Renaissance Services SAOG (RNSS) Earnings Call Transcript & Summary

Good afternoon, good evening, good morning to all of you. Thank you so much for joining the Renaissance Services SAOG Investor Briefing this afternoon. We are starting -- good -- excuse us. There was a little bit of confusion. So good afternoon, good evening, wherever you are, and thank you for your time in joining the Renaissance SAOG Investor Briefing. As a way of introduction, I am Andrew Dawson, the CEO of Renaissance Services. And with me is Juma Al-Khamisi, who you'll know from previous calls, our Chief Financial Officer. In case you were not able to join the last quarter's call on the August 13, just a brief introduction of myself as the new CEO before we open it up for questions. I commenced with the organization on the 1st of June and completed a 30-day handover with Stephen Thomas, our outgoing CEO, who is remaining with the company as an advisor to the Board, which is fantastic, particularly for myself. So I officially took the reins of the organization on the 1st of July. And on the call in August, I shared some of my observations on the many strengths of the company and some early views on what I see as the many market opportunities that we have also. Since then, I've been continuing to meet with many of our clients, with various ministries and Renaissance leaders. And it's just reinforced the views that I shared then on the strong and significant headroom that Renaissance has for growth in the years ahead and the strong capabilities that we have internally to deliver on those opportunities. In the middle of this quarter, we launched some changes in how we are going to be structured in the future, moving towards a more standardized and scalable operating model, which is more targeted for growth and helping us to improve our focus on some key market sectors, which each have unique characteristics and where we see significant growth potential. This is also designed to increase the consistency in our operating standards and in our governance to help us further improve performance for both our clients and for us as an organization. We've also recently completed a deep dive review of all of our overhead and operational cost structures to identify areas for improved efficiency, productivity and indeed overhead cost reduction to enhance our overall performance and again, improve our competitiveness to support the winning of more future new business opportunities. Some of these early initiatives are underway, whilst others will continue to follow a disciplined program across 2026. The objective is singly to improve our competitiveness, to enhance our productivity and to protect and enhance our future margins over the medium term. With -- I guess with that, I can just reiterate again that the -- this is an incredibly strong business. Our fundamentals are incredibly strong. I see fantastic opportunity and growth headroom on the market and that all of this is really in our own hands to capitalize on and deliver over the coming quarters. Without further ado, you've seen the results and our Chairman's statement, which provides a comprehensive commentary of our performance and the operating environment we're currently in. I think it continues the themes that were shared in Q2 on the mix of our business between the Accommodation Solutions and our Contract Services business and the kind of the stable occupancy in Duqm and the PACs. I'd just also emphasize the strong and the growing sales pipeline that we have as a business across multiple sectors of the economy. And that really gives us a lot of confidence for the future. And as I said, the strength and the underlying fundamentals of the business. So without further ado, we're going to open it up for questions. As per last time, Juma is going to take the lead in facilitating those. And as I'm still relatively new, and I'm here to add value as much as I can, and we will try to answer it in as much detail as possible. So again, thank you for joining us, and we'll throw it open for the questions. Thank you.

Yes. Thank you, Andrew. Thank you very much, and thank you, whoever is listening to us from anywhere. [Operator Instructions] Yes, [ Mana Thomas ].

Hello, am I audible?

Yes. Yes, you go ahead.

Okay. So can you provide some light on what is the current visibility on the new project awards for the upcoming...

Again, can I get the question?

What is the current visibility on the new project awards?

Yes. Actually, our contracting businesses is continuing apart of them -- from the regular businesses, there were similar questions last quarter. So we have an extension to our health care from Ministry of Health for 2026. So that will be extended. Other than that, the business is as normal, we are getting the businesses as normal. So whatever is going to be announced, which is the material required announcement, will be announced in the in the stock market.

I can just add on to that. In terms of the forward business pipeline, as I briefly said in the introduction, then we have -- we're seeing that develop positively, and we have a forward pipeline in excess of OMR 120 million right now. That's at different stages of the pipeline. Some were in active pursuits and some we're cultivating for the 2026 and indeed 2027. And we've had strong awards across the first 3 quarters of this year. I think we've secured in excess of OMR 60 million in annual contract awards so far this year. Some of that is the new -- the renewal or new contracts that we've secured on existing business where we've renewed them and some is net new business. So we're very confident and very encouraged by the -- not just the size of the pipeline, but the quality of some of the opportunities that we're seeing emerge in the market for us.

