Management discussion and analysis

Building an integrated engineering and cold-chain platform for long-term growth

CGS enters its next phase of growth at a time of structural transformation within the Kingdom of Saudi Arabia. As food security, industrial localisation, healthcare infrastructure, logistics capability, and defence readiness continue to grow in strategic importance, the Group’s long-established engineering and manufacturing capabilities as well as its unparalleled execution track record position it to directly participate in several of the Kingdom’s most important long-term development priorities.

While CGS has historically been associated primarily with transport refrigeration and cold-chain solutions, the Group today operates through a broader integrated engineering platform spanning manufacturing, refrigeration systems, customised engineered solutions, and lifecycle services. As illustrated on D 1, the Group’s complementary operating segments make up a cohesive, integrated operating model that has allowed the Group to maintain leadership within its traditional markets, while progressively extending its capabilities into adjacent sectors and applications.

The Group’s strategy for the years ahead is, therefore, centred on strengthening this engineering and manufacturing foundation while expanding production capacity and broadening its product portfolio. To this end, the Company also intends to deepen customer relationships and further build the organisational capabilities required to sustain long-term growth as a publicly listed company.

This strategy is a natural extension of the Group’s long-standing belief that investments in engineering expertise, manufacturing capability, and execution excellence create opportunities to serve new customers, enter adjacent sectors, and expand into increasingly advanced applications over time. The strategy also builds on five decades of accumulated technical knowledge, customer relationships and execution experience that continue to differentiate CGS in the markets it serves. It reflects the Group’s vision of becoming a Saudi-engineered, innovation-driven, and best-in-class total solutions provider in the MENA region. As it invests continuously in manufacturing sophistication, automation, technical expertise, and operational scalability, CGS aims to strengthen its position as a leading provider of specialised engineered solutions across both established and emerging sectors.

Realising this vision will require disciplined execution across multiple fronts. The strategic priorities outlined in the following sections focus on strengthening the Group’s manufacturing platform, expanding its product portfolio, deepening customer relationships and building the organisational capabilities necessary to support long-term growth as a publicly listed company.

Strategic priorities

Broadening the product portfolio and diversifying revenue streams

While refrigeration and cold-chain infrastructure remain central to the Group’s operations, CGS’s strategy increasingly focuses on leveraging its engineering and manufacturing expertise to expand into adjacent sectors requiring specialised engineered solutions.

Within the Automotive Solutions segment, the Group also maintains a long-standing relationship with Carrier Transicold, whose refrigeration units are integrated into CGS’s transport refrigeration offering across selected applications. This relationship strengthens the Group’s refrigeration offering within the automotive segment and supports its ability to deliver reliable, globally recognised transport refrigeration solutions and services to customers across the Kingdom.

Beyond the core refrigeration offering, the expanding Customised Solutions segment is the logical next step of the product portfolio’s evolution. Built upon decades of refrigeration expertise, product development and systems integration experience, the segment enables CGS to address a broader range of applications across sectors such as oil and gas, healthcare, telecommunications, and defence.

This includes the development of:

• Specialised vehicle customisation solutions
• Ambulance and mobile healthcare applications
• Surveillance vehicles
• Secure communications vehicles
• Modular and rapidly deployable infrastructure solutions
• Defence-related shelters and applications
• Oil and gas manpower housing solutions
• Advanced stationary refrigeration and processing infrastructure

The Group also intends to continue expanding environmentally friendly technologies and customised transport refrigeration solutions that align with evolving customer requirements and regulatory standards.

It must be emphasised that its diversification strategy does not in any way represent a departure from the Group’s core business model. It is instead an extension of CGS’s underlying engineering capabilities into adjacent applications where specialised manufacturing expertise, systems integration capability, and operational reliability create competitive advantages.

By broadening its product portfolio and expanding into additional sectors, CGS aims to:

• Diversify revenue streams
• Reduce concentration risk
• Strengthen long-term demand visibility
• Improve resilience against cyclical fluctuations
• Position CGS to participate in emerging strategic industries within the Kingdom

Expanding market reach, customer relationships, and regional presence

Our strategy is also centred on broadening our customer base while strengthening long-term relationships within existing markets.

Historically, the Group has maintained a strong presence across the food and beverage, pharmaceuticals, and logistics sectors through its transport refrigeration and cold-chain infrastructure offerings. Going forward, CGS intends to deepen its engagement with both private-sector and government-related entities seeking specialised engineering and manufacturing solutions.

This includes expanding participation in sectors aligned with national strategic priorities, including:

• Food security and cold-chain infrastructure
• Healthcare and emergency-response solutions
• Industrial localisation initiatives
• Defence localisation efforts
• Energy and industrial infrastructure

CGS’s integrated operating model is expected to remain an important differentiator in this regard. Combining engineering capability, manufacturing capacity, infrastructure delivery, and lifecycle services within a single platform, the Group seeks to provide customers with end-to-end solutions tailored to specific operational requirements.

