Renaissance Services SAOG (RNSS) Earnings Call Transcript & Summary

A very good afternoon to you, everyone. Or good morning or good evening, wherever you're dialing in from. Welcome to the Renaissance Services SAOG investors and analysts meeting covering our fiscal year 2024. It's very nice to have you all with us. You have with you from our side as usual my colleague, the CFO, Juma Al Khamisi; and myself, CEO Stephen Thomas. We're not going to go into any major introduction on this occasion because you have the benefit of our Chairman's statement that has been released [indiscernible] which carries a lot of detail and gives you the overview for the year. So we'll utilize the time for you best if we go straight to your questions. And we're open and ready for the first question, please. Thank you.

[ If you could adjust, Josefa ]...

So the first question is from [ Amit ].

So just wanted to know. What is the occupancy level in your RSVD and PAC. And where do you see it going in the coming days?

Sure. So the occupancy as it stands today is just around 6,000. As you saw in our actual report, the year started at the lowest point that we've ever been at, around 4,200. And it's risen to 6,000 by the end of the year. In terms of where we see it going, we have 2 scenarios painted out before us; 1 that we are pretty confident on, which is that it will hit about 10,300 by the end of the year on a fairly steady climb to do that. And another is a stretch target of 11,400-odd which we think is also possible during the year. Those numbers have put out in graphic form in the full annual report. In the CEO report segment of it, we've actually shown you what those predictions are for the year. Now how confident are we in those numbers? They contain some specific histograms given to us by clients who have asked for space. Now obviously the projects have to start on time. They have to be [indiscernible] factor in some of that. So we believe that this is achievable in the course of the year. And that would mean that we have a significant increase over what we did last year. Obviously it's not taking us into the sort of heavy heights of 2 years ago when we were up at around 17,500 at peak, but that, we envisage as the new projects come in. Now there is also news in the market you probably hear as much as we do of an expected announcement of timing for the petchem project, which if that comes through, of course, will then give us some significantly high occupancy in the years to come. But at the moment, that's what we're expecting in Renaissance Village Duqm during the course of this year. In terms of the PDO villages, the PACs as you know them, at the moment, we're around -- our capacity there across all is around 10,123. At the moment, the start of the year with some changeover projects, we've started a little low at around 75%, to 7,500. We are expecting that to come into the 90 percentiles during the course of the year, so we will be up, around 9,200, 9,300. That is what we're expecting on the occupancy front of those 2 businesses. I think it really -- it's an important question because here is a real potential for growth for us that is already in hand. We have the infrastructure. We have the capacity. We have the people to provide the services. We need no further overhead, et cetera, so it's kind of growth that really just picks up variable costs as we serve our customers in those locations. And the rest then flows to the bottom line. Thank you.

Yes. Just to -- I didn't this -- catch this number. Your PAC occupancy is around 9,000 for this end of 2024. Is that right?

No. We're expecting it to get back up to around 9,200, 9,300 during the course of the year. It's at the moment just under 8,000. It's -- went down to 75 -- 7,500, about 75%, but it's coming back up. This is with changeover project, but there's some significant movement coming in this month.

Okay. And my second question is on your margin. So historically you've seen that, despite the macroeconomic situation, margins is one area where the company has always outperformed. And I think 2024 to -- able to maintain around 18.6%, 19% margin is great given the impact on the occupancy numbers. So here I just wanted to know where you see the margins going once the recovery in occupancy happens. And if you could give any number on the breakeven point you have reached now.

Sure. So the -- in terms of margins, our overall margin as a company have again sort of generally held up in the performance this year. The -- when you talk about occupancy going higher in both Renaissance Village Duqm and in the permanent accommodation for contractors, the margins in those businesses at peak when you get to the higher occupancy levels are greater than the margins in our pure services business. You'd understand that because obviously we've got -- the capital cost is in there, so the cost, the accommodation as well as the -- just the pure services that are provided in that. So when you get higher levels of occupancy, you get better margins in those 2 businesses. And that flows down in a positive way to the overall performance of the company, so when we get to higher occupancy, you could expect a better performance than the sort of the traditional 10% overall that we make at the net level. In terms of breakeven, we are very profitable already in all our businesses, except the following. Where -- in Renaissance Village Duqm, where we have always remained EBITDA positive, we were negative at the PAT level in that business last year. The -- but we will be passing through the sort of the breakeven level, which we've actually brought considerably down. And we expect that to be at around 7,500 occupancy, which we're not too far away from now. So we are expecting Duqm to be profitable this year with the average that we've predicted over the course of the full year. So above breakeven is what our prediction is for this year.