So we have also announced earlier in this year that we have win hard FM PDO contract, which actually enhance our capability and growth into facility management, which is the other part of FM, which is the hard FM. So that also will increase our horizon in the market in that vertical.

Okay. That was clear. Just one more regarding -- what is the current occupancy levels in Duqm?

Duqm is still -- even though the outlook is very good and beautiful, actually, we have seen in the media that a lot of MOU has been signed. The Duqm still is in the same level of last year. So we have moved in the beginning of the year to 32% level. And now it's actually in quarter 3, again, relaxed back to 27%. So as -- yes, net to net, it is a similar level of revenue and similar level of results, but the outlook is good. We have been a couple of discussions from the newcomers to the Duqm area. But still that need to be materialized. It's not in the ground, but a lot of discussion around the future outlook of Duqm. You want to add something in this, Andrew?

I'd just add, as Juma has said, so the occupancy is fairly stable at the levels that we've experienced in 2024 at the moment. The positive is actually the average rates are up a little bit because we're seeing a bit of a change in the mix of the occupancy at the moment between the single rooms and the doubles and the multi-person rooms. So that's driven our rates at the moment. We are in active discussions -- I think there's been announcements publicly now, particularly around Jindal Steel and we're -- we already are hosting some of those. We're in active discussions, and we're very hopeful as they move to, we understand, release their contracts and secure their contractors into Q1 of 2026 that we're going to see a significant inflow in that project. And then the green hydrogen project, the pilot project with ACME and some other projects around the renewable energy. So we've got a lot of active discussions, a lot of -- we're hosting a lot of visits. And we really see, I think, some -- after a couple of probably years of lower activity in Duqm, we really see with the announcements of the gas allocations and the projects -- some of the projects coming off the ground that into 2026 -- and further into 2027, we're going to see and experience a healthy lift in occupancy. So certainly, yes, I think some upside ahead there.

So Mana, if you are okay with that, I will move to us, [ Joyce Matthew ].

Thank you for that answer on Duqm. See, in our earlier discussions, we have been talking about some military activity that's expected to happen in Duqm during the course of this year. So just wanted to check, is that over? Or is it yet to happen? So how is the occupancy levels in Q4 is likely to be? Because the earlier discussions where you were targeting to end Duqm occupancy at around 7,400 beds. So is that still the plan? Or are there any changes?

I hope it is a plan because, as you know, Matthew, the Duqm occupancy driven by the market, and we're always holding that market risk on Duqm. But back to your question on the military activities, yes, it is in and out. And this is -- we have entertained some of the occupancy from the military side and might also come in the last quarter. But there is no substantial upside move on that, which we know at this point of time as we talk now.

Second, could you please touch upon the occupancy levels at the PACs? And how do you see it moving forward? Because right now, in your Chairman's statement also, you have mentioned that there is no significant improvement in the PACs occupancy levels. So when do you expect the occupancy levels at PACs to float above the historical average of 90s mark?

So I mean, just in general, and maybe I will ask Andrew to comment on this. As general, actually, we have been similar level to the previous couple of years of the level of occupancy in PDO. The difference only we have -- last year, we have exercised higher occupancy. And also as based on the expectation of PDO that we have done an extension to our PACs. So we are expecting the project will fly in PDO and will increase our occupancy level. But that not yet happened actually. And we see a lot of, I mean, discussion between us and PDO, wherever the activities will come up, of course, our PACs will be ready to open. There's a lot of potential for us. There is no more investment required. So whatever comes to our PACs, it will be upside to our bottom line directly. So I'll leave the floor to Andrew if you want to comment more on this.

