Técnicas Reunidas, S.A.

Eduardo San Miguel - CFO Juan Llado - First Vice Chairman of the Board

Kevin Roger - Kepler Cheuvreux Lillian Starke - Morgan Stanley James Thompson - JPMorgan Chase & Co. Nuno Estácio - Haitong Bank Fernando Lafuente - Alantra Equities Luis de Toledo - BBVA

Hello, good afternoon. This is Eduardo San Miguel.

Welcome to the Third Quarter 2018 results presentation that will be conducted by CEO, Juan Lladó, and will take something like 20 minutes and you can post your questions in the Q&A session that comes after the speech. And now, I give the floor to Mr.

Juan Lladó.

Hi, hello, everyone. I'll try to be - I'm not going to say brief, but I'll try to be at least understandable.

Unless go - I thought I had [indiscernible] is behind. I know, I thought I had a guide to explain to you.

But we're going to talk about our execution. I am going to talk about the delivery of the jobs that we're doing.

I'm going to talk about the awards this year and the launching of projects. Very importantly, I'm going to talk about the pipeline and then let's talk about the numbers and the results.

If we go to see the slide which is supposed to be the second one, this is a boring slide, but it's a very important slide. And I think the most important thing is it sounds vague on paper but the message is today after the last 3 years, we have probably the strongest franchise we ever had, and that's a serious message and that's a real message.

We have an extremely good quality in our execution and we'll see what in the next slides as we are delivering successfully, not delivering, commissioning and precommissioning close to $7 billion jobs. We have a very good quality backlog that everything is already packed into it in a engineering phase, it's a productive backlog, which has become productive late.

That is real with new awards and very important we have a future and the feature is translated into the pipeline. So quality execution and quality launching of projects, which is our backlog, will allow us to capitalize in the market recovery.

Execution. And let's spend a few minutes, a couple of minutes on this one.

I think it's very important. This is the first time in our history and I don't see many companies in the market have done it before, that we commissioned at the same time 3 very large refineries.

We're commissioning for PETRONAS, the Rapid refinery. We are commissioning the most important in our crude unit, the most important process unit of the refinery for $1.5 billion.

And let me tell you, here we have stand out of extremely quality engineering construction company. I would advise you to double check with PETRONAS.

We are at the very last stage and we are proud of my team. And I am very thankful to the professionalism - the professional customers that we had had to this job.

We are at the very last stage of 2 jobs that we're doing for the Jazan refinery. We're doing the hydrocracker and desulfurization unit and also the off-site and utilities for the IGCC.

Both of them together amount to more than $2.6 billion and again, we are already handing-in some of the units of the refinery, and we're ready to pre-commission the offsite utilities. Always with the support - with a very important support and one of the most important teams in the world, which is the Saudi Aramco team.

We're doing that. We've seen quality and we've seen the safety standards needed in this final process of the job.

And now, let's move into Turkey and [indiscernible] customer SOCAR that if you remember, we were awarded as well another job last December. And this big refinery, which has been led by us, which is more than $4 billion investment, led by TR, we are in the very last phase of commissioning.

We have commissioned already some of the units. And we are planning to finalize the commissioning of this plant to get into all the testing and guarantee tests needed by the end of the year.

Again, I'm proud of the TR team and TR engineering [indiscernible] capacity and I do believe our customer is as well. So we have 3 refinery jobs.

Some of its gas being commissioned at the same time by TR. Now let's move into gas.

In Algeria, 1,000 kilometers south of the capital, in the middle of the desert, we are ready to inject gas into the unit. Injecting gas means that you are starting the full commissioning of the plant.

Once injected gas means that the plant is completed. And in just a few weeks, the plant becomes profitable.

First of all you have to gas in and then you have gas out. We are getting ready within the next weeks.

And when I say weeks, it's December to gas in the plant, which is very important. And for Gasco, ADNOC, who has awarded 2 jobs over the last weeks, one of them very recently.

However, we committed with them that we will gas in last summer and we did and we are in the final phases of commissioning. So we're putting all together.

We have more than $7 billion of jobs, both refineries, as I said some of its gas and 2 of them gas, they are at the very last phase of commissioning, which having them at the same time, it's a real challenge. It's a real challenge in terms of cash, it's a real challenge in terms of resources and it's a challenge in terms of doing the job within quality and safety standards.

