Técnicas Reunidas, S.A.

Hello, good afternoon. This is Joaquin Perez de Ayala.

Welcome to this Full-Year 2021 Results Presentation, that will be conducted by our Chairman, Juan Llado, and Eduardo San Miguel. It will take around 20 minutes and you can pose your questions after.

And now I give the floor to Mr. Juan Llado.

Hi, everyone. Let me go -- I'm going to -- let me go through a quick summary of today's presentation.

First of all, I'll do myself an overview of the scenario that we have faced over the last year and how we managed to overcome it. And then after that, secondly, Eduardo will review 2021 results, our performance on the COVID, and an update for 2022.

And then I'll finalize this presentation, reviewing the pipeline, and give you some guidance for the mid-term. What are the three main accomplishments of this year?

Obviously, it has been an extremely challenging year, it is not suited to anyone. But we have achieved three very important goals.

The first one, which was organize those upsells and we start 2022 with a much stronger organization. We now have skilled management team that is going to drive recovery to these new growth scenarios that we talk afterwards.

Secondly and extremely very important and it's really important. We have to strengthen our balance sheet.

We have to strengthen our financial profile. And we have done so with the European fronts for a strategic company, which is important now is also very important to have the Spanish government as part.

So, our balance sheet is stronger and we have the government working with us together as a partner, which is again, a very important accomplishment. And third, in the middle of an extremely difficult and challenging year, we have rebuilt the backlog with €4.8 billion of near works.

It has been extremely successful year towards the end, I have to say, where we have a more diversified and really far more de-risk backlog than the one that we had two years ago. And let me tell you, two years ago at the end of 1919, we had a good backlog and we were facing 2020 before COVID with the rather optimistic guidance.

We're all today have to say we're stronger. Let me start with how we had to strengthen the organization.

Let me introduce my team and let me start with Eduardo. Many of you know him.

He is -- he joined TR about 18 -- 17 years ago. First of all, as Deputy CEO and now he became the CFO, and today is Tecnicas Reunidas CEO.

And he is the CEO and he is managing the executive committee. So, he is a full empowered CEO.

Obviously working with him and with me, we have Arturo Crossley. He's been in our -- he has work in his young years with our competitors, I'm not going to say whom, but many and very successfully.

But obviously he's always been -- thank God, he came to TR about 18 years ago. He has been extremely successful on the commercial side, and today he's the deputy CEO, and at the same time he's our Chief Commercial Officer, and support in TR, myself, and Eduardo with TR's strategy.

Promoted from a Deputy CFO, Javier Diaz Hevia, has managed extremely successfully over the last years, and the last two years has been key. He has proven himself and to TR to be extremely successful, bright, and diligent, and today Javier is TR's CFO.

So, I do believe with these changes. Few changes, but too many important changes together with the executive management team, we're going to be able to manage very successfully the recovery of operations and prepare the company for these new investments weights, is already coming, that we were already seen with the awards and move into these new low carbon industry scenarios.

The very important thing that we have accomplished, the here and towards the end is strengthening TR balance sheet. We're back where we were, but this time with the support of the Spanish government, this time with this report of the European fronts.

And then to gather funds, we have to fulfill European requirements. Obviously, those requirements are, and were that we had been heavily impacted by the COVID-19, probably more than others.

That has to do, how you were cut in the middle of this disaster. Obviously to be -- to have the opportunity to get these funds, you had to be and we are a solving company.

And very important, you have to be and we are a strategic company for the country that grants the funds. So, we are strategic and why are we strategic?

Some of you may wonder, obviously, because of the quality of our franchise and our technology. We are strategic because we happen to be strategic for our customers and for the strategic investors.

We are strategic for -- because we are strategic for traditional and for new energies for both the development, and the successful development of both sources of energy that have to live together within the next few years. And we happen to be a strategic for Spain working here for Madrid, because we have the center of excellence of engineering.

And from here, we do export goods and obviously know-how. So, let's move to the [Indiscernible] chip, which is as important a probably more in the business case.

further than the first two, which means awards in the middle of a probably the more challenging year we have ever suffer. We have had -- we have ended up in a year with the rather successful awards.

And let's go -- I'm not going to go one by one but sector by sector. We ended up a year-to-date and let me make it clear, it's not year-end, year to-date, €4.8 billion of awards, out of which slightly above €2 billion has to do with petrochemicals.