Sure. Thanks, Juma. I'll just add a couple of thing. I think as Juma said, actually, we're in line with historical performance. Last year, there was this crossover of ODC contracted. So there was about a 6-month period of some additional occupancy over the historic averages and say the outcoming the incoming. Actually, when we look at the PACs, and we're having some very constructive discussions with PDO. There's out of the 6 PACs or 5 PACs, 1 TAC. There's 2 where there's particular challenges, we'll say, or opportunities for significant growth in the occupancy, and that's around some delays in some of those oilfield projects, which we see through PDO, the pipeline coming after they've been through, I think, from what I understand, a period of some transformation themselves and some very positive discussions with them working in partnership with them on some contractors who have been in the long term staying outside of the PACs and looking as the opportunity for them moving in, in the coming period. So I think we've -- look, we're continuing very strong performance in the PACs and a very stable performance. And through what we're seeing with PDO, we're actually anticipating and expecting some kind of upside there as some of these projects in the oil fields ramp up in the periods ahead.

Okay. All right. And you just mentioned that MOH contract will be extended. It was supposed to get over by end of this year. So can you throw some color on that for how many months or years is it going to be extended? And is there a fresh tender that's going on right now?

Actually, it's extended for 1 year for the existing. However, there is a few activities also for new hospitals has been launched in March. And also, we are participating at that as a trusted partners who are always being knowing how to deal with the health care. So there is also a little upside of more activities is within the health care. But the extension is for 1 year. And as per the plan, it will be again floated to -- as a tender for another 3 years or even more. We don't have a clarity on how that tender goes as we speak now.

Okay. And is there any updates regarding your M&A aspirations? Are we talking about any specific deals that you are likely to come out soon? Or are you still in the exploratory phase?

We are actually in multiple phases. We are being looking to the market, as we explained earlier. There is a few opportunities which in different stages actually. But all of them is under exploration stage, which we don't have a material information to disclose. Once the moment it reached to the mature level, it will be disclosed in the public domain. But however, it's still been our strategy to look to more opportunity to inorganic growth and also to diversify our business from Oman economy to even to bigger economies. So -- but that's always our intention as we are keep saying. But as you know, Joyce, M&A opportunities require a lot of time, lot of efforts and not whatever you explore, it can be material. There's a lot of opportunity we have cleared. Some of them we have shut down. Some of them, we are in the -- as we sign NDA, and we are exploring more detail until we reach to the right level. But yes, it is being our continuous strategy, and we will be focusing on that just to diversify our portfolio and to make the growth. And you see we have very good firepower to expand as we have a strong balance sheet and very good position to go for such opportunities.

Maybe I can just add that we're taking a very disciplined approach to M&A in terms of the types of businesses that we are interested in potentially acquiring that they are -- they complement our business, that they are similar in terms of services businesses so that we know them well, and we have a lot of capability and confidence to integrate them and to add value to them. And we're looking at businesses which could be complementary to us in terms of opening up sectors of the market, which we're currently not either active in or we're not as strong as we would like to be in or add-on services that we could take new services across our portfolio. So that's kind of the approach. That's what we're looking for. And there must be a strong business case for us where we can really add value and add growth and there's a good cultural alignment and that we can successfully integrate. So that's how we're looking at it.

If you allow me, Joyce -- because there's many hands raised, if you allow me to take the second in the queue. Joey, can you go ahead with your question?

Can you hear me?

Yes, please.

My question is on -- mostly on your cost side. So margins have been lower versus previously this cost pressures. So how do we should think about it? What is the plan here? How do you manage the cost side? And what kind of investments are you making to manage that? And how would you see the margins like sustaining over the next 2 years? What kind of sustainable margins are you looking at?

Yes, if you want to comment.

