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

[indiscernible] with a presentation that will be followed in teleconference. You could access menu, Financial Information and after which the Reports section. Now let's move on to Slide #3 of this presentation, so we can start our meeting. I will move it over to Jorge Mario Velasquez, President of Grupo Argos.

Well, thank you, Juan Esteban. Thank you all for being with us. And I want to reiterate welcoming to Ante Bejarano, who is a great professional, great person. That's part of Argos team in order to lead the organization. For me, it's very grateful being able to share with you all the results that we have accumulated to the first quarter of this year -- second quarter of this year, sorry, is the result, extraordinary results for our business. And it keeps showing the capacity of our group to grow and generate value despite the fact that the price of the stock and the fundamental value of the organization are still uncoupled and are still inconsistent. And because of this, I'd like to begin this conversation by sharing with you all how have we advanced in the different strategic initiatives that we've announced to the market in the month of January of this year, even from December last year, so we could show value generation a bit more clear for value generation to our shareholders that can be summarized in the listing of strategic assets in other stock exchanges, and simultaneously, the simplification of the structure of the company in order for there to be a value transfer as simple as possible to the fundamental value and in a direct manner to our shareholders. The first of these initiatives, as we've mentioned, is listing and admission of our shares in the New York Stock Exchange for the assets that Argos has in that country under Argos USA. It's a company that not just brings together the cement and concrete assets, but also logistics for Cementos Argos in that country through public admission of shares in the capital market of the United States. Over this project, I'd like to say that the team has had significant advancements. And despite the fact that, as you might know, the condition of the international markets have been affected negatively due to different economic and geopolitical circumstances, Cementos Argos anticipates to complete the project once conditions of the market allow to do so in a short by future. According to the market -- the public market rules of the United States, we cannot share any additional information of this process during this moment. This operation is still a strategic priority for Cementos Argos, and it's fundamental in order to materialize the future growth of our business in that country. I can say that we have not stayed behind in terms of resources, technical resources, financial or the support resources in order to drive this process forward. Another of the strategic initiatives where we've been advancing is around consolidating all the infrastructure assets of Grupo Argos, meaning by this those assets that are under Celsia in terms of the generation, distribution of energy. We have Odinsa S.A. in terms of roads and airport's or the real estate businesses. So after we find that mechanism of replacement and adjustment of vehicle, we can bring them to market, we also want to highlight that listing of this vehicle would be the midterm after we've already structured with a process that has been studied rigorously and once the market conditions are right, in order for us to have the right price in order to transfer the value to our shareholders. And this segment has been axis of the Grupo Argos' strategy for the last 10 years and the materialization of this operation will allow us to consolidate a regional platform of the same-class assets where Grupo Argos can manage them through different countries where we operate. Today, we are evaluating carefully mechanisms of different alternatives, business alternatives and the different implications, taxation implications and financial implications, that will be more efficient to consolidate this vehicle that remunerates assets with similar characteristics where we have a different stable cash flows, predictable stable cash flows and with long-term investment horizon. Besides this consolidation, it will allow to optimize in order to -- and optimization in order to maximize operational, taxation, structural and capital structure efficiencies. It's worth to mention that this business model is essentially the same that other asset -- infrastructure asset managers such as Brookfield or Blackstone have carried out successfully where the company acts as a professional manager of private capital funds. Due to that management has a remuneration in terms of commissions and success commissions for the investors in these funds. During the last years, Grupo Argos and its companies have advanced towards this direction and have created private capital funds where we've had institutional investors such as Macquarie and Cúbico Sustainable Investments, over which I'll be mentioning further on this conversation. This process will enable a larger growth and expansion of capacity, but it will allow to maximize the profitability given that the company will not just have returns due to the evidence of its investments, but it will also be remunerated because of its intellectual capital and due to its management capacity in terms of assets. The following operation consists in searching and bringing in new and different strategic allies for the corporate structure in Grupo Argos. At this point, we want to highlight that during June, we had the close of Vertical de Vías where we created a private capital fund with Macquarie, the infrastructure investor, the most important infrastructure investor in the world in order to contribute for road assets of Odinsa, Colombia as well as the rights of origination of 2 private initiatives and keep investing in this business, not just in Colombia, but in the region. Besides, we're also working on the consolidation of an airport vertical with the business model similar to the one that has been implemented in the road concession business. These verticals are key for the infrastructure business advancements that we are carrying out and that will allow us to strengthen the economic value generation capacity for the company. And that promising future surges from a present where Grupo Argos keeps confirming solid fundamentals with outstanding results in the second quarter of 2022. The consolidated results. Strong operations allowed us to close the quarter with revenues close to COP 10.5 trillion, growing at 35% compared to the same period last year, and with an EBITDA of COP 2.6 trillion, showing 16% growth. From inside, the net profit closed in COP 726 billion with a 25% increase. And the net controlling profit closed in COP 391 billion with a 37% growth. In the 10-year period, the consolidated revenues of the company went from COP 6.7 trillion from 2012 to COP 16.3 trillion in 2021, with an annual growth of 9.3%. In that same period, the EBITDA went from trillion to COP 4.3 trillion