Kuwait Projects Company Holding K.S.C.P. (KPROJ) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to KIPCO's Q3 2024 Results Conference Call. This is Ahmed El-Shazly from EFG Hermes, and it's a pleasure to have with us on the call today from KIPCO Management: Mr. Sunny Bhatia, Group CFO; Mr. Moustapha Chami, Deputy Group CFO; and Ms. Eman Al Awadhi, Group Senior Vice President, Corporate Communications and Investor Relations. I will now hand the call over to Eman to start the presentation. Thank you.

Thank you, Ahmed, and good afternoon, everyone. We welcome you to our earnings call for the first 9 months of -- ended September 30, 2024. Please note that today's presentation is also available on our website along with financial statements for the period. Moving on to the presentation. Please refer to the brief disclaimer on Slide 2. Some of the statements that we will be making today and information available in the presentation can be forward-looking. Such statements are based on KIPCO's current expectations, predictions and estimates, and are subject to risks and uncertainties, which may adversely otherwise affect the future outcome. They are not a guarantee of future performance, achievement or results. And now I'll hand over to Sunny to take you through some of the highlights for the period.

Thank you, Eman. Good afternoon, everyone. We are pleased to report that during the first 9 months of 2024, KIPCO reported a net profit of USD 41.1 million, representing a net increase of 7.2% over 9 months 2023. This is primarily due to enhanced performance of our banking operations as well as our businesses in foodstuff, logistics and oil services sectors. KIPCO posted a total revenue of USD 3.6 billion in 9 months of 2024, which represents an increase of 16.6% compared to USD 3.1 billion reported in 9 months of 2023. KIPCO's total assets at the consolidated level stood at USD 41.7 billion at the end of 9 months of 2024, i.e., 30th of September 2024, which is a 3.5% increase from USD 40.3 billion reported at year-end 2023. On to Slide 5. Interest income from banking operations increased by 35.2% in the 9 months of 2024 to reach USD 1.76 billion compared to USD 1.3 billion for the same period last year. Net fee and commission income increased by 26.6% to reach USD 288.8 million. Meanwhile, income from media and digital satellite witnessed a 9.8% decrease to USD 176.9 million compared to USD 196.2 for 9 months of 2023, while hospitality and real estate income saw a drop of 2.3% in 9 months of 2024, in USD $190.1 million. Income from the energy sector also saw a drop of 3% to USD 102 million, while in the industrial and logistics sector registered a 3.2% increase in income to USD 709.7 million. On the expenses front, total expenses increased to USD 3.2 billion in 9 months of 2024 versus $2.7 billion for the corresponding period in 2023, primarily due to an increase in interest expense by USD 408.1 million, and general and administrative expenses increased by USD 72.5 million. Furthermore, the group's interim condensed consolidated financial information includes the effects of hyperinflation in accordance with IAS 29 financial reporting in hyperinflationary economies, stemming from our Turkish operations. As a result, the group recorded a net monetary loss of USD 54.1 million during 9 months of 2024 compared to a loss of USD 78.3 million in 9 months of 2023 due to Burgan Bank's operations in Turkey. For further details, please refer to note 2.4 of the published interim content consolidated financial information. I will now hand over to Moustapha to provide details on the financial performance of the group.

