Notes to the financial statements

OQ Gas Networks SAOG (“the Company”) was incorporated as a closely held joint-stock company under the Commercial Companies Law of Oman on May 23, 2000. On October 24, 2023, the Company was listed on the Muscat Stock Exchange (MSX) following the OQ SAOC’s (Parent Company) decision to undertake a secondary sale of up to 49% of its shares through an Initial Public Offering (IPO). Since 2023, the Parent Company, which is wholly owned by the Government of the Sultanate of Oman via the Oman Investment Authority (“OIA” / “Ultimate Parent Company”), retains a 51% ownership stake in the Company.

The Company’s operations were initially governed by the Concession Agreement dated August 22, 2000, ratified by Royal Decree 78/2000 on August 28, 2000. From January 1, 2018, a new revenue and tariff mechanism, the Regulatory Asset Base (RAB), was introduced via an amendment to the August 22, 2000 Tariff and Transportation Agreement (“Amended TTA”). On June 9, 2020, the Company signed an Amended Concession Agreement with the Government of the Sultanate of Oman, which was ratified on October 28, 2020 by Royal Decree 122/2020. This Amended Concession Agreement, which supersedes the Amended TTA, maintains the same terms for determining and charging transportation charges, resulting in no change to the accounting treatment.

The Company’s objective is to acquire, construct, operate, maintain, repair and augment gas transportation pipelines and perform other activities relating to the gas transportation.

The Company holds 100% ownership of Energy Infrastructure Company LLC (“EIC”) (Previously Gas Transmission Company LLC (“GTC”)) registered in the Sultanate of Oman which is non-operational and hence not consolidated. The Company plans to use EIC to conduct any non-regulated business in the future.

2.1 Concession agreement

Amended Concession Agreement

On June 9, 2020, the Government of Sultanate of Oman (the “Government” or “GOSO”), acting through the Ministry of Energy and Minerals (MEM) and the Ministry of Finance (MOF), entered into an Amended Concession Agreement (the “Concession Agreement”) with the Company (acting as an “Operator”) to regulate the Natural Gas Transportation Network which mainly consists of gas transportation pipelines, gas supply stations and compressor stations.

As per the terms of the Concession Agreement, the Company will:

• design, finance, construct, acquire and own Natural Gas Transportation Network (“the Concession assets” or “Infrastructure” or “Regulated Asset Base” or “NGTN”);
• maintain and repair the NGTN;
• protect the NGTN against all external interferences including physical and cyber related;
• use the NGTN to transport gas on behalf of MEM (the “Shipper”) to the industrial consumers of the gas in Oman;
• connect new customers to the NGTN; and
• undertake all other technical and operational tasks to ensure the efficient operation of the NGTN.

In return, the Company charges a cost reflective tariff to the Shipper based on:

• a pre-determined rate of return on the Regulated Asset Base;
• an allowance for depreciation of the Regulated Asset Base; and
• an allowance to cover the operating expenses and pass through cost.

The term of the Concession Agreement is 50 years. At the end of the term of the Concession Agreement, the Infrastructure will be transferred to the Government against purchase consideration equal to the higher of gross value of Regulated Asset Base or the outstanding debt.

In 2023, MEM transferred their rights and obligations under the Concession Agreement to Integrated Gas Company (“IGC”), a state-owned company. Following the transfer, IGC started acting as the Shipper under the Concession Agreement.

The following key documents form part of the Concession Agreement:

RAB Revenue Rules

These rules describe the Price Control Tariff Setting process, provide regulatory accounting guidelines and provide the computation mechanism of maximum allowed revenues.

RAB Tariff Rules

These rules focus on cost reflectivity and a stable tariff development and establish gas transportation tariff charges payable by the shippers and connected parties by reference to maximum allowed revenues.

Price Control Regulation

The Company’s revenue is regulated under the price control framework established by the Authority for Public Service Regulation (APSR). The current Price Control Regulation 3 (PC3) agreement is effective from January 1, 2024, through December 31, 2027.

Transportation Framework Agreement (“TFA”)

TFA entered between the Company (as gas transporter) and the MEM (as the Shipper). The purpose of TFA is to establish the contractual framework between the Company and the Shipper making the Transportation Code binding.

Previous Concession Agreement

The Previous Concession Agreement with the Government of the Sultanate of Oman was for a period of 27 years starting from 22 August 2000. Under the Previous Concession Agreement, the Company was granted a concession for the construction, ownership, operation and maintenance of two gas pipelines from Fahud to Sohar and from Saih Rawl to Salalah and the ownership, operation and maintenance of the Government Gas Transportation System. Under the Previous Concession Agreement, the Company was operating as an Agency of the Government. The terms of the Previous Concession Agreement have been amended by the Concession Agreement to implement fully the RAB structure.

2.2 Asset transfer agreements

The Company entered into an asset transfer agreement (the “Asset Transfer Agreement” or “ATA”) with the Government of the Sultanate of Oman dated 13 May 2018, whereby the Company acquired the ownership of gas transportation facilities from the Government with effect from 1 January 2018 for a purchase price of X 288,344,063 of which X 174,821,600 was settled by issuing the shares to the Company’s shareholders and remaining was settled in cash.