Just to expand on this. Our -- actually even with a very low occupancy, we still -- or EBITDA is positive. So our EBITDA breakeven is between 2,600 to 2,700. So we are already farther, so even though with the [ negative PAT breakeven ], we are still positive in the EBITDA. And we've been able to serve our financial commitments easily.

Yes. And to just build on what Juma said there, it's important to note, as we've described before, every project that builds requires larger numbers to build them, but they leave behind a residual smaller workforce.

Yes.

And so of our current 6,000 in Renaissance Village Duqm at the moment, 4,500 of those are permanent. So our permanent signed-up occupancy is greater than our EBITDA breakeven level. So this is a positive thing underlining -- underlying the performance as we go through this trough. And the point to the trough is that we're actually on the way out of it. We hit it January of last year, and we're already considerably higher occupancy at the end of the year. Thank you.

I think [ Jois have ] the next one [indiscernible].

Just to follow up on, Steve, your comment on what we are looking at for 2025 in Duqm. So what would be the average occupancy that you are targeting? Because you said right now it's at 6,000. And you are targeting around 10,000, 10,500 on the base case, so is it going to be a gradual increase? Or are we looking at specific time periods where there will be new additions of -- new occupancy -- higher occupancy in Duqm?

Yes. As I've described, we're expecting to end the year up, around 10,000 to 11,000 occupancy. And therefore, we're expecting the average across the year to be north of 8,000, so this will be in positive territory and in profitable territory, yes.

All right. Steve, one new addition that I've seen in the Chairman's report is the growth strategy that you are talking about, specifically in the M&A of -- you have mentioned that M&A is coming into the forefront and you're actively looking at opportunities. Could you throw some more light on that in terms of what are the kind of sectors, the sectors that you are looking at or the opportunities that you are looking at? One is in Oman. And then you said you are looking at -- both in Saudi and Qatar as well as your UAE operations have turned profitable. Congratulations on that. And you are looking at further inorganic opportunity there. Can you please give us more light on that, on each of these aspects?

Yes. I'll speak generally. And then Juma, perhaps you put some specific color on -- obviously we sign NDAs with the parties involved, so there's a limit to the detail that we can give, but I think the important thing about your question, [ Jois ], is that we've made -- you can see the strength on our balance sheet. You can see that we've got headroom not only to give a dividend and to enhance that dividend again, for the second year running, but also to look at using cash to grow the business in a particular way. Now the actual target markets that we're looking at are in our home market of Oman. And more specifically -- you mentioned Qatar, but we're more specifically on M&A looking at KSA and UAE. And in terms of strategically what type of businesses. Now we've been through the diversity of the services. While we're a services company, in that single word, we range from IFM, a range of soft FM services, a range of hard FM as well as waste management utility services, so it's quite a broad spectrum. And the -- and we're looking and we're open to growth opportunities in any of those service or sector areas. However, our maximum desire -- our target desire is to actually focus on M&A that not only gives us geographic footprint and presence and scale but also is going to give us perhaps strengthened skill sets. So where we've got the most room to grow in some of the hard FM service, et cetera and IFM would be priority targets, particularly in the new markets. In our home market, we don't mind. It might come from any of our traditional businesses because the economy of scale that we would get from absorbing additional business into us would be significant whatever the service is. Juma, I don't know if you want to talk about some of the types of opportunities we've looked at, looked at and turned down; and others that are still live...

Yes. So actually we are -- in terms of M&A, we are looking to opportunities, first, in Oman. In Oman, we know the market very well, so we can capitalize on our knowledge and we can also add value to the businesses which we acquire. So we have been looking to different verticals in Oman. And also as Steve mentioned, we are looking to the GCC countries, specifically in Saudi Arabia and UAE, where we see the synergies. And wherever we go, the most important thing is to capitalize on our strength and to create a value addition for our shareholders in terms of return. So we have been looking actively into the markets. And we'll -- of course, we will announce anything whenever there is a material improvement in those opportunities.

