Renaissance Services SAOG (RNSS) Earnings Call Transcript & Summary

Well, hello, and welcome, everyone, to Investors and Analyst Meeting. The -- you're all very welcome. We're following our usual format. Of course, this is the one that sort of wraps up 2023 with the publishing of our annual results. And we'll follow the usual format and take your questions just to reiterate some general points, and I think many of you are familiar with. This time last year, we were explaining, we were going into a year of transition because we knew that in our flagship Duqm operation, there would be a hiatus between the major projects as the wonderful new OQ8 refinery that Oman can be very proud of, would be finishing its construction phase and actually being open, which happened earlier this year by His Majesty and His Highness, the Emir of Kuwait with him. And the waiting for the next major project, there would be this hiatus. So a little bit of trepidation coming into the year. But when you look at everything else that happened in the course of that year, that many of you have shared that journey with us, there's a lot of reason to look at it as actually a stellar performance once you allow for the fact that Duqm would be a much lower, more muted performance than the previous year because everything else has significantly improved in performance, particularly our [ rental ] services business. We had some disappointment in the expansion that we were doing on our permanent accommodation for contractors with the PDO, did happen. We finished the project, the actual variation came late to the plan and the actual mobilization of occupancy has come a little later than planned. And we were expecting to see more of an impact in the last quarter of last year. It will actually really take full impact in the second quarter this year because we've seen that occupancy move in, in the opening quarter of this year. So, overall, whilst we've never satisfied, always innovative, always keen to move on with our plans and implement our Renaissance 2.0 strategy, we had a lot to be pleased about. And underlying that, with the downturn in volume of business at Duqm, tremendous amount of work that was done by our colleagues in terms of looking at operational excellence, looking at how do we drive down costs whilst maintaining or raising standards for our customers and a lot was achieved in that. And as you saw, we significantly brought down the breakeven position of Duqm so that even now at the sort of lowest levels of occupancy, where we're at 4,500 at the moment, we are above breakeven at EBITDA level. So that's the background to the year. I know many of you are familiar with it so, I won't go on and open the matter now to your questions. So, if anyone would like to ask the first question, please let us know. Thank you.

Sameer.

Yes, it seems like in the fourth quarter, there seems to be a bit of a -- lot of one offs and would be great if you can provide more color on like general and admin expenses have seen one-off receivable impairment reversal of OMR 1.1 million, a special income of OMR 3.5 million. There's a tax provision of OMR 2.8 million that has impacted in the fourth quarter. So, could you explain what really happened to these line items?

So, Sameer, I'll go one by one. In general, the fourth quarter has been a fairly stellar quarter and that is how our business plan was structured. Yes, we had the PAC expansion, which certain parts of it started getting commissioned. We had our ops excellence exercise that we saw the fruit of it coming through in the fourth quarter. Yes, our collections have been great, which is evident in our cash, which led to certain reversals on the provisions that we had for ECL but that's a small part of it that led to better cash. Obviously, because we collected much better versus last year, we had certain contracts which did not contribute -- one-off contracts which did not contribute significantly to the bottom line. And hence, there's a disparity if you compare Q4 2022 versus '23, the revenue-wise. But otherwise, it's been a stellar quarter in terms of PACs. What you are asking is that the company had made a divestment in 2019 and the loss related to that divestment was carried forward and used to offset the profits that we've made. The drop-debt date for that assessment was 31 December and we got an assessment order in the negative disallowing the loss that we have used. So, we've appealed that loss -- with the loss and filed an objection with the tax authorities, including abeyance of tax, the tax recovery. We are waiting for the tax authorities to respond. However, they've agreed to the affidavits that we filed. So, that's where we are on tax. I've explained the collections. And if you have any -- as Steve mentioned, the business has performed significantly better in all other segments, leaving aside Duqm, which we've, I think, talked about a lot over the year and we exactly know what it is. And Steve will talk about, although we can't give you forward-looking information but he will talk about how confident we are of Duqm starting Q3 2024. So, I will leave it to you. If you have any other specific questions, I'll take.