The Company entered into two separate ATAs with the Government of the Sultanate of Oman effective from 1 July 2019 and 31 December 2019 for purchase of gas transportation pipeline system and ancillary assets at a purchase price amounting to X 183,669,552 and X 42,616,114 respectively. As per the ATAs, 50% of the purchase price was settled by issuing the shares to the Company’s shareholders and remaining was settled in cash.

The Company entered into an ATA on 3 August 2023 to acquire infrastructure assets from a related party for purchase price amounting to X 16,828,427.

3.1 Basis of preparation

These financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by IASB, and the applicable requirements of the Commercial Companies Law of Oman 2019 and Ministerial Decision 146/2021 issuing Commercial Companies’ Regulations and the applicable requirements of Financial Services Authority (FSA). These financial statements have been prepared on historical cost basis except for end of service benefits which have been measured at present value of defined benefit obligation using on actuarial valuation methodology.

3.2 Adoptions of new and revised International Financial Reporting Standards (IFRS)

New standards, interpretations and amendments adopted by the Company

New standards, amendments to standards and interpretations effective for the periods beginning on or after 1 January 2025 are set out below.

Lack of exchangeability – Amendments to IAS 21

The amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments also require disclosure of information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the entity’s financial performance, financial position and cashflows.

The above amendments had no impact on the Company’s financial statements.

New and amended IFRSs in issue but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

IFRS 18, Presentation and disclosure in financial statements. Effective date of this standard is annual periods beginning on or after 1 January 2027. The new standard introduces the following key requirements:

• Companies are required to classify all income and expenses into five categories in the statement of profit or loss, namely operating, investing, financing, discontinued operations and income tax categories. Entities are also required to present a newly-defined operating profit subtotal. Company’s net profit will not change.
• Management-defined Performance Measures (MPMs) are disclosed in a single note in the financial statements.
• Enhanced guidance is provided on how to group information in the financial statements.

In addition, all entities are required to use the operating profit subtotal as the starting point for the statement of cash flows when presenting operating cash flows under the indirect method.

The Company is still in the process of assessing the impact of new standard on the Company’s statement of profit or loss, the statement of cash flows and the additional disclosures required for MPMs.

The following new and amended accounting standards are not expected to have any impact on the Company’s financial statements.

• Classification and measurement of financial instruments (amendments to IFRS 9 and IFRS 7)
• Annual improvements to IFRS Accounting Standards (Volume 11)
• Subsidiaries without public accountability (IFRS 19)

3.3 Summary of accounting policies

(a) Measurement of fair values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

(b) Functional and presentation currency

These financial statements are presented in Omani Rials (X), which is the Company’s functional and presentation currency. The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(c) Service concession arrangement

As disclosed in note 2 of these financial statements, during 2020, the GOSO acting through the MEM has entered into a Concession Agreement with the Company.

Management has evaluated the applicability of IFRIC 12 and concluded that the concession agreement falls within the purview of the “financial assets” model as defined in IFRIC 12.

IFRIC 12 applies to public service concession contracts in which the grantor of the concession controls/ regulates:

• the services to be rendered by the operator (through utilization of the infrastructure), to whom and at what price; and
• any residual interest over the infrastructure at the end of the contract.

The Company’s concession agreement is covered by IFRIC 12 for the following reasons:

• the Company has a service concession agreement signed with Government of Oman for a 50-year period;
• the Company renders transport services through utilization of NGTN;
• ;the grantor controls the services rendered and the conditions under which they are rendered, through the regulator APSR; and
• the assets used to render the services revert to the conceding entity at the end of the concession period.

IFRIC 12 defines the following models to account for the concession agreement:

• Financial asset model – when the operator has the unconditional contractual right to receive cash or other financial asset from the grantor;
• Intangible asset model – when the operator receives from the conceding entity the right to collect a tariff based on use of the structure;
• Bifurcated mixed model when the concession includes simultaneously commitments of guaranteed remuneration by the grantor and commitments of remuneration dependent on the level of utilization of the concession infrastructures.

Management decided that the most suitable model for its concession agreement is the financial asset model as the company has unconditional right to receive the cash for the construction services and there is no demand risk. As disclosed in note 2, the Company receives return on assets based on a pre-determined rate of return and an allowance for depreciation of the assets which is not dependent on the utilization of the assets.

In accordance with the requirements of the IFRIC 12, the Company recognised the assets recorded under the old arrangement as property, plant and equipment, as financial asset. The financial asset is increased by the various projects relating to the concession being recorded based on construction revenue, acquisition of infrastructure assets, finance income recognised using the effective interest rate method on the financial asset, and decreased by the payments received from the grantor. The financial asset is accounted for in line with the accounting policies stated below relating to the financial assets.

Contract asset

A contract asset is initially recognised for revenue earned from construction services. Upon completion of construction, the amount recognised as contract assets is reclassified to concession receivables.

Contract liability

A contract liability is recognised if the payments received or payments due (whichever is earlier) from the grantor exceed the revenue which the Company is entitled to under RAB revenue rules re-calculated based on the actual cost drivers.

Income on concession assets

Income on concession receivable and contract assets is recognized using the effective interest method. This income is only notional income and does not represent actual interest income received by the Company.

