Técnicas Reunidas, S.A.

Hello, everyone. Let me go through this presentation where we're going to go through our financials and how our financials will explain all the management decisions, a very proactive management decisions that are -- have been taking place and are taking place today to manage TR, to manage our resources and to manage our projects.

And then I'll give you a quick outlook of how do we see the market and how are we positioned in this new world called by everyone energy transition, which we're well positioned. I mean, we have good news there.

If -- on these slides, we have just 4 numbers here. The first number here is our backlog.

And our backlog, this is good news. None of our jobs have been canceled.

We have a backlog of €9.2 billion. It would have been less had the jobs had progressed to what we have a schedule to, but of the jobs have not progressed because, as I said in my notes, we have to reprogram and let me alert you reprogram has nothing to do with slippage with delays, it has to be with transparent agreement with our customers to deliver the jobs in different stages in a better way, which has translated, therefore, because of this reprogramming, and I'd like to underline that because reprogramming is not a new for -- it's not a euphemism.

It's a reality. It's a contractual reality.

It has translated into a low level of sales of €2.8 billion. We had to dimension ourselves to bigger sales, as everybody knows, that if you add up our COVID costs we have an adjusted margin of 3.1%.

And despite the ups and downs and the last 3 months of turmoil, with milestones and payments and collections, we ended up the quarter with a net cash flow of $113 million. So these 4 numbers are there and are very important.

Let's go through the analysis of why are we where we are? Why do we have the lower level of sales?

And why do we have a lower margin? Okay.

Last, when I presented myself at the end of last year, I gave my guidance, we gave our guidance and we had our backlog. We started February with a backlog of close to €2 billion, which is a very important fresh new backlog.

We had new awards in North Africa. We had new awards in Asia Pacific.

You remember very well by Exxon. We have a very fresh and recent record backlog and record awards by Aramco in the Middle East.

And we were having a successful delivery of our jobs. So we dimensioned TR for that, which we were forced to do.

That's why we signed contracts. And that dimension of TR translated in what?

Translated that in 2020, the backlog, we would have had to execute close to $5 billion. That's why we were expecting with new awards to deliver revenues above $5 billion, and that's we had to dimension ourselves for.

That same backlog of €11.8 billion, would have had been executed according to our contracts, about €4.1 billion in 2021. In the remaining of the backlog, slightly below €3 billion, €2.8 billion to be precise.

It would have been executed according to the contract that we had signed. And you have to remember that most of those contracts are contracts of 2019, our last year contracts, would have been executed to '22 and beyond.

Where are we today? And I'm sitting now in front of you where I'm today.

Today, instead of €4.9 billion to '20, we're going to be executing €3.6 billion, €3.6 billion is very much is going to be the level of revenue. So it's all backlog, a new and fresh backlog, awarded in 2019 and early 2020.

Out of the €3.7 billion that would had to be executed in 2021 is the old backlog and as part of the new one is €3.6 billion will have to be executed in 2021. And in 2021, we'll have to report a very low level of new backlog or new revenues.

And then the remaining €4.6 billion of the backlog, if you compare to €2.8 million, the line above, €4.6 billion of that, as I'm calling today the new and fresh backlog will have to be executed. I mean, because auction will start, delivery of the equipment would really start by -- on 2022 and beyond.

Is that good or bad, you might be asking you? And the answer is both, is good as timing go afterwards because it's going to give us the opportunity, and that's why we have -- that's why customers have reprogrammed and that's why we are reprogrammed with them, and that's why we're signing agreements and very transparent agreements is going to give us the opportunity to manage this crisis, this COVID crisis and delivered the jobs when are necessary, when demand, demand will be there.

And it's going to allow us to deliver the jobs with a far less level of risk in a win-win situation with our customers. And the term nowadays because I've been reading many analyst reports of this energy market of our customers and competitors talking about derisking and it's true.

I mean I don't want to talk very much about de-risking. But later on, we'll go as an example, why do we -- how are we going to deliver this backlog with probably more margins and with far less risk of slippage, delays and extra costs.

So let's continue, and let's follow through with my presentation. We're talking about how the backlog is being risk schedule, how the backlog execution is being reprogrammed in line with customer demand, not only because we have COVID problems, that's what the customers want.

So that translates in what? That translates that if we had dimension ourselves to deliver €5.2 billion this year, and we're going to be delivering €3.6 billion.

That translates into we're left, prior to COVID costs, with an EBIT still positive at low €1.3 million. That this low-margin doesn't reflect any problems.

It does not reflect execution problems. It doesn't reflect delays.

It just reflect that we have been structured to deliver large, big projects. And to that margin, you have to adapt the net cost that we're supporting on this COVID situation.

And I'm saying net of some of the companies -- some of the customers already identified compensations. So we have €44 million of COVID costs.

And obviously, to manage this situation, we have invested. We have invested, as I'll talk later on, we have invested and restructured.