Certainly. I think it's a great question. Thank you. I think the margins, I could comment on a number of dimensions. One is the mix of our business. So we have kind of 2 core activities in the business, the Accommodation Services and the Contract Services. The Accommodation Services is a capital-heavy model, long-term, which delivers strong margins. The Contract Services business, a capital-light model, which delivers healthy margins, but I guess, commensurate to the capital that's employed. So some of what you see is just how the mix may move around in that. And when the Accommodation Solutions business, we've talked about some of the occupancy, is a little bit lower, then that can be just a mechanical drag on the margins. I think we're seeing solid and improving performance from the Contract Services business. We have actually, in the last quarter, renegotiated and extended a couple of contracts which were underperforming. And I think now we have a very strong portfolio where all of those contracts are performing. There was some loss of a couple of high-margin contracts in 2024, I understand. So on the year-on-year comparison, that can also have an impact. So I think that's where we are now. For the future, as I briefly touched on in the introduction, I see a great opportunity for us to enhance our overall competitiveness, our productivity and our margins in terms of we are investing in what I'd describe as the way that we produce services, whether it be in our food services business, whether it be in our facilities management business to, I guess, make it a lot more consistent and standardized and cost effective. And that includes a lot of our efforts around operational excellence just in how we operate our services and also in technology. So we've been working -- we have a digital steering group in our business. We have some great technology, and we're really looking at enhancing that the use of AI. We have in our back office, particularly, but also now stepping in with our clients in automation and in our kind of food production technology. So I think there's good opportunity for us in terms of some of it's mechanical just with the mix of our business. And as I said, everything is in our own hands and some of the initiatives that we're taking to improve our productivity and enhance our operational margins, particularly in the Contract Services business, which is where we see a lot of headroom for growth, particularly into the future.

Excellent. My other question would be on CapEx. Any plans on the CapEx side for the short to medium term and how that can impact your dividends?

Yes. So actually, in the CapEx, we don't have a major CapEx. It's just normal adds up whenever the business required, but there is no major CapEx planned in -- I mean, during the year or even in the coming few months of the year. I shouldn't disclose that, but yes, it's the case.

And dividend should be stable is what -- or should we expect as requirements for business increases, there could be -- dividends can remain stagnant for some time?

So actually, I prefer not to answer this question because this is a decision need to be taken by the shareholders after recommendation of the Board. However, but we are being very consistent in our -- in the dividend policy or strategy. The company is solid, stands solid. And I don't think there is any requirement of addition of CapEx or addition of equity. So I mean, the balance sheet, as you can say, is very, very strong. And we have been constantly paying very decent dividend to our shareholders. And the intention is to continue as always. And -- but to me, I cannot say what is -- what the right number of the dividends. That will be the call of the -- at the AGM level. And sorry for that answer, but that should be the answer which I should give because we are not -- we don't want also to promote our share price or to disclose unrequired information at this stage. I ask [ Rashid Hamid ], you may go ahead with your question.

Can you hear me?

Yes. Yes, please.

I guess -- I mean, I had 2 questions. I guess both of them has been answered or somehow answered. But before I go into this, I just want to highlight that the meeting is in English. I know a number of people on the call who are not so good in English. So I wish if you guys could consider something like in both languages.

We are open also to take any question in Arabic and answer in Arabic in this forum or in other forums. So yes, it's open. Sorry, we haven't said that in the introduction, but thank you for saying that. But we are happy to do any questions in both languages. I don't know maybe Andrew can speak other languages of China and things. But Arabic and English is available in the table.

Okay. No, I can't do Chinese, but I can still speak in English, if that's okay. The 2 questions. I know -- I mean, Andrew, you alluded to some of them. But I mean, on the positive side, there seems to be a momentum and growth into your revenues. However, the net profit continues to decline. And if you think that's a fair statement? My question was around what is the pressure, and there seems to be an operational cost pressure-related. My question was, what are you doing differently about it? What's exactly different you are doing about it? You guys have given some answer on this one. It's up to you if you want to go back to it. The other one was also somehow...

Sorry, go ahead. You want to ask -- shall I answer this question first?

Yes, please go ahead.

So I mean the pressure on margin is because of the margin mix. So Accommodation Solution has higher margin and the contracting businesses with a lower margin as it depends on the pace of each investment. So contracting businesses, as you know, it is asset-light. So it's always has actually a lower margin, where the Accommodation Solution, which require heavy capital investments is a higher margin. So I mean, the stress on the margin, if you see because of the mix as we have explained well in the Chairman report, which is there has been stress in the Accommodation Solutions side. So that's because of the mix, Rashid. But there is no fundamental change on our businesses. And when we grow, I mean, if you see that the top lines maybe came more this year from contracting businesses, it shows a resilient business as going forward.