Okay, but could you just guide us on the timing, the potential timing; or the size of these transactions that -- if that comes in. Probably, is it -- will it likely to happen in the first half or second half, something like that...

Well, yes, [ Jois ], what I would say is that, if we look at some of the things we've already analyzed and decided not to go forward with, those could be happening now had we decided to do it. And M&A is often -- it's driven by what is available on the market; and then its suitability for the business; and then of course, the stage of actually integrating it culturally and physically into the organization. And all of those factors have to be considered, so I think by invoicing this as openly as we are doing now is intended to let professionals in the market know as well as maybe competitors who are thinking, for various reasons, to divest their businesses -- to let them know that we are actively looking. So some of these things will -- could happen fairly shortly, so we're actively looking now. And once you get a green light on something, these things can happen fairly quickly. Obviously you've got to go through a very professional due diligence process and everything else and then that has to be done, but we've got some serious opportunities in view at the moment. Juma, anything to add...

Yes. I mean maybe you should understand how M&As go. So it's very difficult to predict the timing for it, so -- but we assure you that when everything -- when anything material, we will be putting in the public and we might discuss it.

Yes.

And for the time being, we cannot say when and how because we're still exploring. And you probably know, [ Jois ], how this kind of things goes. It can as -- be as long as you couldn't predict. Sometimes it happens earlier than you expect as well.

Okay, got it. Another thing that I have is on the PDO permanent accommodation facility. There you have mentioned that you have further scope for capacity addition and -- so what do we mean by that? You said the temporary accumulation facilities, once they are [indiscernible] and everything, but could you please throw some light? And also connected to how we are seeing the Manazil project coming up.

Yes. So on the point about PDO, you will recall, as you've mentioned there, that we have -- we used to be around 8,500 beds capacity across all the PAC. And with the expansion, we are currently at 10,123 beds. Now some of those expansion areas -- this is a temporary facility that would operate for about 5 year and that would then become part of Manazil and become the shutdown camps for Manazil when it's -- I'll come to Manazil in just a moment, but in some of those areas, those expansions that we've put in have filled up. In a couple of areas, there's a downturn in occupancy with major contract changeovers in Marmul and Bahja, for example, where we're lower occupancy in spite of the expansion. Now our client is working very diligently and hard with us to -- where there have been approved camps outside the PAC fence, these, as their contracts come around, are shutting down and moving into our PACs. So we'll start to see that movement coming much stronger in this year, so we are expecting to come up to a high 9,000-plus occupancy in the PACs, 9,500, 9,700, in the course of the year, which is close to our 10,123 capacity. On Manazil, we're expecting the tender to come out this year. Now that's 2 different parts of this. So the Manazil that came out before that was then put on ice has been replaced temporarily by these temporary expansions of the PACs because that means it gets people working in the oil fields at least out of camps that don't have the full facility requirement to meet the United Stations ILO standards and PDO own standards that they want to see their contractors have and hence want to move them so that they've got access to the PAC facilities. Now Manazil will now be in 2 parts. One is that PDO will now build their own replacement camps. So PDO [ will have 11 ] camp locations across all the oil fields, their concession areas. And in each case, there will either be a brand-new PDO facility built. Or where some of those facilities have new buildings, et cetera, there will be a conversion of the existing facility, with a lot of new build happening in and around existing facilities. And at the moment, the soft services operator for those 11 facilities is ourselves. And you remember we were given that contract for a year and then 1 of 2 things will happen. This will be rebid during this year and then the opportunity to have a 3- to 4-year contract. Or it may be extended. I can't talk more about that. The -- but that service will move during those 3 to 4 years. Where the PDO new build of Manazil -- it happens, whoever is providing the services on those 11 sites will move, will transition into the new Manazil PDO camps. The second part of Manazil is for the contractors. And that means that, everywhere where there are existing PACs, there will be either a new PAC built, an additional PAC built, if there's -- the winner of Manazil doesn't currently operate PACs. Or it will be a current PAC operator like ourselves who will be allowed to extend and expand their existing facility. Now obviously there's a tremendous competitive advantage in being an existing PAC operator and who just has to expand a facility but doesn't need new central services like a clinic or a reception or a swimming pool, et cetera. They're already there, roads, lighting. It's already in place, so there's a great competitive advantage for those of us who are existing PAC operators to bid to expand. That will be -- so we currently have 10,123 beds. What will be up for bid will be just short of another 10,000 beds in the PAC, where there are existing PAC. Then there are some smaller site areas that don't have PACs at all at the moment. And then there will be a chance to bid for new contractor camps [indiscernible] modular fashion but with many PAC features, but they'll be new. They're greenfield, so it's a level playing field for everyone bidding those. And there is another just short of 10,000 beds in those locations, so on the contractor side, the Manazil bid that comes out later this year will be an opportunity to bid for just short of 20,000 additional beds. And when all that is built, everywhere there is no PAC and people are living in their own contractor camps, those camps will be shut down. And they will move in to either the expanded PACs or new PACs or the new contractor facilities where there are currently no PACs at all, so it's a tremendous opportunity for us when you consider that our company has always won the maximum allowed to be won in any bid. So if it's a bid where there are 2 PACs to be built, we've always won 1 of the 2. If it's a bid where there is only 1 PAC to be built, we've always won that bid, so we expect to be a serious contender in the Manazil opportunity when it comes. And whilst I'm sure that those 20,000 beds may well be shared between more than one service provider so that there's a competitive tension retained, we expect to be a serious contender to go after around 50% of that opportunity. Thank you.