Petrochemicals with Orlen, petrochemicals Orlen in Poland, Sasa in Turkey, [Indiscernible] and Sonatrach working together and working with us also in Turkey. And this demonstrates the growing importance of petrochemicals via -- It demonstrates that we're going to see and we're going to continue seeing and we're going to continue developing big petrochemical investments in the TR if fully recognized as one on its players.

We had been awarded on the second half of the year as well, above €1 billion in natural gas. For both ADNOC that we are working together and the risk in the job, we target a partner in Abu Dhabi, and for Qatargas.

For Qatargas, we had worked before, with all the [Indiscernible] feat. and engineering works.

This is the first time that we've moved with Qatargas to sieve large investment programs. And you know that probably Qatargas is the largest LNG player in the world.

Now we do work with them and these programs. So, they've established very -- continuity and repeating business with that not.

Repeated business but moving to research programs for Qatargas, very important and it's a very important award. Third, our division of foreign water.

Power and water some of you, and that got calls and we read that when you had these awards, we had problems with that division, but when we try to diversify, when we move into the areas of know-how that are new effect, there are more renewables. In fact, they had to do with biomass.

And then, I'm not going to get into details, we could have -- we haven't done well. But I think we're one of the best and most complete players in the traditional power business.

And this is the result. I mean, the three technologies, which is the three, through buying, public traders, which is G Simmons and Mitsubishi calling us to partner with them, because in these case -- in the three cases, we partner with them to develop large combined cycles.

In one case it's in Poland and in the other case, for Simmons and Mitsubishi, it's in Mexico. So, while the few of them rely on TR because of its quality of engineering and its project management skills.

Finally, [Indiscernible]. When we talk about [Indiscernible], we talk about the improving the quality of the fields of the refineries.

So, we have to -- in other times, we would have been 50% of the backlog or 50% of the awards. Today is about 10%.

But what are we doing here? Here we working with [Indiscernible] and in Argentina and [Indiscernible].

In both cases, they are jobs without construction. The construction is managed by the client -- by the investor.

I've been here and some of you may wondering, what are you doing with Gazprom. Well Gazprom, we have worked with them and we have developed with them two front-end designs, and this is the EP CM or one of the front-end designs that we had done with them years ago before pandemic.

Obviously, the job with early work has started towards the very end of the summer, contract came into force in December, and we have a contract with them, which at this stage we have very low risks and very few commitments, and we have to explore within recent regulations how we're going to continue. And if you want to wonder how much risk do, we have, well we have to realize that is 4% of the backlog and is no more than 2% of 2022 revenue.

Finally let's move to energy transitions. Energy transitions for us, if we had to write a business case, petrochemicals and traditional energies, oil and gas, in the business case would be via cash down.

They are going to be huge investments and we're going to cash from that. And there are going to be future investments within the next five-years and we're very good at it.

But we're going to see huge investments as well, if no more, in non-traditional sources of energy. Bio-fields, bio-chemicals, green hydrogen, green ammonia, and we following all of them.

Today, it's very difficult to put it in the backlog, it's easier to put it in the pipeline, sort of put a we've been calling demanded by investors, our traditional customers and others to sit down with them and develop projects. And what we have in these slides is the one solid project that it was awarded to us in 2021.

This is the project which GI Dynamics asked us to design, escalate, and standardize their waste to methanol plant in Amsterdam. So well, again, you reflect that we have the resources, the creativity, and the means to profit for this great opportunity, which is these new sources of energy.

So, all these awards together, we're moving to a backlog again, year-to-date up $11.1 billion, today we're talking and we have to manage $11 billion backlog. But we can split it into three parts, that is a good way to see it in terms of how risky these backlogs.

How risky in terms of construction, in terms of new prices, in terms of resources, in terms of diversification. 12% of the backlog is the backlog that is older and is lack of stages of delivery.

It's in construction stage and we're going to be finishing within the next 12 months, 18 months. And we have to say happy customers with good satisfaction, given we have to go through extremely difficult times over the last two years, fully affected by COVID.

47% of the backlog, almost half, all the jobs that has been reprogrammed. Some of them that would award at the end of 2019 or end of 2018 and there were swapped after they had to be reprogrammed or refaced or renegotiated with customers, and we're back on track.

