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

Good morning to you all. I want to thank you for your assistance today. And today, we'll be presenting the financial results for Grupo Argos for the end of the third quarter 2023. With us, we have Jorge Mario Velasquez, President of Grupo Argos; Alejandro Piedrahita, Strategy and Corporate Finance Vice President; Rafael Jose Olivella, Corporate Matters Vice President for Grupo Argos; Mauricio Ossa, President of Odinsa; María Clara Aristizábal, Manager for the Urban Development business; Pablo Arroyave, Vice President of Corporate Finance for Odinsa; Felipe Aristizabal, Financial Vice President of Cementos Argos; and Andre Bejarano, President of Pactia. I want to remind you all that on our website, you can find all the information for this quarter, together with the presentation that we'll be following during this conference. To download it, you can access the menu, financial information and afterwards reports. Besides this, we're also transmitting this via X, previously known as Twitter. To begin, I want to invite you all to move on to Slide #3. And now I'm going to give the word to Jorge Mario Velasquez, President of Grupo Argos.

Thank you, Juan Esteban. Thank you all. Warm greetings. And good morning. I wanted to reiterate our thanks for being with us today. During the third quarter of this year, besides presenting solid results, Grupo Argos announced a milestone for its history of growth and value transformation. Cementos Argos agreed on combining its operations in the United States with Summit Materials. In 2005, the cement business entered the United States market with a strategic long-term vision, establishing as a relevant player of the construction material industry in the first economy of the world, product of the agreement that was made public last September, the combination of Argos USA and Summit Materials will give as a result a company that will become one of the largest construction material companies in the United States and listed in the New York Stock Exchange, in which Cementos Argos will have a participation that's equal to a 31% of its capital. This is, without no doubt, strategic movement that opens doors to new opportunities within the United States and that also values our operations in around $3.2 billion. Cementos Argos will contribute with it's operations valued to a multiple of EV/EBITDA, expected for 2023 of 10x. Enterprise value multiple of approximately 12x, considering the EBITDA generated during the last 12 months, capitalizing its investment through a liquid entity in the New York Stock Exchange and generating value to all shareholders within this Grupo Argos. Very importantly, in addition, the transaction represents the entrance of $1.2 billion in cash from which $700 million will be used to pay the debt of the operation in the United States and $500 million in cash that will enter Cementos Argos. That will reduce the net indebtment in Colombia and will give a larger flexibility in order to advance with strategic projects. This combined entity will count with more than 5.5 billion short tons of aggregates, equivalent to more than 90 years of reserves, given an admitted exposition to the company to an aggregate sector by which the market usually recognizes valuation multiples higher than those cement -- mainly cement companies. In addition, the company will have 11.8 million cement tons of installed capacity, 224 concrete plants, 32 asphalt plants and will become one of the most important companies in the sector with an estimated valuation of $8.9 billion according to the stock price of Summit Materials at the end of the transaction and at the value at which the Argos USA assets are being contributed. If this new combined company would list in the Colombian Stock Exchange, it will be the second in terms of versatile capitalization, only behind Ecopetrol and with a valuation of approximately COP 36 trillion. In this combined way, these 2 companies would generate a pro forma EBITDA close to $1 billion included -- including estimated synergies of more than $100 million in incremental EBITDA. In addition, the operations of Cementos Argos in Colombia, Central America and the Caribbean will be strengthened by a series of auxiliary agreements between both entities and with the largest flexibility in its capital structure, given the received cash. From a market perspective, the transaction announcement, Cementos Argos had a versatile capitalization close to $1 billion, which means that this investment is equal to more than twice this value without even bearing in mind the valuation of the Colombian Central American and Caribbean assets, which contribution to EBITDA, is equal to close to the half of the consolidated results of Argos USA -- sorry, from consolidated Argos. From the moment the announcement has been made, ordinary stocks of Cementos Argos