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

Good morning, everyone. Welcome to the H1 session for the period ended 30th of June 2025 for Barka Desalination Company SAOG. With me is Mr. Asim, who is the CEO of the company; whereas me is Zain Siddiqui, who is the CFO of the company. Just before we begin our -- proceed on with our further slides, just a disclaimer for everyone on your screens. And importantly, that this session is being recorded and can be shared and the material of this meeting can be shared internally or externally. So let's proceed. So we start with the overview of the water market in Oman. 85% of the potable water demand in Oman is being met through the desalinated water performed by the plants located across various areas of Oman. NPWP, which is Nama Power and Water Procurement Company, has contracted capacity to various operational plants across the Sultanate, more than 1,600 MLD capacity. The main interconnector system is one of the largest part of the water system covering northern areas of Oman, including the Muscat zone, the Barka, the Sohar. As far as the overview of the company is concerned, Barka Desalination was registered and incorporated as a close Oman joint stock company on 21st of January 2016. Later on, on 27th of Feb 2022, it was registered on Muscat Stock Exchange. 40% of the shares of the company are hold by the local public. The objective of the company are to acquire, develop, finance, design, construct, own, operate, maintain the desalination facility of Barka 4, also known as Barka IWP. The plant has a capacity of 281,000 meter cube per day. Barka 4 is one of the largest operating water desalination plant in Oman, supplying almost 20% of the water demand of the country. As far as purchase agreements are concerned, we have 20 years of WPA with PWP spanning from 2018 to 2038, whereas our O&M contract is entrusted with Veolia Environmental Services, SPC for the same 20 years. This is just the project time line from where BDC has started. This is just the bird eye view of the plant if somebody is concerned. Now I'll leave the floor to the CEO of the company, so he can discuss some operational highlights.

So on the operation highlights, the company commenced commercial operation 13 of Jan 2018. Since then, the company has been supplying more than 561 million meter cube of potable water to Nama Power and Water Procurement Company in accordance with the water purchase agreement. Also, the company increased progressively the production throughout the year. It has been supplying 40 million meter cube of water during the period of end of Jan 2025, which corresponds to 79% of the plant capacity. The plant of the annual performance test of the contractual year [indiscernible] was successfully conducted on 18th March 2025. And also the company's profitability is primarily driven by plant availability and not impacted by load factor and power consumption. And the plant performance for 2025, water quality was maintained at 100% compliance rate and the average scheduled plant availability of the period was 99.94%. The result of the constant improvement asset management program and robust plant operation implemented by the operator. Also, the operator achieved more than 561 million meter cube produced since COD without LTA.

Thank you so much, Asim. So now we present the financial highlights for the period ended 30th June. We can see that the revenue decreased by 4% as compared to the same period in the previous year of 2024. This was mainly due to the slightly lower dispatch by the client. Operating costs decreased by 7% as compared to the same period in the previous year. This was mainly due to the lower dispatch supported by lower capacity payment to the operator as with regards to our tariffs agreed with O&M operator. Admin and general expenses have decreased by 15%. This was mainly due to the application of robust cost reduction plans in the company. The finance costs decreased by 9%, which represent OMR 165,000, which was mainly due to the declining SOFR rates in the international market and also due to the repayment of the loan. As far as the internal control and corporate governance of the company is concerned, the management of the company believes in strong internal control system, and we also adhere by it. And we also ensure that we are 100% compliant with the FSA and the IPPF regulatory frameworks. The company has placed high standards of corporate governance, which are compliant with the CCG regulated by FSA. As far as our future strategy and future plans are concerned, the company is taking endeavors to ensure that we continue to operate our plant at optimum performance, maintaining the plant's reliability and availability and without compromising on any HSE matters. As far as the future plans are concerned, the company aims to distribute OMR 0.012 per share every year biannually in May and in November. So that was our slide for today's session. The floor is yours. If you have any questions, any queries that you would like us to answer, this is your time, most welcome.

I just want to ask what is the reason of the decrease in your other income? And what is the component of the other income?

Other income? Where are you specifically referring to other income?

Yes, other income. See the decrease of 50%.

Yes, exactly. So the other income is that we had some outsourced staff. So we had to reduce that -- the responsibilities of that outsourced staff. So that's why we have reduced income. But obviously, that also have an impact in our G&A expenses. So it's ultimately zero impact to our bottom line. So there's no impact to our bottom line on that one.

Okay. Great. So you can maintain the same level?

Exactly. We stay on the same level. So we were having a G&A expense and the other income. So ultimately, there's no impact to that one. Anybody else on the floor? So I believe that is it. Thank you, everyone. Thank you for joining us today. We hope to see you on the next session. I wish you a very nice day ahead. Thank you. See you bye.

Thank you.