Galfar announces steps to pare losses

MUSCAT: Leading Omani contractor Galfar Engineering and Contracting SAOG has approved a major financial restructuring of the company aimed at substantially eliminating accumulating losses amounting to RO 32.177 million.

The decision was taken at an Extraordinary General Meeting (EGM) of the company’s shareholders on Tuesday.

In a filing to the Capital Market Authority (CMA), the publicly traded firm said the EGM approved the utilisation of the entire legal reserve of RO 13.840 million, as well as the entire share premium of RO 18.337 million to extinguish part of the accumulated losses totalling RO 32.177 million. Additionally, the EGM approve the reduction of the share capital from RO 41.521 million by 30 per cent to RO 29.065 million to extinguish another part of the accumulated losses to the tune of RO 12.456 million.

Galfar had announced last year that it was evaluating various options with regard to financial restructuring with a view to improving the financial position and liquidity situation of the company and set in on a “forward-looking path”

The Group posted a net loss of RO 28.3 million for the 2020 financial year, against a net loss of RO 6.2 million in 2019.

“The performance was substantially impacted due to the COVID-19 pandemic, related idling of resources and additional costs, time and cost overruns in major projects. Management and Board are confident to collect the long outstanding receivables of RO 42 million against which provision is created in the books of account, which will result in reversal of these provisions in the near future,” the company said in its 2020 Directors’ report.

“The liquidity issues of the Company continued on account of delay in receipt of certified payment from the government and its related entities. The unpaid certified receivables were at RO 64 million at closing of the year. This has impacted ability to do business and has impacted our profitability,” the report further stated.

Despite the accumulating losses, Galfar continued to maintain significant order book of jobs in hand at above RO 370 million (as against RO 401 million in 2019) out of which RO 43 million was related to oil and gas sector.