had experimented an appraisal of more than 60%. Nevertheless, we consider that the actual listing in the Colombian Stock Exchange still does not reflect fully the intrinsical potential of this transaction. The combination of Argos USA with Summit Materials adds to the recent achievement that we have traced in our strategy, and that includes the confirmation of the road and airport platform with Macquarie Asset, the largest infrastructure asset management manager of the world, besides the advancements of those generation, transmission and distribution of energy vehicles, which represents the tangible materialization of our vision with infrastructure asset managers. And the recognition and trust within growth quality players due to our experience, management capacity and operational capacity. Before moving on to the consolidated results of the company, I would like to mention the advancements that have been happening in the transaction in order to transfer our investment in the food business from Grupo Nutresa in exchange of Grupo Sura and Grupo Argos shares, which was announced to the market last 16th of June this year. Grupo Argos has been advancing the materialization of this agreement in between with the paperwork required with different government authorities and with other countries in the region. We're fully committed in trying to make this move as fast as it can. In this sense, we continue advancing in another amendment agreement for exchanging Grupo Nutresa shares, which we have communicated last 15th of September through the relevant information mechanism, which are oriented to make the perfectioning of the operation much faster. For this, we speak of making direct exchanges of shares of Grupo Nutresa for Grupo Sura shares and of the portfolio Sociedad. This is the entity that we benefit from this split. And we'll keep on being the holder of the share portfolio that Grupo Sura has and Grupo Argos has, that at the moment are part of Grupo Nutresa, instead of using an autonomous patrimony for the exchange and distribution of shares. Second, allow, that if Grupo Argos and Grupo Sura do not acquire in this public offering, the shares of Grupo Sura or those necessary to complete 87% of the share participation, it can make the payment for the value of $12 for remaining action, which corresponds to the same value by which the public acquisition offers will be made for the rest of the shareholders of the Sociedad. Third, make a share exchange in 2 phases. Once we've perfected the division, we'll have first exchange of the shares of Grupo Nutresa owned by Grupo Argos in exchange for Grupo Sura shares and Sociedad portfolio. And once we've perfection this acquisition public offer, we'll exchange the Grupo Nutresa shares acquired in this acquisition of public offer. And eventually, we'll make a cash payment in order to receive an exchange to the remnant shares of Grupo Sura and Sociedad portfolio that will be now in power of new shareholders. And that way, stop being shareholders of both societies in the same terms that have been specified in the frame agreement. Fourth, we must remember that this public offer of acquisitions for Grupo Nutresa will be done jointly by Grupo Argos, Grupo Sura and an entity designated by IHC in such way that Grupo Argos and Grupo Sura, after acquiring a pro rata of its participation in Grupo Nutresa. 10.1% of the shares with money or with the mix of shares and money in a combination of shares of Grupo Sura and Sociedad portfolio. And the design entity by IHC will offer to acquire in money series of the shares that might be over this average equivalent to 13%. Last 18th of September, there was an extraordinary assembly of the Grupo Nutresa shareholders, which we approved -- where we approved the symmetric division of this project. The division of Grupo Nutresa in 2 companies, Grupo Nutresa Alimentos and Sociedad Portfolio will be a profession one of the government approvals are accepted. Likewise, we expect that the first exchange that has been contemplated in this modification of the framework agreement will happen before the end of this year. In respect with the shares that Grupo Argos will have in Grupo Sura, prior to this transaction, and its historic investment in the society, the company is working currently with Bain & Company, which is a strategic consultant -- first level strategic consultant now to trace the road map that will allow to generate the best options that will generate the highest possible value for its shareholders, preserving the positive externalities that these companies generate in equilibrium with all its groups of interest. Moving on to the financial -- moving on to the consolidated financial results for the third quarter. Grupo Argos was able to keep a positive trend, in particular, in its cement business. In the real estate business and in the energy business, translating