We have to invest it in reducing our workforce. We have to invest it in reducing our costs.

We are investing in renegotiating and closing some of our listings and premises. So that accounts for $10 million.

So even with this reprogramming, had not been COVID and restructuring costs, we would have been within a 3% operating margin, up to 87%. So is that -- is that good?

Obviously, still below -- with the level of sales, it's still below what we had expected, that is acceptable. As I said before, I was accepted by the end of this semester, at the end of the second part of the year, we'll be in the 4% margin.

And it's true that's what we're ready for, and that was the margins that our jobs are yield. So let's move forward then.

If we had an adjusted EBIT of 3.1%, we came out with this term embedded EBIT. What would have happened if the jobs that we have already awarded, had not been delayed that have been reprogrammed.

And let me -- and allowing you to understand that. This is not a delay in the reprogram.

I agree and signed with our customers would have been executed over the last months. That means that if we estimate the same historical margin that we had, and let me alert you.

Those jobs were better. But I cannot make projections with better margins.

I think it will not be prudent. If we are -- assume a 7% margin of that turnover of those sales.

So that execution that it has been reprogrammed for 2022 onwards, we would have another €71 million, give or take, of margins, margin that is moved forward to 2022 onwards. So we would have ended up this quarter or this 9 months result presentation, with an embedded EBIT.

That's how we call it. It's not an accounting term.

It's more the management term, of €4.1 billion. It's a term that is important for us.

Because it's important for me, it's important for TR to understand the health of the business. So we have good projects that have been reprogrammed, and those projects are profitable, and we have good customers, they want to sit with us and we program things.

We have the profitable business, and we have to measure us in such ways. Obviously, to profit from this we have to do -- profit from this, reprogram backlog.

The profit from those jobs already awarded by our best and most important customers in the world, we have to take very important management decisions, what we call robust and urgent management initiatives, and we have taken those. And we'll talk later on.

But let me first analyze why do we have to take those measures. We have to take those measures because we have to profit, and we have to reach the 2022 because we have to profit from the very important backlog that we have on hand.

It's a very important backlog that we have in the Middle East. The very important backlog that we have in Asia Pacific.

And the very important, let's call it, less risky backlog. And why do I say is less risky?

Because you've seen before, and you've seen it with us, with our competitors, and you see where the market has been overheated, that all of us, we start diminishing our margins or reducing our margin when construction is started. And how do you manage a good construction?

You manage your good construction with a very good engineering. And now we're going to have in this time, a very good engineering, extremely good engineering.

Not everybody knows, but in most of those jobs that we've been reschedule, our customers are here sitting with us, not teleworking, sitting with us in our team, our task force. Doing what we call the best defined engineering.

And bad engineering translate into bad construction, whereas a flawless engineering translates into very much derisked construction, because construction with no revision, with little infill engineering -- and obviously, our work afterwards, a much better defined and better engineered equipment. Why do I think that we're going to have better margins?

And why do I think the $6 million jobs awarded last year are going to be well delivered. And they're going to be well delivered because customers are going to give us the opportunity, and they're being very flexible with the vendor list, who are procuring, together with them, from a way wider list of vendors.

That's an opportunity and it's an opportunity to get better prices. And to get better prices, not only because have the widest of vendors, also because raw material and commodity have been reduced.

And shops are not very busy. So procurement, we already see that, we're already procuring for our customers is improved.

And very important, you have risk in construction against the models, we run into trust and the slippages and construction problems, is the equipment and models arrive late. They're the best excuse for the subcontractors and for the late equipment and the models very much uncompleted.

When markets becomes overheated that happens, defective equipment, late equipment and late models. That translates into extra work and lots of extra costs.

So I'm going to hint, that's not going to happen. The likelihood that, that happened on the feedback that we've got, and we've been lucky to get in that backlog in 2019 and 2020, is very, very small.

And finally, construction itself. Obviously, when construction arrive, and that construction is not going to peak this into 2022.

Obviously, with that construction in place, the way we agree with our customers, because we do have time because we haven't got the pressure, is to deliver those jobs in phases, we call it systems or [santims] unit. I don't want to name the customers, but it's the logical thing.

I mean, is the logical thing, you don't do it all at once. Pressure is not there anymore.

And if you deliver the units, you have 2 advantages. First of all, from one unit to another, we have been extremely successful.

And 1 place is quick, where we have to do construction of 3 refining trains, practice is exactly the same, and we put together a construction strategy on a phase way, very successful. And here, together, the customers that we're going to be doing.

Also less peaks in construction. When you have to -- it's much easier to manage 2 units with a peak on phase one after the other, with peaks of each unit of 3,000 people, than all at once of 12,000.

So construction is in sales because of better engineering, because of better procurement because of timely procurement and because of less peaks, and also because of better prices is going to be obviously better managed. So using the risk and reprogramming in itself, it means a lot for us.

