Makhazen (MKHZN) Earnings Call Transcript & Summary

Welcome to Agility's Fourth Quarter 2019 Results Investor Webcast. I will now hand over to your host, Mr. Sidharth Saboo, from Arqaam Capital. Please, sir, go ahead.

Good afternoon, ladies and gentlemen, and thank you for joining us today. This is Sidharth Saboo. And on behalf of Arqaam Capital, I'm delighted to welcome you to Agility's Fourth Quarter 2019 Earnings Webcast. I have with me here today Mr. Ehab Aziz, Group CFO; and Agility's Investor Relations team. Without further delay, I'll now turn over the call to Soriana, Agility's Investor Relations Senior Manager.

Thank you. Good afternoon, and welcome to Agility's Fourth Quarter 2019 Analyst Call. As usual, Mr. Ehab Aziz, our Group CFO, will walk you through the presentation, which you have available on your screen to present Agility's operational and financial performance for the fourth quarter and full year 2019, after which we will open the floor for your questions. So if you would like to ask any questions, please type it in the Q&A box on your screen anytime during the presentation and we will address it during the Q&A session at the end of the call. Before I hand over the mic to Mr. Ehab, I would like to draw your attention to the disclaimer available on Page #2 as this presentation may contain forward-looking statements. Such statements are subject to risks and uncertainties as various factors, many of which are beyond our control, may cause actual developments and results to differ materially from expectations. Please take a moment to read this. Ehab, over to you.

Good day, everyone. Thank you for joining our earnings call for Q4 2019. As usual, I will start with the group's financial performance and then I will move to the main highlights of our key businesses -- business units. Let's start with Slide 4 with some of the main highlights. In general, 2019 was a very challenging year for the logistics industry and maybe one of the most challenging since the past 10 years. Despite that, we have been able to report an EBITDA growth of about 6% in 2019. However that comes after 3 consecutive years of double-digit growth. So it has been a really very challenging year where -- which is basically a result of the regional and economic uncertainty, which also we believe that will continue in 2020. However, we are still confident that we can navigate through those challenges as we continue to deliver our operational efficiencies and digital transformation. As far as the freight forwarding market is concerned in 2019, it has been a weak market and that is witnessed by the lower volumes in 2019 compared to 2018. According to IATA, 2019 had the lowest freight volume since the past 10 years. GIL revenues registered 2.5% negative growth year-over-year. However, due to better yields in Air Freight and Ocean Freight, that was offset at the net revenue level. Also on GIL, GIL reported higher operating expenses, and the main driver here is the transformation and the acceleration of the digital transformation efforts that have been accelerated in 2019. As for the Infrastructure group, it performed relatively well this year and the investments in those businesses continue, [ as we see it ], will actually generate future growth as we would see on later slides. Going into the financial highlights in Slide 5. The numbers here are excluding the IFRS 16 and IFRS 16 has been an anomaly in 2019. As we move into 2020, that anomaly will disappear as the reported numbers will be the same. So we made several remarks about the IFRS here to show comparative figures to 2018, which do not include the IFRS impact. So 2017 -- 2019, excluding IFRS, we reported a single-digit growth in very low revenues, almost flat for the year, for the quarter. And the EBITDA, low single digit of 3% for the quarter and 6% for the year. And when it comes to net profit, excluding IFRS, it was 7% up for the quarter and 10% up for the year. And again, that's excluding IFRS 16. So the free cash flow for the quarter has been a little bit higher, about KWD 15 million than last year. But for the year, it was about KWD 4 million. And there is a slide that shows the different liquid years and the operating and the free cash flow that we have generated given our guidance in 2016, which is low free cash flow given the amount of investments we are at. So that's the highlight for the quarter and for the year. Moving to Slide 6, the full year performance. Again, gross revenue is about 2%, which is almost flat, a very low single-digit growth. Again, this is the weak freight forwarding market particularly in Air that affected GIL revenues, and as a result, the relatively low growth. Net revenue grew from KWD 498 million to KWD 531 million, about 6.7%. So definitely higher than revenue growth and that's driven by the higher yields in Air and Ocean and also the other Infrastructure business. So net revenue is growing at, I would say, a relatively decent single digit. And the EBITDA growth for the year is about -- again, the reported EBITDA is 24.7%. And this slide includes the IFRS. So it's about 24.7% and without IFRS it's about 6% as we saw in the previous. Again, EBITDA, which is not satisfactory to us, is growing this year at a single digit after 3 consecutive years of double digit, and that's a reflection