And we're doing it. And we're doing it extremely successfully.

But at the same time, we are delivering jobs, we are launching new ones and we are launching new ones from scratch and that moves me into the next slide. Our 2018, we started with Aramco one of the largest jobs we have done with them, the Haradh gas treatment and compression station plant, which is different sites in the middle of the desert.

Complex because of logistic, but we have launched this project extremely successful over the last - started in January of the last 8 months, very successfully. But I have to say it again, I mean we have put together the best team we can, but also - so they have done Aramco.

Aramco's team, I have to say is an extremely professional team. So we both together we have launched today a very successful project.

The Baku refinery, the refinery in Baku is a very old refinery. It's a refinery - it's a 40-year-old refinery.

And we started with a very strong team hand to hand with Baku. It's a huge revamping, and we have again launched this project probably mid-January.

The Bapco refinery with techniques, I have to say, we thought it was going to be launched at the beginning of the year, but it was launched in April. Again, today within quality and budget.

The Duqm refinery, as you remember well, we thought that it was going to be launched, first of all, at the end of 2017, then at the very beginning of 2018 and finally, was launched on July this year, a bit late. But today we have to say that we are within budget and with extremely good team working for the customer.

And very recently, we have been awarded 2 jobs, Das Island and Bu Hasa. One of them has to do with gas and the other with oil, both upstream.

And we are putting together the best teams, the best task force to satisfy our customer. And I do believe our customer is satisfied.

And with this to the slide, let's move into our backlogs. And I think delivering and launching projects is translating in awards and a very good and healthy backlog.

Here I have 2 slides, which before getting to backlog, it makes a quick explanation of the 2 jobs, but I don't want to spend much time because you've already read it and we've already made the announcements of what the jobs are. The other important thing is that this first one we have a partner, which is Target and we have a 50% share of it.

Why? As you - very often you see that, we go by ourselves because it's in an island and we have never worked before in an island that far.

And Target is probably one of the best we had worked before in our previous jobs companies in that island. So I think we have put together a very good joint venture for the logistics and construction in the island.

These are the jobs, read by yourself. But I have to say Target, again the same subcontractor, and in this case the subcontractor is a nominated subcontractor for the main part of the plant, for all the mechanical and erection of the plant.

Important thing of the job is upstream. And the important thing is that it is as upstream and is oil.

And it reflects it's important for our presence that is very important for the future of TR. So now let's see what backlog we have got and let's first of all analyze our backlog in terms of geography.

Again, we're back and some people may think is risky, but we do believe is resilient and therefore we've always worked better to the Middle East. And we have 80% of the backlog in the Middle East.

Probably that percentage, if you go through the mapping you see with whom we're working already, with whom we're delivering FEEDS in Russia. We have delivered FEEDS in Europe.

That percentage will decrease through the year as we'll see awards in other regions: Europe, Latin America, and Asia. And finally, I have this slide, which at the very beginning, the first time I didn't like it very much, but I don't want to confuse you.

Let's look into the first and the second column. Okay, the first column is where we were at the end of the year, which was already good in a way, but with the similar backlog, almost 50% of it, 48% according to this column, that's why we call it inactive backlog.

We had awards but most of the jobs have not come into force, which has forced us to maintain the best quality of team and we have to wait for the starting of jobs. 50% of the job was nonactive and 25% was under construction.

The yellow and the red, those are the 2 important colors. And now let's move into the last column.

Today what we have is that 18% is construction and most of that construction is delivery, is pre-commissioning and commissioning. That's very much has to do with the $7 billion jobs that we are delivering, that we are commissioning, and 66% not taken into account, the last award is already in engineering.

So today, we have a backlog that has the peculiarity that 2/3 of the backlog is engineering. That is engineering that has already started.

Is that a problem? The answer is yes.

But it's - I might rather have the problem of the last column than the first column. It is a problem because we have a rather imbalance backlog.

If we add to these backlog the last award, more than 75% of our business, of our project, they are still engineering phase, which requires quality of resources. They have very little impact on revenue, margin and cash.

That is important to have. And I might rather manage this problem than the problem of having jobs either not active, not started or having to manage as we did in 2017 project cancellations.