Yes. On the other income, what exactly it is the -- it is, I mean, of that OMR3.4 million?

So, we were carrying certain provisions related to the divestment. These were indemnities that were given to the buyer which became time-bound and were no longer required in order to take care of the tax liability that was imposed in terms of disallowance of the divestment loss. Those -- that particular provision for indemnities relating to withholding tax that we were carrying were utilized to take care of the tax provision that we needed in our book to cover the disallowance.

Okay. That's clear. And regarding your operations, what's the current bank capacity in PDO PAC after that recent expansion? And is the delay in occupancy, is it due to any delay in projects and any clause you have to get compensation for that? And is the new capacity already contracted with the PDO?

Yes. So, if you look at where were our PACs were, the capacity was 8,300 beds and we always go on that sort of 90 percentile occupancy as being full because there's a delta available for shutdowns and so on that happen in the oil fields. So, that 8,300 capacity has risen to 10,123 beds. And so, what we're expecting to be is at 90% capacity of that new number. As things stand as we come out of the end of the first quarter, we are at 99%. So, we're almost there at the expected level of occupancy. What we're anticipating is going past that 90%. But that's what we're aiming at and on track to do. The issue about -- there's no proviso for compensation for the issue. If we go back in time, the original plan was, without it being awarded at that point, was that we would need to be expanded by second -- sorry, by third quarter of last year and that's when the movement would happen. Now, as it happened, we didn't get the variation until later in the year and therefore, we were still commissioning in third quarter. And it was starting -- then we were expecting to be -- everyone moved in by the beginning of this first quarter. Now, what happens [indiscernible] and I fully understand it, we have to be there for our clients and accept, there are times when they're [indiscernible] to get more in than we're ready for and so on. And this is one of those times where they've been delayed. Now, the delay is, we know that the payback when we're at the total occupancy is 3 years on this. And we've got a 5-year horizon for this expansion that may well go on beyond that. But that's the nature of the variation that we've taken. So, without getting micro, there's specific contract, major contract that was mobilizing into the oil fields across all locations that would move in. There was delay in the tender process of that contract, nothing to do with us, that's where our occupancy would come from. And so once that was awarded, then you've got the delay in mobilization of the [indiscernible] awarded to more than one contractor across different locations. So there have been tactical issues that have slowed that up. The good news is, we come out of this first quarter, we're not waiting for that occupancy anymore. We're at the 89%. And the last bookings and movement in to take us over the 90% is already secure. So, there isn't a mechanism to go back and ask compensation for that. If you like, the rewards and returns we would get for this variation have started later and will finish later. So we will get what is expected from the variation, it's just a delay in when we've started to feel the benefit of it.

I think Neetika is waiting. Good afternoon, Neetika.

So, going back to the RSVD occupancy. So, what I want to understand is, when we last spoke, we had, I mean, the current -- the known demand as per the management comments, it was around 7,500 to 8,500 over '24 and '25. So, when we are saying that the recovery is bound to happen from -- is expected to happen from 3Q 2024, as per your comments. So, is there any update to this number? Or you see that ultimately, at the end of the year, you will reach 7,500 but then it will start picking up in 3Q '24. I'm just trying to understand the phasing here of the occupancy.