this into a solid growth of its main consolidated values. Revenues closed in COP 17 trillion, growing at 9%. EBITDA closed in COP 4.4 trillion, growing at 13%. Net profit closed in more than COP 1.4 trillion, growing at 33% as net profit of the controller closed in COP 908 billion, growing at 56%. All this happens despite a considerable increase in the financial expenses in respect with the previous year. In the separated financial results, as well as in the consolidated results, we recorded favorable results. Product of great performance in our investments as well as the perceived revenue due to the sale of Grupo Argos in Opain. After the closure and materialization of the road vertical and airport vertical with Macquarie, the accumulated revenues for the year reached COP 1.3 trillion. EBITDA closed in COP 930 billion. And the net profit in COP 822 billion, figures that more than double what has been recorded in the same period last year. This profit achieved in the separate financial results in the first 9 months of the year is equal to more than COP 900 per share and evidences the capacity that Grupo Argos has in terms of value generation for our shareholders. Now I want you to move on to Slide #11, where we'll be going over the results of our businesses. I will begin with Cementos Argos. In respect with the actual state of the agreement with Summit Materials, last 23rd of October, the Hart-Scott-Rodino law came to a final period, which means that there were no requirements from the competition perspective. So in that chapter, a chapter is counted within the pre-requirements in order for us to advance in the formalization of this agreement. We're also waiting for the authorization of the Securities and Exchange Commission in the upcoming weeks with the intention of submitting under votation in the Summit shareholder assembly the final agreement and close this transaction as fast as we can further than this transaction that represents a historical milestone for the company. The Cementos Argos results happened this year are extremely positive during the third quarter. The cement business of the group kept on delivering results, focusing on our profitability and on margin recovery. The results were driven by a very strong price dynamic in all our regions combined with cost and expense efficiencies, which made possible an expansion of almost 500 basis points compared with the previous year and the EBITDA margin that closed in a historical level of 24%. Given the results of this first 9 months of 2023, that add a total of close to COP 2 trillion in terms of EBITDA, in the third quarter, Cementos Argos had already achieved 85% of its guidance by which we decided to increase the EBITDA guide in a range of COP 2.45 trillion to COP 2.55 trillion as EBITDA guide for 2023. Moving on to the results of the quarter, the results of the cement business reached COP 3.1 trillion, maintaining stable compared with the same quarter last year, while the EBITDA closed in COP 722 billion, growing at 23% year after year. This is the clear evidence of the value focus that has led Cementos Argos. In terms of operational results for the quarter, the volumes reached 4 million tons, while the concrete business registered 1.7 million cubic meter volume, lower than what had been reported last year. But with the commercial study that's focused on segments that offer a larger profitability for the company, keeping the expansion -- caring for the expansion, the results are particularly favorable in the United States where we can concentrate more than half of the revenues for the EBITDA of the company. It would have gone through the year, we've grown 11% in terms of EBITDA and 42% leverage in the dynamic -- faster dynamic in commercial segments and in the infrastructure segment as well as a healthy dynamic in terms of prices in the sector. We also want to highlight the behavior of the Colombian exports, which keep growing at 10% in tons of cement compared with the same quarter last year 2022. We also need to remember that with its plants in the Colombian Caribbean, such as Cartagena and Toluviejo both with access supports, our business -- our cement business has with a great exports capacity and with the great capacity of connected with the geographies that show the largest growth in the American continent. Now I want to invite you to move on and look at the results of the energy business. We began our chapter in energy production on that announcement that Celsia gave in August, going into a new geography in the continent. The company will take its operations to Peru with the acquisition that we did from Grupo Ibereólica, coming from the Wind Project Caravelí. With an initial capacity of 218 megawatts, the project is right now in its preconstruction phase. It's located in the Lomas District in the Caraveli province in Arequipa, where other wind generation plants