Okay. Well, the second question, I mean, you somehow as well answered it. I don't -- I know you don't want to promote your shares. I'm not directly asking for what's the dividends. But it's just your view on how the pressure continues to impact your Q4 results? And how does that could basically possibly impact your strong performance in terms of dividends?

Yes. Rashid, again, this forum actually is -- we are -- based on the requirement of this forum is not to predict the future results. So I don't want to comment on that. But what I can assure you that our results is being always resilient. And I mean, if you see, the liquidity position of the company can tell you a lot. So that's what I can add to this forum, but we are not going to predict our future or the -- so this forum is to highlight the shade on the quarter 3 report. So that's basically -- we need to stick to that to make sure that everybody have it in the same page.

And maybe I can add, Rashid, like for the long term, outside of Q4, I guess, as we've said with some of what we see in the pipeline for Duqm, plus, as I was talking about with the Contract Services and the growth opportunities there. But then internally within Renaissance, as I mentioned, we've got a very strong cost discipline around our overhead costs and our transformation program now around how we produce and deliver those services. I see in the medium term, good upside potential in terms of our operating margins. And the more that we can kind of grow our Contract Services business, our Accommodation Services business is as sound and strong. And as the occupancy flows back into there, then that's kind of all upside in my mind. So I think in the medium term, I think we're in quite a good position and it's in our hands to deliver on that.

We have in the line [indiscernible]. You may go ahead with your questions -- Sorry, I think Rashid, maybe he finished, but we can come back to him if he's not yet finished. Can you raise your hands again, Rashid, if you still have more questions?

I'm done. Thank you very much, gents. Appreciate it.

Thank you very much, Rashid, Very good questions.

Hope I'm audible. So just to refresh, correct me if I'm wrong, please, but I believe from the earlier discussions the total maximum occupancy at Duqm, the total capacity is close to 20,000 people. Is that correct?

Yes, 20,000 beds, you're right.

20,000 beds, yes. And when you say the current occupancy is 27%, that means just over 5,000 beds is now occupied?

Exactly.

My question is regarding your breakeven level. At what occupancy is your operating breakeven for this?

Actually, see because this is actually very technical questions to answer because it depends on the pricing mix. As you know, in Duqm, we have a tenant -- I mean, we can call it anchor tenants who are staying with us with a discounted price. But just roughly, I mean the operation actually -- first of all, we have a positive EBITDA. The EBITDA with the current occupancy is still good, and it can serve our actually loan commitments for the coming 2 to 3 years. However, actually, the breakeven, if I said it roughly, it can be like around 7,000 of beds. But that, again, it depends on the mix. If the higher mix into like normal equipment, it will be different. And if it comes from the anchor tenant will be different. So sorry, maybe I cannot give you the right answer because of the occupancy mix because it's different price.

And just to add, I guess, that's what I was kind of touching on when I said the average, while the occupancy is stable across the year there at the moment, the average rate is actually up to Juma's point, because that mix has changed a little bit at the moment. We have more of the single occupancy, more of the executive rooms as an overall proportion. So it kind of changes that.

Perfect. I appreciate your answer. And moving on to the packs. I believe the total maximum capacity there is close to 10,000. Is that correct?

Exactly.

Yes. And what is the current occupancy there, if you could give us the numbers, please?

Yes. Shaoor, if you excuse us not to share that as a competitive advantage. However, because we have 6 villages in the oil field, and it is vary from one village to another. But due to competitive advantage, I prefer not to share that as a number just for competitive advantage.

Sure, sure. Okay. Understood. Now coming back to a comment that was mentioned in the start of the Q&A by the CEO, you mentioned that OMR 60 million of projects have been there this year in which some of them are renewals and some of them are new. Would you be able to give us a number, a percentage as to how much of this OMR 60 million is new and how much of these are renewals?

It's actually it's a mix. I mean our business is some of the contracted with the existing customers who are -- we are actually aiming to renew and some of them is already renewed and it is with us. And some of them is a mix. So it's a mix of contracts, and we have disclosed earlier, as we said, that Ministry of Health, we have extension to existing contracts for 1 more year. So also it is included there. So it is a mix of new, but we also have small size of contract, which we are doing. And based on also insights, we do have extra work we are doing with the existing customers. So we cannot tell what is the right mix for you as there is no big contract can change the horizon because it's well diversified business other than from the big clients, which you already mentioned in the earlier discussion.