of the challenging environment, which is a result of many, many aspects, the trade tension, the global and regional economic uncertainty and now with the coronavirus. And that's why we expect 2020 to be more or less in line in terms of challenges to 2019, if not even more challenging given the situation that we are seeing around us. So reported net profit for the year increased by 7%, that's the reported, and that includes the IFRS impact. Excluding the IFRS, actually, our net profit year-over-year has increased by 10% and there is a negative KWD 2.5 million, negative impact on our net profit as a result of the implementation of IFRS 16. So excluding that, our net profit for the year grew by 10% year-over-year to reach about KWD 87 million. Moving to the following slide, Slide 7. That's -- it shows the, again, the contribution by business group. The Infrastructure business contributed positively to the group whereas GIL had a decline in revenue, as we mentioned before. At the level -- at the revenue level, Infrastructure contributed more to this growth, as you can see on the slide, about KWD 57 million and KWD 29 million came from GIL. As you can see, the revenue split is about 75% GIL, 25% Infrastructure in 2018. In 2019 , it is 70-30. And if we look at the net revenue, which is not shown in the slide, net revenue, it was almost 50-50. 50% of our net revenue comes from GIL and 50% comes from Infrastructure. At the EBITDA level, the growth included, excluding IFRS 16, is, as you can see, primarily coming from Infrastructure, but excluding the IFRS 16, which had more impact on the GIL as a result of capitalization of leases in the Contract Logistics sector. The net growth in Infrastructure is a result of our investment over the past several years in that sector. And as you will see in the CapEx slide, most of our CapEx have been going into that business sector. And as a result also and due to the economic -- global economic condition, the Infrastructure group has been growing faster than GIL. Now GIL EBITDA also was lower than last year definitely due to the slower and the softer market, but also due to the acceleration of the transformation efforts that is taking place in 2019. So our spend on digital transformation has been higher in 2019, GIL. And despite that and the economic slowdown, GIL has been more or less flat or negative 1.4% relative to last year pre-IFRS. So -- while on the Infrastructure side, the EBITDA before IFRS grew at about 7.7% and it's across-the-board as we'll see in a later slide that all entities in Infrastructure have been growing at a decent high single-digit to double-digit sales. Moving to Slide 8, our balance sheet, a snapshot of our balance sheet. We continue to enjoy a strong and healthy balance sheet. Total assets stood at around KWD 2 billion and over KWD 1.1 billion in equity. The IFRS 16 had an impact on our balance sheet of about KWD 111 million on the asset and the liabilities side. And there is a slide that will detail the impact of IFRS 16. In terms of net debt, excluding IFRS, net debt increased to KWD 186 million -- KWD 187 million. Net debt-to-EBITDA, again excluding IFRS 16, stands at about 1.1x, increasing from 0.9x last year. As we have guided before, we expect net debt-to-EBITDA not to exceed the 2, 2.5x and that's in the normal course of business. And that means without any -- without factoring any M&A, large M&A transactions. Moving to Slide 9, in terms of cash flow and CapEx. We generated healthy cash flow from operations, around KWD 121 million excluding the IFRS 16 and -- which is about 24% year-over-year improvement. And that's primarily driven by 2 things. One is the cycle in working capital have reversed in GIL, and as a result, there has been a better working capital management. And as we have seen revenues did not grow much this year, so the working capital have been reversed. So that had positive impact on our working capital for the year. And in addition to that, also within GIL, we basically sold some of our receivables. So the liability has moved to the financing firm, and accordingly, that has been reflected as cash. So there is about maybe KWD 6 million reflected in our operating cash flow from that as well. So these are the 2 main factors driving the improvement in working capital for the year. If we look at the effects on the right-hand side, you can see how much we have spent over the years. And 2016 is when we announced our 2020 target and we started the CapEx program, so that summarizes where the money has been spent. And as you can see, most of the CapEx is being spent in the Infrastructure. That other category that you can see is including the investment in UPAC, which including investment in the Reem Mall. So a big chunk of that is related to the UPAC Reem Mall. Moving to Slide 11, so we move to the business group segments. We start with GIL. GIL quarter -- Q4 results, revenue declined by 3.7% over the same period last year and about 2.6% on a constant currency basis. And again, as we mentioned, this is due to lower freight forwarding, Air and Ocean volume, and that has been the theme across the industry, particularly in Air Freight. However, that has been compensated by the higher yields, and as you can see, yield -- or net revenue improved, grew by 4.2% and that's result of the compensating