Grupo Argos S.A. (GRUPOARGOS) Earnings Call Transcript & Summary

[Audio Gap] We will be following the teleconference. And to download it, you can access the financial information reported in the reports. You will find a file that's called Presentation 3T 2020. Now let's go to the presentation test. And I want to give the word to Jorge Mario Velásquez, President of Grupo Argos. Good morning, Doctor.

Natalia, good morning to you all and to all those that are with us in this conference, my colleagues from Grupo Argos and our different branch companies. [ Also, with ] them all, I hope you're all well health-wise, safe with your family, caring for yourselves, as we all do. Let me start by making some comments around management that we've been doing as Grupo Argos in terms of the attention of the actual situation and the continuity plan that we have for our businesses. As you might remember, and as we mentioned since the beginning, with this current situation that we face, as people define our -- we define people as the priority of Grupo Argos in the past, present and future. That's why in the third quarter of this year, we've been proceeding with our time and efforts strengthening that plan in terms of health, life and well-being for collaborators and their families through a permanent follow-up. Today, we are 1 of the companies in Colombia that more COVID tests have done for its collaborators, with around 10,000 diagnostic tests that are equal to 73% of our population, which has allowed us to register pretty hopeful numbers in the cross-cutting management caring for the health of our collaborators. In addition, in what we have covered this year, the business group has purchased inputs and personal protection elements, like with COVID, to protect all our collaborators in the 17 countries where we operate with -- for more than COP 3 billion. In this moment, 30% of our population is working remotely and 70% of our people are working presently, operating safe in each one of their operations. From that population, 100% of our collaborators are working from home, which has represented a great opportunity not just for the holding, but for all the companies and their branches in order to accelerate the digital transformation processes and flexibilization processes and leverage schemes in order to ensure, as we've done until the moment, to have a successful continuity in our business. This massive learning have confirmed the importance of valuing the new realities at work as a competitive lever and as a generation source for value, for efficiency, for productivity, attraction and retaining our talent. Besides this and under the awareness of the important role that we play in labor generation in the different regions where we operate as an organization, we've honored the commitment of keeping our workplaces for more than 14,000 collaborators during -- within this and other regions that we operate as a main priority in order to face this current situation. That commitment has allowed us to contribute and mitigate the social and economic effects of this last month in a panorama where the disemployment in Colombia has reached numbers that are worsened, not just national-wise but in the main cities of the country, with values that have exceeded, in certain moments, 20% of their occupation. In terms of corporate citizenship, we advanced roughly with our contribution in order to strengthen the attention capacity of the [ health industry ] in Colombia, survival of the most vulnerable families with food aids through the efforts done by the Grupo Argos Foundation. For the third quarter this year, this contribution exceed COP 20 billion. In terms of the financial performance of this third quarter of this year, we confirm our adaptation and response capacity that we have as a business group in order to achieve positive results in terms of generating an operational cash flow. This effort has allowed a reduction of the gross debt of more than COP 280 billion compared with the previous quarter, which has allowed us to meet the initial goals that we set in a shock plan that started around March when we faced this grave situation. That includes actions that totalize COP 2.8 trillion in different liquidity operations, CapEx optimization, OpEx optimization or tax returns in favor of the organization. This plan has led to resources that have allowed a very important flexible -- flexibility within the organization. I also want to highlight that for September, 3 months before the end of the year, we were able to reach and exceed our initial OpEx savings goal for COP 508 billion. We were -- we have reached COP 540 billion. This shows the [ recurring ] commitment that we have all taken in terms of organization without compromising the quality and the sustainability of our products and services or even our operations. Today, the business comes with an available cash of COP 1.6 trillion, in order to keep contributing in favor of this current situation. In the case of Grupo Argos, liquidity reaches COP 116 billion. In Cementos Argos about COP 960 billion. In Celsia, COP 228 billion. And in Odinsa, we're close to COP 117 billion. It's worth to mention at this point that the liquidity for this current situation that the organizations comes with and was initially granted through credits is kept at the time that the debt stock has reduced with amortizations close to COP 400 billion when they're compared to March when we began with preventive isolation. During this year, Argos Business Group will also issue debt for close to COP 1 trillion, keeping ourselves as one of the agencies that have the best trust in the market and is a relevant dynamizer of our country's economy. This organization is one of the stakeholders that has proven with the highest commitment with the capital market development and keeps strengthening. And as proof of this, we want to highlight our most recent debt [ emission ] that became the first transaction of this type made in Colombia for the private sector. This debt had happened before -- that sale happened before in a public aspect, but not in the private aspect. Within our first action plan for our financial management, we have focused our efforts in optimizing the capital structure, the extension of the expiry curves and the improvement of the debt cost. In addition, in the measures that we are able to reach a higher visibility in economic surroundings, we have the expectations of reducing our consolidated leveraging. We hope that for the end of this year, Celsia will be one of the companies that contributes the most in reducing this indicator. While in Cementos Argos, we keep working on nonintegrated asset disinvestment in order to advance and favorably [ subjected ]. Let me move on now to discuss the financial results for our third quarter. In answer to the actual implementation of our strategy in terms of the shock plan for the business group and the commitment that each one of our collaborators assume facing this challenge, adjusting ourselves rapidly in our operations and also finding, in that new path, new opportunities for developing our business. As proof of this resilience capacity, I want to highlight our growing trend in terms of results for our strategic businesses, in which even though the consolidated revenue increases by 16%, the EBITDA grows to a rate of 40% in respect with the month of April. That's the month that has been impacted the most by this pandemic. If any of the Grupo Argos operations have been impacted, all