With most of our customers we have succeeded those negotiations and with others we continue on ongoing phase, but are always in extremely good terms, which again, it's an opportunity to de-risk the management of our projects. And finally, very important for the 1% of the backlog are the awards that I just mentioned, which are obviously because they're new, because they have just come into force a few months ago and some of them a few days ago, pricing obviously includes the changes of prices in today's new environment having to do with raw materials and having to do with inflation, and also reflects how well we're positioned in natural gas petrochemical and energy transition.

And that's so having done the split of the backlog, I'll pass the floor, in this case is not a floor it's a table, to Eduardo.

Okay. Thank you, Juan.

Good afternoon, everyone. I feel very honored to be here with you in my new position, and I want to thank publicly Juan and the board for their confidence.

I am sure working together we will get Tecnicas Reunidas back to the level it deserves for the benefit of the shareholders and the rest of the stakeholders. Let me move now to briefly explain the performance of the company in 2021 and what we see for the coming year.

In this slide you have the main figures for 2021, they are heavily affected in many different ways by COVID. Secondary sales, we see that they dropped €2.8 billion, far from pre - COVID levels, which were around €4.5 million.

These 40% fall was an avoidable, so it's about half of our backlog was not fully active as it was posed and reprogrammed up by our clients. And also, on top of that, the rest of the backlog advanced quite slowly due to COVID restrictions.

We've seen 40% sales in any business. We've seen 40% of expected margins.

Regarding the costs, COVID generates lower productivity and higher operational costs. As we have explained with some detail in previous webcasts.

And obviously, we have been hit by the [Indiscernible] side project with a financial client terminating the contract with a percentage of completion of 99.3%, dismissing any COVID claims and executing our warranties despite having achieved first hiring of the plant, and on that in the middle of a huge alpha COVID wave in Northern England. And [Indiscernible] like very little but in these years, everything has been so extraordinary.

I think it makes sense to analyze it. And adjusted EBIDTA of €48 million, something like 1.7% of the sales shows we have still an underwriting profitability of our business, despite a 40% sales fall.

And finally, the cash. For the first time, we have a negative figure at year-end.

And there are three reasons. First, impact of this side.

Second, there's a low base in project execution and milestone recognition. And third and last, the difficulties in arriving to agreements with clients without face-to-face interaction.

Before entering into what we expect from 2022, I will like to devote a minute to explain how the company has crossed 2020 and 2021, the two COVID years. Because here in TR we're disappointed, very disappointed with the results we have delivered.

But we also believe we need to analyze the performance of the company with some fairness. The fact is, and you can see it on the left, we have used around 4 billion of revenues in two years.

And despite that, and you can see it on the right, if we remove the impact of this site termination carried in those two years it's very close to break even. So, as I said before, we're very disappointed, but what I can assure you is this quasi break even, is the result of implementing many tough management actions.

One of the actions we have implemented, it is one without impact in our P&L, is the agreement with SEPI. Most of you already know the details, but let me share with you the main terms and conditions.

There are two tranches. The first one of €175 million is a participative loan that enables us to look it as equity.

Its average cost is Euribor plus 450 basis points. The second tranch is an ordinary loan for a €165 million with a 2% fixed cost over 4.5 years.

[Indiscernible] agreed with us that the terms are fair, considering its equity features. And let me just make four specific remarks that I think are important to highlight.

The disbursement was completed four days ago, last Friday. Our potential option to convert the [Indiscernible] tranche into capital has not eventually been included in the final agreement.

Dividend’s kind of be paid until loans are fully repaid. And finally, let me stress, this gas will be devoted to accelerate the working capital cycle and speed up project execution.

Let's move now to 2022. We expect that removing the impacts of COVID will progressively translate into better sales and margins, more in the second half, many in the first half of the year.

€4 billion revenues shouldn't be a challenge considering a high-growth speed in project execution once COVID restrictions soften. The respect of the reprogrammed projects already agreed with clients and the new sales coming from recent awards.

And achieving a 2% EBIT margin is several send above target as well given a growth of sales no less of €1.2 million, a reduction. And hopefully the ending of extraordinary COVID costs, and our continuous effort in optimizing costs following our efficiency plan, Transpharma.