element of the yield improvement. The net revenue, as I said, on a year-to-date basis grew more or less the same at 5.1%, so it's more or less the same story. Top line is reducing because volumes are going down. That has been compensated by a better yield in Air and Ocean and there is a slide -- the following slide talks about that and we'll show you that. So in the quarter, 4.2% improvement year-over-year on a constant currency basis and it's actually more or less the same, about 5.1% improvement in net revenue, while revenue is flat on a constant currency year-over-year. So it's the same story. However, the decline in Q4 has -- the volume has been accelerating. At the EBITDA level, again, the IFRS 16 is an anomaly that is basically changing the numbering that's why we excluded. So the column that you see on the far right is the EBITDA excluding IFRS at a constant currency. And as you can see, it would be for the quarter about a decline of 5%. Again, due to the net revenue challenges -- the revenue and net revenue challenges but also due to the investment in transformation. And for the full year, although the decline is not relatively as severe as the quarter, it's only 1.3%, almost flat to last year. Again, that's due to the transformation cost, due to the challenges in general in the market, particularly in Air and Ocean. So in terms of product slide on Slide 12, as I mentioned, Air Freight volumes in Q4 declined and that decline in Q4 has been about 7%. And again, this is due to the trade war concerns and the lower demand across different industries and geographies. But that was offset, to a certain extent, by yield improvement of about 1.5%. So as a result, net revenue for Air declined by 6% for the quarter. As you can see for the year-to-date, net revenue declined by 2.1%, but with a decline of almost 7% in volume and an improvement in yield of 5.1%. So definitely, Air Freight has been very challenging and the challenges have been accelerated in Q4. Ocean Freight, on the other hand, experienced higher volume with a decline in volume for the quarter, about 1.9%. However, a decline in yield, so -- and that resulted in a net revenue decline of only 0.3%, so almost flat for the quarter. For the year-to-date, revenue improved -- net revenue improved by about 4%. And that's assumption of the decline in volume of 0.6% and the yield improvement of 4.5%. So the story, again, for Air and Ocean is a declining volume, particularly in Air, partially offset by improved yield, and as a result, net revenue for Ocean is up and net revenue for Air is down for the year. In Contract Logistics, as you can see, posted a very positive improvement year-over-year and quarter-over-quarter. So relative to the other segments and the other products, Contract Logistics registered 5.1% quarter-over-quarter improvement in terms of net revenue and 7.1% in terms of year-to-date. And on the right-hand side, you can see the split, the regional split for the 4 regions. And all the regions have reported a single-digit growth in 2019. Asia remained our largest contributor to net revenue, followed by the Middle East. So overall, it's a challenging year. External market conditions definitely impacted our volume in Air and Ocean, and internally, our spend on transformation and accelerating our transformation efforts have also increased our operating cost in GIL. And as a result, year-over-year, profitability has been flat. I would call it flat or negative 1%. Moving to Slide 13, which is the Infrastructure group. Infrastructure had a solid performance across all key business units and posted 13% in revenue for the quarter and EBITDA grew by about 16%. If we exclude the IFRS, the growth would be about 6% in EBITDA and revenues would be by 15% and EBITDA about 15%. On the right-hand side, you can see the different business that we focus on, the key businesses that moved the needle. Agility Logistics Parks, which is our industrial real estate, for the quarter, it has been about 8% for the quarter and about 15% year-over-year for that business. And that business has been growing quite nicely over the past several years. Again, Tristar flat for the quarter, but about 11% for the year. UPAC posted 2.2% revenue decline in 2019 compared with the same period in 2018. And UPAC operations still being affected by the shift in passenger traffic to dedicated airline terminals at Kuwait International Airport. However, this was partially offset by generating new revenue from the car park management in Q4 that we got last year. NAS, which is a very strong performers within the group, again suffered in the first quarter of the year based on challenges. However, NAS have been able to recover in the second half and for the full year, performance reported a growth of about 8% in revenue and that's due to favorable market condition in some markets where NAS operates, coupled with successful turnaround efforts and that led to this growth. GCS, which is the customs modernization entity that we have, posted about 9% growth in revenue for 2019, pretty much consistent -- the Q4 and the year-to-date is pretty much consistent. So we have witnessed solid growth across-the-board and we believe all engines, including GIL, are performing relatively well to the current market conditions. However, the tough and challenging