Barka Desalination Company SAOG (BRDE) Earnings Call Transcript & Summary

[Foreign Language] Good morning. Hello. Welcome, everyone, to the second half yearly session of BDC on 26 February 2025. Just for your information, before we start, we would like to let all joinees know that we shall be recording this session and the contents of the meeting can be shared internally or externally. This presentation contains some statement related to BDC, just for information purpose of the public, and we shall start with our presentation. We shall start the presentation with the overview of the water market in the Sultanate of Oman. As we all know that the 85% of the portable water demand in Oman is met through the desalination of water by the plants located throughout the country. NPWP has contracted the capacity from 11 operational plants across the Sultanate. The main interconnected system is the largest part of the water systems covering the northern areas of Oman, including the Muscat zone, the Barka zone and the Sohar zone, which is completed by 7 large plants supplying the area of capacity more than 1,200 MLD. And Barka 4, BDC is part of the main interconnector system. As far as the overview of the company is concerned, the Barka Desalination was registered and incorporated as an SAOC company on 21st of January, 2016. And later on, it was listed on MSX on 27th of Feb 2022. The main shareholders of the company remain with ITOCHU at 21.6% of shareholding with Veolia, ENGIE at 16.2% followed by Towell and with the 40% of shareholding being held by the local public. The objectives of the company are to acquire, develop, finance and design construct, own, operate, maintain the desalination facility at Barka 4. The plant produces 281,000 cubic meter per day of water design capacity. Barka 4 is one of the largest operating desalination plant in the Sultanate. The water purchase agreement with NPWP is for 20 years and it spans until 2038. The O&M is interested with Veolia Environmental Services for the same length and tenure of the water purchase agreement. This slide gives you an overview of the project time lines where we started in 2015 with the award of the project throughout 2038 when the WPA ends. This is just the bird's eye view of the plant of the Barka IWP 4. Now I will let the CEO of the company, Mr. Asim Al Rashdi to present the operational highlights of the company.

Thank you, Zain. The company commenced commercial operation in 15th June 2018. Since then, the company has been supplied more than 521 million meter cube of potable water to Oman Power and Water Procurement Company in accordance with the water purchase agreement. The company increased progressively the production throughout the year. It has supplied 89 million meter cube of water during the year of 2024, which corresponds to 86.73% of the plant capacity. In 2025 so far, the plant reached 80.41% of the capacity. The plan of the annual performance for the contractual year CY '28 will be on 18th March 2025. The company, the profitability, the primary driver by plant availability and not impacted by the load factor and consumption. Water quality has maintained 100% compliance rate and the average availability for the period was 99.95%. The result of the constant improved asset management program and robust plant operation implemented by the operator. The operator achieved more than 521 million meter cube proceed since the COD without the LTA.

Thank you so much, Mr. Rashdi. So now we will proceed on to the financial highlights of December -- of the period ended December 2024. We can see that the revenue has increased by 2% as compared to the same period in the previous year. This is mainly due to the high electricity charge adopted due to the change in tariff from CRT to flat rate. The operating cost has increased slightly, a 0.05% as compared to the same period in the previous year. This is also again due to the electricity costs being increased due to change in tariff, which is a pass-through costs. The admin and general expenses have decreased by 8% as compared to the previous year. This is mainly due to the adoption of robust cost reduction plans by the company. We can see that the finance costs have slightly increased by 0.5% as compared to the same period in the previous year, which is due to the rising interest rates globally. As far as the internal control and corporate governance is concerned, the management believes in strong implementation of strong internal control system throughout the company, which in turn is overseen by our auditors and the regulations prescribed by the FSA and the IPPF. As far as the corporate governance is concerned, the company has placed high standards of corporate governance, which are compliant with the code of corporate governance promulgated by FSA. As far as the outlook for 2025, the company is taking endeavors that it continues to take reasonable and professional and prudent steps to maintain its performance by maintaining the plant's reliability and availability throughout the tenure. As far as the future plans for the dividends are concerned, the company aims to distribute OMR 0.012 per share every year with biannual distribution in May and November, which will be subject to approval by the Board and the shareholders. So this concludes our presentation for today. If any questions from the audience, please let us know. So I believe no more further questions from the audience. Thank you so much for joining us. Wish you all a great day ahead and see you in the next session. Thank you, everyone. Bye.