are already operating. The diversification of our international presence is news that fuels us with enthusiasm. Peru is a country that has very interesting opportunities in the sector with lots of things that are attractive for these types of projects and with additional possibilities of growth in order to deploy towards the future of the portfolio of the Celsia businesses. The total value of the project is estimated in $240 million. And it will come with the latest wind generation technology. The execution of this new investment in Peruvian territory will be framed under our consolidation strategy, such as alternative asset manager, we will use resources such as our own as well as the third party resources in order to make the capital investments that are required by the project. The operation will start -- or expects to start in second semester 2025. In order to make the execution of this more agile, we'll use equipment and agreements with suppliers that we had previously contracted for the projects that have had delays in La Guajira, while we move on forward the licensing and inquiry processes in these regions of Colombia. From another side, in respect with the advancements and the close of the transaction, we announced at the end of the second quarter, based on the sale of some assets in Central America. Last week, Celsia received the financing nod of [indiscernible] that accelerates the process of closure of the operation that's expected to be happening during November. The company will receive for its share participation, this sold assets close to $194 million. And we'll see at the same time, a reduction in indebtment close to $198 million. It's also necessary to mention the effects of a linear phenomenon that feel stronger in the regions where we're present. In the quarter, the water contribution to national interconnected system were under the historic average closing the quarter over 57%. Our water energy generation has dropped attending the climate situation. At the same time, our thermal plants have had special protagonism delivering reliability, efficiency and responding to its applications in the measure that it has been required. This proves the importance of having a balanced portfolio such as ours and a responsible policy of contracting and maintenance that has prepared us for the situation. Moving on to the operational results, found on Slide #14. You can see the consolidated revenues, which reached COP 1.5 trillion during the third quarter, growing at 14% year-after-year. EBITDA closed in COP 414 billion, stable compared with the same period last year. If we add to this, the generated EBITDA by our platforms, which with the Caoba expansion, Celsia energy, Laurel, and Tesorito start of operations. The EBITDA with platforms for this year would close in [ COP 1.8 trillion ], growing 15% compared with the first 9 months of 2022. Caoba, the platform that invests in transmission assets in Colombia registered a growth in its revenues of 28% until September and 27% in terms of EBITDA, for that side, C2 Energia obtained revenues for COP 88 billion with an EBITDA of COP 76 billion, from that side, Laurel, a small platform that has smaller project, counts currently with 84 photovoltaic systems and adds COP 9.8 billion in terms of revenues. The thermal plant Tesorito has grown importantly in this quarter, in terms of renewable generation portfolio and in terms of the natural gas energy generation. Given the El Nino phenomenon, it's accumulated generation reached 427 gigawatt hour, delivering an EBITDA of [ COP 112 billion ] in these first 9 months of the year. The generated energy for the period closed 1,254 megawatts per hour. This is a reduction compared with the same period last year, which is mainly explained due to a reduction, as I already mentioned, in the hydraulic generation under the framework -- under the current weather conditions. Now let's move on to the concession business. Roads and airport concession business that has been managed by Odinsa, that you can see on Slide #15 of this presentation, we will now highlight. Besides our good operational results, this quarter had a special achievement on the 12th of October, we brought back to operation, El Alambrado bridge. The construction of this infrastructure that's part of our concession in Autopistas del Cafe, was achieved in only 4 months, which normalizes the operation of this road corridor in structural and permanent manner. The concession has been making different strategies and initiatives with the clear conviction of offering support to the neighboring communities that suffered due to the collapse of this bridge. Donations such as infrastructure work material, support in terms of food, also delivering drinking water filters for the population between others. I also want to highlight that's how our concession keeps compliant with its commitment of contributing