I will elaborate a bit about this plan later. With all this in our mind we can confirm the guidance for 2022 that we provided in our last November presentation.

Two issues are critical to achieve our targets this year 2022, to improve our working capital, and manage properly the raw material inflation. Let's start with cash, and again, I don't want to simplify my message, but we expect cash levels to recover because the reasons that have contributed to its deterioration in 2020 and '21, should not last for long.

We do not expect losses. We anticipate new awards with some payments.

And more important we foresee and we have to work hard in improving the cycle of working capital. The generation of working capital in our business has become a trend and we should revert it by three ways.

1. Recovering the ordinary pace of execution, which allow us to achieve milestones quicker, and then invoice and collect from our clients.

2. Accelerating our negotiations with clients to solve change orders and claims.

We are going to be as proactive as we couldn't be during the pandemic because of travel restrictions. Our last part of our working capital needs has to do with two years without client’s approvals of ten charters.

But in the last three months, we have closed more than half of all those pending issues. So, we have to be confident about this trend will persist in 2022.

Third, improving our payment conditions. Better payment terms will help to speed up prior execution and to shorten billing cycles.

And these will create a positive cycle that would end up favoring our clients and suppliers. With all these, we are sure to recover our historical positive net cash position through the first half of the year.

And let me move to the impact of raw material inflation, that topic that worries all of us. My main message is that although we expect an impact, that's obvious, it is already included in our result estimates, in fact, in our guidance.

It is a fact that most projects that were in the backlog when the pandemic started have almost bought all the relevant equipment during the last two years. And it is also true that in the recently awarded projects, our prices to clients were based on updated costs of raw materials.

Moreover, we are reaching agreements with 10 clients that are willing to compensate us when projects were reprogrammed or slowed down. Obviously, not every client is doing it, but we know raw materials will probably be the issue of the year, and that's why we're very focused on maximizing the impact of all the measures we implemented in our efficiency plan transformer.

The plan was ready by the end of 2019, but the lower level of activity during COVID has not allow it to produce all its potential impacts. Some measures, to give you some example of the transformer plan are, concentration of procurement in [Indiscernible] headquarters instead of procuring project by project, searching for suppliers in new markets, obtaining from clients authorization to open the list of accepted suppliers, standardization of projects to buy similar equipment for different projects produces economies of scale, engineering work for cues on the sign-in lecture restructures less intensive in raw materials, selection of purchasing windows when prices are expected to be lower.

Those are some missions. In some, we are facing this issue in alignment a part of our backlog and we are dealing with it to together with customers and suppliers.

And now, Juan, the floor is [Indiscernible]

Thank you very much, Eduardo. So let me finish with the final mid-term guidance and outlook.

Let me do so talking about the pipeline. It is true that we have a strong pipeline as it is again is one of the strongest pipelines, we ever had in terms of quality of the pipeline diversification, the pipeline and the certainty of that pipeline.

Obviously, the strong demand today on energies, some different source of energies is translated in very high prices, which are supporting the rights in the investment activity. Right investment activity for next year, for this year now 2022 and beyond.

We've seen it our past. Our backlog has come into force in this business from the time you're getting letter of awards and the contract gets signed, and comes into force, sometimes takes years, so a year.

And now, it's just an issue of weeks. There is a necessity of invest.

And this translates -- and let me start with transition -- energy transition. Obviously, we're going to be seeing energy transition investments.

Energy transition investments they are going to become more than project. They're going to be tangible and material investments.

And we're going to benefit from that. And we already have in the pipeline some very important projects that we hope to benefit in 2022.

This is our star, talking about business case that we have also the cash cow. And the cash cow offers big opportunities in natural gas of petrochemicals.

Big opportunities have come and we have already benefit from them. And big opportunities are going to be coming in 2022 and far beyond.

And today, we're extremely well-positioned in workplace to benefit from this market investment. TR -- quality TR franchise is best placed, and we have maintained the quality of engineering and the quality of execution, and today we're seeing how worldwide customers come here, or we go there, now that travel restrictions are over, to talk to them and present it.

So now it's time to -- obviously to recover, it's also time to be selective, and it's time to profit for the quality of the business we're running, and profit means going back to the normal, if not better, margins that we had in the past. And in future I'd say that into numbers, it should be in the mid-term 2023, going to normal level of awards of 5 billion.