environment is posing some risks. However, we are confident that we will be able to manage and navigate through these challenges. We believe 2020, and again, I'm reiterating that, will more or less follow the same trend. However, it's anybody's guess about how this coronavirus is going to impact the overall economy and the markets we operate in. Moving to Slide 14. I think that's just the big picture of the IFRS and it's for your own -- for your info to basically neutralize the numbers for the year. Next year, 2020, we should not have this issue because that anomaly would be eliminated because we'll be reporting on the same basis year-over-year. But this is a reference slide in case you want to compare numbers over the years. We provided this to show you the impact on the different elements of our P&L, balance sheet and cash flow. Moving to Slide 16, this is our -- those who have been following the company would remember this 2020 goal of $800 million as we commented in our previous quarters' conferences. We believe that we are still on track to achieve that goal. However, that goal is being pushed further in time, not necessarily by 2020. And as much as this is disappointing to us, however, we are happy with the progress we have been able to make over the past several years. And I think it has been a rewarding journey for all the stakeholders so far. So we are definitely not satisfied with the outcome of where we are today relative to the target we set for ourselves in 2016. And we are definitely coming short of that. The target remains the same. The time frame is being shifted given internal as well as external factors that we are working on, on the internal side. So hopefully, we'll be able to communicate when we expect that target would be achieved. But as you can see, we have made significant progress, and the following slide will show further the progress we have made. But we expected a double-digit growth in EBITDA. We have been able to achieve that over the past 3 years except last year, it was a single digit and it was a disappointing year. However, given the challenges that we are facing, we believe we'll be able to navigate through that. Operating cash flow, we're expecting that to increase in line with EBITDA and I think that has been the case this year. It has, again, increased due to 2 -- the 2 reasons I mentioned, which is the reversal of the working capital cycle in GIL and the factoring of the sale of receivable that we have made. Free cash flow has been, as we communicated, limited due to CapEx program and that has been very low relative to the amount of operating cash flow we generated. Net debt, if you remember, we moved from a net cash position to net debt position. However, at this level of KWD 187 million, which is 1.1x EBITDA is, I would say, a reasonable level. And we don't expect to lever up our balance sheet in a significant way. The maximum we would go for is probably 2 or 2.5x. Dividends, lower relative to the pre-2016 period. And as you can see, we have been consistently paying cash dividends, about 30% this year. We have increased it to 38% for -- that has been the recommendation of the Board to the general assembly. Moving to the next slide, and I want to end my presentation with this slide. I think we have to look at the previous slide, this slide, in conjunction with this slide and the previous slide together. And as I said, although we are not satisfied with the outcome of the achieving the $800 million by 2020, we believe we have made significant progress over the year. So this is a slide that summarizes the last 10 years and the value creation the company has created to the shareholders, which, as you can see, very tightly related and correlated to the improvement in EBITDA and the improvement in net profit. So we have generated about KWD 1.3 billion over the past 10 years. 80% of that is market value appreciation and 20% in cash dividends. So we distributed about KWD 232 million over the past 10 years as you can see on the slide. The value creation, we have been up almost every single year except 2015 where there has been a correction in the market due to the oil prices and all strip markets in the region have witnessed a significant decline. This year, 2019, we created about KWD 234 million, about 19% total return to the shareholders. So we are quite, I would say, happy and satisfied with that aspect of the business and that aspect of the shareholder return. And as you can see, this is not in vacuum, but it's actually correlated to the improvement in profitability. If you look at our profitability, our net profit almost tripled, which is more or less the same return, which is 332% from the base year of 2011. And for those who do not know, we use 2011 as a base year because that's the first year we started operating without any military business and it's kind of the reset for our commercial activities, pure commercial activities. So although we are not satisfied with the 2020 outcome and we're still working hard to achieve that and deliver that in the shortest possible time frame, however, we are happy with the progress we made over the past 10 years and we are working diligently to continue that path for the next decade. I think that concludes my presentation. And I will open the floor for any questions you might have.