Yes. So, when we're talking full years, we talk about the average occupancy over that full year and so, whilst today, we're at 4,500, we are expecting by the end of the year to have averaged north of 6,000 for the year. So that will come by an upturn in occupancy that will happen and benefits us more in the second part of the year than the first. Where will that occupancy come from? It will come from a variety of clients. Some are existing long-term permanent clients who are increasing their manner because they themselves are building a successful business in Duqm and require another 700 people. The other sources are new projects that have started. So for example, there is breaking of ground and preparation of the land for the Jindal or Vulcan, I should say that the name as being given to the project in Duqm, green steel project. And so, whilst that has a small number there today, while they prepare the land for the project, as the project starts to mobilize towards the end of the year, those numbers will come up. So these are 2 examples of where the occupancy will come from. Now we're always dependent and then actually the example that we've just answered from Sameer's question about the [indiscernible] you can see issues where there are delays in project mobilizations, et cetera, that can make slight differences. What we can have is a lot of clarity and sort of forward commitments from different clients that this is when they need those rooms. And if that all happens, then we fully expect to average that for this year. We fully expect to average an additional 4,000 through next year. And we expect to be full the year after and actually have the challenge of overflow. So the 2 years we asked you to be patient about last year happened. We've managed as a business to compensate for that and within Duqm itself managed to drive down the cost base without compromising standards to make sure that we could come through that period unscathed. We have the benefit of that work will really come to pay back as the occupancy comes back because, obviously, the economies and the operational excellence exercises don't go away, that we will see the benefit of that. So it's now about the numbers coming in. We've got a variation of committed numbers, projected numbers, some of it might vary on mobilization date, but it is looking positive in that respect. Does that cover that for you, Neetika?

Yes, pretty much. And one more question on the Saudi operations that you were looking to venture into Saudi. So, what's the update there? And where do the -- I mean, what's the -- where do we stand now?

So Saudi, again, is slower than planned, but we absolutely are committed to that market. Now -- so we're registering a specific entity that will be 100% owned by ourselves and our base so that we have our registered entity, mobilizing small team business development focused of Saudi national and existing colleagues into that market. We have 2 live things that play because we recognize it's very difficult when you go into a new market like Saudi Arabia, that is already well served by established national and international players or joint ventures already providing many of the services. If you break it down into our soft services, catering, cleaning and so on, hard services and FM and so on, that -- it's a well-served market. So a newcomer has to bring competitive tension or has to bring some unique proposition. Now -- so we plan to do both to start competing in the pure services market, but we expect there to be established very strong competition that we will be up against. At the same time, we won't be deterred by that, we'll be cognizant of it. At the same time, what can we bring this unique value proposition is -- what we have done in Duqm and the oil fields here in terms of permanent accommodation for workforces that deliver United Nations International Labor Organization minimum worker welfare standards at affordable cost. That is something that we have found in our prequalification efforts in Saudi to be something that they are very interested in. Now, does it mean that other players already established in Saudi won't be able to provide, or to bid and compete for that? Of course, not. What's interesting is the scale of what's happening in Saudi is they actually need more capacity on the supply side coming into the market. So where we have sought to prequalify on issues like NEOM, we have found a very welcoming environment that is looking for people with our experience and track record on this subject. And it's not one that is just about service companies. This is about understanding design, build, own, operate, transfer on a major scale and an affordable thing to make projects viable for the country. They want to compete at their international level. So that's where we're finding a lot of interest in what we have to bring. The second element of where can we bring -- coming in [indiscernible] as we mentioned to you in the previous session that we've taken part in a major PPP opportunity in South. Now, we've done this in a manner where -- with a partner who we've also partnered in PPP opportunity here in Oman, who is the investor to the company that has done multiple PPP investments. It is a very well experienced and very well respected in that field. And, with them, they're looking to be partnered with an IFM services provider who can then provide the services. So we have a live bid, which is under -- when I say under discussion, it is down to the last 2 or 3 favored bids. And I'm pleased to say we're one of them. And that process is ongoing and you can get to a best and final offer situation fairly shortly with that. But that's the kind of thing that if we were successful, of course, it's a great announcement that we'd be able to make because you're talking about in the case of Saudi, a 20-year contract. When you were talking about the opportunity here in Oman, it's a 25-year contract. So, we're tremendously adding to backlog. The actual timing of that will be a couple of years after the build in which we are not investing with CapEx. There's minimum CapEx in sort of fixtures, furnishing and equipment that we need to provide the service rather than building the infrastructure where we have a partner who is going to do that piece of the work. So that is a very interesting way. If we are successful of entering the Saudi market at scale on something that is a much narrower than the platform of competition, although obviously serious competition because these are major sophisticated projects. But with our experience of things like RSVD, I know that wasn't a PPP project but when you look at it, it's private sector investing for the public good and they are the key enabler for a major government initiative in building a smart city and industrial complex in Duqm, it's the same kind of thing. And so that is our strategy in Saudi. It's -- they're still very serious about it. To summarize, PPP, we see as the major trojan horse type opportunity that if successful in that's one opportunity we bid, there are others that we are considering that are coming out. We may take part with the same partner. That's one. The second is the potential of bringing workforce accommodation with our enormous experience and the third is normal organic competition in services where we expect to start at the back end of the grid in the Formula 1 sense but work our way through the field.

