Phoenix Power Company SAOG (PHPC) Earnings Call Transcript & Summary

Good morning everybody. I welcome you to our session for discussion of our performance for the 6 months of 2025. So first of all, we will present our performance during this period. And later on, will give you the floor to ask any questions. [Operator Instructions] So we'll start with the disclaimer here as usual as we normally start. So I'm pleased, we informed that whatever we are presenting here is unaudited of public knowledge disclosed to the market. And we are not intended to construct an offer or not intended to pass an advice for investors to invest in our company. This is our safety's message. So always, we communicate this message to our employee, our staff, our contractor. So nothing is so urgent or important that cannot be done safe. We move to the pipeline of the company or the project for and not all of them about the project. So 2 independent to our project is owned by the Phoenix Power Company. It is built and operate with a gas-fired combined cycle power generating facility with a power purchase agreement of 15 years. It is located in Sur industrial area, approximately 180 kilometers from Muscat. The capacity is 2,000 megawatts within operations. The project cost was around OMR 1.6 billion. As I mentioned, the owner of the project is Phoenix Power Company and is operated as a Phoenix Operation & Maintenance Company [indiscernible] Following up, we'll move to the contractual relationship framework that the company [indiscernible]. So here, you can see the stakeholders of the company, we have shareholders, the founders plus the public investor as well. As you are aware that 35% of our peers are traded in the public with -- at MSX. We have also lenders, majority of international lenders. It is regulated on the authority of public process regulations, which is the authorities regulated this sector. We are selling the electricity to the [ PWE ]. We are having also a contract for [indiscernible] with integrated gas company. We have a long-term purpose agreement with the OEM, is Seimens also this, as I mentioned, we have O&M agreement with the operator who is Phoenix Operation and Maintenance Company. If we move to the contributions to the grid. This year, as you can see here, we're still contributing more than 20%. For this year, we are contributing 23% of the total minus -- and we can see the total capacity of [indiscernible] 8,800 megawatt power. So our contribution to that is 20%. As we move to the HSE statistics, further the company had first -- with the highest brand work of health and safety environment practice and its activity with our focus to create a safe working environment for our employees, contractor, also the business. We have successfully achieved 2.8 million total manhours [indiscernible] and also, we have completed 3,825 total number of days without lost time injury since the commercial operation. This year, we have completed 131,606 total number of manhours in [ 2000 ]. We move to the operations by end of the second quarter 2025 [indiscernible] operations performance with the commercial availability of 99.85%, which is compared to 99.32% in last year, the same period, as we can see it has slightly improvement in the commercial availability. And we have dispatched power of 4,820 gigawatt hours for the 6 months of 2025 compared to 4,726 gigawatts in 2024. So there also was improvement in the dispatch as well, 2025. I now move to the financial performance. You can see here a summary of our performance in 2025 are compared in 2024. So as you can see, the net result was OMR 12.266 million compared to what has been achieved in 2024 OMR 10.364 million which means that we are higher than last year almost by 18.5%. Our revenue also has increased by 3.78%. It was OMR 82.97 million compared to OMR 79.9 million. Here is a comprising same thing but in a chart. You can see the revenue, as I mentioned, has been increased compared to last year. Direct operating cost has been slightly also increased. Other expense also was OMR 824 million compared to OMR 755 million. So it was slightly increased. Financing cost has been reduced, it was OMR 4,222,000 compared to OMR 5,191,000 in 2025 which represent reduction this year, and this is a result of the casual repayment that's been carried out. This is waterfall for showing that result compared to last -- a year ago. We start with 2024, OMR 10.354 million. There was OMR 236,000 coming from the higher capacity products and [indiscernible] market. Also OMR 462,000 because of the maintaining cost -- higher cost during the scheduled maintenance, OMR 69,000 increased in the D&A. We have OMR 736,000 from the other income. [ OMR 969,000 ] lower interest costs due to the scheduled repayment and of course, OMR 422,000, increase in the tax due to the higher effect or the highest income in 2025. So this is a summary of our performance 2025. We'll give you now the floor if you have any questions, I want to have any clarification in our results, which have been disclosed in the MSX in 23 -- July 23. If you have any questions, please raise your hand, but the team will unmute you.

Am I audible?

Yes, please introduce yourself first, and you can ask question.

I'm an [ Anna Thomas ] from United Securities. I have just a question regarding how any discussions going on regarding the PPA agreement? Whats's the status right now?

Do you have any other questions?

Okay. Do you have any kind of CapEx plans?

Do we have -- sorry, what?

CapEx plan?

CapEx plan. Okay. Any further question or just you have this?

That's it.

Okay. Thank you. Regarding to the discussion with PWP. So as usual, we have some time to have discussions, so the PWP for extensions. However, as of now, nothing to be updated or if there's anything materially to be updated, we will disclose in the market. And regarding to the CapEx, I can't see any expenditures and CapEx terms within 2 or 3 years.

Okay. Just one more question is that you started paying tax. So could you tell me like how much -- how will this tax payment affect the dividends for the rest of the PPA period?