with a compound annual growth of 10.4%. And finally, net profit went from COP 344 billion to COP 1.2 trillion with a compound annual growth of 13.3%. Before moving on to the business results, I wanted to mention about the OPAs and reassure that all the decisions, and each one of the procedures that Grupo Argos has set 6 offers for its portfolio investments have -- we bear in mind economic, legal, strategic alignment aspects, and we've gone with the support of well-known global advisors. It's also worth to mention that Grupo Argos investments, Grupo Sura and Grupo Nutresa investments, have represented great benefits for the shareholders of this organization with internal return rates that are between 18% and 20% in the last 20 years. Besides representing a portfolio diversification and the risk distribution that mitigates the effects of the negative cycles within the businesses that the company participates. Besides 6 OPAs that have been presented during the second quarter of this year, we closed and declared as the offer for Grupo Argos shares. This led to a large volatility of the share, given that during the [indiscernible] process, the price was increased and [indiscernible] accepted, the price decrease was again aligned with the market that has been presented by the market in the last months. It dropped. The share was accelerated during the period. Ordinary Argos shares still presents a growth of 16.6% in the last 12 months, while the [indiscernible] index that's referenced for the market has increased 5%. Now I want to invite you to move on and check the results of the construction materials business that you might find on slide #8. To June this year, we presented the highest revenues of our history, thanks to good dynamics of volumes and prices that have powered the prices in Colombia and the United States. Added to the efforts to mitigate the inflation pressure and the cost of energy products has allowed the company to keep its EBITDA goals in more than COP 2 trillion for the course of this year. The mid- and short-term perspective for this business is very positive given the construction growth in the different regions where we're participating. We project that next years, there will be more than $1 trillion of execution in order to construct and renew the United States infrastructure, and that will allow to support the growth that has been growing 4%. From inside Colombia in the market, we trust that the market will keep showing a positive dynamic in the execution of a fifth generation infrastructure process that might represent more than COP 50 trillion and with the dynamic of restructuring residential housing that this year has grown [ 7% ] in social interest housing and for -- and 1% for those non-social interest housing. In operational terms, the cement volumes reached 4.2 million tonnes, a bit lower than previous year. In Colombia, dispatches grew 13%, while in Central America and the Caribbean, we had drops given to the market behavior such [indiscernible] affected by external sourcing situations that we expect that will stabilize in the upcoming months. In the concrete business, when we exclude the contribution of disinvestment plans, there was an increase of 13% in terms of dispatches, reaching almost 2 million cubic meters. Cementos Argos revenues in the second quarter of 2022 are historically high and reached COP 2.9 trillion with an annual growth of 15% and 34% higher than we had in second quarter 2020. EBITDA by it side reached COP 409 billion, aligned with has been registered by the company in the same period in 2021. When we exclude from both sides the impact that this investment had. In order to analyze the results of Cementos Argos, it's also important to drill down in the monthly growing trend given that -- given to the favorable behavior in terms of prices and thanks to the operational efficiencies that have been reached, the company achieved a very important growth month after month that up to June significantly compressed the increase of fuel cost and distribution costs that were globally registered. If we analyze the results for June compared with April period, where prices recovered, we could see 50% income in terms of revenue, 33% increase in EBITDA and one had a 165% in terms of net profit controller to close with a monthly contribution of COP 47 billion. This progression in, these figures give us ease about the results that we have for the rest of this year. In the United States operation, where we're driving a listing process that I have previously mentioned, the results were especially good for the month of June given that this showed a growth of 21% in terms of revenues, 41% in terms of EBITDA during the same period. Effect of trend seeing during the quarter fills us with optimism in order to achieve good results at the end of the year, considering the price increase and stabilization in terms of costs, thanks between others to the fuel supply contracts that for this year, we'll grab a hedge of 60% of the energy needs that the business has and that will be kept during the second this year. Now I want to invite you to check on the results of the energy business. For Celsia, the first quarter -- first semester, sorry, 2022 was once again best semester. Operational excellence, the strategy that the company has driven during the last years focused on strengthening its renewable generation portfolio while ensuring stable flows with the consolidation of the distribution center focus on the customer and the favorable conditions in terms of energy demand drove a period that we have not yet seen before. During this period, Celsia kept implemented a powerful investment plan that, up to this moment of the year, adds more than COP 827 billion. They have been executed. The materialization of this plan ratifies the commitment that the organization has around the transition that Colombia has around nonrenewable energies and traditional energies. And so [indiscernible] we just started the operation of Celsia farm, which has a capacity of 19.9 megawatts that required an investment over $20 million. [indiscernible] counts with 38,000 solar panels that will avoid the emission of more than 29,000 tonnes of CO2 per year. Besides this, this year, we expect the start of operations of the thermal electrical central and Tesorito, and Sahagún, Córdoba. This project that we have previously mentioned will supply 200 megawatts of reliable energy to the generation metrics of the country. With technological novelties just that makes them efficient and fast, but also agile when it comes to cover the needs of the country. This project, in its peak of its construction, generated more than 1,000 employments, and it was close -- the investment was close to $200 million. Moving on to the results. The energy generated for the period closed in 1,549 megawatts hour and the commercialized closed in 923,000 megawatts power, with growth compared to the same period last year of 14% and 8%, respectively. This growth in terms of generation and commercialization added to the better energy prices and the use rates and connection rates for