[Burair Al Lawati]

one also we don't mean like we are ignoring the actual bread and butter of the business. We still put our focus in

52:24
[Burair Al Lawati]

it and make sure that we maximize value for the shareholder but… but the last two or three years picture is not

52:31
[Burair Al Lawati]

necessarily the result of the of a normal way of doing business it's more

52:37
[Burair Al Lawati]

of the kind of long-term strategic… long-term decisions that we had to make

52:44
[Burair Al Lawati]

which even Lamees mentioned earlier and certain decisions we had to make to protect the company and the shareholder value

52:52
[Burair Al Lawati]

our employees, their also values and and go for a bigger Sprint… it's a marathon at the end of the day

52.59
[Burair Al Lawati]

and…and again the example, the restructuring that we're making it so transparent to you as investors community

53.07
[Burair Al Lawati]

and to our shareholders. This is one example of what we are planning for the future of this company.

53.13
[Burair Al Lawati]

You know we have been in this country for more than 65 years, right, so as Shell Oman Market… (sic.) as a downstream business.

53.19
[Burair Al Lawati]

We have been a publicly listed company from 1997. Our long-term high dividends payouts, our PE ratio, and our indicators

53:30
[Burair Al Lawati]

historically speaking are actually what makes us even more motivated and excited to… to push and create this value

53.42
[Burair Al Lawati]

that you know are sort of seeking as a shareholder.

53:45
[Burair Al Lawati]

Yeah, that's what I can say about your question for now.

53.50
[Joice Mathew]

Yeah, thank you.

53.51
[Joice Mathew]

Now that is that… that is primarily for from a modelling perspective to know what's your… you know… Capex plans and everything because of

53:59
[Joice Mathew]

the last two years we have you know very stable Capex so just wanted to

54:04
[Joice Mathew]

check you know whether your Capex will change significantly over the future

54:09
[Joice Mathew]

or should we be looking at you know on an average around six million …six million Riyals as Capex?

54:18
[Burair Al Lawati]

Uhh… Do we disclose of the Capex of the business in the last 3 years?

54.23
[Lamees Al Lawati]
We do some part of our financial statements but I think the question is more on the long-term expansion…

54:30
[Lamees Al Lawati]

We don't really disclose publicly right so I think Burair has covered it in the narrative mentioning that we continue to

54:37
[Lamees Al Lawati]

be committed to growth, to you know being the pioneer in…

54:42
[Lamees Al Lawati]

…introducing any or capitalizing on any new opportunity in the market but at this stage

54.49
[Lamees Al Lawati]

we don't really share any absolute numbers in terms of where they really want to invest and how much the quantity of that investment will be.

54.57
[Joice Mathew]

See that that again leads to… you know… another answer of your question to Shaheen about the dividends so you know?

55:04
[Joice Mathew]

We …we've been seeing that there is earlier Shell had a high payout ratios

55:10
[Joice Mathew]

and in the meantime it was reduced and now you are now reaching back to 100 percent payout so now just wanted to gauge

55:16
[Joice Mathew]

how much of the dividends and everything you know will come from the company see, the only thing is if the management gets

55:23
[Joice Mathew]

opened then only it will help us investors to gauge the potential of the company and gauge the real potential of the company.

55.30
[Joice Mathew]

Otherwise you know there will be a lot of mispricing and you know a lot of asymmetry about in the market.

55.37
[Joice Mathew]

Our Market itself is you know very inefficient in terms of trading liquidity especially for Shell… or companies like Shell…

55.44
[Joice Mathew]

So you know what we are trying to do is to gauge the real… real potential of the company

55:50
[Joice Mathew]

and then communicate to the investors. If the management doesn't do that then you know we also are helpless people

55.58
[Joice Mathew]

so that's the reason why we are asking all these kind of questions – and you know usually managements are open and giving

56:06
[Joice Mathew]

they open their plans, their strategy and everything but this is I'm very disappointed… know that you…

56:13
[Joice Mathew]

know there is… there is no real takeaway for me in this call. I'm very sorry to say this, I can’t help… I can’t help not saying this…

(Inaudible)

56:29
[Joice Mathew]

What…What will be the dividend payout that you will be looking at in the future you know. This question is

56:38
[Joice Mathew]

primarily because you have now reached back to 100 per cent payout so this should this be a norm going forward or will there

56:46
[Joice Mathew]

be any further, should we be looking at a lower dividend payout?

56:52
[Burair Al Lawati]

Okay Joyce you know I'm… I'm also disappointed that we feel that way that we haven't answered any you know your concerns…

57.01
[Burair Al Lawati]

But let me just comment on the dividends which I think earlier also it was commented on. Year-on-Year we

57:09
[Burair Al Lawati]

probably will analyze what is the dividends that will be paid – but it's not even us who will make that decision.

57:15
[Burair Al Lawati]

It’s the shareholders through the board members. And as you can see depending on the situation every year

57:23
[Burair Al Lawati]

that decision will be taken by the board – and of course we give our input, we share your kind of feedback

57.31
[Burair Al Lawati]

also with our with our board members and… and the leadership team but it really depends on multiple factors

57.41
[Burair Al Lawati]

I mean if you look at as you said historically if you look at the payouts that gives you an indication

57:46
[Burair Al Lawati]

what kind of company we have been but even in the long term it depends on whether we have a much aggressive Capex plan,

57.54
[Burair Al Lawati]

what is the borrowing cost, what is the market conditions and many other things that before we can commit to a number

58.02
[Burair Al Lawati]

you know. What I can say that we'll be looking at maximizing the value that we can give to the shareholders.

58.09
[Burair Al Lawati]

As it's been the case for Shell Oman… you know… as a company in the public listed in MSX before now for ...for over 25 years.

58.22
[Burair Al Lawati]

But other than that we… do you think you know as a management team member, we can

58.28
[Burair Al Lawati]

override the board member’s decision-making authority on this (?) That's something probably I cannot give you more than this for now.

58:39
[Burair Al Lawati]

But …but not mistaken, let me see what we can I can get back to you also you had other questions in the past so let me see what

58:45
[Burair Al Lawati]

I can do for you for other than this one. I'll reach out to you separately.

58.50
[Burair Al Lawati]

We have already reached the end of the call in terms of the timing, unfortunately, but I would like to again thank everyone

59.00
[Burair Al Lawati]

for the attending this session and for the questions that was raised

59:05
[Burair Al Lawati]

making it very interactive and interesting for us. And at the end of this call I'd like to thank… I thank Sultan, Lamees and we have here Ahmed

59:15
[Burair Al Lawati]

who's been also a soldier in this behind the scenes and of course everyone who attended this call

59.22
[Burair Al Lawati]

for sharing your time valuable time with us. Looking forward to the next session

59.28
[Burair Al Lawati]

Insha’Allah and until then keep safe and take care.

(Thankyou)

59:36
[Joice Mathew]

Thank you very much

59:44
[Music]