If the arrangement had not fallen under IFRIC 12, the Company would have recorded property, plant and equipment and revenue calculated under the RAB revenue rules. Further the cash outflows relating to construction services have been classified under investing activities in the cashflow statement as they reflect cash outflows resulting in the recognition of assets.

(d) Revenue recognition

Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties.

Construction of infrastructure

In accordance with IFRIC 12, construction of the infrastructure by the Company is a service that it provides to the grantor, distinct from the transportation, operation and maintenance service and, as such, will be remunerated by it. The Company assumes that there is a market based margin on the construction services equal to the rate of return on assets pre-agreed with the regulator. Construction costs and income relating to construction are recorded in the statement of profit or loss for the year, considering the requirements of IFRIC 12 in the captions “construction revenue” and “construction cost”.

Revenue from construction of the Infrastructure is recognised over time on a surveys of performance completed to date or milestones reached. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Under the Concession Agreement, the Company invoices to the Shipper for the revenue allowed under the RAB revenue rules.

No revenue is recognised if it is not probable that the Company will collect the consideration to which the Company will be entitled in exchange for the services that will be provided to customers. In evaluating whether collectability of an amount of consideration is probable, the Company considers only the Shipper’s ability and intention to pay that amount of consideration when it is due.

Allowance for expenditures

Allowance for expenditure represents the Company’s entitlement for a fixed allowance for operating and administrative expenses as per the RAB revenue rules. Revenue is recognised when the related costs are incurred satisfying the performance obligations.

Allowance for pass-through cost

Allowance for pass-through cost represents the reimbursement of fuel gas and regulator fees (together presented as pass through cost under operating expenses) and current tax expense, at actuals, as per the RAB revenue rules. Revenue is recognised when the related costs are incurred satisfying the performance obligations.

Project management services

Project management services fee has been accrued for providing supervision services on construction of various gas related projects to related and third parties. The revenue for these services is booked overtime.

(e) Capital work in progress

Capital work in progress is the cost incurred on project under construction not covered under the service concession agreement. Capital work-in-progress is measured at cost, net of accumulated impairment losses, if any, and is not depreciated until it is transferred to completed assets, which occurs when the underlying asset is ready for its intended use.

(f) Investment property

Investment property is initially measured at cost and subsequently in accordance with the cost model i.e. cost less accumulated depreciation and less accumulated impairment losses.

Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. Rental income from investment property is recognised as other income.

The estimated useful life of investment property is 30 years.

(g) Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised.

The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

(h) Inventories

Stores and spares, raw materials and chemicals are valued at cost or net realisable value which is less. The cost of stores and spares is based on the weighted average cost principle and includes expenditure incurred in acquiring and bringing the items of inventory to their existing location and condition.

Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

(i) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand that are held for the purpose of meeting short-term cash commitments and are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash in bank and at hand, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management.

(j) Contribution in aid of construction

When capital contributions in aid of construction are received toward the cost of constructing connection or any other assets, they are initially recorded at fair value as deferred income in the statement of financial position. These contributions are recorded as revenue over the useful life of the constructed asset.

(k) Financial instruments

Initial recognition and measurement of financial assets and financial liabilities

Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Financial assets, unless it is a trade receivable without a significant financing component, or financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. A trade receivable without significant financing component is initially measured at the transaction price.

For the transactions that has significant financing component the company has a policy choice to apply either the simplified approach or the general approach in accordance with IFRS 9.

Financial assets

Classification of financial assets

On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity investment; or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

Financial assets that meet both of the following conditions are measured at amortised cost and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management.

The Company does not have any financial assets classified as measured at FVOCI debt instruments or FVOCI – equity instruments.

Subsequent measurement and gains and losses
Financial assets at amortised cost	These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recoginised in profit or loss.

Amortised cost and effective interest rate method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired.

Impairment of financial assets

The Company applies IFRS 9 Expected Credit Loss (ECL) Model;

Under IFRS 9, loss allowances are measured on either of the following bases:

• General approach (12 month ECL): these are ECLs that result from possible default events within 12 months after the reporting date; and
• Simplified approach (Lifetime ECL): these are ECLs that result from all possible default events over the expected life of a financial instrument.

Simplified approach

The Company applies simplified approach to measuring credit losses, which uses a lifetime expected loss allowance for trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.

General approach

The Company applies three-stage approach to measuring ECL. Assets migrate through the three stages based on the change in credit quality since initial recognition. Financial assets with significant increase in credit risk since initial recognition, but not credit impaired, are transitioned to stage 2 from stage 1 and ECL is recognised based on the probability of default (PD) of the counter party occurring over the life of the asset. All other financial assets are considered to be in stage 1 unless it is credit impaired and an ECL is recognised based on the PD of the customer within next 12 months. Financial assets are assessed as credit impaired when there is a detrimental impact on the estimated future cash flows of the financial asset. The Company applies general approach to all financial assets except trade receivables.

(i) Significant increase in credit risk

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the company considers reasonable and supportable information that is relevant and available without undue cost or effort.

This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward- looking information.

To determine whether a financial instrument has low credit risk, the Company uses internal credit ratings which are mapped to the external credit rating agencies such as Moody’s etc. The Company considers that rating within the investment grade are financial instruments with a low risk and have less likelihood of default. Where the external rating of a financial instrument is not available, the Company reviews the ability of the counterparty by reviewing their financial statements and other publicly available information.

