Good morning all, good afternoon all, and welcome to today's ACWA Power financial results conference call for the year ending December 31st, 2024. My name is Adam, and I'll be your operator for today. If you want to ask a question in the Q&A portion of today's call, please use the raise hand icon or the Q&A box if you've joined us via Zoom, or if you've joined us via the phone, please press star one on your telephone keypad. I will now hand the floor to Ozgur Serin, Head of Investor Relations, to begin.
Thank you, Adam. Good morning, good afternoon, everyone. Thanks for joining us in this call again. Here today, we are going to talk about ACWA Power's fiscal year 2024 financial and business results. Obviously, for the year that ended 31st December 2024. Three of us are hosting this call today as usual. Abdulhameed, who is our CFO, and me, Ozgur, as Head of IR, we are in Riyadh. Marco, who is our CEO, he is in Dubai. Also, three of us will be hosting the call today together. In the first part of the presentation, again, as usual, we will be presenting to you our prepared remarks together with our slides. In the second part, we will be accepting your questions.
Before I hand over to Marco, I just also would like to pay your attention to the new Saudi Arabian Riyal symbol that we started to use on our slides. Really a few days ago, Saudi Arabia had announced their new currency symbol, therefore, please don't get surprised when you see a new symbol on our slides. Without further ado, let me pass the word to Marco. Marco?
Thank you, Ozgur, and welcome everybody. I have read some of the notes that were published, and I saw also the reaction on the stock market. I think that I would like to, together with Abdulhameed, walk you through what we believe were the key achievements in 2024 and both from a strategic and from a financial standpoint. What I think that we have two main areas. One is the great progress that we're making in growth, and some of you highlighted how this is a very high growth stock. I would like to focus on what we have achieved there. At the same time, the fact that over the past year, our profitability has been relatively stable, so I think that there, we would like, with Abdulhameed, to explain in more details how to read that.
Let me start with 2024 and the growth in our portfolio. The first point is about the actual new capacity that we have brought in, 14.3 GW and 0.4 million m3/ day of desalination. I would like also to add the second green hydrogen project whose construction we started early last year in Uzbekistan. On all fronts, we're making progress, and you saw already in the first couple of months of this year, we added another roughly 10 GW of capacity. You see how the speed is such that comparability quarter by quarter is really probably not describing the full picture, and that's why we would like to give you a little more color to that. The second is great progress on bringing the projects that we have under construction into operation.
You saw here 3.8 GW and 76,000 m3/ day that reached commercial operation in 2024, with the first PIF project fully operational. If I stop one second on the PIF program, in Saudi Arabia today, we have about close to 4 GW under operation at this point, and another 15 GW- 16 GW under construction. That makes it very significant in terms of the evidence of the big decarbonization program of Saudi Arabia, which is contributing, by the way, also into decarbonization of our own fleet that today reach more than 50%. We have today 25 GW of assets under construction for a total project cost of over $30 billion. To give you an idea, this is as much capacity as we built in the previous 10 years combined.
We enter China, as you know, and we triple our business development activities between financial closes, between tenders that we are preparing and submitting. If we go to the next slide, you will see also some additional remarks basically on the progress that we're making also on the operations. In availability, I'm very pleased with what we have reached in desalination and renewables, solar and wind. Although, as you know, and that was a big impact in 2024 on our results, we had issues both in Morocco and in the Emirates on our combined and concentrating solar plants, where we are working hard to basically bring them back to speed, with great results already in the Emirates and a few more activities needed in Morocco. We have also worked to enhance our strategic partnerships at all levels.
On the EPC side, you know that with our scale, where we target to roughly invest about SAR 20 billion per year over the next foreseeable future to achieve the goal of SAR 250 billion under management by 2030, it's very important for us to maintain a healthy supply chain and particularly EPC contractors. On this, we added four new contractors to our panel from Egypt. We're working with Turkish contractors. To enhance both the strategic relationship with our core Chinese and Indian contractors, but also to expand them, to expand the panel, so that we can count on everything that we need to deliver the growth that we are targeting.