I mean we're going to have strong business and do we have a very strong backlog and profitable backlog in the oil and gas business specifically. But in order, I would say, before we have to take management decisions, as I said before, what are those management decisions?

Because we have to reach to 2020. And we mentioned TR for this -- we have to reach 2022 as we dimensioned TR for a €5.2 billion sales this same 2020.

Well, as at submarines, nuclear submarines do deep and silently, we've been working, and we've been working hard. We have reduced already day-to-day, a workforce by 20%.

And obviously, you have to do that without making much noise, but we've done it, which translates into an annualized effect of $119 million. As I said before, we were working with our advisers in 2019 to be more efficient and to be able to do engineering and construction with less people.

Now we have taken -- we have worked on that. That are in an exponential way.

We have to adjust ourselves to the new reality. The new reality is that we had to reduce the -- all the workforce by 20%, which translates in less cost in an annualized basis of close to $120 million.

Obviously, we have already renegotiated our rentals, which has been reduced by 20% and will have an impact on an annualized basis of $90 million. And we were working with our -- that we talked before and talked in many presentations on our TR-ansforma plan.

And TR-ansforma plan is a plan of optimization. Well, that is in place.

And that optimization of our procedures, optimization in our engineering, optimization of our procurement, a standardization of procurement, it translates already, and we can come with it in $50 million in an annualized basis. So when I said we've been working, management has been working proactively and very diligently and very silently, because we've been criticized by some of the analysts and investors.

We're not making any noise. So we're not making noise, but we were working and working hard to reach this number of close to $180 million of cost savings in an annualized manner.

And very recently, we announced that we had a divestment plan. We announced last year.

Last year, we already Empresarios Agrupados was divested, in the years Eurocontrol has been divested as well. So we have not been quite -- we've been quiet, but we have not been -- we've been working hard.

So that divestment plan, which was important, is already close to 50% achieved. So that's good news.

We're managing TR in the correct way, the proactive way and with a very robust management strategy to manage TR with a healthy backlog that is going to take -- it's been rescheduled to 2022 onwards. And obviously, that management has also to do with finance.

If we know we're going to have less sales for the next 2 years, and I'm not taking into account a market rebound and the very good feeling that we, everybody has about the new vaccine. I'm not taking anything -- everything into account.

I'm only taking into account what I already know I do have, which are good customers and a good backlog. And in order to reach better, what I do need is to strengthen TR's balance sheet.

And what we have done in the last 3 months, we have refinanced our credit facilities. We have a total credit facilities to close to $900 million and a net cash of €113 million.

And that strengthen of the balance sheet means that the debt maturity of our debt, if most of it was in 2021 and 2022, now is being phased down, where we only have a peak of $275 million in 2021. Again, we've been working.

Not making very much noise. Our banks -- our bank is poised at working and working hard.

And most of you may wonder well, and where are you going? I mean, are there going to be awards?

Are you going to -- are you going to be moving forward? The answer is yes.

It is also true that everyone, all our customers are being far more cautious about sanctioning awards. We had a few awards this year, we just had 1 recently.

I had to congratulate my team because we're back in Chile with an app, which -- where we had delivered to them and with them bunch of jobs in both refineries. Again, an app is back on the invest in the mood, and we're going to be working with them.

But if you analyze our opportunities are there. I mean, if we are saving and reducing cost in production, in overhead, in projects, in construction supervision, in engineering, adjusting ourselves, we're not saving a cent in our estimation proposal and marketing team because we're busy.

And we're very busy in our gas business. And we're very well positioned.

We're very busy in what we call today, clean free oils and petrochemicals. We're very busy.

We're bidding, and we're being successful. And we're working with our customers and prequalify in a bunch of projects.

We obviously cannot start naming. But most of you, if you follow the public press, you would know.

And we -- and our energy division is also active. We're very active, obviously, in Africa and the Middle East for investments in taking place, and we're very active in Europe and the Americas.

So we are active. I do expect when market recovers, there's going to be awards.

And if market recovers and there are awards, I can assure you, that TR is going to be one of the awarded. And finally, let's move to this energy transition outlook.

I have a couple of slides here. 2 slides, there profound long details, but I don't want to spend much more time.

I mean there are 5 lines of activity, of lines of work that is very much understood by everyone, but all the institutions. We have the lines of work of deployment of renewable energies, decompensation, development of low-carbon technologies, reduction of wind sails, and obviously it's easy for politicians and for everyone to demonize the oil and gas business and to demonize our customers, and now we call them energy customers or energy business.

Well, our customers and our service to our customers, I mean, we're not a problem. We're definitely part of the solution.

If you analyze in different lines of business, it would not be very difficult for you to understand that all our customers are investing in all 4 lines of business. And it will not be very difficult for you to understand that we have know-how, with some exception, which is wind.

We have know-how in all the different boxes that I have presented here. We have the tools, we have the procedures.

We have engineers, we have the customers. And we have the understanding with our customers to provide a good service.

So in all of them, we're well placed. So the message here is we're not a problem.