The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held) or the financial asset is more than 90 days past due. The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

(ii) Definition of default

The Company considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable:

• when there is a breach of financial covenants by the counterparty; or
• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Company, in full (without taking into account any collateral held by the Company).

Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is more than 90 days past due unless the Company has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

• significant financial difficulty of the issuer or the borrower;
• a breach of contract, such as a default or past due event (see (ii) above);
• the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
• it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
• the disappearance of an active market for that financial asset because of financial difficulties.

(iv) Write-off policy

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

(v) Measurement of ECLs

ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset. The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

Derecognition of financial assets

The Company derecognizes a financial asset when:

• the contractual rights to the cash flows from the financial asset expire: or
• it transfers the rights to receive the contractual cash flows in a transaction in which either:
• substantially all of the risks and rewards of ownership of the financial asset are transferred; or
• the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

Classification of financial liabilities

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

The Company does not have financial liabilities that are classified as at FVTPL.

Subsequent measurement

All financial liabilities are measured subsequently at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired.

The Company also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

Off-setting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

(l) Treasury shares

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in the reserve on trading of treasury shares.

(m) Provisions

Provisions are recognised on the statement of financial position when the Company has a legal or constructive obligation as a result of a past event and it is probable that it will result in an outflow of economic benefit that can be reliably estimated.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

(n) Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company as a lessee

The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Lease liability

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the interest rate implicit in the lease or, if that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Company:

• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;
• uses a build-up approach that starts with a risk-free interest rate; and
• makes adjustments specific to the lease, e.g. term, country, currency and security.

Lease payments included in the measurement of the lease liability comprise:

• fixed lease payments (including in-substance fixed payments), less any lease incentives; and
• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date.

The lease liability is presented as a separate line item in the statement of financial position.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

• the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
• the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease li ability is remeasured by discounting the revised lease payments using a revised discount rate.

The company has made modification adjustment to reflect the change in lease rentals.

Right-of-use assets

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. Vehicle leases run for a period of 3 years and infrastructure leases run for periods ranging from 3 to 30 years.

At each reporting date, the Company reviews the carrying value of right of use assets to determine if there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. If the recoverable amount is less than the carrying value, then an impairment loss is recognized in profit or loss.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line ‘Operating expenses” in the statement of profit and loss and other comprehensive income.

(o) Employees’ end of service benefits

Defined contribution plan

Company makes payment to the Omani Government Social Security scheme under Royal Decree 72/91 for Omani employees, calculated as a percentage of the employees’ salary. The Company’s obligations are limited to these contributions, which are expensed when due.

Defined benefit plan

The Company also provides end-of-service benefits to its expatriate employees in accordance with the terms of employment of the Company’s employees at the reporting date, having regard to the requirements of the Oman Labour Law 2003 and its amendments subject to the completion of a minimum service period.

The Company’s obligation in respect of the defined benefit plan is calculated by a qualified actuary under projected unit credit method, by estimating the amount of future benefit that employees have earned in the current or prior periods and discounting that amount.

Actuarial gains or losses arising from experience-based adjustments and changes in actuarial assumptions are recognized in other comprehensive income. Service costs and interest costs are recognized in profit or loss.

(p) Taxation

Income tax on the results for the year comprises current and deferred tax. Income tax is recognised in the profit or loss except to the extent it relates to items recognised directly in equity, in which case it is recognised in OCI. Current tax is the expected tax payable on the taxable income for the year, using the tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that:
• is not a business combination; and
• at the time of the transaction (i) affects neither accounting nor taxable profit or loss and (ii) does not give rise to equal taxable and deductible temporary differences;

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used.

Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans of the Company.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates and tax law that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(q) Foreign Currency

Items included in the Company’s financial statements are measured in Omani Rial (X) which is the functional currency, being the economic environment in which the Company operates (the functional currency). These financial statements are presented in Omani Rial (the presentation currency).

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the transaction date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss as they arise.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign

currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.

(r) Earnings per share

The Company presents basic earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. If the number of shares changes as a result of a stock split or reverse stock split, the earnings per share for all periods presented is adjusted retrospectively as if the new shares had been outstanding during those periods.

(s) Dividend distribution

Dividend distribution is recognized as a liability in the period in which the dividends are approved by the Company’s shareholders.

(t) Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Substantially, all the assets of the Company form part of one concession agreement and one regulatory asset base model. The Company’s assets and services are managed as one segment. The chief operating decision maker considers the business of the Company as one operating segment and monitors accordingly. During the year, the company invested in pipelines for transporting hydrogen and carbon dioxide which are not part of the concession agreement (note 12). Since these assets are below the quantitative threshold specified in IFRS 8: Operating Segments, these are not reported as a separate segment.

In preparing these financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty are as follows:

The following are the critical judgements, apart from those involving estimations, that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognised in financial statements:

Concession Arrangement

Management has evaluated the applicability of IFRIC 12 and concluded that the concession agreement falls within the purview of the “financial assets” model as defined in IFRIC 12. The evaluation is disclosed in detail in note 3.3 (c).

Recognition of deferred tax assets

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

End of service benefits

The end of service benefits obligation is determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

5.1 Construction revenue is recognized on market-based margin on the construction cost of X 85,904,981 (2024: X 33,634,716), equal to the rate of return on assets pre-agreed with the regulator.