I think Bishen.

[indiscernible] A few questions. I'll try and keep it really brief. You mentioned the Saudi project, all the best for that. What is the size of the project?

So, I mean, when we're in live competition, I don't like to put numbers out. But you're talking -- I don't want to say a competitive number but you're talking in -- if it was in dollars, we're in the hundreds of millions of dollars as an announcement and because it's over a 20-year period. And, yes, it's with a partner, so 50% share, et cetera but it would be an absolute substantial, so if our [indiscernible] services today has OMR 80 million of backlog, it would be significantly increasing that backlog by a multiple, yes.

I just wanted to check on your G&A, what would be the run rate going forward because there was a one-off in Q4. Of course, you've seen a lot of savings on that side, but what would be an annual run rate going forward on your G&A expenses? And also, what was the one-off? Was it -- what -- could you just elaborate on what the one-off was because it was a lower number in Q4.

So, the one off we discussed when I answered Sameer's question, it was an indemnity that we were carrying related to a past divestment, which actually was not required and came back to a credit to G&A and then booked as a tax provision. Do you want more details on that, Bishen?

Understood. That's fine. So, I heard about the indemnity, I did not know it was based in G&A. That's fine.

Because if you go through G&A., wherever you book it is where you take the credit and then bring it back.

Now on that, I have a couple of more questions. One is, we've heard about this revision in the sort of gratuity law. So, what impact would that have on you? Has that already been absorbed? Is it yet to be absorbed? What's the amount?

So, just to give you guys comfort that we have complied completely with the neuron decree, which was pronounced on the 25th of July. So our accounts take into consideration exactly what was mandated and all approvals are based on the new labor law as decreed.

Got it. Perfect. Now the next question would be, you had taken a...

[indiscernible]

Is it -- OMR 1.1 million, right? So the impact of that was OMR 1.1 million. And I think that is going forward. There are some additional things that come into play in this year and next year. The -- of course, what we take due note of is that there is still a dialogue going on, led by the Chamber of Commerce with the sort of executive arm of government to discuss these impacts and to discuss the fact that some of these things are retrospective and that's -- it is unusual to have things that are retrospective that have bigger costs incurred to the company. So, as Raashid said, we've allowed it all. We've implemented it all. We've changed our HR policies to be aligned with the new labor law. But we also have a colleague represented on the committees that are looking at discussions with the government on whether all of that is sustainable and whether there can be any changes to that. And if there are, then we're in a happy position because we're already fully provided for it. Thank you.

Understood. So, if I look at the 2022 full year number of OMR 7.2 million of G&A and I adjust all the one-offs and take a normalized scenario for Q4 '23, where would we stand against that number on a normalized basis going forward for G&A?

So you could. I mean I'm not allowed to give you forward-looking information but you could consider the 2022 number as the run rate.

Understood. Perfect. That answers my question. Next is, if I look at this other income of OMR 3.5 million, basically an indemnity provision that came through the G&A to offset the OMR 2.8 million tax charge, which is currently under discussion like you rightly said. If you look at your report, the provision that you have is against the overall tax exposure of OMR 5.8 million, which tells me there's another OMR 3 million that probably might come under dispute. Is that a correct, is that a fair statement where there could be another OMR 3 million of a tax provision or a tax sort of hit that the company might have to absorb? If you could just give us some clarity on that?