value to the region with leading projects in Peru, of well-being, mobility, economy and the environment. Likewise, we want to highlight that the second of October, Odinsa made the payment of the issued bonds in 2020 for a value of COP 280 billion, generating an important debt reduction for the company and strengthening even more its capital structure. Moving on to the operational results of the company. This quarter, the daily average traffic for the road platform slightly dropped due to the reduction of the traffic in Autopistas del Cafe, due to the situation that we as previously mentioned, with the El Alambrado bridge that will normalize once this bridge has gone back to operation. From it's side, the airport traffic keeps on improving, the passengers mobilized by the airport platform reached 12 million in last quarter, growing 10% year after year. We want to highlight the good dynamic in the Quiport in traffic that allowed in year-to-year growth higher than at 22%. In the real estate business. Pactia gross effective revenue was of COP 113 billion, growing 10% year after year. And the EBITDA for the quarter was COP 60 billion with an increase of 14%. After adjusting and due to these investments, the gross revenue and the EBITDA grew 11% and 16% respectively. In terms of the same assets for the accumulated year, the operational net revenue and the EBITDA grew 19% and 22% compared with 2022. In total, contracts were renewed for 31,000 square meters and new contracts were placed for 21,000 square meters for this -- we've covered this quarter 2023. At the end of the period, the fund closed with its non-hotel Portfolio occupation of 97%, a reduction at 65 basis points compared with the same period 2022 and an increase of 90 basis points compared with the previous quarter which keeps itself in very healthy levels. The sector that showed a large growth was the hotel business, closing with an average occupation of 60.3% at an average rate of COP 282,000. The revPAR or revenue per available room was of [ COP 170,000 ], an increase of 16% year after year. Nevertheless, 2023 has proven to be a more challenging period due to the increase in VAT, the increase in the plane tickets and the situation generated by the modifications of some of the routes due to the closure of some low-cost airlines. In terms of trade, specifically the shopping malls of Gran Plaza, we want to highlight the good behavior in sales, which exceeded the expectations and led to an increase of the variable profit of 18% compared with the same period last year. Now I want to invite you to move on to look at the urban development business, which is found on Slide #20. In the quarter, our Urban Development business showed favorable growth, growing 29% in terms of accumulated cash flow in respect with the same period last year, we want to highlight the signature of two Promise of Sale: On in Baru and one in Barranquilla. In the period, we recorded revenues for COP 80 billion. This is 170% more than the previous year as an EBITDA of COP 21 billion. In terms of the accumulated value, revenues add COP 211 billion, its an increase of 45% year-after-year. And EBITDA of COP 70 billion which represented an 81% growth compared with the previous year. Despite the situation of the market where we see a drop in the sales of the country, we still see a great appetite for the products that we offer at the same time that we keep on working for looking new business opportunities in order to comply with the objectives that the urban development business generates given that it generates more resources for the shareholders of Grupo Argos. Now I want to invite you to move on to the consolidated financial results and separated financial results for the group. And for this, I want to invite you to move on to Slide 22. The revenues reached COP 4.8 trillion during the quarter, which represents a drop of 5% compared with the same period at 2022. EBITDA reached COP 1.3 trillion, this is stable year after year. Likewise, the controlling net profit of the period closed in COP 190 billion, also relatively stable compared with the previous year. On Slide #23, we could see the variation of the contribution of each one of our businesses in terms of revenues, in terms of consolidated EBITDA. In these graphs, we could see a greater contribution of the real estate business and in the energy business in terms of revenue, thanks to its great operational performance as well as a significantly higher contribution in our cement business in EBITDA due to its excellent results in what has been covered this year. From another side, we could see a lower contribution in terms of the concession business in terms of revenues, where from this quarter, we could see the breakdown of the financial results of the airport assets to the closure of the airport vertical with Macquarie. Nevertheless, as I mentioned in the