Thank you, Sunny, and good afternoon, everyone. Let's move to Slide 7 where we cover key performance highlights of our banking operations. We start with Burgan Bank Group's results for 9 months 2024. I would like to note that Burgan Bank held its earnings call on November 4, and you can refer to the transcript for more details. Net operating income for the 9 months 2024 came to $542.2 million, up 5.3% from the $514.8 million reported in 9 months 2023. Net income increased 10.5% to $109.2 million versus $98.8 million for 9 months 2023. Burgan Bank's loan book went up 3.5% to $14.4 billion, while deposits increased 12.8% to $16.5 billion in 9 months 2024 when compared to year-end 2023. The bank reported a strong liquidity coverage ratio of 150% and a net stable funding ratio of 115%, above the regulatory requirements of 100% for both metrics. Provision coverage ratio remained strong at 218%, while the NPL ratio dropped slightly to 1.9% for the period compared to 2% for 9 months 2023. The bank reported a CET1 ratio of 12.9% and CAR of 19% for the 9 months 2024, well above regulatory requirements of 10.5% and 14%, respectively. In July, Burgan Bank redeemed its outstanding $500 million perpetual Tier 1 capital securities issued in July 2019. Subject to regulatory approvals in Kuwait -- subject to regulatory approvals and the completion of necessary studies, Burgan Bank continues to fulfill the procedures of the acquisition of the 100% stake in United Gulf Bank from United Gulf Holdings. We move on to Slide 8 to cover JKB's performance for the 9 months 2024. JKB's net profit for the first 9 months of 2024 came to $122.5 million, 69% up from the $72.4 million reported for 9 months 2023. Total income grew 53% to reach $416.9 million versus $271.8 million in 9 months 2023. During the period, JKB's loan book remained at $2.8 billion, and deposits increased 12% to $5.9 billion from year-end 2023. On Slide 9, we can see the performance of SADAFCO. The foodstuff company reported a 6.6% increase in revenue for 9 months 2024 at $594.4 million compared to $557.6 million for the same period of the previous year. Operating profit was up 14% for the period, registering $101.8 million compared to $89.3 million for the corresponding period in the previous financial year. SADAFCO posted 24.9% increase in net profit to $104.4 million compared to $83.6 million in 9 months 2023, primarily driven by increased sales and improved gross margin. SADAFCO continues to dominate the market in its 3 main product lines: UHT milk, tomato paste and ice cream. In Q3 2024, year-on-year sales in dairy, culinary and ice cream increased 6.62%, 12.58% and 2.41%, respectively. United Gulf Holding company, UGH, is featured on Slide 10. UGH incurred a loss of $27.1 million in 9 months 2024 compared to a net loss of $36.5 million in 9 months 2023. Total revenue increased 3.4% to $98.4 million in 9 months 2024 compared to $95.1 million for the same period last year. AUM grew 15.3% to $16.4 billion in 9 months 2024 compared to $14.2 billion at the end of 2023. On Slide 11, we have the results of United Real Estate Company, URC. Across its key income streams of the business, the company reported a 4.4% increase in rental and hospitality income, offset by a 5.8% decline in the contracting and services revenue, resulting in a 0.5% decrease in revenue for 9 months 2024 at $202.8 million. Operating income dropped 5.3% to reach $58.6 million versus $61.8 million in 9 months 2023. URC's net profit posted an increase of 11.9% for 9 months 2024 at $17.4 million versus $15.5 million for the same period in 2023. It's worthy to note that in October, URC was awarded the S5-A/C/D Commercial Investment project at Sabah Al Ahmad residential area in Kuwait. The contract duration is for 20 years -- 22 years, inclusive of 2 years of -- for design and build and covers an area of 35,464 square meters over 3 land plots. Moving on to Slide 12, starting with our logistics and power rental business, JTC, which reported a total revenue of $68.8 million for 9 months 2024, 3% lower than the $71 million reported for the 9 months of -- reported for the 9 months of last year. The drop is mainly attributed to the port division with a slight decline in contract logistics and power rental, partially offset by an increase in the warehouse segment and equipment leasing. Net profit for 9 months 2024 amounted to $17 million, 14.5% higher than the reported $14.8 million for the same period last year. On to the National Petroleum Services company NAPESCO, our oilfield services provider, NAPESCO's revenue for 9 months 2024 went up 1.5% to reach $98.8 million versus $97.3 million in 9 months 2023. NAPESCO posted a net profit of $27.8 million for 9 months '24, 32% up from the $21 million for the corresponding period of the previous year. The increase in net profit was primarily driven by the operational efficiencies and the addition of the group's share of results from associates and joint ventures in 9 months 2024. Moving on to the health sector with Advanced Technology Company. ATC witnessed a 17.6% increase in revenue to reach $449.9 million compared to $382.7 million in 9 months 2023. ATC achieved a net profit of $5.2 million in 9 months 2024 compared to $12.7 million in 9 months 2023. Finally, Slide 13 shows the recent business updates on OSN. As you know, earlier in the year, OSN successfully closed the merger between Anghami and OSN+. The deal involving an injection of $38 million of cash has created a media tech company with AI at its core. The [ MENA's own ] powerhouse now has 120 million users, more than 2.5 million subscribers and a $100 million combined revenue. OSN continues to negotiate its content and studio deals with the aim of optimizing cost. It constantly works to enhancing the dishless OSNtv box experience. The plug-in box reflects OSN's strategy towards streaming TV with a linear environment. I will now hand over the call to Ahmed to invite our listeners to raise any questions they may have.