of them have been impacted by these results, we need to say that we have been seeing a positive trend in the different indicators. But in certain cases, exceeds the results that we had in September 2019, such as the volume sales in terms of cements in Colombia and DR, Haiti or even in the traffic flows in several of the highways and growth concessions that we operate in Odinsa. On Slide #8, I want to invite you to look at the consolidated results for the business group. The revenues for this quarter reached COP 3.5 trillion, with a drop of 17% compared with last year, excluding the disinvestment effect of the Free Trade Zone in 2019, over which Grupo Argos registered a nonoperational revenue for COP 1.1 trillion. It's also worth to highlight that the revenues grew 3% in respect with the previous quarter, in line with that progressive recovery that we're seeing in our businesses. In terms of cost and expenses, in all the businesses, we see that fourth quarter, there were reductions in structural costs -- structural expenses, sorry, and we're the only company that presents a positive variation in Celsia, which is explained by an additional contribution defined by the [ ministry ] of public service superintendency that's not repeated in the future, and it reached the value of COP 23 billion, eliminating this effect. The expense and reduction is close to 70% in the energy business and 8% in a consolidated level. And the consolidated EBITDA reaches COP 857 billion and proves a similar behavior to the revenues with a reduction of 22% pro form, We also would highlight the contribution of the cement business at an EBITDA level registers COP 40 billion additional -- COP 40 billion year after year as a result of a significant effort that has been done in order to variabilize the cost and expenses and that allowed this business to improve 262 basic points. Risk management balance here for markets and natural hedging is reflected in this ability that our financial expense percent for this quarter, that dropped 19%, reaching COP 266 billion. These efficiencies are reached thanks to the contribution of better rates despite a higher indebted at a consolidated level that presented a variation of COP 469 billion when it's compared year after year, explained in their totality by the effects of the exchange rate. The impact of devaluation was close to COP 1 trillion, even though we made amortizations were more than COP 526 billion. Adjusted by the excess cash that our companies have as a policy for controlling the current situation, the debt is close to COP 16.7 trillion. In this graph that you're seeing at the screen, on the left side, you could see the variation of the debt stock. And this variation are explained by the exchange rates and the reduction of COP 526 billion in the natural stock -- structural stock, sorry. And when this is compared with the available cash, the stock is kept in a very similar manner with COP 16.7 trillion between both periods. The reduction for the financial cost and expense, [ and certainly ] is relevant, as you might see on the right side of the screen. The profit before taxes closed for this quarter COP 146 billion, and the net profit was COP 78 billion. Both values present positive variations in respect with our previous quarter, which reflect a better trend month after month. Now let me invite you to go to Slide #13. We could go over the state of results separately. Revenues reached COP 24 billion and are broken down into COP 13 billion for the real estate business and COP 10 billion for the participation method. For the participation method, I wanted to highlight a very important improvement in respect with the result that we had in terms -- the negative result that we had in the second quarter this year, and this reflects a higher contribution that comes from the contributions of the cement operations and energy operations. The structural expenses increased 12% for the quarter, given mainly to higher depreciation expenses that don't represent cash. Nevertheless, the accumulated expenses for September dropped 4%, and this has happened 6 years in a row. This align with the efforts that have been done in a sustainable manner during all this years, reducing the operation cost for the holding. EBITDA up to September reaches COP 125 billion, while net profit reaches COP 15 billion. In respect of the capital structure, we finished the quarter with a debt of COP 1.7 trillion, which represents an increase of 10% and are based to the execution of the shock plan that the organization has in order to strengthen liquidity and that we have previously mentioned. In this train of thought, we closed with a cash position of COP 160 billion, a value that's kept stable compared with the register we had from previous quarter, which reiterates the capacity that these companies have to ensure the continuity of the operation, maintaining a cash flow even during these types of shocks that we're going through right now. For the leverage indicators, I want to highlight that the observed increase corresponds to decisions that have been taken in order to preserve liquidity and solvency of the businesses in the short term. In this sense, Cementos Argos postponed the dividend payment until October, while Odinsa delayed payment until December. In Opain, it was canceled this for 2020. Nevertheless, the risk rating companies keep supporting the company, keeping the ratings based on the trust of recovery for the flows in a consistent manner with a progressive economic reactivation that we are seeing right now. Our strong liquidity position and the rightful and solid financial management has allowed us to keep the trust of the market that, for the end of October, supported a new operation of exchange of ordinary bonds for a total amount of COP 136.5 million. This transaction constitutes or becomes the first private debt exchange made in the country, representing a milestone in the capital market of Colombia, and at the same time contributing to the development and deepening of this market with innovative mechanisms. From a financial perspective, this operations strengthened the debt profile that the company has. But up to date, [ didn't count. ] It will expire -- it's due to 2022, substituting the amortizations that we have for 2024 up to 2027 and increasing the average life to 5.7 years. This transaction allows us to use those attractive interest rates that closed in an IPC plus 2.65% with due that's 7 years, which reduces the cash commitments that we have for the next 4 years, giving us a larger flexibility. Now I want to move on make some comments about the main figures of our different businesses that we have in our group. The cement business continues, confirming month after month a very positive trend with a demand recovery and with signals that fill with optimism in all the markets that we are present. In September, Colombia broke a historic record in terms of VIS household sales with a growth of 43% year after year. This is a favorable behavior that also was part of a growth for the first time since the beginning of the pandemic of the non-VIS household, which showed a positive variation of 16% year after year. Both increases were led by the subsidies of that rate promoted by national government. This dynamic that strengthens the demand was also reflected in the volume of cement dispatches in Colombia. Being September, the best month of the year, was a volume of 395,000 tons that have been sold and a growing dynamic that