On the equity side and financing side, we have strengthened our relationship with Japanese and Korean companies entering our combined cycle in Saudi Arabia, entering our renewable projects in Central Asia and Kuwait, Qatari, and Italian financial partners, alongside Saudi EXIM and EIG taking partnerships and financing positions on our portfolio. We are also focusing a lot on growing our people. More than 10% of our spending in operating costs and G&A actually goes to training and developing of our people, both at the higher level for our management and also on the more junior side, for the people that we need to bring up to speed to take the operating roles on our power plants.
On that, I'm pleased to report the expansion of the internal succession tables, reduced attrition rates by more than 46%, and we were recognized as the best employer in multiple regions where we operate. The renewed loyalty and development of our people are very core, to support the growth of our portfolio. Next, please. You see here also the progress that we have made on three core measures, HSE and availability of our power and water fleet. On power and water, I think I discussed already, I think that besides the issues that we had on the CSP and some of the issues that we have experienced on CCGTs that were due to some technological problem with some of the gas turbines that are under resolution.
We are very pleased with the progress, as you see, which basically for the rest of the portfolio, are really at world benchmark level. Where I'm really not satisfied, although the lost time injury rate looks very good, is that we have to report, unfortunately, three fatalities in 2024 and one additional fatality at our operation at the beginning of the year. This is really something that we have been discussing at our management committee, at our board as recently as last week. We have a renewed focus on all this, where we will not be satisfied until we reach a pristine record. It is a wide and growing portfolio. Today, we have between the different plants and different construction sites, including our contractors, more than 55,000 people at our site on any given date. That makes it in more remote locations.
It requires a greater focus on ourselves. Moving to the next slide, you have the size of the portfolio that we reached. We're now close to, and actually with the new project that we added in the first two months of the year, at the $100 billion level of assets under management, which make us really one of the world's leaders in energy transition, desalination, and green molecules. 8.1 million m³/day , which are now 8.4+ million m³/day. With the signing of the agreement for the acquisition of the ENGIE assets in Kuwait and Bahrain will reach almost 10 million, confirming ACWA Power as the leader in this technology in the world. Battery storage, as I mentioned, green hydrogen also growing in the year.
I'm really pleased with the speed and the pace, which put us really clearly on track with the 2030 goal that we have. If we move to the next slide, it's the last slide before moving to Abdulhameed to focus on the financials. It's a very healthy development pipeline, which as I mentioned, is already underlined by the roughly 9.5 GW close to 10 GW of new capacity, and if we include the acquisition, 1.5 million m³ of water desalination. Of course, all this is subject to the approval of the local authorities. I don't consider and I don't include it yet in our statistics, but it's something that we're working on very closely. With this, I will transfer to Abdulhameed to cover the financials.
Thank you, Marco, and good afternoon, everyone. [Foreign language] . First of all, I would like to congratulate everyone on the call for the achievement of completion of 2024. We did mention at the beginning of the year it will be a very challenging year full of opportunities. As you have seen from Marco's presentation, the growth is just outstanding when it comes to building up the portfolio and preparing it for our targets to achieve 2030. A point about profitability, and I think it's important since it was also highlighted at the beginning of the call from Marco, that actually the compounded growth since we have been listed, which is 2021, it has been 32%, which is also an excellent result when it comes to compounded growth for a company that is still growing and building up their capacity.
When it comes to the financial results, we will be carrying in the next few slides a couple of sections, and I would like to highlight a few things. One, that this presentation will cover the business actually achievement when it comes to business development, achieving nine different project financial closures when it comes to the size, around SAR 32 billion , almost equivalent to 2023 if you exclude the new green hydrogen part. We have also brought quite a significant capacity into operation, 3.8 GW, either through full project commercial operation date or a unit commercial operation date. We are also on track for the capital raise that has been announced middle of last year, and we are targeting to complete it in the second quarter of this year, inshallah. This is the financial closure figures that we have highlighted earlier.