5.2 All the revenue is generated from customers within the Sultanate of Oman.

6.3 Profit on call accounts in Islamic banks is X 902,835 (2024: X 920,894) and interest on call accounts in conventional banks is X 26,591 (2024: X 40,508). The call accounts had an interest / profit rate of 0.70% to 4.85% (2024: 0.70% to 5.75%).

7.1 During 2024, the Regulator agreed to provide an additional allowance for expenditure of X 5.3 million to the Company in price control regulation 3 agreement related to the price control regulation 2 period.

8.1 Pass through costs represents fuel gas and regulator fees which are reimbursable on actual incurred basis presented as “Allowance for pass-through cost” in note 5.

9.1 This represents the total fees paid to the auditors during the year for audit and non-audit related services including agreed upon-procedures and tax related Services, amounting to X 46,700 (2024: X 52,823).

10.1 Interest on term loan from commercial banks was ranging from 5.2% and 5.7% (2024: 5.7% and 7.25).

As per Article 4 of the RAB Revenue Rules of the Amended Concession Agreement with the Government of Sultanate of Oman, the Shipper will reimburse all Oman income tax liabilities to the Company. Any current tax expense is recognised and reimbursement of same from the Shipper is recognised under allowance for expenditures as revenue.

The Company is subject to income tax in accordance with the Income Tax Law of the Sultanate of Oman at the enacted tax rate of 15% (2024: 15%) of taxable income. For the purpose of determining the taxable results for the year, the accounting profit has been adjusted for tax purposes. Adjustments for tax purposes includes items related to both income and expense. These adjustments are based on the current understanding of the existing tax laws, regulations and practices.

The Company’s tax assessments have been completed and agreed with Oman Taxation Authorities for all years up to December 31, 2021. The Company’s management is of the opinion that additional taxes, if any, assessed for the open tax years would not be material to the Company’s financial position as at December 31, 2025.

On December 31, 2024, Oman issued Royal Decree Number 70/2024, enacting new global minimum tax rules to align with the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (“BEPS”) Pillar Two project. Under Pillar Two, multinational enterprises (MNEs) whose group annual revenue exceeds EUR 750 Mn. (in two of the last four years) are liable to pay corporate income tax at a minimum effective tax rate of 15% in each jurisdiction they operate. The enacted law includes the implementation of a Domestic Minimum Top-up Tax (DMTT) and Income Inclusion Rule (IIR). These rules are effective for fiscal years beginning on or after January 1, 2025.

For the year ended December 31, 2025, the Company did not recognise any current tax expense related to Pillar Two income taxes, on the basis that the effective tax rate for the Group in Oman jurisdiction exceeds the minimum threshold of 15%.

Based on the assessment performed to date, the Company does not expect the application of Pillar Two to result in a material top-up tax liability.

11.1 Tax expense

The taxation charge for the year is comprised of:

11.2 Tax reconciliation

The reconciliation of taxation on the accounting profit at the applicable rate of 15% and the taxation charge in these financial statements is as under:

11.3 Deferred tax

Deferred income taxes are calculated on all temporary differences under the liability method using a principal tax rate of 15% (December 31, 2024 – 15%).

The deferred tax liability and deferred tax charge in the profit or loss and other comprehensive income are attributable to the following items:

At the reporting date, the Company has cumulative tax losses of X 51 million (2024: X 37 million) available for adjustment from future taxable profits. The management has determined that the cumulative tax losses will expire from 2026 to 2030.

12.1 Capital work in progress represents work done on project to construct pipelines to transport hydrogen and carbon dioxide. This relates to project under construction not covered under the service concession agreement.

12.2 OQ Gas Networks SAOG has entered into a Cooperation Agreement with Fluxys SA to jointly develop the hydrogen transportation infrastructure in the Sultanate of Oman. Fluxys and OQGN, shall own and operate the hydrogen network. The agreement entails that OQGN will cover 75% and Fluxys 25% of the expenses related to the development of hydrogen transportation infrastructure. Accordingly, partial interest in the hydrogen transportation project for the value of X 150,246 has been transferred to Fluxys under this agreement.

13.3 This represents the revenue under the RAB revenue rules, calculated based on the actual cost drivers, and comprises of:

Billed during the year has been categorized in concession receivables and contract assets as below:

13.4 Concession receivables and contract assets have effective interest rate of 7.39% (2024: 7.42%) per annum and will be settled / recovered over the term of the Concession Agreement.

13.5 During 2025, contract assets due from others of X 432,455 transferred to receivable from related party on account of the Pipe rack constructed at Salalah Port on behalf of that related party.

13.6 For the purposes of impairment assessment, the concession receivables are considered to have low credit risk as the counterparty of this receivable is Integrated Gas Company (which is considered as equivalent of the Government of Oman). For the purpose of impairment assessment for these financial assets, the loss allowance is measured at an amount equal to 12 months ECL using general approach.

None of the balances at the end of the reporting period are past due and taking into account the historical default experience and the current credit ratings, the management of the Company has assessed that ECL is insignificant, and hence have not recorded any loss allowances on these balances.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance.