we feel will keep on growing for the rest of 2020 and that even grow stronger in 2021. In the United States, residential sector keeps a very positive perspective with [ housing ] associations growing at a rate of 2.8% year after year, mainly driven by the low interest rates coming from an expansive economic policy from inside the commercial sector, even though it's, under historic values, has not proven additional deterioration signals. And in the contrary, in the warehouse constructions or dispatch centers segment, where we are present as one of the leaders, this segment has proven favorable variation that also come with high optimism for us. Even though the volumes in the third quarter presented a slight reduction, this were associated to climate factors. Here, we keep a very positive expectations for the sector, being -- this is the geography that has most consistently kept its economic dynamic and the most -- demand grow most during the months of pandemic. Central America and the Caribbean registered growth of 5% in terms of cement volumes compared with the same quarter last year, doubling the records of April, confirming the resiliency that these markets have under us, with reserve volumes of 256 million tons, with a growth -- 256,000 tons, sorry. This has led mainly by the steel construction sector. While Panama, even though in a negative terrain, restarted their operation -- their construction sector, which translated into higher volumes of new household sales. Without no doubt, 2020 has been a challenging year. But nevertheless, when looking at the results of our cement business for September, we reiterate the opportunities that emerged in these difficult moments, and we validate the commitment, the experience and the huge talent that we have in terms of our human team that has reacted in a very agile form and flexible form to a complex market situation. Even though volumes registry dropped 12% year after year, the revenues only dropped by 5%, while the EBITDA drops only 3% as a result of a very rigorous strategy for optimizing costs and expenses. In September, we were able to exceed the potential savings that we had identified in the optimization plan for March, the 104%. Cementos Argos closed the third quarter with revenues of COP 2.4 trillion, growing 11%. EBITDA registered a positive variation of 16% compared to also with second quarter 2020 and a growth of 8% year after year, closing COP 479 billion, which reiterates the optimism in growing and positiveness of this market. I also want to highlight the results of Central America, with sales close to 1.3 million tons in the quarter, growing 5% compared with the same period last year and with a positive EBITDA of COP 131 billion, which implies a growth of 14% year after year. Equally, Colombia continues showing a recovery trend with an EBITDA that improves 127% in respect with our previous quarter, reaching COP 106 billion. Financial expenses for the quarter dropped 13% despite the higher debt stock that came from the shock plan and a higher devaluation. In this line, we want to highlight the cash position with which the quarter closed that reached COP 960 billion, close to COP 1 trillion, 46% over the one we registered in the close of the first quarter this year, which were based on the capacity of free cash flow generation that the business has proven, and that for this quarter was COP 472 billion, avoiding a deterioration in leveraging and guaranteeing a positive availability -- positive cash availability in order to face this situation. This cash position, the full generation -- the cash flow generation has led to a leverage indicator that closes in 4.1x. This is the reflection of a disciplined administration of treasury and of the operational costs. The performance is consistent with the trust that the market has given and the trust that the financial institution has given us in terms of the capacity that Cementos Argos has in compliance with its obligations, and that has been reflected in the debt [ emissions ] and the covenant negotiation and in the restructuring of 2 debts. We have the conviction. That is the measure that we're able to reduce delevering. Through these investment initiatives that we have been working on, we will have the capacity of activating even -- an even stronger lever for value generation. Now let me move on to the energy business, where the results are consequent with the strategies that the company has been leading for the last years. Today, Celsia's revenues include a stable component both in energy distribution as well as in generation that allows us to have more consistent and balanced results, which allowed reaching COP 819 billion, with a reduction of 17% in respect with last year. The energy generation for the quarter was lower than the one registered in the same period 2019. But as you might -- given that, as you might remember, last year portfolio included the generation of the Free Trade Zone in Barranquilla. Excluding this effect, given this investment we had in the asset, Celsia's generation increased 7%. We also want to highlight the increase of the generation of the Colombian assets and an improving demand performance that has been growing after the mandatory lockdown, which reached a growth for the third quarter of 21% compared with the previous quarter. This growth is validated with the demand results for October month, in which we exceed the figure that we had in October 2019, the 0.5%. Higher hydrology led to a reduction in the market prices, which corrected close to 306 kilowatt hours to 153 kilowatt hour. Nevertheless, in what has -- we have covered this year, Celsia is commercializing great part of its energy generation in long-term contracts that ensure values over the current spot price and improve the stability of our revenues. From another side, we also want to highlight that, in Panama, the marginal cost of the system is kept in levels that we had been seeing since 2018, especially low levels. Collection keeps showing a good performance, while we received the payments of these government subsidies on time, allowing us to keep a safe cash generation even during this current situation. The third quarter EBITDA reached COP 257 billion, with a reduction of 20% with respect with the same period last year. To compare third quarter EBITDA this year with 2019 one, we need to exclude the contribution of the Celsia Free Trade Zone and of the assets that were moved to the [ Caribbean ] investments platform, besides making an adjustment for a larger contribution of the service superintendency, which totalized in this last case close to COP 22 billion. These 3 elements are equal to a positive adjustment of COP 79 million. So for this way, in order to compare this, the EBITDA of third quarter grows at 6%. The simplification strategy of our society structure, together with the advancements in terms of asset rotation, was translated in a net profit that reached COP 56 billion, which implies a conversion factor of 81% of the net profit to controlling net profit that's higher than the historic value that we had in our company that for 2018 was 65% and for 2019 78%. Celsia closed September with a cash of COP 373 billion, a consolidated debt of COP 4.4 trillion and a leverage indicator for net debt over EBITDA of 3.26x. As numbers prove, the company comes through with a comfortable cash position that will be used to reduce the deleveraging level, we have a larger visibility of the landscape. Cumulated to September, the