The SAR 34 billion is basically a list of projects that we cover both in Saudi, UAE, Azerbaijan, and Uzbekistan. There has been mainly one project that has been able to be closed towards the end of the year, and it was also including one additional country, which is Egypt. The Suez W ind Project for SAR 4.1 billion . It is actually a record for us to build and for the country to build the largest wind farm in Africa. Actually, just few weeks ago, we have also signed a PPA for the new project that's going to be even larger than that, which is the 2 GW project, inshallah. When it comes to the capacity being completed, I think it's important to highlight the first one, Sirdarya, which is our first-ever project being completed in Uzbekistan.
I think this was a project that we kept communicating to the investment community the challenges during COVID when implementing this project. Right after that, we had impacted by the Russia-Ukraine war, when the logistics of the project get delayed by six months. Overall, completing this project has been a great success and we are really glad that this project is behind us when it comes to execution risk. Now we are all working to get into the full operational capacity of this project. Shuaibah 1 also has the 600 MW full into operation. Last week we have announced the second Shuaibah that also get completed, which is around 2 GW. Riverside is also our first solar PV project in Uzbekistan.
This is a 200 MW that was actually completed before the financial close, we are now working to achieve both financial close and installing the battery storage capacity for this project. Here just a quick summary for your quick reference. Translating this into numbers, I would like to focus mainly on the full year analysis. As has been highlighted earlier, I think quarter to quarter is not the right reference for a developer and besides ACWA Power, because there is many and multiple things that happen not recurringly every quarter, but it happen in different time of the quarters. For example, achieving financial close is usually varied between Q2 to Q4. When it comes to capital recycling also is not consistent in a quarterly basis.
We would like to focus mainly on the full year report the quarterly review report is just presented for the sake of visibility against the reporting standards of Saudi Exchange. Overall stability in the operating income, I will go to the details in a later slide. When it comes to net income, it has been almost 6% increase from last year. As I mentioned earlier, aggregate or CAGR net income for the last four years starting from 2021 is around 32% increase. When it comes to the adjusted net income, this is something maybe we did not report last year because there wasn't much of a requirement. This year we have a lot of unique transactions that I will walk you through it, based on which the adjusted net income is around SAR 1.3 billion.
Parent operating cash flow remains very strong and stable at SAR 2.8 billion. When it comes to maybe the good news for me was really the net debt to POCF. While we were expecting a higher net debt to POCF, we have been able to continue growing the portfolio while maintaining stability in the net debt to POCF, which is down at 6.3x as compared to a higher budget that we had in our numbers. Let's start first with the operating income. Operating income, if you look at the trends from the similar period of last year to the end of 2024, there has been multiple impacts. One is actually the capital recycling, which is part of the business model of ACWA Power.
Again, for our investors who are joining for the first call, the business model depends on four key pillars where one is development, invest, operate, and optimize. Optimize is a big part of our business model, where we do a capital recycling. During the year of 2024, we have three divestments, two in Uzbekistan and one in Saudi. The capital recycling initiative has led to SAR 400 million impact or additional impact compared to 2023. The second is the ACWA Güç, which is the Kirikkale project we had in Turkey. This is a project that we took a full hit a few years ago being mainly impacted by a project that has a no- offtake agreement, which is the only asset we have in emerging markets.
There was a significant issue related to having dollarized funding against a local currency, basically kind of payments, where at the time before the IPO, we have decided to take the full hit at that time. In 2024, we have been actively working, and we have done a fantastic transaction, flipping the assets to get a full, buying it out from the lenders. Today the asset is free of any debt. That's clean the issue of the mismatch that I just highlighted. Based on that, the valuation of the net asset value of the company, we have now a gain of SAR 368 million attributed to this and others as well.