[indiscernible]

Firstly, about the -- what specific sector contribute the most to the revenue increase in quarter 4 2024?

Sorry, Abdulaziz. I didn't catch that. Did you...

What specific sectors [ contribute ] more revenue in quarter 4. So in quarter 4, basically it's more on the utility sector, where we have -- actually get 2 contracts from [ an ADC ]. And also, from PDO IFM, we have also [ had that contract ] in quarter 4. This is why you will see the growth in quarter 4 -- quite more than the previous 3 quarters.

Yes, yes. So we specifically rolled out in December alone 250,000 smart meters, which our client informed us at the ceremony that they awarded us is the fastest rollout in the region of that number of smart meters. That happened in December. And of course, the PDO contract mobilized in October is...

Yes.

[ We've got 2 more of those ].

All right. Basically me and Abdulaziz [indiscernible] we are both colleagues. And we represent Tanmia, Oman National Investments Development Company. So that was our first question. Just a follow-up on that: So it means, out of 400,000, 250,000 meters were rolled out in December, so is there any backlog now remaining? Or are -- all of the meters are rolled out.

Yes. There's no backlog remaining. So that assignment has happened during the course of the year. I mean it's the final 250,000 went out in December, of the 400,000 that we've rolled out during the year. So what is live at the moment is a tender opportunity, so the -- where we rolled those out is called zone 1, up here in the capital area. There's a tender opportunity now for the rest of the country, called zone 2 and zone 3. And this will mean that, in the course of this year, there's an opportunity for whoever wins that in the game, we expect to be a serious contender, to roll out 350,000 meters during the course of this year.

All right, that's great. And do you expect this to happen earlier, in the first half; or second half?

Well, we expect the decision to be taken in the first half. And then once it's taken, we're pretty well up and running and mobilized and able to get going. And I think that's something that the client is looking for. The client wants this done as quickly as possible and -- as in the case of last year's [ push ], so we expect it to happen quite quickly once an award is made.

All right, one more associated question. We just saw and realized that the general and admin expenses were anomalously very high in quarter 4. What explains that? Does it also include the provision with regards to Mekdam [ Qatar ]?

[indiscernible]

[indiscernible] I didn't get the question...

Yes. We're getting a bit of feedback on your line [ Abdulaziz ]. It's no problem. Just say it once more for us and we'll catch it.

Sure. So basically what I'm asking is about the general and admin expenses for fourth quarter that have been anomalously very high versus the past 4, 6 quarters. What explains that? Does it -- is it because of the utility smart meters rollout expense? Or is it because of the provisions also recorded here with regards to Mekdam?

Yes. So it is -- yes. Basically you got it right, which is the specific provision we have made in the last quarter which have that impact [ on it ].

Okay, but even if I exclude that provision of OMR 1.1 million -- the total G&A expense is OMR 3 million. Even subtracting that is about OMR 1.8 million, which again is very high versus all your previous few quarters. What's -- what led to that high expense?