The 7% of nonactive is Mexico. And everyone that follows Mexican politics, Mexican business, Mexican announcement, having a nonactive job, I mean, having a contract signed but today is temporarily canceled as they said but we're continuing conversation.

Today is an opportunity and a year ago it was a risk in the backlog. And today I have to say, I've been to Mexico quite recently over the last few weeks.

It's a real opportunity. So we've gone from a backlog with uncertainties to a backlog full of opportunities that we have to manage and will improve our cash and revenue as the backlog moves more into more balanced backlog with procurement and construction.

I mean, the execution of the backlog translate - is going to allow us and is allowing us already as we've seen with the recent awards to capitalize into - to capitalize our pipeline. The capacity of launching jobs or capacity of delivering and when I say delivering, commissioning start up large jobs at the same time is allowing us, is giving us enough credibility to capitalize on the pipeline that I do believe on it, I do know is the strongest and most highest quality pipeline we have ever had.

We have a very strong pipeline in all the different countries that we had worked for before in the Middle East, very strong and very real. And many of them they are already in the beginning stage.

We have a strong pipeline if we take Russia into account in Europe. And we have a very credible pipeline, very credible with a very strong opportunities in Latin America.

Rest of the world includes Asia where I do believe some of the jobs were extremely well positioned. And $39 billion you might think is just a great number, is just a big number.

But we have to clarify that it is our real market potential. It's only TR share of the jobs that we are bidding.

If TR share of the jobs that are some of them could be awarded to TR, it's not the market potential, it's TR's potential, which is different. And with this backlog, executing engineering and delivering the last stage of the jobs, let's move into the numbers.

And numbers this quarter, it is slightly lower than we had forecasted in our sales, slightly lower, not much, but it's slightly lower. And why is that, because the procurement phase on most of our jobs has been delayed.

And therefore, revenues - if we don't procure, if TR doesn't - if we do not buy, there is no revenues. And if there is no revenues also we're having an effect of margins.

So it's slightly short in revenues and it's slightly short in margin. When you say how short you are in margin, let me be [indiscernible] with you, it might [indiscernible] we were expecting to have in the neighborhood of $7 million to $9 million more margin, which will put us closer to our target.

But difficult to be on target when you're delivering and cashing out and paying subcontractors at such critical stages at commissioning phase of the jobs. I mean, at that point in time, my decision is quality of delivery and customer satisfaction is a priority.

I am not trying to save or include or delay a job for - although percentage wise, it's sounds a lot, having only 1% of margin. The reality is there is extra cost we all expect.

We had an impact this - at the end of this quarter, at the end of the third quarter, with the depreciation of the Turkish lira, with - and that had an impact in the neighborhood of $50 million, which is a pity, but obviously it's something that shouldn't be happened before. We are finalizing the job.

It is a noncash item. It is more accounting item and probably through the year part of it will be recovered, which we ended up poorer, I mean the 3 quarters, the first 9 months with profit before taxes of $8.4 million.

The net cash position is $189 million and is in the neighborhood of $20 million dollars shorter of our internal plan. And why it is shorter of our internal plan because we had cash outs to our subcontractors and again everybody understands this business at this stage of the project, and we have 5 jobs at that stage.

You cannot delay payments or you cannot face $0.01 with the subcontractors as we would put the commissioning and the safety of the plant at risk. And finally the outlook.

And this is exactly the similar slide that I presented before but if you are asking me, are you Juan, more or less optimistic that were you were a year ago or were you were in July, the answer is I am far more optimistic. I am far more optimistic why because I do believe that with this backlog and with this pipeline and with this team, this capacity of execution, I think we see lot of light at the end of the tunnel.

And I think sure than sooner - sooner than later, we'll place TR - I'll place TR back in the profitability trend that we had before. We have proven to our customers and to the market that we have very solid execution.

We have proven to the market this is a not a paper presentation that we can launch in 2018, more than $8 billion jobs very successfully to customer satisfaction and we have already proven this year that we can capitalize on this execution in the capacity of launching jobs and we can capitalize on that with awards. With awards that if you double check and you check most of our awards are repeating customers, which is - it's a message to the market, it's a message to our customers.

It's a very good message to our prospective customers, as we are bidding to some customers who we have never done business before. And it gives me the comfort that 2019 and 2020 together with market recovery we will be back on track.