operational comments, the dynamic of the businesses is extremely positive. Now let's move on to Slide #25, in order to analyze the consolidated indebtment evolution. The consolidated net debt of Grupo Argos closed in COP 12 trillion, 4% less than the same period last year despite a net debt that drops given the increase in the interest rates, the net financial results increased 23% year after year. In separated financial results, you can see on Slide #26, as well as the consolidated results, we recorded positive results. The quarter revenues closed in COP 270 billion, EBITDA closing COP 167 billion, and the net profit closed in COP 118 billion. All these growth represent more than 40% on respect with the same results of the same quarter last year. Thanks to the cash position that we closed this quarter with. The separate net debt of Grupo Argos that's detailed on Slide #29, closed in COP 710 billion with a reduction of 36% in respect with the same quarter last year. The cash position of the company at the end of September was more than COP 900 billion, which grants a great flexibility to the company. For the operations that shall be carried out, under the framework of the transaction, we will be exchanging shares of Grupo Nutresa for Grupo SURA and Sociedad Portfolio. The cost of the debt of Grupo Argos keeps on dropping, placing -- being at 9.9% at the end of this period. This is 210 basis points less than at the close of 2022. Looking at the trend of the IPC, we hope for this trend to be maintained, which will be of great support for the financial expenses of the organization that have increased significantly in the last year, as I already mentioned. Despite the drop of the debt stock, in addition during this quarter, the company kept executing actively its share repurchase process, a measure with which we want to reassure the trust that we have in our business plan and the strategy that we have been executing from Grupo Argos in all its companies. Today, the company has repurchased close to 4 million ordinary shares and more than 750,000 preferential shares. The expansion and the growth of Grupo Argos would have not been possible without the Barranquilla development story, a city with which we are intimately linked in many of our business lines. Because of this, we are proud of being part of the transformation of the city. And today, we want to highlight two recognitions that the company received under the framework of the activities that are urban development business in place. From one side, Realismo Magico Park received a recognition in the category of urbanism works as an award for a sustainable architecture and excellence. This Realismo Magico Park was designed and constructed in October 2022 by the urban development business of Grupo Argos and the Barranquilla Mayor's office, the district Infrastructure Agency and Siembra Mas, offers more than 10,000 square meters and a cultural location. Since it's inauguration more than 7,000 people have benefited from an offer of 145 activities around entrepreneurship, culture, physical health and mental health -- true milestone for the appropriation of public space. From another side, I want to share with you that the Urban development business also received the award of national response social national responsibility for 2023 given by Camacol due to its project Reciclemos Juntos, or let's recycle together. It's an initiative where we benefited more than 18,000 visitors in which we have the participation of 150 recyclers, which have recovered more than 100 tonnes of waste during the last 16 months. This has contributed to the formalization of recyclers, which in the majority are people found in extreme property and going from people with no revenue alternatives, becoming entrepreneurs, business partners. And right now, they have a better revenue, and they have access to education and training information in order to have a dignifying life. This recognition reassures that the construction of sustainable cities is only possible when in the prices, we articulate the interests and wills of the communities of the public sector and the companies. Finally, I want to share with you our guidance for we have -- for the rest of 2023, we keep the communicated figures of this first -- at the beginning of this year. We hope closing 2023, increasing revenues increasing our consolidated revenues for COP 22 trillion and an EBITDA of more than COP 5.2 trillion. Now I want to give the word back to Juan Esteban Mejia, so we can move on with the Q&A session. To you all, thank you for being with us.

Well, thank you, Jorge Mario. [Operator Instructions] Our first question comes from Juan Camilo Jimenez.

Thank you for the information. Are you considering to use a repurchase mechanism, the same as which Grupo Argos announced in previous days? When are you expecting to have the results that are being done?