So normally -- see. I mean we are getting adjusted the numbers at the end of the fourth quarter, so this fluctuation might be the reason of that. Provisioning is one side of it. And the other side is to normalize the [ yields ], doing the cross-reconciliation of the provision toward the quarter 4. So that can be the reason, but I will get you the details. Once we've got the details, we can go off-line, if you need further detail on that.

Sure. One more question, with regards to the waste management project that you guys have. Can you just give an estimate of how much actually it contributes in the revenue? And what are the margins profile on that? Like, what basically work are you doing for be'ah? Is it recycling? Is it waste collection? Is it depositing? Is it the operation of trucks? Can you spell out more on that, please?

Yes. And you'll forgive me, [ Abdulaziz ], if I don't go into the details of the numbers. And one of the reasons is that there's the opportunity of competition for growth in that, but let me tell you what is happening because this has been a profitable and positive entry into a new service market that we've now been in for a few years. But what happened is that -- and when the government decided to privatize waste collecting, primarily, it is set out in 8 different contracts, the largest of which, Muscat zone A and Muscat zone B, et cetera, have -- are operated by other service providers. And we came late to that competition with our partners from Italy's Sager. So Renaissance Sager Environmental Services. And we won the final 3 smallest of this, so we actually have about 8.3% of that waste collection market as a total. And these were 7-year contracts. Those 7-year contracts have started going out in 2017, so some of them have run out and been extended recently. And the -- for us, we came into it a little later and got our first contracts in 2020. And therefore, they're due to run out in a couple of years time. Now the -- in terms of the services that we provide. All of those contracts have one thing in common, which is waste collection. Ours had slight differences. In the PDO -- because we won in 3 areas: PDO, the concession zone; the whole Al Wusta area; and the SEZAD area. They're 3 different contracts. In PDO, we also have the task of dump site clearance of all the old dump sites that have accumulated over a long time lots of wood, stone, iron, steel, et cetera, all to be cleared up and done. We finished that work, which was part of that contract, but what that does give us is in country a unique track record of having done that very successfully; ahead of schedule; and safely, without incident, which is very important to the oil field plant and to be'ah. The -- and the other thing that we do have, because of the area that we're operating in, in Wusta, is there are many other additional services. There's lots of beach cleaning involved down the coast there. That's part of that contract, not part of the contracts up in the North [indiscernible] which are still performed by the municipalities. The -- also we're dealing with major things like roadkill and so on, these quite sort of specialist things to be able to remove and dispose of cleanly and safely, so we have a few differences, but it's basically waste collection. Now -- and where the opportunity lies for us is -- I'm sorry. I'm -- one thing I have said in this forum before and will say again: We are very proud of the fact that, when be'ah publishes to all its service providers the performance KPIs, there's only 3 contracts that are above their required 95% [ on performance ] and they're us. We're 1, 2 and 3 in those 3 contract areas, so we have a client who is very, very happy with our service level and performance level. Now the -- where will the opportunities come? In waste collection, it will come -- there's an issue now of be'ah transferring or at least offering to the municipalities -- the governorates and municipalities the opportunity to take waste collection back under their banner now that the privatization phase has happened. And so that is happening as we speak. Now for us, be'ah will continue to be the client in [ SEZAD zone ]. That may change in time and it may become [ SEZAD ]. And be'ah will still be the client in the PDO [ concession ] area, but what will change is our client in the Wusta area will change the Wusta governorate. And there are then 3 municipalities within that governorate. So that process is happening for all the other service providers in the other contracts around the country, from the capital area and Salalah, to Sharqiyah and Batinah; and all points East and West. So where those contracts come back out for tender, and there are a few extensions happening in order to enable this transaction -- transition to happen, we have the opportunity to bid for those as well. And for that, it gives us -- we only have 8.3% of that market, so we have the opportunity to grow, depending on our competitive success in bidding those contracts. After that, where will the growth come from in the waste sector will be from other forms, waste treatment and recycling, landfill management; a whole range of different things, chemical wastes. There are different things that are performed either by -- self-performed by individual entity or government, but it will come to the private sector in time. And we stand ready to perform those services as they come out. We picked up a small but important contract with the new Khazaen market facility, where we're looking at -- we're doing all their waste management, et cetera. And we're looking at how do we compost the food waste from the market, et cetera, a, to make it smaller in terms of what goes to landfill -- but also then what could be used and recycled into agriculture usage and so on. So these are the kind of opportunities. I know I'm not giving you color on numbers. Because the issue here, [ Abdulaziz ], is it's a very competitive environment, although it's good margins when you win in this area. But I don't want to be too -- put too much color on numbers when there's such a competitive opportunity coming up for us in the coming months and years.