The first item of the item number three is basically related to lower fees when it comes to development and concession management fees and a bit of provision we have related to one project in Africa, which we had taken a full write-off for the fact that we don't believe that we would pursue with this transaction, which was maybe the biggest impact for us in 2023 when it comes to development. Item number four is mainly related to higher G&A expenses. I think this is coming through a few different initiatives that we have been working on. One is that hiring in advance to capture and build up the right resources for the future of the growth coming up in front of us. Second, actually, is related to the interest that was announced last year, which has an impact around of SAR 30 million.
It comes to staffing, which is building the resources, training and development, success planning, all of that program of the people and culture that has been announced last year is big factor in this cost for 2024. The last point is a 72 million impact, which is mainly related to two things. One is that better generation from KAEC assets, which is RAWEC, MAPCO, and the other CCGT assets, and the impact that we had in Morocco and mainly in Noor 3. Let's move from the operating income to the net income. For simplicity, we just added the operating income impact in item number three. I will not cover that.
In the first one, when it comes to the net income, we had a higher income, better cash management, better management of the capital within the company, based on which we have been able to get a gain of SAR 200 million compared to last year. When it comes to item number two, it's mainly a few things. One is that we have successfully extended Barka Project, which has for two years been out of contract. Based on that extension, we have reversed its relevant impact of impairment. Noor 3, as I mentioned earlier, had been out for almost most of the year. Hopefully, our target is to bring it within April now. That impact is also embedded in the item number two.
For item number four, it's simply the non-controlling interest on our net income for both transaction, Barka reversal and also RAWEC . Item number five is lower income mainly due to recognition of fair value of derivative that had happened in 2023 and did not happen in 2024. If you recall, that was related to Hassyan IPP at that time. That brings us to the SAR 1.7 billion when it comes to net income. I did refer to an adjustment which brings us to SAR 1.3 billion. If you allow me, I will take you quickly through these adjustments that we believe are non-recurring, which for the transparency and for better visibility for you or for the analyst to give you a better picture. Out of what I have mentioned, there are mainly three things.
One is the termination of the project in Africa. It carries a large development cost due to the fact that we have actually hedged the project from interest movements, from currency movements, and ultimately achieved the financial close 20 days ahead after the target or long- stop date based on which this transaction was terminated. We are adjusting for it here because we believe this is a non-recurring activity. In this sector, usually a long stop date is negotiable with the off-takers and usually we get extension in most of the time. Out of the 20 years' experience within ACWA Power, we have not seen that except for this project. That's why we are adjusting for it here. Having said that, the management is still persistent and pushing to get this project done in different forms.
Ultimately, we are working together with our partners, stakeholders, and off-takers to get something back when it comes to an opportunity within the same country. ACWA Güç , I just explained it in detail. This is an impact. We are taking it as an adjustment. Termination of hedges, which was, if you recall, in quarter one of 2024, where we had yet again, SAR 313 million related to termination of three hedges. We are adjusting for it here because also we believe termination of three hedges is not a core business and is not a recurring business. We are taking it up from the adjusted net income. This is a slide I like. I think it gives the best visibility for the analysts and for the investors on where we are getting our net income built up.
A few of these I have discussed in the last few slides in detail, I will not walk through every single item of it, but you have seen it in the previous slides. Maybe I would like to highlight a few things here. One, when it comes to fee, which is NOMAC. NOMAC is a growing business within the company, and we do believe that 2024 number does not reflect the reality of the growth of NOMAC. We have been actually taking a conservative provision in few payments related to NOMAC, based on which the biggest impact of the SAR 138 milion is because of that. I do believe that NOMAC portfolio will continue to grow and the possibility will continue to increase. This year is an exceptional experience that we have seen.