Forget about it, we're a solution. And if we move forward to the next slide, and we do a very really quick analysis, where are we in those 4 lines of business.

You see that in all the 4, we already have projects under execution. And in all 4 of them, and I'll leave you with slides to explore, we have projects in the pipeline.

So again, energy transition is a reality. Our customers are investing in energy transition.

We do have the know-how. We do have the resources, and we are already working on it.

So we part of it. That's probably the large message or the big message that I want to send to you with these 2 slides.

And finally, with -- in main takeaways in this presentation. Where are we today?

We have a very solid performance, despite COVID. We have a strong management, strong engineering, strong construction team and very strong customers.

So -- I mean -- and that's why we still -- and we do have a profitable business. We have a solid performance despite the environment.

And that's an important message. We said with our customers and together with them, we're working in win win reprogramming.

So that's an opportunity. It's not a risk.

It gives us certainty, it gives us visibility and it will give us guidance for 2022, now for 2021. So yes, for 2022, which is good.

It's an opportunity. Obviously, to reach the 2022, we have to adjust and we have to adjust to the new situation.

So I do believe we have strong management and the strong management has translated already, I believe a dip into cost-cutting and cost improvement of our operations very aggressively and very successful. And obviously, our management, our financial department has to strengthen and has presented to you before our financial profit.

And with those 4 messages, I cannot be very optimistic about sales because I don't want to be over optimistic with a whoops, but with half -- and only with a half, we could have sales above €3.5 billion by the end of the year, and we could have maintained an adjusted margin of 3%. In that, and there's the message for today.

I just -- I wanted to set on that, solid performance and win-win opportunities with our customers. And that's it.

I'm done with this. And I'm more than happy to answer any questions that you may want to pose.

I have some question. The first one is I would like to understand the margin target, that 2.1 on the 3%.

Because if we understand that you're going to achieve much higher number of savings. I don't know if it's going to be €70 million or something around that figure in Q4.

So assuming that we are not going to have a worse scenario in terms of the underlying business, this should imply a margin on an adjusted basis of around 4%. So probably, there is something wrong on my calculation, but I don't know what what's the trick?

The second question is on the backlog execution for next year because you commented that once all the restrictions would be lifted, modular secretion and you have a lot of contracting in construction phase and procurement phase. So don't you expect an acceleration from 2020, a year which has been really weak in terms of execution?

The third question is a quick question on working capital. So how we expect -- how you expect the working capital to perform in the coming quarters?

And last but not least, it's just to know if in the cash figure of this quarter, it's included the Eurocontrol cash?

Francisco. Okay.

Let me see if I can answer both questions. We today by 15 -- by mid of November, we've already analyzed our cost.

We've already undertaken the COVID costs. We're already the real costs.

And it's difficult and difficult for us to give guidance of above 3%. I mean, that's the best we can do.

I mean -- and most of the costs have already been produced. And they're already embedded in the projection that we're making for the end of the year.

And it has not been easy. You have to realize that in February, we had a structure to deliver big, to do a lot of engineering and a lot of construction and a lot of procurement, which has been reprogrammed.

And I like to analyze the reprogram because that very much answers the second question. We're not -- I mean, there is now acceleration because our customers want to accelerate that's good news.

But it would make a difference, the word reprogramming to slow down of project is that we have agreed with customers to reprogram those jobs. So unless customers who wants to reprogram again, we're not going to have an operation.

I mean that's the good news in a way. The good news is we have the certainty with our customers.

We have new milestones, new schedules, new construction awards when it comes. In some of the cases, we've agreed to finalize equipment.

In most of the cases, we've agreed with our customers to finalize engineering and to have the best quality of engineering in order to have the best procurement and the best construction. But unless customers see it positively and want to blow a whistle and tell us go back again and reprogram once more at a rate, that's not going to happen.

So that's why when I explain to you how the backlog is going to be executed, I think you need to account what we are agreeing, and we have already agreed with our main customers, which takes most of the backlog awarded in 2019. So the good news is we have good backlog awarded in 2019.

And also, the good news is that backlog has been reprogrammed, not canceled. Working capital evolution and Eurocontrol.

Eurocontrol cash is not part of this quarter. It's paid when announced later on or a few days later.

And then the working capital evolution, I think, will normalize in our working capital. We've got through very difficult August and September months and October as well.

The last month has been very difficult. Restrictions, stops, reprogramming and trying to reach agreement with customers so we probably little by little and -- probably no, certainly, little by little our working capital will start to normalize with pay in and pay out.

So -- but we've gone through a difficult turmoil. I have to recognize.

But I think that we manage it. We manage it both with customers and suppliers.

Just a follow-up. So could you tell us what is going to be the level of savings at the end of the year?

I mean, you posted €102 million at 9 months, so what is the level of savings on your restructuring plan by February? Sorry, by December?