This year all the sum we ended up with 4.8. If we have 5 billion sales, we'll awards that we translated in 5 billion sales, obviously, in our objective, it shouldn't be a challenge.

It is the margin that we deserve, and we're going to work for it and we're going to get it off 4%. So let me finish by recapping the initial message of this presentation.

We have the strength in the organization, we have the support of the European fund and we have a very strong pipeline, which is going to be managed within a very strong franchise? So, we'll be back very soon to normality.

Thank you very much. And now Eduardo and I will stay here to answer any questions that you may want to pose.

Good afternoon, everyone. A couple of questions if you may.

Can I just first to go back to what Eduardo said about the reprogram backlog? Clearly, those projects are starting again against inflation.

Can you just talk through exactly how you [Indiscernible] them -- those projects for margin? I know you did a lot of the procurement previously, but some of those are still very, very early stages.

Just give us some safe reassurance around that reprogrammed workload.

Hi, Mick.

Hi.

How are you? The extremely specific highlights of what projects I'm going to talk about.

I think we have four projects that have been reprogrammed. Two out of those four projects, we have already talked to the client and we have agreed new prices to compensate us for any extra cost due to inflation or due as to the mobilizing and remobilizing the people to the site.

So those two projects are fully solved. There is our third project where the client recognizes it has an impact, this period of having the project [Indiscernible].

And we still have to negotiate with them what's going to be the impact. And there is a fourth one that probably we are still in the various initial phases and we're talking with a client, but to be honest, the answer for the client is still a bit shy.

But my feeling is, these two are already right. One is about to be solved and the fourth one, hopefully, within the [Indiscernible] we'll find to solve it.

Obviously, I am concerned, but I do not believe it will have a material impact in what we expect are going to be the results of the year.

Okay, but obviously in Project 3 or 4, you have an embedded assumption of margin in there, which could be different, is that not the case?

[Indiscernible] we have a certain level of protection in my contingencies. So, I cannot cover -- I cannot warranty if it's enough, but hopefully it should be up.

And the next question is just on cost inflation and your bidding pipeline. I'm not sure yet if it has happened.

But I'm sure at some stage you are going to present a bid and your clients are going to look at the number on the paper and think it's far too much. Have your clients started showing concerns about getting project accelerated before they get too expensive?

I cannot be very precise on it. There's some -- I mean, you've seen it, that had an issue of weeks we had negotiated and closed some very important jobs with -- and this obviously had to do with both.

The customer who needed the job in three months and secondly, the longer it took them to reach the agreement, the more uncertainty was we both had on the closing price. So, either happens.

In some of the big cases received, their customers are saying, okay, let's wait a few weeks, let's wait a few months. I don't know but the level of uncertainty today in -- and instead of accelerating our delay, what it is today, we'll receive today is way level of concern because the investments are real.

I mean, they have to invest, and they have to have to find ways to reduce the cost. Value engineering, opening the vendors lift, finding ways to reduce the costs.

And at the same time, concerns about -- on our side concerns about close knit price that would put us in a difficult situation once that has been close. It is in the market, it is concerned.

In some cases, it's translating to some delays that we have to think together how to do it, and in others, easiest track translated are ready in accelerating in closing the price, and placing the orders, which is what we have done over the last two months. So, we see both, Mick.

Thank you very much, [Indiscernible]

Yes. Good afternoon.

Thanks for taking the question. The first one is related to your Q4 performance.

Basically, you were guiding for €3 billion plus topline in '21, you arrived to €2.8 billion. Is there any particular reason for this €200 million gap that we have in Q4?

That would be the first question that I have. And then I know it's maybe difficult for you, but looking at 2022 you have [Indiscernible] guidance, but how should we think about the overdue show over the upcoming quarters?

With one of your slides, it seems that you expect a gradual improvement in revenue. Should we assume that the margin will follow the same dynamic or you expect to be at a more stable avail all of the year?

And on the working cap, clearly understand that you are renegotiating a lot the payment downs, etc., with the client, but how should we think about the evolution for 2022? Should it be enough in a way to bring back -- to kick us to a net cash position?

Okay. And will start with the third question for the capital evolution for 2022.