When it comes to item F, which is related to mainly the cost, I have explained that in details earlier, but this is, again, myself, Marco, and the team are working in a cost optimization initiative within the company, where we believe that we will bring the cost into rationalization. There is an initiative that was completed in 2025 and others will complete in 2026. This is where we believe that rationalization will occur and the cost will be within control. Let's talk about the cash position. Distribution of the project companies and NOMAC is around SAR 1.2 billion for the year. We have also seen a good development when it comes to the distribution of the fees in general, which was around SAR 2 billion, almost in line with last year. Capital recycling activities, which is mainly RAWEC divestment, has put a big gain for 2024.
That brought the whole cash inflows during the year to around SAR 4 billion. I just took out the SAR 1.2 billion we have highlighted earlier related to the staffing cost, financing cost, and other costs associated with that, brought the operating cash flow into just around SAR 3 billion. This is the movement of the cash. Simply, what I just showed, which is the SAR 2.8 billion or let's say around SAR 3 billion POCF position. If you add the opening cash position of 2024, this brings the total cash within the company to around SAR 7.6 billion. During the year, we have used around SAR 5 billion in the following categories. Almost 70% of the cash was used mainly on investment, which is a healthy indicator of the growth ambitions of the company and also the actual uses of the cash we have on hand.
Mainly on investment and growth. Around 25% or SAR 1.7 billion mainly on the financial charges related to the EBLs which sits in the corporate and the Sukuk. We have distributed 6% and if you recall, last year was a lower distribution in terms of cash because we have also provided the cash, the bonus share, which has actually balanced and optimized our cash distribution. We have used almost 2% of the cash for the share buyback, which is the active program that we have announced earlier. The closing balance is around SAR 2.5 billion for the year 2024. When it comes to the leverage, to take you through this slide, which we usually actually highlight, first, what is in the balance sheet and what is in the contingency, and then from there, we build up the recourse-based position.
If you look at what is in the balance sheet, there is around SAR 26.7 billion debt on the balance sheet. Some of it is consolidated in our recourse and some of it is recourse. We are taking usually the recourse, which is having the obligation on ACWA Power to pay that specific debt, which is around SAR 9.4 billion. It is mainly equity investment, Sukuk, and a loan we have from the shareholder. Adding to that, around SAR 11.2 billion, which is financial obligation on the contingent liability. This brings the total recourse debt to around SAR 20 billion. Then we take out the SAR 2.5 billion cash that we just presented in the last slide, bringing the total current net leverage figures to around SAR 18 billion.
If you divide that from the POCF, you will get to 6.4x, which is the net debt to POCF and recourse debt in the previous slide as well. This brings us to maybe the last slide. We will open it now for Q&A. Thank you.
Thank you. As a reminder, if you would like to ask a question on today's call, you have joined us via Zoom, please use the raise hand icon or the Q&A box provided. If you have joined us via the telephone, please press star followed by one on your telephone keypad now. We will start with a telephone question from Ricardo Rezende from Morgan Stanley. Ricardo, your line is open. Please go ahead.
Hello. Good afternoon. Couple questions on my side. The first one is related to China. Last month, you had mentioned that out of the 1 GW of pipeline, you had about 300 MW ready, locked in. How can we think about the rest of this initial pipeline in China in the terms of just timing? Then the second question, I know you said that not to focus on the quarterly figures that much, but I have a very specific question on the adjustments on your net profit about the project in Africa. Looks like there is a reversion in the fourth quarter on the amount that you had written off previously. Is that related to the hedge that you mentioned before? Thank you.
Maybe Marco would like to answer the question to us.
The first one, basically, the first few projects in China are through agreement with some of our historical partners. What we did is we entered in late-stage development. For the structure that we put in the agreement, we are formally actually doing the closing. The signing was done, but the closing only after the project starts commercial operation. That means that technically we have in hand this 1.1 GW, but we have closed only the first 300 MW. The rest will come in the next few months, basically as the projects are being built.
