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

Good morning to you all. This is Natalia Agudelo, and I want to thank you for your participation in this fourth quarter result presentation. We have Jorge Mario Velásquez, President of Grupo Argos; Alejandro Piedrahita, Strategy and Finance Corporate VP; Rafael Olivella, President of Corporate Matters in Grupo Argos; Mauricio Ossa; President of Odinsa; Pablo Arroyave, President of Corporate Finances for Odinsa; María Clara Aristizábal, Manager for the Urban Development Business. This conference is being translated into English simultaneously. Remember you all that all reports as well as the financial reports with relevant information and presentations are published in Spanish and English in our -- for investors in www.grupoargos.com. In our website, we have made available a presentation that we will be following during the conference. In order to download, you can access the menu clicking on Financial Information and afterwards clicking on Reports, we will find a file called Presentation 4Q 2020. I want to invite you all to go over the presentation on Slide #3, and I'll give the word to Jorge Mario Velásquez, Grupo Argos President.

Thank you, Natalia, and good morning to you all. Thank you for being with us during this call in order to share with you the results for the fourth quarter 2020. And I wanted to begin by hoping you all well with good health and getting ready to step outside this such profound shock that we've suffered as society, but we are starting to see that light at the end of the tunnel for all of us. So thank you very much, and it's a pleasure having you all. I would start by saying that if 2020 presented obviously a challenge, very important challenge for society and for the business group, the organization has proven this year its adaptation capacity, its equity strength in order to navigate this extreme shocks, achieving results that even though have been impacting the economy to its closes such as cement dispatches or for example, the airport closure for several months as well as roads and the reduction of traffic in shopping malls where a large part of our operations is focused. Of this, started showing a positive trend quarter-after-quarter and at the end, results that even though have been impacted on their numbers due to this economic deceleration do present better results than the one that we could have imagined at the beginning of this situation with such a large impact. Today, we count with a solid organization, structurally speaking, with debt that's located in the same levels that we had in 2019. Our businesses have proven the adaptation capacity in order to keep on generating cash. And even in the most challenged moments, but at the same time, they proved the necessary flexibility in order to adjust all structures both in costs and expenses according to the difficulties that we faced in this unpredictable moment. Priorities that we defined and the action plan that we implemented in a fast and anticipated manner at the beginning of March allowed us to mitigate the financial effects that this pandemic brought with. I would like to highlight the role of Grupo Argos as a strategic articulator in a coordinated effort with all the companies in order to keep on contributing in synergy creation as a powerful source of value generation. And at the same time, as an articulator of strategy that's known for our long-term vision. Thanks to this joint effort, in 2020, we were able to move investments for more than COP 1.4 trillion guaranteeing, at the same time, the continuity and reliability of the operation and the highest quality standards of our products and services. Likewise, in OpEx terms, we were able to reach savings that reached to the figure of COP 541 billion. For those COP 541 billion, we want to highlight a reduction in the structure expenses for more than COP 165 billion. This is less percent less compared with 2019. In addition, in order to guarantee the liquidity during such uncertain moments and the highest moment of uncertainty of the year, we took insured credits for COP 1.4 trillion that during the year were prepaid, thanks to the solid cash generation of all of our businesses. Once we go over the financial results, you'll be able to evidence the relevance that, as I said, this actions had. In order to make the cost and expense structure more variable that we consider were fundamental initiatives in order to maintain our equity strength, the equity strength of our business group in such a difficult year. I would like to start by the operational results of our different businesses. In such way, we're able to have a better landscape and a better understanding of how the consolidated result of Grupo Argos is constructed and analyzing simultaneously the accelerated recovery that we have been seeing since the beginning of the second quarter last year and that during December showed not just a very positive view or expectancy for 2021 and 2022, but also with a solid competitive decision and very similar to what we had previously in our operations. So let me begin by each one of the businesses. Now I want to invite you to follow the results of our Cement business. In our Cement business, we closed fourth quarter 2020 with 4 million tons of sold cement, 2% higher than the volume that we reached same period last year and 25% higher than the volume that we had for second quarter 2020. This was the period where we had the largest lockdowns and where the pandemic was hitting strongest. We want to highlight that during November and December, we increased the cement volumes compared to the same months previous year in 7%. This is a very positive signal facing 2021. Even though that during the fourth quarter, we saw a contraction in the concrete sales in the United States, dropping 21% compared with the same period last year due to climate conditions that were less favorable in several of the states that we operate that delayed the maintenance of those works that our customers have been bidding, we're completely trustful on the reactivation given the different economic dynamism contracts that we're seeing locally, regionally and global towards post-COVID recovery. Likewise, the indicators concerning the sectors all around our geographies prove recovery signals. We want to highlight that in Colombia, we saw an acceleration of new housing sales during the last quarter that grew 