It's embedded in projects. I mean, this -- I mean, you have to realize that when I said that we dimensioned ourselves in terms of number of engineers, number of construction supervisors, number of managers, number of detailed engineers, and we had to adjust ourselves, that's the first 2 lines, workforce reduction by 20%, €64 million.

With the reduction this year, we're not going to be saving much because contracts were signed. And in fact, the next year, we're going to reduce for a phase.

We have to pay our bills there. And obviously, we're already embedded, already is producing part of our TR-ansforma phase in the neighborhood of $40 million.

So give or take, we already implemented to -- from that, I mean, over this year and it has started to be implemented once COVID and once restructuring of our jobs started to take place. And very specifically, June, July, August and September.

The level of savings is in the neighborhood of slightly above $100 million. So the answer is we would have been had we stand still and do nothing and waiting for customers to react, we would have had cost of $100 million higher.

That's the answer. And that's what...

Couple of questions, if I may. Thank you for doing the adjusted EBIT and the embedded EBIT, and I understand where you're coming from.

Just a couple of questions on it. If i look at the rescheduled EBIT, that's €71 million.

Now I think your change in revenues for this year is €1.5 billion to €1.7 billion. So that says, it's 4.1% to 4.7%.

Why shouldn't I be using that as my margin expectations for 2021 is the first question.

One thing is what I'm programming for next year. And what I'm -- the guidance for next year, and it's not an optimistic guidance.

I don't want to be optimistic in this presentation. I want to be very realistic.

If our guidance is €3.5 billion of sales, which is only the execution of the backlog. And although we'll be working hard and continue working hard in cost reduction unless there are big awards, which may happen, so we're not going to be able to improve that much out of that, more or less, which also could happen that some of our customers, as Francisco was asking us before, may want to revert our already agreed restructuring plan, our sales are not going to be much higher.

So we're going to continue working our cost restructuring very aggressively, investing on that, trying to be efficient and trying to be efficient to reach the 4% or above margin in 2022. But I don't think we're going to be reaching those margins in 2021.

It's too early. We're still going to be embedded in restructuring, adjusting and I don't think we're going to be able, with the agreements that we already have with our customers, which is good and bad, I mean, it's good because we have agreements, and it's bad because we're not going to have great level of sales.

But the agreements that we have with our customers, and those are agreements and not COVID impact, those are already agreements. We're not going to be able to have turn over very much above €3.5 billion next year.

So it'd be very difficult to go for margins above 4%. I feel far more optimistic with all that backlog, and I don't want to name customers, but those are the jobs awarded at the end of 2019 early 2020 and during 2019, when those jobs go back and start moving at -- in a normal way, in its normal procurement and execution phase.

So meanwhile, through next year, we're going to have to finalize, deliver, do good engineering, finalize procurement with our customers, do the best expediting and inspecting those yards, making sure the models are nicely erected, but a construction and running through the project is going to take a while.

Okay. And then a follow-up, obviously, your embedded EBIT is 4.1% on €158 million of EBIT absolute.

You lost €140 million in power to my knowledge in the first half. Is that telling me that had all things gone correctly this year, you would have been well into double-digit margins?

Mick, I was just talking to my team because they were correcting me. I was going to say on the first semester, especially the first quarter, on the first semester, we had good things and bad things.

The bad thing is we undertaken losses and absolute losses on the power division. But also was also a good semester in terms of acceptance of change orders.

Change orders in Latin America, change orders in Saudi Arabia and change orders in the Middle East. We see with -- not Saudi Arabia, which very much compensated for some of the losses, which, together with the good management of the oil and gas business, which is the oil and gas business is doing well and the health of the new projects.

And with those change orders, we were able to compensate as we stated in our last presentation via the losses in the power division.

Okay. And then just looking at the market.

Obviously, I think what's changed this year is -- so 1 of the big changes in the year was that European hydrogen plant which included €11 billion to decarbonize the refineries of Europe. To my knowledge, there's only a handful of you who work in the existing refineries of Europe.

So have you seen any work materializing from that yet?

Our customers are -- I mean, I cannot give details, but our main customers are working on it because those are the investors who service to them. And we're developing front-end designs, analysis, in some cases, detailed engineering already in hydrogen plants.

Is not -- it's hydrogen plants for customers and hydrogen plants for us is not a new business. So that we need to be cool and that we work hard with our customers for them to hire us.

I mean we're not investors. But the answer, and that's 1 of the messages that I wanted over the last 2 slides that I finished today, that I wanted to say we're part of it.

We're part of this market, and we're part of these new investments in these new markets and talking to our customers, who happen to be the investors in many cases.

2 follow-ups basically. The first 1 is related to the commercial pipeline and the expectation in terms of order intake.

Would you say that you still have some opportunities for 2020? Or you would say that now everything is over and that we have to look for 2021 in terms of order intake?

And the second question is related to -- it's really great to have the split on your EBIT -- adjusted EBIT with the restructuring cost and COVID cost. Can you provide us some information on the evolution of those 2 lines for the Q4?