Okay. So I'm assuming that the PDO contract that was announced for the MSX, it's a renewal, right?

Yes. And also, we have the Ministry of Health as well. So these are the big contract. Other than that, it is well diversified business.

I could just add to that, like a little bit of flavor because even when we've signed some good new contracts, which we had before, but those new contracts are on enhanced scope, enhanced terms. So because, I guess, from a facilities management outsourcing, the value that we're adding and evolving with the client, then even a contract which we can say, okay, we operated for the last 5 years, and we've just signed for the next 5 years, but it's on a different basis. So that's where it's very hard to answer in terms of numbers. We're not trying to avoid the detail because the value of the new contract can be significantly different to the existing contract, same client, but on an enhanced scope.

Right. Okay. Makes sense. And my final question is regarding your dividends. I know that this has been asked a couple of times before me. And I know that you are not to discuss anything that happens in the future, and it's a prerogative of the Board. My question is, do you guys have enough free cash flows this year? Because obviously, your profitability has been impacted this year because of lower margins due to the reasons discussed that if the management or the Board were to decide to continue the current dividend levels of 30%, does Renaissance have enough free cash flows this year to actually sustain that or entertain that number?

So actually, in terms of the cash as it's disclosed in the market and the balance sheet. So they have OMR 16 million of free cash in the balance sheet. But again, it depends on our optimistic plan on the growth as well. So this is -- I mean, it's all there in the balance sheet. You can see it is already disclosed and published in the financial statement. I mean the company position is very much liquid and solid balance sheet, and thanks for the trust of the investors on us. So that's the thing.

And I think just to reiterate, I mean, the strength of the business model of Renaissance is the long-term contract. So month-on-month invoicing our clients and being paid by our clients, then it's a very strong cash-generating business. And that is shown, I guess, in the resilience between the mix between the Contract Services and the Accommodation Solutions. So I think from a cash perspective, we're a very healthy business.

Thank you very much. So if I go to the second in the line is Varun. Varun, I think it's also you have raised the written question, but please go ahead.

I have a couple of questions. So obviously, this year, the revenue grew by 7% in 9 months. So I'm assuming that the growth has come from IFM. So if I go back in 2022, that is where I'm assuming the Accommodation Solutions was...

Which year, Varun, again? 2022?

2022. So obviously, the growth in 2025 has come from IFM. So -- but now that I get clarity that the PDO contract that was signed in August is a renewal contract, is it fair to assume that the company didn't win any new contracts with respect to IFM in this year?

So Varun, actually, we have announced in the market that we have win the hard FM of PDO.

Yes, PDO in August. Is that a renewal contract? Or is that a new contract?

That one relatively new contract, which is in the hard FM space.

That's a new contract, Varun. It's just gone live actually at the -- in October, 1st of October. It's across the entire PDO portfolio, so 11 locations across Oman for all of the maintenance, so electrical, mechanical, HVAC, so air conditioning, maintenance, support services across that portfolio.

Yes. That's -- Varun, I mean you have another question, written question. So we are not disclosing the breakdown of IFM as a listed company, we are one company as a segment.

Okay. Understood. So could you help me understand what was the occupancy levels of RSVD in the year 2022? Because now I can see that the RSVD has been incurring losses since Q2 2023 till date. So obviously, you are expecting things to turn around in 2026 and 2027. I would like to understand -- so obviously, now it's 27%. So I'd like to understand what was the occupancy level in the year 2022 for RSVD?

You ask a challenging question, but fortunately, I have the answer. It was 60% high. And even in 2021, it was 65%. The year before, in 2020, it was 70%. So those were the golden years. And that's what actually as the macroeconomics back then after the refinery, there will be petrochemical industry. So there were -- when the extension to RSVD happened in Duqm. But unfortunately, things didn't move to the right direction. But the outlook is very good also. We can see very good outlook. Our asset is ready. There is no more investment is required. It's the moment the occupancy comes, all the upsides will come to our favor.