35% year after year, reaching 59,000 sold housing units in the United States for the month of December. The construction expense increased 5.7% year after year. And the housing construction licenses, that's a lead indicator for future cement consumption grew 17% year after year. Meanwhile, in Central America and the Caribbean, the majority of the regions and countries, with the exception of Panama that has had a slower recovery have proven a positive dynamic in the self-construction that's leading the cement demand. Thanks to the progressive recovery in the sales volumes, we were able to achieve revenues in Cementos Argos for COP 2.3 trillion for the quarter. This is a very stable result compared with previous year, and we reached an adjusted EBITDA for nonrecurring operations for COP 448 billion, which grew 16% compared with fourth quarter previous year. The implemented efforts by the company in order to optimize its expensive cost structure during the pandemic represented in savings for 2020 of more than USD 115 million were key in order to operate in a lighter manner and close that base in order to follow that path of profitability maximization that we expect to maintain even further than 2021. Celsia. 2020 was a year that has proven the stabilities and resilience of the energy business of Grupo Argos. If we -- even though we never stopped our operations during the year, the electric sector was also affected by this global economic deceleration that was translated in the demand drop in Colombia of 2.6%, particularly impacted by the consumption of the industrial segment that decreased a 3.4%. The accumulated energy generation for the company dropped a 7% during the year. If we exclude the generation of the Termoflores plant that had been sold in September 2019. Nevertheless, thanks to a better hydrology during the last weeks of the year in Colombia, Celsia closed the year with reservoirs at 67% level. It's a very healthy level in order to face those dry periods that we'll be facing in 2021. In the distribution and commercialization energy sectors, we closed the sector with 876 gigawatts sold per hour, very aligned with what we had recorded in the same quarter previous year with a base that is consolidated today higher than 1.2 million customers in Colombia. In the financial aspect, the company reached revenues for COP 898 billion and an EBITDA of COP 336 billion for the quarter, represents a reduction of 7% and 11%, respectively, compared with the same quarter previous year. This drop is explained mainly by the creation of Caoba. That's our investment platform with Cúbico Sustainable that incorporated the assets of what we called Plan5Caribe, Toluviejo and the assets of Level 3 and 4 for Tolima. Starting from 2020, this platform has been deconsolidated from our Celsia financial results. When we eliminate this effect, the EBITDA dropped 3% in the quarter, even though that it has grown through the year at an 8% rate. We also want to highlight the investment plan that has been programmed for energy business for 2020 for close to COP 3.6 trillion from which COP 1.4 trillion will be contributed by the company and the rest by the platforms in order to strengthen and improve the quality of the service, which is an aggressive strategy for renewable energy growth -- nonconventional renewable energy growth and deconsolidation of the distribution and transmission assets under the strategic alliance scheme that have been proving to be a powerful route in order to keep on growing in a profitable manner around this business. Odinsa. Moving on to the road and airport concessions, we see a year with high operational affectations given that the passenger and vehicle flows were highly impacted by the constrained measures -- mobility constraint measures decreed by the authorities in order to mitigate the propagation of the virus. The magnitude of the impact for an infrastructure asset that faces the loss of revenues but keeps its availability in honors, the debt service is, of course, very relevant. In the segment of road concessions, the traffic dropped to less than 1/3 part between February and April, but recovered is the measure that the mobility constraints were lifted, reaching a total of 123,000 vehicles mobilized per day during the month of December. This figure is 3% less than what we recorded the same month previous year. I want to highlight under this respect, a performance traffic-wise, higher than the last months previous year for all concessions in respect with our historic data in exception with Túnel de Oriente concession that has a higher correlation with the José María Córdova airport traffic and that ended with levels of 81% of vehicles compared with the same month previous year. In airports, we went from moving 3.3 million passengers month on average in 2019 to 1 million passengers month on average during 2020. As you can see on Slide #7, this business confirms an accelerated recovery for roads since May while the airport business began presenting recovery signals since September. With a gradual reopening of El Dorado airport, that began progressive operations with national passengers moving on afterwards to the reactivation of international flights, a segment that we want to mention contributes with the highest traffic rate in terms of the results for this asset. El Dorado closed, in December, with 1.4 million passengers, meaning by this, 54% less that would have been recorded same month 2019, but substantially higher, with practically no performance during the confinement months. Economically speaking, we have achieved important investment negotiations with competent authorities in order to reach the economic reestablishment of the contracts that were -- that had their equilibrium affected by the ordered closures by the incidents. We also want to let you know that with the support of the different agencies, the National Infrastructure Agencies subscribed 2 agreements with different product concessions in order to mitigate the impact of the pandemic. In this, we recognize the affectation of the revenues due to stop of the toll charges for those vehicles that were going over the national territory and also the affectation due to the reduction of traffic in the different toll roads as a condition to the measures adopted by the national government. In respect with the airport concessions, our Opain subsidiary together with the rest of the concessions of the