[Operator Instructions] We have a question from Zafar Nazim. [Operator Instructions] I think we have a problem with Zafar's microphone. We can take another question from Rakesh Tripathi.

The first question I had is on leverage and more in regards to the crew, how that plays out with the broader strategy for the company. Now what I've noticed, and please correct me if I'm wrong, but my understanding is that the net debt at KIPCO level, at a parent level was around $2.2 billion at the end of 2022. And despite the stake sale in GIG with most of the cash receipts in just one tranche remaining in December of this year, net debt actually increased to $2.5 billion at the end of last year. It was around $2.4 billion at the end of the first half of this year. So while there has been the stake sale, we have not seen much in terms of the actual deleveraging and the total asset value as the rating agencies see it, is somewhat lower now. So LTV levels are kind of elevated. So my question is broadly to understand how does the company look at this? What are the plans with regards to gradual deleveraging? Where do you look for sustainable or stable LTV levels? Where do you aspire to be vis-a-vis where you are right now as per your internal calculations? And how does that play out in the context of the cash burn that has been going on at the company for a while now and one of the reasons why the leverage has been up? My initial calculation is that with around $120 million to $150 million in dividend receipts perhaps next year as well and about $150 million to $200 million kind of outflows related to OpEx at the parent level, the debt servicing costs and without even assuming any sizable cash injection in subsidiaries, the company would still be in a cash burn kind of position even next year, net-net negative cash flows and that would add to pressure on the leverage profile. So how do you see this? And what are the plans to address this?