The Company leases building, land for various infrastructure and vehicles for operations. Vehicle leases run for a period 3 years and infrastructure leases run for periods ranging from 3 to 30 years.

(i) Set out below the are the carrying amounts of right-of-use assets

15.1 During 2023, the Fahud accommodation building was transferred to investment property because it was no longer used by the Company in rendering services under the concession arrangement. The accommodation is rented out to a related party and the rent is recorded as other income. The fair value assessment of the investment property was carried out by management resulting in fair value of X 4.9 million in 2025 (2024: X 3.6 million) which is higher than the carrying value.

15.2 Fair value measurement

The fair value measurement of the investment property is a level 3 fair value measurement calculated based on discounted cash flows using significant unobservable inputs.

The following table shows the valuation technique used in measuring the fair value of investment property, as well as the significant unobservable inputs used.

16.1 Movement in the provision for obsolete inventories is as follows:

17.1 Receivable from IGC represents revenue receivable on account of invoices billed to IGC. The average credit period on invoices raised to the customer is 30 days. No interest is charged on outstanding trade receivables.

17.2 As at reporting date, the Company had recognized an allowance for expected credit losses of X 21,010 (X 21,010) against project management fee receivable from third parties. There is no movement in the allowance for expected credit loss during the period.

17.3 The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECL using the simplified approach. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment, that includes forward-looking information. There has been no change in the estimation techniques or significant assumptions made during the current year.

17.4 All trade and other receivables are expected to be realized within one year of the reporting date.

18.1 These deposits are denominated in Omani Rial EO and held with Islamic bank. They carry interest at effective annual rate of 4.5% with maturities having less than twelve months from the reporting date. Interest on deposits accrues monthly.

Term deposits are assessed to have low credit risk of default since these are placed with banks that are highly regulated by the central bank. Accordingly, the management of the Company estimates the loss allowance on balances with banks short term deposits at the end of the reporting year at an amount equal to 12- month ECL. None of the short term deposits at the end of the reporting year are past due, and taking into account the historical default experience and the current credit ratings of the bank, the management of the Company have assessed that there is no significant impairment loss.

19.1 Cash at bank comprises of cash at Islamic banks of X 21,309,498 (2024: X 15,167,816) and cash at conventional banks of X 458,964 (2024: X 639,653).

19.2 Balances with banks are assessed to have low credit risk of default since these banks are highly regulated by the central bank. Accordingly, the management of the Company estimates the loss allowance on balances with banks at the end of the reporting period at an amount equal to 12 month ECL. None of the balances with banks at the end of the reporting period are past due, and taking into account the historical default experience and the current credit ratings of the bank, the management of the Company have assessed that there is no significant impairment loss.

20.1 Share capital

The Company’s authorised share capital is X 500,000,000 (2024: X 500,000,000).

The paid-up share capital comprises of 4,330,623,920 shares of X 0.1 each (2024: 4,330,623,920 shares of X 0.1 each).

Details of shareholders who hold 10% or more of the Company’s shares are as follows:

The shareholding at the reporting date is as follows:

20.2 Legal reserve

Article 132 of the Commercial Companies Law of Sultanate of Oman requires that 10% of the Company’s net profit after tax to be transferred to a non-distributable legal reserve until the amount of the legal reserve equals to one-third of the Company’s share capital. This reserve is not available for distribution. During the year, X 5,124,385 (2024: X 4,779,543) has been transferred to legal reserve.

20.3 Dividends

On March 26, 2025, the shareholders approved to pay a final dividend of 4.92 baizas per share amounting to X 21,306,670 relating to the third and fourth quarter of the year 2024.

On October 9, 2025, the shareholders approved to pay an interim dividend of 5.6 baiza per share amounting to X 24,251,494 relating to the six-month period ended June 31, 2025.

Dividends proposed subsequent to the reporting date are disclosed in note 35.

20.4 Treasury shares

During the year, the Company engaged a third party licensed liquidity provider on Muscat Securities Exchange (MSX) to facilitate the selling and buying of its own shares. Under the agreement, the gains and losses on trading of shares by the liquidity provider will accrue to the Company. At December 31, 2025, the liquidity provider held 2.74 million shares on behalf of the Company at par value.

The premium recognized on trading in its shares is recorded as “Reserve on trading of treasury shares”. Such reserve which amounted to X 4,419 is classified under equity. Included under the reserve is a net gain of X 256,097 realized during the period ended 31 December 2025.

Net movement in treasury shares is presented in the statement of cashflows as cashflow from financing activities as below:

21.1 The movement in the term loans during the year are as follows:

21.2 The movements in unamortized transaction cost are as follows:

At the reporting date, the unutilized balance of the term loans was X 56 million (2024: X 91 million).

21.3 On June 19, 2023, the Company entered into two unsecured conventional term financing facilities of X 60 million, denominated in Omani Rial and X 86.65 million (USD 225 million), denominated in US Dollars, with a syndicate of financial institutions.

On 19 and June 20, 2023, the Company entered into two Wakala Facility Agreements with local and regional banks, of X 165 million, denominated in Omani Rial and X 152.11 million (USD 395 million), denominated in US Dollars.

21.4 Repayments

These facilities are repayable in semi-annual instalments commencing six months after the date of execution of the relevant agreement, with the final instalment of the Omani Rial denominated facilities representing 70% of the relevant facility amount repayable on their 10th anniversary; and the final instalment of the USD denominated facilities representing 82% of the relevant facility amount repayable on their 7th anniversary.