airport -- of the country stores signed a Memorandum of Understanding with AMI in which it's recognized that the adaptive measures by the national government in order to avoid propagation of COVID-19 implied the total restriction of commercial flights between March and September of 2020 generating an impact in regulated revenues and nonregulated revenues for the concession. Attending this, the concession for El Dorado airport will have an extension to that the data had initially been established that will compensate regulated and nonregulated revenues that were not perceived between the 23rd of March and the 30th of September 2020. These agreements that have been reached for road and airport concessions and that are not reflected in the financial results for this period have been estimated over COP 400 billion and partially mitigate the impacts in the equity value of the assets granting an extension without costs to this dates that we had initially specified in the contract. Odinsa closed the fourth quarter with revenues closer to COP 204 billion. This is 13% growth compared with 2019, with road concessions keep proving strength both from the contractual model as well as from the traffic side. Nevertheless, the airports that enter through a participation through Odinsa keep impacting the results in a very important manner with a negative variation for the quarter close to COP 18 billion. EBITDA for the period closed in COP 76 billion with a drop of 16%, excluding the nonrecurring effects. It's also rightful to remember that Grupo Argos consolidates El Dorado airport. The asset that reflects has to be said the highest affectation in the concession business, and that reflected a net loss of COP 14 billion during the quarter. Now let me move on and discuss the real estate business. And I want to invite you to see the main highlights that we have on Slide 8, where we highlight that at the end of this period, were businesses for COP 136 billion that together with those that have been signed in previous year, ensured COP 290 billion of revenues for the next 5 years. Within this promises -- within the sales promises, we had the last block of the project that we've called Ribera de Mallorquín. It's one of the most innovative urban developments in the country that concentrates in attending social interest housing demand in a sustainable, inclusive manner and based on material quality standards and urbanism standards that exceed other national reference and will turn this project into an iconic project for Colombia. With this last sales promise that we have signed, we completed the closure of those 5 land lots that are part of the first stage of this project and that contributed, during the year, COP 54 billion to our financial results. This contributed to the fact that in 2020, the urban development business grew a 7% EBITDA-wise compared with previous year, closing in COP 48 billion without bearing in mind the results of Pactia Real Estate Fund. We also want to highlight that we were able also to postpone CapEx investments for COP 39 billion that will be executed in the upcoming years, with which the business closed the year with a net -- with a positive net cash flow of more than COP 14 billion. In respect to the real estate rental business, Pactia, for the fourth quarter, we had an effective gross revenue of COP 74 billion, decreasing 15% year after year while the operational net revenue was COP 50 billion, decreasing 14% year after year. EBITDA for the quarter was COP 31 billion and it presented a reduction of 21% year-after-year. These differences in results reflect the relief that Pactia has granted to its customers in shopping malls and less revenue to available rooms in the hotel do as a consequence of the pandemic. But nevertheless, we just these changes through the accounting in the property taxes and nonrecurring revenues, the operational revenue and EBITDA dropped 1% and 2%, respectively. In terms of the same assets for the year, the reduction year-after-year of the effective gross revenue was of 8%, 2% from the operational net result and 4% for the EBITDA. It's also important to highlight that in the last quarter, we saw a very strong recovery in the Colombian economy in the real estate sector. The fund placed more than 44,000 square meters of rentable growth area and sold nonstrategic assets for a value close to [ COP 67 billion ]. Also during the fourth quarter '20 [indiscernible] Plaza shopping mall presented increases of 58% in their traffic and 30% in terms of sales compared with the results they had in third quarter last year, while the 7 hotels that we have in our portfolio went from a 10% occupation to a 25% occupation rate. This landscape represents the results and dynamics of each one of the businesses within our business group. Let us now look at the consolidated results. As you have been able to see, the results of our different businesses were impacted by the effects of COVID-19. But this also -- they also show our rigorous and disciplined management in order to mitigate these external shocks and to support a progressive reactivation that we have been evidencing with positive results in the majority of our businesses during this fourth quarter. On Slide 11, you'll be able to see the consolidated results. Revenues for 2020 reached COP 14 trillion and close to COP 3.6 trillion. This is [ 7% ] less compared with the adjusted results for nonrecurring operations of 2019 but 4% higher than what we had in the third quarter 2020. We also want to highlight the performance of the energy business with contributions to consolidated revenue of that fourth quarter for COP 892 billion that represented 25% of the total revenues followed by the Cement business, with a contribution of COP 2.3 trillion, equal to 65% of the revenue. This behavior in our consolidated values was impacted by the shock of the airport business that consolidated, as we mentioned before, our Grupo Argos and that meant a lower contribution of the concession business for COP 181 billion compared with the revenue of fourth quarter of previous year. In total, cost expenses dropped COP 1.4 trillion during 2020 that are equal to a reduction of 10% year after year and reassure the magnitude of the shock, but at the same time, the importance of a mitigation plan that has been previously mentioned. Consolidated EBITDA closed fourth quarter COP 789 billion with an increase of 1% compared with