Thank you, Rakesh Tripathi, for your question. From the -- the company has been working on our strategy -- 2-pronged strategy, the first strategy's on the asset side. And on the asset side as a holding company, we are striving to improve the -- and strengthen the overall operating performance of our few key subsidiaries in the key operating companies. And as you may have seen in the presentation made by my colleague, whether we talk about the banking sector or whether we talk about the food sector, generally, there has been a trend of improvement or strengthening in the performance. And that has been driven by the respective strategies of each of those operating companies guided by -- to the extent through our presentation on the Board of these companies to strengthen their operating performance wherever needed. These companies have taken actions and made changes in their management team. They have taken the organic strategies. They have done the M&A strategy where relevant, release capital, refocused their businesses to where they need to. Now all of these strategies actually would result in a better operating performance, and better operating performance would result -- is likely to result which as normal higher profitability and, hence, higher ability to upstream the dividend, of course, after retaining the required profits for their growth strategies but also generally is supported for their improvement in their prices of their stock, which actually feeds into the equation of loan-to-value -- the asset side of the loan-to-value ratio. Now coming on the liability side, our strategy has been to strengthen -- lengthen the tenor of our liabilities and also to refinance them in a very proactive manner well ahead of their maturities. And we have attempted to tap -- and successfully tap actually every pool and pocket of the liquidity, whether it is conventional KD debt bond market, whether it's KD Sukuk, whether it is establishment of a Sukuk program or whether it is the relationship with the banks within Kuwait and within the region. I think we are aware of the level of the debt, the biggest element of our cash outflow is actually the interest expense. And in a higher interest rate environment, the interest expense outflows have remained elevated, that is still market driven. On -- when you look at our debt profile, 51% of our debt profile at the parent level is variable rate of floater. As a result of that, as and when, there are changes to the short-term benchmarks rates, we should -- going forward, we should be reducing the servicing burden. But when the rates have remained elevated, it has contributed to higher outflows of the interest. The second element of the outflow is linked with our media segment, which, as my colleague alluded, we have made several initiatives to stabilize the performance of this segment, but it did require the injection of further cash, and one element of the cash which is disclosed is $38 million for the Anghami the cash contribution, Anghami and OSN+ model. Then moving on to your question of the sustainable level of debt assets, we do not have the internal targets. But as a company, we aspire to be cash flow positive and generate and improve the return for our shareholders, which should be -- which should also contribute to the more conservative debt to -- LTV or debt-to-equity ratios. So when we look at our overall debt-to-equity ratios, we are way below our 2.5 covenants in our bond. But when it comes to the LTV, which we do not publicly disclose because it is -- each of the rating companies have their own ways to disclose, [ the rating companies ], but by and large, it remains over -- slightly less than 50%. And Rakesh, one more thing I would like to clarify that as far as the net debt level is concerned, when you take the actual debt and the gross debt, both on 30th of September as well as on 31st of December, by and large, it remains at the same level.

I would agree. I would agree. Yes. Thank you very much for -- first of all, for the clarification. And yes, I would agree that the net debt level has not changed much. My concern rather has been that it hasn't really declined the way we would have expected or rather broadly investors would have expected considering the fact that there has been -- the company has taken significant steps in terms of even monetizing the cash receipts from IG stake sales, but that hasn't really reflected in net leverage going down and one of the reasons why we haven't really seen the bonds doing well in the markets and trade where they are. I understand you cannot comment on where the bonds trade and what the broader perception of the market is. But it is a concern as far as investors on the fixed income side are concerned. Taking that aside, for the next year, for 2025 as well, as I alluded to earlier, do you -- would you agree with my broader assessment of the kind of inflows and outflows around $120 million to $150 million somewhere as far as broadly dividend receipts would be concerned and somewhere around $150 million to $200 million -- between $150 million to $200 million as far as the outflows would be concerned, without considering any specific cash injections per se? Would you agree with -- or broadly -- at a broader level, without necessarily providing a specific guidance, would you broadly agree with these -- this assessment of the expected cash inflows and outflows for the next year?

First, Rakesh, I'd like to clarify on the fact that despite you see there is no -- you don't see a significant deleveraging as far as net debt is concerned. Two -- one reason, as we already discussed for the higher level of the servicing or the interest expense as a result of the higher rate environment. And the second has been that you would have note -- seen from our various public disclosures, the investments made, for example, the investment made in the acquisition of a 52% stake in Burgan Bank Turkey, which released 190 basis point of capital for Burgan Bank. So there are some steps initiated which strengthen the long-term performance and the structure of the company because 190 basis point release of capital for Burgan Bank by acquiring the stake from them for our Turkey operation, releases the capital that gives -- it allows them to focus in accordance with their strategies and strengthen their performance and also to reduce their exposure to the currency-related loss although at the group level, it does remain same or maybe slight increases because of the increase in the effect of ownership of Burgan Bank, Turkey. But nevertheless, we are strengthening -- we have created -- taken steps to strengthen the capital base of our core key bank investment and allowing it to grow in accordance with that strategy. Now coming back to your second question on the projection for 2025, we would not like to comment on the future projections, but you are free to make your own assessment. But generally, as a company, we will try -- we always try to improve the operating performance of our key operating company, which eventually should lead to stabilization of our net cash position. And actually, the cash inflows, although people do take a narrow view of just taking the dividend income as inflows and reducing the interest expense and the G&A as the outflow minus the investments and the capital of the -- some of the companies. But it's important to see that we as a holding company, when we make an exit, the realized profit from our investments in a way is part of our operating cash inflows as well. So once you start looking at the cash inflows from a holistic point of view, which includes not just the dividend income, but also the realized profit on exits, then the cash position -- picture does look quite different than one would see just by looking at the dividend income. And as a holding company, the total shareholders return is equally important. So it's not just the dividend flows, but also the overall -- some price pressure, the share price of our key investments that also adds to -- that is also an important metric, which we look at while looking at our overall performance. I hope this clarifies, Rakesh.