And also maybe if we should expect something again for 2021, please?

Okay, I'm going to answer myself the first 1 and which is -- I have a better feeling. And then I'll allow Eduardo, our CFO, to try to explain to you where are we in terms of COVID and restructuring in the -- on a quarterly basis.

On the first one, we may see some -- I mean, we were very well positioned. And I say, when I say very well, I like to underline, and I want to be very serious about it.

We're very well positioned in a bunch of jobs for either renegotiating with the customer, and we call it against the contract or we only have -- we know we're very well positioned, and we're only 2 of us competing. Or we are only 3 of us competing and customer has known that it's going to be awarded within the next 3 months.

It was going to be with -- a month ago was within the next 3 months. And today, it's again within the next 3 months, that happens in this business.

But if we don't see any awards by the end of the year, with 15 -- by mid November, we definitely see awards by the first 2 months next month -- next year. But it's very difficult.

But we're very well positioned in open book jobs that we're negotiating with the customer. We're very well positioned in open bidding EPC jobs in Europe.

And we have good expectations. We're working hard to secure it.

We're very well positioned in some gas jobs in the Middle East that we're looking forward. We're very well positioned in a very large front-end design, very, very large, that we're already talking to the customer and working with them, how we're going to together execute those big front-end jobs that would allow us in the very near future also to be part of that investment.

So -- and I would -- it also would give us a breadth in terms of resources because those large front end requires what we call our process -- most of our process department, which is our know-how, which restructuring. One of the risks that companies like us we have when we do restructure is that we might be losing know-how.

And by maintaining the flow of our engineers working on fits allow us not only to make money, but allow us now to improve and maintain our engineering know-how. So that's good news.

And we expect very soon a very important award on a very large front-end design job, which is going to be in Asia Pacific. I can give you the region, but I cannot give you more details.

So we have good feelings. That's what I said that we are doing restructuring and cost-saving in other departments.

We're not doing so. We cannot do so in our commercial, which is estimation and proposals department because we're busy.

We're working very hard. Customers fortunately, they're not sanctioning large investments, but they're utilizing us in a positive way.

We're working together in many jobs. So I'm optimistic.

But I mean, in the middle of this COVID, despite of good vaccine numbers that we get in our expectations, I don't think it's time to be -- to sit here in front of you and be optimistic. We have to be realistic and tell you what a good backlog we've got and what a good management I've got.

Okay. And regarding the COVID and the restructuring costs for the fourth quarter, it's not an easy question.

Basically because COVID is a live animal. I mean, what's COVID?

COVID is the difference between the costs we expect to have because of COVID. And then money we can recover from our clients.

So both things are moving. I believe costs are already evaluated, and give or take, will be similar to what we currently have, but it's difficult to predict what's going to happen with the client.

So let's say something to provide you some guidance. If everything remains as it is today, I think the impact could not be significant, maybe in the range of €5 million.

No more than that additional cost, additional net impact due to COVID. And restructuring is a bit more easy to estimate because it's a smaller figure.

And we know what we are currently doing we have to spend on a quarterly basis, 3 months -- €3 million per quarter. So in the last 2 quarters, so my estimation today is probably we'll have another €3 million in the forthcoming quarter.

So €5 million coming from COVID and another €3 million is coming from restructuring costs. I think that's a fair guidance.

But as I told you, COVID is a live animal, please be careful with these figures.

Okay. Very clear.

And just if I may follow-up, for 2021, if everything stays like that, do you say that we should not have any restructuring or COVID costs for 2021, that everything will be over?

Could you repeat the question, please?

I understand for the Q4. I was just asking for 2021.

If everything remains like it is today, would you say that we should not, like say, include any COVID or restructuring costs in the 2021 P&L? Or there is, I say, some remaining the €3 million that we should include?

Kevin, honestly, as of today, is very difficult for me, for my management, and I think for anyone in this business, to speculate on how we're going to be managing 2021. All I can say is that we are better fit to manage COVID.

Our customers have better understanding how to manage COVID. We probably better fit to manage those costs as we've learned.

There are going to be less surprises. And very inwardly ourselves are optimistic that it's going to -- the market is going to bounce back.

So it is very difficult for us to anticipate if everything is going to remain as it is today. Let's hope for the best.

But in our projections, as I said before, it's going to be very difficult that we're going to have sales unless there is very early awards, and that would be engineering because it will be the -- whether first phase of awards is obviously engineering, it's going to be -- in our sales figures, it's going to be lower than we had expected earlier in the year. And probably, we'll have a better understanding, a good understanding with the customers on how to manage COVID if it stays.

But we have no idea. So it's very difficult to start -- to start making projections anticipating numbers and how we're going to manage in 2021.

I have 2 questions. The first 1 is, what percent of your backlog has already been rescheduled, wherein you have finalized the agreement with the client?