The other thing [ that is ] regarding your previous question on administrative expenses [ was that ], in quarter 4 also, the mobilization of PDO contract is one element to increase the admin expenses; and also [indiscernible] contract. Because we have deployed over 200,000 of smart meters, that's [ cost ] also some administrative expenses which is, comparing to the previous quarters, much less.

Okay, got it. Just 2 more clarifications. Number one is regarding the market share. Did you say a 0.3%, or 8.3%? Number one, with regards to the waste management. And number two pertains to the duration of these contracts. Are they renewed every 2 years, 4 years? Or how does it work?

Yes. So it's 8.3% of the waste collection market. Now waste collection is only one of the features of waste management opportunities, but it's a significant feature in terms of that has been privatized across the whole country. So we only have 8.3%, but that, I say that as a good thing because it means we've got a lot of headroom. When you're performing 1, 2 and 3 in the marketplace, and they all serve the same client, then we've got a real opportunity to go after that. And the contracts have been -- the first contracts have been 7 years. We will have to wait to see what the second-generation contracts will be. The -- some will be being issued by municipalities and governorates. Some will be being issued by be'ah, but generally speaking, they are lengthy contracts. I wouldn't -- I'd expect them to either repeat the 7 years or, as a minimum, come to 5 years because there's a big investment to be made in the trucks and the infrastructure, in the number of bins and so on. And we uniquely -- in our contracts, we've put in, obviously, bin. We've put in a lot of technology in terms of the bins and the trucks and the linkage between them -- as well as the only one that is actually in Al Wusta getting segregated wastes so that we can, where we find an end user, actually be recycling that waste. So those are things that we've got to march on in this sector, in this country.

All right. And you also mentioned in the report that your UAE operations have turned profitable.

Yes.

Can you just shed some light on that?

Yes. Now our UAE operation continues to be small. It's a business that works out of central kitchens in the different emirates as well as some individual contracts on the back of that. So -- and we have struggled to turn that around. And I think we've had that conversation in this forum before. I'm very pleased to say that turnaround did happen in the course of last year. So it is now a profitable business. It is not a business that is making a huge contribution to us, but at least it's not detracting from us now. Now that is why -- in the conversation we had a little early on about M&A, why we're targeting UAE for M&A. One of the things that we've learned is it's difficult to just grow organically in a new market even when it is a close market that has many, many similarities. The reality is that in each of those markets in most of the services, whether it's soft or hard FM, there are already established players with established -- whether they're international players with established local partners; or they're established, strong local businesses. And it is sometimes difficult for people to make that leap. "Why would I go with a new contractor from a different country coming in, when I already am comfortable with what's available here?" So that is why we believe that we do need to -- if we're going to make a quantum leap of growth in those markets and establish a greater footprint, the best thing to do would be to do it through M&A and acquire a larger footprint there. So when we do that in UAE, it is something that will be complementary to the smaller business that we have there now that is now profitable because it will then give this sort of economies of scale for that business that doesn't need -- every business needs an overhead, however small it is, to run it. And so we're expecting that the -- and looking at in our M&A activity in UAE how can it actually synergize and benefit the existing business there. Thank you.

The geographical basically segregation says that, out of OMR 107 million revenue, almost OMR 8 million came from Middle East. Is it safe to assume that all of this came from -- most of this came from UAE only?

[indiscernible]

Yes. Yes, you can say that.

All right. And the last thing I would like to say is that basically you mentioned that 3 -- you lost 3 contracts, [ Badil ] obviously, and other company as well. So have they ended now? Or are they supposed to end in the near future?

