Al Batinah Power Company SAOG (BATP) Earnings Call Transcript & Summary

[Foreign Language], everyone, and welcome to Al Batinah Power Company Investor Meeting. So we will be discussing the financial results and operational results of 2025. Agenda for today's meeting will be HSSE, technical performance, financial performance and achievement for 2025 and post-PPA opportunities. The first agenda is health and safety, security and environment.

Thank you, Faraz. Starting with the health, safety, security and environment, we are proud to report that as of December 2025, the company completed 5,291 safe days of operation without lost-time accidents and with 0 environmental incidents. The company maintained ISO new certificates, ISO Quality Management 9001, Environmental Management ISO 4001 and also occupational health and safety 45001, which demonstrated that the company complies with the international standards. The technical performance of the company, the guaranteed power capacity remain as per the contract with PPA 736.53 megawatts, and it remained until the end of the PPA. The plant reliability for 2025 was 99.65%, which maintained an excellent results. The H1 plant load factor was 62.4% in 2025. And the thermal reliability of the plant was 88.70% during 2025. And even it shows we are in the stable performance in terms of the thermal efficiency.

Thank you. Next is financial performance for 2025. So the net results were better by $3.1 million compared to previous year, which was mainly due to reduction in finance costs, and savings in some of the G&A costs. So I will move to the waterfall next slide. So if you can see, this is mainly due to -- the gross profits are increased by 2.3% compared to previous year. This is mainly due to last year include custom duties for the upgrade. In current year, there was no such upgrade. The net profits are better by 8.4% compared to 2024, this is mainly due to 2 reasons: one, reduction in finance costs due to the scheduled repayment of project loans and second, lower insurance costs, which we have negotiated and has been reduced. Next is achievement for 2025. So regarding HSSE, the company achieved 5,291 safe days without LTA, and the company has celebrated this 5,000 safe days achievement with the O&M and contractors. ABPC was named among the global top 3 finalist in the ENGIE Global Safety Award 2025 under the category of No Life at Risk, which is showing strong safety culture and commitment towards the health and safety. Annual performance test for the contract year 13 has been successfully completed in 2025. Company has achieved energy savings and CO2 reduction through smart cooling integration and water park heater implementation. Al Batinah Power also won the second place on the outstanding operational excellence category at ENGIE Decision Maker 2025 under the category for Sohar-2 Smart Cooling Integration. Next is Al Batinah was also honored as a top brand in Oman for 2025 under the Power Generating Supply Category among the all power and destination companies in the energy sector. Al Batinah was also recognized as one of the best MSX listed company in mid-cap category at Alam Al Iktisaad Awards 2025. Al Batinah CEO, Mr. Saud Al Waili, was also recognized the power sector icon for the year for his leadership and impact on the power sector. ABPC was also honored with prestigious, Oman Best Employer Award 2025. Lastly, ABPC was also won the third place on the Diversity Equity Inclusion Champion at ENGIE Transition Maker Award 2025 under the category of Women Leading the Transition. Next is future strategy and plan. Regarding the dividend, as a result of the refinancing in 2024, the company was successfully eliminated the cash free and now is able to distribute dividend due to which the company has distributed the dividend in June and December 2025, and will also be able to make future dividend based on the available cash flows after fulfilling the covenants as per the finance performance. Planned maintenance we had in Q4 2027, it is planned to have a major maintenance of the GP, which might result in any higher maintenance costs. Regarding the PPA extension, the company has already disclosed on assets. The company is in discussion with the PWP regarding a new PPA to succeed its existing agreement, which is set to expire in March 2028. The company has submitted its proposal on 28th September 2025 to PWP with multiple tenure options and the maximum term was up to 15 years. As of today, discussions are going on, and no final agreement has been reached between the company and PWP. The opportunities and challenge. So regarding the opportunities, Sohar-2 is very highly efficient plant due to its technology. Second, and our debt repayment will be and before the current PPA expiry. Third, there is an expected high growth demand in the market. Challenges what we have is the spot market initiatives. Second is emerging of new technologies to the electrical grid and plant cycling after adding more renewable projects. So these are the challenges, which we have. The last is the disclaimer. This presentation is not and should not be construed as an offer invitation or recommendation in respect of company's security, neither this presentation nor anything stated in it shall from the basis of any contract or commitment. This presentation is not intended to be relied upon as advise to investors and does not take into account the investment objective, financial situation or needs of any investor. Any future outlook statements -- all comments are associated with known and unknown risks and uncertainties. Hence, this presentation provides no guarantee or commitments for any future results nor expressly or nor impliedly. The financial information included in this presentation is of public knowledge, disclosed to the market on MSX website, and it is for information purpose only. Now we will open the platform for the question. If anyone has any question can raise their hand and introduce yourself, your name and the company or firms, you are represented.