those that are indexed with the consumer price index, were reflected in the financial results that were historically high for this organization. The revenues for the quarter closed in COP 1.2 trillion, with a 29% increase year after year, leveraged in a larger generation in a better energy price and better rates. The consolidated EBITDA reached COP 449 billion when we exclude non-recurring operations, which is equal to an annual growth of 43%, led mainly by the positive contribution of all the Colombian businesses. The EBITDA in the country was COP 395 billion so with a 51% growth. While in Central America, we reached COP 61 billion, growing at a 17% rate. The EBITDA margin for the quarter was 38%, with an improvement of almost 390 basis points compared with the same period last year. Now I want to invite you to visit the results of the concession business, mainly Odinsa on Slide #12. This business also presented a very positive results with not just increases in traffic, but also in the financial results. I want to start by highlighting the recognition that our airports in Bogota and Quito received as the best ones in South America. This recognition was granted by Skytrax. It's a British organization in charge of evaluate the service offered by airports all around the world. And for this occasion, customer service, facilities -- customer service and facilities of more than 500 global airports. In terms of the road concession business, after complying with the president conditions of Odinsa and Macquarie, the infrastructure -- biggest infrastructure asset manager in the world. And that's the consolidation of strategic alliance through private capital fund Odinsa Vías. Each 1 with a participation of 50%. Odinsa acts as manager of the constituted fund and receives a remuneration due to the intellectual capital contributor in order to comply with this role. Odinsa Vías for roads and manages Odinsa and Macquarie's Asset Management participation in the existing concessions. This means Autopistas del Café, Malla Vial Del Meta, Pacifico 2, and Oriente Túnel. Besides, we'll keep with the development of projects and restructuring initiatives such as the broadening of Túnel de Oriente, for example, in Sabana Perimetral, in Cundinamarca, in Centro Conexión project in the coffee region. And besides, we'll have a broad capacity to develop a strong new road infrastructure project, not just in Colombia, but in the region. The 50% of this investment of the road concession participation that we have previously mentioned. And the constitution of the private capital fund of Odinsa Vías generates for the company important and relevant changes in accounting terms that can be appreciated parting through June this year. Those changes imply between others, the deconsolidation of those concessions and the concessions for Autopistas del Café, Malla Vial Del Meta and Oriente Túnel, which start being recorded in one line that will enter into the Odinsa's financial results as a revenue. This will be calculated as the variation of value of the Odinsa's participation units in the private capital fund that has been managed quite the same. I also want to highlight besides that, in June, Fitch confirmed an increase in the credit rating for Odinsa. That is AA right now with a stable perspective. This is a milestone that recognizes the solid measures of the company's capital structure. And the deep leverage work that has been led within the organization. Now I want to invite you to check the results. Total traffic of Odinsa's truck concessions for the quarter in an average of 104,000 vehicles daily, which represents an increase of 41%. When we exclude the contribution of ADN and BTA, the roads that we just invested in the Dominican Republic. The road concession segment had a lower contribution, explained mainly by the anticipated end of ADN and BTA the deconsolidation of the Colombian roads in June. Airport traffic closing 10.1 million passengers mobilized, figure that almost doubles the figure that we had in the second quarter at previous year. In terms of revenues, at a consolidated level, Odinsa recorded COP 135 billion in the second quarter 2022. This means 2% less than what has been recorded in the same period last year. It would exclude the concessions of Dominican Republic and the concessions contributed to the private capital fund Odinsa Vías that I previously mentioned. In the airport segment, we had revenues, EBITDA and net profit, which were positive for Odinsa through participation method. Product of a recovery of the passenger traffic. This segment recorded COP 30 billion in the cumulative results for June this year, approximately COP 36 billion more than what had been recorded in the same period last year. It's also important to mention here that outlining results despite being positive, are not contributing to the consolidated results of Odinsa given accounting past termination that was taken in 2021 or the results of this asset will only start being recorded within Odinsa results parting from the moment where its equity is felt in positive terrain. The EBITDA for the second quarter presents a positive variation of 421% year after year, reaching COP 304 billion as increased corresponds to the recorded profit that had been recorded in June due to the sale of 30% of the Colombia Macquarie asset, road asset and for the construction fund that has been previously mentioned. In terms of the construction segment, the EBITDA contribution was minus COP 12 billion, mainly explained by the end of the construction of Pacifico 2 and the associated expenses to the contract liquidation. Now I want to invite you to check the results of the real estate business. The revenue was COP 85 billion, growing at 4% year after year. And the EBITDA for this quarter was COP 30 billion, with a reduction of 15% year after year. Nevertheless, after adjusting this results on these investments that were made during the period, the effective growth revenue and EBITDA would be 24% and 29%, respectively. In terms of the same assets for the same quarter, the operational net revenue and EBITDA grew a 23% and a 33% versus the same period 2021. The business generation dynamic keeps being highly positive. During the first 6 months of the year, we renewed contracts for 9,000 square meters. For the end of this period, the fund reached a record occupation of the non-hotel portfolio of 96.7%. The sectors with largest recovery were trade and hotels, with increase of 26% and 193% in terms of revenues compared to the same period last year. In shopping malls, Gran Plaza, the average sales per square meter grew 17% compared to the same quarter last year. [ Housing ] and hotels, the occupation closed in 57.5%, almost 26 percentage points higher than what had been reported in the same quarter last year. Finally, in terms of the logistics and storage, we want to highlight that from the 426,000 square meters of industrial assets, the 8 U.S. storage buildings closed the quarter with occupation over 99% and 88%, respectively, thanks to the drive of the last-mile distribution of electronic trade. All these