And this is a very brief summary of my outlook. I finish with this, and I'm more than happy to answer any questions that you may post.

Two questions on my side, please. The first one is related to the backlog and to the project, which are currently into mechanical completion phase, so Rapid and Star.

Those projects are under mechanical completion phase since the Q1 of this year. And if I'm right, the Rapid refinery should have been completed this quarter.

So I was wondering if those projects are - they scheduled to be out of the backlog by the end of the year? And why the mechanical completion phase of those 2 projects are taking, let's say, more than 6 months?

And second question is regarding the recovery on your EBIT margin. So you did not provide guidance for 2019.

So I was just wondering, how should we think about your top line for 2019? Should we expect an increase in your top line?

Or it's going to be difficult regarding your current backlog again, and then you were previously guiding for an EBIT margin above 4% for '19. Is it still the case, please?

Let me review really quick. We are writing down all your questions, so I can answer you.

Okay. I mean, let's go one by one.

I mean, you're asking about Rapid and Star. I mean, Rapid, we finished this - regardless of the schedule, regardless of one quarter against the other, the last quarter, we were on mechanical completion stage.

Most of the units were mechanical completion, but you have to be - you have to launch and you start the jobs when the utilities are done and finish and they were not. So pre-commissioning and commissioning is done with the utilities and pre-commissioning and commissioning has been done this quarter and very successfully through customer satisfaction.

So there is - we're very much in line. And if anything a little ahead of the last - of the other units, having to do with the other utilities and the other process units of the plant.

So there is no bad news about - or delays in Rapid, if anything is very good news. Star refinery, putting the refinery into operation is difficult.

It's a full refinery, it's not a unit. We started mechanical completion this summer, and we started to commission the plant in the month of October.

Some of the units have already delivered and handed to the customer, they're commissioned. And we have to finalize the commissioning, which means the startup of the plant - the full start of the plant, which are the downstream units, the complex units over the next weeks.

So again there is from what have said before, there is nothing - they are different. There is - it might be slippages of weeks, because one unit against the other, because of coordination, because of one thought that it has to be better, we can't tell it at the end as a TR success story, that both those 2 - those refineries are going to be commissioned and are being commissioned in 2018 at the same time.

Your second question, was - you're asking me about sales of 2019. I mean, the sales of 2019, it will be the split of how do we work in the jobs that we have been awarded.

We might see a slightly increase if anything in sales, but nothing great unless we get awards first quarter of the year, which can very well happen. If not, if you analyze our backlog and you analyze the stage of our backlog, that we're slowly moving into procurement and realize that how long does it take, most of our jobs are 39, 40, 43, 38 months to translate backlog into revenue is going to take a while.

So unless we get awards in the first quarter of the year, the sales or the revenue is going to be quite flat. Is very difficult to tell you if it's going to be slightly higher, but it's going to be quite flat.

And do you have any other question, Kevin, I think you asked me 2 or 3. I'm getting lost.

Yes. Well, that's very clear for the moment.

Just wondering, then regarding the EBIT margin, so you were guiding previously for EBIT margin to be above 4% in '19. I was just wondering if it's still the case or as you have, let's say, slightly revised on the EBIT guidance for this year and it has also an impact for 2019?

We have to wait and see a little bit. I do believe our margin, I do believe - I am comfortable that the margin would improve over 2019.

But the improvement is definitely we're going to be seeing - there's going to be a slippage on that improvement, as the jobs are taking much longer to start and the awards is taking longer to take place and the recovery is not as hectic as people said in terms of awards. So it might be a bit of slippage.

But I'm confident that I don't know what it is going to be, first half of the year, second half of the year, but what I'm quite comfortable is that through 2019, we'll place TR back on track on the 4% margins. But we have to develop, we have to move into procurement, we have to deliver the jobs, and close the jobs that are about to finish.

And obviously, we have to get more rewards, which we are very close to get and we'll be getting first half of 2019. Did that - that's what I said, Kevin, at the beginning that I was more optimistic that I was a year ago, far more optimistic.

I have two questions. The first one is you talked about the aiming for the low end of the guidance for this year.

And I was just wondering that would imply a strong recovery in the EBIT margin towards the fourth quarter? If you can provide a bit of color of what are the anchors that give you confidence on that recovery in the fourth quarter?

