Thank you for standing by, and welcome to the Qatar Electricity and Water Co first quarter results call. Please note today's call is being recorded. I would like to hand over to Bobby Sarkar from QNBFS to begin the call. Bobby, over to you.
Thank you, Paul. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Qatar Electricity and Water Company's first quarter 2024 results conference call. On this call, we have Narayana Rao, who is the acting Finance Manager, Gojy Augustine, who is the Head of Management Accounts, and Abdullah Al Janahi, who is the Cost and Budget Controller. We will conduct this conference with the management first reviewing the company's results, followed by a Q&A. I would now like to turn the call over to Narayan. Narayan, please go ahead.
Yeah. Thank you, Mr. Bobby. [Non-English content], and good afternoon to everybody. As you know, QEWC had this board meeting on 23rd April 2024, that last Tuesday. We declared our results. For outset, it looks like a big reduction in the profit compared to last year. We had only QAR 318 million profit against QAR 401 million last year, with a reduction of around 21%, which is a huge decrease, actually. Actually, if you look into the details of the profit last year, we have got two one-time items, non-recurring items. One is profits from the sale of Siraj Energy. We sold our 49% ownership in Siraj Energy to QatarEnergy, which resulted in QAR 78 million profit. And other non-recurring item last year is QAR 26 million reversal of provisions, which has been made in earlier years. Totally, we had QAR 104 million additional.
If I deduct from that last year's comparable profit would have become QAR 297 million. And this year we are not having any such items. So it implies we have to compare QAR 297 million against QAR 318 million. It is actually an increase of QAR 21 million in the profit, and 7% is the real increase in that respect. This year, revenue has gone up from QAR 658 million last three year to QAR 687 million. This is mainly due to the increase in production, I can say, increase in production in the sent out power and water.
Sent out power has gone up by 2% and sent out water has gone up by 4%. This is the major reason, and cost of sales has gone up by 1.87%, that is by QAR 9 million only, with small increase. It is normal increase in salary and gas, et cetera, but there is not a major increase, actually.
Next, if we go to other income, it was QAR 137 million as per our presentation, QAR 137 million this year and QAR 196 million last year. Here we have to see, as I told already, QAR 26 million reversal of provisions was there last year. That is one of the item included in last year's other income. Apart from that, interest has gone up by QAR 17 million this year. Sorry, it come down by QAR 17 million.
Last year it was QAR 76 million, this year it is QAR 59 million. This is one of the item which resulted in a reduction during the year. Around QAR 17 million, this year's other income has come down because of that. Apart from that, the other major item is dividend. Dividend last year it was QAR 91 million. This year it is only QAR 74 million. There also around QAR 17 million reduction is there.
It is mainly because of IQ has declared a lower dividend historically, if we compare, it is lower dividend. Last year, they declared a very good dividend. Totally because of that, we are down by around QAR 60 million, QAR 79 million in the other income. Next, finance cost. Sorry, general and administration expenses, if you look into it, actually, there is no major increase, only QAR 5 million increase is there. Last year, QAR 61 million, this year QAR 66 million. It is normal increase only. Finance cost is concerned, we are having a big reduction, around QAR 23 million reduction is there, which is almost 17%. Of course, you know, we repaid lot of short-term loans last year, and quarter one, we had around QAR 1.8 billion in Qatari riyal terms. In US dollar terms, it is $501.2 million .
This full amount has been repaid during the course of last year, from quarter two to quarter four. Quarter one, we cleared around $251.2 million . Quarter two around $100 million, if I'm right. Quarter three, $150 million. Totally $501.2 million , we paid completely during the last year. With this, our cash balance has come down and deposits has come down, due to which our interest income has come down. Interest expense also has come down. All side impact is there because of that. But balance sheet is concerned, we are comparing 31st December versus 31st March, we will not see any implication. Interest cost has come down by QAR 23 million. That is finance cost, which we are discussing about now. Interest income also has come down by QAR 17 million. This is about the finance cost.
The major item which we can see there is share of profit from our joint ventures. Share of profit from joint ventures. In financials, it is stated as equity accounted investments because for both associates and available for sale, joint venture and associates, we follow equity accounting method. They're together mentioned as equity accounted investments. It is QAR 144 million this year and QAR 132 million last year. Last year includes actually QAR 19 million, from the discontinued operation of the CPC as a Nebras item. Whatever, total increase is QAR 12 million here. Almost 9% increase is there. This is mainly because of some investments of the Nebras, especially in UMPL, Bangladesh, which is commissioned during the Q1 and generated QAR 18 million profit during the Q1 2024. Equitix, which we acquired in the end of 2023.