Maybe it's happening too early to say that but we have the feeling that things are changing little by little but they are changing. We see clients -- obviously, the oil price or the gas price is higher than one year ago, and in many cases, they are trying to accelerate as much as they can the construction of the plan, so they know and they understand that the only way is to put money into the system and to accelerate, and to give flows of cash to the cycle.

So, I see clearly our working capital improving through the years. I also -- through the year, I also believe that some recent awards have, not a good down payment, but a good cash in the very early stages, so we will see an improve in the cash figure quite soon.

I have said in the presentation, we will see the company going back to black numbers in terms of cash within the first half of the year, I'm almost sure about it. And I also have in mind that the money coming from SEPI will be there.

So, I mean, there are many reasons to believe working capital difficulties will be smaller and we will see black figures when you have a look to our cash position very, very soon. But first, regarding the evolution of sales and margins, we again, have to be careful, but we have detected the willing of the clients and that willingness please move as fast as you can.

But they realize that it's very difficult to come back if we did mobilize our teams one year ago. And it's very difficult to put all that people back very quickly.

But what we feel now is that we're back to normality -- we are coming back to normality. And consequently, my expectation is by the -- by half of the year obviously, we will not be doing €2 billion at obviously on revenues, half of €4 billion.

And while we're somewhere between what we did last year by June and what we expect for [Indiscernible] to sign on in '23. I don't know, maybe €1.8 billion should be something achievable.

It should be something achievable. And regarding the fourth quarter, to be honest, it's the number it gives the system.

Probably we have been finishing a number of projects. We have devoted a lot of hours.

But seeing we are in the last stages of construction, probably those projects were not delivering big volume of revenues. There is not any specific reason I don't feel the deceleration, just the opposite.

I see how the projects are little by little speeding up. Maybe just one quarter, but it's not what we should expect for the first quarter of 2022.

Okay, understood. Thanks.

Hi, thanks for taking my questions. The first would be on the de-risking of the portfolio you -- this year, of course, you have had probably more awards of smaller size and more diversified, which in itself it's implies a decision of the portfolio.

But I wanted to know whether or not contract by contract there is any lower risk than the traditional contracts that you have usually performing biased, maybe if it is due to a different structure, maybe shifting from UPC to cost slash or higher percentage of feed conversions or something that is also helping to reach the portfolio that would be my first question. The second question would be on the restructuring efforts.

If I look at your adjusted overhead expense, it has actually increased from €91 million to €113 million. So, I wanted to know whether the cost-cutting from the transformer plan is already reflected here or whether we should see an improvement in going into 2022?

And my third question would be on the capital restructure. I understand that the financial package from the SEPI does not include an option for conversion into equity.

But whether right issue is still potentially on the table for the future as you indicated on the last quarterly report? And also, if SEPI would still be willing to contribute and become a shareholder of the company and whether you would be okay with that?

Thank you.

Hello, Alvaro. When you go through the -- and you have the list and the presentation of most of the jobs and the awards, which is obviously some of them on the smaller site.

But this is smaller site because it hasn't got construction. If you go through the [Indiscernible] job in gas, it would have been a drop of $1,900 million or but are we share in it with the construction company, so that's why we call it the risk.

Obviously, if you go to Sasa it is $100 million, we don't include construction and it's a cost-plus job. It goes to a balance sheet with a fee that is very much the risk.

In Orlen, we had a partner, and it's not a construction partners, it's an engineering partner, but it is the result of a competitive feed, is not the result of a fierce competition, it's more a technology battle than a price battle. That's why we can -- sometimes we can say has been de-risked, we feel comfortable with the risk.

And if you go into the three jobs that we doing with Empower. There's three of them, we know running the risk of the technology which are the delays of the problems.

So, the efficiency of the power plant, that risk which sometimes is quite dangerous for an EPC contractor is being run either by G Simmons and Mitsubishi. So really and if you go on their [Indiscernible] fields, both of them having got construction risk.

So, it's very much the risk instead of awards. Obviously, the size of the awards, if we had to include construction in this case, it would have been closer to 7 billion.

So, it's good. Believe me, it's very much the risk.

Now, it's for us to manage it, but it's very much the risk. And Eduardo will try to answer the second question that has to do with the transformer.