In relation to your second question, which I heard, you may correct me if I heard it well, it's about basically the provision related to the projects in Africa. You mentioned something about also further adjustments in Q4. Just to give you a perspective, basically the provision is related to two components. One component is the project development cost, which was fully written off, earlier in Q3. The second one is related to the hedges and of the interest rate and the swap. This one was also fully written off at a higher amount in Q3 because of the numbers actually for the market at that time. In Q4, it has basically adjusted in line with the maximum. It will keep moving, until basically you novate these hedges to another project, or you terminate it, this can pay the lenders.
That's kind of for the position. We don't want to terminate the hedge. We believe that we can use it for other projects, given the growth that we are having in front of us. If this is your question, I hope I answered. Otherwise, please also clarify your question in case it's different.
That was exactly the question. That is very clear. Thank you.
Thank you.
The next question comes from Dinesh Chadda from Standard Chartered. Dinesh, your line is open. Dinesh, please ask your question. Moving on, our next question comes from Talha Nazir from Alliant. Talha, please go ahead and ask your question.
Hello, gentlemen. Thanks for the call. I have a couple of questions. First of all, your operating revenues, they dropped by 13%, and there is quite a bit of reversal. The earnings, there has been a significant decline around 13%. Is this something that is the normal earnings that we should be looking at going forward? Do you think that with the cost rationalizing and revenues improving, that we will see some margin improvement, and we will see some operating earnings going up? Hello?
Yes. Yeah. You said you have a couple of questions. Can you give a couple of questions?
Okay. You want me to move on. Okay.
Yeah.
The China plans, I'm personally quite interested in the Chinese plans because you have already entered the market. The growth potential there is massive. There is a lot of investment that is going, and China has it. What exactly is there any pipeline that is being built in China that you have that we can see that this is a potential for ACWA? Secondly, your development and construction revenues came down. Is this the new normal, or should we expect some improvement in this? I think I'll just keep it to that for now because I can go on.
Sorry .
Yeah. Sorry about that.
Go ahead.
No, sorry, I just want to get the last question because I did not hear it well.
The last question is about the development and construction costs. Is it the new normal that we should be looking at, or is it something that is a one-off and it would start to improve eventually?
Thank you. On China, we have a very healthy pipeline of several gigawatt. The pipeline is always difficult to measure because you need to then look at the quality. We are due diligencing several gigawatt of advanced development projects. We expect that the first couple of years, we will have more advanced developments than full early-stage greenfield development, as you can imagine, because we want to build the knowledge of the market, the cash flow, and the materiality basically to then support the longer-term activity. I wouldn't focus really on the number or whatever because it depends then on the success rate. The success rate that we had on the pipeline last year was quite high.
That means that we're putting a lot of focus in speaking with companies that basically had already many years of experience with us to focus each other on projects where we can find mutual agreement to cooperate in the short term and not waste time on, let me say, something that we go through a full due diligence and then nothing happens.
Thank you. Maybe just to cover question number one and three in one slide. I think it's all here. I would like to share with you a few parts, right? The first one, which is an important question you have mentioned about the development and construction management fees. As we are growing the portfolio, as we are growing as an organization, we are also trying to balance our model from upfront fees to more recurring fees.
This is something we have highlighted also earlier in some of the calls, it will take us three years to reach our target. Our target ultimately does not get into a point where we are completely out of the structural development and construction management fees. We'll continue to get that but we are trying to rebalance that to more recurring fees. Yes, the trend forward should see per project less development and construction management fees. In overall, because of the still growth in front of us and ahead of us, you will still see that coming up as well on the next few years minimum because of the pipeline of the growth. Looking at the trend of the operating income, capital recycling, I do believe this is just the start of it.