That's a U.K. project. There we made a profit of around QAR 19 million. In QEWC also, we made some profit of around QAR 9 million from IBPC additional profit. Discontinued operation QAR 19 million, it was last there the profit, on the CPC. This year it is not there. Taking net impact of all this, we made an additional profit of QAR 12 million during the year, on the share of profit from the equity accounted investments.
As I explained, it is joint venture companies and associated companies. That's it about balance sheet. In effect, where net profit is concerned, we had a 21% down as I explained, and in reality it is 7% increase. That's what I explained already. Major factors as the QAR 78 million from the sale of Siraj Energy, as I explained already, and QAR 26 million from the reverse of provision, which I also explained already.
Dividend income reduction by QAR 17 million is one more major item which affected the net profit. Now, if we go to balance sheet, this time it is not much movements like last year. If you balance sheet in first item, non-current assets, where we can see a small reduction of around QAR 200 million. This is mainly because of one item, if you go to the details. We have got this equity accounted investments, which around QAR 8.8 billion is there as of March 2024, and QAR 8.3 billion was there as of December 2023. Which implies almost QAR 0.5 billion, means QAR 500 million increase is there. It is mainly because of investments in Nebras projects. You can go to note seven in the financials where it has been explained properly.
Out of that, to summarize that, it is only two items in effect because profit and dividend almost same. It getting net impact is almost zero. Profit earned minus dividend declared from all these accounted investments. So only major items are investments in overseas projects, around QAR 0.3 billion. QAR 268 million or something is there. QAR 286 million, sorry. QAR 286 million, QAR 0.3 billion. Increase in hedges of these companies, they're around QAR 0.2 billion. Net impact is around QAR 0.5 billion on the equity accounted investments. That's also mainly due to overseas investment by the overseas projects investment by Nebras. That's what I explained already, and it is companies, if you want to know, it is already mentioned there. AES, Baltic and Stockyard Australia, and Surkhondaryo project in Uzbekistan. These are the major projects where we invested.
Other items, only some small reduction in fixed assets because of depreciation and all. Loans were around QAR 100 million. There are small differences, not much movements there. Current assets are concerned, it is QAR 4.3 billion versus QAR 5.1 billion. Around QAR 0.8 billion reduction is there. It is mainly because of cash and bank balances. You can see there a major reduction of QAR 1.1 billion, you can see that. I can say it is due to two reasons. One is dividend payment of QAR 900 million by QEWC. The investment by Nebras, as I explained already, around QAR 300 million. These are the major reasons. Of course, other differences are due to normal operations. The receivable has gone up by QAR 150 million. Of course, other negative side, the net of this almost becomes QAR 800 million. That's it. Which is the reduction in the current assets.
Equity is concerned, you can see a small reduction there, 3.44%, QAR 15 million - QAR 14.7 million. It is small amount actually, QAR 15.2 million last year, now QAR 14.7 million. Movement, of course, statement of equity is attached in the accounts. To summarize it, the major items are QAR 9 million, as I told, QAR 9 billion is the payment of dividend, which has to be taken out from there, and around QAR 300 million profit create in million, as you can see, that is to be added. It is almost QAR 8.7 billion, if we make that adjustment to retained earnings.
Retained earnings was QAR 9.2 billion last year, now it is QAR 8.6 billion - QAR 9.3 billion, I can say. Rounding off QAR 9.3 billion, now QAR 8.6 billion. This explains almost the movement. It is QAR 9.3 billion opening balance. Closing balance is QAR 8.6 billion. Only 0.1 other adjustments. You can see statement of equity, it has been explained properly there.
Other differences, only hedge and there is a foreign currency movements, translation resource and all. If you take it is only around QAR 200 million. It explains the difference of QAR 0.5 billion in the equity. Non-current liabilities are concerned, movement is very minimal, only 1.2%. It is normal repayment of the loan installments, nothing else. You cannot see any movement there. Current liability is concerned, it is almost the same. There are very minimal payment movement. I think no explanation required there, only 1.8% movement. With this, I think I explained most of the things here. Only if you see our market capitalization, it is almost QAR 17.93 billion. QAR 16.3 billion into QAR 1.1 billion. It is QAR 17.93 billion. Our credit rating, of course, very small change. It is A1 stable with Moody's, and the company is definitely performing well.
There is no any significant factors which is to be informed to shareholders. We all disclosed whatever important going to be disclosed in the financials very much there, yeah. Nebras, of course, I explained already additional investments. Even though I will just explain, which is disclosed in the accounts. Two items we exposed, even explained in the accounts in, I think, note number seven or something. In March, Nebras acquired 35% equity shares in Surkhondaryo project in Uzbekistan with 1.590 GW project it is actually. Here, effective shareholding is 35% into 75%. Effective shareholding is 26.25%. The project has a long-term PPA and project finance agreement in place. The power plant is under construction with the notice to proceed issued in March 2024. COD expected in 2027. Other partners include EDF, CGNEI, and a local developer.