And then the second question I had was with regards to the outlook and the pace of the awards. As you mentioned, you're quite confident on sort of the margin improving in terms of the pipeline that you're seeing.

But the evidence from this year shows that some of these awards were a bit choppy on timing with a bit of better second half. I was wondering if you're expecting sort of a similar pattern going into 2019 with the second half being a bit stronger and may be first half being a bit slower, or you're seeing more of a normalized level in terms of the awards?

Sorry, I was talking to you but we had the speaker off. Let's move on to the first question.

This last quarter of the year, part of our backlog, not all is moving into procurement. When the backlog moves into procurement and we have extremely imbalance, a good backlog, but extremely imbalance backlog, that translates into sales and translates into margins.

That's what I do believe that we can see a recovery, both in sales and margins on the last quarter. I mean, that's our planning and our expectations.

But it might be a slight delay to be on the high-end of our guidance. And if anything we will be very close to the - in the neighborhood of the low-end of the guidance.

I mean, when you do percentage wise and you still have crunchy numbers that translates that we have to get 3% margin on the third quarter. Is that - but if you put into absolute numbers is $12 million in management - managing the backlog of $10 billion and delivering $8 billion jobs and launching $7 billion jobs.

So it's - I mean, it's always - making money is always a challenge, but it's definitely a quotable number. And that was the first question.

And the second is our awards. I mean, according to customers because when I talk about pipeline, most of that pipeline, there are many jobs that are in the bidding stage, it's not just market potential as I said before.

Some awards, according to customers are going to take place first half of the year, some important ones. But I can - it may take a bit longer.

I mean, I don't want to say yes and no, but we do expect first quarter of the year to see some awards. And then we do expect second half of the year to see some other awards.

That's according to our bidding stage and our customers, when we have to present the bids. Some of the bids have already been presented.

Some others have to be presented in January and some others have to be presented in December. And according to them, those decisions are going to be made first quarter of the year.

But sometimes it may take 2 or 3 months longer, as they have to go through tabulation or some of our competition asked for a few extra weeks. But I will feel comfortable is that we're going to see awards over the first half of 2019.

We're going to see awards in power, we're going to see awards in refining and we might see awards in gas. But is very difficult to tell you whether [indiscernible] is going to be first quarter, second quarter.

We do believe first quarter we'll see some awards.

One quick question from me please. I guess since Saudi introduced higher and Kingdom requirements several years ago, has your margin assumption used when recognizing revenue on work done in Saudi changed?

Or has that margin assumption been pretty stable?

At the end of the day, I think margin very often has - is very much linked to competition and the size of the market. When the size of the market increases, like in any business margins increase as well.

And there is - it's a bigger pie for the same competitors. So we have been able to deliver quite well and with margins, not great, but with margins in the Kingdom of Saudi Arabia.

And I do believe, I mean, for what I'm seeing on the jobs we have launched over the last 2 years that our working for Aramco is a good business. I don't want to say very loud because competitors might just run a bit.

I mean, it's not margins are not great, but it's solid business, it's a resilient business and it's a very important business as we sign large and risky contracts with a reliable customer. That's why we continue working in Saudi Arabia, and we continue working for Aramco.

And you haven't seen us bidding for power plants and whatever and infrastructure jobs in that region. And the kingdom, well we've been working in the region, and I think we very much comply within Kingdom requirements.

It is the same thing as we do in Emirates. The Emirates have the Kingdom requirements.

We know the country well. We've delivering the jobs correctly.

We have been successful in Haradh delivered 7 months ago. We've been quite successful in the Gasco job.

And I think we'll comply well within Kingdom requirements with our subcontractors and with the local, the quality of the local suppliers, which is very much the key to really understand the subcontractors and local suppliers.

Just a couple, please. Just following on from that question and commentary value.

Could you maybe talk a little bit talk about the bid process for the Abu Dhabi, the one that you announced overnight? And Bu Hasa just in terms of obviously you're one of the lowest bidder there, just how that process panned out?

Whether you think there's more opportunity there. And then secondly, just in terms of the $7-odd billion that is completing over the next few months, are you able to sort of quantify the potential working capital release from that and how we might think about cash through 2019.

Yes. I agree.

There was a bit of noise in the local press about Bu Hasa as we had been awarded a job before that, which was the ADCO. But if there was - what I can say it was not a rebidding.