things contribute to a larger cash generation -- operational cash generation. This business -- this semester, I must say that the Urban Development Business presents very promising results. Net cash flow after paying expenses and investment plans increased more than 600%. The revenues grew 80%, thanks to the signature of 2 promises of purchase sale in Barranquilla, sale of 2 lots in Puerto Colombia and the payment of other businesses that have been impacted in previous years readjustment losses. In the P&L, we reflect the sale of 3 lots, the second stage of Ciudad Mallorquín, a beautiful project where we're constructing social interest housing with urbanism development and the sign of a very high level. Those 2 lots added to the additional square meters that were sold in Baru Island previous quarter. And given an increase of 85% in the disinvested area, an increase of 230% in EBITDA. We also want to highlight the positive advancement of constructions with 98% of the units at the first phase of Ciudad Mallorquín commercialized in the just 16 months and the launching of 2 additional projects. This market dynamic gives us positive perspectives in order to keep on feeding our pipeline with new businesses and this project in the zone. Up to date, we have 30 current transactions for a total of COP 624 billion, from which we are still missing to enter in cash COP 300 billion during the next 5 years. Now I want to invite you to go over the consolidated results of Grupo Argos on Slide #18, where we can see the added effect of the positive performance of our businesses during this quarter. Revenues reached COP 5.9 billion during the period, which represents an increase of 46% compared to the same period last year. The largest sales volume was translated into EBITDA increase, which closed COP 1.4 trillion with a 1% increase year after year after we eliminate the effect of divestment that was carried out second quarter 2021, and that impacted the EBITDA something close to COP 180 billion for the quarter of 2021. Net profit increased to a larger proportion, registering a figure -- a pro forma figure of COP 368 billion, with an 18% growth, and the net profit of the pro forma control of COP 227, growing a 32% compared to the same period last year. On Slide 18, we can see the variation in the contribution of each 1 of our businesses in terms of revenues in terms of consolidated EBITDA. In this graph, we can clearly see the good performance of all the company's businesses that during this quarter, kept presenting operational and financial growth. Leverage stood by a clear strategy, a long-term strategy, operational improvements, the improvements in terms of cost and expenses. If the cement business presented a reduction in the EBITDA contribution due to the increases of cost, a few, and energy that we previously mentioned, the perspective of this business are still favorable, and we forecast a positive change in terms of this contribution supported in the good commercial and price dynamics that we have been seeing and that we mentioned previously. Now let's move on to Slide #20, in order to analyze the evolution of the consolidated indebtment. In that front, we want to highlight the amortizations that have been made by the organization in the last 12 months, which reached in total to COP 2.2 trillion, achieving a reduction of 13% in the gross -- the consolidated gross debt and of a 17% in the consolidated net debt going from COP 17 billion to COP 14.8 billion. The largest part of the indebtment reduction is being led by Odinsa, Cementos Argos and Grupo Argos. From another side, Celsia improved its leveraging indicators, moving from a net debt EBITDA ratio of 3.3x in June last year to 3x June this year, thanks to the EBITDA growth. The additional debt is being used to keep on funding the project investments that are highly profitable and will generate positive results in all the lines of this organization. And separate the financial results as well as the financial results, we've found positive results. Pro forma revenues closed in COP 172 billion, EBITDA COP 124 billion, net profit in COP 82 million with a 9% increase year after year. Separate debt for Grupo Argos that has been detailed on Slide 24 closed second quarter in COP 1.4 trillion with due dates 97% of the credits after 2023 second semester, which grants a complete financial flexibility to the company, and allows the company close the period with healthy indicators, in line with the current credit rating that the company has. The financing rates have increased around the world, and this has led that the debt cost has closed in 9.9%, which represents an increase compared with June 2021 rate. Nevertheless, the company has implemented a series of hedging mechanisms, which have allowed the company to mitigate partially this rate increase. If the company had not implemented these types of tools, the financing tool today would be 11.4%, meaning by this 150 basis points, which is higher than the one that we've been experimenting. And between the treasury strategies, we want to highlight the company -- with paper investments of fixed revenues for COP 302 billion, which generated a positive carry for the company given the yields that are over the cost of the debt. To close the slides, the slide I want to be mentioned that we reached our best ratings, AAA both from Fitch and Standard and Poors. In terms of sustainability during the quarter, the organization reached great milestones in its climate change strategy. I want to especially highlight that recently, Celsia, our energy business, informed to the market that they have been granted by ICONTEC, the Neutral Carbon Certification. Within the achieved investments in order to reach this milestone, we want to highlight last 4 years, Celsia reduced and 76% its greenhouse gas emissions and becomes an undoubtful leader in the generation of a cleaner and more sustainable metrics. This achievement is part of a cross-cutting strategy in terms of climate change, led by all the group in order to mitigate and compensate the consolidated carbon footprint and adapt the businesses to the effect of climate change. The goal is driving transition towards neutral carbon of our businesses in 2050 as we have previously mentioned in other locations. And finally, I just wanted to close by reaffirming the trust that the organization has in the country. And the view of optimization, leadership led by the opportunities that we are identifying in the infrastructure sector, more specifically for the productivity and the development of our country. With this trust and under this key premise of value generation for our shareholders and the strategy that we are carefully executing in order for us to consolidate ourselves an infrastructure -- asset infrastructure company, will drive profitability and at the same time, the transmission regulation of fundamental value for our shareholders. Now let me give back the word to Juan Esteban so we can coordinate the Q&A session. Thank you all for your attention. And we'll be open for any advanced questions or queries that you might have.