Actually, that has been already forecasted in our budget. I don't see any -- going forward any major impact on us. Of course, we start this year, and it will be continuous until the end of the period, but I don't see any major impact. Nobody is raising hand for questions.

Could you also share your thoughts on the post PPA plans? Have you started in discussions for the extension of PPA?

I'm sorry, before there is a discussion from time to time. now -- as of now, there's nothing to be disclosed. As I mentioned, if there's any material information or anything that need to be disclosed, we'll disclose that first in the MSX and then we'll have a discussion. But as of now, nothing is to be disclosed.

Sorry, just can you give some kind of a time line as to when the discussions will happen in approximate so we can have an idea?

Actually, we don't have any idea about the timeline. If there's anything, as I mentioned, that will be disclosed in the MSX . But as of now, we don't have any timeline, these discussions, it's happening on a regular basis. But as of now, we don't have any timeline. Yes, Mona.

Yes, just last question. Like on the dividends, can we expect the OMR 0.0055 to continue until 2029? Or is there any changes to be expected?

Actually, our [indiscernible] is to maximize the dividend payout. So if there is any possibility even to be higher than OMR 0.0055, we work on it. But for this year, we have already taken the authority from the AGM with a ceiling of OMR 0.0055. If no further question, we can finish the meeting. Yes. Any further questions?

I was allowed in the meeting just now. My name is Joyce. I was not allowed in the meeting earlier. And I was just allowed right now, so probably I have missed most of the discussions which you had. But my question is on your PPA extension, potential for PPA extension. Have you started any discussions with the OPWP for extending your PPA? And also what are the lines of your discussions with OPWP, if you can share any thoughts on that?

Okay. So the first question I have already answered, I don't know if you hear it or not, but we have from time to time and discussions with [indiscernible] as of now, nothing is to be disclosed. If there is any material information or any material update will be disclosed in the market. But as of now, nothing has to be updated. Regarding to your second question. Here in Sur, [indiscernible] company. We are keen to extend our PPA beyond 2029, and we are working hard to achieve that target. [Foreign Language] of course, working very hard to achieve that day. Any question?

Yes, I do. When do you expect OPWP to come up with the new tender for extension of 2,000 megawatt power?

See, Joyce, we don't have any timeline for that. It is controlled by PWP and as we mentioned, there's nothing to be disclosed here or updated. If there's anything, of course, that will be disclosed. So Joyce, you have another question?

I think there's a technical glitch, my -- I'm getting continuously muted during this meeting, even if I was trying to unmute myself. It's not -- I'm not able to do that.

What I suggest here as I mentioned in the beginning, if you have any questions, okay, ask all the questions first, then we will answer you rather than one by one. So if you have any questions, please ask it in one go, and then we'll answer. So if you have any other questions other than this, what you have listed or you want to ask, ask it in one go and then we'll answer.

Sure, sure. We'll do that. The first one is, are there any major maintenance activities scheduled during the next 4 years? And if it is there, what could be the potential CapEx spending that you might be expecting or you might have budgeted for that? The second one is for the PPA extension, should we expect any major CapEx or spending or plant life extension or any kind of activities in case there's a PPA extension? Are there anything like that is required? And what could be the potential spending on that? These are the 2 other questions that I have. And the third one is on your dividend distributions. So now starting from this year, you started paying the taxes. So then -- now OMR 3.5 million you have already paid this year, next year will be almost OMR 4 million. And now the tax expense will go up. So I just wanted to check if you're -- on your dividends. So do you think that you will be able to support this [indiscernible] surplus dividends for the next 3 years on a yearly basis? Or will there be any further changes in dividends or potential changes in your dividend paying capacity during the final years of your PPA?

Most of this question have been answered, but again, I'll answer to you. Regarding to the PPA extensions as I mentioned before, there's nothing to be updated here. If there's any material information that will be disclosed in the market. So we are here just to try to discuss our performance over the 6 months of the year. There's nothing to be update you regarding to the extensions. If there's anything, we'll disclose in the market. Major maintenance for the expected 4 years. Actually, we have done a major maintenance [indiscernible] on the plan that has been working this from 15 years -- for 15 years from the [indiscernible]. So there's major and minor maintenance, we are carrying out. But however, that will not impact the company because this is already -- as we had a contract, we have with the [indiscernible] provider. So there is no impact or a major impact on us. Regarding to the dividends. As I mentioned, our policy is to maximize payout. So we have already taken from the AGM authority to distribute OMR 0.0055 this year, and we have already distributed OMR 0.0035 in July. And our -- also to distribute to this in January. So that in total, we have -- will distribute OMR 0.0055. Tax payment will have no impact on us -- major impact, I can't see any major impact on the distribution of the dividend with continuous being dividends till end of our current PPA. Yes. Any questions? Okay. Thank you. Thank you very much for joining this question. We [indiscernible] we hope that will give you the answer for your question. We'll finish now our presentation and thank you. Thank you all very much for joining this discussion.