Yes, sure. So, the total disallowance of the divestment made in 2019 was in the range of OMR 5.9 million, okay? And against which we've used it as a tax shield and taken our profits against that, brought forward loss and adjusted them. So to that extent, we were pretty -- we understood the fact that it will be very difficult for the initial assessing officer to pass an order allowing the entire loss to be claimed on the divestment and we understood. We've taken a provision in the books. We were carrying a provision of approximately OMR 2.9 million for this purpose. The fact that the entire amount of loss was disallowed was a bit of a surprise, which we've objected to, as I said, and we are awaiting the tax department to review our objection. And in the event they require any further clarity, we are here to support them. So the entire -- it's basically the amount of profit that we made from 2019 October onwards, which has been adjusted against this tax shield that we had, which has been taken as a provision in the books as of now.

I noticed that your minority interest for Q4 is a positive number, 440,000, which is great. Now, is that a sustainable number? Are there any one-offs over there?

So, the minority interest is not -- if you're just trying to calculate Duqm, then there's 2 -- there are 2 or 3 aspects to it. But we remain absolutely bullish on Duqm and that number should on a full-year basis, be positive.

Okay. Okay. So probably there are some one-offs over there. But going forward for FY '24, the outlook is that the number should be positive?

Yes.

Okay. Great. Next is with regards to cash taxes, will that -- is that something the company I -- as I see from the balance sheet, the company has started paying in 2024 and onwards, taxes?

So it all depends on what happens to the tax shield that we are carrying. But, yes, going forward, once we exhaust the tax shield, assume -- and I'm assuming that it would be -- the objection would be entertained and because it is a loss and there's no particular reason for the disallowance. So that would -- that entire amount of OMR 5 million would flow back into P&L. And yes, as the tax shield gets exhausted, we would be liable to tax on normal commercial rates as per the Oman tax laws.

The independent tax adviser said it should be allowable. It's normal sometimes for the tax authorities to start from a 0 position and then look at it and look at the evidence over time. And so, we're quite confident that we have a proper case in line with the tax regulations and that, that should work out in the end.

And also, Bishen, just to give you some comfort and everyone else on that, I think because this divestment was 2019 and by the time the request for information came to us, it was mid-October. And the assessment itself would have been timed -- would have been time-bound by the 31st of December 2023. So I don't think there was a choice but to disallow the divestment loss and ask for further information because they didn't give themselves enough time to review and come to some kind of opinion or conclusion related to the loss seen on the 2019 divest.

That would then be a reversal in your P&L this year if you were to win that case?

Yes.

Noted. Noted. Okay. Any update on the school project, the 24-year contract in Oman?

Yes. That's the PPP. I'm referring to in relation to Oman. And there is a current movement, which is, the client has come back to 2 of the bids. We were one of them and when I say we, remember we're doing this in a partnership with an investor and with an EPC contractor, who will actually build the project. And they looked at some descoping, what could descope to get the overall position into what they see the -- their budget for this. That process is nearly -- the discussions on descope is nearly finished and it is going to require we have a date coming up shortly, where we will then resubmit best and final financial offer. So whilst the overall quantum of it will come down by that, it's not a material change in terms of the overall scale of the project. So the awards -- there's always worrying when you go into these big tenders of this nature that there's a cancellation of the bid. [indiscernible] one of your competition is -- they get canceled, it doesn't go ahead and you put in all the work and effort to bid it. That is looking less and less like we're finding the client very, very engaged to turn it into a successful PPP. The government announced major PPP initiatives. They've done a couple, not up to the scale of that original announcement. This would be a good one for them. And indeed, the ministry concerned is very keen to do it and it's a necessity. If they don't do it through PPP, these 42 schools -- these 40,000 school children are required. So, we're expecting to see a decision on that, but during this year, but later in the year.