Well, thank you, Jorge. You can ask your questions in the Q&A session, and let's open the Zoom platform. Let me see the questions that we have. We can ask -- start asking questions that we have while we get more. First, a question from [ Laura Lopez ], and I want to divide this question in 2 segments. I'd like to know, from the perspective of different businesses, how are you seeing the taxation reform proposed by the new business, more specifically in the cement business with a reduction of incentives for the construction of social interest housing VIP -- or VIS types of houses?

Well, thank you, [ Laura ], for your question. Thank you for your comment. I'll try to approach the question in a broader sense and then I'll -- and by speaking about the incentives to the social interest houses, VIP -- or VIS types of houses. I have the following comments. The project that was presented -- the [ taxation project ] was presented in August. It's a project over which there is a discussion that started, not just within the private and public shareholders, it has been the -- between 2 different -- I think tax and government. But there must be a discussion within the Congress of the Republic. Now this is a project over which I'd like to express a certain -- general considerations. First, I do celebrate the conversation space that Minister Ocampo has been having with different private [ actors ] and more specifically, with the conversation that we had in [indiscernible], that conference and this Friday in Cartagena. We had the chance to express the concerns that we have as a private sector, more specifically those related to -- with a broader sense, the contributors to this reform, it would be not right if we focus the reform over natural people and natural individuals and the companies that have a certain capacity to supporting the additional marginal values that are -- pretend to be collected. Meaning by this, emphasizing in those actions that has to do with this illusion and look at those sectors that can contribute to sustaining the state. Obviously, there's going to be a discretionary on the size of the reform, if it's going to be [ COP 25 trillion ] or the figures are a little bit different. But besides these prices, because I do agree that there should be alternatives in looking for additional contributors, we've also expressed the concern in certain specific cases. For example, we have combined a rate between societies and individuals that could reach a 67.5% higher than 41.5% [ in Colombia ] and -- which places that I think -- for that 41% on the average of Latin American country, 67% would be very high, higher than average. And if we add effects with which we could generate to equity tax over the investments as people might have in certain societies, we're concerned for there being a signal of this investment of the formalization of the businesses. And this investment, the Minister has mentioned his interest on going over specific aspects, not just to dividend tax, but in terms of other matters. I believe it's a process where we're beginning the conversation that we need to support initiatives that are feasible that will support the investments that the government of the country requires to do around social matters. But with the right balance and with the care for us to maintain the signals for more investment and for the creation of more businesses. I think this is a very important message to reiterate. It's a big concern that we did mention this to the Minister, this specific one that -- such as [ Laura's ] mentioning in terms of the incentives. And for the [ AFC ] accounts or for those that are going towards the projects, such as the ones that have been developed around housing and that we will have to go over, I'd say that part of the success of being able to construct 130,000 houses in Colombia -- housing units in Colombia, largely those -- a large number of those being social interest housing. And with the projects that have been implemented in the country, this shows that they're not just economically beneficial but socially beneficial, giving the opportunity to so many people that require housing. I would also believe that we need to go over the reduction of benefits to the deductions that are being thought of in certain ranges of wages by high levels of collection, but can also have a collateral effect into these incentives in terms of savings and housing acquisition. So in summary, I think, there is a process that's just beginning. It's a process that will have to be debated, both [ R&D as well as other guilds of other businessmen, who've -- raising our hand, respectively ], and -- but clear to show the government, more specifically the Minister Ocampo, the collateral effects that there could be at this [indiscernible], this attitude of mass discussion over them. So in general terms, I would answer your question with these comments.