There was definitely no rebidding on price, but obviously, the customer wanted us to confirm. I said it to all the competitors, how we're going to - how we had worked in the past and how we're going to go work in the future to comply within country value requirements.

And then there's very little less we know, because it's the customer the one who does the right tabulation and makes a decision, which is a mix of both. And as probably done very correctly, it is true that we've heard at the beginning we were not the frontrunners, but at the end of the day probably not only the in-country quality, but the quality of our offer, the price must have been close.

We have no idea made the customer to decide that we - to select TR as a winner. And it's very difficult to get far more information.

It's very much has happened to do with price, as there was no rebidding. It's very much has to do with in-country value, the presence and the future of the companies working for them or ADNOC.

You were asking me about working capital as - it is true. At the end of the project, when you are at the very end of the project, definitely you have - it's a cash-out project.

You cannot stop paying your subcontractors. You have to deploy your best teams for startup, your best teams for process.

You have to - and obviously, the customer still has the retentions and the last payments, which they are released at the very end of the project when the plant is fully accepted. So the - in terms of cash finishing project, it's not good news.

It's good news honestly for the customer and our team relationship because both of us together we see a lot of light. And is at the end of the - as I said before, you see light at the end of the tunnel.

You see as a plant the ready to start up. You see that some of the units are working well.

But in terms of pure balance sheet, it's not good news. We have to cash out.

We have to startup. We have pay subcontractors and some of the times have to pay overnight for some of the units.

And we have to wait for the plant to be fully accepted to get the last payments from the customer. So we might see a reversal towards next month from 2019.

Just coming back to the theme of the margins, again, if you don't mind. Just trying to understand this evolution that you have this year in terms of margin as you started with an EBIT margin of 0.8%.

You will be finishing around 3 as you're saying. Is this project that you're - where you're finishing and you're using extra contingencies or something like that and therefore your margin was weaker.

Is this sort of the new projects you're assuming a very low margin in the beginning and then this margin increases? I would just like to understand this - what is actually happening here, so that we can protect the margins going forward?

And also second theme is coming back to this last question on the cash evolution, so as the project enters the procurement phase is the cash going to be - cash evolution going to be better? And I ask that because I don't think I have seen many times that your commercial working capital is negative as it is right now?

So the indication for yearend '19 and '20, because the backlog that you're going to execute now, you already have it. Do you expect significant improvement on this number?

Or is this going to be around here this €200 million? [Technical Difficulty]

Nuno, are you there?

Yes.

Obviously, I am not - I pressed the wrong button and I hung up. I'm not a very good as starting up of a plant.

But you're asking - let's look out on margin evolution. The is no change of margin evolution.

The thing is when you start engineering, you have a little margin. Engineering accounts have 10% of the value of the job.

So there is very little revenue with very little margin. I mean, 7% or 8% margin over 10% is little margin.

And it doesn't - it's not compensating. This some margin misses that we have, marginal misses that we have on the completion stage of the job.

That's why it's very difficult when we're talking about 2% margin, 1.5% margin is very difficult to get a solid target. When you're managing so many jobs and most of the - and you have such an imbalance backlog.

We realize that we have thousands of workers working for us, if we put them all together and when I say thousands, it is more than 50,000 workers working for our subcontractors. And at the same time, we're launching engineering over the others.

And it's very difficult one miss, near miss, it takes us off by $6 million, $5 million, $7 million. But it's not mathematical, it's just an imbalance as I said before backlog.

Eventually and that's our hope. But let me tell you, I better manage this and balance backlog the backlog that I had a year ago, which was an expected backlog so to speak, had little of awards but nothing had started yet.

So eventually if we had as we had before, backlog were 20% or 30% of the backlog is engineering, 40% is procurement and the remaining 20%, 30% is construction, obviously, the margins is stable. A little margin [indiscernible] in one is always compensated with other.

And here, you cannot compensate construction at the end of the project with engineering, so that's why we're missing out. It has nothing to do that the project has less margins as we had before or that we take in this margin that we had forecasted.

In cash and working capital, again we might slowly but as I said slowly, it should improve with the new jobs and when we start to get paid for new jobs and we start get paid and we move into procurement phase. It should improve as - and we should go back slowly to the net cash balance we have had in the past.

