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

Hello, [Foreign Language]. Good morning, everyone. Welcome to the first half yearly MSX discussion session of Barka Desalination. We shall start our presentation slide. Just before we move on, I wanted to let the audience know that the meeting and its contents are being recorded and can be shared internally or externally. Let's start with the overview of the water market in Oman. Almost 86% of the potable water demand in Oman has met through the desalinated water being desalinated by the plants throughout the Oman. NPWP has contracted the capacity from 13 operational plus and the Sultanate of about 1.15 million cubic meter per day. And they are the one responsible to procure additional capacity for the upcoming demands or the growing demands. The brief overview of Barka Desalination. Barka Desalination was incorporated as a joint stock company. It was incorporated on 21st of January 2016. The company was then listed on the MSX on 27th of February 2022. It had 4 main original sponsors or the owners, including ITOCHU, Veolia, ENGIE and Towell, whereas now the 40% of the shares are held by the public. The objective of the company is to acquire, develop, finance, design, construct, own, operate and maintain the desalination facility of Barka IV IWP. The plant has a capacity of 281,000 cubic meters per day, which is equivalent to -- which almost covers the 23% of the water demand in the country. The water purchase agreement with PWP spans from 2018 to 2038, which is almost -- which is 20 years. The O&M of the company has been entrusted with Veolia Environmental Services SPC for the same tenure as of WPA. Just a brief time line of what we discussed in the earlier slide. Now the operational side. The company commenced commercial operation on 13th of June 2018. Since then, the company has supplied more than 656 million cubic meters of potable water to NPWP. The company increased progressively its production throughout the year, which is 2026. It has supplied around 43 million cubic meter of water for the June ended 2026, which makes about 84% of the plant capacity. The plant had its annual performance test on 17th of March 2026 for the contractual year 9. The water quality was maintained throughout at 100% compliance rate and the average scheduled plant availability was 99.97%. We move on to the financial side. As we can see that the revenue has increased by 3% on a year-on-year basis. This was mainly due to the higher dispatch where we can see the same impact on the operating cost of the company, which improved by 5%. This was mainly due to the higher dispatch plus the higher capacity payment the operator in line with the O&M contractor. The G&A expenses have decreased by 2%, whereas the net finance cost decreased by 8% on a year-on-year basis, which was mainly due to the impact of, one, the repayment; two, the lower SOFR rate. The management of the company believes in a strong internal control system, which has been overseen by our internal auditors in compliance with the prescribed regulations of FSA and IPPF. The management -- the company has in place, higher standards of corporate governance, which are compliant with the applicable code of corporate governance. If we talk about the outlook for 2026, the company is taking its endeavor to ensure that it continues to take reasonable, professional and prudent steps to sustain its plant's performance by maintaining the plant's availability and reliability without compromising on the HSE. The future plans, the company aims to distribute -- continue to distribute the dividends at the pace of OMR 0.12 per share by -- annually. So this concludes the presentation. If the audience have any questions or queries, they can take the floor.

So I believe no questions. Thank you, everyone. Thank you for joining us. Yes, Faris, I believe you raised the hand?

Sir, do you hear me?

I can hear you now. Yes, Faris.

I just have a question. Are there any expected change in the water purchase agreement in terms of revenue? There will be any change?

No, there is no change. The water purchase agreement is fixed for the period of 20 years from 2018 to 2038, and there's no change.