Other one is AES Baltic Holdings BV, where we had already 43.33% shareholding, but it has been increased to 83.33% in the end Q1 2024. Yeah, that's what, 83.33%. Mainly, it is handling the IPP-1 and IPP-4, which is 381 MW and 250 MW projects in Jordan. With this, I conclude my explanation to the financials. Any queries, questions you are welcome to ask. We will try to clarify, myself and Gojy and Abdullah are there to attend your queries. Thank you very much.
Thank you. We will now open for Q&A. If you would like to ask a question, please press star one on your phone keypad to raise your hand and join the queue. Your first question comes from the line of Mark Krombas from TFI. Please go ahead.
Thank you very much for the call, gentlemen. I have a question about other income. It is broken down into two parts, the dividend income you have discussed, and then miscellaneous income. Last year, you had QAR 147 million in miscellaneous income, and you also had QAR 23 million in secondment income. Could you talk about what the source of that miscellaneous income is? What is the outlook for this year?
Okay. Just give me one minute. Miscellaneous income. Last year, of course, we had so many items there in miscellaneous income. Mainly, we had 1047 in.
But even in 2022, you had high miscellaneous income, QAR 77 million.
Yeah. That, of course, mainly dividend included there.
Mm-hmm. Anyway.
Sorry? Yeah.
I am just trying to understand how much we can count on this year in your estimate?
Sorry, that miscellaneous income is the reversal of provisions. Out of that, QAR 26 million is reversal of provisions. For this year, we are not expecting any reversal of provisions.
Yeah, dividend.
There was QAR 3 million that you have done so far this quarter. That was also reversal of provisions?
No. That is secondment, I think.
Yeah. Because before you had a separate item of secondment income.
No reversal of provision during 2024, actually.
To summarize, you are not expecting any miscellaneous income in 2024, and you are expecting some secondment income. Do you know how much? What is the secondment income from the source of it?
Actually, some expert employees have been seconded to our joint venture companies. From there, we are getting some secondment income.
Is that like a fee income, which you can predict?
Actually, it is nothing but it is a salary which we are billing to them based on some contract entered into.
Is it one-off in nature?
Yeah. It will be there throughout the year. Yeah. It is not one time. Secondment income will be there throughout the year.
Okay. All right.
Yeah. If I'm right, last year also, it is around QAR 7 million, and this year also it is around QAR 7 million.
No. Last year, secondment income was QAR 22 million.
Pardon?
Last year, secondment income was QAR 22 million, and miscellaneous income was QAR 147 million.
No. You are telling for the year or for the quarter?
Yeah, for the year. I am asking you your outlook for the year, for secondment income and miscellaneous income.
Yeah. This is eight into four. Yeah, QAR 32 million it was, right? Yeah, that is right. It will be in the same level.
All right. Okay, thank you.
Secondment. Other incomes are, that is a one-time income, like what you say, dividend and all those things we already discussed. Dividend, some reduction.
Yes.
There compared to last year. Other QAR 78 million, I think it is not included there, mainly dividend. Of course, interest income also in the presentation we included that. Interest also, compared to last year, it has been reduced this year by QAR 17 million. Yeah. In presentation.
Okay, thank you.
Yeah, other income. But in the financials, it has been taken separate income.
A reminder, if you would like to ask a question, press star one on your phone keypad. Your next question comes from the line of Seki Mutukwa from Ashmore. Your line is open.
Hi. Thanks for the call. Two questions, please. The first one being, can you remind me of the electricity capacity expected to be commissioned in calendar year 2024? However, whether it is net or however you would like to disclose that. Secondly, on a three-year basis, so 2024 all the way to 2027, which year would you expect to have the highest increase in capacity from projects being commissioned, please? Thank you.
About the electricity capacity to be commissioned, I will not expect anything during the year 2024. Right, Gojy?
No. Nebras is having the Bangladesh project.
Yeah. Nebras, that is commissioned already, right?
Yeah, 2024.
Yeah. It is commissioned in Q1 2024. That is why we had earned around QAR 18 million profits from that. I think there are also, of course, any other project in Nebras is to be commissioned, I don't think. Is it right?
Yes. Nothing in 2024.
Yeah. Apart from this Bangladesh project.
Yeah.
Which we already done. Yeah.
Yeah.
2024 to 2027, we have got Facility E, which is under tender process is completed. Not completed. Tender process is on now. As per the planning, Gojy can explain it actually, basically, instead of me.
Yes.
Facility E.
Yeah. Facility E most likely will be commissioned by 2027, and Nebras also having few projects in Uzbekistan expected to be commissioned in 2026 and partially in 2027.