the same quarter previous year, eliminating the noncurrent effects. This behavior -- or based with the viability of cost and expenses that we led in order to adapt ourselves to those external shocks in order to protect margin -- our margin and the sustainability of our organizations. On Slide 14, you'll be able to see the detail of the structural expense reduction in each one of our businesses. It was a joint effort that was indispensable in order to keep the organization's profitability. Moving on to the nonoperational results. The financial expense for the year reached COP 1.2 trillion and it dropped COP 36 billion. This is 2.8% lower compared with what we had in 2019, explained by the reduction of the interest rates and proactive management from our different treasury offices in the reprofiling of debt. This exercise let the companies to carry out operations with the bank and with the capital market over to COP 1 trillion in favorable rate and term conditions. Cementos Argos advanced successfully with the admission of COP 250 billion in November. This operation allowed to improve the average life of the total debt that dropped in a short-term portion going from a 25% in the middle of 2020 to a 14% at the end of this year. From its side in Odinsa, there was a refinancing of the Tunel de Oriente debt for COP 660 billion last month of the year, what reassures the coherence of the plan at the moment of the acquisition and allowed us to use the leveraging capacity that the asset has in order to reduce the indebtment of the company in front of its debt level that we had in September 2020, simultaneously maximizing the present value of the concession. Bearing in mind what has been previously said, we want to highlight that this exercise that has shown a significant devaluation of the Colombian peso, and given that 37% of the organization's debt is on U.S. dollars due to our international operation, we were able to close 2020 with a consolidated indebtment of COP 16.7 trillion. This is just 3% higher than what we had in December 2019. If we eliminate the effect of the exchange rate variation, the debt increase would be even lower than 1%. Net debt registered a small reduction during the year and was located COP 15.4 trillion. The net profit for 2020 closed at COP 154 billion from the controller side, minus COP 100 billion, given that the highest effects have been happening in those sectors where we participate such as the airport concessions. But nevertheless, we also want to highlight the capacity that the organization has in order to generate an operational cash flow for COP 2.8 trillion. This effect allowed us to proceed with our operations and comply with other obligations, proceed with our investment in adjustment maintenance programs, closing the new year with a strong consolidated position that reached COP 2.7 trillion. Our indebtment levels and the continuity prove the structural solidness that Grupo Argos had in moments of shocks, such as the one we saw previous year. Now I want you to move on to look at the separated results that are on Slide #16. In respect with the separated results, 2020, the revenues reached COP 256 billion, with a positive contribution of our Cement businesses, energy and real estate that added with these investments and with the dividends of portfolio investments reached COP 457 billion compared with the losses of COP 204 billion in the concession business that are registered, as we had previously mentioned, in the Grupo Argos revenues through the participation method. During the year, the manageable expenses dropped a 10% in nominal terms. EBITDA was COP 83 billion, and net profits reached minus COP 59 billion, mainly due to the effects -- the negative effects over the concession business that we had broadly explained. It is also very important to highlight that the operational cash flow during the period at a separated level had a positive behavior, reaching COP 103 billion, driven by the expense efficiencies. In terms of the capital structure, Grupo Argos closed with a separate debt of COP 1.6 trillion, which doesn't represent a variation in comparison with the close of 2019. The financing source diversification capacity and the liquidity of Grupo Argos at a separate level, besides the rightful and timely financial management, has allowed us to keep the trust of the market that at the end of October, supported the ordinary bond exchange for an amount of COP 137 billion. This transaction constitutes the first private debt exchange that has happened in the country, representing a milestone in the capital markets of Colombia, contributing at the same time to its development and indebtment. In addition, we also want to highlight the credit refinancing with local bank for close to COP 480 billion, that extend the debt average life from 5.7 years in September to 6.3 years at the end of December 2020, achieving a reduction in the debt concentration between 2022 and 2023 of a 47% to an 8% of the total expiries. With this transaction, we're also able to take advantage of the favorable conditions of the market in order to access debt at much more competitive rates. Even though the consolidated and separated results were impacted by the external shock of the pandemic, the strategic coherence of a long-term vision of Grupo Argos proved its power and solidness during the year. 3 milestones during the 2020 ratified the strength that has characterized this organization for the last 90 years. The company, first of all, was able to keep a stable net debt with a very difficult year. Second, we were able to reach a reduction in our structural expense structure. We also confirmed the extraordinary capacity of our businesses in order to generate cash flows. All this proves that Grupo Argos is the flexible and prepared organization in order to prepare as a leader in the economic reactivation in all the territories where we operate today. Under the light of these results, the company and its Board will bring to the shareholder consideration a dividend of COP 382 per stock that represents an increase aligned with the inflation of 2020. In addition, the organization will offer the option to its shareholders to receive the dividends in ordinary shares of Grupo Argos in cash or a combination, 50% shares, 50% cash. With this purpose, we want to keep the structural strength of the organization that has allowed us to sail that 2020 shock at the same time that we honor the commitments we have with our shareholders that have supported us through decades and that keep on helping us in the strategic vision of this group, and we want them to be here also over the long term. Finally, the commitment and disciplined and rigorous management of the shock plan contributed to the mitigation of the effects of the pandemic and prove the structural strength of the organization. 