Sharqiyah Desalination Company SAOG (SHRQ) Earnings Call Transcript & Summary

Hello, everyone. Good morning. This is MSX session for Sharqiyah Desalination Company on 11th August 2025. The meeting and its content are being recorded and can be shared internally and externally. Here is the content for today's discussion session, the company overview, operational highlights, business continuity, financial information, internal and corporate governance. Here is the key dates for company -- the company was incorporated in 2007. The commercial COD for the initial project was in 2009. The company was listed on Muscat Securities Market on 2013. The financial closing related to the expansion project was in 2015. Confirmed COD by OPWP was in 2017. The solar farm inaugurated in 2023. This is company overview about the pre-IPO and post-IPO. Post-IPO, Veolia Middle East is having 35.75% of the shares. Middle East Investment 29.25%, public holding 20.53%, pension fund is holding 14.47%. Here is the in-country values, capital invested, maximum capital is invested locally. We have procurement. Procurement is again locally, we are procuring more of the [indiscernible] item and -- in human resource, we have the recruitment policy, training for Omani nationals, training budget and training structures. Local development, maximize the impact of local communities through the wide range of the actions. And local activities, company is committed to full compliance with all aspects of Omani regulations. This includes but not limited to the Royal decree related to the employment Omanization and allocate a portion of fair awarded contract to Omani content. And we have the CSR and training program where we -- Sharqiyah dealing with Tamkeen. The Tamkeen program aims to empower, develop and train young people to qualify and integrate into market -- labor market and it enhances the self-confidence to serve, support for the job seekers being a priority for the government and a focus of the national policies. Tamkeen program, we have the beneficiaries, 16 beneficiaries, 10 young men and 6 are young women, which includes electricians, mechanics, administrators, procurement, HSE. We have some other CSR program, support lower income families, orphan financial support, Ministry of Education [indiscernible] giving for schools, a green Sur initiative, honoring outstanding students and blood donations campaign. The operational highlights in 2025, the plant produced 12.3 million cubic meter of drinking water with 66% average plant load and 96% availability of the water. Quality was maintained at 100% compliance rate through strict maintenance protocol. The plant achieved an average specific energy consumption 3.2 kilowatt hour, indicating effort to optimize the energy usage. Overall, plant exceptional performance, maintenance practices, collaborations contributed to its success, a reliable provider of high-quality drinking water in the Sharqiyah region. Also for 2025, SDC is in meeting the obligations to OPWP and the people of Sharqiyah by providing enough drinking water to meet the community demands. The company plans to review its energy optimization strategies and prioritizing sustainability in next decade. It's also a positive step toward ensuring the long-term environmental and the social responsibility. It is important to acknowledge the support of the community of Sur, shareholders, partners and employees [indiscernible] SDC at efforts collaboration and cooperations are to achieve the long-term success and it is encouraging SDC recognizing and appreciating the support it receives. Overall SDC commitment is through meeting the water demand, prioritizing sustainability and being a responsible employer is commendable. By staying dedicated to these goals, SDC can continue to contribute positively to Sharqiyah region and its community. The company paid a cash dividend of OMR 0.015 amounting OMR 1.4 million for the year ended 2024, 15% of the share capital to its shareholders registered with MCD as on 16th March 2025. Now the financial highlights. Revenue was OMR 5.5 million compared to OMR 6.4 million for the same period of last year. 1st January to 30th June decreased by 13.2%, [ OMR 830,000 ] this is mainly due to the higher amortizations for the year a direct result of decrease in the finance income, P&L impact only, linked to the reduction of outstanding finance lease balance as per the finance lease model and lower water output revenue. Cost of sales decreased by [ OMR 615,000 ] mainly due to lower water output and electricity costs. G&A expenses, the general and administrative expenses are lower by OMR 42,000 linked with decrease in manpower cost, professional fee, advertising and sponsor charges. Finance charges are lower by OMR 124,000 mainly due to loan prepayments. And the cash flow highlights, the dividend for the 2024 was OMR 1.4 million, 15% of the share capital. Loan repayment made in June 2025 OMR 1.6 million, finance costs paid for June 2025 [ OMR 109,000 ] and DSR is at 1.33. Internal control and corporate governance. The management of the company believes in a strong internal control system overseen by an internal auditor in compliance with regulations prescribed by the Financial Services Authority same and the International Professional Practices Framework. The company has in place high standards of corporate governance, which are compliant with the Code of Corporate Governance promulgated by the Financial Services Authority. This is all about the presentation. Anyone has any questions, please? Any questions, please? No questions. We can conclude the meeting. Thank you, everyone. Thank you.