Yes. So those contracts finished during the course of last year. And I think I would not be speaking out of line. I mean that people are welcome to take references from our existing clients and our former clients. And I'm very happy to say that we're a company that has very few former clients. The -- but where we do -- and these were 3 superb clients. I mean really very, very -- they're very professional companies working in the oil and gas space, but margins are very, very tight in the pure services. And sometimes, as an incumbent, you know too much. And you know exactly what the client wants, exactly what those requirements are, et cetera. And what happened in each of these cases where -- we were the second lowest bidder. And so other bids, higher than us, which gives some credibility to our product, but where the lowest price was significantly below. I mean in one case I'm talking 30% to 40% below. And I can assure you we were not making 30% to 40% margins. I wish we were, but that's not the case. So in those cases, it's difficult sometimes. There are government shareholders and state audit looking at these things who -- if you've got a [ technically qualified ] bidder and they bid at a low price, even if it is looking dangerously low price, there is a compulsion to go after that low bid. So the -- we wish all our competitors well, but I think there will be some struggle in some of those contracts to provide a compliant performance. So one thing is, if the price is wrong, something suffers. Either your bottom line suffers or the...

[indiscernible]

Compliant service suffers. And so we look forward to those contracts coming around again and we will look forward to competing for them again. There's no right to say that we would win them all. I mean what was very gratifying was that we managed to pick up the PDO soft services at 11 sites. The intention of that bid was that no one would win North and South, and we won both. And we get the economy of scale of that, so we've been able to replace the lost business, but obviously we'd have been a lot happier talking to you today if we held all of that and gained the PDO one. But this happens in the course of business and we don't see sort of anything to worry about. We've taken a view. We're not bidding for loss-making contracts. And I know loss-making contracts are a feature of services around the world. We see it in the annual reports of some of the global leaders in our industry. They're always reporting on their loss-making contract, but we're really looking at a portfolio that doesn't carry loss makers. It happens every now and then, but then we're looking to correct it to make sure that that's not the case, so it does mean that we won't always be that lowest bidder, but we look to be the lowest technically competent bidder. People know, when they get the Renaissance project, they get us as a differentiator that will be a competitive price but which guarantees you many of the things that our clients are looking for: the safety. They want to see that they're going to get that proper safe performance in the oil and gas fields. And indeed, in all our contracts, the life cycle value that we provide; the responsible green environment, really positive local impact; and also some future-focused innovation. All of these things come with a Renaissance project. And we look to deliver that at the fiercest, most competitive price possible. Yes, [ Amit ], are you going again?

Yes. Just wanted to ask, what is the split between your accommodation service and catering service revenue in percentage terms, roughly?

Again, [ Amit ], actually, we regret that, this level of disclosure, we do want to disclose, for competitive advantage, so yes, sorry for that.

Yes, a few hands up.

[ Jois ] again.

[ Jois ].

A few follow-up questions on certain things. Like, do you have any target IRR in mind for your new investments? I mean the M&A opportunities that you will be looking at.

Actually there is no specific target. It depends on the sector where we are, but of course, we are targeting double-digit IRR. But it depends actually. Sometimes when, where there is opportunity which starts gradually less than that, we will evaluate it on an individual basis.

Okay. And on the acquisition strategy, would it be looking at all-cash acquisition? Or will -- are -- will you be open to a share swap plus cash or a total share swap, something of that sort?

Yes, when we find the right opportunities, then how we structure it at that time, we will structure that at the optimum level. We will see what does do best for us and if there is a partner as well. So at that level. Then we will look on how to structure it in the proper way.

Yes. I mean the actual -- the opportunities that have presented themselves, so far, are people who are looking for a full exit. And in those instances, we'd be looking at a full acquisition. And it -- we do not rule out partnerships. We do not rule out...

Yes.

And creating new joint ventures in which we buy into, et cetera, so we are very, very flexible in our approach here. One thing that we have noticed -- and this is not to be arrogant, but it's to be more reassuring to our investor and analysts community. We've -- obviously, when you open the lid, after signing your NDA, on competitor companies, it gives you insights and comparatives as to how you are performing. And we've been very pleased to see that, whilst there's always room for improvement -- and we've done that with our own operational excellence and other initiatives. We always find a new way to do something better -- and we could have done better before, but we find, in comparisons, that our performance metrics are very, very positive, in comparison to others. Now when you get an M&A opportunity, as you synergize the 2 organizations together, we look that those will be things that would also increase the performance metrics as a result of coming together in the economy of scale. Thank you.

Another question is on your -- well, I'm coming back to the Duqm accommodation. What we have seen is there was a higher loss during the final quarter of the year, whereas your occupancy levels has been on the higher side. Because most of the lower occupancy was in the first half or around mid-summer, but when it came to the winter, you ended up the year with 6,000 up -- beds occupied. But at the same time, the loss contribution has been higher. Is my reading correct, or am I missing it -- something there?