2020 ratified the benefit of counter with the portfolio of assets that their majority are regulated or hired in the long term in order to ensure predictable and stable cash flows, but at the same time, it validated the convenience of diversity in order to mitigate and compensate the effects of the pandemic in some of the businesses. We had airport closures. We also want to highlight the continuity and strength of the energy business, the progressive recovery of the road concessions and better volumes in cement in the different regions where we have operations. We're optimistic about the future because besides our financial flexibility and the adaptation capacity that the group has proven in 2020, we're identifying positive signals in those markets that we participate in, both in the infrastructure sector and that will pool the results of our businesses in the United States, the new office project investments for more than $1.9 trillion -- $1.9 billion, sorry, as a mechanism to create millions of employees -- of employments and renew the infrastructure. In Latin America, we have identified relevant opportunities in the professional administration of the assets that the region requires in order to keep on growing. And in Colombia, the structuring of a 26-project package is being organized. Under this line, the social and economic effects generated by pandemic during 2020 ratified the role of companies as a main source of employment and investment as vehicles to drive the development of economists and to create solutions that will offer progress and well-being to our citizens. The situation has proven that if companies drive -- companies strives to, that's why we said with -- we are working on a fund -- education and employment fund that search wants to, through different educational programs and different commitments with different companies, employing a group of 2,000 youngsters, training another 6,000 youngsters, given that these are the populations that have been affected the most by the pandemic in Colombia. Initially, we'll be working on this pilot program with Comfama and with Proantioquia and other companies that we expect also to be part of the program progressively in order to multiply this impact. In addition, we have been implemented a relief program, a support and rescue program for those vendors of the organization that have required so in order to ensure the subsistence of value chains in order to contribute to the national productive cycle agreeing due dates -- payment due dates and helping to strengthen their businesses through mentorships of our professionals. This program is contributing to the protection of more than 25,000 employments of 800 micro, small- and medium-sized company. From the social aspect, we want to highlight the contributions of Grupo Empresarial Argos in order to face this current situation that exceeded COP 24 billion at the end of 2020 with a donation of more than COP 10 billion for the acquisition of health equipment -- ER equipment in order to strengthen the health system in Medellín, Antioquia and 2 -- with contributions also in departments such as Bolivia [indiscernible] and Tolima. The special way of understanding and developing our businesses was recognized during 2020 by the Dow Jones Sustainability Index, which located Grupo Argos and its companies within the most sustainable around the world for eighth consecutive year. In this addition, Grupo Argos and Cementos Argos have consolidated for the eighth time as members of Dow Jones Sustainability Index, highlighting -- or standing out as one of the companies with the best practices -- business-related topics in environmental and social aspects. The group's companies also were mentioned in the Sustainability Yearbook of S&P Global. Grupo Argos and Cementos Argos received the Silvers seal and Celsia the Bronze seal as a recognition to a transparent, cross [indiscernible] and long-term focused management. This distinction brings together those companies that have had the best sustainable performance at a global level in order to recognize its efforts around economic, social and environmental aspects. In this edition, the 2020 edition, 7,000 companies were evaluated, coming from 61 different industries from which 13 of those are Colombian, including those that belong to Grupo Empresarial Argos. This recognition strengthened the trust in those different stakeholders, different international and national investors in front of those companies that work in favor of long-term value generation. From the environmental angle, after a very careful analysis of each one of our operations, we established concrete goals in order to mitigate those effects coming from climate change. In this sense, we will reduce in a 46% the intensity of our emissions of carbon dioxide or greenhouse effects, equivalent to COP 1 million of consolidated revenues for 2030, and we will simultaneously reduce 37% the emissions in terms of this component in an absolute manner, and we will advance in the risk and opportunity management in terms of climate change. This ambitious commitment asks from us to keep on advancing decisively in operational eco efficiency in the increase of electric energy, parting from nonconventional renewable sources and the progressive substitution of fossil fuels for alternative fuels in between other measures. I don't want to end this conference without thanking you all for your permanent support and to thank our more than 14,000 collaborators that make all these efforts possible, but moreover, has proven with its dedication and talent that we share that higher purpose of positively transforming the lives of millions of people through infrastructure and that all of them have contributed ideas and knowledge in order to materialize this value proposal that has been shared with society. I want to thank you all for your attention. And I will know now open the Q&A session. Natalia can support us leading or coordinating any questions or queries that the audience might have.