Yeah. Transformer was a plan that was focused simultaneously both in overheads and operating costs.

And we did our work a couple of years ago and well, regarding overheads, I think the savings were already last year in the results. This year 2021 we have been focused in how to be efficient in the operation.

So, there are some impacts, but you can see them easily because they are hidden in the lower results of the operation. But by the way half, half.

Originally, this project was called Plan 10, Plan 100, so that -- that was the money we were targeting for at least another year. Obviously, it has been impossible to achieve these kinds of savings, because the year -- the lack of activity has not allowed us to be effective in terms of applying this planned transformer.

But this plan will come back and new GI will be clearly profitable and useful for the company. Regarding the question about account equity, well, the fact is that the policy of SEPI is to have the companies to go back to the equity they had when the COVID started.

So, the money they have given us at least is purely that, the target is, let's move back to late 2019. So, at that time for us, that volume of equity was enough to operate.

So, it has to be enough now, obviously, what's clear is that, well if by any specific reason in the future with effect that increase, that equity could be useful. We will have to analyze the options, but well, it's not now in our minds.

Thank you and a follow-up, if I may, on the direction of the portfolio. Thanks, Juan, for the comments.

I wanted to know whether the increased diversification and probably smaller average size of the project, which provides higher diversification, is that something that Tecnicas Reunidas has looked after or it's just how the pipeline and the overall industry is now working on? Thanks.

It has nothing to do with the change of the strategy. Looking for ways to de-risk the award is part of our strategy, that the fact that the size of the jobs is smaller.

One part is because it hasn't got construction, I mean, Sasa would have been more than a billion and is 600. The [Indiscernible] we have a partner of construction, it would have been a job and we decided to partner, and therefore, it would have been a billion.

If you go and you take the jobs of [Indiscernible] and Mitsubishi and you compare those jobs with all the combined factors we've done before, that's where we understand the risk would have been on top, and the technologist regarding on [Indiscernible] and Mitsubishi would have been non-duress. So, the jobs would have been about €600 billion to €700 billion each.

So, it's a mixture of both the jobs came as they came whether we put a great effort in not looking for volume, but looking for quality and a de-risk award.

Thanks, Juan and Eduardo, for the comment. That's very helpful.

Hi. Good afternoon, gentlemen.

The question relates to the energy transition. Is Tecnicas targeting any niche segments or markets because it's considered it has something different to offer?

In the traditional business, you have a very solid track record in the [Indiscernible], somewhere you are different and you can have -- maybe you're more competitive. Is there any segment which you, in the same way, could be for something different in the energy transition and leveraging off some of your clients in different markets?

Thank you.

The thing is in energy transition, the big investments still have to come. But obviously we have something to offer.

And in some presentations, we've said if a customer needs to work in a big green hydrogen plant, then it is someone that has able to do the -- not only to do the first design, which we escalate that technology because that thing knows have to be escalated. That means you need the initial process engineers, one that technology has been improving and escalated.

You need to put together a tax force of engineers to do the design. I don't know whether it's going to be EPC.

Let me tell you, I think EPC utilization is going to take a while. Customers may want to going to take a while because the maybe EP consortium management, because technologies are not fully close.

You close -- none of us know how much we cost to construct them. We might close the procurement; we might close the engineering but not the construction.

Technologies that have to be escalated they're not rocket scientist technologies. It's an issue of costs.

And once that cost working together has been reduced, its unusual having a good team of engineers that has done similar things. And that's where we can offer.

That's why we're working for GI Dynamics, that's why we're working with Repsol Developing Plant, that's why we're working and starting with [Indiscernible] public. How we can decarbonize and what are the investment that they need to make, first of all, in Southern Spain and then all over the world.

And then the capabilities on the [Indiscernible] of project management on execution is both. You have to be able to design and then you have to manage.

And for that, you'd need energy services, engineering houses. And I think -- that's why we -- that's the feedback we're getting from customers, sometimes our traditional customers, sometimes our investment groups, infrastructure groups, that try to put in a lot of money into the market, and that's the feedback we're getting.

And that's the feedback we're getting in the recent awards with GI Dynamics.

I guess you have a very strong potential domestic market as well, which you can leverage off as well. In terms of Spain, there's a lot of opportunities there as well.