Okay. So we have received one question from [ Rao Aamir ] Regarding the borrowing declined to $19.6 million as of December 2025 compared to $35.9 million in September. Have you repaid the loan ahead of schedule? No. So as per the CPA, we have to repay our loan in April and October. So the October repayment was made in this year, and there's no loan ahead -- we have not paid any loan ahead. So regarding the deferred tax liability. So actually, this is as per IAS 12, deferred tax temporary difference between the accounting base and the tax base of the plant. So this is mainly due to this and this is noncash item. So this will not affect our cash flow. It is just regarding the provision -- reversal of provision, whatever we have made regarding the deferred tax liability and it will have a reversal in future year. So there is no impact on the cash flow. The plant life is 40 years as we mentioned in our financial statement. Yes, Shaoor.

Beautiful presentation, very good numbers, and it gives us analysts and the investor community a lot of confidence when you mentioned that the PPA negotiations are going on with OPWP. My first question is regarding your dividend payout. As you mentioned that you guys have successfully been able to renegotiate the debt structure and now the cash sweep is gone, you will be able to sustain the dividends that you have announced. Just to clear my understanding, on MSX, you guys have notified of 2 dividends semiannually. And that is up to OMR 0.08. Is that each? Or is there in total up to OMR 0.08...

Yes. So this is mid cap total, including April and June, this is total cap of OMR 0.08 for 2026.

Okay. Perfect. That makes it clear. And based on your cash flows, the company is now easily able to manage this sort of dividend until 2028, which is the expiry of your PPA. Is that correct?

Yes, correct. So this is actually, as we mentioned, the dividend will be based on the available cash flows. So whatever available cash flow, we will distribute accordingly.

Right. Okay. Now assuming that your debt will be repaid by the expiry of current PPA, which is 2028, when you'll enter the new PPA, there won't be any debt repayments or debt servicing going on, right?

Yes, correct. And current -- sorry.

Yes. Okay. So I just wanted to understand this with no debt servicing, should we be expecting a surge in the dividends because the available cash flows will be -- I'm expecting them to be higher because of the lag -- because there will be no debt servicing. So should we be expecting a higher dividend and significantly higher dividend because as per my calculations, over $20 million of your cash flows go into your debt repayments. So could you provide some color on that, please?

Thank you. So actually, see, this will be based on the negotiation in the future PPA. So whatever will be finalized based on that, whatever cash flow will be available, that will be distributed.

Okay. And could you give us some color on whether the terms of the current -- or the new PPA would be similar to the current terms of the current PPA? Or do you have any insights about that for the analyst investor community as of now?

So actually, this information is again confidential, okay? So as and when that will be finalized, so we will inform accordingly. So as of now, whatever is going on is confidential.

Perfect. Perfect. Understood. Now with the -- there's a transmission pipeline from -- there's a transmission line from DPS connecting the MIS, I believe, which is expected to come online very soon. How would that impact the capacity? Because as per my understanding, there is some excess capacity in the DPS and in the MIS as well. So when -- and of course, the influx of renewables that is coming in. So would that be a problem when renegotiating the PPA? Or do you think that the system still has enough demand to cater and ongo with the PPAs of the current power plants?

The impact of this connection, we don't expect it will be there an impact on our side, because also, we should not forget there is also the annual growth. There is significant growth -- a significant growth -- I can say it's mentioned or expected by the off taker during this -- the upcoming 5 years. So we don't expect significant impact on our side.

Okay. Perfect. And one last question from my side. It's on the sector. Do you believe that currently, with you guys and all of the other PPAs that are there with the available capacities, obviously, there is an increases in -- annual increase in demand, as you well mentioned. Do you believe that currently, the demand is high compared to the available capacities? Or are you still -- do you think that there still is overcapacity in the systems in both the MIS and DPS?

I think in the MIS, there's no surplus capacity. And in the future, we don't know, frankly speaking, it depends based on the demand growth as well as also to the -- depend also on the additional capacity, which is off taker, which planning to add. So currently, there is no surplus. Anyone else? Any questions? You can raise your hand. There is no more questions, then we can conclude this meeting. Okay. Thank you so much, everyone, for joining this meeting. Thank you.

Thank you.