[Operator Instructions]

Yes. So the first question is about how do we think -- how should we think about the net profit growth in 2020 compared to in 2019 in light of the recent developments. I mean it's -- it depends on the business. Overall, I think we'd be more less in line with last year, a single-digit year-over-year growth. That's my guess. However, there are so many variables and so many moving parts. If we look at the GIL, volumes have been growing significantly down, as you would expect. That is driven by the coronavirus impact, and we don't know yet how this is going to be -- how this will manifest itself. On the Infrastructure side, it's more of a hedge and I think it's more resilient than the GIL. And this is where I'm a little bit hopeful that we would see single-digit year-over-year improvement this year. The second question is about how should we look into increase in DPS when the company has over the past. Is there a dividend policy, which you will follow internally? How should we think about it when the company plans to invest for growth? I think if you look at -- we consistently pay dividends over the past 10 -- at least 10 years. So as a matter of policy, that will continue. But that has been around 30% payout ratio. We have increased that this year to 38%. I think if you look at our capital structure today and our debt level, I think still within a very reasonable range. So I would say, given the situation and how the challenges -- the market challenges will manifest itself, I think we should expect dividends to remain the same and maybe a little bit increased every couple of years, but no major change in terms of policy from the past several years. Okay. There is a question about the Reem Mall and commencement of operation. We expect that to be delivered in -- around Q1 next year. And operation would be -- soft openings would be in probably Q2 of the same year. So we have about maybe 12 months from now to deliver the mall and then we'll start soft opening right after. Okay. So there is a question about the CapEx expectation. I think we have been running at around KWD 100 million on average as you can see from the previous slide. I think CapEx should be more or less around that level, and I think that would be for the next couple of years. So once the Reem Mall done, once the real estate expansion and the ALP expansion is moderated, I think that will drop. But for the next couple of years, it's around KWD 100 million. There is a question about the coronavirus on the business. I think I have addressed that. And today, we see volume decline in Air of about 30%, 40% in some countries. And as you would expect, things are -- I mean airlines -- we have read the news, airlines are taking drastic measures and all businesses are taking drastic measures. And I think that will have some severe impact on the economy, overall economy, and definitely on our freight forwarding business. So we expect some significant challenges on the freight forwarding business. However, on the Infrastructure side, we expect things to be more resilient and more stable than it is on the freight forwarding and GIL business for the year. But we don't know how much that would be. We are not able yet to quantify that impact. Okay. There is a question about Korek, and I think we have a full disclosure in our financials about the legal situation. But again, it is an arbitration. There are several legal cases against the company and against the shareholders and against the government of Iran. A full disclosure is in our financial statements. There is also another question about Tristar listing in terms of time frame. So the IPO track is still the preferred option for now. However, we are -- given some recent trends and some recent events that happened in London, we are exploring different options. But no decision has been made yet. But -- so the IPO track is still ongoing. The listing venue is still -- is under some consideration given what has been happening lately in London Stock Exchange relevant to some Middle Eastern listed companies and the investors' appetite for such assets. Okay. There is a question about the, I believe, better margin environment in Air and Ocean Freight is sustainable. GIL net revenue margin has been volatile over the past 2 years. The first question is the net revenue margin yield improvement is sustainable or not. I think it's somehow sustainable but not for the long-term for sure. But I think now there are measures to improve productivity and realign the organization with the level of business that we have. So the short answer is it's not sustainable. We do our best to make it last as long as possible. But it's not definitely something that we see sustained over an extended period of time. And the GIL net revenue margin have been a function of rates and -- the industry rates and, well, we believe we are at today at a reasonable level in terms of net revenue margin. We don't see any margin pressure today. I qualify that by saying that we don't know yet how