Okay. Let me try to answer both questions and maybe Alejandro and Felipe can complement and Rafael Olivella also with me here. The repurchase program, as I mentioned during the call, it's a strategic priority that we have defined at our business group level. It has two main purposes as it was also mentioned. The first one is the materialization of the conviction that we have in the business plan that we have -- in the long-term business plan that we have, that unfortunately this is not reflected in the value -- in the share market. It's a series of measures that are focused in different magnitudes and mechanisms in each one of the companies in becoming an active player in the share marketing in Colombia. And being a player that can grant to the market, the possibility of having a liquidity for those shareholders that don't have options. So we've been advancing not just in Grupo Argos, but also in Cementos Argos, as we announced and Celsia has also been studying and structuring a program that has been approved by the shareholder assembly of the company. We've acquired for around 4 million shares and 775,000 shares -- referential shares for Grupo Argos, combining with the balance for the shareholders within the different types. This policy will keep on happening. And right now, the reacquisition is suspended in Grupo Argos due to the regulation of the stock exchange that regulates these purchases in a certain period of time before the representation of the results will be happening today. So this will keep on happening. The amounts and magnitude and the mechanisms are all open and to be used. Cementos Argos has announced a mixed mechanism.

Are you seeing traditional mechanisms and purchases in blocks of close to COP 20 billion that will be starting their operations in few time?

We do believe that this is important mechanisms or these are important mechanisms but the conviction, the capital allocation and the implementation of several mechanisms will keep on doing. The amounts and the quantities are different in each one of the organizations and clearly depend not just on the cash situation, but also in the authorizations it has and in the future usages of compromised resources. As I mentioned in the call, the cash situation of the company is pretty comfortable right now. But as we mentioned, we have the closure of several operations, such as the share exchange that we'll be having with Nutresa for Grupo Sura that might require a certain amount of cash that might [indiscernible] between $60 million to $50 million to $140 million, depending on the amount of shareholders or -- And those that we cannot exchange, we'll have to purchase cash besides the taxes that we had to pay for previous years. So we still have the cash to do that reacquisition, Cementos also. Celsia probably will announce reacquisition mechanisms. And we keep under this conviction that the business plan is extremely powerful in all the companies of the group and in the measure of that conviction and a better capital allocation, we'll keep on trying to maintain this dynamic in terms of share -- acquisitions. In terms of the second question, as we mentioned before, we are working in all the strict initiatives that the company might have, coming from the fact that once we consolidate the share exchange. Grupo Nutresa is removed from our portfolio, and there's going to be a relevant increase in the participation of Grupo Argos in Grupo SURA. And as I also mentioned, part of this shares, mainly ordinary, will be taken to -- the patrimony or the equity. But nevertheless, we have, as shares that have a very important economic value in this conglomerate. The idea is to map all the possibilities that the organization has compared with other countries, and see which would be the best scenario in order to maximize the value of our shareholders and transfer the largest amount of generated value to our shareholders and maintain all the externalities that this organization has over different groups of interest being employees, collaborators and suppliers or our society in general. We expect to advance decisively for the rest of this year and for the first quarter 2024 and have clearly established a road map that will be submitted to the approval of the required instances that these companies might require.

Okay. Perfect. We also have three questions from the same line. We have a question from Katherine Ortiz, [indiscernible] and Leonardo.

About the decree in resolution of the transportation ministry in terms of the increase in the toll payments. And how would this apply for private initiative concessions?

Leonardo, Katherine, very good question, I'll give the word to Mauricio Ossa. Mauricio, being President of CCI has a better context. Just in the short-term implication, but also how this affects our assets and obviously, we have a different regime from public -- private initiatives. So Mauricio, can you help me with this answer?