21.5 Interest

Interest profit on Omani Rial denominated facilities is payable at the rate of 5.70% per annum until the 4th anniversary and thereafter at the base rate (the monthly “Private Sector OMR Time Deposit” rate as published in the most recent CBO Bulletin) plus 2% per annum. With effect from 17 June 2025, the interest profit rate has been reduced to 5.15% per annum till 5th anniversary (June 15, 2028) and thereafter at the base rate plus 1.0% per annum till June 15, 2030 and base rate plus 1.20% thereafter.

Interest/profit on USD denominated facilities is payable at the compounded SOFR rate, plus the applicable margin, which is set at 1.9% per annum, amended in December 2024 to 1.25%.

21.6 Covenants

The Company is not subject to any financial ratio covenant in relation to these facilities.

22.1 Employee costs comprise the following:

22.2 Employee end of service benefits

The movement in employees’ end of service benefits is as follows:

The amount of actuarial gain or loss recognised in the statement of other comprehensive income is as follows:

At reporting date, the amount of obligation for expatriate employees is computed by actuarial valuations using the projected unit credit method as per IAS 19. Following are the key assumptions used in the actuarial valuation:

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

(i) The movement in lease liabilities is as follows:

(ii) Analyzed as:

(iii) Amounts recognized in statement of financial position

(iv) The Company does not face a significant liquidity risk with regard to its liabilities. Lease liabilities are monitored within the Company’s treasury function. Maturity analysis of the lease liabilities is disclosed in note 30.

The Company has received contributions in aid of construction of connection assets. Movement in the liability recognized in the statement of financial position is as follows:

25.1 All trade payables are unsecured and expected to be settled within one year of the reporting.

The Company enters into transactions with companies and entities that fall within the definition of a related party as contained in IAS 24 Related Party Disclosures. Related parties comprise the shareholders, directors, key management personnel and business entities that have the ability to control or exercise significant influence over financial and operating decisions of the Company. The Company maintains balances with these related parties which arise in the normal course of business from the commercial transactions at mutually agreed terms. Outstanding balances at year end are unsecured and settlement occurs in cash.

Government of Sultanate of Oman (the Government) indirectly owns the Company. The Company has applied the exemptions in IAS 24 related to transactions with the Government and other entities controlled, jointly controlled or significantly influenced by the Government. In this respect, the Company has disclosed certain information, to meet the disclosure requirements of IAS 24, in this note.

Most of the related party transactions are with the Government / state owned entities (such as IGC) and with the entities under common control by the Parent Company.

26.1 Transactions with shipper

26.2 Transactions with other related parties

26.3 Key management personnel compensation is as follows:

Key management compensation and board remuneration during the year are as below:

26.3.1 Short term and other benefits of key management personnel reflects changes in the organization structure, including title changes and appointment within key management roles.

26.4 Receivables from IGC

26.5 Amounts due from Parent Company and other related parties under common control (note 17)

26.6 Amounts due to Parent Company and other related parties under common control (note 25)

The Company is currently defending a legal claim filed by MEM, which seeks indemnification for penalties incurred due to delays in project delivery. While the Company does not admit liability, if the defence is unsuccessful, it may be required to pay an amount of X 19.5 million (2024: X 20.9 million).

The Parent Company has provided an undertaking to indemnify the Company against any amount that may become payable in relation to the MEM claim.

Based on legal advice received, management believes that the Company has strong grounds for defence and that it is probable the claim will be successfully contested.

As at reporting date, the Company had commitments pertaining to the capital projects under construction of X 45.7 million. (2024: X 15.8 million).

Earnings per share are calculated by dividing the profit for the year by number of weighted average shares issued during the year.

(i) The weighted average number of shares takes into account the weighted average effect of changes in treasury shares during the year

Details of significant policies and methods adopted including the criteria for recognition for the basis of measurement in respect of each class of financial assets and financial liabilities are disclosed in note 3 to the financial statements.

The carrying amount of financial assets and financial liabilities recognized in the financial statements approximate their fair value unless stated otherwise.

The Company’s activities expose it to a variety of financial risks including the effects of changes in market risk, (including foreign exchange risk and interest rate risk) liquidity risk and credit risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. Risk management is carried out by the management under policies approved by the Board of Directors.

30.1 Market risk

Market risk is the risk that changes in market prices, such as foreign currency rates and interest rates will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency. The Company is exposed to foreign currency risk arising from currency exposures primarily with respect to the US Dollar. The Omani Rial is pegged to the US Dollar. Since most of the foreign currency transactions are in US Dollars, management believes that the currency rate fluctuations would have an insignificant impact on the post-tax profit.

(ii) Interest rate risk

The Company is exposed to interest rate risk as it borrows funds at floating interest rates. Further, the Company is exposed to interest rate risk on its interest bearing assets (bank deposits) and term loans from banks. The Company manages interest rate risk by placing deposits for short periods to earn interest at market rates. The management monitors the interest rate risk by setting limits on the interest rate gaps for stipulated periods.

At the reporting date, interest rate risk profile of the Company’s interest-bearing financial instrument was:

Sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial instruments at fair value through profit or loss. Therefore, a change in interest rate at the reporting date would not affect profit or loss.