the coronavirus crisis is going to impact the business in terms of volume, in terms of capacity and in terms of carrier capacity and in terms of margin. So it's still a big unknown. But as I said, that's one part of our business, which is, I tend to agree that it's a bit volatile and that's correlated to many variables. But on the other side, the Infrastructure group is providing some hedging to that. So another question about what drove the spike in digital journey, and we have been spending on the digital consumers for several years. So what really changed in H2. I think there is a realization that we need to get to the finish line with several initiatives, and -- I mean we have been pushing very hard to accelerate that. And I think we -- as a result of that, we had to spend probably more than what we have budgeted at the beginning of the year. And if you also remember, we had a discussion with -- around the merger with Panalpina. And I think also there has been some realization that transformation is a very critical aspect of the business, the digital transformation, to do anything inorganic. So we are trying to accelerate that, again, for our organic business and for our productivity, improving productivity, et cetera, but also it is an enabler if there is an inorganic play in the card. And as of today, there isn't. The market is very limited and the opportunities are very limited. Very few assets are suitable and available for such play. However, that said, I think the Panalpina discussion also increased the importance of trying to get to the finish line as soon as possible in transformation, hence, the increased spend and activities. And I know it's not an answer, but to be very frank with you, it is a very challenging area. It's -- many players tried and failed in this space. Many competitors, large ones, have failed to transform and move from the releases to a new system and it is a very challenging process. So I wish I could tell you with high level of certainty that this will be done in the next 6 months or 12 months. Unfortunately, I can't give you that at this point of time. All I can tell you is that this has the highest level of attention within the organization, to get to the finish line one way or the other. And as we get into this, hopefully, we can share some more information with you. Okay. There is a question about the medium-term EBITDA guidance and provide a recap on which area contributed to missing initial 2020 targets for the full year: GIL, UPAC, Reem Mall. Okay. I mean you can kind of -- so the first question about the new EBITDA target, we will communicate that in due time. Unfortunately, we cannot do that today. But in due time, we'll come up with a new guidance to all of you to set expectations for the next 3 to 5 years. So that's the first part of the question. The second part which area is missed. I think there are primarily 2 areas where we have missed. One is the Reem Mall. The Reem Mall operation, start of operation is one, which is happening next year and hopefully things will get, I mean, better from here. It's a very challenging retail environment. But we are still confident that this project is going to materialize and deliver value to all stakeholders. And it is going to be a very significant landmark in Abu Dhabi market. That's one area. The other area, if you follow the GIL EBITDA improvement over the past 3, 4 years, you would notice that this has not been contributing or increasing significantly over the past 4 years. I mean GIL improved significantly over the past 10 years. But over the past 4 years when we announced our 2020 target, GIL has not improved as expected, not due to any lack of effort or lack of will or -- but due to multiple challenges internally and externally. So -- but we are still very confident that this business is very valuable to the group. We are still confident that this business has done extremely well over the past 10 years and has created significant amount of value and contributed significantly to the shareholder value creation that we shared with you in the slide. So this is not to undermine the contribution of that business or the value of that business. That business is, I would say, is the crown jewel of Agility Group today, and the potential of that business is quite significant as we see more and more. Yes, it has variable, it has lots of challenges and volatility. But its value, whether organic or inorganic, is quite significant, and we have quite strong conviction about that. And we are working diligently and very hard to unlock that value and materialize that value to the shareholders. So I hope I gave you some color on where things are. I'm receiving some questions and they are going up and down, so if I miss any question, this is not intentional. But I think the sequence of questions, they go up and I'm trying to figure out which one I have addressed and which I have not. I think the GIL volume, I have addressed as a result of corona. We are seeing 30% to 40% decline in volumes. That has