energy business had generated a cash flow of COP 900 billion, which has allowed to continue with its investment plan and keeping a healthy capital structure. Now I invite you to move on to the slide on Page 26, just that we make a comment. You have then the image you have on your screen. The Pacifico 2 concession over the Cauca River bridge that, during this quarter, had a very important milestone reaching the connection of the central beam. So you could see the magtitude of these bridges, they have 112 meters of height. It's even higher than the Colpatria building in Bogotá, just for you to have an idea of what this work has been, and has been structurally finished in a successful manner. Now let me invite you to move on to Page #26. We could go over the concession business results. The third quarter this year started showing a recovery in terms of the Odinsa results. This is a part of our shock plan that the business groups started in order to mitigate the impacts of the pandemic. The shock plans add each concession. And as Odinsa S.A. has led -- has avoided the deterioration of the capital structure and has guaranteed the liquidity. At the same time, that has allowed us to keep the operations in the roads and airports with all of the biosecurity measures needed in order to safeguard the health of the users and collaborators. Up to date, there's an advancement recorded of 93% in Pacifico 2 concession during the quarter, as I mentioned before, we want to highlight the connection of both sides of the bridge. So this has been a great milestone for us, where we have connected both work fronts, and at the same time we ended one of the most risky parts of the project, which translates in an important reduction of the risk perception of the financial market. And because of this, a confirmation of the asset increase. This important and iconic work is composed by a bridge, as I mentioned before. It has 490 meters of length, have longer and close to 112 meters of height over the Cauca River. In addition, in that same work, we opened a new operation control center. It's an infrastructure that besides offering monitoring services, the safety and -- for the users on the road, we'll also operate it as a communal space in order to promote the integration and the realization of different social and cultural activities of -- for the different populations of the region that this Pacifico 2 work affects. This project is a proof of the trust that the organization -- that this organization has over the country and the institutionality and the impose of infrastructure that the national government has led -- want to celebrate for those new engineering sustainability and social management milestones that have been reached during this concession. And the contributions to this work will offer for the connectivity of the region and the country. It's also relevant to highlight the process of bond -- ordinary bond placement for an amount of COP 280 billion done by the company last 2nd of October with an over-demand of 1.56x. The results are more than satisfactory given that they improved the due date profile and the optimized rate, which allows Odinsa to develop investment strategies for short and long term, keeping the single trust with which the capital market and its investments see in this company that, besides this, comes with the support of Grupo Argos. Before moving on to the detail of the results, I wanted to share a little bit about the advancements that we have been able to reach with different authorities in order to reestablish the economic equilibrium in the road and airport concession contracts besides guaranteeing the cash positions in order to proceed with the operation of these assets. As we shared with you before in previous calls, Odinsa's administration has actively participated in the negotiation table established by the authorities in order to seek to mitigate the effects of lower traffic both in roads and airports, given to the economy closedown and the impact of the cash flows as well as the reduction of the mobility expectations, those reductions are explained by decisions taken by the national government. But at the same time, as you consider these assets and it's constituted as such a magnitude that leads to the reestablishment of the economic value, it's so [ important ] announce that up to the date, we are in the process of subscribing and advancing with the infrastructure and national agency to reestablish the conditions of -- the road conditions where there will be a recognition of the specific period in order to normalize the contracts that are equal to 98 days of the impact, the recognition of those costs generated during the mandatory lockdown and the definition of an expedited paperwork in order to recognize those events that, it seems, are social responsibilities that are related with the [indiscernible] emergency that was brought by COVID-19. Likewise, we advanced the negotiation of the recognition for the concessions for lower revenues given the traffic restrictions, such as a consequence of the decree expedited by national government and the reduction of the vehicle flow given the mandatory lockdown. In both cases, we are seeking for a compensation with exceeding money from the contract as well as recognition of time extensions, extending this field point that we can compensate our impact. In respect with the airport concessions, we have fully advanced in order to reach agreements where we estimate compensations both in money that are located in an [ external ] manner in the contract, as well as in a higher or longer due date for an amount that increases COP 200 billion. Those of the revenues that we did not receive during the restriction of the El Dorado Airport. And for the liquidity front, we are negotiating the time extension of the -- [ depending on ] the government. And besides that, we also had a credit with the support of the National Guarantee Fund for COP 100 billion. As you can see, the team has worked intensively in different fronts in order to see not just the short-term measure that will allow us to ensure the liquidity for the rest of our operations, but also to reestablish the economic equilibrium of the contract. Moving on to the financial results in terms of revenues. At a consolidated level, Odinsa registered COP 188 billion, growing at 2% in respect to the same period last year. We also want to highlight that all the road concessions are consolidated in Odinsa contributed positively, growing 38%, mainly due to the good results in Pacifico 2. The consolidation of Túnel de Oriente and the revenues of the different roads that are in operational phases, such as Autopistas del Café, Autopistas del Nordeste, Boulevard Turístico del Atlántico or the Green Corridor. The airport concessions continue presenting a lower contribution through the equity participation method given a reduction of the net profit that continues affected by lower traffic associated to the closedowns ordered by -- due to COVID-19. Without no doubt, this is the highest year -- or this is highest challenge that we faced. But we positively advanced the negotiations that we're having with the authorities, as we previously commented, in order to compensate in large measure the impact over this asset. EBITDA reached COP 117 billion with a negative variation of 14% year after year. This effect is explained by a lower contribution of the airports to the participation method -- for the participation method to COP 52 billion. It