Noted. And who would be the EPC contractor you're planning to partner with?

We -- Okay, our partners in this are Vision Invest from Saudi Arabia, who are looking at the CapEx model of the property. The EPC contractor would be Galfar and the facilities management for services provider would be ourselves. And the actual business that will run this after the event will be an SPV that is put together by those 3 partners with us as the lead owner in terms of share ownership in that SPV and Vision is next and then Galfar with their share. So they're dealing with upfront investment and the build. And then we come into play, having during that period formed this SPV in which they will be included through majority -- the 25 years of the contract.

Got it. And then just last question. I know I've been -- I've taken a lot of time. Just last question is, you mentioned in the management discussion report about a double LTI incident. Was there any monetary impact of the same?

Sorry, I missed that. We didn't catch the question.

I'll repeat that, sorry. You mentioned about a double LTI incident and you've basically -- you've taken all steps to make sure it does not repeat. Was there any monetary impact of the same?

So in terms of -- obviously, our first concern was with the sort of human impact, really glad to report and I did say positively last time, but I can say more positively now, both colleagues involved in that incident have made a full recovery, back at work and in full working order. Now, in terms of asset damage, we have been operating, we actually moved the kitchen, we shut the kitchen down to actually relook at the entire gas supply system into the kitchen. We have, as you would expect, applied full international standards originally when we've had the incident. And the incident came down to a couple of issues without trying to bare myself here, some of it was maintenance related, so that's operational on us and we've corrected that. Some of it was in the quality of product that was being supplied and we have corrected that with our supply chain. In terms of the actual infrastructure of the gas supply system from central tanks, LPG tanks into a system that's got monitors and detectors, all of that was 100% international compliance. I mean, we have been inspected not just by Civil Defense ROP, whose standards, I can tell you, internationally, are very high indeed. We've been inspected by various friendly forces of foreign military who've stayed with us, whose standards are exceptionally high and not found wanting. What we have done because the warning system did not trigger even though we had the sensors meeting international standard, we've doubled the capacity. So beyond the standard. So we've invested in those things. There is a cost to that. Obviously, we're looking at the insurance element of that but we're doing a refurb of the kitchen anyway, while we've taken that opportunity. It is not a material impact cost-wise. But obviously, there's some when you're sort of reinstating the gas pipeline system. Joyce.

Hi, Joyce.

Just a few follow-up questions and on -- the first one is, is there any major contracts that are coming up for renewal over the next 12 to 15 months?

Yes. So, there are. And let me just highlight the 2 largest ones. So we have about 7 -- I think that's about 8% of our services revenues are up for grabs this year. And so it's actually, although a couple of those are sizable contracts, one in the oil and gas fields, another in our port relationships, et cetera -- ports contracts. The -- they are coming up during this year. If I talk about the quantum in a single year, the value is about OMR 6.5 million top-line of all the contracts, the 7 contracts that are coming up. The -- when I say coming up, a number of them are already bid, a number of them are pending award decisions. And all I can say is, we're never arrogant or complacent about these things but we also have a very good track record of retention. And we have brought every effort to bear on our rebids of those tenders, as well as, I'm pleased to say we do stand on a track record of strong operational performance. So yes, that's the rebid situation at the moment.

And also, could you just touch upon the smart meter supply contract with, where you are planning to do with the Tata Power? So, what's the status of it? When should we start looking at it? Or when should we start hearing from it?