Sensitivity analysis for floating rate instruments

For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the end of the reporting period was outstanding for the whole year. At reporting date, if interest rates on USD denominated borrowings had been 1% higher/lower with all other variables held constant, profit for the year would have been lower higher, mainly as a result of higher lower interest expense on floating rate liabilities as shown below:

30.2 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet obligations as they fall due. The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Responsibility for liquidity risk management rests with the Board of Directors. The Board has built an appropriate liquidity risk management framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows.

The following tables detail the Company’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

Trade payables are interest free. The amounts included above for variable interest rate instruments for financial liabilities (as disclosed in interest rate risk section of this note) is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.

30.3 Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the receivables from customers.

As at reporting date, the Company’s maximum exposure to credit risk without taking into account any collateral held or other credit enhancements, which will cause a financial loss to the Company due to failure to discharge an obligation by the counterparties arises from the carrying amount of the respective recognised financial assets as stated in the statement of financial position.

The Company has significant concentration of credit risk with the Government of the Sultanate of Oman represented by the Shipper. The management continues to monitor the willingness of the customer to pay the amount receivable and provide for any amounts deemed unrecoverable, therefore the Company considers the credit risk to be minimal.

With respect to credit risk arising from the other financial assets of the Company, including cash and cash equivalents, the Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The Company limits its credit risk with regard to bank balances by only dealing with banks with acceptable credit rating.

In order to minimise credit risk, the management develop and maintain the Company’s credit risk gradings to categorise exposures according to their degree of risk of default. The credit rating information is supplied by independent rating agencies where available and, if not available, the Company uses other publicly available financial information and the Company’s own trading records to rate its major customers and other debtors. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

The Company’s current credit risk grading framework comprises the following categories:

The tables below details the credit quality of the Company’s financial assets carried at amortised cost and contract assets, as well as the Company’s maximum exposure to credit risk by credit risk rating grades. Based on ECL model, loss allowance on other financial assets are not recognised being not material.

The status of past due balances of financial assets are as follows:

Details of basis of ECL allowance on each financial asset is given in note 3 and notes of respective financial asset.

The exposure to credit risk for trade and other receivables at the reporting date relates customers originating from Oman only.

The Company’s policy is to maintain an optimum capital base to maintain investor, creditor and market confidence to sustain future growth of business as well as return on capital.

The Board of Directors monitors the return on equity. The Board of Directors also monitors the level of dividends to ordinary shareholders. There were no changes in the Company’s approach to capital management during the year.

The capital structure of the Company consists of gearing ratio being net debt (interest bearing borrowings offset by cash and bank balances and term deposits) and equity of the Company (comprising issued capital, reserves and retained earnings). Lease liabilities are excluded from the calculation of net debt.

The Company’s management reviews the capital structure of the Company on a semi-annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.

Gearing ratio

The gearing ratio at year end was as follows:

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (“COD”). COD, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic decisions maker. The Company’s operating activities are disclosed in note 1 to these financial statements. The strategic business unit is managed as one segment. For the strategic business unit, COD reviews internal management reports on a monthly basis. Performance is measured based on the profit before income tax, as included in the internal management reports. COD considers the business of the Company as one operating segment and monitors accordingly. The requirements of IFRS 8: Operating Segments - paragraphs 31 to 34 relating to entity wide disclosures have been covered under statement of financial position, statement of profit and loss and other comprehensive income and also in notes 1 to 4 to these financial statements.

The below table details changes in in the Company’s liabilities arising from financing activities including both cash and non-cash changes:

The Company and its customers may face significant climate-related risks in the future. These risks include the threat of financial loss and adverse non-financial impacts that encompass the political, economic and environmental responses to climate change. The key sources of climate risks have been identified as physical and transition risks. Physical risks arise as the result of acute weather events such as hurricanes, floods, and longer-term shifts in climate patterns, such as sustained higher temperatures, heat waves, droughts and rising sea levels. Transition risks may arise from the adjustments to a net-zero economy, e.g., changes to laws and regulations, litigation due to failure to mitigate or adapt, and shifts in supply and demand for certain commodities, products and services due to changes in consumer behaviour and investor demand. These risks are receiving increasing regulatory, political and societal scrutiny, both within the country and internationally. While certain physical risks may be predictable, there are significant uncertainties as to the extent and timing of their manifestation. For transition risks, uncertainties remain as to the impacts of the impending regulatory and policy shifts, changes in consumer demands and supply chains.

The Company is currently in the process of embedding climate related risks in its Risk Management Framework as part of its commitment towards OQGN’s Sustainability strategy, that includes setting proper risk appetite metrics and maintaining policies, processes and controls to incorporate environmental and climate change risks in the management of its risk categories.

The Company acknowledges the need for further efforts to fully integrate climate in the Company’s risk assessments and management protocols.

In a meeting held on March 05, 2026, the board of directors proposed a final dividend of 5.6 baizas per share for the second half of the year ended December 31, 2025.

Certain comparatives information has been reclassified to conform to the presentation for the current year. Such reclassifications were made to improve the quality of presentation and do not affect previously reported profit or equity.

Figures have been rounded off to the nearest X unless otherwise stated.