is also important to say that this contribution directly impacts the revenue and EBITDA line by which the variation we can see in the last line is higher. Right side, we registered a higher performance in terms of EBITDA margin for the road segments and also for the construction sector. In respect with the capital structure, the consolidated financial debt for the company, closed the quarter in COP 2.8 trillion, is increased in comparison with last quarter in the 12%. And this is mainly explained by the devaluation, the consolidation of the debt that we have in the Túnel de Oriente. If you compare this debt, eliminating the accounting effect due to consolidation of the Túnel de Oriente financing and the devaluation effect, this would require a negative variation of 12% year after year. This means COP 303 billion. The optimization strategy for the company is reflected in the lower cost, and that is reduced both in pesos as well as in dollars. In terms of separated debt for Odinsa, the balance for the end of the quarter is COP 1.37 trillion, 17% compared with the previous year, we will eliminate the effect of the exchange rate, debt reduction of this balance and that balance would be close to 25%. And finally, I want to invite you, move on to Slide #31. So we speak about the urban development business. In the third quarter, revenues were 3% higher in respect to the same period last year, given the prices of both land lots for VIS projects, in which we have been renegotiations with Puerto Colombia, from which we signed and purchase-sale promises for 5 blocks of terrain. Recognizing this transaction's in the first instance, the price of the business can manage the credit risk much better. That's assumed when you transfer the property of real estate before receiving 100% of the payment during -- especially sensible times, the P&L revenue for the sale of these assets will be reflected next year in the moment that these are transferred. In terms of cash flow, we see a reduction explained by the payment done by Decameron hotel in the Barú in 2019 and the granting of some times for customers in order to mitigate -- payment times for customers in order to mitigate the effects of the pandemic. The cash flow revenues show a reduction of COP 20 billion compared with previous year. But nevertheless, we've been able to compensate this effect, displacing current investments for next year for about COP 3 billion. In respect with the real estate renting business, Pactia closed the quarter with a gross revenue -- effective gross revenue of COP 66 billion with a drop of 18% year after year, while the operational net revenue was COP 47 billion, with a drop of 14%. The EBITDA for this quarter was COP 29 billion and represented a reduction of 24% year after year. These differences in the results reflect the contributions we give to our customers and also for hotels and also the shopping malls. For the accumulated year, with close to September, the [ VAR ] reached an increase of 1% in the operational net revenue compared to the same period last year, product of the operational effort and a very good result in this first quarter of this year. I want to highlight this growth in the middle of extremely challenging conditions. We also want to highlight the strategic flexibility of Pactia to have been able to transform its portfolio in order to adapt itself to the needs of their customers, opening the possibility of lessening their rentable spaces to uses that obey the change of the landscape, with operational efforts that help strengthen the productivity and efficiency of the company. As a result of these efforts, the portfolio of occupations, without including the hotels, reaching 86% during the third quarter, 100 basic points under its pre-COVID level at the end of the fourth quarter last year 2019. Sustainability. In the sustainability front, we ended a project that I wanted to mention in order to determine and deepen the environmental risk view -- social, government, environment, so ESG. This presence was supported by the World Business Council for Sustainable Development, that stately organization around the world that gathers more than 200 companies globally that execute and design the best sustainability practices in which we have to do progress. The object of the project was identifying the ESG risks, its causes, its possible consequences, the impacts and probabilities with the mere objective of including these variables in order to manage them in a crosscut manner in the strategic risks during extension faces. As the result of this exercise, we identified 14 environmental risks, 14 ESG risks, and we included climate change as a relevant risk within our risk takings. As the results prove and as closing, I wanted to reaffirm the resiliency capacity and faster adaptation capacity that the businesses -- within the business group have, most especially in this challenging moment. The performance of our company's Argos, Celsia, Odinsa, the capacity of our talent, the positive signals in terms of economic dynamization in the regions we're present, the flexibility in the real estate business and in real estate rents, fill us with optimism and motivation in front of the future or facing for the future, and give us strength towards this future that is definitely showing some changes in economic behaviors. We trust that the reactivation of the economies will be strongly leveraged, and the impulse that the infrastructure sectors comes with that, by definition, has a great [ dynamism ] capacity of the value chain and also employment generation at large scale. According to the estimations of the Colombian Infrastructure Chamber, the country will experience a 6% increase for next year in this sector with the start of an ambitious program, a 5-generation program, that comes with 24 multimode projects and that represent, in total, investments close to COP 42.9 trillion. In this reactivation process, we want to highlight the commitment -- the behavior of the household sales in Colombia that in October reached 42% in VIS and 43% in non-VIS households compared with the same period last year, thanks to the subsidies for 200,000 households given by the national government that's driving the demand of construction materials and energy in the short and long term. And by its part, the United States and the reductions of rates, that is expected to last for several years, will leverage the household of construction and will facilitate the beginning of ambitious development programs that, in Joe Biden's plan, he proposed this investment for $1.3 trillion for the next 10 years. Markets are responding to these [ themes ] of those economic -- those expansive economic policies that are being implemented by many central banks by aggressive reductions of the interest rates. Maybe one of the most important relevance in this sense has to do with the reduction of the funding cost for infrastructure megaprojects that in the Colombian case represent the possibility of strengthening the connections within the regions through road and energy projects and that are translated also in great employment opportunities, and at the same time increasing the competitiveness of the country generating like this a virtuous cycle. We also note with optimism the appetite of the financial market for the development of renewable energies and for construction. The good results of the recent admissions of the business group reached more than COP 600 billion during this year as the available