We'll take our next question from [ MAR ]. Sorry, we don't have a full name. [Operator Instructions]

I just wanted to talk about the media assets. And just first to clarify, I guess, post the acquisition of OSN+, do the assets -- or does that business now represent around 25%, 26% of total assets?

Yes. No, as total assets of KIPCO, that represents now...

No, total assets of -- like if I look at the segment assets, just on the media side, I'm just trying to first clarify, OSN is -- or the transaction as disclosed was, let's say, KWD 47.5 million and total assets increased to KWD 180 million. I'm just wondering, is that correct, it's 25% of the business? And just if you can explain what is the rest of the assets on the books? Is it the other linear or non-OSN+?

Okay. So the segment line of the media and the network -- satellite services does not include only OSN. We have some other businesses that have satellite services. So the -- in terms of OSN total assets, it's sub-10% of the total consolidated assets of KIPCO Group.

Yes. But if we just take the media, is it 25% of media assets?

Of the total segment assets? No, we're talking about almost 80% -- 70% to 80% of that.

Okay. So 70%, 80% is OSN like everything, but the OSN+, which is, I guess, the streaming business is maybe 25% of that?

So the streaming business, and as disclosed, we have -- so once we -- once KIPCO or OSN merged as a streaming business with Anghami and getting a 55% of Anghami, they have transferred an OSN+, plus $38 million in cash. OSN+, if we do just a simple math and that has been disclosed as well, it will be around $98 million to $100 million kind of valuation for that particular business.

Okay. So just on the -- yes, so thanks to clarify. But -- so on this transaction, I mean, could you provide more color? I mean, I know you have the slide that discusses the merger and the deals. But one, could you just describe what's the goal here? And then two, if we think about, again, the segment still showing a loss, and then you mentioned negotiating content deals. But maybe give some more color on what is the key to turning a profit in this business? Is it ARPU? Is it content costs? Is it increase in users? Anything to help clarify that breakeven point would be very useful.

Yes, absolutely. So as we mentioned in our call that the main objective is to have a certain media tech platform. Anghami has already proven their tech experience in terms of their platform as well as the advertising tier as well that they are providing to their sub base. So as our main objective, having our own platform, which has already been executed, today, OSN+ is being broadcasted through a platform done by the Anghami team, making a certain -- or having a certain cost synergies at that level at the tech level was our primary objective, which has been executed successfully. Another main objective is just have a gross synergy revenues getting along with 2 different segments of subscribers, the music subscribers and the media subscribers, and also getting more engaged into the different plans, which we have now a new plan on OSN+ and we will have soon also the advertising plan. That's mostly in terms of the cross-sell revenues. Of course, that will have a certain impact on the ARPU. Having all those efficiencies will improve our ARPU, and also the cross synergies will also improve our customer base. All these were leaning toward getting or reaching better revenues and a much more refined cost base.

Okay. But if you -- I guess, -- like currently, I guess, we have roughly -- if we just take the 2.5 million subscribers on average with the $100 million revenue, let's say, $40 per user, again, not thinking about just the segmentation, do you have a sense like at what level do we breakeven on that business and if we think about ARPUs or subscribers?