We are building a huge portfolio, there is a lot of projects coming with a 100% ownership of ACWA Power. We are working in a program, we call it Long-Term Value Creation, where capital recycling will change from single asset divestment to a portfolio divestment. Obviously, this will not be as fast-recurring as single asset, basically, recycling, it will be much larger in term of quantum. I do believe that when, for example, looking at item number one, it will be even bigger and bigger in the future, but maybe not recurring. That's the capital recycling continue to be bigger. Ultimately, in each company or in each project company, we would like to get into our sweet spot position of 30%-40% ownership.
If you look at the annual report, if you look at the investor's report, you will see our ownership in all the companies. All the companies that we own more than 34%, 30%, 40%, it is targeted for us for capital recycling program. When it comes to the last two points I have in this one is, the operating income, it is growing, as we have mentioned and highlighted by Marco. $ 100 billion under construction. All these assets will come ultimately to operation, and this operation will contribute to this operating income. The last point relates to the G&A. We have highlighted that we are not happy with what we have achieved, and we believe there is room for improvement. This could translate either to improving your operating income or reducing your G&A.
We have to take one of these routes, and within the next 12 to 18 months, we will have to deliver better than what we have delivered on that specifically.
Thank you. Just this one last question. I'm sorry for that. Chinese market is highly competitive, what is the kind of IRR we are looking in the Chinese project?
Sure. Just to make it clear, we never communicated a targeted IRR for a specific country. We always highlight that in a portfolio basis, we are targeting the mid-teens in IRR, when it comes to positioning the portfolio. This is one of the reasons for us to diversify our portfolio. You have a lower cost of equity in Saudi and UAE, and that bring us to a lower IRR compared to countries like Uzbekistan and Egypt. The beauty of the portfolio is diversified. We will be willing to deploy more than 50% of the portfolio in these countries, and the remaining will be in countries that has a higher IRR and higher, basically, because of the higher cost of equity and the risk associated with it. You can do the math. China, actually cost of equity is low.
China's cost of funding is low today because of the RMB. China does not have a long offtake like what we have in most of the countries. They have a typical offtake, but the price is adjusted in a yearly basis. Taking all that factor, you can basically build your own assumption on the IRR, but we are remaining committed to the overall portfolio of the company, no matter is it in China or Africa .
Thank you.
Thanks. Just a reminder that star one via the telephone or the raise hand icon or Q&A box via Zoom. We have a question from Sudaif Niaz from BlackRock. Sudaif, please unmute and ask your question.
Hi, gentlemen. Thank you for the call today. Just one question for me. It looks like a lot of the new projects are actually mostly associates or equity investments that you have. Looking through the details, I think you mentioned this in the call, but basically the Turkish project had a big debt restructuring where the debt was converted into equity. I was looking through the detail of the notes, and it says that that actually resulted somehow in a gain for ACWA Power, despite the debt restructuring. Can you explain how that happened? It's conceptually I'm not sure how that's possible.
Thank you. This one, actually, we explained it in detail in quarter three, but I can give you a quick summary on that. As I mentioned earlier, the reason for that is few years ago, before the IPO, we took out the full provision of the assets. Actually, we have recorded more than SAR 1 billion loss at that time. What happened during the year is that we flipped the asset, and the asset became free of debt, right? Just like any other assets, you do an impairment testing on that asset. The net asset value of this particular project becomes positive. You cannot anymore keep that full provision that you had in the past.
Technically, almost like a reversal of a provision of part of the provision you had earlier, because the net asset value of this specific project has increased because now it has no debt in its balance sheet and ends up on a portfolio on a basically clean basis. Today, for the next few years, any basically, revenue comes from the generation. After that, paying the D&A of the project company, it is completely distributed to the shareholders. This is a debt-free asset. That transitioning of the portfolio, the mix of the debt and equity of the asset has resulted in that to be completely, basically different asset class.
Okay. Interesting. Can I ask, did you take the provisioning when the debt conversion happened, or you took it before or after?
No, the write-off was taken a few years ago, back in 2018. It's almost like seven years ago. We had a SAR 1 billion provision, more than SAR 1 billion. SAR 1.5 billion.