Yes. So that tender, you may have missed the thing in the last session, Joy. The major tender where we're looking at the entire country, that tender was canceled at the last minute. And -- but there are -- it has led to other things. If you look at -- whilst there are multiple zones within the zone, there are 3 main zones of utility provision in the country. Zone 1 which we operate are the 3 capital area zones and that goes from [indiscernible] right to Quriyat. So, it's a very large geographical area. And then there's Zone 2 and Zone 3. So the rest of the country is split in 2, they're the South and Central and [indiscernible]. And then the -- what has happened is, uniquely for Zone 1 [indiscernible] they have extended the contract and they -- we are signing a variation to roll out a rapid rollout in this year of a significant number of smart meters. So, that will be a very positive impact in the year. Now it requires the variation to be signed, which is imminent. It requires the client to buy in the hardware and it then requires us to mobilize the additional manpower and capabilities to roll it out very quickly. But that is happening. And if we can get it as much of it done as possible within the 2024 year, then this will have a good impact on us during the year. The other 2 zones, the first of those zones could come back for tender and we are participating in that tender. And it's -- the bid hasn't gone in yet, et cetera. So that is there. Other aspects of that bid like the technology that holds it all altogether, the headend services as they have call it has come out as a separate bid. We've already competed with that. But that end of it -- so the smart meter implementation piece is with Tata, as you mentioned, and the headend services, the smart technology that goes with that is with Fluentgrid, that -- they are our chosen partner. And so that bid has gone in. We've had the first clarification session with the client. It's a live bid. So, again, I'm not going to comment more on it. But I think the main point to answer you, Joyce, is we were hugely disappointed at the cancellation of the main tender because we expected it to be awarded in at least 2 parts and we expected to be a serious contender in that. We're down to a short list of 3 and it didn't happen. Now, given that it didn't happen, we can have the best of the outcomes of it not happening in getting a variation for our zone to rapidly roll out faster than the original tender smart meters in the capital area. And we're now actively competing. There are 3 live [indiscernible] tenders, 1 -- I mentioned 2 of them. So there are others because they've decided to do it in a different way. And that gives us opportunity every time that happens. And our diversification into the utility services, we go back to that point that we are a services company but then we tell you all the services we provide and it sounds very diverse at that point. Utilities is the last of our major diversification [indiscernible] we're diversifying services, sectors and geography. The services and sectors, both have these utility issues, the sector with utility and the services we're providing are manifold. And it's proving to have been -- its been profitable from when we started it and the opportunities are coming. They're just coming in a different fashion than that 1 grand tender opportunity.

Okay. Understood. The next question is on your higher payout, dividend payout. You have increased your payout this year. What has led to this decision? And what should we be looking at in the future? Will you be maintaining this 50% payout, dividend?

So basically, free cash flows determine dividend. If we have a significant and compelling investment opportunity, which will create value for our shareholders, then we'll curtail that dividend and invest in that particular opportunity. If in the medium term, no such opportunity exists and our cash is at a level where we can pay more to our shareholders, then this year, we've actually considered 10 extra baisa as a special dividend to our shareholders given that we've had a tight year. We've consolidated a lot. I think, Joyce, you've been part of the journey for the last 4 quarters and seen the ops efficiencies coming through, et cetera and how we've managed to navigate ourselves through the hiatus of occupancy that we've seen in Duqm by running a really, really tight ship, not letting anything slip through the cracks. And that is what gives us the confidence to give a dividend of -- declare a dividend of 30 baisa, which is, I think, the highest since 2005, if I'm not mistaken. So, I hope [indiscernible]