2026 and 2027. And sorry, Facility E, will you tell us size or any updated information later?
Yeah. Yes. So capacity is 2,300 MW and the power and water is 100 MIGD. It is going to be commissioned in 2027 in phases, but still the final target dates or things, it is not yet finalized, but it will be. Yeah.
Okay. Phase I maybe in 2027 and then the other phases thereafter, depending on how you decide to do it.
Yeah.
Okay. Thank you.
Thank you.
And that concludes our Q&A session for today. I would like to hand the call back over to Bobby for closing remarks.
Hi, guys. This is Bobby again. Could I just ask a couple of questions? Just as a follow-up to Seki's question, this Facility E, I thought it was supposed to be operational by 2025, 2026. Is there a delay to 2027? And then what is your net stake in this project? Is it still around 55%? And if you could give us a sense of what the cost will be, in terms of building it. That is my first question. My second question is, you gave us a like-for-like number for the first quarter of 2023 versus the first quarter of 2024. Could you also give us the same versus the fourth quarter of 2023? Were there any one-offs in the fourth quarter of 2023 that we need to account for when analyzing the first quarter of 2024 numbers? Thank you.
First of all, it is 55%, that is right, QEWC share, facility. Expected cost is around $3 billion. Of course, final picture is not clear, that is only expected cost, $3 billion. Your second question, I think, major difference is only the take-or-pay on RAF station, which is there in Q4 2024, but not there in Q1 2024. Sorry, I mean Q4 2023 and Q1 2024, if we compare. Any other item, Gojy, you have got anything to say on that?
Yes. Nebras had a reversal of provision on their books.
Okay.
We accounted for a QAR 51 million provision reversal in Q4 2023.
That is right. Yeah. QAR 51 million provision reversal. Yeah.
A total of QAR 131 million in one-off provision reversals in the fourth quarter.
QAR 131 not a provision reversal. It is take-or-pay. It is different. It is not a provision reversal.
Right. You are reversing the gas fuel charges, essentially, right?
That is right. That is because it would have been. Suppose demand from Kahramaa is more, then that would have been not there. That is why we provided that, because we expected that Kahramaa will take that portion. But they did not take, that is why take-or-pay income we have got. But provision, we have to make because to meet the uncertainty. It is not exactly provision reversal. It is during the year only. It is not the RRS.
Sorry, what was that again?
No, it is the provision made also during the year. Reversal because Kahramaa is not demanding the more power from that station.
Sure.
Yeah. That is right. During the year only. It is not from year-to-year difference. Yeah.
Sure. Okay. Could you venture to give us any kind of guidance or outlook, in terms of the JV and associate income for this year? Could you talk a little bit about how you see your overall debt level going this year? Thank you.
Second question, where our debt level is concerned, it will not change now because we are not taking any major loans unless we go for a new project. It will remain same because if you see our balance sheet now, it is after clearing all short-term loans. We cleared all short-term loans, and we are working with the minimum working capital requirement, whatever is there now. And accumulation of cash is also for the various purposes only. And of course, we have to keep additional cash in Nebras because of the new projects may come at any time, and we should be ready to invest there. That's the reason they have got a lot of cash there. It will continue for some time until we will find out some other alternative instead of keeping in cash. Is there any other alternatives there where we can earn more?
Something we have to look into that aspect. But time being, we are operating with the minimum cash, and we are not going for any other loans except the equity bridge loan and in the Facility E, once it is finalized. I think that is no fresh loans are required during the year, and cash position will also remain almost same. Then the first portion, that's your question, right?
Yes. What about the JV income? Can you give us a sense of how much you expect from your OpCos and your previous JVs and your Nebras for 2024?
Nebras income definitely going to be higher than the previous years because we know Bangladesh project has been commissioned, and we have got the Equitix in U.K., which is functioning. And of course, so many projects are under construction. That is there. Until they commission, we cannot account for the income from there. It will be for the future years. Other thing, new projects also, we are working on various new projects. Our Nebras team is working on various new projects, which we have to see the outcome and how it adds for the future income. It is not like QEWC, we can project 100% to how about at least revenue side, almost we can give you some projection. But here it is difficult to give the projection in the case of Nebras. But definitely good future is there for the Nebras.
We are on the very much on the positive side, and new projects we are acquiring and working on new projects. That's it.
Okay, great. Thank you. Paul, do you have any other questions from the outside lines?
Bobby, no more questions.
Okay. Well, if there are no further questions, we can end the call for today. I wanted to thank QEWC management for taking the time to answer our questions, and we will pick this up again next quarter. Thank you very much.
Thank you. Thank you, everybody.
Thank you.
This concludes today's conference call. You may now disconnect.