Unfortunately, since Anghami is a listed company, we can't give forecasted numbers. However, as I mentioned, all those measures are towards going into higher revenues and a lower cost.

Okay. Do you know what the current burn rate is for that business, the media business?

Burn rate in terms of?

I mean, if you're operating at a loss, what's the cost to keep this business going?

Well, the data of Anghami now is being published and it's -- they have their financial statements published. But this business requires funding in terms of content -- acquisition of content rights. The main game over here is the cost efficiency and, of course, increasing the revenue base through acquiring more and more subscribers and controlling the piracy, which is the main event, let me call it that way.

Okay. But -- and if we think about the segment result, it's a loss of KWD 27 million for the 9 months again, do you think -- which has increased, right, since last year. I'm just trying to get a sense of what the annual kind of cost of doing business there and if you have a sense of maybe that stopped or reversing in any way?

Operationally -- operating loss has been reduced. The segment, as I mentioned, includes as well other than OSN, includes another business, the satellite service, which -- satellite and also satellite and Marina FM. So it has also -- that segment was also facing some difficulties recently. However, in terms of operating losses, cost synergies, I can say we have reached almost 100% of the efficiencies and the operating loss has been reduced. Now we're banking on the revenue side where we have introduced new plans that should materialize soon, and all the numbers will be reflected once Anghami would publish their own numbers by year-end. You will get more sense and you will get more flavor on the numbers.

We'll take our next question from Zafar Nazim.

I just had one question on dividends. Can you please -- Sunny, if you can tell us what's your total dividend income has been at the holdco level this year so far?

It's $130 million in dividends.

Sorry, can you repeat that?

USD 130 million dividend.

1-3-0?

That's right.

Got it. And how much of this $130 million was from the publicly listed companies?

Actually, we -- I mean off-hand, I do not have this information because EQUATE is not particularly at this stage, so I don't have it.

Got it. No worries at all. And this -- and then on top of this, do you also have some interest income or that's included in this?

On top of that is some interest income.

I think we have another question from Rakesh.

So just a couple of more questions. First one was on the plans with regards to the 2026 bond maturity, if you could talk a bit in a broader sense, not necessarily specifics, but in a broader sense as to what would be the company's plan? What kind of timeline should we expect as far as a potential refinancing of the deal is concerned? What could be the potential sources that you might look at? That's one. And the second one is like you mentioned earlier that dividends would not be the only way to look at the inflows and income from any potential exit is also a very important source of inflow. So without being specific, again, are there any plans broadly in work to rationalize the holdings potentially look to exit anything in the near future? And do you expect any cash receipts also from a potential sale of the United Gulf Bank to the entity Burgan Bank?

Yes. First, the -- as far as the plans for 2026 maturity, which is the October 2026 and then February 2027, the EMTN maturities are concerned. As you would have seen in the past, we always -- way ahead of our maturities, we will be looking at the strategies to refinance these, and we would be doing the liability management way before maturities as we've always done in the past. We can always tap multiple pools of liquidity. We have tapped the bank loan market in past, we have tapped the KD bond market and also the international market. So all the options are open, including the Sukuk market. We have $2 billion in Sukuk program [ in KWD ]. We have our EMTN program, we have the KD bond market. So at this stage, we do not have any specifics. And the only thing I would like to say is that we would like to explore the multiple pools of liquidity way ahead of these maturities. And as and when we have anything specific, we will be making the requisite announcements. Now coming back to your second question on the potential for any sale, at any point of time as a holding company, we are always looking at opportunities to either exit or make new investments. And that's part of our normal strategy for a holding company. As we have said in the past, the exit would depend on either something which is noncore or where we believe that we have peaked the value creation, and we will not be in a position to generate our value going forward, we will sell the entity. There is nothing specific, which has reached a stage which would require a public disclosure. Again, as and when we reach that stage, we would make the right -- make the total disclosure. As far as your third question is concerned, which is whether the [ dated co-book ] is getting any cash proceeds from the UGH, first of all, the sale is being made by UGH subject to, of course, the due diligence and the regulatory rules. So at this stage, it is still too early to discuss what are going to be the proceeds of the sale to be received by UGH from Burgan Bank and what the use of those proceeds would be. So again, as and when things develop further on this, UGH and Burgan will be making the right announcements. And so would we if there is a need to.