liquidity for the execution of the projects are levers in which we will keep on deepening in order to strengthen the value generation. Actual situation that we did, besides the evident immediate slots, have implied the opportunity of concentrating in the long term and ratifying the strategic conviction that we have of consolidating businesses that have a very good administration in terms of cost, in terms of operations, in terms of debt, that [ care for their ] cash, but at the same time support the development and the social well-being of the country with empathetic operations and transformational projects. This particular way of understanding and developing our business was recognized in October by Merco. That's a corporate reputation business monitor, that highlighted Grupo Argos is a business group with a better reputation in Colombia. In the ranking, besides this, Cementos Argos was part of the top 10 most valued companies for the seventh consecutive time, while Celsia reached the position 43 and Odinsa is placed in the second place in the ranking -- improved its ranking in terms of construction and infrastructure. This recognition is the result of the conviction and discipline that we have in each one of our businesses in order to do things the best way possible with a deep commitment of leaving a footprint that will present and will generate value and well-being -- shared value and well-being. In Grupo Argos, being coherent with our bigger purpose of transforming the lives of people, we understand that our responsibility is generating value for each one of our groups of interest. Therefore, the society as a group. But even more, understanding that this is a key moment to prove leadership, purpose, transformation and sustainability. Because of this, during the last months, based on the understanding of this situation the country is going through, we constructed and started executing a strategy that's visualizing the essential growth that the company has and that's oriented to offer opportunities and to contribute to the economic reactivation of our country. This program that we've called creamos valor social, or we create social value in English, we'll be concentrating efforts for an [ important ] generation for young men and women and those population or groups that have been affected the most by the impact of the pandemic. We'll also generate a program of alleviation, support and rescuing of organization vendors in order to ensure the value chains of these companies and to contribute to sustainability of the natural productive cycle and maintaining employment. And with the social impact, we also want to -- we're going to contribute with the rural communities and urban communities, as we have been done, doing until the moment, specifically those that are vulnerable. I don't want to end this conference before thanking our more than 4,000 -- 14,000 collaborators that make all this possible, but more even, have proven with their dedication and time, that we share this higher purpose of transforming positively the lives of millions of people through infrastructure. They have contributed ideas, knowledge and efforts in order to materialize this proposal of a shared value with society. Thank you very much. And let me give the word to Natalia so we could open up for a Q&A session that you might have. We have all our team here. And we have several of our businesses here also. So questions are more than welcome, Natalia.

Well, thank you, Jorge. And for everyone, the questions are being received via chat. We have several now in line. Let me begin with Odinsa. Several questions for Odinsa. So let me start. They are asking, what percentage of the OpEx savings achieved by Odinsa will be kept once operations are normalized? This is the first question. Second, if we have spoken about the advancements of the negotiation tables [ we've done ], they're also asking about this agreement. So I don't know if maybe you want deepen on these topics that we have previously discussed at the conference. We've also been asked, with the objective of increasing debt in the Túnel de Oriente concession, very similar to what we did with Quiport, Opain and [indiscernible], and when did this transaction happened. These are the questions that we have for the moment in terms of Odinsa.

Okay. It's good you grouped these questions. It's also very interesting. Just let me do something here. Let me give a bit of context. The work line that we have in each 1 of these 3 challenges opens the reduction that we've had. How do we see the possibility of keeping this within short and midterm at negotiation tables? With the national governments, I believe that this is the most important chapter, and I wanted to emphasize, on this, so I'll ask Mauricio. You can see detail in each one of those verticals, both roads and airports and the debt operation for the tunnel. So just [indiscernible] speaking, the OpEx effort also includes CapEx. And expense associated to project development has had, as he was showing on the graph, very important optimization. A concrete answer to this question is that we are optimizing operationally all the operational expense in order to keep the service standard that the assets require from one side. So this means we have not yet stopped investing money in order to guarantee that the operational systems within the airports -- because the other question was around this, about the concession business. And as mentioned and as you -- in order for you to keep it operational, remember that airports such as the Bogotá Airport and the Quito airport, they operated for -- kept operating for cargo and for humanitarian flights. So the OpEx expense for this are the ones that keep the best condition in service, rendering efficiency, and also in terms of safety for the users and for the different officials within the organization. The OpEx have a variable component in some of these assets. And the measure that an airport retakes an operational level that is, in October, for example, the El Dorado Airport is operating around 750,000, 800,000 passengers. When they go back to 2.53 million passengers, as we hope it will happen, there's going to be a change in the OpEx. That obviously will become more variable because there would be a larger area and more operations. But -- and there is a revenue generated here. So there's a positive effect. The other charter has to do with DevEx with the capital expense associated to the project development. This one, I believe, as we mentioned before, has been frozen, everything that we don't have a clear visibility on are [indiscernible] in projects and that can be taken to contracting and construction phases. So I believe that as long as we don't have those 2 conditions, and that is having projects that are completely closed, we'll keep the reduction in terms of DevEx. Obviously, in a scenario that has different dynamics from the ones that we have, the objective of the company is to keep on growing, but that will be -- that base will be supported by closures and contract developments. So there's a correlation between the -- while the shock measures are maintained, we'll keep on recovering traffic, and they'll be expanded in the measure that there's projects that have sense been developing. And the table and the work table, so over this briefly, and then I want to give the word to Mauricio. I just wanted to say that we see, with lots of optimism, the direct approximation, voluntary and friendly approximation that's been