CGS also continues to benefit from a broad installed equipment base across the Kingdom, which supports recurring service opportunities through maintenance, monitoring, and lifecycle support activities. The Group’s operational footprint currently provides coverage across approximately 96% of the Kingdom’s population with its service centres and mobile workshops. Management views the expansion of recurring service revenue as strategically important to strengthening long-term customer retention, improving earnings quality, and supporting more resilient cash generation over time.

Geographically, over the medium term, the Group intends to evaluate selective expansion opportunities beyond the Kingdom, particularly within regional markets. Management believes CGS’s Saudi-based engineering capability, manufacturing expertise , execution experience, and an integrated operating model provide a foundation for measured expansion into new geographies aligned with the Group’s operational strengths and long-term strategic priorities.

Strengthening leadership and organisational capability

CGS recognises that long-term growth depends not just on manufacturing capability and engineering expertise but also on organisational strength, leadership development, and workforce capability.

The Group, therefore, continues to invest in building a robust management structure capable of supporting a larger and increasingly sophisticated organisation, particularly post-listing.

This includes:

• Leadership development initiatives
• Technical training programmes
• Succession planning
• Workforce capability enhancement
• Organisational development initiatives aligned with long-term strategic objectives

Management aims to foster a culture of continuous learning and operational accountability that supports innovation, agility, and execution discipline across the organisation. As CGS continues to invest in advanced engineering capability, automation, and manufacturing technologies, the Group also aims to strengthen its position as an employer of choice for technical, engineering, and industrial talent within the Kingdom. In doing so, the Group seeks to contribute to the development of local capabilities through the recruitment, training and progression of Saudi nationals, in support of the Kingdom’s broader Saudisation objectives.

The transition to a publicly listed company also places greater emphasis on governance, reporting discipline, and institutional capability. As CGS continues to scale, the Group expects investments in talent, systems, and organisational infrastructure to remain essential to driving operational excellence and supporting sustainable long-term growth.

The Group’s focus on developing internal leadership capability is also intended to support continuity and long-term resilience as the business evolves. In strengthening succession planning and cultivating leadership from within the organisation, CGS strives to ensure that it retains the technical expertise, operational knowledge, and management depth necessary to support future expansion.

Strengthening manufacturing capability and technological leadership

Our competitive positioning is fundamentally rooted in our engineering and manufacturing capabilities. The Group, therefore, continues to prioritise investment in production infrastructure, automation, and advanced manufacturing technologies in order to improve scalability, precision, operational efficiency, and product quality.

CGS continues to invest in strengthening its manufacturing platform as part of its long-term ambition to maintain leadership in specialised engineering and refrigeration solutions. This includes targeted investments across its production footprint, including planned developments in Al Kharj, aimed at enhancing manufacturing capability, increasing production flexibility, and supporting the delivery of increasingly sophisticated solutions. These initiatives align with the Group’s broader objective of reinforcing its competitive position while supporting localisation, innovation, and long-term growth.

Our manufacturing platform already incorporates advanced production technologies such as laser cutting systems, CNC machinery, automated welding solutions, and robotic manufacturing capabilities. These capabilities are, in turn, enhanced by design and development tools such as 3D printing, 3D scanning, simulation software, and virtual reality applications, which go on to support product development, prototyping, and design optimisation. Investments in these areas are intended not just to improve production efficiency but also to support increasingly sophisticated engineering applications across sectors such as healthcare, defence, and logistics.

CGS remains the only company in the MENA region that uses open pouring panel technology, operating one of the world’s largest presses. The Group also continues to invest in specialised production and testing capabilities aligned with its long-term growth ambitions. Planned infrastructure enhancements include dedicated ambulance production flow lines, testing chambers for defence technologies, and enhanced surface treatment solutions that support the Group’s expanding role within specialised engineering applications.

These investments reflect a broader strategic objective to maintain manufacturing superiority while creating the technical and operational platform required to support long-term product diversification and sustainable growth.

Enhancing operational efficiency and sustainability

As CGS scales its operations, management remains focused on improving operational efficiency while exploring sustainable manufacturing and operating practices.

The Group continues to pursue lean manufacturing initiatives, process optimisation programmes and automation investments designed to improve productivity, reduce waste, and enhance execution efficiency across its operations.

At the same time, CGS is increasingly incorporating energy-efficient technologies and sustainable operational practices into both its internal processes and customer-facing solutions. The Group is keenly aware of the demand for environmentally responsible engineering solutions across several of its key markets.

Management also believes that operational efficiency and sustainability are increasingly interconnected. While improvements in automation, process discipline, and manufacturing precision certainly support cost efficiency and scalability, more importantly, they contribute to improved environmental performance and long-term operational resilience.

As regulatory standards and customer expectations continue to evolve, the Group expects sustainability considerations to become an increasingly important component of both product development and operational strategy.