Thank you. Dr. Jorge Mario. Want to invite you all to ask questions through our Q&A widget. We have several now that may begin. First comes from Juliana Aguilar from Valores Bancolombia. She asked about the extension on the due dates for Opain or if it's just expected -- with the revenues that are not being received? Or if this is just for the period that the airport was closed or if it contemplates another extension period. And in addition, and she asks if in Quiport, there has been conversations with the authorities in order to compensate those revenues that had not been received.

Well, thank you, Juliana, for the question. It's key. And I'm going to propose -- I'll be approaching these questions at the same time. And this is a question, I'm sorry, I will be making a bit longer in order to convey this as best as we can, the reach of this agreement is because it's the fundamental for us. And for the organization, understanding the importance of these agreements. First thing is that the life of the concession ends in 2027, January 2027. So we have agreed during this Memorandum of Understanding with ANI for the airport concession business. It's precisely the compensation of those regulated and nonregulated revenues. Just remember that the airport has regulated revenues coming from the airport rates that are in the contract and nonregulated ones product of those real estate activities or nonregulated services. And during the lockdown what happened is that we could not exercise the object of the contract. So because of this, the agreement part from the recognition of the nonregulated and regulated revenue that has not been received. So meaning by this -- the concession could exercise the object of its contract. So what's agreed is to execute this non-received revenue that will start at the end of January 2027. Let me give the word to Mauricio, and he could explain the details of these operations. So the first concrete answer is yes, it does compensate for those revenues regulated, nonregulated? Second question is if it just includes the period of suspension, the concrete answer is that this agreement, what establishes the compensation for that period between March and September that was actually the period of suspension. So in this particular case, September -- March, September, that was 6 months. Now there's going to be a second negotiation round happening probably during April. We will be discussing the residual effect product of lockdowns and those issues that have been taken by the counterpart in order to compensate those revenues that were not received during October on. And in Quiport in, there's a different situation. But I'd like to -- Mauricio to answer this. If you could maybe elaborate over this question. More specifically, I find very important, Mauricio, if you could share with the crowd, the discussions that we'll be having with ANI? And the second part of the question, what happens from September, October on.

Thank you, Jorge Mario. Warm greeting for you all. Effectively, as you mentioned, we have a Memorandum of Understanding that establishes the criteria, the methodology of how the compensation will happen, where the most important is the restitution of 100% of the regulated, nonregulated revenue that has now been received and 100% of the cost or over costs that we have acquired. So effectively, as Jorge Mario mentioned, under these lines, there's an agreement for that time where it was closed, it was March, September 2020. That's total -- we had a total suspension. And there's another agreement Economic equilibrium restitution for the next 6 months, October, March, and that's how we're going to be operated to reestablish the traffic and actually traffic year base was taken as 2019. So it's a compensation, a compensation that has a figure that more Jorge Mario mentioned, COP 350 billion, COP 400 billion that translates into an extension on the due dates for the concession, and that start [indiscernible] January 2027. So since then we'll be adding about 2 or 3 more compensations because according to the forecasts that we have -- according to the different forecasts that we have in terms of traffic, we would believe that this will be normalized at the end of 2022 or beginning of 2023. I insist once again, we are using a special traffic in 2019, and that's where we get that figure of 3.3 million passengers per month. In addition, we had taken a series of measures also due to the support of ANI in respect to the flexibilization of certain contractual obligations that have a very important impact on the OpEx and the deferral of some charges such as those that have been added to the time of concession in order to flexibilize the operation. Because of Quiport, effectively, we have been having conversations. Conversations have been happening a bit differently here because the first thing we had to do is agree with [indiscernible] municipality who's the counterpart, the [indiscernible] of the master plan. This means delaying investments close to $82 million. One part was in 2020, another one in 2021. They were delayed. Field traffic come back up again. This is the agreement we've reached. And right now we are having conversations around compensation. This conversation is just starting, but there is a disposition. There's an openness from the counterpart. Both from the Ecuador case and the Colombian case are completely aware of the impact that this generated, and there were -- these were outside our hands. So this would be all that I would have to mention. Let me give the word back to Jorge Mario.