SAR 1.5 billion.
Basically, what we have reversed is based on the new asset value after the full debt being cleaned up from the asset.
That's right. The SAR 1.5 billion was even before the IPO, as Abdulhameed has mentioned. After that, obviously, there were negotiations going on with the lenders. As a result of these negotiations, the debt was buy out at some favorable terms as well.
Yeah. I think the missing information for you, that's why you maybe saw that interesting concept, is that you were not aware of the big provision we had earlier before the IPO. For any typical debt buyout, you will not end up with the same situation if you had not had that big write-off of the asset earlier.
I can provide you with more detailed information separately. I can send you an email, all of us could collect.
Okay, that would be very helpful.
Yes, sure.
We can actually add the slide on the annual report that will be submitted to those.
Yeah
For everyone as well.
Yeah, everything I'm going to share is already on the prospectus. It is IPO prospectus. We have a very large section. It is going to be very useful as well.
Yeah.
We have some text questions that have been submitted. We have one from Muhammad Hamza from Akseer, who asks, why has your financial charge dropped this quarter? Secondly, how optimistic are you for your AUM target of SAR 250 billion by 2030?
Yeah. I would take maybe the first question and maybe Marco can talk about the target for 2030. The finance process is a few things. One is that there was an interest rate drop during the year 2024 compared to the 2023. As a reference date, this was actually dropping. We did actually a couple of big repayments when it comes to equity bridge loans during the year of 2023, based on which the overall payments of these EBLs has positively impacted us. Also we had, if you take the facility of the finance cost, as mentioned earlier in Q1, we have also get a finance income that actually reduced the finance cost, which is the pre-hedge termination for two projects. Marco, maybe you want to cover the SAR 250 billion target for 2030.
Yeah. We're very confident that we are going to hit the target. If you look at the first two years, we have grown our asset under management by about 80%. We want to triple by 2030. I think that shows that we are on the right track. Maybe then we can give you the precise numbers of the growth from December 2022 to today.
Mohamed Farag from EPIS asks, "When can we expect Ghazala Power IPP financial close? Regarding Egypt's 3 GW green ammonia, can you elaborate on the project timeline?
Close. If I interpret, 2 GW wind project in Egypt, right?
Yeah.
Yeah.
Okay.
Can we have the question again, please, Adam?
Of course. When can we expect Ghazala Power IPP financial close? Regarding Egypt, 3 GW green ammonia, can you elaborate on the project timeline? I've read it verbatim.
Okay. Maybe I will talk about the Hurghada, which was, I assume the reference is for Hurghada, which is 2 GW. We just signed last week the PPA. This going to take time. This is a PPA we signed, and we mentioned in the announcement in the project exchange, that this is something that will need at least one year of wind study. Our target financial close is 2026 for this specific project. For the green ammonia in Egypt, Marco, maybe you have a better visibility, but it's maybe.
I think if I hear the numbers, basically 1.1 GW was just reached financial close. The 2 GW we signed, as Abdulhameed said, that we now need to go through environmental impact assessment, wind measurement, and all the things that you need basically before reaching financial close, so it would be a little more a year or so. The green hydrogen, we're making progress on that. There are really no interlink between the three projects. Those are three separate projects. On that one, we continue to have discussions with off-takers, and we will update as we have new progress.
As a final call for questions, that's the raise hand icon or the Q&A box via Zoom or star one via the telephone. We have no further questions; I'll hand it back to the management team for closing comments.
Thank you very much, Adam. Thank you very much, Abdulhameed, Marco, and everyone who has been working very hard for the closing. Thank you, obviously, everyone who's in the other end of the lines. As you know, if you have any further questions, you can reach out to us, and we will get back to you with our answers. With that, I would like to say thank you once again, and have a good day, have a good evening, wherever you are.
Thank you.
Thank you.
This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.