There's a couple of additional questions about the taxation reform, [ Laura ] and Rodrigo Sanchez [ are going to connect more questions ]. First is about [indiscernible] position in terms of [ Free Trade sellers ]. Like to know what percentage of [indiscernible] distributors are coming in Free Trade Zones. And from the other side, Rodrigo Sanchez asked about the impact of the reform in the urban development business, mainly focused towards the impact that hotel demands might have if we eliminate the benefits for the hotel business. And the impact in occasional games in these investments of land and partly, assets that might happen in the future.

Okay. It's a very broad question. Let me give María Clara -- maybe I could start and then María Clara could take over to speak about the implications of the urban development business and the benefits, especially for hotels, and occasional gains in terms of these investments because there is a technical thing here that we should discuss and how our inventories [ are looking now ]. Let me speak about the first thing and to say the following: [indiscernible] in Free Trade Zones, we see, for the group, the cement business has a very important Free Trade Zone in Cartagena. It's a Free Trade Zone. We have the plant that was built in 2013. We export the -- not the majority of the total of the volume of cement that this company is exporting. That Free Trade Zone is mainly focused on exports. And the Minister has said publicly that he will review the eventual standardization of the rules there are for multipurpose federate sales with the united business Free Trade Zones as Cartagena's case is. And so if we have an export commitment of 60% or 70%, this could operate for the multipurpose, but also for the united business Free Trade Zones and the -- and that's fair that both Free Trade Zones could be -- follow the same rules. And this gives us hope. And just so you know, we have a [indiscernible] contract until 2028, 2029. So from that side, we don't have a large concern. Let me give the word to María Clara so she could speak about the hotels, highlighting that this large part of the trades that we have, they are not necessarily focused on hotels, but our focus are more on housing construction. And a great part of the projects we develop are basically social interest housing projects, which has a very large impact in the potential of growth back to the social policies of the government. But let me give the word to María Clara so she could complement this with this idea.

