Muscat City Desalination Company SAOG (MCDE) Earnings Call Transcript

Good morning, everyone. Welcome to Muscat City Desalination Company's, MSX, discussion for first half 2026. I'm Megumi Kikuta, CEO of this company. Today, let me explain about our company's performance for first half 2026. Can you go to next page? I'm going to touch upon 3 agenda: operational highlight and financial highlight and outlook. Can you go to next page -- another page? Okay. Before that, I'm going to touch upon the company's overview. Company's name is Muscat City Desalination Company, and the location is Ghubrah, Muscat. The business is a production of potable water via seawater desalination process. And our plant's capacity is 191,000 cubic meter per day. And our client is Nama Power and Water Procurement Company, NPWP. And our contract start from signed in February 2013 and the COD was February 2016. And the IPO was January 2018. Okay. Can you go to next page? Okay. I'm going to touch upon the 2 issues. One is water output delivered and second is plant availability. In this first quarter, our water output delivered was slightly lower than last year. Basically, the reason is our maintenance activity, we concentrated in first quarter. That was slightly lower than last year. And basically, this water output delivered is based on our client dispatch instruction. And the next one is plant availability. Plant availability for first half was 95.88%. That is also slightly lower than last year. But as I mentioned, our maintenance activity concentrated in the first quarter. That's why slightly lower than last year. But basically, our expected plant was 94%. So comparing to our plant, slightly higher than our expectation. So -- and we also touched upon the historical availability change. 95% is not so high, not so low. Okay. Can you go to next page? Next topic is HSE. HSE means health, safety and environment. Company achieved -- company experienced -- we didn't experience the lost time incident during this first half for this year. And we achieved 3,775 days without any LTI since COD. That was our status. And we also didn't experience -- we haven't experienced environmental incident during this first half of this year. Please go to next page. Next topic is CSR, corporate social responsibility. Same as usual, our allocated budget was OMR 8,000. And our activity is still ongoing for this year. And the focus area is same as usual: education, water awareness program for students and helping the unfortunate people of the community. Okay. Can you go to next page? Next topic is financial highlights. From this agenda, our CFO, Mr. Falah, will explain the detail. Please go ahead.

[Foreign Language] and very good morning, everybody. My name is Khairul Falah. I'm the Chief Financial Officer for MCDC. I will run through with you guys the performance of first half of 2026 versus first half of 2025. In front of you, you'll see 6 bar charts. In terms of the revenue, for first half of 2026, we made OMR 8.68 million against an OMR 8.75 million compared to last year. And the slight decrease is, as mentioned earlier by Mr. Kikuta, that it's our plant availability is slightly lower, but still within the range of operation limit. With regards to gross profit, we clocked in OMR 3.14 million against OMR 3.15 million. It's very stable at the moment. G&A expenses is slightly lower by OMR 50,000 in comparison to H1 2025, we are at OMR 0.45 million for general and admin expenses for 2026. This is just a timing difference because one of the inspection that we were supposed to do in June were delayed to July because of the tension in the Gulf. So our technical adviser couldn't arrive here on time. Financial costs, it's lower compared to 2025 first half of the same period. So financial cost is OMR 1.12 million for 2026 against OMR 1.22 million for 2025. Main reason is because paring down borrowings between last 2025 and this time 2026. With regards to profit before tax, we're clocking OMR 1.57 million against OMR 1.43 million for the same period last year. Mainly, the slightly higher number compared to last year is because we have better recovery of our -- by various events with NPWP. And lastly, profit after tax is OMR 1.33 million for 2026 against OMR 1.20 million for 2025 first half of the year. Effective tax rate is still at a similar level of 15.5% to 16%. On share price, as at 30th of June, MCDC share price is OMR 0.092 per share. The same time last year was OMR 0.070. Dividend in the AGM that we have held on the 26th of March 2026, the shareholders has approved a distribution for May and November 2026 from the retained earnings of the company ended 31st December 2025, not exceeding OMR 0.005464 per share in total. And of course, in April 2026, the Board has resolved to distribute cash dividends of value of OMR 0.002732 per share out of the retained earnings of December 2025 to shareholders who are registered in the company as at 7 May 26. This dividend was only paid in May 2026. That's all on the financial highlights for the first half of the year. I'll pass this back to Kikuta to run through the outlook of the business.

Okay. Can you go to the next page? The outlook and the challenges, basically, the situation is same as before. Our business is secured based on the long-term contract with NPWP. And as we've shown on the screen, our opportunity is the high water demand in Muscat zone and the challenges: extraordinary natural phenomenon and/or, as we understood, the regional conflict is also challenges. But so far, there are no impact for us basically. We believe our performance is very stable. And we can -- I believe we can keep the same level of the dividend in the future. That is our outlook. Thank you. That's it from us. If anyone has some questions or something, please let us know. No one has a question? Okay. We're going to finish our session.

Alright. Thank you very much for your support. Thank you.

Thank you. Thank you very much.