Joy, taking Raashid's comment into longer-term strategy because what he's saying is absolutely correct. Our policy is about -- we want to be able to give a regular and consistent dividend to shareholders as long as cash flow allow them, as long as they're not competing compelling issues to invest. But we also want to keep a war chest available as we do think we answered the Saudi question earlier, there will be some CapEx-related opportunities in that, that we're looking at and so on. So we want to be able to respond to those opportunities when they come. But longer-term issue, it's about value creation. And if we were to measure Duqm during this 2 years of hiatus, it's not going to come out best in terms of looking at what its return on equity, what its return on capital employed, et cetera, it's during this downturn. Yet we're delighted with what it's done operationally to tell us what kind of value it will create the next time we have an upturn. And then we talked about our PPP projects and how we've platformed them in this instance, where we have excellent partners with a strong appetite for capital investment that enables us to win long-term services, pure services contracts on as partners in that without having the capital outlay. Now the ability to create value from that, it is excellent for us. So we're forever looking at how we drive our value creation. And then it's about value capture. Now we've had all the efforts we've talked about to drive down our costs without affecting standards. And we have all our efforts to drive up our sales, where we have some recalibrating and the retendering and so on and sort of absorbing costs that have come into the market in the gap and so on. Now, we've been very careful to call this dividend, the 20 baisas, which has become -- since we've been a pure services company, has become a regular and consistent achievement over the last number of years. And that continues to be our target that we want to be paying that out on a regular and consistent bases. So we've called this additional 10 baisas, a special dividend because we've got the headroom to do it in this year and as, Raashid, has already described. Now, what we would love to do at an appropriate time in the future, is if we're able to say, actually, our 20 is going to be 25 or it's going to be 30, or whatever, to be able to do that. But we will only do that when we see that our base of value creation and our ability of value capture is going to give us regularly and consistently sufficient additional headroom to be able to invest. So it's -- my answer is that strategically, we'd love to be able to answer that to you in the future. But today, we've got to keep with that reality and to behave in a manner that you would expect us to do that is prudent in the way we manage our cash flows and create a normality to what you can expect as a dividend we have now, as we see from this year, that --what, if you think, we hope everyone is happy about it, the happiness of upsides when it's possible.

Of course, very clear. And you guys have done a fantastic job in Duqm by bringing down the breakeven levels and everything and managed the downturn very well. And I hope -- and I wish you all the best in Duqm and in all the -- your future projects.

We're kind of running out of time, I think.

Yes, doesn't time flow when you're down celebrating [indiscernible] no idea we were so close to the time. But I don't see any other hands up. There's time for one more if anyone wishes. And if not, as always, great questions from those of you who do raised those questions. And I know that, that means for others of you, you get your question that you had ready has already been asked. So and I think we've covered the main issues. Was there anything we wanted to...

Just, I think to Joyce and Bishen's questions also lead to and what you answered about the backlog and the contracts that we are bidding for. As Steve mentioned, some are 25 years, some are 20 years, which basically take our order book to a different level altogether. And what it does is it gives us a much stronger vision of reliability, predictability of our revenues and that helps us plan a lot better in advance. So it's -- it all comes together as we build our order book and as we bid for contracts, which are more in the 20 -- more longer term rather than the typical cyclical contracts that are in the region, which are between 1 and 3 years.

And that's right. And we've changed our capabilities and resources over the years and then in recent times with Renaissance 2.0 to be able to tackle those kind of opportunities. Sameer, I see you put your hand up one more time. We've got time [indiscernible]

Yes. And sorry for that. And in between, I got cut. I mean, when you were talking -- I mean, Bishen has asked a question regarding a contract, 25-year contract. You mentioned about a joint venture with Galfar and Vision, which contract you are referring because I got cut in between, so.

Okay. So this was talking specifically about the schools, 42 schools PPP contract. And the Vision is not to be confused with our wonderful company in Oman, both Vision. It's a Saudi investment company, Vision, is our partner there. And it's a special -- excuse me, I'm suffering a little, it's a special contract and special purpose vehicle centered around that opportunity where Vision will be the lead partner in terms of the investment. Galfar will provide the EPC works and we will then provide the FM services where the lead changes because we will be the owning and consolidating partner but they will be partners in that and the operating part of that. That's where that is. So at this point in time, it's not -- it's -- we and Galfar are partnering with Vision for that first piece. And then Galfar, Vision and us will partner together for the long-term operation.

That's clear.

And on that note, as we come to the end of this session, as always, we'd like to thank you for your interest and your questions. We look forward to these session with you every quarter and we'll be back with you soon talking about the first quarter of 2024. Thank you very much indeed.

Thank you very much.