Not sure -- I'm having some feedback here, just fix this. About the 9% question, [ none of domestic plan were conditions was contemplated ], this benefit that started operating in 2021. Actually, the sale that we had for the first hotel, for Sofitel Casablanca, where we had a good option, we could still -- the business project in year 5 has a formula that's linked to the behavior of the hotel over the EBITDA line. It's something like 10x the EBITDA of year 5. So this has nothing to do what happens under that line in terms of the taxes. For the rest of the hotels, I'd say that the situation is the same. No doubt this made this sector much more attractive for potential buyers of our land. So let me repeat, every time we made a transaction, we've made it without bearing this in mind and this was an additional upside. So I would maybe say that if there's a sector that's going to be benefited, it's probably going to be tourism. In the 7 years that we've had with the hotel, we've had a performance close to a -- 30% higher than what we were planning when we had the transaction's underwriting. So I do feel with ease and with optimism in terms of the hotel sector. Now speaking about subsidies for social interest housing. Without no doubt, there will be an important effect or particularly, if we would eliminate the subsidy to the offer through the admission -- elimination of 4% return of the VAT. If we bear in mind that the value of that is a residual, that for this case, it will be around 10% -- 15%, but [ within 2% of land ], a 4% that's eliminated or that's added as a construction cost. This means that land will have a price increase between 20% and 40%, which will make unfeasible these types of sales. This is extreme case, though, that I'm not really seeing right now. In this case, Argos, we will have to refocus into the nonsocial interest housings and to the hotel sector. I feel optimistic, too, [indiscernible] starts of employment in that sector and the country needs this sector. And only in our region, in the Caribbean region, in [indiscernible], in Atlántico, we have 160,000 units of -- in terms of deficit, housing deficit. We can contribute up to 60,000 in housing units in a project. And if that happens, we will have to reorientate towards the other sectors. But once again, I do see this as something complicated.

Well, thank you, María. We have a couple of questions from Argos USA, [ Nubia Rivera ] and Daniel Guardiola, and we connect this into this one. First is what is the probable date for stock market listing? And it's going to be an ordinary or preferential stock for Grupo Argos? And then Guardiola is also asking about the timing of the transaction and the general update of the process.