To be honest, it will be very nice. We do think in Spain that a bit of -- I don't feel very -- been in Madrid and having 99% of the business outside is a lot of fun.

But I would prefer to have big chunk in the backyard. And for the team, I'm looking forward for that.

And I do believe there are great opportunities.

Thank you very much Juan.

Great. Good afternoon, Juan and Eduardo.

Thank you very much for the presentation also so far. I was wondering maybe if you could just talk a little bit about the near-term.

Obviously, there's a lot clearly happening geo -politically today. It's a very sad situation.

Is that changing discussions around potential timing of contracts, clients looking to wait and see, are they looking to deploy capital sooner rather than later, given everything that's happening? And secondly, obviously you've always been very small relative percentage exposure of your backlog to Russia at this point.

But be good to hear your thoughts about project work in country and whether you are going to start working there. Thanks.

Hi, James. To be honest, I cannot be very precise because we see -- well may be not especially today, in the last weeks, the level of uncertainty is great.

And the level of prices is uncertain. We've seen both and we had seen, as I said, to make a while ago, we have seen scenarios that we have signed right away and place new order and saved the order, it has to do with power.

Because prices would escalate and the investment needs is there. In the middle of this turmoil would -- we have in the feedback on some customers lift, which we've working on contracts, and we just waited a little bit.

But all of them, they're waiting with urgency. We are feeling some level of urgency on the market to invest, because they have money, they have made a lot of money, been making a lot money, and the market is there.

So, the feeling, I mean the investment mood that we post in market has nothing to do with the one we had in 2016 and '17. It starts to be -- it's far better than the one we saw at the end of 2019, when the market was fully recovered.

Now they are -- they have the market and they have to invest. Obviously, uncertainty sometimes accelerate, which has been the case with us in some other cases, there's a bit of wait-and-see or less.

More than we think in the investment and see whether I can restructure if it's too expensive. Exposure and backlog to Russia, and as I said before, the only job we've got is the -- and we just started.

We just started in the last quarter of the year, which is the job which is EDP for Gazprom Neft, is €214 million, which represents about 4% of the backlog and 2% of our 2022 sales. That's the only -- and it's at the very initial stage.

We are having -- we're not very much engaged with the job. We have very little risk.

Okay. Thank you.

Thanks very much for that. And just going back to as you will make after that in terms of the Q&A and the reprogrammed backlog.

These were for pure fixed-price contracts to begin with. I'm just quite interested to understand how you've been able to renegotiate price through that contracting structure, because I guess it was the view that the customers would be quite happy probably to allow more time, but probably less happy for it to cost them more money.

So, I guess, just to confirm, those are all -- those are full fixed pure kind of lump sum turnkey projects rather than any other structure.

It's easy to balance client willingness to accelerate now because it makes sense, and simultaneously, they know that they need to pay for it. Some extra costs, and if you want me to move faster, you will have to help me.

Unfortunately, probably the contracts do cover specifically this situation, but probably nobody in his mind that has signs a contract, the idea of a potential COVID to come in. So, in the end, this is a win-win.

Both the client and us need to solve these problems to force us to move fast.

Okay, thanks.

Thanks for taking me again. Juan, can I just go back to the comment you made on energy transition and the size of the projects.

Obviously, a lot of energy transition projects to-date seem to be somewhat smaller. So, what is it that you're seeing that thinks the size of those energy transition projects can become meaningful in the shorter-term?

[Indiscernible] good to have you back. And I do believe -- as I said before, for us energy transition for the [Indiscernible] this [Indiscernible] is we'll have to fall through new opportunities.

Some of the jobs might be smaller and some others might be quite big. But even if it's smaller, we [Indiscernible] sales to capture them because they're going to need new technologies with -- they need to be escalated.

Not complicated technologies but new technologies, and I think we have a lot to bring. And let me tell you, what engineering has, we made money, we make a lot of good money developing engineering.

So, it shouldn't be an issue of sites, it should be an issue of putting together a profitable business. And I think we're going to be seeing a profitable business quite soon.

Thanks.

Okay, thank you very much as seeing we are done because it was year-end and we would to and a lot of questions, it has taken a bit more than an hour so thank you for staying with us, and thank you for supporting us and we will be talking to you, I understand in May.Thanks a lot.