done between the concessionaires and the national government with their representation of all the control entities, the prosecutors' office and defense office and controller office, the national infrastructure agency and the different concessionaires in order to reestablish the liquidity mechanisms of value of the different concessions. This is highly technical. Because from the side of concessions, there are different modalities, from first, second or third generation, fourth generation, private initiatives. And in each one of these, the methodology for reestablishing the value is different. There's concessions that have a minimum expected revenue and they behave in a certain way. There's concessions that have a guaranteed revenue, and that's a different dynamic, where it moves the time of the concession. There's concessions, such as 4-generation concessions, that have collection differential. So the [ traffic ] did not pass. Each one of these have a particular agenda. But in general terms, there's a very significant advancement for reestablishing not just as it was mentioned before, 98% of [indiscernible] of those [ that ] we could recover. The costs associated to the economic stock, those traffics that passed and didn't pay, or if those that just in pass and didn't go pay. And all these [ motives ] come from the government ruling of stopping operations. And there's other reasons in terms of liquidity that Mauricio will also explain. There's high expectations on reestablishing the economic value of those contracts and growth concessions. In airport concessions, I'll ask maybe Mauricio if he can speak a little bit about this point, more specifically, let's speak about Opain more than Quiport. Because Quiport is a concession that goes up to 2047. The size of the asset is much more relevant, 6.5x more than Quiport. But nevertheless, the impact and the possibility of reestablishing the value is much more relevant in the case of Bogotá, for example. Here, there's 2 large chapters at its time. One is the reestablishment of the value of the asset due to air traffic or the regulated or nonregulated revenues that didn't happen during the closedown. That was -- it's something that we didn't expect. It goes further than general operation of an airport. Completely understandable reasons, obviously. But from this contractual order, we cannot expect a private concessionaire the one that assumes because of that unilateral decision from the guarantor. So there's a discussion happening. It's open this way for us to reestablish the value money-wise or term-wise and the liquidity in the short term. And so with this, let me give the floor to Mauricio so he can speak a bit more about this. And at the end, we can make a small comment about the possibility of restructuring of the tunnel's debt. Concrete answer is yes. Yes, we're looking into it. There is value in it that we can optimize the capital structure. But Pablo could maybe speak a bit more on how we're doing this. So if -- maybe Mauricio, if you want to maybe comment on that [indiscernible] in Bogotá.

Well, thank you, Jorge Mario. I want to greet you all. I hope you are doing good. Thank you for your presence and participation and for your questions. I believe, Jorge, that you made a very clear explanation. Maybe I'll have to repeat some of the things you said but -- in order to make a more specific explanation. The first point in terms of OpEx savings, I would note -- well, your answer is very complete. And obviously, there's certain flexibility in the costs and both in roads and airports, because we need to ensure, by contract, the availability by contract. We also need to maintain the state of the assets. So these issues that have been made that have affected others tend to be very structural. And to answer fully, yes, we believe it's not 7% of the savings that we will be kept, but at least a 70% or 80% of this. Why can we maintain all savings? Well, we recover the traffic in the airports, let's say, from here to 6 months, we'll have to activate some of the things that we had to spend it. So that will be the first part. In respect with the agreements, first roads. We have this structure of conversation and of the -- of seeking that bilateral agreement, friendly bilateral agreement with support of different components. This as a mechanism to send a message of ease to different markets and buyers, and also send a message of opportunity for the ambitious infrastructure plan that we're structuring. This is the motivation that has the parts involved on this, in this structure, 2 agreements for growth. In the first agreement, there were 4 topics dealt that agreements signed over [ it ], the recognition of a special period, 68 days where the traffic was affected, [ reaching ] a very low traffic due to the preventive isolation. And an extension for toll payment for those vehicles that used the [ ground ]. So we decided also to add another 30 days because, within this promises of the infrastructure project, it happened immediately. But the infrastructure reactivation takes certain time to reactivate once against the work. So we established 98 days as a period that will comply for reestablishing different parts of the contract. And secondly, the biosecurity costs and the declaration of an event that -- an express event that we call. And that is a possibility that if we're going to have a second lockdown or if it takes a couple of years, so in that situation, we could immediately activate a mechanism to absorb the impact that might -- that this might creating in the road, and then we'll have to go into -- and we will have to keep these bilateral conversations. This first agreement is already signed. It's public actually. It has already been public. And second contract has to do with revenue reestablishment. So here, the discussion is divided into 2 parts: the traffic that used the road but didn't pay the toll, for which we are identifying the formula about how to quantify this traffic. We're taking 2019 and the growth percentages of February 2020. Based on this, calculations are being made for the rules that will apply for all the concession contracts. And the traffic that didn't use the road. And this -- sorry, what I just said applies for the one that didn't use the road. And the one that used the road -- the toll this will be determined in the future. This has an additional -- this is transfer of the public APPs serviced by the government. But for the private one, there's a particular analysis being done, because each contract is different but the script is the same. It's reestablishing the traffic that used the road but didn't pay the toll or any traffic that didn't use the road at the end. So we hope that for the end of the year, let's say, mid-December, we should be subscribing to this agreement in the case of road. For the airports, the conversation structure goes as follows. First, the isolation period both for national flights, goes from 25th of March to 31st of August; and for international flight, 23 of March to the 30th of September. Here, we're speaking about a compensation of the regulated revenues that we didn't receive. And we are also speaking of work table in the second part for the nonregulated revenues that were not received in that same period of time. And we're speaking about third table or third chapter for that negotiation and that is based on the 2 previous ones. A semestral review mechanism from now until the situation goes normal again. So that is the