And are there any other major projects, which still needs negotiation with the clients? And the second 1 is on the Eurocontrol sale, how much did it contribute in 2020 in terms of EBITDA??

Could You repeat the second question, please, Nikhil?

The Eurocontrol sale, disposal that you did, how much was it contributing EBIT in 2020 year till date?

Nik, still I don't really understand the second question. Can you either rephrase it or repeat again?

Also, it's also my fault because sound, for some reason, is not very good.

Yes. So the second question is you -- the disposal that you made on Eurocontrol, how much was its contribution in EBIT in the first 9 months of this year?

Let me answer the first question. What percentage of the backlog has already been rescheduled or any other projects to be rescheduled.

So let me tell you, to give you an example, some of the -- over the last 4 or 5 months, some of the projects in Canada, for example, where we scheduled a couple of years forward, it has been rescheduled back quite recently 6 or 12 months onwards. So -- but that's not very important.

But if you want a big number, almost all the jobs awarded last year and some of -- we sat with the customers because they're early jobs and because most of those jobs had not started construction. So customers and us, in a very transparent way has sat down and we had -- we adjusted to the customer demand.

So it makes no sense to launch construction in 2021. It makes very little sense to start construction at the end of 2020.

So it has been 100% of our awards last year and early this year has been in a very transparent way, not delayed, but rescheduled, which take it as good news. But don't take it as bad news.

That's what I said before that this has given us the opportunity to maintain the -- the bad news in our business is cancellation, that's bad news because you have the structure and then you haven't got the job. We do have the job.

We have sat down with the customers. So I don't want to name them.

But a one-on-one basis, we have rescheduled the milestones. We have scheduled the target of starting construction.

We have this reschedule with them. The way we work on to deliver the units.

We have rescheduled with them. The dates where the models had to be finished and delivered to the sites.

We have even agreed with them, how we're going to finish and preserve the equipment that was already being finished, and that has to be accelerated and finished and then preserved by us and by the customer at site or at the yard, depending on the job. So it has taken a great deal of -- I'm not going to say negotiations, but a great deal of understanding on what the customer needed and what we could provide.

And has translated into bad news, as I said before, a much lower, a quick drop in sales. That has nothing to do with delays.

But also in the opportunity of keeping the jobs and maintaining the opportunity to deliver those jobs in a better way because that's why I said before win-win is not a consultancy set of sentence. It's a reality.

So then there's a little more. I don't want to name all the jobs because I haven't got the authority of the customers, but 100% of the awards of last year and a few more has been in a transparent way rescheduled with the customers.

And Eurocontrol. To be honest with you it's not material, it's very small.

And I'm not certain right now because I'm looking at my colleagues around me, whether I'm allowed to say it, because the buyer has not announced and has not made the public announcement, and we have a confidentiality agreement. Which I do believe I could say it.

But they tell me I have to be prudent and not to drop any numbers. But the important thing is if it's not material, it's not very important.

It has very little contribution in our EBIT. It was a good business.

But to be honest with you, is a business that was very good, and we were not taking much care off. It was not -- we were not very much focused on.

So I think it was a very good decision to sell it. And we've done that very efficiently.

So it has -- unfortunately, that's why we sold it. It had very little impact, very, very little impact.

And very -- that impact is not very material in our EBIT.

I have 3 questions, if I may. The first 1 is on the adjustments.

And maybe a follow-up on Mick's question. If I -- taking your adjusted figures, underlying project margins are about 7%.

And maybe in Q2, they were even higher at about double digits. If we do not have -- looking forward into 2022 when you no longer have the low sales figures and no -- hopefully, no more restructuring expenses or COVID expenses, should we look at over 4% EBIT margin?

Or are you becoming more positive about your execution and margin level than the 4% margin guidance that you were looking for maybe 1 year ago? Second question would be on the savings, which, to be honest, look very high to me, especially the personnel savings because you only invested €10 million.

And with this €10 million, you are able to achieve €120 million savings on an annualized basis. So that's 10x payout just in the first year.

I wanted to understand whether this is a reduction in variable expenses. And if we should see these expenses going back up once activity returns and how this is for the rest of the cost savings, the €9 million in rental reduction and the €50 million in optimization of operations?

And the last question is regarding your balance sheet. I wanted to know whether the debt refinancing is already reflected in the balance sheet in -- as of 9 months?

Because I see that you have short-term financial liabilities of about €600 million, which compares to your expected debt maturities of €275 million for 2021. So if you could please clarify these figures.

Alvaro, this is Juan Lladó. Let me -- let me answer the first 2 questions.

And then the 1 allowed to Eduardo, the third 1 about the balance sheet, Eduardo is definitely going to help. The answer is should we look over 4% 2022?

It looks far. But the answer is yes.

I mean, the good news, that's why I like to stress in this whole presentation. I don't think that was very clear, and I don't think I was very successful in the results analysis that I presented.

I mean, the jobs are there, the backlog is there. The jobs are being very much and very well executed.