Well, thank you, Mauricio. I think this is clearly explained. We would be open to answer any other questions if Juliana has any more doubts.

Okay. We have another question from Juliana Aguilar who asked, in terms of Cementos Argos dividends, will the Grupo Argos receive this as shares. The answer would be, yes, we will be receiving them as shares or stocks. Rodrigo Sanchez from Corredores Davivienda. How much are we estimating resources for the holding in 2021?

Let me give the word to Alejandro. Because for me, this is fundamentally for us to understand the sources and flows for the dividend flows that we have. And couple of this with the dividend distribution flows with the rest of the resource usages. I believe, Alejandro, this is a question that we need to give a certain level of detail in order to have a better context of -- let me start by the conclusion. We have, right now, based on the different choises that we have, the way that we will be taking the dividends -- the distribution proposal for dividends and how do we expect this to be received by our shareholders' in the market. Finally, it is reported by the business revenues, real estate business revenues and also revenues coming from other sources. This leads to a point of equilibrium within the indebtment and in the primary super EBIT. So this means that the company will balance revenues and revenue sources with its expenses. Also, with the structural reduction in this expense structure in order for the primary super EBIT to be higher or 8.0, but I want to give the word to Alejandro because structurally, I believe this is key for this to be detailed, given that it's relevant to understand that the situation does not lead to a higher structural indebtment of the company. Alejandro, the word is yours.

Thank you, Jorge. Of course, let me drill into a bit of detail here. First thing I would mention is that the construction for the cash flow of Grupo Argos is relative to simple. As a matter of fact, you can see that each one of the calls, we always present how is the cash flow for the business. And first of all, let me say that the revenue composition that we have is mainly received dividends and disinvestments of the urban development business and other disinvestments that we might do different from the portfolio at a certain moment. For 2021, when we took the sources -- generated sources from those items that I just previously mentioned, we have a budget of close to COP 523 billion approximately. This is what we have in terms of sources. Usages. Our usages are usually simple, the dividend payments, functioning expenses, interest and taxes. It's basically that what generates our payments based on the investments that we might done -- might do in the future. When you look at the forecasted usages that we have for 2021, those usages are around COP 514 billion. So we have a budgeted revenue of COP 583 million, and we have expenses for COP 514 billion. This gives us a projection with an excess cash flow close to COP 9 billion. Later on, I could make this breakdown just for you to understand better. COP 9 billion, that remember, it's a customer that we have an organization, having a very adjusted cash flow and an absolute efficiency level. In 2019, just for you to have an idea, we closed our cash with COP 1.7 billion. In 2020, we closed our cash with COP 24 billion. We closed with a higher cash level given to what has been happening during the close of the year, with that COVID was, again, affecting the country. So we decided to close with the cash flow that's higher than what we usually have. In this projection, we have COP 9 billion. This usage go as follows. We have a projection or forecast. I call is forecast because this depends on how the market decides to take those dividends in shares or cash. So we use this formula. We would have to pay COP 240 billion. The operational expenses, the total expenses would be COP 120 billion, estimated interest close to COP 94 million and taxes around COP 60 billion. So this, in a certain way, gives us equilibrium conditions, the sustainability conditions also that Jorge mentioned that are key. Another way to make a crosscheck is to see what happens with the indebtment. And as Jorge mentioned, this organization in 2019, we closed COP 1.59 billion in terms of leverage. In 2020, despite the sharp plan that Jorge mentioned at the beginning where effectively, we took a credit of COP 150 billion and paid it completely at the end of the year because we did need the cash. We closed with COP 1.59 billion. And for this year, according to these projections that I show you, we closed with a dividend level of around COP 1.57 billion. So this means that we keep a use and source structure that has a super EBIT without having to increase the leveraging level of the company in order for it to be completely flexible. With something additional that as Jorge has said, we don't have credit expiry dates for 2021. We have a due date in 2022, but due to the mechanism that you use in terms of debt exchange, we're seeing how could we move -- delay another 7 years. This means that in 2022, we wouldn't have any expiry dates or due dates, and we don't have none for 2021. So this proves that from a financial flexibility point of view, we are -- we have lots of flexibility for the next 3 years.