Well, I'm going to reiterate what I said during the call that I need to be very careful here and very limited by [ saying the true -- the ] comments that I might make because this is a listing under the Securities and Exchange Commission regulations that are very clear, and they're very preventive. So unfortunately, I cannot give a specific date or estimate in terms of the time horizon. But I want to reiterate what I said. This is just, say, priority, but it has also brought the teams and economic resources completely focused on the construction and enablement [ because finding the right moment tends to make the system ]. But in terms of the aggressive -- if it's ordering shares or preferential shares, let's remember that -- what will be listed as the cement assets of Argos USA is not Cementos Argos. It's not the company that's in Colombia. It's going to be all those assets, cement, concrete, port and logistics that the organization has within the United States. So this does not have to do with the ordinary shares or preferential shares. I'd also like to say -- and let me excuse myself for not being more specific, I'd like to be specific in my questions, but I need to be careful with this one, but I would like to say that all the energy of the resources [indiscernible] is advancing very well in order for it to be executed in the right moment.

Okay. Thank you, Jorge. And then we have a question from [ Nubia Rivera about cost of liberty as other OPAs, cost of OPAs ] in any of these shares.

[ Nubia ], I could not say. Let's remember that OPAs are public offers done by companies or by individuals for a company that appears in the stock exchange after passing certain limits because they have a participation or because they're requiring a particularly high volume. But I have no knowledge of there being any other additional operation or close to be executed in one of the companies. In terms of the comments of the energy [ vertical, that is we're granting the -- similar ] structure imports, those have been attached in vehicles that's [indiscernible] renewable energies as solar and wind. In the case of Celsia [indiscernible], Celsia is being renewed also for these assets. And there's certain benefits like law 1715. Either that will impart or move towards the idea that this movement is very close, they come together. I can [indiscernible] in the stock exchange, but we're doing it early and in concessions. This is straightforward and I'm bringing all the assets of the same class, which are assets with the surge in cash flow through predictable flows in the same infrastructure asset class, but they'll be united in a vehicle, which that -- which is the vehicle which is the best way and which one's the most efficient. And [indiscernible] looked after by other investors or by the market. But to answer, we're doing energy the same that we're doing in road concessions or something similar to what we did in real estate.

Rodrigo Sanchez also asked about the fact that reduction of the deleveraging on this, have you considered to increase your participation in Malla Vial del Meta?

I don't if know Mauricio's here with us maybe. And Mauricio, I don't know if you want to answer this question. I'll speak about the operation that has been closed [ in Malla a little bit ].

Thank you, Jorge. I hope everyone is doing okay. Starting with the first semester and emphasizing on the second quarter, we [ encountered completed ] operations of this investment in the DR assets. Refinancing [indiscernible] if cash can [indiscernible] to the end of the contracting phase. And finally, we closed up our deals via transaction that has been discussed by [ Jorge Mario. These things have allowed us to amortize that COP 1.1 trillion approximately ]. We have to be [indiscernible] that I should need to be attending in the next 2 months. So the company will reduce significantly its leveraging capacity. This is the capacity of this defined opportunity -- growth opportunities towards the future, more participation in the secondary market and advance the consolidation of the Meta [indiscernible]. This was actually the first private initiative that was started in Colombia some years ago before Grupo Argos started to do Odinsa. This led to a complex process that will be very well executed [indiscernible], which is a reduction that the traffic has had. More specifically, heavy with traffic, the [indiscernible] movement and there was an important drop of oil prices. So we start working on this via Odinsa, but we were able to rebalance and during this contract into something feasible. And that coincided with the moment we were doing closure of Odinsa Vías. This gave us the possibility on thinking of retaking the position that others had in the consortium. And that's how, for this, I went from 51% participation, and now we have 92%. It's [indiscernible] investor that [ give us the position as an 8% ]. And we're jointly in that consortium through the very important majority, thinking on what will be in the beginning of the construction phase for this process. So we did this already with the district in the eyes of Macquarie. And this participation increased, [ we're ending it there. The general use of the pod is going to be a grower percent, and that's the way it will be in order to execute the part ] in the construction phase.

Thank you, Mauricio. And Steffania Mosquera asked how [indiscernible] into the future -- in the future, the formation of the [ concession Grupo ]. He has a question, please. The -- right now, this project had a sample flow, but the construction ones have -- concession ones have negative cash flows. So how is the information going to be presented?