structure of the negotiations. There is a subscriber agreement. This is being reviewed by the control organism, but this will be ready in a couple of weeks. In airports, we are finishing defining how the percentage of the compensation would be in both revenue branches, regulated and not regulated. And based on that, we could have a revision done by the control organisms. So this would be the main comment. And also to ratify the operation of the tunnel seems moving smoothly, and that we will make it without problem. This is not part of the question, but I also find relevant mentioning in the call, Jorge Mario, if you allow me, growth traffic. Growth traffic has had a recovery, a very fast recovery, almost all the corridors under Odinsa have a traffic growth, starting from the 10th of October, higher than what we had in October 2019. So these are growth that we understand is sustainable. We understand this growth as happening in all the categories. The category one was the one that was affected the most by the pandemic due to natural reasons. So we're seeing a recovery here, a very fast recovery, a solid sustainable recovery. In November, nevertheless, it [ will be a range ] and it still shows very good behavior. And I should also say that it has been a good year in terms of growth traffic. In terms of airports, it applies from both airports, being [indiscernible] of much better performance. It has had a very important growth. There's the 3 figures here that are relevant. Airport occupation is reaching -- it's over 80% in all of the airlines and in the all routes. This is an average number. There's some higher and some lower, but few of them are under 80%. Second, from 6,000 passengers that -- and then other airports moving the first week of opening, right now, we're speaking of 30,000 passengers. This is a very important growth in passenger ones. But this shows that there's a solid demand. And practically, in terms of territory constraints, as the frequencies, is we're reducing them to [ onboard ] accommodations, this is done by the authority, are completely saturated and they will be doubling. So in order from here to December and for the end of the year, the capacity, with this prices thing, that if this behavior keeps on going, we should be around 40,000 passengers daily or 45,000 daily passengers around December, which also prove a solid and sustainable recovery. Today, if we would look at the November numbers, we would be close to 1 million passengers in November. Far away from the 3 million that we were pre-COVID, but reaching 1 million in only 40-something days that the airport has been opened.

Thank you, Mauricio. I have some questions related with Argos Group leveraging. Maybe Alejandro Piedrahita can you help us with this. Basically, with our leverage in metrics that the group wants to reach in 2021 consolidated and individual level. And there are also been -- we've been ask also for the net debt-to-EBITDA figure.

Thank you, Natalia. Thank you, Jorge. I just wanted -- I wanted to start by saying, where are we today right now, which are the numbers that we are facing right now, the metrics we have. This question also related to actual figures. And just to remember, that our metrics are handled in a consolidated manner and a separated level, too. If you look at September 2020, consolidated net debt -- EBITDA net debt is 4x. At a projection level, in terms of 2021 perspective, what we have thought is a net debt-to-EBITDA figure would be around 3.5x. This is more or less what we believe the figure will be. And this is aligned with the rating that we got from Standard & Poor's, that the rating company that looks at the company at the consolidated level. Right now, their rating is AA+ with a stable perspective. And besides that, this is the metric of the bond admission that Argos Group has right now. And at a separate level, let's remember that the metric that we use is net debt -- or gross debt over adjusted EBITDA. And why adjusted EBITDA? Let's remember that this is a holding company. So in the EBITDA, what we need to do is an adjustment over the EBITDA, we need to remove what counts for participation method of the companies, this is eliminated, and we add the dividend that are actually given by the companies. In a certain way, this is coherent and consistent with big methodology metrics -- metrics methodology used by Fitch, sorry, which rates the debt structure at a separate level. And there, our rating is AAA with stable outlook. Right now, net debt-to-EBITDA that we have separately is 5.6x, it's a metric that's higher, and that ratio that we had spoken before, 3.54. But nevertheless -- and this is also explained by the current situation that we've been facing in this last month due to COVID. But you could see that we still have a stable perspective and our rating was maintained. Because in a certain way, the rating company does not just look at that indebtment ratio but also looks in other series of elements that are important for the business context. One of the contexts that has been seen is the capacity that the organization has in terms of funding source and diversifying. And a very important element was the operation that Jorge was mentioning about debt change. It's an innovation, an innovation tools. So for example, in capital market innovation, that brings us to a higher financing source and more instruments. This is in a positive manner. The causing indicator that we are seeing separated for this year is a net debt adjusted EBITDA closed to 5x. This is how we're seeing this in the system line, with the projections of the ratios that we have been announcing to the rating company. Next year, this ratio should be 4x approximately. Thank you, Ricardo. That's clear.

Thank you. There are some questions associated to our clients, specifically Opain and Quiport. We've been asked by the due dates for the anticipated date for Opain and Quiport. We've been asked what does amortization for the intangible Opain means. Would we stop paying royalties for some months for the government? So maybe for the Odinsa there.

Let me propose the following, maybe we could divide them into several questions because these are very detailed answers. So maybe we can start by the first one. And I would ask Pablo Arroyave, that's with us, if you could tell us a little bit about the negotiation and how this compensation will be moving. And maybe we could move one by one. So Pablo, maybe you can tell us what was negotiated and speak about the compensation?

Okay. The compensation at this moment, remember that every single year, Opain has a 2 times a year compensation. So one in July. We pay the percentage of revenue between January and June. And then in January -- or we pay the respective percentage of revenues between July and December. So this year, the payment that should have happened in July was moved initially to the 30th of October. And now, it has also been extended for another 2 months. This 2 dates have been temporary. That under the federal agreements that Mauricio described, we have a change in the due date to the end of 2021 for paying the compensation for July. And the idea is those same agreements, that Mauricio has also mentioned, we will do the same in respect with the second compensation for 2020 that would be paid in January. So we're not speaking about reducing the percentage of revenues that should be paid. Percent is the same but the revenue is less, so the amount is going to be smaller compared with other years.