Perfect. We have Rodrigo Sanchez asking which are the goals as the metrics for Grupo Argos that you want to reach in the mid- and long term? And how are these behaving for the end of 2020.

Rodrigo, let me begin by illustrating a little bit about the strategic path that the company has been building upon. I think it's relevant, being able to give a context about all this first thing that we -- and the first thing that we've decided is that we've decided to become a relevant infrastructure player within the region in business -- in construction material in the geoconstruction businesses and so for road and airport concessions. With the following particularity -- with a certain particularity, and that is developing a capital allocation activity within these businesses according to the best opportunities and the best risk profile according to each one of these. So meaning by this, Grupo Argos allocates capital within its businesses and within its businesses within the subsectors, where we see the best opportunities in order to execute 2 simultaneous strategic paths. First one is the profitable growth, meaning by this, finding growth opportunities, always generating value over the capital cost. And second is the work that we have been executing in the last couple of years of improving the operational metrics focused on capital return for each one of our businesses. Meaning by this, optimizing the EBITDA because of this increase in the capital return that we have allocated with the company. In that train of thought, we have been growing and the metric, coming back to the question, is that in 2021, we will be increasing 182 basis points that return over the capital that has been implemented in a consolidated manner within the business -- in companies of the business. This will lead us in 2021 to be only 60 basis points under the weighted -- WAC of the [indiscernible] businesses that's right now around 8.56. So we'll keep on growing. We'll keep reallocating capital, making cash outs or debt structuring that will allow us to reallocate the capital in those businesses that belong to these 3 business groups, where we can see there's a potential value capture and where we can also leverage that growth in a better cash flow structure according to our current businesses. So this means better revenue management, better cost, better structural expenses much more focused on the primary efforts of each one of the businesses in order to have positive cash flows. With that long-term vision, we are very optimistic in capturing value to future. If you think about this in 2021, there will be an increase of 180 points in the [indiscernible] scoring, but there's still very important considerations in terms of the shocks that we have faced. We are not in a full recovery year -- post-COVID full recovery year. It's a much better perspective than 2020 for sure. But still, as we have proven on the graphs, the airport traffic, it's 1.4 million, 1.5 million passengers, where we had 3.3 million in the past. So this will have a recovery that will take some time. But we want to reach this past values that we had. The road traffics are still in similar values that we had in -- pre-COVID, but there's important growth around this also. Dispatch cement -- these patches also have shown positive signals in the last months, but there's still an impact in many of the activities that's around the cement business. For example, Panama, they are highly affected yet in their economic dynamics. So with this, I want to say that changing this 181 points based on a better operation, better efficiency and a better capital allocation is a very positive signal because in the moment that the full recovery comes back, the value generation of this group will be potentially very, very relevant. This from an economic point of view, focusing ROCE, focusing cash, focusing selective investments and profitable investments. Simultaneously, the organization has also set certain goals -- working goals in other fronts that we consider that are absolutely relevant. And I want to mention specifically the one that I mentioned during the conference, the climate change strategy. Grupo Argos has been articulating with other businesses, cement, energy concessions, real estate business, a very vigorous execution and follow-up of CO2 emissions or greenhouse effect emissions. And as I mentioned before, we had set this goal for 2030. It's a very ambitious goal, but it's fully documented, reducing 36% in absolute terms the CO2 emissions and 46% in terms of economic density, meaning by this in terms of tons of CO2 equivalent to COP 1 million revenue. These costs have a concrete plan in each one of the companies, a transition to the energy businesses to greener energy, substitution of alternative fuels, working with CO2 captures with projects such as [indiscernible] that we are working on, on cements with clinker production -- much greener clinker production as compared with the cement we had previous year. Cross-cutting efforts in our concession operations such as El Dorado has done from the generation up to waste management and water management. So all our impact in our operations will lead to a drop of 37% in terms of absolute emission values and 46% in terms of economic density. This is not a figure that should be taken lightly. We hope for this reduction to answer to the leadership that we maintain in terms of better behavior and better performance of industrial activities within our country and being among the best in the world. So this is a commitment that we have with our investors that simultaneously, we will keep our discipline and keeping to look for larger growth, but at the same time, execute an ambitious plan in terms of environmental mitigation and compensations.

Okay. So we have a question from Johanna Castro from Itaú, asking about the statements given by transportation minister, where she said that the third runway for El Dorado is not optimal. And we're asked, how does this change our investment plans? And if the crisis has affected the investment schedule for other road airport programs?