Is there any seasonality in the business for this company? Is Q4 typically a stronger quarter for the company or...

Yes. You mean seasonality as Renaissance as an overall or are you asking about Duqm again?

Overall for the company, is there any seasonality in the business?

Seasonality in a sense that there is different revenue mix between Accommodation Solutions and contracting businesses. But however, the company stay resilient in terms of the revenue size. And as you said exactly which -- when we have the integrated facility management services, which across all the services, it's been always a growth story and a lot of services can be introduced to make sure that the pipeline is going on. So wherever there is any core services for our clients, we will be happy to step in. We have been very active in the utilities, and we are being very active also in the waste management. We have also very active in the soft FM and hard FM. So I mean, actually, there is a well-diversified basket of products which we can provide, which actually help us on avoiding the risk of big ups and downs. But as a nature of this business, always it is a contracting business. So you will win new contracts, you will lose some contracts, which is as per the business model is normal in our course of business. But it's still a lot of services also we can add to the businesses, which we are not tapped in yet, but we are thinking on our pipeline to tap it into our clients.

And maybe I can just add from a granular level, really the only service that we see any kind of seasonality in is the food services business, and that's around Ramadan, where there is actually positive activity. But as we continue to grow across the range of services, we diversify, then that portion of the business will continue to grow but become proportionately smaller as a mix. But that's kind of the only seasonality I see as a relatively newcomer to the business in our model.

Okay. So I have one last question. So if I try to see your Q4 revenue and if I try to extrapolate it for this year, the revenue can be around OMR 115 million. So how much of this is recurring revenue for the next year, couple of years? Obviously, now the growth will come from a combination of solutions, the expected pickup in occupancy and everything. But the current...

Varun, in between your voice went down.

I think I got -- Yes. I think I can answer. I think it was how much is kind of long-term revenue.

Yes. So this year, approximately, we can end it at around OMR 115 million-odd in terms of revenue. How much of this is recurring? Because I don't see any new contracts that were announced on the IFM space. So obviously, this next year, the growth will be more inflationary and expected pickup in Accommodation Solutions. So just -- could you throw some light on how much of this is recurring?

Moving into 2026, we will be close to 100% of the revenue we have now from a Contracting Services business. There's no major contracts which are coming to an end. We've actually had a good year of renewal or wins. And we've mentioned the extension on the Ministry of Health contract, which goes through to the end of 2026. And in terms of, as I said, our sales pipeline, so I think we see some good growth potential for next year in that pipeline, there's pursuits at all different stages to be delivered through the coming 12 months and beyond. So I think from what we have now, we have a very stable base for next year. Obviously, there's some dependency on the occupancy. But I think as we've said, we see more upside than risk in that, particularly around Duqm and with where we are at with -- what we see with the partnership with PDO.

Yes. And Varun, just to add to Andrew, as we said, we are always adding up services to make sure that the pipeline is healthy for us. So we have been very active in many, many other sectors, which we are -- we have now. So that will add to our pipeline going forward for midterm and long term, we see that our performance can be very resilient. And yes, the market condition is there, but always we need to have ways and means to increase our top line. Yes. Shall I take the next question. I think we have covered most of the questions. If there is any further question, we have 10 minutes more. [indiscernible] have also wrote some questions. So if I take the first question is because of the -- again, similar answer we have answered this question is this is because of the stress in the margin and in the margin because of the business mix, because of the revenue mix. So that's the answer we have demonstrated earlier. The second question is what is the plan of Duqm, there is any limit increase in the occupancy level. Yes, we can see a very good outlook. And Duqm always has been actually a market risk for us, but we are seeing a good potential in Duqm. And as I said earlier, Duqm is ready for a newcomers and that's whatever comes to our villages will be upside. There is no further investment required. In the meantime, also, we are trying to create a value addition to our services, which we provide to the Duqm area wherever it's possible, but that's the case of Duqm. The last question is, could we provide the occupancy at the PACs? As we said, we prefer not to disclose the numbers as I have explained the same questions to Varun or Joyce earlier. With that, actually, I will look -- I will give a few more minutes to -- if there is any additional questions we can take. Joyce, I think we have cut you off. If you have more questions, please go ahead or anyone can -- because we still have a few minutes to go before we complete the 1-hour session. Let us wait for -- Impact on oil price. Varun added one more question. Impact of oil prices on renewals. Well, I don't see any impact. Our services is always required. Even in the pandemics wherever the shutdowns and things. But our type of services and the diversity of our services make us services always required food industries, hard defense to maintain businesses. So all of them are very, very good. I don't see any direct impact on the oil price into our business. Of course, the oil price is always good. The increase in oil price, which enhance the projects, the SOFR and spending. But I don't see direct impact if a reduction in the oil prices will happen.