And when I do the embedded, and I give you a hint when I put the embedded margins, and I say that, that embedded margin and projecting at 7%. I do believe it's higher than 7%, to be honest with you.

I mean, it's -- that's why I spent some time here explaining why do we have better jobs in a win-win situation with our customers because that's the result of detailed full negotiation with them. Customers want us to make money.

We want our suppliers to make money, and we want our subcontractors to make money. It has happened before, and I think it will happen again.

So the answer is yes. We have a healthy backlog for 2022.

And it is not very difficult to anticipate that our margins in 2022 are going to be above 4%. So that's definitely, yes.

When you say that savings seems very low because we have invested $2 million, we have reduced, and I don't want to say numbers, because we're going to have to go even further. So it's -- I don't feel comfortable using the numbers of people.

So that's why we've used numbers in terms of euros. We had reduced a lot of professionals of TR that were out of retirement phase or early retirements.

That's hundreds and you have to realize that unions allow us since September 2019 to retire people when they're 64. Before that, we could not.

So there was an advantage. To a very large percentage of our workforce makes us more costly that just -- to take actions that we've taken now, we hire them through agencies.

So a very large percentage of this cost reduction has been reduction of professionals that come through agencies. That has no investment cost.

All we have to do is, as contracts mature, and reduce -- we've got a little money, reduce the agreements we have with agencies. And finally, yes, there is investment and will be investments in direct cost reduction.

I don't like to use -- so that we have to be ready to continue investing in cost reduction. And we're going to be continue investing in cost reduction because it's part of our plan.

Because our team has to be the best, and we stay with -- if we invest the money on it, when the market bounce back, we're going to be ready to grow again. But you grow again with the good teams, now with the goods and the less good ones.

So that's the reason why we have invested very little money. And it has been very profitable.

And the reason is retirement, early retirement, agencies and also agreement with people that was at the late-stage of their careers. Plus other ones, obviously.

And the third question was about balance sheet, but honestly, I think Eduardo will be better prepared to answer.

Yes. You are wondering why I have such a big amount of current debt and the stake of noncurrent liability is so small.

And it has to do with the fact that our syndicated loan agreement, the new one, the one I have recently negotiated has a forward start close. This means that until the former syndication facility finishes, I am still under the former syndication facility.

And once it finishes the new one starts. According to the accounting principles, I'm currently under the former syndication facility.

And consequently, I have to book this loan as if it was due within this year 2020. But I know that immediately, once this syndication finishes the new one starts.

And consequently, since it's a loan that has a tenure of about 4 years, it will be booked as a long-term facility, and I need the former facility to finish first.

Nobody has asked about Teesside. Can you just tell us where we are, what the schedule is, how you expect it to go?

Yes, yes. How is it going basically?

Okay. On Teesside, we're working well with the customer.

We're working well with the subcontractor. We are very advanced stage of construction, practically mechanically completed.

But the important here is precommissioning. And we start in different phases of precommissioning.

And I think we, again, might be wrong -- or maybe wrong in definitely not months. Just a few days.

I think we're going to start groups with pellets arriving next week. So that's good news.

I mean the plant hopefully will be working. We have signed good agreements with all the subcontractors.

We're working hard with the customer. Obviously, it has been and has been a very costly operation.

But I think both subcontractors, customers, us we are seeing light at the end of this tunnel, and we're working hard. We have the people in place.

You always were scared with this COVID because this COVID produces inefficiencies that we cannot manage. But over the last weeks, we have been able to work -- and I say weeks, many weeks, at a level of productivity similar to pre COVID, which is good news.

And in your early remarks, you mentioned about opportunities within Europe. And obviously, I'm looking at Teesside and the other historical moves, I'm thinking in Belgium, Portugal, do you think you are now in a position you can address opportunities in Europe?

Obviously, opportunity is still an opportunity, and we'll have to see those jobs come, see they do come, whether we do like the job. Which in fact if we're bidding is because we do like it, whether we do have construction agreement with subcontractors.

And whether we can execute the job with construction agreements as they take some of the risk away. But also, we have to take into account, when I talk Europe who I'm not only talking about Teesside or Belgium, I'm talking about Turkey and Russia.

I mean, we see Europe in a big way.

Yes. It's just that there's obviously a massive investment program actually in Teesside being planned for net 0, including hydrogen.

There's investment plans down the road in Humber being planned, and these are as big as we've seen in the U K and I'm just worried that 1 of my companies goes out and goes after some of those contracts.

The Teesside program, we're following it. But it's not an immediate shot at all.

But we have shots which are earlier in other parts of Europe. And in Russia and in Turkey.

Okay. I think we finished with Mick.

Thank you very much, Mick, for your questions. And thank you, all of you for listening to me.

It was an important presentation that I had to make, and I really hope that I made my points across and definitely, I will talk to you, I think, as late as February, with the end of the year results. Hopefully, by that time, all of us will be healthy and safe.

Take care all of you. Thank you.