So on occupancies in the PACs in particular, you're talking, [ Jois ]...

[indiscernible]

No. I'm talking about Duqm, yes.

Duqm. No -- so Duqm has come up during the year. And actually, if you go to our annual report, in the CEO report, we're actually showing you the trajectory, where we've come down during '23, to hit that low point at the start of '24; where we've come up during '24; and where we're heading upwards. And we've got 2 -- 1 likely target and another stretch possible target in '25. Now you -- what you will have seen: At the end of the year, we sort of -- we came up to [ 6.5 ]. And we've come back down to [ 6 ]. If that's something that you've noticed, then you're very perceptive, [ Jois ], but we know that of you. The -- but that's a temporary phenomenon where you've got a short-term contract, somebody coming in working on a road project or whatever it is. And then they move out. The overall projections, we've actually put in the report there for you to see.

Yes, but if you look, [ Jois ], to the overall performance, I mean, the last quarter performance has been impacted with a specific provision of OMR 1 million. So that's -- might be the thing which is abnormal to you across the quarter [ if you are to go quarter to quarter ].

I understand the OMR 1.1 million, but I was specifically referring to the minority loss contribution, which has increased during the final quarter. So I was just checking what has really happened there.

Any further question, [ Jois ]?

No. I'm fine.

Yes. That's explained by my point about the [ 6.5 ] coming down to [ 6 ]. There's slightly been a -- and came off the boil a little but still on an overall upward trajectory.

Yes. One more question. One last question that I have is your -- you mentioned in the report that there are 3 live PPP opportunities in KSA.

Yes.

Could you please explain, what are those opportunities? And the likelihood of their decision coming up in -- during the course of this year.

Yes, of course. Now -- so one of those is one that you and other regular visitors to this forum will be familiar with, is the border post that we're doing with -- in joint venture with Vision Invest, the -- and Saudi Vision Invest company. And that, the client is ZATCA; and that is a significant opportunity. It's just been rebid with best and final offer because there was a change in scope where, with the security issues in the region, they wanted to increase the number of vehicles being checked going through those posts. Now that is a significant opportunity, 20 years, in which we would be providing the...

FM...

FM services for soft and hard. In either, you can win 50% of the bid. There were 6 locations. They've now been reduced to 5, but the scale remains the same. And you can win either 3 or a similar size of 2. And so that remains a very live opportunity. And we're amongst the remaining shortlist bidders for that. Now if that were to be awarded, it would be a very significant announcement in terms of scale, the value of it over those 20 years, of which 50% of the value would come to us, but we wouldn't start earning that for a couple of years because the facilities have to be put in place first. But it would be a significant entry on scale into that market and a sustainable entry as well. Now there are 2 other PPP opportunities that we're bidding with the same partner in the same market. These are both accommodation solutions very similar to what we've done in Duqm. One is with Aramco, and another is with ZATCA again. So that is they're in a more formative phase. It hasn't reached -- the bid has not gone in yet, but the prequal is all done. We're still -- were prequalified and through there. And Saudi is definitely moving towards a model: I remember when we're talking before about what we've done at Duqm is playing where the ball is going to be in terms of worker welfare and minimum expected standards, et cetera. And that is exactly what's being specified in these examples, where they're, again, looking at 20- and 25-year PPP options to put in significant accommodation facilities for workforces exactly to the standard that we already provide here, so our prequalification has gone very well there. Those are the 3. Thank you.

We are crossing 1 hour. If there's any final question in the queue, guys -- or we will close the session. Abdulaziz, do you want to take that?

You're on mute, Abdulaziz. You're on mute. You're on mute, Abdulaziz. We're going to take one more question because we'd go segueing straight into another call, but yes, go ahead.

Yes. I've got the -- asked the question that is in the chat, so sorry, everybody. I don't have any more questions. Thank you.

Thank you.

Thank you, Abdulaziz.

Well, on that note, we'd like to thank everyone. Again, always some good questions in this session. We do appreciate the interest that you all show. Thank you for joining us today. And we look forward to seeing you all again when we do this at the end of the first quarter of 2025. We wish you all a very blessed and peaceful Ramadan. Thank you very much.

Thank you. Thank you much. Thank you. Ramadan kareem.