And just to add on the major contract we referred to with PDO and the maintenance, and that's a long-term contract. We're locked in for the next 4 years at least on that contract. So there's some stability there in the oil fields on that.

It raised his hand. Rashid, do you want to go ahead?

Yes. A quick question is your external out-of-country operations. I mean if you have a view, just to share on that one, please, and how it's performing.

Sure. Actually, we have a fantastic story, and it's still a small business, but it has potential growth. Our ETC, which is Emirate Test in UAE, we have conducted one of these sessions once upon a time from there. So it has been turned around. We have already finished the -- I mean, the CapEx expenditure last year on the central kitchens. So the platform is good, and the business has started turning around, but still the impact is small, but there's a lot of potential to growth. So we might look for other opportunities, either organic or ting up that business with inorganic growth. So we are also exploring opportunity on the on the UAE. Other than that, we are also participating as we disclosed earlier in a tender in Saudi Arabia, I mean, for hard FM. That tender is still going on. And we are also exploring different opportunity in Saudi market. And we are not only limited to the GCC area wherever there is a good opportunities, we will be able to be there. If it match our business and what the know-how we have and if it match also our investment appetite, we will be happy to go and grow as we are -- we have a very good position to go for such inorganic growth. Thank you for this question, Rashid. We haven't touched upon the external operation. Any further question, Rashid? Yes. We have one more question in the Q&A. You mentioned transformation plan. Can you explain what are there and how to plan to achieve it? Andrew, I mean we have a very ambitious plan on this. Maybe Andrew will shed a light on it in a few minutes, which is remaining for us to close the session. Absolutely. And we will conclude with that question.

That's a great question. Thank you. I think, look, what the transformation plan is around what I call the target operating model. So we're moving to, I guess, a more structured standardized approach and actually focusing our teams into a number of business units to focus on specific sectors of the economy where we see great upside opportunity. recognizing that each sector and the clients, the organizations within them have specific needs, requirements and expertise. So to be closer to those sectors, closer to the organizations in them to really support us in stronger growth. And at the same time, ensuring we have a scalable model, so setting ourselves up for growth and a consistent way of operating because we can only grow if we have the managers and the teams to support the growth. So ensuring that we're operating in a consistent way, so they're well trained. We're very productive. We're competitive, we're safe, we're of high quality to deliver on the commitments to our client is, I guess, really what's underpinning the transformation. And part of that is been ensuring that we are very competitive on our cost structures. And I mentioned our productivity, our overhead cost discipline, our investment discipline. So that's kind of what we're focused on. We have been here for 3 or 4 months now. We have an amazing depth of talent, strong knowledge, strong expertise in the services we do. So we have all the ingredients. We're just organizing ourselves in a more focused way and in a more disciplined and consistent way to be ready for growth and to help us achieve more growth than we have been. So that's kind of what we're doing and what it's all about. Hopefully, that answers you.

Thank you. With that, I think if you can conclude, Andrew, the sessions.

We would like to thank you to each of you for the interest in Renaissance. Thank you for all the questions. They were great questions. And hopefully, between Juma and myself, we've been able to answer them adequately and shed light on those. Again, I'll just leave you, we have a lot of confidence in the future. We have a clear plan. We have plenty of opportunity, plenty of work to do as well, but we know where we're going. And we just thank you for your interest and your support of Renaissance. As our investors, then your support, your stability is key to us. And we really appreciate this opportunity to engage and to answer your questions. So thank you, and we'll wish you a good rest of the day.

Thank you very much. Thank you.