Of course, we're here Mario. Good morning to you all. Let me start. If you allow me, Juan Esteban, I'll try to answer in a cross-cutting manner. So I start by saying that this resolution -- this decree that we estimate should be signed between the 20th and 24th of November, we are still a week before. This decree, we need to understand as the signal that was missing for the financial sector in order to keep on financing the infrastructure projects. In that sense, this is very positive. In it, it's detailed the value of the tool is recognized as the source of payment. The indexation is recognized as a contractual commitment. And we -- the adjustment is recognized as a formal delivery of functional units. This is going to be a gradual process, and this will happen in December. What's expected is that in December, we have the inflation correspondent for this year, meaning by this [ 13.2 ]. And we hope that in January, we'll do the inflation adjustments that happened during 2023. And up to July 2024, all the rates should be normalized. The only thing that would be missing is that adjustment that makes reference through the total delivery of a functional unit. Two, we believe that this gives a clearer signal that normalizes the tool as a source of payment and normalizes the contracts. From Odinsa's point of view, I want to mention something that we have previously mentioned in previous calls. From the [ '24 ] road concessions, in two of this, Autopistas Del Cafe, and Tunel de Oriente, the adjustment was done at the beginning of this year as it was not in the contract and only two are still missing. One is Pacifico 2, that has an internal mechanism within the contract. In terms of collection differential, lower collection in the revenue that this is adjusted in the quarterly report in an act that's signed by the [indiscernible]. This mechanism was activated since the first quarter this year and has worked with no problems, and the government has paid on time. So there has not been an economic impact on this project. As in Pacifico 2, there are other projects in Colombia, like 6 or 7 that have these types of mechanisms. And in del meta road grid, first thing is that this clears the view, as I mentioned before, these are the projects that benefit the most from this decree because it brings it back to its original scope in order to think that this will be executed as it's specified in the contract. We would be still missing del meta road grid, the part of the compensation through some of the sub accounts from the lower collection received this year. That's a figure that would be around COP 25 billion, COP 26 billion. It's an important value, but at the end, it's a marginal value in terms of the contract. Jorge Mario, I believe, and Jorge Mario has started to check or mention of the most relevant elements. We have the expectation that this will be signed at the end of this month, and we'll be implementing this according to what we've agreed with the government. We have permanent conversations with the government. And just an additional comment, this permanent conversation happening with the national government. Since the beginning of this year, that has translated, as you've seen through this year that -- the collection differentials have been attended for the eighth year almost in their totality. And right now, we're regularizing the situation of the tolls. So once we've signed this, we will remove the uncertainty that we thought that might affect the infrastructure sector.

I wanted to add a comment that's not within the question, but I believe it's important to mention anyway. Because in certain circles, there's been concerns that this reestablishment of the EPC was [ 30.2% ] plus the increases that might happen in 2024 might have a relevant effect on inflation, I want to highlight the declarations that just the finance minister that we believe that's very responsible, but also the one from Luis Fernando Mejia. I estimate the effect on the inflation and the increase in tolls won't be higher than 0.01% in inflation variation. So the cost of transportation within this inflation component does not exceed 10%. So I want to make this comment because there's also voices that have said that with the inflation, pressure will be large. But as Mauricio said, it's a clear signal in reestablishing the contractual conditions that the industry has that this is a very positive signal for the investment enthusiasm.

Well, thank you. We also have a question for Odinsa coming from [ Juan Camilo]. Speaking about airport visitations. The Cartagena has been recently delayed. What can you tell us about the rest?

Well, about the process, we did not mention anything different from what we have in public information. If I'm not wrong, this will go up to the third week of November where there should be a winner to those that are bidding. Let's remember that the process is a private initiative process. It's led by a consortium that's mainly led by the group that operate Rafael nunez airport. In the bidding process, we had two other additional parties, and we are following phases that we usually follow these types of situations. First, we evaluate the project, you know that we're interested in the region. We believe on a competitive airport at sea level for Colombia, and that's what we've been fighting for, these types of initiatives in the Cartagena airport. We evaluated this option. And at the end, we decided not to go for it. We're not specifically interested in the airport, but we are interested in development of that region. We've said, no, because we want to concentrate on the project that we're at right now because we're entering the final phase. This December, we need to deliver all the feasibility study. We're making an adjustment in the valuation process that might take up to the first quarter next year. But next year, we should be in a contract and afterwards, appropriate selection. So we thought this might be detrimental if we would be in both processes. And given that the [ Bajo Anchicaya ] process has been advancing so much, we preferred concentrating ourselves on this. So we hope the best for this project. We do believe that Cartagena has a great potential and that airport might help receiving a larger traffic, but we are focused in our projects.