It is going to take months. This is just - this is a long-term business.

And by the time you bid to the time you deliver, it takes seven years. So it's going to take a while.

But once we put TR and the backlog and the pipeline we've got and farmost said today that I was a year ago back on track, we should be back on track on margins and we should be back on track because that's the way this business is managed on cash.

Okay. So you would say that in 15 months' time, by the end of fourth quarter 2019, your net cash position would probably be significantly higher than it is at this point?

Yes. I mean, that's a yes.

I mean, that is a yes.

Just two quick follow-ups on [indiscernible] that I think are quite positive. The first one is on revenues for next year.

Just to confirm the one that you have used that with what you have on the table today, basically your backlog and these latest awards, you're able to basically get your revenues flat at 4.3, 4.4 level for 2019? And the second one, the recovery on cash.

If I understood you correctly, you are foreseeing a rate recovery in 2019. But, I guess, considering that you are over these projects in Q4 and that you're starting the procurement, cash should follow slightly in this Q4 versus the Q3 and the recoveries at the end of next year, right?

I mean, the analysis you've done in terms of revenue with the backlogs we've got and you realize, I mean, the last job is 39 months. The previous one is under 30s.

Most of the new - most of the jobs are on the long 30s and 40s. If you analyze the backlog, we've nothing less awarded.

We will have a flat - in the neighborhood of a flat revenue. And it may increase a little bit in line with awards but you have to realize that even if there are awards as we have seen in the past and we'll see the revenue stream of the awards, it take a long time, it takes many months to translate into revenue.

So we'll see a recovery in revenue with new awards with not many awards, we'll see flat. If awards are towards the end of the year, we'll see it very much flat.

And cash recovery, I don't see we're going to have a worse cash decision from now towards the end of the year. Some of the jobs are already moving into procurement phase and some others are very much finalizing, when I say commissioning it's not precommissioning, commissioning is starting up.

I mean, we are really starting that Rapid, we are really starting up SOCAR. So that very much is contained.

So we will see cash out towards the end of the year. And then we will see towards the year maybe we'll see more towards the second half of the year than first half of the year, we might see some cash recovery.

One question from my side and thanks for reviewing the individual projects. My concern is regarding the one - large one projects, which are due to be delivered by 2021, 2022 like, Fadhili, Al Zour, Ras Tanura, if you can provide us some - are they developing nicely?

Are they starting the engineering phase or you're doing good progress on that side? And you don't expect the difficulties that you're facing some of the projects in the later stages to recover with the current information?

So Ras Tanura is a refining job and is doing well. It's today within the schedule on budget.

And I think we've done extremely good quality job. Fadhili, we have some problems.

We have recovered, we're in the process of recovering having to do some, I don't want to say the names, but some of them have to do some Spanish, in other word, yes, big suppliers, they have big problems and has affected us, but we're in line with the customer. We are on recovery stage with some budget.

That's important to say, and we are back - to putting back in track on schedule. We are very much in line in coordination with the customer.

And those are 2 jobs for - those are the 2 Aramco jobs. In Kuwait we have 2 jobs.

We have a gas plant, which is smaller, which is working well. We may have some slippages, but nothing having to do with us, having to do with some water treatment plant that is effecting us on the customer side, but very marginal.

Customer is happy, and we are working well. And for the time being, I don't want to be over optimistic.

But the Kuwait job, if we have the slippages is not us. It might be the offsite utilities and other suppliers as we happen to be ahead of schedule.

And it's a huge job. I think it's a good story.

I mean, Kuwait, on today's - if I have to make an analysis on today's TRs backlog, Kuwait is a very success story. And the Al Zour refinery, I think we're doing a great job.

But if this is a new refinery, then you have to adjust to the others - in your other units. But we're doing - we have a good customer, and we're doing well with them and our contractors and our partners who are working with [indiscernible] are doing great.

Okay. I think that's it.

We are done. It's been an hour.

I have to recognize that it's been a difficult, but in spite of the number a very successful [Technical Difficulty] it's been a quarter with delivery and it's been a - with successful delivery and successful awards and successfully launching of new jobs. So thank you very much, again for listening to me.

Thank you very much for listening to this presentation. And I'll talk to you, again, at the third week of February more or less.

Thank you very much.