That's very clear. Is there room for just one more question? Or...

Yes, please go ahead.

Just the last one from my side, just the last one. Just in case, if there is a need, we have seen a history of the parent entity KIPCO having a good amount of support from the ultimate shareholder who has stepped in several times in the past to support the business, either in case of a rights issue or any other form of cash infusion when there has been a need in the past. So my question is more in case of any hypothetical scenario, do those options continue to remain open? Is the primary shareholder supportive of the business in the sense that if there is a need, there could be another cash infusion in future, if such a need were to arise? Or has something changed on that front?

Prime shareholders and in fact, all our shareholders have been supportive of the company strategy. And as has been reflected by the successor of previous rights issued. So rights issue participation has been by all the shareholders. It wasn't only the majority shareholder, it was general rights issued subscribed to by all the shareholders. Coming back to some indications from the publicly available information, you would have noticed that for the 2022 fiscal year and for the 2023 fiscal years, both these fiscals years, our shareholders approved not to receive any dividend to strengthen the company's capital structure. So that is just one indication of the continued commitment of our shareholders to strengthen the capital structure of the company. And one of the members of the shareholder, she is our Group CEO, Sheikha Dana Naser Sabah and the other members of the family because of the corporate experience, they are on the Boards or have the Chairperson positions of the key operating companies of the group. So shareholders' support, not only of the majority, but also the other shareholders remains -- say, we remain confident of their shareholders support at any point of time.

We have a question from the chat on NAPESCO. Do you know what the organic profit growth was for the 9 months 2024, excluding the M&A impact? And what is the opportunity in oilfield services going forward, i.e., revenue growth?

Ahmed, we could not hear your question clearly. Could you kindly repeat?

Yes, sure. Can you hear me now?

Yes.

Okay. So it's a question on NAPESCO. Do you know what the organic profit growth was for 9 months 2024, excluding the M&A impact? And what is the opportunity in oilfield services going forward in terms of revenue growth?

Now as far as NAPESCO is concerned, I think we will answer generically. The -- you can see that this is one company which in the upstream model services industry, it has a great reputation. It competes with likes of [ Kayd Majhool and EFG Hermes ] of the world, and it is a [ grade A proctor ] and many times they are in the top tier, and from the growth in their revenues, you can see that they continue to improve their -- not just their bottom line through the efficiencies, but also the top line by getting related contracts from all these companies. And generally, from the state of Kuwait, you can see the state remains committed to develop and -- not just the development to retain and sustain their current capacity, but also to expand their capacity. And companies like NAPESCO and other companies, which are kind of similar, they are the likely beneficiaries of their alignment with the state's priorities to ensure that Kuwait is able to extract and process the crude, not just at their current capacity level, but also at expand it as and when the things expand.

All right. We have another question from the chat from [ Martini ]. Could you share what was the reason for the decline in cash by $100 million during the quarter?

I think it's -- as we always said that for a holding company, it's best to look at the cash from a year-on-year basis rather than looking at quarter-on-quarter because there are always spikes in our cash inflows and outflows. And the best thing is to compare the cash position at the year-end versus the year-end rather than just looking at a quarter. So there is nothing specific which we are in a position to discuss all the [ pros ] of this cash -- change in the cash position.

All right. So I believe we have no further questions. So I'd like to hand back the call to management for any closing remarks.

Thank you, Ahmed. Thank you to everybody who's on the call with us. It was a pleasure having you, and we look forward to talking to you again at the -- once we've announced our year-end results.

Thank you so much.

Thank you. Thank you, everyone. Have a good day.

Goodbye.