stabilized. So that has been in January and February, particularly in Asia and some Asian countries. And now this is stabilized, and I would say things are not improving but not deteriorating further. The EBITDA potential for Reem Mall, once it materialize and hopefully up and running and at reasonable occupancy, is about $100 million to $120 million of EBITDA. That's for the Reem Mall. The CapEx guidance for 2020, I addressed that. There is another part of the question, any change in plans post-corona? I think this year is pretty much set for 2020 and it's going to be probably around the KWD 100 million, more or less KWD 100 million. Now you have to keep in mind, most of the investments and most of the CapEx have been going into the Infrastructure, which, as I mentioned, quite resilient and quite defensive. It's the industrial real estate, it's the Tristar back-to-back shipping and the fuel missions in different countries. So it's very sticky businesses. NAS is concession. And so yes, there would be an impact, but not to the extent that we would roll back or stop the CapEx program. However, we will have a closer look at the impact of the corona, and as things unfold, I think we will be able to have a better assessment on what to do with the CapEx program. GIL impact exposure to China. China represents about 9% of GIL revenue today. Update on Amghara land. Do you still include rental income from this land as part of rental revenue? Amghara land, there is a full disclosure in the financial statement that addresses all the legal cases, including that one. Okay. There is a question about why do we need to sell or factor our receivables? And what is the discount rate? It is, I mean, in the form of an [ ECL ] and that's why it has been reported as part of our working capital, not as part of the financing. But in essence, it's a financing mechanism where certain receivable have been released and the discount rate is quite in line with the financing rate. So we are not talking about 10%, 15% type of discount rate. It's not that, definitely not that. It's a normal financing rate that is used. The form of the transaction is the same, and accordingly, has been classified as working capital, part of the working capital. But in substance, it's a form of financing at reasonable commercial rates. The update on [ KSC ] warehouses, occupancy, contribution, how much is remaining. I think -- so last year, we delivered 120,000 square meters in Saudi and that has been own -- consumed in basically [ lease out ]. So occupancy rate in Saudi is 100% today for whatever facilities have been delivered. I think we have about 100,000 to 120,000 -- another 100,000 to 120,000 square meters that will be delivered this year and we feel very confident about that business, particularly in Saudi. And if you really think about what people need to do in crisis like corona, they need to store goods, they need space and facility for crisis management and strategic reserves. So we feel very confident about our investment in that space and we feel very positive about the progress we made so far in this space. I address -- there is another question around the dividend payout and whether we should expect an increase. I don't think you should expect an increase in terms of payout ratio. But I would say it would be more or less stable. It depends also how things will unfold and how the impact -- I mean if we go to a very worst-case scenario, there could be some implication on the CapEx program, on dividends. However, we don't expect that to be the case. But again it all depends how this crisis will unfold. We believe we are very well positioned to navigate through that, not necessarily to achieve double-digit growth in EBITDA but to navigate and basically protect the business and protect the -- our assets and shareholders during this time. So short answer to your question about the dividends expectation, you should not expect an increased payout ratio year-over-year. It should be more or less the same, and then maybe every 2 or 3 years as we see the situation, dividends -- the policy would basically follow the business evolution. So the main point is that we have been paying dividends over the past 10 years, and we'll continue to pay dividends at a certain level, not necessarily at an increased level from here. So I think I have -- unless there are other questions at the top. Yes, I think I have addressed all the questions. Thank you very much, and looking forward to meet you for the Q1 results. And hopefully, we are -- we have a more optimistic view and more positive view on the results for the Q1 and for the year. Thank you.

Thank you, Ehab, and thank you all for joining us today. We would like to remind you that this presentation is available on our website and will be posted along with the transcript on the relevant stock exchanges. Thank you and see you next quarter.

Thank you. Ladies and gentlemen, this concludes today's webcast call. Thank you all for your participation. You may now disconnect your lines.